| People pictured lining up for social welfare benefits in Dublin’s Bishop Square during the summer |
Dear Santa,
I know I haven't written to you in a while. Well, okay, it's been over 50 years.
You may be surprised to be hearing from me after such a long time. But I'm writing to you this Christmas because I'm desperate. I don't know who else to turn to.
You see, even if I had the money, the things I want for Christmas can't be bought in the stores. You're my only hope. So here's my list (and I've checked it twice):
1. Debt forgiveness;
2. An interest rate cut;
3. A longer loan term;
4. A referendum (in case you can't get the first three items).
Debt forgiveness is the present we all want for Christmas in Ireland this year, Santa. I know it doesn't sound as exciting as an iPhone 4S (or whatever the latest gadget is).
But it would mean more to us here than anything else because it would mean more of us would be able to pay our old cell phone bills or our grocery bills or our mortgages. We might even be able to buy a new iPhone at some point in the very distant future.
At the moment most of us here are struggling just to survive. The main reason for that is the financial squeeze we are suffering to service our massive national debt.
----------------
Read more:
More news on the Irish economy from IrishCentral
Irish American actress Rooney Mara steals ‘The Girl with the Dragon Tattoo’
100 year old letter to Santa Claus found in Dublin home
----------------
We're being hit with higher taxes and lower state services, and there are years of so-called austerity budgets ahead of us which will make life here even harder in the future.
Debt forgiveness would lower the vast amount of money that is being sucked out of Ireland every year now to service our debts. These repayments are so huge that the squeeze is killing our already depressed economy which is now back in recession.
Right now we're trapped in a bailout program that is designed to keep us afloat long enough for us to get our budget back in balance. At present we're still spending close to a third more than we raise in taxes. We're cutting back spending as fast as we can to bridge the gap but it's a painful process, one that will take at least three or four more years.
In the meantime, because no one else will loan us any money, we have to take the bailout money from the EU-IMF to keep going. And the condition for getting that is a program to get our budgets back under control by 2015.
We are continually being told by the EU and the IMF and even by our own politicians that if we stick with the austerity program for another few years everything will be OK. Eventually.
But will it? I'm not so sure.
The fact is our national debt is so huge it's pretty obvious to me we will never be able to pay all of it back and still have a country left. It's simply too much.
We could cope with the sovereign debt we have run up, which comes to a bit over €100billion. But it's the €200 billion in debt owed by our banks that is the problem.
Although we had no idea what we were taking on at the time, we gave a state guarantee to our banks in 2008 to stop them going bust and that has turned their debts into our state debt.
So give or take a few billion, we are in the hole for around €300 billion. And since we are still in deficit -- and will be for the next few years at least -- we are adding to the pile instead of reducing it.
To start paying back our overall debt we need to have budgets that are in surplus. This year, we managed to reduce our deficit by around €3 billion, and we'll be doing roughly the same each year up to 2015 at least, when we should be back in balance.
That has been -- and will be -- very painful for everyone here, whether they are paying taxes or on welfare. But as you can see, it's only a drop in the ocean. At that rate it will take generations to pay off our debt.
Is anybody in Europe concerned about this? Not really. The crisis meeting of the 27 EU leaders in Brussels two weeks ago was all about saving the euro.
They're not concerned about us, beyond making sure that we continue to repay our debt. Failure by us to do so would further destabilize the euro because a lot of our debt is owed to German and French banks.
These foreign banks lent billions to the Irish banks to gamble on the Irish property boom, making a lot of money while it lasted. Now that the bubble has burst they should be sharing the pain, but instead most of the bondholders are being paid back in full.
----------------
Read more:
More news on the Irish economy from IrishCentral
Irish American actress Rooney Mara steals ‘The Girl with the Dragon Tattoo’
100 year old letter to Santa Claus found in Dublin home
----------------
So far we have paid back around €70 billion and we will go on doing so as further tranches of bonds become due, using money we are borrowing from the European Central Bank (ECB) to do so.
Paying back out debts in full was part of the deal under which we were given the bailout money last year.
Burning bondholders was ruled out not just by EU leaders but by US Treasury Secretary Tim Geithner, afraid that it could precipitate another international financial crisis. We had to accept the deal because we had nowhere else to get the money to keep Ireland functioning.
And so we are now expected to grin and bear it, to keep cutting back so we can keep paying back the tens of billions we owe to foreign banks. It's obviously both ridiculous and unfair. But so far no one will listen to us.
A fair and reasonable amount of debt forgiveness is not the only present we want this Christmas. We also need a cut in the interest rates we pay on our debt, and we need a much longer repayment period (like 50 years or more). Both of these would further reduce the burden on us in the years ahead and give us a chance at recovery.
The interest rate Ireland is paying on the billions we owe is still far too high. After the state here guaranteed our banks in September 2008, we had to put billions in capital into them, all of it borrowed.
We had put well over €20 billion into Anglo and another small bank before the EFSF (the European Financial Stability Facility) was set up to provide cheap money to stop places like Greece going bankrupt. We missed out on the cheap money, and we're now paying far too much interest.
For example, we're paying over 8% to the ECB on around €30 billion that went into Anglo to repay debts. And our bailout money from the EU and the IMF is also expensive, despite the recent rate cut. It needs to be around 1% or 2% instead of the 4% or 5% we have to pay now.
The last Christmas present we want is a referendum. Now we may or may not need a referendum to enable us to adopt the terms of the fiscal compact agreement reached two weeks ago at the summit of EU leaders in Brussels.
But the government should copy the Greeks and threaten to have a referendum anyway. The government can then tell the EU that there is not a snowball's chance in hell of the vote being positive unless we get serious debt forgiveness, a major interest rate cut and lengthy loan extensions.
This might seem like a lot to ask for this Christmas. But most of it would not be delivered until next year anyway. And it's only fair that we should get it.
As the EU keeps telling us, we've been very good children this year so this is one present we deserve. And we're only asking for what is right.
Santa, maybe you can have a word with all those elves in Brussels.
----------------
Read more:
More news on the Irish economy from IrishCentral
Irish American actress Rooney Mara steals ‘The Girl with the Dragon Tattoo’
100 year old letter to Santa Claus found in Dublin home
----------------
Comments