Our National Debt

I am the co-founder and director of a small Irish start-up in the tech sector. A typical funding need for a company similar to  mine would be about 1 million euros to get the company off the ground. With funding of 1 million euros you could relatively easily get matched private funding, employ potentially about 20 people for a year (if we use the average industrial wage as a ball park figure) and grow the company significantly on a global stage.

If we do not tackle our national debt crisis and continue with the delusional notion that we do as we are told in Europe, it is going to cost us a minimum of 5 billion euros per annum to service the debt (that does not mean reducing it - just servicing it) from 2013 onwards. If we seek a second bailout then (which is a stark reality given the global economic crisis around us) this cost grows (the above core cost remains whether we take a bailout or not by the way).

5 billion euros is five thousand million euros. With this money a government could fund five thousand companies like mine for one year and generate the exact same in inward investment whilst creating 100,000 jobs i.e reduce the dole queues by about 20% whilst also reducing social welfare payments by the same amount. Together with increased tax revenue from employment these savings almost match the original 5 billion euros investment!

Instead, we are being told that continuing to pay off a debt that we cannot possibly pay off is the way forward for 'stability' for our economy. It is an insane argument with no logical basis of truth. Look at the figures - they are real. Look at the economic conditions we are in - they are real. Look at the fact that we are paying our bills with borrowed money. Things can only get worse if we carry on this way.

By voting no you give our politicians some opportunity to get a negotiation of bank debt onto the table. By voting yes you do not. In fact you throw away the single biggest bargaining tool to get the country out of the mess it is in.

Ireland has two options. Leave the euro zone and default on its debt. Or stay in the euro zone and renegotiate the debt. The latter is the better option because we are too small to go it alone. These two options have to be at the forefront of all government policy from now on. Everything else is a head in the sand perspective as a tsunami is approaching.

The bottom line is this: Ireland cannot pay back the debt we have taken on. We are bankrupt. We are only keeping our head above the water because we have borrowed money to pay our debts hence our debt is growing. This means its only a matter of time when we will default. Asking us to sign a treaty that asks us to sign into law some book keeping measures to keep our finances 'tidy' is a ludicrous notion given the state of our finances. Its pure folly to do this and shame on the government for scaring its population into thinking they have no choice. There ends democracy.

Why I am voting No this week

It has been ages since I wrote anything in this blog. I was actually hoping that the next article could capture some of the amazing experiences I have had in my new family sitiuation over the last year. Instead I am writing about the blooming referendum that the Irish people have to vote on this Thursday. Groan.

That said, I feel absolutely compelled to write this note because I don't know of anybody else doing the same (correct me if I am wrong so I can spread the word;)). It actually takes awhile to get all the figures together (something very few people seem to have these days) but once you write everything down you realise that voting 'No' is the only option the Irish people have this Thursday. The argument goes like this:

Ireland is bankrupt. Right now we are borrowing from the 'Troika' to pay off a 19billion euros deficit  (13% of GDP).

As we do this we increase our national debt. By end of 2013 our Debt/GDP ratio will be >120%.

The treaty we are about to vote on requires that a country keeps its deficit to 3% of GDP. By end of of 2013 we 'hope' that our deficit will be close to 9%.

Nothing in this treaty would have prevented the collapse (for many of the boom years Ireland ran a budgetary surplus).

The above figures (that assume we can get the deficit down to 9% by end of 2013) assume a staggering growth in our economy of 3.3% in 2013. It is far more likely that we will be in recession by then.

Carrying on like this will mean that AT LEAST 25% of all tax revenues from 2013 onwards will be used to service our national debt.

If it’s true that we cannot get ESM funding if we vote no to the treaty then Ireland will have to default – we will have to default at some point – remember we are bankrupt.

Given that Greece is in a worse situation than Ireland, is it conceivable that the EU will not allow us access funds just because we exercised our democratic right to vote no? 

If this is the case then we should not be in the EU in the first place.

The plan seems to be that 'over time' the economy will grow and thus we will outgrow our debt. There is zero evidence globally that large scale growth is on the horizon. Couple that with rising energy costs and you see the folly in this approach.

So could somebody tell me why would you vote yes to a treaty that limits your ability to manage your own sovereign finances and writes these limitations INTO LAW (so that we can be penalised if we fail to reach the targets and clearly that’s what’s going to happen)? This means austerity ad infinitum. It is akin to whipping the flock before they go over the cliff.

Ireland has only one option right now and that is to have its debt renegotiated. This treaty is the one chance the country gets to get that on the table. If you vote yes you lose that chance and the country goes over the cliff - that’s a certainty – just look at the figures. If you vote no you get a chance to negotiate – that’s an uncertainty but far better than the certainty this present government is inflicting on its people.