Monday Business Edition
This is not an easy story to tell in other’s words, so you’ll have to rely on mine. I’m not an economist.
You’ll read today that Ireland has accepted a bailout. They’ll get from 30 to 100 Billion Euros from the European Central Bank, International Monetary Fund (which includes the U.S), Sweden, and Britain (with minor chunks from others). In return for that they’re accepting an austerity plan that includes things like-
Middle class Irish families face the loss of tax credits and low paid workers, totalling 50 per cent of the labour force, will start to pay taxes for the first time.
Ireland’s minimum wage is to be cut 13 per cent and all Irish households face a new £257 property tax from 2012. Welfare payments, including jobseekers allowance and child benefit, will be cut five per cent.
As well as the steep tax increases, the EU has demanded extra public sector job cuts with a demand to cut the Irish civil service by 28,000 between 2011 and 2014.
The job cuts are double the level the Irish has agreed with trade unions and are expected to fuel protests and strikes. A trade union demonstration, predicted to be the biggest in decades, will take place in Dublin on Saturday.
As you might imagine, this is not very popular with the voters on whom politicians depend for their phony baloney jobs-
Irish ministers are so concerned over protests that austerity plans to cut chauffeur driven cars and police outriders have been shelved to protect the government amid heightened post-EU bail-out security.
Support for Fianna Fail, Ireland’s ruling party, has collapsed to 17 per cent the lowest level in 88-year history of the Irish Republic as pressure to hold a general election builds, threatening to plunge the country into more chaos.
What’s not changing, yet? Corporate Tax Rates.
Corporate tax in Ireland is 12.5 per cent, compared to 34 per cent in France, 30 per cent in Germany and 28 per cent in Britain and the policy is credited with attracting over 1,000 multinational companies such as Google and Pfizer to Ireland.
Now, why is a bailout of Ireland ‘necessary’ at all? Well, to prevent senior ‘secured’ creditors from having to take a haircut in the form of simply defaulting on the debt or alternatively converting it to equity and then having its market value drop to zero. In this case senior ‘secured’ creditors means the ECB (European Central Bank) and the Central Banks of France and Germany (British banks also have major exposure).
In fact the total exposure of France, Germany, and the other members of the ‘Eurozone’ to the failed and insolvent banks of Portugal, Spain, and Italy (the next dominoes in the inevitable demise of the Euro) makes them insolvent should they have to mark their assets to market instead of the delusional values they’re now claiming on their books. This has major political ramifications for the Very Serious People who have guided State Policy in the direction of a European Common Currency and a European Political Union for over 50 years now.
It exposes them as idiots.
What are the lessons to be taken away? For one thing I invite comparison to the recommendations of the Catfood Commission, especially their insistence on imposing additional burdens on the middle class and the poor while cutting taxes on Corporations and the rich.
Trickle Down Supply Side Economics is a failure. There is absolutely no evidence at all that it works. Deregulation is equally a failure, Ireland was the Texas of Europe- a wild wild west. As it turns out Texas was the biggest failure of Ronald Wilson Reagan’s Savings and Loan bubble, followed closely by other ‘Red’ states like Oklahoma that are smaller but experienced higher per capita losses.
Politicians, particularly Democrats, who support these policies are going to lose their phony baloney jobs. This includes Barack Hussein Obama. Street protests like you’ve seen in Europe are not our style, but as we saw in 2010 we voted for change and we’ll keep voting until we get it.
Republicans realize this which is why their goal is to block economic progress and hope that the disaffected vote either goes their way or stays home. There is no reason to vote for a Democrat to enact Republican policies.
If Bloomberg runs in 2012 he’ll be much more successful than Ross Perot.
Business News below.
Life actually had its start earlier in the 20th century as a different kind of magazine: a weekly humor publication, not unlike today’s The New Yorker in its use of tart cartoons, humorous pieces and cultural reporting. When the original Life folded during the Great Depression, the influential American publisher Henry Luce bought the name and re-launched the magazine as a picture-based periodical on this day in 1936. By this time, Luce had already enjoyed great success as the publisher of Time, a weekly news magazine.
Recent Comments