Peter Mathews (Dublin South, Fine Gael) | Oireachtas source

As a newcomer to this Chamber I ask Deputies to park the petty, partisan politics of the past. We are in a slow motion crisis that has led to job losses, emigration, financial stress, family break-ups, family worries and even suicides. We have actually managed, despite that territory of ruin and misery, to start the work of site clearance. The Government, which is a coalition government, is doing its honest, level best to try to get a read of the situation, to measure it and to get a degree of correspondence and communication with Europe and beyond on how to deal with it.

Last Thursday and Friday at the summit the Taoiseach did his very best for Ireland. We can all see that. It is obvious. There was backsliding on the part of Europeans, particularly some of the stronger European countries. They tried to hog, as it were, the higher and firmer financial ground of the European Union over September. The Taoiseach went back to determine and assert the position of Ireland. It meant that he had to lift the telephone on Sunday to have a very strong and direct conversation with Angela Merkel, the upshot of which was a joint communiqué indicating that the intention of the summit was to bring about a framework that would lead to the separation of bank and sovereign debt in the EU. We are on track for that and must now build on it. The Taoiseach is to be commended because he did the business-like thing and lifted the telephone. Phone calls do not happen simultaneously at both ends and it is highly unlikely that Angela Merkel would have lifted the telephone to call him.

We should get behind the Taoiseach, say "Well done" and ask him to continue spearheading the direction of that conversation.

This week's must-read article on the eurozone crisis is "The Eurozone Debt Crisis: The Options Now" by Lee C. Buchheit and G. Mitu Gulati. Karl Whelan goes to the trouble of digging these articles out. I do not necessarily read everything he recommends, but he gives us good tips on reading and he should not be ignored. I recommend that Members read the aforementioned article because it explains in stark terms what has happened at ESM level in regard to monetary transactions and what Mario Draghi and the ECB are doing. I tried my best at a meeting of the governors of the central banks of OECD countries in September 2011 to draw attention to the real effects of debt. I also reminded the Joint Committee on Finance, Public Expenditure and Reform about the issue but my concerns were summarily dismissed. This is the core issue for the economies of the world.

There are three types of debt. To make it easy for everybody to understand, a country, an economy or a society is like a body, and the working arm of that body in terms of the state is normally the right hand. Some people are left-handed but for purpose of the analogy I will use the right hand. In Ireland and the other programme economies of Europe - that is, Greece and Portugal - the right hand has been damaged by fiscal imbalances and accumulating debt that becomes unsustainable. Programmes, like injections of cortisone and antibiotics, have gone into that arm. The troika's examination every three months takes the blood pressure, checks the blood count and examines whether the proteins and vitamins are working in the right arm, but one cannot concentrate on that arm alone when there is household debt on the left arm and corporate debt on the right leg, which does the weight lifting in the economy. Corporate business is the engine of production of goods and services outside of the public sphere. In the case of Ireland, these two limbs have gangrene, which has been ignored or overlooked.

That is where the argument about debt sustainability links with the legacy bank debt. I do not have enough time to explain exactly how it happened, but Ireland contributed €65 billion to €70 billion to save the eurozone system. That can be proved beyond doubt, but we have not passed the lesson on to our colleagues in Europe. Let us go back to the start of the European project. Martin Schulz mentioned solidarity. Where is that solidarity? Where is the Delors and Kohl heart of Europe? Mrs. Merkel may not have understood this because she comes from the centralised command economy of Soviet East Germany. She does not understand markets and, perhaps, the financial system, what makes them work and how negotiations and transactions work, but the US understands because it has been a market economy for a long time and it has been influenced by the cultures of many countries. The US put $16 trillion of liquidity into its financial system. The eurozone financial system is like a bad central heating system. Last week I referred to an article by Simon Johnson, "Will the Germans Pick up the Tab for Deutsche Bank, Too?", which examined Deutsche Bank's €2.2 trillion balance sheet. To set what we have done for Europe in context, Ireland's €65 billion equates to 50% of our national income. If Germany was to invest a proportionate level of effort in saving the eurozone system it would provide €1.2 trillion. That message has not dropped, but we should not be reticent about pressing our case. If it means going to the wire, the next time a fully owned bank is due to redeem a bond we should argue that it has a mixture of cash and liquidity and we are not in a position to pay out on the bond until we have a clear discussion on its composition. That is how we will concentrate minds.

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