John Brutons article gets shredded by comments on the Irish Times

OPINION: If Ireland did what Morgan Kelly advocates, the European Central Bank itself might go bust and the euro could collapse

MORGAN KELLY has sparked a lively debate about Irish economic policy with his Irish Times article of last Saturday – much like his previous interventions. He has a lot of credibility because he foresaw the bursting of the Irish housing bubble. To his credit, he does not confine himself to a critique with his latest contribution, but offers his own suggestions.

He is advocating a two-pronged strategy:

(1)That Ireland walk away from the EU-IMF deal (a notion that is, of course, attracting a lot of favourable media comment) and;

(2)that, in order to be able to pay its way in the absence of funds from the EU-IMF, Ireland should immediately eliminate its budget deficit (a drastic notion that, equally predictably, is being ignored in the same media comment).

While I favour speeding up the adjustment, doing it all in one year would be impossibly disruptive.

He claims that a strategy along these lines is needed because otherwise, he thinks, our debts are unsustainable. He bases this on pessimistic growth assumptions, which may or may not transpire. And he argues that a slow, messy bankruptcy would destroy an Irish economy that depends so much on international trust. Better, he argues, to do the whole job immediately.

There are a number of elements missing in Professor Kelly’s analysis.

First, he does not consider the impact of what he is suggesting on other countries, and how they might react.

The effect of a comparatively well-off country like Ireland (a founder member of the euro which had benefited more than most from EU agricultural, regional and cohesion funds) failing to pay money it owed to an EU institution would undermine the mutual confidence on which the EU is based.

If Ireland were to walk away from the EU-IMF deal, that would leave the European Central Bank itself with a huge shortfall. In fact the ECB might be insolvent. It might have to go to the member states to look for more capital. Emulating Ireland’s example, they might refuse, and then the euro would collapse. If they even hesitated about recapitalising the ECB, the resultant uncertainty could have a devastating effect on the world economy; an economy on which Ireland is more dependent for sales than most.

If the euro collapsed because of a failure of other EU states to recapitalise the ECB, or because of a breakdown in trust between its members, Ireland would have to launch a currency of its own in the same year that it would also have to cut wages by perhaps 40 per cent and increase tax revenues to meet Prof Kelly’s other requirement of balancing its budget in one year.

In walking away from the EU-IMF deal, Ireland would be reneging on freely contracted debts to an EU institution and to other EU members, so we would also presumably be excluded from the benefits of EU membership. For Ireland, the Common Agricultural Policy would disappear overnight, as might its access to EU markets for other products, at least until the debts it owed had been collected by other means.

Prof Kelly, who is an economic historian, should look up what happened when we last walked away from international financial obligations. We refused to pay land annuities to the UK in the 1930s, and found some of our critical exports excluded from the UK market, with devastating effects in what came to be remembered as the Economic War.

That is not to say that the EU should not be challenged. The EU-IMF programme may indeed be too optimistic. There is a lack of joined-up thinking on economic policy in the EU. The EU institutions may be too nervous about burden-sharing by private bondholders. There is a selfish nationalism in some of the stands being taken by our EU partners. But then there is a selfish nationalism in some of our own attitudes too. We all have domestic political constituencies and media to appease.

Ireland may not be as influential as it would like to be in the EU. But at least we are still in the EU, and we have some influence there still. We can use that influence to move the EU towards a more credible long-term strategy, one that allows countries such as Ireland time to restore their finances, and allows surplus countries such as Germany time to rebalance their economies towards consumption.

The coming into effect of the European Stability Mechanism in 2013 offers the prospect of all countries still in difficulty having more time and space to resolve their problems in a way that balances public and private interests better than was possible in the emergency conditions of 2008.

In calmer economic times, things are possible that are impossible in the midst of crisis and potential panic.

But trying to achieve all that overnight, by holding a gun to everyone else’s head as well as to our own, as the professor urges, seems to me to be needlessly reckless. Prof Kelly argues that we need to do something like this to keep our international credibility. But, like the advocates of default, I am afraid that the course he favours would destroy our international credibility instantly. It would involve immediate shock therapy for our economy, which could do much more harm than good. It would undermine trust.

All banking, all money, is based on mutual trust and confidence. Why else do we accept a scrap of paper, with no inherent value itself, as worth €100 or €500 or whatever other number is written on it?

Why else do we hand over our saving to banks on the promise that the money will be there when we need it?

It is all about trust. Without trust, the entire modern economy, built up over three centuries, would disappear overnight.

Breaking trust with our European and international neighbours would undermine the future of our own economy, and the economies of those to whom we sell. That is why I do not think Prof Kelly’s article, for all its erudition, offers good advice at all.

John Bruton is a former taoiseach and former EU ambassador to Washington. He is chairman of IFSC Ireland, a private sector body that seeks to promote Ireland’s international financial services sector

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[This user is an administrator] Oireachtas Retort
He is chairman of IFSC Ireland, a private sector body that seeks to promote Ireland’s international financial services sector.

Indeed
Today, 01:57:04
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[This user is an administrator] Bryan O'Donoghue
" If Ireland did what Morgan Kelly advocates, the European Central Bank itself might go bust"

Who cares ? Ireland has been doing exactly as required by the ECB - specifically ensuring no eurozone bank goes bust and in doing so is rated as 42% likely to default on "government" debt inside of five years according to S&P rating agency.

The government is already stonewalling on CCCTB. What does 'constructive engagement' mean ? How out of touch with the REQUIREMENTS of Irish citizens in this regard are you people ?

Who cares about the ECB. It's not acting in the interests of the citizens of this state, appears to be acting against those interests are regular intervals and there's a word for that - enemy.

The ECB is Ireland's enemy. Lets not mince words.

How much worse will it actually get for this country irredeemably wedded to the Euro and the diktats of the technocrats in the ECB ? Ireland is right behind Greece in the ratings agencies estimation of default. Read the FT and WSJ for the last three years. Nobody is fooled. The public perhaps under-informed but, the people who's job it is to lend money to sovereign states clearly AREN'T fooled.

After three years of hapless dithering - Greece in on the cusp, the ostensibly useless political class is in denial. Morgan Kelly has mapped out a path - that avoids a sovereign default in this country.

Instead of sticking to the obviously flawed 'plan' of the ECB/Berlin - we as a sovereign nation should act now and impose a settlement rather than the do-nothing approach which has in effect led this country as lambs to the slaughter.

The 'great project' of European federalism is clearly well helped along hobbling sodenkinder like Ireland. Silence our dissent, bring the country to economic ruin, mandate the fiscal/political union by fait.

By the time Paddy realises what's happened it'll be way too late.

With the way the EU is going it won't take long for radical nationalist movements to start a 'campaign' in Brussels, Berlin and Frankfurt.

We can dress oppression from the EU up as 'help' but - hospital beds closing so that European bondholders can be paid off is oppression and eventually the inaction of the political class will unleash all sorts of non-political unpleasantness.
Today, 01:58:58
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[This user is an administrator] David O'Donnell
'The coming into effect of the European Stability Mechanism in 2013 offers the prospect of all countries still in difficulty having more time and space to resolve their problems in a way that balances public and private interests better than was possible in the emergency conditions of 2008.'

Why not now John? Now that we have 'saved the Euro', you want the Irish citizen-serfs to 'save the world'!

It is time to save ourselves - the banks' detritus is too heavy for the state, and its citizenry.
Today, 02:15:27
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[This user is an administrator] Manofiona
In daring to challenge Prof Kelly's views, Mr Bruton will no doubt be widely criticised in the media. Of the 170 comments on Prof Kelly's article, I counted only 3, including my own, which disagreed with his proposals. The Irish people are being incited into believing that it is possible, and indeed desirable, to take unilateral steps whose only sure result would be to destabilise the Euro and therefore the whole process of European integration. Such consequences would be disastrous for Ireland and for every person in Ireland.

The terms of the so-called bail-out are tough: they had to be in order to be credible. If Ireland cannot meet them (and the evidence is by no means conclusive on this point), those terms will in all probability be changed. No one in the Eurozone wants a member state to fail. However, as is the case with all agreements, any change must meet the reasonable interests of all parties to it.

It is in the interest of all member states of the Eurozone for there to be an alignment over time of the economies of all the member states with the prevailing model in the zone, one which is very different from the model promoted by politicians who claimed that Ireland was closer to Boston than to Berlin. Any Irish government which wishes to establish credibility with its Eurozone partners must show that it is actively working to promote such alignment.

Instead of bamboozling the Irish people with prospects of unilateral actions which no sane Irish government could contemplate taking, those economists and commentators with pretentions to public influence would do well to look at the real challenges facing Ireland over the coming years as a member of a Eurozone which, as Martin Wolf noted in the Financial Times last week, will have to press on with ever closer economic and political integration in order for the Euro to be assured of a long-term future.
Today, 02:34:57
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[This user is an administrator] Robert Browne
How about this for a way out. Reduce interest rates which were increased for Germany and France immediately and which our governor of the ICB Mr. Honohan voted for, telling us by so doing, that he was "playing for Ireland". Then the ECB can be mandated and empowered to proceed with the issuance of a common European sovereign bonds.

If our colleagues proceed with the slaughter of Piigs the foul stench will soon corrupt the entire body politic and destroy the entire European project. Ireland has become a venially corrupt country. We have been on a journey without maps and have not had a vision of where we wanted to go as a people for over 40 years now and that includes your time in office. The dystopia Ahern created was special. I am talking about people not GDP, GNP or some other esoteric ESRI statistical porn. Not one single coherent comprehensive plan has been put forward regarding where Irish society wants to be in 2020 or 2030. I am talking about philosophers, historians, artists, economists, politicians etc sitting down to come up with the road map we were never given. All the journeymen, politicians have done is piled up a mountain of debt as they cede more and more power to foreigners every single week. Meanwhile, all they can do is fill in the blank spots, left for them by the EU/IMF in the MOU (memorandum of understanding) Which one of our best journalists, Damien Kiberd accurately described as a surrender document. My one caveat about my "solution" is that I first want to see an end to the myriad Ponzi schemes, quango's, double pensions and political cronyism. I find it hard to be lectured by someone who preferring to leave office on the principle of putting VAT on children's shoes.

I want to see an end to the enormous moral and egregious abuses of power by unions and others that are continuing on a daily basis then I will move on. We always have the choice of making the hard decisions that Kelly prescribes and of bailing ourselves out by paying ourselves pro rata to what we take in, in taxes. We can take back control of our semi-states, adjust public sector pay and pensions, dole to the same levels as they are in the UK. After all, is it not us that is supposed to be insolvent? However, the likely hood of Irish people taking courageous decisions regarding their collective fate is slim to nil as long as the above mentioned continue with the balm of high public sector salaries and dole all paid for by endless borrowing from the ECB until the collapse comes.
Today, 02:42:07
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[This user is an administrator] conor77
No John, it's about a lot more than that, it's about what is right and what is wrong. It's about standing up for ourselves. That is how people will respect us, not on our knees begging for "trust" as you suggest...
Today, 02:45:55
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[This user is an administrator] Roger Rafferty
If Ireland could have collapsed the Euro, as Mr Bruton says earlier on, what a glorious bargaining chip we had during the bail-out negotiations. Why then wasn't it played? A drastic measure indeed - but drastic measures were needed when the nation's sovereignty – now gone - was at stake. But I have absolutely no doubt that those batting for Ireland batted for the ECB as Morgan Kelly says, so the only drastic measures in play were those the ECB wanted. It’s treacherous stuff, but no surprise when you really see the allegiances of Ireland’s political elite, and top civil servants. The relationships between them and Europe are to the detriment of the ordinary Irish people. The allegiance or rather subservience of Irish politicians and critically their civil service advisers is to the EU project – a feature in part of years of gravy-training too. There needs to be serious decisions taken soon about Ireland's future relationship with the EU - and alternatives explored too. None of the political establishment in Ireland has any vision on this - Enda Kenny's speech yesterday, incredibly despite the kicking we've received from Europe, was to bemoan the fact that Ireland is no longer viewed by all as good European partners. This is shocking – as is the absence of comment about it in the papers. This kind of politics is finished, as it’s outdated guff, and doesn’t reflect our new – subservient – relationship with Europe (aided by our approval of the Lisbon Treaty, with a huge campaign effort helped by big business, bogus promises and an anti-democratic media consensus.) Mr Bruton and other EU insiders can bleat all they want about how it’s in Ireland’s interests to be closer to Europe – but the facts now tells ordinary people otherwise. Those days are over. A failure by those elected by the Irish people to grasp these new realities spells doom for them too like Fianna Fail. My money’s on the doom – and on Morgan Kelly’s analysis any day. We won’t have to wait long to see who’s right.
Today, 02:51:20
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[This user is an administrator] Chris
To dispute everything said in this article we need one word, Iceland
Today, 04:26:08
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[This user is an administrator] CELTIC MELTDOWN
.
I find something very distasteful in lectures like this from a man who when he was Irish finance minister proposed the introduction of VAT on children's shoes.

He seems to be much more concerned with the welfare of EU bankers than with the welfare of the Irish people.
But then again, I suppose what else would one expect from the chairman of the Irish Financial Services Center, the location of all the chicanery which has brought Ireland's economy to it's knees.

.
Today, 04:27:54
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[This user is an administrator] Chris
'The ECB might be insolvent' Really I am very disapionted in Mr. Bruton. He is scaremongering. Do we ever hear anyone talking about the US Federal Reserve being insolvent? What about quantitiative easing? Does the ECB not have access to printing presses to print new Euros to cover their losses? Please Mr. Bruton do not patronise the Irish people. They have had enough of that.
If we were to walk away from the EU-IMF deal we would be out of the Common Agricultural Policy. Again scarmongering. First of all Ireland now contibutes more to the EU than it receives. Secondly, there is no treaty or policy etc that says that not paying back debt of a bank based in your country would lead to being cut off from the CAP. Come in Mr. Bruton you can do better than this.
Mr. Bruton if you are reading this I believe that a student with a masters degree in International Economics and a good knowledge of EU integration could easily defeat you in a debate on this topic. Which is probably why you will never engage in one.

OPINION: If Ireland did what Morgan Kelly advocates, the European Central Bank itself might go bust and the euro could collapse

MORGAN KELLY has sparked a lively debate about Irish economic policy with his Irish Times article of last Saturday – much like his previous interventions. He has a lot of credibility because he foresaw the bursting of the Irish housing bubble. To his credit, he does not confine himself to a critique with his latest contribution, but offers his own suggestions.

He is advocating a two-pronged strategy:

(1)That Ireland walk away from the EU-IMF deal (a notion that is, of course, attracting a lot of favourable media comment) and;

(2)that, in order to be able to pay its way in the absence of funds from the EU-IMF, Ireland should immediately eliminate its budget deficit (a drastic notion that, equally predictably, is being ignored in the same media comment).

While I favour speeding up the adjustment, doing it all in one year would be impossibly disruptive.

He claims that a strategy along these lines is needed because otherwise, he thinks, our debts are unsustainable. He bases this on pessimistic growth assumptions, which may or may not transpire. And he argues that a slow, messy bankruptcy would destroy an Irish economy that depends so much on international trust. Better, he argues, to do the whole job immediately.

There are a number of elements missing in Professor Kelly’s analysis.

First, he does not consider the impact of what he is suggesting on other countries, and how they might react.

The effect of a comparatively well-off country like Ireland (a founder member of the euro which had benefited more than most from EU agricultural, regional and cohesion funds) failing to pay money it owed to an EU institution would undermine the mutual confidence on which the EU is based.

If Ireland were to walk away from the EU-IMF deal, that would leave the European Central Bank itself with a huge shortfall. In fact the ECB might be insolvent. It might have to go to the member states to look for more capital. Emulating Ireland’s example, they might refuse, and then the euro would collapse. If they even hesitated about recapitalising the ECB, the resultant uncertainty could have a devastating effect on the world economy; an economy on which Ireland is more dependent for sales than most.

If the euro collapsed because of a failure of other EU states to recapitalise the ECB, or because of a breakdown in trust between its members, Ireland would have to launch a currency of its own in the same year that it would also have to cut wages by perhaps 40 per cent and increase tax revenues to meet Prof Kelly’s other requirement of balancing its budget in one year.

In walking away from the EU-IMF deal, Ireland would be reneging on freely contracted debts to an EU institution and to other EU members, so we would also presumably be excluded from the benefits of EU membership. For Ireland, the Common Agricultural Policy would disappear overnight, as might its access to EU markets for other products, at least until the debts it owed had been collected by other means.

Prof Kelly, who is an economic historian, should look up what happened when we last walked away from international financial obligations. We refused to pay land annuities to the UK in the 1930s, and found some of our critical exports excluded from the UK market, with devastating effects in what came to be remembered as the Economic War.

That is not to say that the EU should not be challenged. The EU-IMF programme may indeed be too optimistic. There is a lack of joined-up thinking on economic policy in the EU. The EU institutions may be too nervous about burden-sharing by private bondholders. There is a selfish nationalism in some of the stands being taken by our EU partners. But then there is a selfish nationalism in some of our own attitudes too. We all have domestic political constituencies and media to appease.

Ireland may not be as influential as it would like to be in the EU. But at least we are still in the EU, and we have some influence there still. We can use that influence to move the EU towards a more credible long-term strategy, one that allows countries such as Ireland time to restore their finances, and allows surplus countries such as Germany time to rebalance their economies towards consumption.

The coming into effect of the European Stability Mechanism in 2013 offers the prospect of all countries still in difficulty having more time and space to resolve their problems in a way that balances public and private interests better than was possible in the emergency conditions of 2008.

In calmer economic times, things are possible that are impossible in the midst of crisis and potential panic.

But trying to achieve all that overnight, by holding a gun to everyone else’s head as well as to our own, as the professor urges, seems to me to be needlessly reckless. Prof Kelly argues that we need to do something like this to keep our international credibility. But, like the advocates of default, I am afraid that the course he favours would destroy our international credibility instantly. It would involve immediate shock therapy for our economy, which could do much more harm than good. It would undermine trust.

All banking, all money, is based on mutual trust and confidence. Why else do we accept a scrap of paper, with no inherent value itself, as worth €100 or €500 or whatever other number is written on it?

Why else do we hand over our saving to banks on the promise that the money will be there when we need it?

It is all about trust. Without trust, the entire modern economy, built up over three centuries, would disappear overnight.

Breaking trust with our European and international neighbours would undermine the future of our own economy, and the economies of those to whom we sell. That is why I do not think Prof Kelly’s article, for all its erudition, offers good advice at all.

John Bruton is a former taoiseach and former EU ambassador to Washington. He is chairman of IFSC Ireland, a private sector body that seeks to promote Ireland’s international financial services sector

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[This user is an administrator] Oireachtas Retort
He is chairman of IFSC Ireland, a private sector body that seeks to promote Ireland’s international financial services sector.

Indeed
Today, 01:57:04
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[This user is an administrator] Bryan O'Donoghue
" If Ireland did what Morgan Kelly advocates, the European Central Bank itself might go bust"

Who cares ? Ireland has been doing exactly as required by the ECB - specifically ensuring no eurozone bank goes bust and in doing so is rated as 42% likely to default on "government" debt inside of five years according to S&P rating agency.

The government is already stonewalling on CCCTB. What does 'constructive engagement' mean ? How out of touch with the REQUIREMENTS of Irish citizens in this regard are you people ?

Who cares about the ECB. It's not acting in the interests of the citizens of this state, appears to be acting against those interests are regular intervals and there's a word for that - enemy.

The ECB is Ireland's enemy. Lets not mince words.

How much worse will it actually get for this country irredeemably wedded to the Euro and the diktats of the technocrats in the ECB ? Ireland is right behind Greece in the ratings agencies estimation of default. Read the FT and WSJ for the last three years. Nobody is fooled. The public perhaps under-informed but, the people who's job it is to lend money to sovereign states clearly AREN'T fooled.

After three years of hapless dithering - Greece in on the cusp, the ostensibly useless political class is in denial. Morgan Kelly has mapped out a path - that avoids a sovereign default in this country.

Instead of sticking to the obviously flawed 'plan' of the ECB/Berlin - we as a sovereign nation should act now and impose a settlement rather than the do-nothing approach which has in effect led this country as lambs to the slaughter.

The 'great project' of European federalism is clearly well helped along hobbling sodenkinder like Ireland. Silence our dissent, bring the country to economic ruin, mandate the fiscal/political union by fait.

By the time Paddy realises what's happened it'll be way too late.

With the way the EU is going it won't take long for radical nationalist movements to start a 'campaign' in Brussels, Berlin and Frankfurt.

We can dress oppression from the EU up as 'help' but - hospital beds closing so that European bondholders can be paid off is oppression and eventually the inaction of the political class will unleash all sorts of non-political unpleasantness.
Today, 01:58:58
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[This user is an administrator] David O'Donnell
'The coming into effect of the European Stability Mechanism in 2013 offers the prospect of all countries still in difficulty having more time and space to resolve their problems in a way that balances public and private interests better than was possible in the emergency conditions of 2008.'

Why not now John? Now that we have 'saved the Euro', you want the Irish citizen-serfs to 'save the world'!

It is time to save ourselves - the banks' detritus is too heavy for the state, and its citizenry.
Today, 02:15:27
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[This user is an administrator] Manofiona
In daring to challenge Prof Kelly's views, Mr Bruton will no doubt be widely criticised in the media. Of the 170 comments on Prof Kelly's article, I counted only 3, including my own, which disagreed with his proposals. The Irish people are being incited into believing that it is possible, and indeed desirable, to take unilateral steps whose only sure result would be to destabilise the Euro and therefore the whole process of European integration. Such consequences would be disastrous for Ireland and for every person in Ireland.

The terms of the so-called bail-out are tough: they had to be in order to be credible. If Ireland cannot meet them (and the evidence is by no means conclusive on this point), those terms will in all probability be changed. No one in the Eurozone wants a member state to fail. However, as is the case with all agreements, any change must meet the reasonable interests of all parties to it.

It is in the interest of all member states of the Eurozone for there to be an alignment over time of the economies of all the member states with the prevailing model in the zone, one which is very different from the model promoted by politicians who claimed that Ireland was closer to Boston than to Berlin. Any Irish government which wishes to establish credibility with its Eurozone partners must show that it is actively working to promote such alignment.

Instead of bamboozling the Irish people with prospects of unilateral actions which no sane Irish government could contemplate taking, those economists and commentators with pretentions to public influence would do well to look at the real challenges facing Ireland over the coming years as a member of a Eurozone which, as Martin Wolf noted in the Financial Times last week, will have to press on with ever closer economic and political integration in order for the Euro to be assured of a long-term future.
Today, 02:34:57
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[This user is an administrator] Robert Browne
How about this for a way out. Reduce interest rates which were increased for Germany and France immediately and which our governor of the ICB Mr. Honohan voted for, telling us by so doing, that he was "playing for Ireland". Then the ECB can be mandated and empowered to proceed with the issuance of a common European sovereign bonds.

If our colleagues proceed with the slaughter of Piigs the foul stench will soon corrupt the entire body politic and destroy the entire European project. Ireland has become a venially corrupt country. We have been on a journey without maps and have not had a vision of where we wanted to go as a people for over 40 years now and that includes your time in office. The dystopia Ahern created was special. I am talking about people not GDP, GNP or some other esoteric ESRI statistical porn. Not one single coherent comprehensive plan has been put forward regarding where Irish society wants to be in 2020 or 2030. I am talking about philosophers, historians, artists, economists, politicians etc sitting down to come up with the road map we were never given. All the journeymen, politicians have done is piled up a mountain of debt as they cede more and more power to foreigners every single week. Meanwhile, all they can do is fill in the blank spots, left for them by the EU/IMF in the MOU (memorandum of understanding) Which one of our best journalists, Damien Kiberd accurately described as a surrender document. My one caveat about my "solution" is that I first want to see an end to the myriad Ponzi schemes, quango's, double pensions and political cronyism. I find it hard to be lectured by someone who preferring to leave office on the principle of putting VAT on children's shoes.

I want to see an end to the enormous moral and egregious abuses of power by unions and others that are continuing on a daily basis then I will move on. We always have the choice of making the hard decisions that Kelly prescribes and of bailing ourselves out by paying ourselves pro rata to what we take in, in taxes. We can take back control of our semi-states, adjust public sector pay and pensions, dole to the same levels as they are in the UK. After all, is it not us that is supposed to be insolvent? However, the likely hood of Irish people taking courageous decisions regarding their collective fate is slim to nil as long as the above mentioned continue with the balm of high public sector salaries and dole all paid for by endless borrowing from the ECB until the collapse comes.
Today, 02:42:07
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[This user is an administrator] conor77
No John, it's about a lot more than that, it's about what is right and what is wrong. It's about standing up for ourselves. That is how people will respect us, not on our knees begging for "trust" as you suggest...
Today, 02:45:55
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[This user is an administrator] Roger Rafferty
If Ireland could have collapsed the Euro, as Mr Bruton says earlier on, what a glorious bargaining chip we had during the bail-out negotiations. Why then wasn't it played? A drastic measure indeed - but drastic measures were needed when the nation's sovereignty – now gone - was at stake. But I have absolutely no doubt that those batting for Ireland batted for the ECB as Morgan Kelly says, so the only drastic measures in play were those the ECB wanted. It’s treacherous stuff, but no surprise when you really see the allegiances of Ireland’s political elite, and top civil servants. The relationships between them and Europe are to the detriment of the ordinary Irish people. The allegiance or rather subservience of Irish politicians and critically their civil service advisers is to the EU project – a feature in part of years of gravy-training too. There needs to be serious decisions taken soon about Ireland's future relationship with the EU - and alternatives explored too. None of the political establishment in Ireland has any vision on this - Enda Kenny's speech yesterday, incredibly despite the kicking we've received from Europe, was to bemoan the fact that Ireland is no longer viewed by all as good European partners. This is shocking – as is the absence of comment about it in the papers. This kind of politics is finished, as it’s outdated guff, and doesn’t reflect our new – subservient – relationship with Europe (aided by our approval of the Lisbon Treaty, with a huge campaign effort helped by big business, bogus promises and an anti-democratic media consensus.) Mr Bruton and other EU insiders can bleat all they want about how it’s in Ireland’s interests to be closer to Europe – but the facts now tells ordinary people otherwise. Those days are over. A failure by those elected by the Irish people to grasp these new realities spells doom for them too like Fianna Fail. My money’s on the doom – and on Morgan Kelly’s analysis any day. We won’t have to wait long to see who’s right.
Today, 02:51:20
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[This user is an administrator] Chris
To dispute everything said in this article we need one word, Iceland
Today, 04:26:08
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[This user is an administrator] CELTIC MELTDOWN
.
I find something very distasteful in lectures like this from a man who when he was Irish finance minister proposed the introduction of VAT on children's shoes.

He seems to be much more concerned with the welfare of EU bankers than with the welfare of the Irish people.
But then again, I suppose what else would one expect from the chairman of the Irish Financial Services Center, the location of all the chicanery which has brought Ireland's economy to it's knees.

.
Today, 04:27:54
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[This user is an administrator] Chris
'The ECB might be insolvent' Really I am very disapionted in Mr. Bruton. He is scaremongering. Do we ever hear anyone talking about the US Federal Reserve being insolvent? What about quantitiative easing? Does the ECB not have access to printing presses to print new Euros to cover their losses? Please Mr. Bruton do not patronise the Irish people. They have had enough of that.
If we were to walk away from the EU-IMF deal we would be out of the Common Agricultural Policy. Again scarmongering. First of all Ireland now contibutes more to the EU than it receives. Secondly, there is no treaty or policy etc that says that not paying back debt of a bank based in your country would lead to being cut off from the CAP. Come in Mr. Bruton you can do better than this.
Mr. Bruton if you are reading this I believe that a student with a masters degree in International Economics and a good knowledge of EU integration could easily defeat you in a debate on this topic. Which is probably why you will never engage in one.

Des Canine
The Europhile establishment is circling the wagons - Maire GQ and Kenny are talking similar nonsense!

So now all the assurances we were given at the various EU referendums are exposed, by Mr Bruton, to mean nothing. We could be kicked out of the EU for refusing to pay for private Franco-German gambling debts.

Rather more interesting and relevant stuff in the Wall Street Journal today by the leader of the True Finns.

I suggest you read that.

As Mr Burton says - pay attention to "how others might react" to this continued Euro-scam; organised and orchestrated by the same clique of failed politicians and bankers who got us into this mess despite the clear warnings of Morgan Kelly and many others.

Oh yes. And given the choice again I'd have no hesitation in refusing to pay war reparations to the former imperial power under the guise of "international obligations". There is actually a much greater similarity to the events of the 1930s and today then perhaps Mr Bruton intended to reveal.
Today, 09:04:28
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[This user is an administrator] Jim O'Sullivan
"We all have domestic political constituencies and media to appease"

Not to mention the vested interests of those with the money. Any chance that, as we face into our difficulties, we might try appeasing justice and fairness? Can Mr Bruton justify the pensions and other perks he receives from the Irish state given that the incomes of the most vulnerable are being cut for example? The whole taxation policy created by the outgoing govenrment, that sees wealth redistributed upwards, remains in situ and so long as we refuse to bite the bullet and decide to share what we have a bit more fairly, we continue to expose the country to the disastor of social breakdown, a point which the political establishment refuses to confront or even discuss.
Today, 09:08:12
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[This user is an administrator] Brian Flanagan
All very well for you to talk down to us as a paid lobbyist for the financial services industry with big EU and Dail pensions. Look at what you wrote:

"All banking, all money, is based on mutual trust and confidence. Why else do we accept a scrap of paper, with no inherent value itself, as worth €100 or €500 or whatever other number is written on it?"

Why do you think that huge amounts of cash have left the Irish banking system? Why are 10year bonds over 10%? Becauase of lack of trust and confidence.

"Why else do we hand over our saving to banks on the promise that the money will be there when we need it?"

Not exactly comparable but lots of people invested their savings in the Irish banks in the expectation that they would provide a modest, low risk flow of dividends. They need the cash now so where is it? Burnt by a crowd of greedy incompetent bankers. Their share certs are "scraps of paper, with no inherent value".

"It is all about trust. Without trust, the entire modern economy, built up over three centuries, would disappear overnight."

You are right on that one. People don't trust bankers (Irish or EU), politicians and ex-politicians. That is why the economy is going down the plug hole. Ireland has no credibility thanks to these people. No amount of spinning will restore it. We should have these people in jail.

All your response to Kelly has done is to annoy people even more. Apologies for coming across as angry. While anger is not a policy (as Conor McCarthy said recently) it can be a very powerful motivator to pursue change.

Ireland needs real, real help or we default: http://www.planware.org/briansblog/2011/04/banking-crisis-help-us-or-we-default.html
Today, 09:09:55
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[This user is an administrator] Pope Epopt
So we have it on good authority that any form of default will cause the skies to be rent asunder, the earth with groan and all manner of plagues will be visited upon this land.

The problem is that we've stopped believing in this consensus.

Ireland is bankrupt. Let's get on with the default - the ECB, with it's constitutional mono-mania about price stability is an absurdity anyway. If we did bring about a crisis in that institution, possibly leading to it's replacement with something more functional, then we would be doing the rest of Europe a favour.
Today, 09:22:28
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[This user is an administrator] Gavin O'Neill
Mr Bruton has been an excellent servant for Ireland but today his argument is flawed. It implies that if Ireland refuses to pay back the debts of private banks that the ECB could become insolvent. It won't. It always has the option of increasing liquidity in a manner similiar to the way that the US and UK central banks have done. The ECB, and particularly the Germans, do not want to do this, but it is fast becoming the only option. Ireland can not afford to pay the bank debts back and the current policy of bowing down to the EU/ECB in the hope that they take pity on us, eventually, will do more damage in the long run than taking some dynamic or dramatic acion. It is in the power of the ECB/EU to sort out this mess, but they need to be forced to take action. We need to get on the front foot or the country will die................
Today, 09:24:29
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[This user is an administrator] Praetorian Guard
Ironic piece is it?
Today, 09:32:57
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[This user is an administrator] Mark Keenan
John Bruton admits "If Ireland were to walk away from the EU-IMF deal, that would leave the European Central Bank itself with a huge shortfall". The EU-IMF deal is therefore as much a bailout for europe. Therefore why should a country of only 4 million people be forced to pay the burden for shielding europe (600 million people) from collapse of the ECB??? In addition there is no moral reason for citizens to pay the gambling debts of private banks.
In addition, ECB is part of a flawed global banking system (fractional reserve banking) that is scrambling to save itself from collapse. Mr. Bruton doesnt seem to realise that bailing out a flawed system is not the answer. Two wrongs do not make a right.

David McWilliams stated on Pat Kenny yesterday, that Finland (a highly successful country) and Asian countries imposed 'haircuts' on internatonal bondholders during past crises. but the FF and FG/Lab govs have miserably failed to do this here.

John Bruton also conveniently forgets that Ireland gave away 95% of its fishing rights (worth an estimated €400 billion) so as to get grants for landowners, (all the money the landowners got from the EU wouldn't cover what we lost by or could have developed with one of the biggest fishing sea areas in the world - which should have been our main industry). EU hand outs to landowners also drove land prices through the roof - thus causing the cost of housing and land for roads, factories, hospitals, etc. to become the most expensive in Europe. This caused the vast majority of the Irish people to pay for the wealth of the landowners. And, today we have Nama because of it.

Establishment figures like Mr.Bruton dont seem to realise there is a bigger picture and a bigger storm on the way and redesign of the current outdated flawed neo-classical economic system is needed to avoid ecological and resource collpase. See article at http://www.thinkorswim.ie/?p=1324

Also why has the Irish Times stopped allowing comments on the runaway success of Morgan Kellys article ???
Today, 09:44:17
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[This user is an administrator] Mark Keenan
John Bruton shouts about what might happen in case of default but doesnt seem to realise some sort of default is inevitable anyway under the current unjust bailout/austerity package to pay for the gambling debts of privvate banks. I agree with Professor Morgan Kelly.
Today, 09:50:32
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[This user is an administrator] Jim
The choice is simple. We either allow ourselves to become the sacrificial lamb on the altar of EU financial stability, or we take our destiny into our own hands. Both options will be extremely painful but in the case of the second we would be acting solely in the interests of Ireland and its people. Who else out there cares as much about this country? The ECB? The IMF? The US Treasury?

What is stopping us from taking the right course of action is the kind of 'guilt-trip' regularly foisted on us in articles such as this, as in we 'benefited more than most from EU agricultural, regional and cohesion funds'. Even if we were net beneficiaries of EU largesse as Bruton suggests, it should still not prevent us taking action in our own national interest. However, like all Europhiles, Bruton never mentions the price we paid for those benefits. And I don't just mean the loss of national sovereignty, but also the giving away of our vast natural resources in the seas around this island. Properly exploited, this would have been worth a multiple of the billions we received from Europe.

Ireland has endured hardship in the past in the interests of restoring our freedom. However, nothing in Prof. Kelly's bleak prescription would come close to the impact of the Penal Laws or the Famine, for instance. Nevertheless, compared with our recent history, times would get very tough. But they will be even tougher after the inevitable bankruptcy.

This is why it is essential for the present government to take action now, instead of waiting for some chimerical uplift in the world economy to rescue us. As Prof. Kelly stated, we really only have until the next election, when perhaps more extreme elements will be waiting to replace yet another failed administration.
Today, 09:53:15
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[This user is an administrator] daniel king
The only thing our government should be doing immediately, is informing the E.U that if we do not receive a 200 billion euro loan at a reasonable interest rate over 30 years, then it is a default scenario in the next few months for this poor sovereign state.

Ethicist
The folly of taking seriously the views of economists is well demonstrated with the latest ranting from Ireland’s own version of Dr. Kevorkian (aka Morgan Kelly) who seems intent on directing Ireland to commit national suicide.

As much as Ireland’s very own Dr. Kevorkian would have it commit mass kamikaze, common sense needs to prevail.

Much of Ireland’s present difficulties can be traced to the ranting of economists who backed the disastrous PD led policies of deregulation and freewheeling market capitalism that has brought Ireland to its present state.

That Ireland’s media continues to give credibility in the destructive ranting of economists given the damage that they have already wrought on the country is incredible.
Today, 10:07:54
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[This user is an administrator] Jim Walsh
Interesting that in all the criticism on John Bruton and his article he was right in pointing out that nobody here has even attempted to address the second point of Morgan Kelly's article - the fact that by walking away we would have to eliminate our fiscial deficit immedidately. Everybody is just too busy bashing Euope and Mr. Bruton without facing the reality of ALL of what Morgan Kelly has suggested.

So wise people, if we walk away from the ECB/IMF/EU deal, how would you implement the €18 billion adjustment that would be required immediately to stop the country from going bankrupt. How about €12 billion of cuts in public services and €6 billion of tax increases? Or the other way around? Anybody here interested in tax rates of 50%-60% or wage cuts of 30%-40%?

Also how would we expect our ecomony to grow in such circumstances, especially since our the financial crisis in Europe cause by such an Irish default would probably send most of our main export markets into recession. For all the Europe hatred being expressed here we should be aware that most of our exports go there.

And lets not mention the fact that the rest of the Irish banks would probably collapse as the ECB removes funding from them, taking with them billions in savings of ordinary Irish people. Where would the government get the money to guarantee those deposits? Shall we go back to a barter system when we don't have a functioning banking system.

Easy to support the part of Morgan Kelly's analysis you like, but if you're on the bandwagon at least have the honesty to address the impact of ALL of his suggestions.
Today, 10:09:32
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[This user is an administrator] Sjöhuvud
"If Ireland did what Morgan Kelly advocates, the European Central Bank itself might go bust and the euro could collapse."

So instead Ireland is doing what the European Central Bank is advocating, and Ireland is going bust.
Today, 10:14:27
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[This user is an administrator] mikeirl
It's crystal clear Bruton speaks here as a representative of the ruling elites of the banker & wealth classes.

ECB go bust? What complete & utter nonsense.

How rich of Bruton to talk about 'trust'. He is one of the elites whom ordinary people 'trusted' to set up a European common currency & banking system that was not designed from the outset to become a cesspit of corruption & gambling with profits for themselves & the losses for the rest of us.

Note Mr Bruton, along with all the rest of the present system's cheerleaders, isn't too vocal on delving into the mess itself to establish how it all went wrong & what needs changing to prevent it happening again. Sure, why would they? They aren't much affected & are very well placed to profit from recession fire sales.
Today, 10:17:52
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[This user is an administrator] chomp
Mr Bruton - what you describe is a European problem due to the breadth of its impact. Yet what you are asking for is for Ireland to deal with the majority of this problem alone.

A possibly simplistic solution would be for Ireland to deal with its (massive) budgetary issues while the ECB/EU take the legal obligation of the banks liabilities. It is simply unsustainable, and indeed immoral, to ask the population of this country to deal with the debts of international banks and not default. This was a situation forced on us with incorrect information and massive pressure from the global powers to be. Without the threat of a default, we simply cannot force this hand from the ECB. The rest of Eurrope has taken a schadenfreude stance, which may be somewhat justifiable in the short term, but places a noose around our necks in the medium to long term.

As a population many did gain massively from the boom and some have yet to re-adjust to the bust. We should be willing to accept that our current budget deficit is ridiculously unrealistic. This will be a painful short term adjustment, but the long term slow grinding pain is not the answer. We need to allow people to plan for the future. In the mean-time the Irish population needs to show to the TV cameras of Europe why this is unsustainable and our displeasure at the circumstances of being forced into guaranteeing bank liabilities due to the ECBs concern of contagion. If they are so worried about it, they need to help us to a greater extent than short term funding, or expensive bailout financing.
Today, 10:57:08
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[This user is an administrator] V
The entire modern economy is all about trust..?? Trust in mammon..?? One way or another this little EU member state will pay the price for losing the run of itself and throwing caution to the wind……….which is to say putting its “trust” in the philanthropy of the ECB loan sharks that instinctively prey on smaller fish splashing about in the unchartered waters of uncertainty that surround this whole project of the homogenisation of Europe based solely on currency.
Today, 10:57:49
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Morgan Kellys article - Irelands future depends on breaking free from bailout

OPINION: Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business, writes MORGAN KELLY

WITH THE Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable. By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed.

Ireland is facing economic ruin.

While most people would trace our ruin to to the bank guarantee of September 2008, the real error was in sticking with the guarantee long after it had become clear that the bank losses were insupportable. Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed. The ideal time to have reversed the bank guarantee was a few months later when Patrick Honohan was appointed governor of the Central Bank and assumed de facto control of Irish economic policy.

As a respected academic expert on banking crises, Honohan commanded the international authority to have announced that the guarantee had been made in haste and with poor information, and would be replaced by a restructuring where bonds in the banks would be swapped for shares.

Instead, Honohan seemed unperturbed by the possible scale of bank losses, repeatedly insisting that they were “manageable”. Like most Irish economists of his generation, he appeared to believe that Ireland was still the export-driven powerhouse of the 1990s, rather than the credit-fuelled Ponzi scheme it had become since 2000; and the banking crisis no worse than the, largely manufactured, government budget crisis of the late 1980s.

Rising dismay at Honohan’s judgment crystallised into outright scepticism after an extraordinary interview with Bloomberg business news on May 28th last year. Having overseen the Central Bank’s “quite aggressive” stress tests of the Irish banks, he assured them that he would have “the two big banks, fixed by the end of the year. I think it’s quite good news The banks are floating away from dependence on the State and will be free standing”.

Honohan’s miscalculation of the bank losses has turned out to be the costliest mistake ever made by an Irish person. Armed with Honohan’s assurances that the bank losses were manageable, the Irish government confidently rode into the Little Bighorn and repaid the bank bondholders, even those who had not been guaranteed under the original scheme. This suicidal policy culminated in the repayment of most of the outstanding bonds last September.

Disaster followed within weeks. Nobody would lend to Irish banks, so that the maturing bonds were repaid largely by emergency borrowing from the European Central Bank: by November the Irish banks already owed more than €60 billion. Despite aggressive cuts in government spending, the certainty that bank losses would far exceed Honohan’s estimates led financial markets to stop lending to Ireland.

On November 16th, European finance ministers urged Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown.

At this stage, with Lenihan looking set to exploit his strong negotiating position to seek a bailout of the banks only, Honohan intervened. As well as being Ireland’s chief economic adviser, he also plays for the opposing team as a member of the council of the European Central Bank, whose decisions he is bound to carry out. In Frankfurt for the monthly meeting of the ECB on November 18th, Honohan announced on RTÉ Radio 1’s Morning Ireland that Ireland would need a bailout of “tens of billions”.

Rarely has a finance minister been so deftly sliced off at the ankles by his central bank governor. And so the Honohan Doctrine that bank losses could and should be repaid by Irish taxpayers ran its predictable course with the financial collapse and international bailout of the Irish State.

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.

In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.

The bailout represents almost as much of a scandal for the IMF as it does for Ireland. The IMF found itself outmanoeuvred by ECB negotiators, their low opinion of whom they are not at pains to conceal. More importantly, the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, and €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy. Lending to an insolvent state, which has no hope of reducing its debt enough to borrow in markets again, breaches the most fundamental rule of the IMF, and a heated debate continues there over the legality of the Irish deal.

Six months on, and with Irish government debt rated one notch above junk and the run on Irish banks starting to spread to household deposits, it might appear that the Irish bailout of last November has already ended in abject failure. On the contrary, as far as its ECB architects are concerned, the bailout has turned out to be an unqualified success.

The one thing you need to understand about the Irish bailout is that it had nothing to do with repairing Ireland’s finances enough to allow the Irish Government to start borrowing again in the bond markets at reasonable rates: what people ordinarily think of a bailout as doing.

The finances of the Irish Government are like a bucket with a large hole in the form of the banking system. While any half-serious rescue would have focused on plugging this hole, the agreed bailout ostentatiously ignored the banks, except for reiterating the ECB-Honohan view that their losses would be borne by Irish taxpayers. Try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.

Instead, the sole purpose of the Irish bailout was to frighten the Spanish into line with a vivid demonstration that EU rescues are not for the faint-hearted. And the ECB plan, so far anyway, has worked. Given a choice between being strung up like Ireland – an object of international ridicule, paying exorbitant rates on bailout funds, its government ministers answerable to a Hungarian university lecturer – or mending their ways, the Spanish have understandably chosen the latter.

But why was it necessary, or at least expedient, for the EU to force an economic collapse on Ireland to frighten Spain? The answer goes back to a fundamental, and potentially fatal, flaw in the design of the euro zone: the lack of any means of dealing with large, insolvent banks.

Back when the euro was being planned in the mid-1990s, it never occurred to anyone that cautious, stodgy banks like AIB and Bank of Ireland, run by faintly dim former rugby players, could ever borrow tens of billions overseas, and lose it all on dodgy property loans. Had the collapse been limited to Irish banks, some sort of rescue deal might have been cobbled together; but a suspicion lingers that many Spanish banks – which inflated a property bubble almost as exuberant as Ireland’s, but in the world’s ninth largest economy – are hiding losses as large as those that sank their Irish counterparts.

Uniquely in the world, the European Central Bank has no central government standing behind it that can levy taxes. To rescue a banking system as large as Spain’s would require a massive commitment of resources by European countries to a European Monetary Fund: something so politically complex and financially costly that it will only be considered in extremis, to avert the collapse of the euro zone. It is easiest for now for the ECB to keep its fingers crossed that Spain pulls through by itself, encouraged by the example made of the Irish.

Irish insolvency is now less a matter of economics than of arithmetic. If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP.

Economists have a rule of thumb that once its national debt exceeds its national income, a small economy is in danger of default (large economies, like Japan, can go considerably higher). Ireland is so far into the red zone that marginal changes in the bailout terms can make no difference: we are going to be in the Hudson.

The ECB applauded and lent Ireland the money to ensure that the banks that lent to Anglo and Nationwide be repaid, and now finds itself in the situation where, as a consequence, the banks that lent to the Irish Government are at risk of losing most of what they lent. In other words, the Irish banking crisis has become part of the larger European sovereign debt crisis.

Given the political paralysis in the EU, and a European Central Bank that sees its main task as placating the editors of German tabloids, the most likely outcome of the European debt crisis is that, after two years or so to allow French and German banks to build up loss reserves, the insolvent economies will be forced into some sort of bankruptcy.

Make no mistake: while government defaults are almost the normal state of affairs in places like Greece and Argentina, for a country like Ireland that trades on its reputation as a safe place to do business, a bankruptcy would be catastrophic. Sovereign bankruptcies drag on for years as creditors hold out for better terms, or sell to so-called vulture funds that engage in endless litigation overseas to have national assets such as aircraft impounded in the hope that they can make a sufficient nuisance of themselves to be bought off.

Worse still, a bankruptcy can do nothing to repair Ireland’s finances. Given the other commitments of the Irish State (to the banks, Nama, EU, ECB and IMF), for a bankruptcy to return government debt to a sustainable level, the holders of regular government bonds will have to be more or less wiped out. Unfortunately, most Irish government bonds are held by Irish banks and insurance companies.

In other words, we have embarked on a futile game of passing the parcel of insolvency: first from the banks to the Irish State, and next from the State back to the banks and insurance companies. The eventual outcome will likely see Ireland as some sort of EU protectorate, Europe’s answer to Puerto Rico.

Suppose that we did not want to follow our current path towards an ECB-directed bankruptcy and spiralling national ruin, is there anything we could do? While Prof Honohan sportingly threw away our best cards last September, there still is a way out that, while not painless, is considerably less painful than what Europe has in mind for us.

National survival requires that Ireland walk away from the bailout. This in turn requires the Government to do two things: disengage from the banks, and bring its budget into balance immediately.

First the banks. While the ECB does not want to rescue the Irish banks, it cannot let them collapse either and start a wave of panic that sweeps across Europe. So, every time one of you expresses your approval of the Irish banks by moving your savings to a foreign-owned bank, the Irish bank goes and replaces your money with emergency borrowing from the ECB or the Irish Central Bank. Their current borrowings are €160 billion.

The original bailout plan was that the loan portfolios of Irish banks would be sold off to repay these borrowings. However, foreign banks know that many of these loans, mortgages especially, will eventually default, and were not interested. As a result, the ECB finds itself with the Irish banks wedged uncomfortably far up its fundament, and no way of dislodging them.

This allows Ireland to walk away from the banking system by returning the Nama assets to the banks, and withdrawing its promissory notes in the banks. The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner. At some stage the ECB can take out an eraser and, where “Emergency Loan” is written in the accounts of Irish banks, write “Capital” instead. When it chooses to do so is its problem, not ours.

At a stroke, the Irish Government can halve its debt to a survivable €110 billion. The ECB can do nothing to the Irish banks in retaliation without triggering a catastrophic panic in Spain and across the rest of Europe. The only way Europe can respond is by cutting off funding to the Irish Government.

So the second strand of national survival is to bring the Government budget immediately into balance. The reason for governments to run deficits in recessions is to smooth out temporary dips in economic activity. However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost. To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise.

Cutting Government borrowing to zero immediately is not painless but it is the only way of disentangling ourselves from the loan sharks who are intent on making an example of us. In contrast, the new Government’s current policy of lying on the ground with a begging bowl and hoping that someone takes pity on us does not make for a particularly strong negotiating position. By bringing our budget immediately into balance, we focus attention on the fact that Ireland’s problems stem almost entirely from the activities of six privately owned banks, while freeing ourselves to walk away from these poisonous institutions. Just as importantly, it sends a signal to the rest of the world that Ireland – which 20 years ago showed how a small country could drag itself out of poverty through the energy and hard work of its inhabitants, but has since fallen among thieves and their political fixers – is back and means business.

Of course, we all know that this will never happen. Irish politicians are too used to being rewarded by Brussels to start fighting against it, even if it is a matter of national survival. It is easier to be led along blindfold until the noose is slipped around our necks and we are kicked through the trapdoor into bankruptcy.

The destruction wrought by the bankruptcy will not just be economic but political. Just as the Lenihan bailout destroyed Fianna Fáil, so the Noonan bankruptcy will destroy Fine Gael and Labour, leaving them as reviled and mistrusted as their predecessors. And that will leave Ireland in the interesting situation where the economic crisis has chewed up and spat out all of the State’s constitutional parties. The last election was reassuringly dull and predictable but the next, after the trauma and chaos of the bankruptcy, will be anything but.

Morgan Kelly is professor of economics at University College Dublin

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[This user is an administrator] Robert Browne
"National survival requires that Ireland walk away from the bailout. This in turn requires the Government to do two things: disengage from the banks, and bring its budget into balance immediately."

This is the crux of it and we had better get on with it. Dissolve NAMA now and let the ECB swing in the air instead of going along with their dastardly plan to grab our national assets before making us a pariah bankrupt state.

Serves them right. Thank's Morgan you figured it out, others could only talk about asymmetric risks. As a reward I am going to vote for you to deliver the speech from the steps of the GPO in 2016.
2 days ago, 01:04:02
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[This user is an administrator] Lorcan Roche Kelly
Astonishing article.

Frightening, numbing, and worst of all, 100% accurate.
2 days ago, 01:12:32
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[This user is an administrator] John O'Driscoll
This is Ireland's karma. Some of us have been saying since March 2003 or not long after, when the sham cloak of Irish ''neutrality'' and the pious mendacities of Ireland's constitutional 'aspirations' to observe international law became camofluage for the the offshore US warbase and torture facilitation centre known as Shannon Airport.

Some of us saw then that if a country with a history of 800 years of being oppressed and brutalised could nod and wink at Her own cause being so betrayed to cowardice inhumanity and rapine as to allow herself be made a part of the greatest obscenities the 21st century yet has seen, why, She could nod and wink at anything.

But I doubt any tho' would have foreseen that the karmic consequences of that would be so damn...elegant.

Anyway. Moving on. Over a century ago Standish O'Grady - a man who did some work to try and restore Ireland's national pride in herself through his setting out of old heroic myth and legend - tried also to use the report of the Childers Commission as a cause for the Irish to rally around. This report found that, since the Act of Union, Ireland had been overtaxed by some 200 million pounds sterling by England. O'Grady thought that this might help the Irish to shake off what he called ''the Great Enchantment'', the moral and physical paralysis of the Irish caused as he saw it by the projection of evil men's wills from Westminster.

Of course, nothing happened. The report was quietly buried. Ireland continued to be raped and exploited by her own power elite just as she is today. The debt was ignored. Just as today, the Irish supinely, passively, allowed and indeed collaborated in the continuing rape of their Nation.

If we were really a country with any sense of self-respect and national pride, we would tell the ECB and the IMF to FF Off. Tell them we'll pay them back at the rate of 10 million a year for the next 300 years, interest frozen on the settlement amount. And if they don't like that they'll get nothing. Of course, the Irish moral cowardice so astutely identified also by Michael Davitt, the same moral cowardice that allowed us subordinate our own laws against torture and those of the UN's to appease the evil despot Bush and his cabal of demons Cheney, Rice, Rumsfeld et al, so as to earn some filthy lucre, would never allow us to take such a brave step.

Not yet anyway. But 'tis a long road that has no turning, and the Irish people haven't even begun yet to feel the pain that 'karma', or rather the foreign and domestic enemies of this country are going to inflict. It'll be awhile yet but eventually hands will reach into thatches and pikes will be taken down. That's the way these things tend to go.
2 days ago, 01:44:11
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[This user is an administrator] David O'Donnell
Yes. It is possible. That is positive.
2 days ago, 01:49:01
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[This user is an administrator] Michéal
Great article from Morgan. Of course waiting for the present Coalition to grow a backbone will take an eternity.
Wish I was fitter and younger and then I could take the boat.....or take the revolutionary road.
2 days ago, 02:11:43
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[This user is an administrator] peter
The truth hurts, especially when Professor Kelly says so. We're in the Sh*t and no denying it. When will we get leaders who will stand up for us? The endgame draws ever closer...
2 days ago, 02:21:25
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[This user is an administrator] David Smith
This course of action requires vision of Franklin Roosevelt, the courage of Winston Churchill and the swashbucking daring of Errol Flynn; we've got Enda Kenny, Michael Noonan, and Eamonn Gilmore.
2 days ago, 02:50:11
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[This user is an administrator] Irish Citizen
This is a superb summary. A bleak synopsis but one with a workable solution. You say: "Of course, we all know that this will never happen". The truth is that it can, and must for Ireland to regain its independence.
2 days ago, 03:10:40
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[This user is an administrator] Paul Chillage
Scrap the Dail and Presidency and ask Timothy Geithner does he want of be High King of Ireland?
2 days ago, 04:24:29
Mein Gott! So much for blandishments about "Professor Honohan said; Professor Honohan did not say" during the election campaign. Typical sign of absolute political failure when "officials" are transformed into the sole guardians of democratic legitimacy.

But chopping the budget deficit to zero within year is a delusional proposal. It would effectively mean closing the ENTIRE health service and education system. In other words, assuming Kelly is right about the inevitability of default, we are even more sunk than he claims. This is Weimar Republic stuff now.
2 days ago, 06:08:54
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[This user is an administrator] CELTIC MELTDOWN
Excellent as always Morgan.
A beacon of reason shining out on a turbulent sea.

Will they heed you THIS TIME?

Jesus said to them, "Only in his hometown, among his relatives and in his own house is a prophet without honor."

.
2 days ago, 07:02:14
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[This user is an administrator] Sam Simpson
best article on the crisis currently I have seen. In the medium - long term national interst, I would suggest economic realists with expertise lend support to Sinn Féin - the only political party worth investing in in this country...
2 days ago, 07:02:16
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[This user is an administrator] David Fowler
Succinct, informative and brave article. Bernard Connollys' book of 1995(The Rotten Heart of Europe) lost him his job in Brussels for speaking the truth, but we should all have taken note. Where are the politicians brave enough to take note of this article?
2 days ago, 07:21:53
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[This user is an administrator] Finfacts
Ireland is bankrupt now and if restructuring is inevitable in say 2 year's time, the issue is would triggering a Eurozone crisis now be better for the country?

For decades we have had a twin-track economy; in one, world class companies have prospered supplying European markets, relatively independent from the broken governance system and low-level but insidious corruption.

Our challenge is to keep the existing foreign companies and being within the euro system is likely seen as a plus; it is much more difficult to win significant new projects as the centre of gravity of world trade moves to Asia.

Without the foreign sector, we would look more like a Balkan country than a Northern European one.
On swiftly cutting the budget deficit to zero, Ireland would need a level of national solidarity that hasn't been evident so far.

The Department of Finance's stability update report last week said that while taxation receipts in 2011 are projected to be around 2004 levels, gross voted expenditure of Government Departments and Offices in 2011 is projected to be about 40% above the 2004 level. It is this large gap between the State’s revenues and expenditure that is now being addressed by budgetary policy, and will continue to be in the coming years.

In 2004, Gross capital and current spending was €47bn; in 2011 it is forecast at €67bn.

Tax, PRSI and other revenues were €45.2 in 2004; in 2011, they are forecast at €48bn.

The current estimate of the Exchequer Balance for 2011 is -€18.21bn.

The vested interests who remain with bubble gains need to be challenged but it's evident that for too many of the
85% with jobs, unemployment is not the front burner issue as it is in the US.

If we want to embrace an economic emergency, it cannot be left solely to the politicians.

Insiders like Morgan Kelly have to come forward and propose what could be done in their own institutions with a lot less.

Otherwise, the efforts of political leadership would be sabotaged by the vested interests.

There are big unsustainable sums other than easy pickings on the welfare budget; dependence on the Exchequer is hugely expensive.

€2.7bn on public staff pensions; science budget €2.5bn; public procurement at €16bn; public legal bill at €500m and on it goes.

- - Michael Hennigan
2 days ago, 07:23:15
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[This user is an administrator] Paul Slattery
If only there was the collective leadership to engage the policies discussed here. A powerful article that cuts through the rhetoric and explains exactly where we stand.
2 days ago, 07:32:45

- - Mark Keenan
The FF goverment gave away some of Ireland's economic sovereignty in its deal with the ECB/IMF. After fighting for independence for 800 years will Ireland have to regain independence all over again in 2016?
It is worth noting that under the Lisbon Treaty, the ECB got an even more iron-clad statute of independence from political supervision. Hardly ideal given the ECB now effectively influences Irish economic policy. http://www.ecb.int/press/key/date/2008/html/sp080124.en.html
Such a blatant handing over of economic power was done without any recourse or consultation with the people of Ireland. There was no referendum, no evaluation or public debate allowed of the other options available, for example Richard Douthwaite's proposal. This handover was done over a weekend in which our government agreed to taking an ECB/IMF bailout and could be viewed as economic treason by the FF government.
In reality the Irish government is also bailing out the IMF/ECB flawed banking system. If Ireland did not accept a bailout the Euro currency could collapse as unpaid debts to foreign banks could result in the collapse of foreign banks - risking a domino effect.
A blanket gaurantee to protect the international bondholders at the expense of Irish citizens was the first time this has ever happened anywhere in the world. Iceland rejected this option when the banks tried to force them to bailout the bondholders. Forcing the people of Ireland to pay for the gambling debt of the banks bondholders is a financial crime. The banks did not provide the full picture about their balance sheets that surely makes the banking gaurauntee null and void.
Ireland's assets ESB, Eirgrid, Coillte (Ireland's forests) etc are at risk of sale to foreign corporations. This must be opposed. Ireland has one of the best renewable energy sites in the world. In addition, €400 billion worth of oil has been discovered of the coast of Kerry. Ireland's must control her own natural resources at a time when global oil supplies are running out.
There has been little resistance by the people of Ireland for various reasons. Many are unemployed, many are on large public sector salaries, many people are just 'getting by', many are busy minding and raising children, many are 'busy watching english soccer teams on sky sports' while their country is being ransacked. Our nation's talented and skilled men and women are being forced to emigrate. This is unacceptable when Ireland has all the resources it needs to be a vibrant and succesful nation.
We must also note that what is happening is part of a much larger systemic crisis. Ireland must stay positive and prepare herself for the years ahead. See article at http://www.thinkorswim.ie/?p=1324
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[This user is an administrator] Blankfiend
Outstanding article Prof. Kelly! Only one thing you got wrong, and that was calling Geithner's veto of the bond haircut "unexpected." Mr. Geithner is the most avid advocate of bank-owned taxpayers in the world.
2 days ago, 04:58:46
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Is eco-innovation enough ?

Author: Mark Keenan
The challenge of the 21st century is to align our political, economic, social and technological systems with the science of sustainability and the reality of resource limits, while maintaining wellbeing for citizens. In 2011, we are facing the decade of the ‘turbulent teens’. As the economic system scrambles to save itself from collapse (at the expense of ordinary citizens), we also face the challenges of ‘peak oil’, a slow (or no) growth decennia and increases in the prices of energy, food, and raw materials, which will impact citizens’ buying power, and the stability of our societies.

These events represent an opportunity for a re-evaluation of the values that our economic system is based on and an opportunity for transition toward a more sustainable, resilient and just society.

Eco-systems and global resources such as arable land, fish stocks, and oil reserves are in decline and Europe is faced with scarcity and access problems in the field of energy (gas and oil), water, and critical raw materials that Europe does not have. In addition, climate change needs to be addressed. These constraints are design challenges and opportunities for innovation. Societies, businesses, and governments that take a systems view and have the foresight to develop strategies in alignment with sustainability principles will avoid hitting the walls of the funnel (‘The Natural Step’ concept of the funnel – see diagram) and in the process capitalise on the strongest long term trend globally. However, Tim Jackson has estimated that the level of innovation and industrial improvement required to de-carbonise our systems sufficiently by 2050 is ten times faster than ever achieved in industrial history. The sustainability U-turn, if it happens at all, has to happen fast.

Our current economic system, which requires ‘growth’ to pay back ‘interest’ on loans, has failed to create a sustainable society for humanity, and has failed to recognise that we live in a finite world with resource limits and ecological limits. There are physical limits to continuing economic growth based on resource use. The economy is a subsystem of a larger finite system, the biosphere, hence permanent growth is impossible. Thus, the term ‘sustainable growth’ becomes an oxymoron (unless the economic activity is ‘de-coupled from environmental and resource impact).

Without growth this flawed economic system becomes unstable and crashes. Wuppertal Institute has estimated that a total global resource extraction of around 80 billion tonnes in 2020 (200% of the 1980 value) will be necessary to maintain global economic growth. On a planet with finite resources there is obviously a conflict here.

To keep the financial system from crashing civil society has to continually work to pay ‘interest’ on money that banks created from nothing (via fractional reserve banking and sometimes via quantitative easing). People exist to serve a flawed economy, whereas the economy should exist to serve the people. Meanwhile the resources, bio-diversity and eco-systems our species’ relies on, continue to be consumed or destroyed. As Satish Kumar said ‘Humanity is cutting the branch upon which it sits’.

Will GDP growth solve environmental and resource problems?

In the late 20th century ways to decouple resource use from economic growth were hypothesised by environmental economists. A hypothesis, called the environmental Kuznets curve (EKC), predicts increasing decoupling of resource use from GDP/capita as technology improves and material substitution occurs. In some cases, this accurately describes reality. In other cases, the resource flow continues to increase with increasing GDP/capita. An EKC hypothesis has not been validated. If it were validated then it would imply that economic growth is the means to environmental improvement.

Can we rely on the market to solve resource issues?

The market cannot be relied on to solve the problem. According to an Aldersgate report ‘Beyond carbon: Toward a resource efficient Europe’ markets respond to short-term supply restrictions, they do not anticipate constraints in natural resource stocks. Therefore a prudent policy would promote low resource consumption as an important part of securing future competitive advantage, in advance of the market and before resource-constraint shocks force change in the economy. Acting on resource efficiency ahead of the market would support the transition to a low carbon resource efficient economy. Market failures in resource management must be overcome.

The future of resource efficiency and eco-innovation

Technological innovation is one of the main approaches governments emphasise to maintain the growth required to keep this system going, and to address resource constraints governmental policy approaches to date have focused on decoupling GDP growth from resource use. This is an important step in ensuring non-renewable resources are not exhausted. Some relative decoupling of economic growth from materials and energy consumption has been achieved by a number of EU countries during the past 10 years, however ‘business as usual’ has not achieved absolute decoupling of economic growth and resource use in the EU.

As part of the EU 2020 strategy the European Commission is putting forward seven flagship projects. One of these is called “Resource Efficient Europe” to help decouple economic growth from the use of resources. This involves a shift towards a low carbon economy, increasing the use of renewable energy sources, and promoting energy efficiency. In the U.K., a recent WRAP report states that resource efficiency can make a significant contribution to achieving climate change targets for reducing greenhouse gas emissions and that resource efficiency could reduce carbon emissions with no significant negative effect on GDP.

In Ireland, the need to become a low carbon and resource efficient society was explicitly recognised in Comhar Sustainable Development Council’s Green New Deal report. The Irish government’s own high-level group on Green Enterprise also identified a key role for resource efficiency in the green economy. There is a need to assist front-runners and eco-innovators in Ireland. In my opinion the synergies and alignment of resource efficiency priorities, green public procurement and eco-innovation could make a significant contribution to achieving a more environmentally and economically sustainable Ireland. (The public procurement spend is ~€12 billion per annum, so GPP has significant potential to drive innovation. Minister Gormley’s department published a GPP consultation, but the GPP national action plan was not published before the party left office.) According to the Wuppertal Institute the world market for eco-innovation is likely to double by 2020 (market volume estimated at €3,100 billion).

The Irish government will likely need to develop a ‘National Action Plan for Resource-efficiency and Eco- innovation’, that will add value to current initiatives, address priorities, and create new multi-stakeholder initiatives. A policy framework would need to be developed in a co-operative way that increases uptake across all sectors of Irish society and economy. Comhar Sustainable Development Council is currently conducting research to provide recommendations in these areas. Recommendations could include the launch of Irish multi-stakeholder eco-innovation networks or transition platforms; the development of co-operative eco-enterprises (sharing innovation and open-source developments are becoming key ways of achieving sustainability); and developing or acquiring technology (including mid-level technology) that is not reliant on fossil fuels or resources that have a high supply risk.

Tools such as ‘environmental footprint, life-cycle analysis, material flow analysis, sustainable design (such as ‘cradle to cradle’, ‘zero-waste systems’, design for disassembly and longevity), and sustainability planning frameworks, such as ‘The Natural Step’ are relevant. Across the developed world significant resource efficiency developments and eco-innovations are taking place, but…

Is resource efficiency enough to reduce resource use?

It is (in my opinion) unlikely that resource use can be reduced by resource efficiency improvements alone – due to what is known as the ‘rebound effect’. Relying on resource efficiency will be insufficient to de-couple GDP growth from environmental and resource degradation. Most economists tend to think that greater efficiency enhances sustainability, however many environmental scientists think that it doesn’t. William Jevons stated in 1865: ”an increase in efficiency in using a resource leads, in the medium to long term, to an increased usage of that resource rather than to a reduction in this use”.

This contention has been called the “Jevons paradox”. In many cases, due to increased efficiencies the resource flow per unit of product or service created tends to decrease with increasing GDP/capita. However, this decoupling of resource use from GDP growth is often not sufficient to curb the total flow of resources, because total consumption continues to increase as a result of the consumption of more units. This effect can be explained to some extent by price mechanisms (decreasing price induces growing demand).

The gap between the decreased use of resources that is expected from increased “eco-efficiency” and the actual utilization has been called the “gross rebound effect” (GRB). An example described by the International Energy Agency is that although efficiency in the usage of energy per unit of product or service in the OECD-countries improved by about 30% between 1970 and 1991, the use of energy in these countries increased by about 20%. GRB describes the net effect of societies overall resource use/environmental impact due to consumption patterns, population development and degree of eco-efficiency.

A study conducted by scientists at the Department of Ecology and Environmental Science, Umea University indicated that improved efficiency in the use of natural resources is insufficient to prevent further increases in global resource use and is insufficient to counterbalance the effects of increasing affluence and increasing population.

The study finds that the ecological footprint across 135 countries did not decrease at high levels of GDP per capita. The improved eco-efficiency, which is seen in many wealthy countries, is associated with economic growth which increases the global ecological footprints of these countries. One example of this ‘catch 22’ is that “Finland, a wealthy and eco-efficient country has been classified as both the most sustainable country (Devitt and DeFusco, 2002) and the country that caused the fifth largest per capita ecological footprint in the world (Loh, 2002)”. The study also finds that a highly efficient information society does not lead to decreased use of natural resources. For example, investments in rail transport can lead to a local decrease in air pollution, but also increase the economic activity in a region, which in turn leads to a net increase in the human ecological footprint.

In addition, a separate report ‘Analysing Rebound Effects’ from the Wuppertal Institute states “the policy conclusion one may drive from neo-classical analysis could be that stimulating efficiency gains for conservation purposes is not very useful or even harmful”.

In my opinion resource efficiency needs to be viewed as part of the wider system that it is operating within, and it is the destructive effect of the ‘system’ we need to alter. To echo McDonagh and Braungart, the key is not to make human industries and systems as resource efficient as possible but to redesign them in a way that has zero impact on (or contributes to) the natural systems that we rely on. The Natural Step sustainability framework is an example of a scientific methodology for redesigning our systems toward the ideal of full compliance with the laws of a sustainable biosphere.

Is technological innovation enough to create a sustainable society?

These concepts have been described using the Holdren/Erlich equation I=PAT, where I represents environmental impact, P is population size, A is affluence per capita and T is the effect of technology. A factor describing behaviour/lifestyle (B) has also been added (I=PBAT).

The Umea study maintains that to find a way to sustainability, it will be justified to determine sustainable levels of resource and energy flows locally–globally; adapt population (P), change individual consumption (A) and improve technology (T) in the IPAT equation so that sustainable resource and energy flows are reached. Another policy proposed is that rebound effects need to be limited by price policies (e.g. a tax on resources which experience efficiency gains).

Unless economic activity that violates the laws of sustainability (for example The Natural Step principles) is reduced or stopped for conservation purposes, the problems will continue. A sustainable steady-state economy based on the science of sustainability and resource limits needs to replace the current system.

Redesigning the system

A Green Economy needs to be more than just a technology platform for eco-industries. It has to be guided by a vision of what a sustainable society should look like in the long run. In my opinion the economic system needs to be redesigned based on the Science of Sustainability (which includes ecological and resource limits) The Natural Step Scientific framework for Strategic Sustainability, is an example of a successful framework for moving toward environmental, social and economic sustainability and is being utilised in over 30 countries. In 2009, I authored a policy proposal to government to embed peer-reviewed scientific sustainability principles in all government departments to create policy alignment and a shared understanding of sustainability in our system.

In the absence of effective de-coupling, economic systems and models must be considered that are in alignment with the resource-efficiency constraints. The human economy must be enabled to function within the limits of the environment and its resources and in such a way that it works with rather than against natural laws and processes of a sustainable biosphere. A strong concept of sustainability is needed, in which economy adapts to ecological imperatives, rather than seeks technological substitutes that may fail to deliver the same range of functions and services. In the absence of a move toward systems, such as steady-state economics or ecological economics, re-allocation of growth to more environmentally friendly sectors is to be expected. Systemic effects due to peak oil (as described by David Korowicz) may pre-empt any redesign and according to Dimitri Orlov systems collapse before they re-organise. It is important (in my opinion) that local and national resilience planning is promoted in Ireland.

A Sustainable Ireland

Very little adherence to sustainability principles over the past 20 years has left Ireland overdependent on foreign oil, foreign investment, foreign goods and borrowing. We have built little ‘self-reliance’. Resource efficiency and eco-innovation will be an insufficient strategy for sustainability in the years ahead. In light of global resource challenges, the economic downturn, winter freeze and seasonal flooding we urgently need national and local community resilience planning. While maintaining Ireland’s place in a globalised society, more support and planning law needs to be directed to creating a more ‘self-reliant’ Ireland in terms of food, energy, water, technology and economy. We need a new vision and design for the future direction of Ireland that is based on sustainability policy, otherwise we will remain vulnerable to external factors.

The philosophy of sustainable living must underpin everything that we strive for. Ireland is blessed with many natural attributes that are advantageous including: adequate rainfall and mild climate for food production and water supply; huge renewable energy potential (the development of which could be hindered by the ongoing economic collapse); and highly educated people. We have the capacity to re-invent our nation. It is up to us – increased ‘quality’ is always within our capability. A ‘Sustainable Ireland’ can emerge that values fundamental human needs, quality of life, a progressive economy, and the environmental resources upon which we all rely. Education, co-operation, optimism and leaders with vision are needed for the transition.

Mark Keenan has worked with the Department of Energy and Climate Change, U.K. and with Comhar Sustainable Development Council, Ireland. He has a Masters Certificate in ‘The Natural Step’ sustainability framework, BTH, Sweden; MSc studies in Sustainable Development and Climate Change, DMU, UK; and PhD research experience in Sustainability Strategy, Institute of Energy and Sustainable Development, UK. See also www.sustainableireland.net

see also

http://www.thinkorswim.ie/?p=1324