Here you go Dalymount my full address to Microsoft .Made more sense than any politician of the time or since
Good Morning and thank you for the opportunity to address you .Its not often that somebody who proudly boasts I LEFT SCHOOL WHEN I WAS TWELVE BEFORE THEY COULD EDUCATE THE INTELLIGENCE OUT OF ME . Gets a chance to address such an esteemed audience .I responded to this online request .
Dear all
Everytime I come to Dublin I have a very entertaining trip from the Airport as the driver has a view on everything. I run conferences and in September it will be at Microsoft. I need a key note speaker (15Min's max) who can talk about the Ireland and the Irish economy.
You know of anybody?
Please let me know
Regards
Laurie Beagle
So here I am and I hope that what I say will entertain and give you some food for thought .
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Once again Ireland are among the first to agree to something without knowing all the facts .We agreed to the bank guarantee then a bailout and now the ESM .
We have no idea what the terms and conditions of access to the ESM will be....... what the coupon on monies will be.... or what political niceties will have to be met .Our agreeing to sign up to the fiscal treaty and the ESM without all the facts is a bit like getting married and then deciding if you like your partner
There is nowhere in the Fiscal Treaty where it states that Irelands deal will be changed .We got our cash and signed up to a deal .The best we can hope for is that access to future funding will be provided by the ESM .
We will have to contribute to the fund .So we will need to borrow money to put into a fund so we can borrow money from the fund.
Ireland ,Greece ,Portugal have all got their deals and there is no going back .A few tweaks and twitches will be applied but the basic deal will remain the same .
Irelands politicians have proven that the parish pump has always decide fiscal or political direction and now that the troika have neutered, muzzled and gotten a choke chain on us they will not let us off the lead to run free and spoil everything for the rest of Europe If anything the government will try to curry favor and apply a toxic budget to give the impression that they are more European that the other litter runts and all they will get in return is a rub of their tummy.
Irelands debts. are too unstable for the ECB to allow us to refinance them through the ESM .We have yet to deal with our mortgage black hole and the special purpose vehicles that hide billions of banking debt NAMA being the bastard lovechild of wayward lenders .
The other big cloud on Irelands horizon is banking union which might result in a bank transaction tax and possibly a unified corporate tax rate .
Why would other Eurozone nations agree to finance their opposition on unfavourable terms for themselves?.
Irelands reduced corporate tax rate is protected by treaty but IF cheap funding via the ESM is only available to those who meet the conditions of the ESM and one of the conditions is tax harmonisation .Then there is a political decision to be made .
The Dept. of finance may have some big decisions to make .They will need to get out the old abacus and do the sums and try to calculate how many jobs and how much wealth will disappear if the imposition of a bank transaction tax and corporate tax harmonization are the price of access to future funding at reduced rates from the ESM ,while in the Taoiseachs office they will need to measure up the political consequences of such surrender of sovereignty.
There is also the possibility that the UK will decide its time for them to get out of the EU .This then presents a problem and an opportunity for Ireland. Do we go as well ?
Undoubtedly the UK would be granted access to the European free trade zone .If we went with them we too would have access for geopolitical reasons .This would allow Foreign Direct investment into Ireland continue as we would still have free access to the European markets for our produce.
The ECB are aware that the UK are not as enamoured with Europe as some nations are, and they are also aware of the historic bonds between Ireland and the UK.
If possible they will not allow Ireland to re designate the promissory notes or other monies loaned to Irelands banking system from the sovereign debt .
Why have the Troika been so hard on Ireland and why did they insist on Ireland paying off all bond holders ?
..Let me return to the biggest Sovereign debt problem that Ireland has .Bank debt and especially the Anglo Irish Promissory note .The Minister for Finance decided in closed session to guarantee all deposits and bond holders in Irish banks .This has been described as madness but lets just for laughs believe for a few minutes that everybody in that room when the decision was made was reasonably intelligent .Then we need to ask what could of been the logic behind such a guarantee ?. I would suggest that .The minister had been convinced that the problem was one of liquidity and not toxic debt .By implementing a bank guarantee backed by the Sovereign it might of been expected that funds from other European banks would flood into the Central bank of Ireland .
Remember at this time Ireland was the poster boy of European Economic Greatness with a very low debt to GDP ratio and this money could have been made available to Irish banks at a low coupon .This would of had the effect of allowing the banks to refinance bonds and try to trade out of their difficulties while masking the toxic dept problem from Eurozone overseers .
Irish banks have benefited regularly from government largess.The SSIA savings scheme was introduced by Charlie Mc Creevie some years earlier to take money out of an overheating economy . Any other minister would of increased taxes to achieve this.It resulted in Irish banks being cash rich and this money on deposit was used to leverage up their capital and this cash bonanza is what fuelled the Celtic Tiger .
It is possible to draw the conclusion that the severity of the troikas policies in Ireland are a way of punishing Ireland for trying to pull a political stroke in offering the bank guarantee to create cash flow into Irish banks and as far as they were concerned mask the problems at the expense of other Euro Member Countries.
Ireland fired a warning shot across the bows of Europe and it went un noticed. They signalled their closeness to the UK ...During the recent Presidential election campaign .The leading parties candidate Gay Mitchell suggested that Ireland should consider re-joining the Commonwealth and the historic visit of Queen Elizabeth to Ireland and the monumental handshake between Martin Mc Guinness and the Queen spoke volumes for Anglo Irish relations .
Mr Mitchell is an astute politician and such a remark should never have been allowed go unchallenged .Was he signalling that Ireland have options ?. Trying to ride two horses at once .We have seen that there are two rules in Europe one for the big boys and one for the rest .Europe was good for Ireland in the past but now we need to look to the future .An honest debate has to take place and we need to decide if the reality of European Union membership matches up to the peoples aspirations of Europe .
Ireland is at a crossroads in its political evolution .It is coming of age and now has to choose if it will embrace European Federalism and all that, that might involve? Or take a different road .
We must have politicians that will stand strong and defend our natural resources especially our most precious natural resource our right to set our own tax rates. This includes corporate rates .Foreign Direct Investment is the lifeblood of the Irish economy. It is the oxygen we breathe and without it we will perish .The road that Ireland chooses to travel must always recognise this truth.
The single currency dangles by a tread .I sometimes wonder if it is a currency or just a rumour.Frau Merkel makes a remark and the value of the Euro soars or falls even though the fundamentals have not changed .The Mario brothers who use to be characters in a computer game have been replaced by the Mario brothers ,Monti and Dragi who are characters in a game of brinkman ship.What trust can people have in a single currency that can collapse by a few wrong words by a few well placed people .What would happen if the Mario Brothers and Frau Merkel went to dinner and when the bill came one of them reached into their pocket to get cash to tip the waiter and found a crumpled up 10€ note in their trousers pocket and was heard to make the comment .”This bloody Euro is useless” He was referring to its structure being made of paper as opposed to the Aussie dollar being plastic .The world financial system would race into turmoil .
If or when the UK decide to exit the European Union then Ireland may become pivotal .The exit of the UK would not be seismic .In fact many other European Union countries might welcome the exit of the naughty child as the UK have never really embraced the project whole heartily .The UKs ultimate decision will be based on IF the banking transaction tax is imposed upon them or just on Euro zone members .They would possibly prefer to remain within the union but there is a wild card scenario .If the UK could convince Europe that if they exit they might take Ireland with them .This would be catastrophic for the Euro Single currency if one of its members were to leave voluntarily . The UK might offer to finance Ireland until it can return to the bond markets .This might be enough to prevent the introduction throughout Europe of the banking transaction tax which would destroy the British financial system and at the same time empower Ireland to insist on maintaining their low corporate tax rate.
If Britain leaves and we go with them then we as a Sovereign Nation could default on some of our non Sovereign banking debt and put our self in a position where we could afford to finance our self as billions of Euro of interest repayments per annum would disappear.
I believe that we are fast approaching decision time for the Euro and the equation is simple .The majority of monies loaned to European banks emanated from Germany .The German government have bullied Sovereigns to transfer bank debt onto the sovereign to try to guarantee repayment .The Spanish baulked at this proposal and put pressure on Germany to change its policy .If the ECB become the lender of last resource for distressed Sovereigns then the Germans will have to fund the ECB .This is not what they want to do .How much will it cost to save the single currency against how much will the German pensioner, business, and state stand to lose if it falls apart ?.The future of the Single currency will depend on these calculations. The Germans are a pragmatic people who claim to have invented gunpowder but at the same time gave us printing and I believe in their final analysis they will opt to save the currency.
If the Germans do decide to fund the ECB then we must accept the terms and conditions of the fiscal Treaty 80% debt to GDP and the 3% Structural Deficit .This then presents a new set of problems it guarantees austerity for Europe for decades unless there is massive growth. Greece will be sacrificed as soon as this system is up and running as a warning to others .Great care on the timing of a Greek expulsion will be taken as Europe knows that a small puff of wind that can extinguish a match can also fan a flame .
Already we have seen cuts in welfare payments and cuts in government spending and Pensions being paid later in life.This will mean that people will work longer and opportunities for younger workers to enter the workforce will be delayed. This could have some serious social repercussions . To prevent unrest among the young we must consider a universal youth guarantee .We must guarantee all youth a job opportunity or job training .This should be a two way requirement before you qualify for unemployment payments .Consideration of transferring the amount that would be paid as welfare benifits to the person who provides on the job training as part of a wage should also be considered .
Printing of money and bond purchasing by the ECB will be necessary for years and ultimately a rapid increase in inflation will result .As I see it the Emperor has no clothes .Germany will have to agree to the ECB buying up bonds and printing money as most of the monies loaned to European banks is German savings and much of it is insured against default by German insurers either way they pay .
We must also keep watch on other regions where events could lead to fiscal turmoil .The Middle East is a powder keg and one wrong move could ignite the whole region .China are beginning to peruse claims on other Sovereign territories .
In conclusion .
It is essential to Irelands future that we put the protection of Foreign Direct Investment at the heart of our political agenda .I believe that our low tax rate is safe .Property deflation has made this an ideal time for overseas investors to secure premises at affordable rates and the massive reduction in domestic prices has alleviated wage demands making Ireland one of the most desirable locations in the European Union for Foreign Direct Investors .
A reorganising of social contracts in Europe is being undertaken. Unemployment benefit ,Pensions and access to medical services are under review.
An issue which I have heard opined on many occasions is that of workers associated with some overseas companies who are accompanied by their spouses who are not allowed to take up employment in Ireland .I believe that Ireland should change its visa policy to allow those who come here on short term work visas who are accompanied by a spouse receive a family work visa allowing both partners work .This would remove the strains placed on families especially families where both have desirable skills but can not work .This change in Employment policy should allow companies recruit the best and brightest to come to Ireland to work for them especially in research and development projects .This is the time to take up this issue with government .They need you .
So the next time you take a taxi .Remember that the driver has possibly listened to more radio that Mr average ,read more books and newspapers as he waits between jobs ,listened to more people’s opinions than the average politician and there may be a lot of wisdom in what he has to say .On the other hand ........”we’re here NOW”.
John Mc Grath
