Pic: NiallOLoughlin.com“Just because some people choose to buy fast cars doesn’t mean every single one of us is somehow culpable" argued Áine Hartigan at the annual Irish Times Debate last Friday evening. Hartigan was arguing in favour of Ireland defaulting on the IMF imposed sovereign debt. Those arguing in favour of defaulting on the debt have taken the line that it’s unfair to burden the youth now and of future generations with debt which has been accrued by many irresponsible and incompetent people whom have escaped scot free with their pensions intact.
On the other side of the coin there are those who feel we deserve what we are getting and need to knuckle down and deal with it. Speaking at the Irish Times debate, one debater arguing against defaulting said “we need to take the EU-IMF-shaped aspirin and grow up as a nation”. This is an argument which is difficult to support, as not defaulting may mean crippling the Irish economy for many years to come in order to continually service the mounting interest. Leader of Sein Fein Gerry Adams echoed this sentiment recently stating that “the ECB has a lot of money in Ireland, but that’s its problem,” he said. “We are far better dealing with this on our terms . . . acting in our common good rather than a crisis coming down the line which will just swamp everybody.”
Although not the most economically astute politician, Adams may well be right here, and if Ireland are looking for a precedent than we need look no further than Argentina. In the 1990’s the South American country suffered a major economic crisis which resulted in the country being plunged into recession at the start of the millennium. Argentina received major financial assistance similar to Ireland, from countries such as Spain, Italy and France. Eventually the Argentineans defaulted on the sovereign debt of almost $95 Billion. A number of difficult years followed with Argentina being shut out of financial markets, but now in 2010 the country is stable and has a renegotiated debt package which is easier to manage.
So should we take our medicine and honour our debt, or should we stick it to the IMF and refuse to suffer for the Euro’s stability? Ireland has to pay interest on the loans being negotiated at a rate which exceeds the rate at which the economy grows over the next few years. This will make the country’s situation worse, not better. We have no option but to default and/or leave the eurozone. In any case most of us will probably be on a beach in Oz so take it with a pinch of salt!!
http://www.irishtimes.com/newspaper/ireland/2011/0223/1224290628869.html
http://www.irishtimes.com/newspaper/ireland/2011/0221/1224290426814.html
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