EU's own global greed machine will bring about its downfallApril 2011: The full extent of the utter disaster inflicted on the Irish economy and people by a combination of membership of the euro and of the global market finance speculation racket of which the euro is a part is only now becoming clear.
It has now emerged that the 67.5 billion euros (£59 billion) the Irish got in a bail-out from the European Central Bank and the International Monetary Fund is only the surface film on the deep abyss of debt from which Ireland must be pulled by Europe’s taxpayers.
Regulators at the Irish central bank have conducted a review of how much extra capital - as a buffer against future losses - is required by the rescued banks, Bank of Ireland, Allied Irish Bank, EBS and Irish Life and Permanent. This is where the bailout money is going. It appears this will be will be a bit less than 35bn euros - including 8bn euros that was supposed to be injected into them at the end of February, but was postponed because the reaction of the Irish people to first bailout package brought down the Irish Government.
So it now appears the Irish Government will need to be bailed out to the tune of at least 75 billion euros. That is over half the size of the entire Irish economy!
But that’s not the worst of it. Apart from bailing out the Irish Government so it could bail out its banks, the European Central Bank has had to bail out those banks directs. Because they are light-years down in debt to other banks (mostly German) and sundry international financial institutions and speculators who are frantically demanding their money back lest they go bust themselves.
The European Central Bank has lent these banks direct 117billion euros so far. Whilst the Central Bank of Ireland has lent them a further 71bn euros. So that's 188bn euros of loans from the eurozone's taxpayers to Ireland's banks - which makes the 67.5bn euros lent directly by the eurozone and IMF to the Irish government look like peanuts.
This means EU taxpayers have lent 208bn euros to Ireland's banks. That means Ireland is in debt to the tune of 154% of its GDP. It owes taxpayers over one and a half times the total value of its economy.
If Ireland was a person, the bailiffs would be kicking in its doors and it would go bankrupt.
The total debt burden beneath which Ireland lies crushed is huge. And it will all end up being borne by the Irish people, not the global banks and financial institutions who got Ireland’s banks into this mess. Because the Irish Government has to keep up the repayments to them – if they think they won’t they’ll demand all they are owed back at once, collapsing what is left of the Irish economy.
There is worse for the poor Irish taxpayer. The money they've been lent by the IMF and eurozone carries an interest rate of 5.8% on average. This is higher than the Irish economy can hope to grow, so every year Ireland gets deeper and deeper into debt. Forcing an endless cycle of more Government spending cuts and tax hikes which makes the economy grow even slower, making the debt burden higher and so forcing even more cuts and tax hikes, slowing growth even more making the debt deeper.
Ireland and its people are being sucked by their membership of the euro and the global financial/banking system ever deeper into a black hole of poverty and debt.
The money for the endless ever higher bailout loans is currently coming from German and to a lesser degree French taxpayers, who are getting fed up and starting to vote for alternatives real – the FN in France – or imagined – the Greens in Germany.
This in turn worries the Governments there, who are starting to demand that non-euro nations – notably Britain – do their share as “good Europeans” to keep the floundering euro afloat. That means our taxes will go up to bail out their common currency.
In the longer run, this cannot go on. One of the victim economies will collapse completely under the strain, forcing its people, if they have not wearied before then of impoverishing themselves paying the debts of billionaire bankers and speculators, to arise and throw off the shackles of International Finance and the Euro. They have to do both – it is impossible, without a ruinous run on your economy, to withdraw from the Euro without at the same time taking back control of exchange rates and money movements from the global markets, contrary to IMF and EU rules.
This sovereign default – even if it doesn’t trigger all the other euro-victim countries to follow suit at once - will almost certainly collapse the European Central Bank, as international institutions drive it to implode, and as a result the euro if not with a bit of luck the whole EU.
It will be ironic if the EU perishes at the hands of the very global greed money machine it was set up to serve.