Dáil debates

Wednesday, 24 October 2012

European Council Meeting: Statements

 

12:15 pm

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance) | Oireachtas source

Mr. Martin Wolf, a respected economic commentator with the Financial Times, in June last, wrote:

Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events.
We could not have a better description of the crisis that we are facing in the eurozone, now in its fifth year. At the heart of the crisis is a simple fact, that we do not know whether the eurozone's most powerful economy, Germany, is really prepared to do whatever is necessary to save the euro. We do not know whether it is prepared to take the risk of pushing Greece out. We do not know whether it regards Ireland as a special case because we do not know what "special" means. What we know is that a recession flowing from a financial crash can easily turn into a depression.

The euphoria, the frenzy of lending and borrowing, and the mad speculative risk-taking that takes place on the way up in this bubble are now replaced by their opposite after the crash. There is fear, massive de-leveraging, a refusal to lend, collapse in demand, collapse in investment, hoarding of capital and capital flows to safe havens throughout the world. Some $32 trillion are heading into the Cayman Islands and Switzerland, with a potential $280 billion worth of tax-take into revenue.

The only way to contain such depression is to increase State spending to offset private sector de-leveraging. What the eurozone needs is less austerity, expansionary monetary policies, stronger German demand, some inflation and collective backing of the financial system and some sort of euro bonds. What I speak about are measures which we know, from the 1930s and, indeed, from this crisis, are necessary to contain a depression in capitalism. I am not even talking about a solution to the fundamental contradictions contained within the system. Even if the measures required to limit the damage of the crisis are beyond the European elite, the eurozone is on a journey of a break-up that Germany shows little will to alter unless there is a change in policy direction, in tack and in targeting what needs to be done, that is, the creation of jobs.

The Taoiseach made a point about his conversation with Chancellor Merkel, that she registered a genuine appreciation of the steps the Irish people are taking to turn our economic situation around. The IMF says austerity is not working. In that regard, therefore, we are talking about crashing our economy. We have her full support for our efforts to get back to markets, but at what cost? It is at the cost to our citizens. I have made this point already in the Dáil. We have been cut to the bone. The Government is now chasing after the marrow, which is probably not there. We cannot take anymore. We must go the European Union and state we cannot pay this debt.

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