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Will Ireland go bankrupt?

Ireland

Ireland (the government plus the private sector) has by far the largest net international debt of all EU countries (measured as a % of GDP). To an extent this is caused because the Irish state was pressured, by its EU friends, to borrow money from other countries to bail out (the creditors of) Irish banks. The large and fast deterioration of the Irish position in 2014 and 2015 might be caused because large international companies finance their Irish headquarters with inter company international debt. But whatever the cause – it is ridiculous that a country like Greece, which is in a much better state when it comes to its net international investment position, is pressured (among others: by Ireland!) to cut pensions, sell government assets and raise taxes – while the Irish government even refuses to collect taxes due.

  1. September 2, 2016 at 7:22 pm

    Is Ireland facing a contradictory set of roles here: the low tax haven of Western Europe, now faced with collecting taxes to save itself based on Neoliberal “standards” of % debt vs. GDP?

  2. September 3, 2016 at 11:42 am

    I’ve just been sent a highly relevant comment, if on the situation in Scotland vis-a-vis England as against Ireland v. EU. The difference of course is that Scotland had (still has) more natural resources than Ireland, just as Greece has better weather for its agriculture and leisure industries. The main article below is complicated, illustrating each step in the argument with another article spelling out the facts, but it is so good that the comments are also (on the whole) extremely good, with many of those commenting intending to keep the main article for reference.

    http://wingsoverscotland.com/junkies-tramps-and-thieves/#comments

    The particular outstanding comment passed on to me was by davidb on 3rd Sept at 09.29, but reading through all the comments I found this by MJack (2nd Sept 12.27) which seems to me entirely relevant to the Irish situation:

    ” What always gets me is that money in Scotlands budget over and above what Scotland raises is borrowed by the central bank not given to Scotland by England. That could only happen if England were raising more money than they spent, but that hasn’t happened for a long time.

    “England can’t give Scotland money that it doesn’t have, so it’s borrowed money!”

    Precisely! What purports to be money owed to foreign investors was itself borrowed from foreign banks, who didn’t earn it but simply had to “print” it. It is those who make money by falsifying money who need to be bankrupted, not governments which use money for its proper purpose: of ensuring their citizens can make themselves and their homeland worthy of an obviously attainable (since has already been attained) standard of living.

  3. Blissex
    September 3, 2016 at 12:29 pm

    «the Irish state was pressured, by its EU friends, to borrow money from other countries to bail out (the creditors of) Irish banks.»

    The decision of the Irish government to do so was very right from a political point of view, even if from a neoliberal economicist “F*CK YOU! I got mine” point of view it was not the one that gave the most immediate gain because:

    * Ireland in the 1970s and 1980s was very poor and an economic basket case.

    * Today they are in a much better situation.

    * One reason for the improvement is large amounts of money donated by Ireland’s «EU friends» for development purposes.

    * Another reason is the forbearance by Ireland’s «EU friends» for being a tax haven, again given for development purposes.

    * Given the enrichment largely enabled by help from their «EU friends» the irish voters decided to fritter it away, english-style, on a crazy ponzi-like property bubble.

    * The irish voters have not complained much about bailing out the EU banks because they know very well how much they owe to their «EU friends», and that blowing up the banking systems of Germany and France was a poor way to show their appreciation for the help they have received.

    The outcome of all this is that certainly the core EU governments, and especially Germany, have a very different perception of Ireland and Greece, and towards the irish have none of the widespread and well deserved contempt they have for the greek culture of corporatist right-wing asset stripping of their own state.

    The main mistake of the Irish government, probably arising from panic, including the fear of being seen ungrateful, was to make excessively wide guarantees to creditors, and bailing them out too much, probably beyond what their «EU friends» would have considered acceptable.

    But whatever, I think that if Ireland is in bigger trouble, their «EU friends» will remember and help again. In particular german politicians even if maniacal are not unimpressed with Ireland’s friendship.

    As to Greece:

    «Greece, which is in a much better state when it comes to its net international investment position, is pressured (among others: by Ireland!) to cut pensions, sell government assets and raise taxes»

    The question here to which I never get a straight reply is: what percentage of GDP is Greece entitled to as no-conditions-attached fiscal transfers from the EU? 20% of GDP like it was in 2008 as “pretend loans”?

    Because without massive fiscal transfers Greece has no alternative to «cut pensions, sell government assets and raise taxes», as Y Varoufakis has argued convincingly so many times when arguing for those massive fiscal transfers (usually in the form of an unlimited overdraft at the ECB).

    And if Greece is entitled to the 20% of GDP fiscal transfers to get them back to the GDP per capita they had in 2008 instead of the one they had in 2001, isn’t Poland entitled to 100% of GDP fiscal transfers to equalize their GDP per capita with that of Greece in 2008, or aren’t Bulgaria and Romania entitled to fiscal transfers of 300% of GDP for the same reason?

  4. Hepion
    September 12, 2016 at 11:44 am

    Ireland is such an odd case because there are so many companies pretending to be Irish.

    They operate outside, they are owned outside, but they are probably counted as being Irish companies owned by foreigners because they have HQ in ireland

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