I Really Can’t Get My Head Round The Monetary System

Posted on November 22, 2010

So it looks like we are going help our neighbours across the Irish Sea with a seven billion pounds loan. Correct me if I am wrong, but is that seven thousand million pounds, I thought we were broke? All these public service cuts were supposed to be enforced because we are skint, yet we can find seven billion pounds. The argument goes that the Irish will pay it back with interest. How are they going to do that then, they haven’t got any money as far I can see? Any bit of research I do on the Internet suggests that they do not have a pot to piss in.

One of over 250 Irish ghost estates
It would appear we have no choice to be good neighbours to Ireland because if they go bust the knock on effect to the UK would be pretty serious stuff. They import 7% of our total exports (more than Brazil, China, India and Russia put together). Worse still, the Irish government took a step that may have made matters even worse – by guaranteeing all money on deposit at the banks. It means the government was required to keep propping them up with more and more payments. It was when Anglo Irish asked for another £10 billion (on top of the £20 billion already poured in) that the crisis reached tipping point.
However it isn’t just the Irish government that is over-exposed, this is the real reason Britain has no choice, and to use an old pun it sounds like de ja vu all over again. British banks have lent an astonishing £140 billion to Irish banks. Our old friends, the ever inept Royal Bank of Scotland and Lloyds (the two banks largely in the hands of the British taxpayer) have a collective £85 billion on loan to these banks…………..it is only at this point that us mere mortals can begin to take on board the scale of what is happening……..but at least the boys at RBS and Lloyds are getting their bonuses again.
If the Irish banks were to collapse now, the their government have no more money to prop them up, and there has to be severe doubt that the UK government could pick up the pieces of a disaster of such magnitude. All of a sudden £7 billion doesn’t seem that much, but in my opinion it makes a mockery of the public sector cuts that are potentially going to cause a “double dip” recession. That £7 billion has wiped out any public sector savings that might have been made, so it’s a hopeless situation really. If we can afford to borrow at low interest  loan to bail out Ireland why can’t we afford to bail out the British public sector at least until there is a commercial recovery? Just a question.
I have picked up all this information of the Internet, it is everywhere, so all of what is written above is taken from facts and figures from various financial web pages, it is not me trying to be clever as I am no economist. What is obvious to anyone though, is that bailing out the Irish will mean (for the UK) more cuts, more job losses, and higher taxes. It could be worse you could be Irish, many of their people who were duped in to 100% mortgages on the back of the “Celtic Tiger” have seen 60% wiped of the value of their properties, and even worse some are living on ‘ghost estates’ that have never been finished, have sewage problems, no street lighting, unfinished playgrounds, and unprotected half built houses for their children to play in.
God hope that never happens here!

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