For some time now we have been fed a peculiar line of spin from our Government, and in particular from Brian Lenihan. Last December he told us that the economy turned a corner. At the time I debated this issue live on RTE Radio 1 with Dr Sean Barrett of TCD. I believed then, as I know now, that no corner had been turned. It was patently obvious to everybody in the real world who was struggling to make ends meet that this was untrue. Messrs Lenihan and Cowen obviously inhabit a different world to you and me. A world of generous salaries, limitless expenses, and munificent perks conveyed for little effort with no expectation of results.
Fast forward to April 2010 and once again they gave us the line that we have turned the corner. In July more of the same as Mr Lenihan told us that the “worst is over… economic activity in this country is turning the corner”. Last week we were again told that we have turned a corner. So according to Mr Lenihan we have turned a total of four corners bringing us right back to where we started. In a way he was correct in spite of himself, because we have made absolutely no progress with economic recovery. This means in effect that we have actually gone backwards.
We have all been hit with severe austerity cuts with more to come over the coming weeks. We all have less money to spend. The knock-on effects are that unemployment continues to rise, tax receipts continue to fall, welfare costs are increasing, and we are borrowing €500 million a week to fund current expenditure. The budgetary savings achieved will not meet the interest requirements of government borrowings of €500 million every week at a staggering 6.3 per cent plus. This enormous figure is only to meet our current spending requirements. In other words we are borrowing €500 million every week just to keep the lights on. This is the crux of our problems and it cannot continue indefinitely.
It is an absolute folly for us to continue to bail out the banks’ bondholders when we cannot fund our day-to-day spending. Anglo’s debts were never Irish sovereign debt. Anglo’s debts were adopted by an economically deficient Finance Minister supported by a wholly deficient Taoiseach through an inadequate bank guarantee. The strategy is to protect the foreign investors at our expense. Those same foreign investors are charging us the highest interest rates on the planet. They view us simply as a cog in a vast money making machine. We should view them in the same manner. We can and should make them absorb Anglo’s losses because that is the nature of investment, you win some and you lose some, for there are no guarantees in the world of investment or business.
We can only exit this recession if we focus our energies on job creation. If people are working our economy becomes more productive, tax revenues increase, welfare costs decrease, and national income improves. The current economic strategy, whereby we must save the banks no matter what and address our fiscal deficit through punitive cuts in spending and increases in taxation, is an absolute fiasco. A strategy without some major elements of economic stimulation and a huge emphasis on job creation will fail because such policy is regressive and economically unsound. It ignores the two elephants in the room. These are borrowing for current spending needs and unemployment.
So when you hear fairy stories from the two Brians about the turning of corners remember that these stories are coming from the same people who continued to insist that the economic fundamentals were fine and that we were in for a soft landing or that the bank guarantee and NAMA would get the banks back lending again.
They have lied to us many times before to save their skins and they are doing it again. Their primary motivation is self preservation and damage limitation to ‘the party’. Fianna Fáil caused this problem through their greed, corruption, and incompetence. That is a fact. They are simply not able to get us out of it. That too is a fact. It is time that they started dealing in facts and not fiction!
Post script: I have put a link to the live radio economic debate at the bottom of the home page on my website www.pearceflannery.com Go and judge the extent of our economic progress. You decide if we have turned any corners.
Pearce Flannery is Ireland's premier business advisor and training facilitator and is an acclaimed conference and motivational speaker.
He believes that to get improved results a business must be open to change from the top down.
This philosophy also holds true for the country!
