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So Fear triumphed over Anger and the Irish referendum on the Stability Treaty was passed by a "resounding" 60:40 margin on a 50% poll - more or less as predicted by the opinion polls and close to the average turnout for similar stand alone referenda in the past. Not much of interest here; time to move on to the Greek elections and Spanish banking crisis if the MSM are to be believed.

The government has been quick to spin the result as an endorsement for its austerity strategy and as a positive message to send to the rest of Europe (and the global investment community) of Ireland's unequivocal commitment to the Euro. Sure, there have been the usual noises about the need to promote a growth strategy for Europe and to revisit the "sovereigntising" of private banking debt and the hope that any new strategy devised for Spain involving more direct European bailing out of Spanish banks will be retrospectively made available to Ireland.

Quite how a YES vote was meant to advance that agenda is less than clear. German responses to Irish pleas have already been dismissive: Revisiting the sovereigntising of Irish banking debt would send out a"negative signal"apparently...
Kenny admits immediate bank debt deal unlikely

...but senior German officials dispute Mr Kenny’s interpretation of Ireland’s fiscal treaty vote as a “message to European Union leaders” for a “just” debt deal. “We see no need for movement at the moment,” said Martin Kotthaus, spokesman for finance minister Wolfgang Schäuble.

Indeed. The German Government clearly knows what the Irish people are thinking better than the Irish Government itself...

When you consider that, of the major parties, only Sinn Fein (with an historical max of 10% of the national vote at the last election) advocated a NO vote, then the 40% NO vote can be put into more perspective. Essentially almost 30% of the electorate abandoned the party line of the parties they generally support and voted NO. Little wonder that Sinn Fein more than doubled it's support (to 24%) in opinion polls taken after the referendum.

However it would be a mistake to regard Sinn Fein as Ireland's answer to the Greek Syriza party. Sinn Fein didn't advocate tearing up the Troika agreement or defaulting on national debt. Their line, as usual, was that the Government had failed to negotiate a good deal, and that any agreement to the Stability Treaty should only be done in the wake of agreement to a more comprehensive European growth and bank recapitalisation plan. As a negotiating ploy, it is hard to fault the strategy, and even conservative independent TD (Member of Parliament) Shane Ross argued for a postponement of the referendum pending a more compressive agreement on bank recapitalisation and growth for Europe as a whole (and Anglo Irish bank promissory notes in particular).

Even the yes side is agreed that most of their voters voted yes "through gritted teeth" acknowledging that "certainty" over access to ESM funding and the safeguarding of FDI to Ireland were essential to Ireland's national interest even if the Stabity Treaty was clearly a bad Treaty when viewed from the perspective of Europe as a whole. As my own local (independent) TD, Stephen Donnellyput it: The Treaty is clearly an economic nonsense, and Ireland would be doing Europe a favour if we rejected it. But Ireland's own narrow national interest is that we pass it so as to reinforce certainty of access to ESM funding, confidence in Ireland's commitment to the Euro, and continued FDI inflows into Ireland which appear to be enabling a very fragile stabilisation of Ireland's economy despite drastic government austerity measures and collapsing consumer confidence.

And so the European house continues to be built on sand, and with an increasingly reluctant and cynical attitude to the European project. The Irish elite, as exemplified by Irish Times editorials was rabidly in favour of the Treaty: How else would we continue to pay Doctors, Nurses, Teachers, Gardai and social welfare benefits if we didn't have access to the ESM? Little mention was made of the fact that our problems in this regard would be much less had we not first bailed out foreign creditors to private Irish banks. Or even of the fact that it makes little sense to refer to "Irish Banks" in an integrated single European market for financial services where light touch regulation was a feature at BOTH Irish and European levels.

I will leave the last few words to Fintan O'Toole:Yes vote an expression of grim fatalism

Here we see the deep strangeness of contemporary Irish politics. In a normal world, if people don't believe the Government, they vote against it. But in the topsy-turvy world we currently inhabit, people voted for the Government line precisely because they don't believe the Government. If people did believe what Michael Noonan had told us - that a second bailout is a ludicrous and inconceivable notion - the main argument for a Yes vote would have collapsed.

The Yes campaign had effectively stopped trying to argue that the treaty, as a response to the euro zone crisis, had any intrinsic merits. The only real issue was, as one voter quoted in a vox pop put it so succinctly, "I am going to vote Yes because we need the money and I don't see us getting it anywhere else". This is the surreal state we're in: people voted Yes not in spite of their belief that Government is bullshitting when it says a second bailout is ludicrous but because they believe it is bullshitting.

This is not "a loud expression of confidence in the Irish economy", it is a loud expression of the belief that the Irish economy is likely to be on life-support for at least the rest of the decade. It is not "another reminder that Ireland is dealing effectively with its problems", but an expression of grim fatalism. People, by and large, do not believe the policy of austerity for the poor and lavishness for dead banks (what should we call it - banksterity? austravagence?) is leading either to economic growth or to a restoration of sovereignty.

And there is a clear reason for this: people are not eejits. They know that the EU expects Gross National Income to decline by a further 1.3 per cent this year, with private and public consumption continuing to fall. They can read the figures that show that long-term unemployment (the really toxic kind) increased by 7 per cent in the last year.

They know that only large-scale emigration is keeping youth unemployment from reaching catastrophic levels. They know that the domestic economy, on which the vast majority of Irish employees depend for their jobs, is still shrinking. They know the Government is still committed to burning almost as much money every year on promissory notes for Anglo Irish Bank and Irish Nationwide as it is taking out of the economy in cuts and extra taxes. They know that the political and governance systems that created this mess remain largely unreformed. If this is evidence "Ireland is dealing effectively with its problems", it is difficult to imagine what ineffective policies might look like.

This delusional talking-up of the state of the country wouldn't matter so much if we could put a cordon of silence around the island. But what are our European partners to make of our pleas for help when we keep saying "ah but sure we're doing grand really"? Or is it that the Government feels there's no danger because it knows that no one believes what it says anyway?

Originally posted to Frank Schnittger on Wed Jun 06, 2012 at 03:02 AM PDT.

Also republished by Shamrock American Kossacks and Community Spotlight.

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Comment Preferences

  •  Tip Jar (17+ / 0-)

    "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

    by Frank Schnittger on Wed Jun 06, 2012 at 03:02:34 AM PDT

  •  Oh you just don't get it. (2+ / 0-)
    Recommended by:
    Frank Schnittger, notdarkyet

    We're all going to save more money. That's a good thing, right? And we're going to have pro-growth policies so that we all make more money. That's good too, right?

    You say how can anyone make more money when everyone is saving money? You don't understand the magic of the free market.

    Neither do I. Do you believe in magic?

    We're fools whether we dance or not, so we might as well dance.

    by PowWowPollock on Wed Jun 06, 2012 at 03:26:17 AM PDT

  •  This reflects (6+ / 0-)

    the vote in Wisconsin which, from what I read in diaries about it, seemed to reflect a fear of instability rather than an endorsement of Walker's positions.
    I wish I had had your diary as a reference yesterday when I posted this comment as a response to gjohnsit's diary about Spain here.
    You have outlined the position of the Irish much better than I did.
    People are not voting for their best interests, they are voting against torches and pitchforks.

    "There's a crack in everything; that's how the light gets in". Leonard Cohen

    by northsylvania on Wed Jun 06, 2012 at 03:29:49 AM PDT

    •  And how many people couldn't be bothered (2+ / 0-)
      Recommended by:
      Frank Schnittger, notdarkyet

      to vote in Ireland?  The majority didn't see the point either way.  I imagine that there's a bit of fatalism there in regards to the fact that every time a vote on the EU fails to go the EU's way they just re do it until it does go their way.  Why bother voting no if you know that's going to be undone months or years down the line.

      There revolution will not be televised. But it will be blogged, a lot. Probably more so than is necessary.

      by AoT on Wed Jun 06, 2012 at 11:30:50 AM PDT

      [ Parent ]

  •  Eventually, the money managers (8+ / 0-)

    (banksters) are going to have to recognize that currency is worthless.  That's true, not because money is now made out of paper (which grows as trees) or composed of electronic blips, but because money is a figment of the imagination, an icon, if you will, which represents value but has no intrinsic worth.  In that, money is like the scripts we use to write and communicate.  That reading and writing skills also used to be reserved to an elite cadre of society is not coincidental.  Rather, it is evidence that the transfer/transaction of information and material assets has always been targeted for control by humans who have little or no personal skills to sustain themselves.  That is, there have always been human parasites/predators who need to exploit others by sitting at the nexus of trade and exchange and claiming a "cut" for themselves. The invention of currency makes it easier for them to assert a claim simply because the currency is not worth anything.
    We need to keep in mind, in the interest of not being intimidated by monetary wealth, that none of the Kochs' billions are fit to eat.  If nobody sells them lunch, they won't eat.  It's a good bet that their lawns don't even grow dandelion greens.

    How much longer can the banksters pretend that money is worth something?  As long as we let them.

    People to Wall Street: "LET OUR MONEY GO"

    by hannah on Wed Jun 06, 2012 at 04:05:37 AM PDT

    •  Most money creation (7+ / 0-)

      is not even in the form of cash, but in the form of credit issued ex nihilo by private banks (who only have "real assets" to cover a small percentage of the credit created).  You need to google and read about Modern Monetary Theory if you have a deep interest in this subject. I suspect their concepts of inflation as a tax on wealth and taxation as a means of retiring excessive money from the economy would blow your mind. The popular neo-liberal notions that Governments have to borrow money and to 'balance their books' is revealed as the bullshit it is when you realise that, ultimately, only Governments can print money and a degree of inflation is actually a good thing if you want to transfer wealth from the asset rich to the asset poor.

      For every Government deficit there is a private sector surplus and if Governments rein in deficits they are only depressing the economy by making it impossible for the private sector to make surpluses=profits. That is why GOP Governments always run huge Government deficits (the opposite of what they say in opposition) because they want their friends in the private sector to be able to make big profits.

      Dick Cheny said "deficits don't matter". He was right if the only objective is to facilitate a more profitable private sector. For every debtor there is a creditor  and the purpose of Good Government is to ensure that debts don't become unsustainable and that the distribution of wealth is equitable (which also happens to be more efficient - more unequal advanced economies tend to be less efficient).

      So yes, money is intrinsically worthless and valuable only insofar it is accepted as a claim over scarce resources. Printing money doesn't necessarily create more scarce resources but it can improve the equity and efficiency of access to them.

      "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

      by Frank Schnittger on Wed Jun 06, 2012 at 05:11:48 AM PDT

      [ Parent ]

      •  I do visit Mosler's blog (3+ / 0-)

        The Center of the Universe regularly and comment from time to time.  He's an heir of Galbraith. Mosler's emphasis is slightly different because of his history in investing and a lingering commitment to the notion that the economy ought to be controlled by someone.
        I'm more inclined to be satisfied with just countering abusive behavior such as fraud and cheating.  Proving fraud is difficult in an environment that's committed to the proposition that "consent" even when fraudulently obtained is enough to render abuse innocent.

        People to Wall Street: "LET OUR MONEY GO"

        by hannah on Wed Jun 06, 2012 at 05:41:49 AM PDT

        [ Parent ]

      •  This is Ron Paul crazy stuff....which also borders (1+ / 0-)
        Recommended by:
        Roger Fox

        on arch-conservative monetary theory.

        Gov't. deficits at a time when private investment is lagging is a quick way to re-inflate (a good thing) a depressed economy. Once that aggregate demand is revived, the private sector will re-invest because there is more employment, more demand for Goods and services and government will then be able to reduce the deficits.

        If you understand that demand begets supply and not the reverse, you can understand how credit creation through managed government deficits (preferably spending on those who have a high propensity to consume with an additional dollar) will contribute to a recovery of private investment.

        Private investment won't happen or will lag until Demand generates opportunities to gain a return on that investment.

    •  Love this hannah (1+ / 0-)
      Recommended by:

      "sitting at the nexus of trade and exchange and claiming a "cut" for themselves".  That is essentially what has happened.  It is fear and intimidation for producing nothing for the people beyond their ability to pay protection money.  Walker in WI is the same story.  Where is Robin Hood to fight the corrupt sheriff?  At least Walker had to stand for recall.  In CA we had "blackouts for blackmail" or basically the same thing.  The scams are not only big-time, but people buy into them thinking maybe the sheriff will toss a crumb their way.

    •  So you're ok with Ron Paul's gold stuff then? (0+ / 0-)
  •  Who understands what is at stake? (2+ / 0-)
    Recommended by:
    FishOutofWater, northsylvania

    Is there an intellectual position of political economy that can make a case for what has happened and what is needed? This holds both in the USA and in Europe.

    What kind of politics is needed?

    I thought that the super human effort in Wisconsin would lead to a recall of Scott Walker.

    The article in the Guardian did point out that the writer never understood what the other candidate stood for.

    Tom Barrett was the John Kerry of Wisconsin. In the five days I've been reporting from the state I have yet to meet a single person who voted for him as opposed to against Walker. In the end this was just not enough. His failure to give some vision for what Wisconsin under his stewardship would look like could not win over the coveted independents or sufficiently inspire his base.
    When it came down to it, the people of Wisconsin wanted more than the absence of Scott Walker. They wanted the presence of an alternative
    •  I like to think that the citizens (2+ / 0-)
      Recommended by:
      Frank Schnittger, LillithMc

      understood that the responsibility for the mismanagement lies with the legislature.  So, they handed the Senate over to the Democrats.
      A chef can only cook the ingredients he's got in the larder.
      The austerity being promoted by legislators is largely artificial, designed to show the citizenry who's the boss.  If citizens insists on asserting their authority, then there will be a change.  Government by the people is still in its infancy.  It's only 40 years since all adults got the franchise and males could no longer be dispatched at the whim of their elders to die in wars.  Though the potential for the latter still exists in the obligation to register for the draft.

      People to Wall Street: "LET OUR MONEY GO"

      by hannah on Wed Jun 06, 2012 at 04:38:13 AM PDT

      [ Parent ]

    •  It's called social democracy (3+ / 0-)
      Recommended by:
      Roger Fox, LillithMc, notdarkyet

      and it operates where only the people have a vote and corporations are regulated in return for the privileges of limited liability they receive under the law. Corporates giving money (or advertising) to promote the political interests of their owners are regarding as committing bribery and defrauding their customers and shareholders for using their funds for purposes for which they weren't intended.

      Its not rocket science. Where in the constitution is money equated to free speech?

      "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

      by Frank Schnittger on Wed Jun 06, 2012 at 05:22:52 AM PDT

      [ Parent ]

  •  I'm not sure how Ireland and Greece move (1+ / 0-)
    Recommended by:
    Roger Fox

    forward unless they are willing to correct some of the practices which led to this crisis. If they don't, then Germany and others will abandon them and that will be disastrous for them -- a decade-long Depression as investors pull out.

    I'm not saying severe austerity is acceptable either because that also leads to a decade-long depression. However, there has to been short-term stimulus and "bailout" with medium-to-long-term correction of the public budgets which can't be sustained.

    Kind of familiar, huh?

    •  Maybe Germany (0+ / 0-)

      is already disastrous for them.  They have lost control of their money and in many ways their democracy.  While they can pretend to play the game, the smart ones will organize under cover and take control of their lives as best they can much like the Democrats did in WI.  Not surprising the IRA said to vote against the agreement.  They know how the system works.

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