Green Shoot Polyanas Must Be Bananas?

April 18, 2010

There’s the usual crop of delusional polyanna green shoots brigade in the newspapers today. Brian Lenihan biggest polyanna of them all leading the chorus. For example, Marc Coleman, Sunday Independent p24,   focuses on ‘house prices’ suggesting the market is being led by ‘irrational’ fears. He suggests normal conditions will see the market return defining this as ‘absence of fear, abolition of artificial obstacles to trading up, such as stamp duty, and, most important of all, economic growth.’  He refers to the ESRI in support of evidence economic growth is underway. He doesn’t go into the detail of these forecasts!

The reality is Ireland fell off an economic cliff 2009-2010, observe the graphs here:

Latest ESRI quarterly report:

“In our analysis, we assume that the Government will implement its indicated budgetary package for 2011 where spending cuts and tax increases will amount to €3 billion.”

“For 2011, we expect GNP to grow by 2¾ per cent and GDP to grow by 2½ per cent.”

This will be export, multi national export led growth as these multi nationals plug into recovery in the US and other economies. That
miserable  2½ per cent is the only gain against an injection of further loans to the tune of €54 billion from the ECB to save the banks? Not much of a result there!

Coleman’s article including the reference to the clearing of the banks balance sheets by NAMA and the return of the banks to lending all depends on this illusory growth taking place.

Why is this growth illusory?

Its illusory because while multi national export led business may continue to thrive, home grown industry because of rising taxes, depleting prosperity due to rising unemployment, cuts in public spending, lack of jobs especially among the young, over dependence on a bubble property/construction service industry, our economy will continue to be decimated. We are not addressing the meltdown, we are making it worse by foolishly trying to kickstart another property bubble economy.

The reality is economic growth is not going to return to Ireland in the short to medium term under present government policies. Property prices have another 50% to fall because of over supply, lack of purchasers among the young, growing unemployment levels. Our economy has been led into a deflationary spiral downward.

The injection of €54bn plus for NAMA and the banks is being  spent on another property, artifically induced,  bubble our weakened economy cannot endure.

Money is being wastefully spent, billions on useless development/private/commercial property that has no intrinsic value whatsoever. This investment is on a loan taken out on behalf of Irish taxpayers that will cost between €1bn – €2bn annually to pay back, all paid for by cuts in public services, job losses, rising taxes.

Next year cutbacks in the order of €3bn are on the cards.

NAMA is on another property binge funded by the ECB and paid for by Irish taxpayers in the hope this will revive our economy and begin economic growth.  For taxpayers, higher taxes and if the polyannas get their way, higher property prices extracted from young taxpayers being scammed further by inflated Ponzi property prices, plus a ransacked economy unfit for purpose.

“Dr Wilhelm Hankel, professor of economics at Frankfurt University and one of the four litigants, said the EU-IMF bail-out throws good money after bad. “The whole manoeuvre merely delays the day of reckoning. It is not in Greece’s interest to accept the money because the wage cuts and tax rises being imposed will lead to an endless economic depression. They should step out of the eurozone voluntarily, devalue, and restructure their debts with IMF help. That is the path of economic sense,” he said. “In the end, the only way to save the euro is to shrink the eurozone. There are other candidates”.

Hankel I’m sure means us as one of those ‘candidates’ and this writer is in full agreement with him.

Irish banks should have been nationalised. Anglo should have been wound down immediately. An immediate firesale of property/commercial/residential  property should have taken place, commissioned to Irish property movers with an upper limit of 5 yrs for its disposal as happened in Sweden 10 1992.

Taxpayers should have been supported by ECB aid during this process. Investment in infrastructure including a large investment in education and the Smart economy should have taken place. Instead, our useless government in league with the gombeens who made money out of the property bubble scam that brought us into this crisis, recapitalised with ECB bonds to the tune of €54 bn plus are now wastefully pouring it down the drain into the black hole of Anglo and into the pockets of property speculators.

This is now legalised State robbery, safely authorised, sanctioned and protected in a large scale fleecing of taxpayers.

This is not a formula for economic growth. This is a formula for economic doom, a plague of unemployment for generations to come, a pillaging of our economy by wheeler-dealer fat cats who got us into this mess,who are now back for their pickings.

The sooner we step out of the eurozone voluntarily, close Anglo, fire sale NAMA and close it, decently capitalise a Smart economy and an educational/broadband/IT infrastructure to support this, devalue and restructure our debts with ECB help, the better.

Right now, Ireland INC is a bit like a jet plane running out of fuel and faraway from land,there’s not enough in the tank to reach land….

ECB has managed to refuel us but instead of landing the plane we’ve decided to head out to sea again, but there’s not enough fuel in the tank. While the plane hasn’t fallen out of the sky yet, go figure. Either they get more fuel from you, taxpayer, or they get it from the ECB again or, go figure!

Or, if you wish another analogy, profligate and feckless bankers and incompetent politicians with their cronies have gambled away our wealth on a property bubble casino. They almost went bust, but, hey, they are now banked by the ECB to the tune of €54 and have now opened their own casino, CASINO NAMA.

You, Pinocchio taxpayers, they scammed with huge mortgages, they want your taxes to go up and property prices to go up to pay for more huge mortgages.

After all, this was such a money spinner for them in the past, now they got taxpayers and the ECB on the hook to pay for this, its back to the game tables of CASINO NAMA, and to their delight, its the only game in town.


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