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We’re Suckered By Sarkozy

Posted on: November 13th, 2011

I knew that our world was going to end last week. No, not when Italian bond rates breached 7 per cent. Nor when Berlusconi threw in the towel. Not even when it emerged that Merkel and Sarkozy were plotting a new europe.

Something much more shocking happened when I urgently sought a copy of the Financial Times.

Normally I would head for the Oireachtas Library where the voice of the free markets often remains untouched despite the global crisis.

Luckily, help was at hand far closer to home. Two highly unlikely characters, both TDs, carry the free market bible clasped in their fists as they walk the corridors of Leinster House. When I bumped into committed socialist Richard Boyd Barrett last week I spotted, deep in the files under his arm, the pink paper. I shivered momentarily.

Next I discovered that people’s developer, Mick Wallace, my colleague just down the corridor in Leinster House, buys it daily.

It was bad enough discovering some months ago that Labour’s star performer, Pat Rabbitte, needed a daily fix of the Financial Times when in opposition, but these two converts added a new dimension. In some circles it would be called contagion.

Whatever about Rabbitte’s position on the political spectrum, it would be hard to discover two guys further to the left than Richard or Mick. If the duo are informing themselves on the doctrine of the free market, perhaps the revolution is really coming.

Perhaps not. After all, when I was sent off at the mega- capitalist Rugby School in England, one of the first newspapers I spotted was the hard-line communist, Daily Worker. It is essential to keep abreast of the thinking of the opposition.

The difference between the genuine Left like Boyd Barrett and his co-leader Joe Higgins and us free marketeers is fundamental, but the two opposites share plenty of common ground. Committed free marketeers identify flaws in the system because they want it to work. The hard left highlight them because they wish it to fail. We attack common flaws in pursuit of diametrically different ends.

We share similar views about the banks, the euro and we condemn the identical, but failed, policies being pursued by the last government and the current coalition.

Above all, free marketeers and socialists unite in the belief that the Irish government has put the interests of Eurocrats and bankers above those of Irish taxpayers (free market speak) and workers (Joe Higgins speak) .

Happily the conflicting ideologies want to put Ireland first, insisting that both governments have surrendered the nation’s independence to the threats from outsiders. Both regimes relentlessly practised the doctrine of deference.

Events last week confirmed our worst fears. Too late. The chickens have come home to roost. The doctrine of deference has delivered all right, but to our detriment. This weekend, the devil is at the door.

The devil struck with venom on Thursday when RTE’s news led with the story that Germany and France were in intense talks about the possibility of an exclusive, but strong, eurozone. No doubt they will include Holland, Finland, Belgium and Austria in the new club. They are seriously pondering a relaunch, a strong currency.

Ouch. Where would that leave Ireland?

Well first of all Sarkozy and Merkel do not care a hoot. We will be dumped. In Angela’s and Nicolas’s ‘Plan B’ Ireland can go jump in a lake. Ireland can join other basket cases like Italy, Greece, Portugal, Spain and maybe Cyprus in a second, ultra-soft eurozone. We will bring our troubles and our debts to the party hosted by the successors of Berlusconi and Papandreou. We will be thrown to the European rubbish heap, facing a crisis a week with the other club-med cowboys. A nightmare beckons.

That is why it was more than a trifle alarming to hear Taoiseach Enda Kenny in the Dail last week, refusing to contemplate even the prospect of a Plan B. Enda has pinned all his faith on the current tottering project and its perfidious personnel.

Once again the Taoiseach is isolated, next bullied, then abandoned. Angela and Nicolas are plotting an exit. Even David Cameron admitted to the House of Commons on Monday that Britain had made contingency plans.

Not Ireland. We are good Europeans. We put our faith in the bullies of the ECB. Germany and France are our masters. We pursue a rigorous policy of deference. We defer to bankers at home, bankers abroad and central bankers in Europe. Meanwhile, our French and German political masters are planning treachery.

In the same Dail session only the far left and the opposition free marketeers shared a sense of emergency. Yet the government could not even concede that the vehicle for a solution — the European Financial Stability Facility (EFSF) — was floundering. This much-vaunted fund saviour of the eurozone, was in deep doo-doo. Europe was begging to borrow billions from any mug or bandit on the planet to gamble against market speculators. The failing fund was supposedly being “leveraged” up to €3 trillion to scare the speculators with a “firewall”.

Finance minister Michael Noonan was putting his faith in this phantom fortress at the very moment that Angela and Nicolas were contemplating desertion. There is no firewall. Instead contagion has now spread from Athens to Dublin to Lisbon to Rome. Next victim is noble Nicolas’s Elysee Palace. France has an even bigger deficit than Italy. Its banks are wobbling. Yet here in Ireland we still defer to Nicolas. We have been suckered by Sarkozy.

Angela had already let it slip at the G20 summit that the emerging market nations had looked at lending to the EFSF and sent for the men in white coats. Russian Prime Minister Vladimir Putin had turned his back on the investment while the mighty Chinese sovereign wealth funds had considered backing the eurozone and passed the poisoned EFSF chalice. Even more ominously, a week earlier as Berlusconi’s Italy sunk toward political and economic oblivion, a €3bn EFSF bond had been pulled because of “volatile market conditions” — meaning that global traders had lost faith in the entire European project. The bond issue limped over the line on Monday.

It could all have been so different. Imagine if we had burned the bondholders back in 2008, 2009, 2010, or even under Enda’s government in 2011, the crisis would have been over by now. We would be in the recovery room.

On the downside, we would have been in the European doghouse, ticked off by Nicolas and Angela and deeply unpopular with European banks. Not a bad place to be. The European banks are now smirking at our doctrine of deference to them. Ditto Angela and Nicolas as they chart their betrayal. Even at home the major banks, true to form, eyeballed our most powerful ministers at last week’s meeting over interest rates. They told Ireland’s sovereign government to jump in a lake. They too were ingrained with the doctrine of deference.

Rumours are rife that the NTMA has been holding councils of war about the approach of Armageddon. Maybe they haven’t told Enda. Today we should be looking at whether we should be part of a convalescent second-tier European currency. Perhaps we are in secret negotiations with the UK or the US about the possibility of pegging ourselves to sterling or the dollar?

The alarm bells are ringing in France and Germany. Our fair weather friends are heading for the lifeboats. There is no room for Ireland on them.