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Standard and Poors opine on the democratic decision of the people of the Irish state… hmmm March 31, 2009

Posted by WorldbyStorm in Economics, Economy, Irish Politics.
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Perhaps I’m being overly sensitive, but I can’t help but find something a bit inappropriate in the report, on the front page of the IT as one might expect, that:

Agency says Ireland may need ‘new faces in Government’

And it continues:

Frank Gill, speaking a day after the agency lowered Ireland’s credit rating, also said Ireland had a “very low” chance of defaulting on its debt during an interview with Newstalk radio this morning.

Mr Gill said a change of Government may be required in an effort to stabilise the debt to gross domestic product ratio. That ratio may rise to above 9.5 per cent, according to the Government, more than three times the European Union limit.

Yes. Well, unless I’m much mistaken I was under the impression that the EU was cogniscent of that fact and had accounted for us running a much greater than usual debt for a limited period of time.

But it’s the first comment which is, in a sense, breath-taking. Who precisely are Standard and Poors to be making intrusive comments about the democratic choices of the irish people? You may have noticed that contributors to the Cedar Lounge have been, and appear to be likely to continue to be – what’s the term… oh, yeah, harshly critical of the Government. But that Government remains the democratic choice of the Irish people as expressed through the last election, still not quite two years past. Now, it may be that an election is necessary. But I’d like to think that it would be as a result of circumstances intrinsic to the political processes in this state. Not noises off.

And the source of these statements is one I’d treat with a certain scepticism at the best of times.

But then, why the surprise?

Consider that the Irish Times last week argued that:

Ultimately, however, it is what the Government decides in the emergency budget on April 7th and how it balances tax rises and expenditure cuts that matter. Success or failure there will be measured both by the reaction of the public and, critically, by the judgment of the bond market.

If those are the criteria by which a sovereign democratic state is meant to operate where the bond markets appear to be elevated to a level equal to, if not (critically) greater than, the ‘public’ where exactly are we again?

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1. EWI - March 31, 2009

Fuck you, Standard and Poors.

And Jim Powers and the rest of you financial ‘industry’ parasites, too.

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2. WorldbyStorm - March 31, 2009

That’s sort of my thoughts although you put it more concisely.

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3. Crocodile - March 31, 2009

‘Spotty analysts’ as Fergus Finlay calls them have immense power over our lives.

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4. WorldbyStorm - March 31, 2009

Is true. What a world.

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5. Leveller on the Liffey - April 1, 2009

EWI – Surely you mean ‘experts’?

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6. Libero - April 1, 2009

In all fairness, Mr Gill cannot do his financial job (studying the risk of sovereign debt default) without having firm opinions on matters political.

At the moment, we’re suffering under a government trying to do its political job without having much of a grasp on matters financial.

And perhaps its better that those views of his get aired publicly, where they can be responded to (if only as EWI has done). rather than behind closed doors and in private briefings.

It’s hardly surprising for a (presumably) conservative analyst to think that “fiscal correction” can only be brought about by new faces in government. One doesn’t have to be of the right to see that a government with little political capital cannot take unpopular measures.

So will the progressive left now row in behind Cowen (or be invited to do so!) to defend levels of expenditure from the nasty boys and girls of the international bond markets? Or does EWI’s response suffice?

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7. WorldbyStorm - April 1, 2009

It’ll be a mixture of both Libero. ;) But… while I accept some aspects of the point you make I still think it is dangerous for representatives of corporate entities to make any pronouncements on democratically elected regimes. The views he expresses aren’t views that he should express. They’re the ones that Irish political representatives should make or that Irish citizens should. That is their function. I’m sure he has firm political opinions as his right, but, they’re his, and they’re far from infallible…

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8. Tortoise - April 1, 2009

Very good article WorldbyStorm. I see the same ability to differentiate between annoyance at the government’s handling of the present crisis and its right to its democratic mandate has been shown by Joan Burton.
I also had noted the Irish Times line “its the reaction of the bond markets that matters”. But the media generally have been saying this for months. I’m no economist (getting less embarrassed by that degree in Eng. Lit. when I see how little the real “economists” know) but surely, apart from the barefaced cheek of it, is it not THE INFALLIBLE MARKETS with their clueless jargon and arrogant posturing that landed us in this mess? Now we still have to not just listen to them but kow-tow to them as well. How did we let things go this far? Makes sense really. For years, and especially during the preening, strutting boom years, Corporate Capitalism the world over has dictated to democratic governments, and democratic governments from whom every last Left-leaning vestige has been purged, have cravenly done the market’s bidding and sought its approval. Because, y’know, ministers like to strut and preen too and feel that they’re part of the big dick-swinging corporate zeitgeist. To show they’ve got with their master’s programme ministers fall over themselves using the new tough lingo: “Rationalization” “Deadwood” “smart economy” etc. The markets called the shots during the boom. ( But where were all those finger-wagging “rating agencies” when the world economy was slowly sending itself over the cliff?) Old habits die hard. Can you believe the reaction of “the bond markets” will decide our fate. And that Standard and Poor (reminds me of Sligo law firm Argue and Phibbs) can suggest we change our government? Ah, yes, we are where we are. The question is: how the Hell did we get here?

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9. EWI - April 2, 2009

In all fairness, Mr Gill cannot do his financial job (studying the risk of sovereign debt default) without having firm opinions on matters political.

Well, there’s an expansive view of who should be calling the shots in democracies. So, “Masters of the Universe” in truth then, eh?

At the moment, we’re suffering under a government trying to do its political job without having much of a grasp on matters financial.

I believe that the readership of this blog are well able to judge for themselves as to who is about to save whom when it comes to the vaunted private-sector expertise on “matters financial”. I do not believe that any of us are in any doubt as to just who ought to be shutting up, as they get bailed out with obscene amounts of taxpayer money.

And perhaps its better that those views of his get aired publicly, where they can be responded to (if only as EWI has done). rather than behind closed doors and in private briefings.

I entirely agree that it is a good thing that these individuals (and Powers was quoted as well in the OP) give us plebs an insight into their thinking at this juncture, but perhaps not for the reasons that you may envisage. The field of economics has been in a sad decline since the late Seventies (with the ‘science’ end occupied by cargo cultists and the ‘philosophy’ one by Randroids), and it’s good to have periodic reminders of this.

Still, best to be positive – at least that means that these particular individuals didn’t become Political Scientists (truly the most pointless Arts degree in existence, in my experience).

It’s hardly surprising for a (presumably) conservative analyst to think that “fiscal correction” can only be brought about by new faces in government. One doesn’t have to be of the right to see that a government with little political capital cannot take unpopular measures.

It may be “hardly surprising” to Mr. Libero of Politics.ie (have we met somewhere before, perhaps?), but that doesn’t mean that the rest of us have to swallow the “Ireland Inc.” bollixology that free-market cultists have been pushing for the past decade and more. The last time I looked, the Constitution stated us to be a democratic Republic with an elected parliament and government answerable to the public – not a wholly-owned concern of those who are well-connected and those born into unearned wealth (at least not in theory!).

So will the progressive left now row in behind Cowen (or be invited to do so!) to defend levels of expenditure from the nasty boys and girls of the international bond markets? Or does EWI’s response suffice?

You may be behind the news. Such noted friends of the working man (and woman) as our dear sainted Eoghan Harris have been making such calls already.

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10. Libero - April 3, 2009

Of course I don’t believe that the international capital markets (or participants therein) should “call the shots” in any democracy, nevermind ours.

But once a country raises money in those markets, it has to expect that its creditors will pay close attention to their prospects of being repaid. For all its failings (and most of them have nothing to do with Mr Gill), Standard&Poors is a source of opinion-forming information for existing and prospective creditors.

Ireland can afford to get snotty with S&P, but if the effect is to lower international confidence in our Republic’s ability to repay its debt then the price for taking that stance will measured in how much extra the Republic pays for raising new debt and refinancing existing debt.

Them’s the facts. And if a country doesn’t like having to pay due attention to its creditors and their advisors, said country should stay clear of international sovereign debt markets.

Mind you, I think that a lot of the commentary from the likes of S&P and, say, Irish stockbrokers, doesn’t pay enough attention to the social and economic costs of sudden large movements in government spending and taxation (one down, the other up) and resulting unemployment. Personally, for what it’s worth, my analysis on that front is closer to ICTU and Michael Taft.

As for the comments on economic cargo cults, Politics.ie and those born into unearned wealth, one of my last posts that site was defending higher rates of inheritance tax from the FG kids who’d merrily have the state rent out for soup kitchens the commercial property they inherit (100% tax free of course) from Daddy.

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