Und morgen wird die Sonne wieder scheinen

Trichet reiterates opposition to Irish debt restructuring – The Irish Times – Tue, Feb 08, 2011

EUROPEAN CENTRAL Bank (ECB) chief Jean-Claude Trichet has reiterated his opposition to any debt restructuring by Ireland, saying the terms of the EU-IMF bailout plan for the State have been approved by “the entire world”.

The world according to Trichet, of course. This world does not include the broad mass of people living and working in Ireland because, quite simply, they are not part of his concern. It doesn’t matter to him what level of unemployment there is in Ireland, or what sort of burden the EU-IMF crackpot plan imposes on ordinary people: what matters is maintaining the stability of the financial system.


They (the plans for the population to pay for bondholder losses) have to be implemented and I expect that the working assumption of the international community, not only the European, according to which they will demonstrate their capacity to adjust, after having behaved in a very improper manner, will be progressively convincing.

Marx is often misquoted as saying that the State was the executive committee of the bourgeoisie. What he actually said was that the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie. Still, this does not detract too much from the old joke that ECB stands for Executive Committee of the Bourgeoisie.

Why does the ECB exist anyway? Short answer: price stability, or controlling inflation. It is presented to the population as a collection of objectively-minded, mildly obsessive technocrats who survey the broad sweep of economic activity and make adjustments here and there in order to keep the gears of that divine system of industry and trade, known as the common market, nicely oiled. But that is not the full story.

The real effect of ‘Reaganomics’ | Dean Baker | Comment is free | guardian.co.uk

To take the most obvious example: fighting inflation has come to be seen as the holy grail of central banks – a policy that it is supposed to be outside of the realm of normal political debate. On slightly more careful inspection, the inflation-fighting by the Fed and other central banks is actually a policy that is designed to ensure that the wages of ordinary workers do not grow too rapidly.

For Baker, the question is how the debate is framed. The claims to inflation-fighting are part of the rules that redistribute income upward. He is talking about America, but the insight applies here too:

As long as progressives ignore the rules that are designed to redistribute income upward, they will be left fighting over crumbs. There is no way that government interventions will reverse a rigged market. For some reason, most of the people in the national political debate who consider themselves progressive do not seem to understand this fact.

What happens when the ECB raises interest rates, as it surely will sometime soon?

When central banks jack up interest rates to tame inflation, the CEOs at Goldman Sachs and JP Morgan won’t be out on the street. The people who lose their jobs will be factory workers, store clerks and other less privileged workers. Raising unemployment among the group of less educated workers keeps their wages down. In other words, controlling inflation is about making sure that the wages of less educated workers don’t rise relative to the wages of more educated workers. And the central banks have a licence to push as hard as they like in this direction.

Incredibly, the vast majority of progressives go along with this central bank squeeze. They accept the absurd notion that this upward redistribution by the central banks is simply apolitical monetary policy and agree not to criticise the central bank.

See that? When a central bank ploughs forward with its inflation-busting remit, and when leftists turn a blind eye to why it is doing this, it remans unseen as a powerful instrument for class war.

In Ireland, the class dimension to the European Central Bank’s operations is ignored. First, because the media denies class exists. Second, because there is a conscious identification, on the part of business, policy and media elites, with the supposedly cosmopolitan nature of European institutions, including the European Central Bank. This they contrast with the supposedly insular outlook that comes from the essentially backward, parish pump nature of Irish institutions.

The second factor has to do negative projective identification on the part of these business, policy and media elites, who need the idea of an insular xenophobic rabble, because they want to present themselves as occupying a position of command, even when they may well feel a sense of anxiety themselves, since they consider themselves very small fish in a very big pond. And so they present the European Central Bank as a benevolent uncle, giving the wayward Irish a dig-out.

There are all sorts of patent absurdities in play when politicians talk about the European Union. Consider Brian Lenihan’s claim, when pressed on the idea that Ireland had lost sovereignty on account of the EU-IMF bailout, that in fact, Ireland had long ‘pooled its sovereignty’ with other countries in Europe.. The obvious question to pose, faced with this answer, ought to have been when precisely the people of Ireland will get their go at managing the affairs of France and Germany.

Consider also when there is talk about ‘our European partners’. The ‘par’ bit of the word ‘partner’ implies equal, as in primo inter pares. Strangely, the newspapers seldom talk about Brian Cowen in the same breath as Sarkozy and Merkel when it comes to the most powerful actors on the European stage. But how could this be? Is Brian Cowen not the equal of M. Sarkozy? Short answer: no. Everyone knows this- that is why they wet themselves with laughter at the idea of Enda Kenny stcking it to Sarkozy and Merkel.

There is also the idea of Ireland punching above its weight in Europe, in the manner of a featherweight pugilist with a fierce left hook: Barry McGuigan in the form of a state. And then there is the idea of Ireland as canny poker player, last put to good use in the EU-IMF bailout negotiations by Batt O’Keeffe – I suggested shortly after on #budgetjam that:

The Irish government had taken on the mantle of The Gambler in the Kenny Rogers song: it was a matter of knowing when to hold ’em and when to fold ’em. When the government folded a week later, shovelling the contents of the National Pension Reserve Fund into the state’s banking furnaces, it was The Coward of The County’s ‘twenty years of crawlin’ that seemed more appropriate.

The Gambler/Coward of the County dyad, if you will, dominates the way Ireland’s relations with European institutions are portrayed. On the one hand, you have the idea that the country is locked into a game of wits with the ECB etc and there is one last ace held up the country’s sleeve, some means of turning the tables and leaving the Eurocrats ashen-faced. On the other, European institutions stand poised to crush even the most minor act of lèse majesté.

The other morning on RTE I heard a panel discussion on the Marian Finucane show. The panel included economist Tom O’Connor and -like they used to say about PUP members, the man understood to have an insight into IMF activities, Donal Donovan. O’Connor -whose proposal to my mind seemed eminently reasonable- was continuously interrupted for attempting to suggest that Ireland ought to borrow money for investment activities and that  there was a need for a negotiated political solution, involving other EU countries, to the burden created by the EU-IMF bailout. Donovan at one stage told him that his loose talk was dangerous, and levelled the accusation of “populism”, as opposed to his own ‘pragmatism’, which entailed shouldering the full burden of repayment wth one’s mouth shut, lest the powers that be decide to inflict great vengeance and righteous anger.

In the Irish Times today there is another example of this ‘loose lips sink ships’ line of thinking:

The Irish Times – Letters

Madam, – Eamon Gilmore’s remark regarding the EU/IMF bailout deal (Home News, February 4th) that “It’s Frankfurt’s way or Labour’s way” strayed too far into the territory of jingoistic campaign hyperbole. There is strong competition in this election for typically left-wing votes from Sinn Féin and United Left Alliance candidates who campaigned against the Lisbon Treaty, so there may be a temptation for Labour Party candidates to also hint at Eurosceptic views. Mr Gilmore’s comment certainly seems in line with such an attitude and clearly communicates an overtly negative connotation regarding the influence of European policymaking in relation to Irish affairs.

While there seems to be a widespread desire to revisit the terms of the bailout arrangements, this does not justify such undiplomatic use of language. The Irish negotiating position in the EU is extremely weak due to the economic crisis and its fallout. It does not need to be worsened by having a future senior minister – as Mr Gilmore hopes to be – making a statement with the potential to adversely affect goodwill regarding one member state in particular. Mr Gilmore should immediately apologise for going overboard in the manner of his rhetoric. – Yours, etc,

The Coward of the County talk on display here, this don’t-let’s-be-beastly-to-the-authorities sentiment is quite remarkable, and points up just how supine Irish public opinion can be.

Even though Gilmore’s rhetoric will not be backed up by substantal action, and even though ‘Frankfurt’ is more a metonym for the European Central Bank than one for Germany, any politician that sought to represent the interests of the population in Ireland -and workers across Europe- would be completely justified in pointing the finger at successive German governments,
and German banks.

It is not just that German banks loaned outrageous sums to Irish banks, an act for which the Irish population bears no responsibility whatever: it is that the policies pursued by successive German governments -which has resulted in German workers getting paid much less than what corresponds to them on account of their high productivity- has kept German domestic demand low. The German government shows no sign of any inclination to reflate the German economy, raising German salaries and thus raising German demand for imports and stimulating the European economy. It prefers to see further wage cuts in the PIIGS countries, plunging these countries into even deeper recession.

Not only that, but Germany is seeking the application of a ‘debt brake‘, whereby countries would introduce constitutional changes thus limiting the size of their budget deficits, in imitation of their own ‘balanced budget’ constitutional amendement. According to yesterday’s Irish Times editorial, both Fine Gael and Labour have, remarkably, expressed approval for this idea.
As I pointed out on Cedar Lounge yesterday, here’s what Wolfgang Munchau had to say at the time of Germany’s ‘balanced budget‘ constitutional amendment, which is basically what the Germans want for the rest of Europe:

‘Anchoring the stability law at the level of the national
constitution is an extreme measure – like locking the door, and
throwing the keys away.’


While the balanced budget law is economically illiterate, it is also
universally popular. Average Germans do not primarily regard debt in
terms of its economic meaning, but as a moral issue.


The balanced budget constitutional law is therefore not about economics.
It is a moral crusade, and it is the last thing, Germany, the eurozone
and the world need right now.

Yet there is seldom any direct criticism of the German government in Ireland. You would think such criticism might be a good idea, seeing as it is complicit in the destruction of the fabric of Irish society (pointing the finger at Germany should not, of course, let anyone else off the hook). The fear among Irish opinion makers is that remarks such as that of Gilmore’s will show the side up. Here is what Irish Times resident right-wing economist Dan O’Brien had to say:

The content and tone of Gilmore’s introductory remarks were
reminiscent of speeches to a British Conservative party conference on a
day of especially heightened Eurosceptic fever.

Gilmore is a
serious and intelligent man. He was neither of those things yesterday.
Utterances made in this campaign will echo far beyond this country’s
shores in a way they have never done in previous campaigns. They could
have serious consequences. It is to be hoped that he tone down this

On the contrary, if any sort of awareness of how European institutions -as instruments of class power- are shafting the Irish population is to be formed, this sort of message must be amplfied tenfold, and hundredfold.

Elite opinion will seek to portray basic statements of worker solidarity as xenophobia, ‘Euroscepticism’ and loose lips sinking ships. The function of ‘Euroscepticism’ in this context is similar to that of the accusation of ‘anti-Americanism’ when the policies of the United States government are criticised: it is a means of stifling dissent and of glorifyng the power of the corporate state. We should know by now that this has everything to do with looking after their own narrow national class interests and zero to do with the advancement of a European-led universalism.


6 Responses to “Und morgen wird die Sonne wieder scheinen”

  1. 1 Pope Epopt February 10, 2011 at 8:37 pm

    A good and timely article Hugh, and I can’t disagree with most of it.

    I can’t realistically envisage Germany being able to generalise their insane conversion of an obsession with deficit limits into constitutional law across the EU. I just don’t see other member countries going for anything other than (possibly) a watered down policy, which will quickly be ignored when push comes to shove.

    As for:

    the supposedly insular outlook that comes from the essentially backward, parish pump nature of Irish institutions.

    Not supposedly, they are insular and backward. Along with the institutions of other EU countries. Most EU policy is made by insular and backward national governments jockeying for advantage at that level.

    Meanwhile the owning and lobbying elites operate on a different scale, and are indeed cosmopolitan; but not in an Enlightenment ‘citizen of a world culture’ kind of way, but more the ‘I’ll take my money wherever I can extract most profit/rent and be subject to the lowest rate of tax’ fashion.

    Consequently, they can only be countered on the same scale, with plenty of the European-led universalism that you mention. Local (which means national, these days) resistance, will only have effect if coordinated across an economic block. More members of the EU will be ‘encouraged’ to guarantee private losses, to stave off the moment when the globalised banking system implodes under the weight of its unrepayable and unservicable debts and securitisation. Common cause can be found with the widening pool of European citizens who suffer for this fiction.

    • 2 Hugh Green February 11, 2011 at 12:20 am

      Cheers Pope, and thanks for the comment. I think you’re right – it is too crackpot for other states to contemplate, even if the ground is more fertile than ever for it, what with the obsession with deficits.

      The ‘supposedly’ bit was badly phrased and I agree completely with what you’re saying. I was trying to describe the self-serving attitude toward both sets of institutions among these groups, but it didn’t come across that well.

      Agree 100% on the last point. I think more needs to be done to emphasise the potential effectiveness of the co-ordinated resistance you’re talking about. When you think about it, there is every incentive for ruling elites in each EU member state to imbue the crisis of capital with a national character. And so you have this kind of inwardness fostered in the population, where they are diverted to think about reform, better regulation, cleaning up the political system.

      I was in Spain in December and January and it was simply remarkable to hear how exactly the same talking points on radio and television that you hear in Ireland were being offered up there – “we” have to be more competitive, the political system needs radical reform, etc etc. So I think it is fast becoming the duty of leftists to kick against this, engaging in local resistance of course, but doing so with a more strident outward approach to confronting these states and institutions. Burning effigies of the European Central Bank board, that sort of thing. OK, maybe not the ECB board, but hopefully you know what I mean.

  2. 3 Pope Epopt February 11, 2011 at 10:37 pm

    I was just thinking – as a result of the CPI leaflets advocating repudiation of the private bank debt that the Irish state has taken on, and is now (thanks to the masterly ‘switcheroo’ – as Michael Lewis outlines in hist Vanity Fair article) largely owed to the ECB – what would happen to the country that repudiated those debt.

    I suspect that, were they alone in this, the Irish state indeed would be severely disciplined, and left to the tender mercies of the bond markets, pour encourager les autres. The bogey-man held up by most media commentators would come to pass, the state would run out of cash, and consequently all social services and public pay would indeed vanish.

    However, if two or three countries repudiated debts (and I know these debts differ – none of them include such a high proportion of blatant transfer of private risk to the public as Ireland) in a co-ordinated manner this would force the EU authorities into a more systematic response and with luck significant writing down of debt; with the consequent loss of influence by finance capital and easing of debt peonage, and loss of nominal wealth of the rich. Pension funds may get further screwed in the process but their benefits are largely fictional by now.

  3. 4 John mcdermott February 11, 2011 at 11:19 pm

    There is always the unthinkable..default and leave the Euro.
    How is Iceland faring nowadays?

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