John Gerard Hanafin (Fianna Fail)

I welcome the Minister. We are fortunate that there is a contrast between the situation in Athens and Dublin. The Government in Dublin took action quickly. We saw the difficulties confronting us, took action immediately and promptly and were open and transparent in the way we did our business. That is reflected in how the economy is now in a position and seen as such by our European partners to be one of the partners that can help to bail out Greece.

The situation in Greece was different. First, Greece misrepresented its situation to the European Union when it applied to join the euro. It appears that borrowing was hidden and that the full extent of the problem with the drachma was not shown when it joined the currency. Second, there are inherent difficulties in the Greek economic system. It is a far more restricted economy, less mobile and less able to react to the difficulties within it. That is the reason it is so difficult for the Greek Government to achieve acceptance of the conditions and reforms necessary to get the country out of its difficulties. Then there are the hedge funds, to which I will return.

The situation in Greece is such that it appears the people who are rioting on the streets — there are a few I know — either do not understand the concept or deliberately do not wish to know. If the European Union and the IMF are providing the money for day-to-day spending, acting on the calls of "IMF Out" or "EU Out" would mean no pensions would be paid in Greece, as the economy would collapse. However, that is not the way the Greek Government has acted. It has acted responsibly and indicated a clear structure, whereby it will reduce its deficit of 13% in 2009 to 9% in 2010 and below 3% by 2012. That will require a great deal of hard work. The government has cut pensions and wages, removed restrictive practices and stopped extra bonus payments, early retirement at 45 years of age and the making of 14 monthly payments per year. This had to be done.

Everything done in Greece was probably done on the basis of growth rates. It appears that very few countries got it right; very few saw that it was not the big bang of freedom of capital that was the problem but its regulation. The Canadians perhaps show best what is and was necessary. Their banking and financial systems are very solid. We are getting there. Unfortunately, the regulation was not what it should have been, although, thankfully, it was not as bad in this country as in others. Ireland is now on the path to getting the economy right. That path to recovery means that we are anticipating growth this year and a 3% growth rate next year. Of course, that could change, but it could also change significantly for the better.

A big benefit was the fact that the man in charge of the US treasury, Mr. Ben Bernanke, absolutely understood the financial crash of the 1930s and avoided the restrictive trade that took place then. He avoided allowing banks to go broke, which would have created instability, uncertainty and fear in the market. Why not let some banks go broke? Lehman Brothers Holdings Inc. was allowed to go broke, but it represented only 4% of the American market. Anglo Irish Bank represents 50% of the Irish market.

The Government has made strong, stable and solid decisions. The proof of how solid and stable they were is that on two major occasions the major Opposition party supported them. Even recently we saw that the Labour Party would not support what was necessary. Previously, it would not support the bank guarantee. Party politics should never come into this situation. As the Opposition spokesperson in this House said, it is very important that the Croke Park agreement go through. It is important for the nation. No party should be allowed to sit on the fence and state: "We do not have an opinion on this because they have asked us not to get involved." The reality is that it is afraid of its electorate and afraid to make decisions. We are in politics to make decisions. In 1997 we did not know we would have so many years of growth and certainly did not know in 2007 that the situation would change so radically. However, one must face the situation as it presents itself. We will be judged ultimately not on enjoying the benefits or the losses in the bad times but on how we managed. I believe we have managed very well.

It is important that the Greek Government take a serious look at the measures taken in this country which I believe were taken fairly. From the outset the emphasis was on social solidarity. There has been little upheaval in this country, if one discounts the obvious attempts to create mischief at the gates of Leinster House. We have yet to find who was behind that mischief making. However, it was no more than that. It was a deliberate ploy to make waves and show there was instability in the country, which there is not. The public knows there is a request from the Government — that is all it can make — that everybody bears the burden according to his or her ability. We have made cuts. However, it is important that we are in this position because, other than the fact that we are saved the dreadful puns of being wary of Greeks bearing gifts which would have ensued if the Greeks were giving us the money, we are able to assist the Greek economy. Of course, that is something about which I am particularly pleased because if they follow the model we have implemented, ultimately it will benefit their economy. It shows that taking strong steps quickly is what will assist.

The Greeks have had a second problem. The second problem has been the betting and deliberate attempts to destroy the Greek economy by hedge funds. That is why I welcome the EU decision to regulate strongly hedge funds.

These hedge funds regard themselves as waiting lions on the savannah which, during natural selection, would take out the weak. The reality is these hedge funds are sometimes less than vultures. At least vultures wait for their prey to die before they attack.

These hedge funds have taken positions previously against currencies and against sovereign debt. In Argentina, for example, they bought up the sovereign debt at sometimes up to 20% of its write-down value and then brought the sovereign nation to court looking for full payment. They have done the same in Peru and they have done the same in Greece. It is quite straightforward. They buy up the debt, dump the debt on the market, create the impression of instability or use some riot or strike to give the impression that this will bring down the economy, drive down the price of the debt and then go in to buy it cheaply themselves. It is just short of economic terrorism and it is time it ended because it had a very serious effect on Greek bond sales, so much so that the Greeks refused to sell to mutual funds and to banks because some of those banks had acting hedge funds and instead went for insurance companies and sovereign debt. The Greek situation, bad and all as it was, was made much worse by speculation against the currency. The hedge funds would have speculated against Irish debt also using any excuse to imply we could not manage our debt.

Looking at the situation, of course, when one is dealing with reality one must take what people say. If an Opposition spokesperson states that €100 billion left the economy and just disappeared, that is arrant nonsense and it should not be allowed stand. First, it was suggested that it was the developers. Now we know from all the court cases that everything that the developers have, including part of their pension funds, is being taken from them, and that just does not run anymore.

Then it was the banks. The banks did make losses on the developers. However, the money that was in the Irish economy was given out. It was given out by the State in very low tax and in capital payments and it is clear that is what happened. Let somebody show me the truth of the amount of moneys that left the country because I do not believe it is there. There are losses and the reason was there was a property bubble, and that would have been managed were it not for the world collapse. However, the same people in those hedge funds I spoke about earlier were the very ones who sold the sub-prime lending and who, once the sub-prime lending hit Bear Stearns and Lehman Brothers, took positions against HBOS and Lloyds. At the very same time that they were responsible for the downturn, they were betting against solid banks and, of course, further exacerbating the problem.