Thursday, June 16, 2011

Iceland and Ireland

One of, if not the best political blogs in Ireland - recently posted on the Ireland vs Iceland situation.
A few months back, it was drummed into us by politicians that we did not want to be Iceland, that being Iceland was to be a financial leper.

Well, lets look at the results of people power in Iceland. We keep being told about being on the Bond markets - Iceland returned to international debt markets for the first time since its banking meltdown more than two years ago as investors offered to buy twice the amount the government offered in dollar-denominated bonds.

Iceland averted a sovereign default by refusing to let the Government bail out bondholders when its banks failed in October 2008.
Iceland will enjoy economic growth of 2.2 per cent this year and 2.9 per cent in 2012 as its budget deficit narrows to 1.4 per cent of GDP, according to the Organisation for Economic Co-operation and Development.

The island’s approach to resurrecting itself from financial ruin has won the praise of Nobel laureate Paul Krugman, who says Iceland is now better off than euro member Ireland.

On the other hand we elected FG and Labour who continue with failing FF policies, our services are being cut back, our hospitals sold, we are allowing development of frac drilling all at the behest of the EU/IMF.
At the end of May, the banks’ total borrowings from the Central Bank in Ireland and the ECB stood at €156 billion, down from €160 billion in April.

The gradual loss of deposits at the Irish banks over the past year has led to a surge in borrowing from the ECB which reached a peak last November, when banks here were in receipt of €136.4 billion in funding.
The dramatic rise in Irish financial institutions’ dependence on ECB funding, at a time when other countries were reducing their reliance, is believed to have been one of the key triggers behind the IMF-EU bailout.

What galls me most is yesterday, listening to Brendan Howlin, a Labour politician, talking about burden sharing in the country.
Lets get this straight - the vast majority of people in this country were not involved in the banking sector or property speculation - Why do we need to share the burden for the speculation of others? I have an overdraft, why dont the banks pay back some of that?
Instead, I am faced with stealth taxes like road tolls on top of road tax, and future additional costs with water metering and property tax on family homes.

Paycuts and levies are applied to the lower and middle ranks of the civil service, not those in senior positions on whose watch the crisis developed.

The citizen should come first, a wider range of the people, not just the bankers and speculators should be bailed out.
I do not understand why banks could not be re-capitalised from the bottom up - i.e. subject to criteria, that people could not have transferred a mortgague from private banks to the state, in essence becoming council houses. As an addition to the National Solidarity bond, they could be regarded as assets for the state. The banks would have got their money and family houses would have been secured.

The long running joke that tells us the only difference between Ireland and Iceland is one letter and six months is true, they are better off after 6 months, their economy is stronger and better than ours and they are not burdened with debts on the public purse for the private sector.

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