How can the ordinary person make any sense of what is happening to this country when the so-called experts – the economists, analysts, central bankers, regulators and senior civil servants – don’t seem to be able to agree about what caused our financial melt-down, let alone workable solutions?
The government says everything is under control, that we don’t need to seek emergency aid from the IMF/ECB rescue fund (which would be the equivalent of a sovereign default) and that its four year master plan to cut billions out of our day to day spending will work. We the people, say the government, (even though ‘we’ were never consulted) will repay all ‘our’ debts (€150 billion and rising) no matter how large, no matter how long it takes.
Last Friday’s statement from the five big members of the EU that they will save bondholders from an Irish default, soothed the immediate fears of the bond markets. The Irish bond rate fell back to 8%, though rumours then started that talks had begun with the ECB/IMF about the aid.
Events are moving quickly. They may very well have changed by the time you read this. Should you be worried? What can any of us do?
First, the (albeit reluctant) vote of confidence in us by the Germans, French, British, Italians and Spanish at the G20 meeting in Seoul, has much to do with the expectation that the December budget will be passed.
We all know what €6 billion worth of spending cuts and higher taxes means: people who have income and savings will have to spend more of it to pay for services like education, healthcare, transport, local authority services. Social welfare and universal benefits will undoubtedly be reduced. We can only hope that the spending on quangos and other useless government activities will also shrink, even if the ring-fenced €20 billion public service pay bill, does not.