From Socialist Voice, June 2010

Government banking strategy has endangered the state itself

Socialist Voice has previously reviewed a paper written by Prof. Morgan Kelly of UCD in which he described in very clear terms the reasons why NAMA as a project will fail in its expressed aim of enabling the banks to release credit back into the economy to assist in economic recovery.
     Despite our clear political difference with Prof. Kelly, who views things still from an establishment viewpoint, his writings have value and should be read.
     Towards the end of May he wrote an article in the Irish Times in which he argued that the burden of debt being taken on by the state puts the solvency of the state itself at risk. Indeed he starts the article by saying, “It is no longer a question of whether Ireland will go bust, but when.” This is a point that the CPI has emphasised on several occasions. The actions of the state are not only burdening future generations with the debt of the wealthy but are threatening the solvency of the state itself so as to protect its ruling class.
     The important point is that the next crisis—and there will be one, because of the logic of monopoly capitalism—is likely to devastate the lives of working people to a far greater degree than the present one, if things are let be.
     Kelly correctly identifies national sovereignty as being central to the question “How much national sovereignty have we got?” but also “How much are we losing?” and “Will we have any sovereignty in the future?” Presumably his reference to the concern for sovereignty being the “monopoly of republican headbangers” would include us too!
     This is where the struggle lies.
     National democracy—the right of the Irish people to decide what is best for Ireland, without concern for how it is viewed by speculators and gamblers hundreds of miles away—is essential if a viable and sustainable economy is to be developed.
     Kelly correctly attempts to direct attention away from the curve ball of public spending to the giveaway of welfare to the banks and developers. He then contrasts the extent of the bail-out in the United States with that in Ireland and concludes that the Irish bail-out has cost us ten times, relative to population, that of the United States.
     How much are we likely to lose, according to Kelly? Of the €100 billion of property development loans, about 33 per cent; of the €35 billion in business loans, about 20 per cent; of mortgages and other personal loans, about 5 per cent—leaving taxpayers with a bill of more than 30 per cent of GDP, and with a ratio of debt to GNP of 140 per cent!
     Leaving aside Kelly’s proposed solutions, by which working people would still be forced to take most of the pain and which do not fundamentally challenge monopoly capitalism, his calculations concur with the analysis made by the CPI and reaffirm the correctness of the policy opposing not only bank guarantees and bail-outs but also the nationalisation of the banks. The party’s alternative of a State Development Bank—established under democratic control, giving the option to individuals and businesses to transfer savings and loans to it, transferring staff members from existing banks, so saving their jobs, and recapitalising through a variety of means—is looking more attractive every day.

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