Workers Pay €50 Billion for Bankers’ Gambling Debts


In September 2008, Twenty-Six County minister of finance Brian Lenihan announced his government’s plan to offer a blanket guarantee to the state’s private banking system.

The guarantee covered customers’ deposits and the banks’ own borrowings and included a guarantee for international bondholders amounting to a total of €440 billion [£384 billion]. The decision to offer a blanket guarantee followed panic amongst the Twenty-Six County state’s banking elite as bank share prices plummeted and Anglo Irish Bank experienced a run on its deposits. The bank guarantee, supported by all of the political parties in Leinster House with the exception of Labour, effectively tied the state’s finances to the vagaries of international markets and bailed out bankers and developers who accrued obscene profits during the decade long property boom.

Exactly two years later, the full cost of that reckless and treasonous decision has been revealed. The gambling debts of Twenty-Six County bankers have come to a staggering €50,000,000,000 [£44 billion] and it is workers who are expected to pick up the tab. The final bill amounts to one and a half times the state’s entire tax take of €33 billion [£29 billion] last year.

Anglo Irish Bank, the plaything of the Ireland’s property developers, which was nationalised in January 2009, will alone cost between €29 and €34 billion [£25-30 billion], while four other financial institutions make up the remainder of the €50 billion bailout: Allied Irish Bank, which has now been nationalised, will cost €6.5 billion [£5.7 billion]; Bank of Ireland’s bill comes in at €3.5 billion [£3.1 billion]; Irish Nationwide Building Society, whose chief executive Michael Fingleton escaped with a pension of €27 million, a relatively small player, will cost an astonishing €5.4 billion [£4.7 billion], while EBS Building Society makes up the remaining €350 million [£305 million ].

The socialisation of the losses in the private banking system has created a budget deficit of some 34 per cent of GDP and has hitched the future of the people in the Twenty-Six Counties to parasitic international financial investors. In October 2008, Brian Lenihan claimed that the bank guarantee scheme was “the cheapest bailout in the world”, comparing it favourably to bailouts in Britain and the United States, where he suggested that “billions and billions of taxpayers’ money are being poured into financial institutions”. It is a reflection of the paucity of political analysis in the Twenty-Six Counties that large sections of the establishment media laud Lenihan as a competent minister.

Following Thursday’s announcement of the alleged ‘final figure’, the Dublin government moved quickly to heap the burden of the bank bailout upon the shoulders of the working class, who now face four consecutive years of austerity budgets.

Under the European Union Growth and Stability Pact, member state budget deficits cannot go beyond three per cent of Gross National Product and the EU is demanding that this target be reached by 2014. Last year’s €3 billion of budget cuts was merely the opening salvo of the class war and it is clear that, this year, the working class will face yet another onslaught, with a further €4 billion to €5 billion in cuts expected, which will be followed by further savage cuts in 2012, 2013 and 2014.

The battle lines have been drawn: in order to satisfy the insatiable demands of international investment markets, the Dublin government and its allies in big business expect the working class to pay for the greed of the business class. In their demands for public sector cuts, wage reductions and the privatisation of public assets, faceless international bondholders are dictating the future of the Irish people. The notion that the population in the Twenty-Six Counties exercises sovereignty has been exposed for the lie that it is.

That the Dublin government slavishly follows the diktats of the private market demonstrates that democracy under capitalism is a fallacy. In order to satisfy private profit demands, the Irish working class is expected to accept a further reduction in their living standards and to tolerate chronically reduced health, housing, education and welfare services.

Employers group IBEC has been quick out of the traps, arguing for a pay freeze until at least 2013 and calling for the abandonment of the minimum wage, which is currently set at €8.65 [£7.54]. Meanwhile, public sector workers who have consistently been the target of vitriolic attack from right-wing hacks in the Sunday Independent are once again in the firing line.

William Slattery, who served as a member of the board that devised the infamous McCarthy Report and is managing director of one of the world’s leading international investment banks, State Street, which had declared assets in 2009 of US$12.7 trillion, has called for 30,000 public sector jobs to be slashed. This from a man whose company benefited from the US Treasury’s $140 billion bailout in 2008 and yet was able to pay its CEO Richard Logue a bonus of $29 million.

It seems increasingly clear that investment bankers will attempt to dictate the terms and conditions to workers in Ireland. Another of this contemptible elite, Peter Sutherland, chairperson of Goldman Sachs International, a subsidiary of investment bank Goldman Sachs, has claimed that wage levels in the Twenty-Six Counties were not ‘benchmarked’ to other EU states and argued that €3 billion in budget cuts were necessary, even if they caused some pain. The former EU commissioner has become a regular feature in the Irish media in recent weeks, adding his voice to the growing clamour from the business class that workers should take the pain of the bank bailout. One imagines it is easy to argue the case for both wage and public sector cuts when, like Sutherland, you have a personal fortune of some €130 million [£113 million], while simultaneously collecting an annual state pension of €58,000 [£51,000].

Another member of Ireland’s rich elite, Michael Smurfit, spoke to the Irish Independent this week from the comfort of his tax exile in Monaco and similarly argued that Irish workers should exercise ‘wage restraint’.

During the course of the interview, Smurfit bemoaned the collapse in the ‘yacht market’ – it seems the parasites who are funded by the Irish taxpayer to enjoy the comfort of life as a tax exile are having a tough time of it. The parallel universe in which Ireland’s establishment live was amply demonstrated by Smurfit as he whined to the Independent: “I think the yacht market has had a terrible time; when the current builds are finished, there are going to be hundreds of yachts for sale. I know one person who was worth a billion, but is now worth 100 million. He has two yachts, but no buyers for either. It is the upkeep that really costs, some of the bigger yachts in Monaco have a staff of 70, for instance.”

Notwithstanding the obscenity of super-rich millionaires, who choose to live the comfortable life of tax exiles, lecturing Irish workers about ‘wage restraint’, their assertions about wage levels in the Twenty-Six Counties are simply wrong.

According to data from Eurostat, at the end of 2008 private sector wages were one per cent below the EU-15 average and 14 per cent below the average of the other top 10 EU economies, of which the Twenty-Six Counties was one; manufacturing wages were two per cent below the EU-15 average and 16 per cent below the average of the top 10 economies. Furthermore, the highest earners in the state pay considerably less of a percentage share of their income in tax than the average PAYE worker. A report published by the Revenue Commissioners last August demonstrated that 189 high-income individuals with an income of €500,000 [£436,000] or more paid just 19.8 per cent in tax, while 234 individuals earning between €250,000 [£218,000] and €500,000 paid an average of just 13 per cent.

In a little over 10 weeks, the Dublin government will announce its budget. The parameters being set are crystal clear. The working class is once again to be sacrificed upon the altar of ‘competitiveness’, while our public services are to be plundered in the interests of international investment capital.

Wage cuts and additional taxes on pay and in the form of residential property tax and water charges will once again be on the agenda. A reversal of this scenario will only be achieved through collective mass action on the streets. A sustained and relentless class war has been underway for some time and must be met with equally vigorous and determined action.

The articulation of fine words upon the dung heap of Leinster House will not make a whit of difference. The wealth produced by the working class has been appropriated to pay the gambling debts of Ireland’s rich class of bankers and developers, who continue to lead prosperous and comfortable lives and yet pontificate about how workers must shoulder the burden and demonstrate resilience. Austerity is reserved for the working class while the Peter Sutherlands, Michael Smufits and Michael Fingletons of this world swan around yachting marinas and golf courses while continuing to amass vast wealth.

It is time for the working class to fight back. It is time to cast off the fetters on human development, to slay the capitalist ‘masters of the universe’ and reclaim control of our destiny.


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