In the past few days I’ve suggested that Ireland should threaten her European ‘brothers’ that she might default on her debt – together with threatening to leave the Euro, I claimed that such a political maneuver might work to persuade the EU to stop its crazy austerity measures and begin using the ECB for Keynesian fiscal policy.
But now comes the question: will we end up defaulting regardless? Simon Johnson, over at Baseline Scenario, seems to think so. Johnson argues that its pretty much a foregone conclusion that Ireland will default on its debt. I think that Johnson is basically right. Insofar as it has managed to pass through the crisis bit by bit while effectively ignoring it, Ireland has proved itself to be a wonderful procrastinator – if that adjective can truly be applied to that noun.
Whether Ireland will default on its debt or not is part of this same process – its an inevitability, that is being avoided through pointless procrastination. Needless to say that this makes my point that Ireland should use defaulting as a threat to the EU even more pertinent – if it’s going to end up happening anyway, why not try to use it to try to score political points?
Johnson points out that the international community don’t currently understand the nature of Ireland’s crisis. So, while they’re busy trying to sort out their GDP from their GNP, our government should be taking advantage of this financial fog to make these threats to the EU.
I’ve long wondered why the EU – and the wider world – has been putting up with Ireland’s procrastination. No doubt our current incompetent incumbents think that its down to their wicked ‘cleverness’. You know, that roguish cleverness that every Irishman supposedly possesses – and which supposedly gets him out of all sorts of binds? Well, its bullshit – the Irish government are not and never have been ‘clever’. They’ve simply found themselves amidst powerful global economic and political forces that they were easily able to fit themselves into – they then convinced themselves that the outcome was due to their own innate shrewdness.
Ditto for all the procrastination and denial that has taken place during this crisis, I thought. I assumed that Europe were tolerating the Irish government’s violent repression of their crisis because they didn’t want to see the Euro fall too much in the international money markets. I don’t think I was far wrong, either. But in his article Johnson points out another determining factor in this economic game – a game where we currently find ourselves playing the part of the fool.
It would seem that various European and world powers have significant stakes in our crumbling banking system.
“German banks are owed $139 billion, which is 4.2 percent of German G.D.P. British banks are owed $131 billion, or about 5 percent of Britain’s G.D.P. French banks are owed $43.5 billion, which is approaching 2 percent of French G.D.P. But the eye-catching numbers are for Belgium, which is owed $29 billion – in the relatively small Belgian economy, this accounts for around 5 percent of G.D.P.”
“Aha!” I hear the reader say. Aha, indeed. No wonder Europe don’t mind ignoring the elephant in the room that is the Irish economic system – it’s not just down to the Euro; they also have a remarkably high exposure to Irish debt.
So, as our government plays the international fool, the knaves in Europe sit quietly counting their stakes in Irish banks – ignoring our tomfoolery, and cleaning up after us so that the rest of the world don’t realise just how fragile this house of cards really is.
If all the world’s a stage – then Ireland is currently running one of the strangest farces ever seen. What’s more, the Irish government think of themselves as the crafty knave – when they’re nothing but the dupe of foreign powers… the grinning drunk, cockscomb on head, laughing all the way to the gallows.