Ireland is protesting.
It's the same ole song and dance of yore. The Banksters privatize profits and socialize the ruin. What are they cutting? Pensions, social safety nets and retirement. Below are just a few bullet points from their plan. See a pattern?
- Increase the state pension age to 66 years in 2014, 67 in 2021 and 68 in 2028.
- Reduction of public service costs through a reduction in numbers and reform of work practices as agreed in the Croke Park Agreement.
- New public service entrants will also see a 10% pay reduction.
- A reduction of existing public service pensions on a progressive basis
averaging over 4% will be introduced.
- Reduce national minimum wage by €1.00 per hour to foster job creation for
categories at higher risk of unemployment and to prevent distortions
associated with sectoral minimum wages.
- Reform of the unemployment benefit system to incentivise early exit from
The list goes on and on. Screw the people, bail out the banks.
The unemployment rate in Ireland is 14.1%.
Incentivize getting off the dole when there ain't no jobs and whose fault is this anyway? The workers? Nope, they are just the ones who are supposed to pay for those lovely gambling chip derivatives, tax havens and shell companies.
The Irish Times focuses in on the lovely interest rate 5.83% on €85 billion, as a loan. Guess who gets the money? The Banks:
The European Union has approved an €85 billion rescue package for Ireland which, if drawn down in its entirety today, would attract an average interest rate of 5.83 per cent.
Of this €10 billion will be used to immediately to recapitalise the banks to bring them up to a core tier 1 capital ratio of 12 per cent, with a €25 billion contingency.
The remaining €50 billion will be used to meet the budgetary requirements of the State.
Ireland has also secured an extra year – until 2015 – to meet its target of reducing its budgetary deficit to 3 per cent.
Under the terms of the deal the State will contribute 17.5 billion of the required funding, €12.5 billion of which will come from the National Pension Reserve Fund and €5 billion from “other domestic cash resources”.
The European Financial Stability Mechanism will contribute €22.5 billion, the IMF €22.5 billion and the €22.5 billion from the European Financial Stability Fund.
You know what Ireland won't touch? Their corporate tax rate of 12.5% and all the games corporations play with tax shelters.
Simon Johnston says Ireland's debt is more like 150% of GNP and notes the press is using GDP instead. If you recall, Google managed to lower it's tax rate to 2.4%, in part by running corporate profits through Ireland first. Simon Johnson:
At least 20 percent of Ireland’s G.D.P. is from “ghost corporations” that have little or no real activity in Ireland. Corporate taxes are set at 12.5 percent, but leading global corporations are able to construct complicated schemes involving other offshore tax havens that reduce their effective tax rates to the low single digits.
David Malone, in who bankrupted Ireland, describes more how multinational finance companies set up subsidiaries in Ireland due to their lax banking laws. Yes, our friends, derivatives and shell vehicles for tax havens are the Godzilla dancing the Jig.
German banks set up subsidiaries in Ireland. These subsidiaries were often registered as completely Irish companies. Back in Germany the German regulator (BaFin) had strict and enforced rules. Very good rules for the most part. Far, far better than Britain or Ireland. But these good rules, properly enforced meant German banks could not do many of the most lucrative and in hind sight reckless kinds of deals.
So the German banks would do the figures and work it all out in Frankfurt, then send a banker over to Ireland, get them to sit at 'their' desk in Ireland, in the Irish bank, and do the deal there. The legal registration of the deal and the 'oversight' were all Irish. This is known in the financial world as jurisdictional arbitrage. You and I would call it cheating if we were feeling charitable and lying if we weren't.
The Banker flies back to Germany, where the German bank hasn't done any deal, and therefore has done nothing wrong. The deal was properly overseen and approved by the appropriate Irish financial authorities and the profits would be banked at a very happy Irish bank. If any management of the 'deal' was required an Irish company would be hired, there are many, and an Irish manager often living not far from Cork, would 'manage' the money in and out.
Gets worse, many have been warning of a domino effect:
It is now common knowledge that there is a potential domino effect of European sovereign debt contagion in roughly the following order:
Greece → Ireland → Portugal → Spain → Italy → UK
While some people have been writing about this for well over a year, many others have joined the party late (there are now over 600,000 hits from a Google search discussing this topic.)
It is also now common knowledge that while Greece and Ireland have relatively small economies, there will be real trouble if the Spanish domino falls.
Iceland has the world’s 112th biggest economy, Ireland the 38th, and Portugal the 36th. In contrast, Spain has the world’s 9th biggest economy, Italy the 7th and the UK the 6th. A failure by one of the latter 3 would be devastating for the world economy.
There is some talk of forcing creditors of insolvent nations to take a hair cut, but currently bondholders escape scot-free. What a concept, forcing a hair cut on derivatives and other private investment vehicles? Nah, surely not! Let's rob the Pension fund instead!
European finance ministers backed a Franco-German compromise on post-2013 bailouts that watered down calls by German Chancellor Angela Merkel for investors to be forced to take losses to share the cost with taxpayers. The ministers agreed that a future crisis-management system won’t automatically cut the value of bond holdings, easing away from a proposal that led investors to dump assets of Portugal, Spain and Italy.
Next up, Portugold and Spain. Yup, let no crisis go to waste and move to cut social safety nets at all costs.
Maybe Democracy should be relabeled of the people, by the people and for the people....except when a corporate lobbyists object or big business wants some cash.