GOVERNMENT RESPONSE
TO CRISIS SET
FOR FAILURE:
THE BANKS MUST
BE NATIONALISED



The government has decided to recapitalise Bank of Ireland and Allied Irish Banks with €6bn. That is much more than their combined market value, which last Saturday, 24 Jan, stood just above €1bn after their shares rose 11% (BoI) and 12% (AIB). Their nationalisation, by this government, for the moment, is ruled out.

The crisis of the Irish banks, however, has no end in sight. Since the market value of Irish banks shares reached a peak value of €59.44bn in February 2007; nearly two years later their market value stands at €1,65bn (Irish Times, 20 Jan). Years of speculation; extension of the Irish economic boom by means of credit, and huge profits ended abruptly at the end of September last year when the top executives of the Irish banks informed the government that they didn't have capital to face their liabilities.

The Dáil approved, on the 4th October 2008, the Credit Institutions (Financial Support) Bill 2008 in order to guarantee with €400bn the liabilities of AIB, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide and EBS building society. Later the guarantee was expanded to €500bn to cover some foreign banks operating in Ireland.

The Minister for Finance said that, “"Were liquidity to dry up in the banking system in the weeks ahead, the inevitable result would be economic catastrophe for this country." (Irish Times, 1 Oct 2008)

The crisis of the Irish credit system just followed the crash of the Irish housing market. House completions fell more than half in 2008, from 90,000 to around 40,000. The crisis in the housing market and the credit system triggered a generalised fall in retail sales and the money supply. The main consequence has been a sharp increase in the number of unemployed, which has reached 300,000 (8.3 per cent) and it is expected to get as high as 400,000 (or around 11 per cent) by the end of 2009.

On the other hand, the economy is expected to contract 5 per cent this year, which leaves Ireland as the country with the second worst recession in the EU after Latvia. In that situation and since the budget deficit keeps increasing as revenue decrease, the government plans to cut €2bn in government spending while BoI and AIB are going to get about €6bn.

Attacks on workers

Speculators and developers have played an important role in the extent that the crisis has reached and for nearly two decades made huge profits. But, while they get bailed out the workers must bear the sacrifices ahead. That is clear from the words of the Taoiseach, Brian Cowen:

“Those who are in employment [not just those who lost their jobs], whether in the private or the public sector, will also share the burden. A particular responsibility lies on those who have benefited most from the rapid growth of the economy over recent years, whether as investors, self-employed or employees. They are being asked to show solidarity with those who are less well off.” (Irish Times, 21 Jan 2009)

Apart for a reference to investors and self-employed in passing, it is clear that those who will have to show “solidarity” are the workers “whether in the private or the public sector”. But solidarity with whom? With the rich? Mr. Cowen tells us as well that the workers were the main beneficiaries of the past economic boom!

The €2bn in cuts are going to come mainly from pay cuts for workers in the public sector and for increases in of the contribution of workers to their pension schemes. IBEC, the employers group, has already let us know also that further pay increases agreed in the last partnership deal will have to be deferred, at least one more year, and the minimum wage cannot be increased. That statement means that also workers in the private sector will have to show “solidarity” with the wealthy.

The strategy of government and employers, according to John Fitzgerald (ESRI) (Irish Times 24 Jan 2009) should be, in the medium term, to lower wage rates in order to “substantially improve competitiveness as “the key to the restoration of full employment” after restoring “order to the domestic banking system”. They don't say a word about how employers and speculators are going to show their “solidarity.

Credit and crises

The banks role in the present crisis has consisted in increasing its magnitude. The Irish economic boom that started in the early 1990s came to an end in 2001 in the productive sectors of the economy. Capitals then shifted to more profitable sectors such as construction. Easy credit allowed a housing bubble to grow way out of proportion. The housing crashes and credit crunches that have followed in Ireland and in the OECD countries are not accidental or merely domestic problems. They are connected; because of the global tendency of the gap between real and fictitious capital to grow, and, ultimately, because of the anarchy of the market economy.

A tight regulation of the Irish housing market might have avoided the housing crash. But at what price? If billions had not been invested in housing in Ireland they would have moved elsewhere. There was no way to avoid the recession within the parameters of the market economy. Now, even right-wing governments are declaring that the credit system must be tightly regulated, but it is not clear how the regulation of the credit system is going to come about. On the other hand, the banks solely cannot account for economic crises. According to Marx, “what appears as a crisis on the money market in actual fact expresses anomalies in the production and reproduction process itself.” (Karl Marx (1978), Capital, V2, Penguin books, p. 393)

What can be done?

Credit, nevertheless, should play an important role in supporting and creating economic activity. A recovery plan for the economy that could benefit workers demands the nationalisation of all the Irish banks. Under public control and democratic scrutiny, credit could be allocated primarily to those economic activities aimed at creating jobs and improving living standards for all. The Credit Institutions (Financial Support) Bill 2008 didn't solve anything. If anything, it only delayed the crisis.

By the beginning of 2009 banks were lacking capital. The Anglo Irish Bank, shrouded in fraud, was the most affected by this lack of capital and the government decided to nationalise it. That nationalisation in its present form, however, means mainly passing bad debts to taxpayers.

After the government taking the risk of guaranteeing banks liabilities for over €400bn, it does not make sense to leave the banks in private hands, particularly when the total market value of the Irish financial system is below €2b. Recapitalisation of the banks on the back of taxpayers without their nationalisation is another way to postpone the final crisis of banks, taking all the risks but none of the benefits.

In order to restore some kind of order to the financial market in Ireland all banks must be nationalised. Considering the huge profits that these banks made during the past decades and their role in the present crisis, the government would be right to just expropriate them without any compensation. Yet, nationalisation per se is not enough. Banks, under public and democratic control, should primarily fund economic development, but on a different basis as stated above. The defence of jobs, equally, would require the nationalisation of the companies that cannot guarantee jobs, labour standards and wages. A way out of this crisis that would benefit workers and the majority of society, rather than the rich minority, demands measures very different to those proposed by the economists and politicians of the establishment.

Israeli Criminal Blitz on Gaza

UN SECRETARY GENERAL CONDEMNS

ISRAELI DESTRUCTION OF GAZA:

BAN KI MOON SHOCKED BY

EXTENT OF DAMAGE:

The United Nations Secretary General, Ban Ki Moon, last week, standing in the ruins of the UNWRA Building in Gaza, with the remains of Israeli phosphor shells still burning behind him, condemned Israeli attacks on Gaza civilians and expressed total shock at the extent of the damage caused to the people of Gaza, their homes and public facilities during the criminal onslaught of the Zionist forces invading the territory in the past two weeks.

The peremptory departure of the Israeli Army, following, apparently, a sharp-toned message from Washington that bombing of Gaza could not be tolerated while the new President of the USA, Barack Obama, was being installed on Tuesday, shows how cynical and murderous this whole episode has been with the Palestinian death toll now 1300+ and more than 5000 wounded, mostly women and children. The departure of Israeli ground forces has allowed the entry of international media to the devastated territory and if the world was shocked last week by the scenes of the bombing, it was nothing compared to the rising anger of millions of people worldwide when they were able to see the destruction wrought on a defenceless population by the criminal actions of the Zionist state; lawless, contemptuous of world opinion and the UN Security Council; ruthless in the pursuit of its political and military aims; risking wider conflict throughout the region and brutally disregarding of the human and civil rights of the population of Gaza.

The dreadful carnage unleashed by Israel will reinforce and consolidate worldwide opposition to their dirty deeds and give new urgency to the increasing calls for the total boycott of the Zionist state now being organised on all continents. The photos below show only a fraction of the evil-minded destruction perpetrated on the people of Gaza; they do not show the pain of families who have lost their sons and daughters, wives and husbands, fathers and mothers and the suffering of the thousands of wounded, some still awaiting treatment in devasted hospitals and medical centres.

BOYCOTT ISRAEL NOW!

Total boycott of economic, political and cultural links!

Send Israeli ambassadors out of Europe!

No Israeli aircraft or ships allowed in Europe!

Withdraw all EU aid for Israel; divert these funds to the

Reconstruction of Gaza!

FearFeasa Mac Léinn

Áth Cliath/DUBLIN, 25 Eanair/January 2008.

PS: FÁILTE – WELCOME to a new contributor; Francis P. Bowman.

FPB will write on political economy, international affairs; especially Latin America, and of course any other subject he wishes to inform us about.

FFML (Adminstrator).

UN HQ BOMBED WITH
PHOSPHOR SHELLS AS ISRAEL'S
WAR OF TERROR CONTINUES:

Israel’s bloody War of Terror against the defenceless population of Gaza scored a new low of barbarity on Thursday when the UN HQ in Gaza city was attacked with phosphor shells by Israeli invasion forces totally reckless of the lives and welfare of the UN staff and the 700 refugees, mostly women and children, sheltering there from Israel’s cruel and inhuman bombardment of everything in Gaza which they chose as their targets. Despite a UN Security Council demand for an immediate ceasefire and worldwide condemnation of their actions, the Israeli military and their political leaders in Tel-Aviv continued to show utter contempt for the UN, world opinion, and the suffering of the Gaza people in the worst onslaught on a civilian population since the depredations of the Nazi Reich in WW2.

ISRAEL LOSES POLITICAL BATTLE

Israel has lost the political battle as a result of this brutal warfare which makes their military actions redundant and massively counter-productive. Following the American tactics in the illegal Iraq war in 2003, the Zionist leaders banned journalists from the Gaza strip which meant the Western media in the US and Europe, usually their best allies, had nothing to show their viewers but Israeli propaganda spokespeople like Regev and Liebovicz with their cynical euphemisms for murder and mayhem, or, actuality footage coming from Palestinian cameramen and women showing the reality of Israeli war crimes and the devastating affect on the population of Gaza of these brutal and illegal attacks on themselves, their families, homes schools and hospitals by the latest weapons supplied by the US taxpayer. While Liebovicz was seen on television denying Israel’s use of phosphor shells in Gaza, her lies were accompanied by actuality pictures showing Israeli tanks and aircraft using these weapons. Score 0 for Zionist propaganda.

WESTERN HYPOCRISY IS TOTAL

Meanwhile, the spineless EU leaders continue with their rhetoric of condemnation but, have made no effort whatsoever to restrain Israel or impose any sanctions which they have the power to do, and as we have stated previously, these sanctions would be the only thing that would make the Zionist leaders take notice. Tomorrow, Saturday, Eanáir/January 17 has been declared International Boycott Israel Day by the worldwide Anti-War Movement and is a way in which ordinary people throughout the world can express their horror and disgust at the Israeli terror campaign against Gaza by identifying Israeli products in their own countries and organising a total boycott of such products. In Dublin tomorrow the campaign begins in the city centre, Dame Street, at 2pm and groups will attend at all the main shopping outlets where Israeli products will be identified and citizens asked to join the boycott. The campaign will later be extended to the suburban outlets. As boycott was invented in Ireland in the 1880's “Land War” where English landlord Captain Boycott was subjected to social and economic isolation which led to the eventual success of the Irish Land League, strong support is expected from the Irish public in this endeavour in defence of the human rights of the Palestinian people. The boycott of South African products by Dublin supermarket workers in the 1970’s was praised later by President Nelson Mandela as contributing to the defeat of Apartheid in his country. We have an excellent tradition to follow.

BOYCOTT ISRAEL NOW!

The Boycott of Israel is something practical and effective we all can participate in and bypass the inaction of the hypocritical US and EU leaders in failing to restrain their Zionist friends, and let the Zionists make no mistake, will be pursued relentlessly and effectively from now on whether there is a ceasefire in Gaza or not. They have roused the conscience of the world and they will now have to bear the consequences.

FearFeasa Mac Léinn

Áth Cliath/DUBLIN,16 Eanáir/January 2009.

View video of Dublin protest, 10.01.09, here: