Tag Archive: economy


There seems a fundamental paradox in austere measure as an answer to a need for economic growth. Yet the markets seems to be overpowering logical decisions, and progressive economic policies seemed handcuffed by an insatiable need to restore financial stability to global financial institutions.

Indebted Euro zone countries policies are in a strangle hold by the current economic downturn. The markets are demanding those in the red zone act swiftly and aggressively in order to blow out the fuse on the powder keg of instability which is currently planted firmly underneath the Euro. Appeasing the will of the markets is an obligated political commitment and the need to implement austere measures is a political reality.

The rules of the Euro zone necessitate the immediate introduction of punitive cuts in the exchequer coffers of those culprits who have for too long thrown the rule book out the window. Reducing spending, implementing severe cuts and ending the addiction to borrowing by some Member states makes sense holistically for Euro survival.

However for struggling Euro economics this represents the ultimate paradox. Economic growth is the engine to drive a crippled state out of recession. With growth comes employment, with employment comes tax generation/welfare alleviation all of which contribute in a progressive fashion to the erosion of national debt.

While European political will is very much in favour of halting the brakes on borrowing and paying back the backers by any means necessary. This will is shaped by a ferocious need to protect the Euro, but conversely the need to protect the Euro is most sacrosanct to these very borrowers in the first place.

Staying alive in the Euro zone is going to become increasingly more hazardous on the socio-economic structure of struggling Euro countries. The rules of the game have changed and many may begin to question; is competing in the Euro zone and abiding by its accompanying rules beneficial or a bulwark against true recovery? Is the survival route being applied by most governments the only method of salvation?

A subservient method of applying beneficial Euro-centric policy to the behest of the national economy is the current prescription, alternatives are muted and perceived as potential fractious to European stability.

Perhaps a new departure is on the horizon but intrinsic foreboding about market retaliation is clouding any new vision.

The Euro is continually slipping towards parity with the dollar, regardless of the frantic implementation of bailout reserves, austere measures and staunch financial regulation. Perhaps a European wide solution is not the true answer to staying alive in the Euro zone. Devaluation of the Euro is not an option as no one country is singing from the same hymn sheet. A dislocation of indebted member states to revert to a national currency, devaluing it and leaving the remaining “strong economies” to restore confidence to Euro stability maybe the only way to stem the fate of the currency.

Political will is diametrical opposed to this notion at present but is it plausible that any indebted countries government can survive a new tenure while subsequently applying furiously the necessary means to keep the Euro afloat. Something will have to give and unfortunately the current toeing of the line may have damming repercussions which could paralysis many economies and their citizens .

The fear of on an economic outbreak perpetrated by the “contagious “Greeks, and the foreboding forecasts of a wave of financial instability consuming the Euro zone have prompted E.U Commission to take a drastic stance encompassing a potential inflammatory budget review process.

The commission is advocating the implementation of a “peer review process”, where effectively national sovereign member states would submit their budgets for approval by the Commission. The review process would act as a preventive measure to ensure economic harmony and act as a defense against potentially destabilizing fiscal policy.If unharmonious policy was enacted it would have detrimental consequences to the valuation of the Euro and effectively devalue other member states economies, and in this lies the premise for the Commission’s actions.

The implication of this move could be potential shattering to the solidarity of the European Union. The emergence of a fractured European Union is a real possibility.

Take the hypotheses of an indebted member state in a position where its Government is unable to enacted tough austerity measures which are the perennial prerequisite of any current bailout package. The Euro zone bailout reserve will be forced to provide funds even though the Government is unable to meet the requirements of its lenders. The alternative; to refuse funding is utterly unpalatable. It would have a domino effect of instability on other member states, particularly in the strength of the Euro.

The Budget review process would try to act as a combatant to this happening in the first place, and would act as a progressive form of economic governance and undoubtedly would give the Commission the ability to pre-approve bailout countries budgets ensuring economic harmony.

The fundamental problem that may arise from this is that the tenure of any Government under the current climate is on shaky ground. In the case of a further bailout to a member state, there could very well be a rapid turnover of Government. The incoming Government will undoubtedly have to appease public opinion and undoubtedly dilute austere policies and in some cases abandon them. The consequences would be dire and other member states would undoubtedly call for harsh repercussions and in extreme cases expulsion from the Euro zone.

Olli Rehn, Europe’s economic and monetary affairs commissioner stated: “Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don’t put at risk the stability of the other member states”

The dwarfing of sovereign fiscal autonomy is not new to member states, their very presence in the E.U is a commitment to a higher authority. However the national Budget is the ultimate in economic autonomy and the Big Brother Budget review process will inevitable be taken on the premise of “what is good for European economic harmony? “ and the needs of a domestic national economy will inevitably be marginalised.

Austere measures imposed by a national government are bitter pill for most to swallow, but the implementation by a supranational body of these measures with the primary goal of Euro zone stability, would be comparative to asking citizens to swallow a rugby ball, it wouldn’t fly and the backlash would range from protest, to calls for referendums on an exit of the Euro zone.

The complex between indebted member states wanting what’s best for them tempered by stable member states refusal to be weighed down by these reckless states may be the impetuous for a radical overhaul of the composition of the Euro zone. The creation of a fractured E.U is a distinct possibility with the relative solvent in one corner and fiscally defunct in the other. The Budget review process may be the catalyst to accelerate this dynamic and invariably bring about the beginning of the end of the European Dream.

The Greek financial bailout and the effect on its citizens is a painfully poignant example of the effect of inadequate financial regulation. It is perhaps a foreboding forecast for the future of an Irish society which has a higher domestic debt than the crippled Greeks.

Living through an age of austerity is now a political reality for the Greeks and will shackle most of its current generation. Their reaction and its effect on those in power should provide a stellar scale of analysis for other Governments. Effectively the austerity measures of the Greeks creates a real-time scale of consequences for political actors. This scale could be highly influential on Governments in similar situations, enabling them to determine how far people can be pushed when trying to decimate crippling debts.

The necessity of austerity measures and conditions of the bailout mean that no matter how unpopular with the Greek electorate, sledgehammer economics consisting of cuts, streamlining, shrinking of social welfare and essentially increased unemployment are all going to be devastating inevitable bi-products of the rescue deal.

The political will in Greece at the moment to engage in such measures is strong, but political will is enabled by the electorate. Will the Greeks continue to support a Government that has essentially committed themselves to a devolution of Greek society? Although an economic necessity for Greece’s financial survival, its people are already revolting and with time and further punitive measures this can only increase.

This situation should raise some alarming questions for those fronting the bill for the Greek Bailout. Is it possible for any Greek elected party weary of political survival to enforce the tough economic measures in their totality, which are fundamental prerequisites of the bailout? Unless political parties are willing to engage in political suicide, the realization of these measures in full are a seriously doubtful outcome.

The Germans approach to the handling of this situation and some calls from within the Bundestag for the Greeks to be thrown out of the euro should not simply be palmed of as political pandering for domestic approval. It’s true that Merkel had to appear as reluctant as possible to her own electorate and act as if her hand was forced, and in many respects it was. She evoked the image of a catastrophic collapse of the euro and stressing the effect of this on the German people as a resounding reason to back a Greek bailout. There is however a true underlying reluctance that should not be underestimated and this reluctance is reflected in the severity of the conditions of the bailout.

“If Greece is ready to accept tough measures, not just in one year but over several years, then we have a good chance to secure the stability of the euro for us all.”- Merkel

Although the Greeks have been rescued from financial oblivion, their inevitable diluted version of the tough measures required will anger their financial backers and make these backers increasingly unwilling to engage in any other rescue packages.

“There is a fear in the financial markets that the government will be either unwilling or unable to deliver these austerity measures.” -Ken Wattret, chief European economist at BNP Paribas.

Ireland should be sitting on the edge of its seats to see how smoothly the Greek bailout materializes. The ramifications of political turmoil and a dissolved Government in Greece would be devastating to any future financing Ireland may desperately crave.

The Greeks are in an ironically privileged position of being the first in the Eurozone to be bailed out. Although the Greeks will never see it that way, any further bailout will undoubtedly be stricter and given the future outcomes of the Greek situation, further rescue packages may not be forthcoming at all. An open objection from member states to another financial bailout could have devastating repercussions for the future stability and tenure of the euro and more worryingly a cataclysmic effect on Ireland.

The bailout may seem crippling to the Greeks now, but if Ireland was to stick its hand out in the future the results could be paralyzing.

Change is not born through apathy

Political leadership having the intellectual capacity of a door knob, is usually a prerequisite for change. However Ireland appears to be going through a form of transformation inertia, where the inability of a ruling party is not met with political upheaval, but a muffled whimper.

Political upheaval does not have to take the form of lynch mobs and flaming torch processions, conversely what is needed is a decent alternative. A change form a Fianna Fail government to a Fine Gael led coalition government is not an alternative, it’s a deformed substitution.

A instigation of functional politics is what Ireland craves; a non-partisan, impassioned logical approach to dealing with Ireland financial woes passionately implemented. Grouping together industrial, social and economic experts with a clear mandate for institutional change of a system currently nullified of any form of adequacy is the first step.

Current incumbents of supposed institutional change are obviously political driven, concerned more with a feverish search for savings that any worthwhile effective change for the people. The governments political mandate, although elected, is diluted if not completely dispersed.

The construction of N.A.M.A, its far-reaching ramifications and imposition of massive debt on Ireland’s citizenry has passed with relative impunity. Protests; in order to work, have to be transformed from screaming at news bulletins, rolling eyes at newspaper headlines and venting frustrations with friends and family. An organised political movement for change, where knowledge not nepotism, creativity not cowardice, and innovation not incompetence are rewarded, cultivated and shared with the electorate is the cure for the ills of the Irish electorate .

The only political direction any new party should be concerned with is going forward!

Inexperience will be shouted from the roof tops from traditional party spokesmen, if the formation of a new political party was to come to fruition. The solution is in the hands of the public. We should coerce out are best and brightest from all sectors of society, converting mere commentators, industry leaders and social innovators to empowered instigators of change and recovery.

All sectors of society could place their vote on that ballot sheet based on genuine competent political candidates and not just what the traditional parties dish out in front of them.

Change is not born through apathy, or protest votes, but a concerted effort to push forward with the commitment of the people. If change is what you crave, then your commitment is what is needed, apathy plays into the hands of those in power, dwarfs your views and aspirations and destroys what little power you hold.

Engagement in the political process will empower you. A mass engagement of those disillusioned and angered with the current political process is the only truly effective means to instigate change. If in five years are media channels are still packed with doom, gloom and despair we only have ourselves to blame.