Fianna Fáil syndrome… May 31, 2011Posted by WorldbyStorm in Economy, Irish Politics.
Perhaps I’m in a particularly stupid mood, but I do find the level of artifice surrounding the EU-IMF bailout quite bizarre. I’m not much of a fan of our newish Minister for Transport, one L. Varadkar, and there’s little doubt that he did indeed exceed his portfolio in his recent comments, which merely goes to show that opposition and government are two entirely different political environments and the skill set applicable in one doesn’t seem to have the same degree of traction in another.
But for all that there was something almost bathetic about him being berated for saying something many will agree with, something which the market itself is arguing through its proxies and then seeing the market respond as if this was all news to it.
What outrageous thoughts were expressed in his words?
In an interview with a Sunday newspaper Mr Varadkar speculated on when Ireland might be able to return to borrowing on financial markets: “I think it’s very unlikely we’ll be able to go back next year. I think it might take a bit longer . . . 2013 is possible but who knows?”
The Minister added that it might mean an extension of the existing EU-IMF programme or a second initiative.
Dear oh dear oh dear. But what’s this I read in the Irish Times not a few days later?
Ireland may try to restructure its debt to lower interest payments or extend the maturity on its borrowings as the economy contracts again this year, according to Ernst and Young.
The Government probably will repay its debt and investors aren’t likely to lose any of their principle, a move that would imply a default, said Neil Gibson, economist with the financial services and advisory firm. ”It is much more likely that the debts will be repaid in full, but at probably a more modest interest rate or over a longer timeframe,” Mr Gibson said in a telephone interview today. He added that he expects the economy to contract 2.3 per cent this year as “the headwinds are too significant”.
Now I don’t take anything Ernst and Young say as gospel, there’s too much of running with the hare and hunting with the hounds about them. Yet they are an expression of [some] market sentiment. One might note that it was Bloomberg which carried that piece, so it’s hardly a state secret or something whispered in quiet corners under subdued lighting.
And given all that there was something to what Independent TD Stephen Donnelly said this week:
…that the problem for Cabinet was not what Mr Varadkar had said but that he had said it “out loud.”
“Leo has irritated some of his cabinet colleagues but certainly it’s refreshing to hear some straight talk.”
“The denial of the size of the problem and the insistence that we will continue to pay our debts and everybody else’s debts is beginning to feel a little bit like Fianna Fáil coming on the television and saying the IMF isn’t really here.”
“The reality is, whether we need another bailout or not, most people now believe that we will and that we will not go back to the markets,” he said.
Mr Donnelly said the markets would not lend Ireland any money “when we’re paying off everyone else’s debts.”
And it really does have that feel to it, that Fine Gael are rapidly assuming the bad habits of their predecessors of pretending that all is hunky dory long past the moment when it is apparent that quite the opposite holds true. Or consider this, as was put to me during the week. There’s poor old Richard Bruton pushed into the public eye to take the flak on JLCs [rightly so, by the way], and where is Michael Noonan in all this, indeed isn’t it notable how his public profile has subsided in the last few months – yes, at the very time when we face continuing economic distress. The conclusion? That the situation is now so bad that FG/LP are waiting for events and others to make the running for them.
That may be true, or it may not – but there is a strange air of passivity abroad.