In 2007 Jim Power, like most right wing economists, proclaimed that there was nothing wrong with the Irish Economy and that the ‘fundamentals were sound’; however Power did see a danger, not the danger of an oversupply of housing/property, nor an over accumulation of wealth or even an oversupply of credit; for Power the true danger was those who were ‘talking down the economy’ (see here and here).
This idealistic viewpoint doesn’t see problems in material conditions; the crisis instead comes from ‘confidence’ in the markets or even the confidence of the markets. Five years on and Power, ever blind to the material facts of the economic crisis, concentrates on how the household charge revolt ‘looks’ to outsiders and how this, like before, is the real threat to the economy.
This of course is to say nothing of how economists working for banking and financial interests (friends first in the case of Power) continue to be given platforms in the national media, notwithstanding their obvious conflicts of interest and the minor fact that they have in general and certainly in the case of Power been consistent in calling it wrong again and again. While Critical Media Review dusts off the ‘Green or Grün Jersey’ Michael Bride deconstructs Jim Power’s take on the household tax revolt and its consequences.
Jim Power and the Household Tax Revolt – Michael Bride
Normally I post newspaper articles because I think they are insightful and illuminating. I’m posting this one by Jim Power in the Examiner for the opposite reason (Household Levy Revolt Sets Dangerous Precedent). I disagree with every word, which seems to have been inspired by a closed mind rather than an insightful one. But that itself is illuminating, because it shows the slavish adherence to ideology which rules the minds of the right, minds which are plainly disturbed by the rise of people power in our Campaign Against House and Water Taxes (CAHWT). It’s worth deconstructing in detail just to see how disturbed and dysfunctional our enemies are, and I do mean enemies, not ‘opponents,’ because this is a class war we’re fighting. First of all, look at that opening sentence:
One of the most positive developments over the past year has been the marked and dramatic change in the international coverage of Ireland.
The new government has had a whole year, and what is the best thing that can be said for it, that it has restored the confidence of investors, boosted employment or stopped the immigration brain drain? No! It has won the approval of foreign newspapers, and (although Power is careful not to point this out) only newspapers with a distinct neo-liberal agenda! He has completely dismissed the notion, crucial to the wellbeing of democracy, that a government’s mandate comes from the people at home, not editors abroad! In doing this, Power is trying to persuade us that others know better than we, the Irish people, when it comes to the art of government. So, if foreigners are ‘postive’ about Kenny and Noonan, we should be too! Essentially, he is saying democracy is wasted on the Irish, so, we shouldn’t be worried about the loss of our sovereignty.
We should all be prepared to hear and read plenty of arguments like this, especially when the referendum campaign kicks off properly. And we should also be willing to look through other arguments, this time arguments which consist of statements that make apparent sense on the surface but actually distort the truth rather than reveal it. Power comes out with such a statement when he declares that austerity ‘is helping foreign direct investment and tourism, and of course bond yields have been declining steadily.’
The first part is plainly nonsense, for multinationals and visitors from abroad have no interest in the domestic politics of any country unless it affects their own bottom line or holiday experience (there is no evidence to say it has done either here). But what about the last part? Isn’t it true that Irish bonds are more attractive now than they were recently? Yes, but not because austerity has helped Ireland ‘turn the corner’ as Kenny declares and Power suggests. Irish bond yields, like those of Portugal and even Greece, have performed better lately, but only because the ECB has colluded with private banks across the continent to perpetrate a monstrous fraud against European taxpayers and international investors. The fraud works by the ECB pumping out cheap money, a trillion-euro plus, which the banks use to purchase the bonds issued by the ‘PIIGS’ including Ireland, thus creating an artificial demand which deflates bond yields. This is just a grander version of the shell game being played domestically by the Irish Central Bank and Bank of Ireland concerning those promissory notes.The central bank issues a cheap loan to the private institution, which uses it to purchase government bonds. In BOI’s case it is ‘lending’ the money in turn to Anglo, and pocketing the difference between the high rate Anglo pays it, and the low rate BOI pays the government, in the grander scheme the banks pocket the difference between low-interest ECB loans and the yield on Irish, Greek and Portuguese bonds, still far higher than the profits to be gained from lending into real economic activity. But in both cases it’s the taxpayer who is being cheated, twice, by funding the central banks at a loss, then paying the profit to Bank of Ireland or the local non-performing institution, depending where they live.
The other ‘marks’ in these confidence tricks, international investors who collectively amount to that fabled entity ‘the markets,’ have never fallen for this, which is why yields from the bonds of peripheral states remain much higher than those of the core nations like France or Germany, and their refusal to bite is now exposing the fraud as a failure.
Spanish bonds have again become hard to shift and, just in the last few days, a bank in Germany and another in Austria has stopped taking collateral issued by Ireland, Portugal and Greece, because they realise ‘the markets’ won’t buy this trash, no matter how it is dressed up. Jim Power won’t mention any of these underlying truths, but the FACTS are freely available in the writings of Richard D. Wolff and Yanis Varoufarkis, left wing economists, Joseph Stiglitz, Richard Reich and Paul Krugman, who are nearer to the center, and even classic free market economists like Constantine Gourdgiev and David McWilliams. All are agreed that austerity is a sickness not a cure, and all describe the manipulation of bond yields by central bankers as a cosmetic application to a chronically sick economy, Irish and European, rapidly deteriorating while the shoddy makeover goes on!
There’s ever greater fraud at play when Power addresses himself to our ‘laughable’ objections to the household charge. It involves the usual reference to property taxes being nearly universal throughout the developed world, a reference which conspicuously omits the fact that, in Europe at least, stamp duty on the purchase of a primary residence is unheard of, or any mention of the rates at which these foreign property taxes are levied, rates far lower than the effective one involved when each of us paid our stamp duty. But, Jim Power being Jim Power, he has to add an extra twist of deceit, by declaring that ‘if one lived in Westborough, Boston for example, one could expect to pay up to $8ooo per annum.’ The deception only becomes clear if you take the time and trouble to look up the facts on Westborough, Boston, as I did online. These show that, before you paid that much in annual charges, you would have to possess a home valued at no less than $442 000 today, more than twice the value of an average house here, and 50% higher than the typical house in that part of the USA, itself the richest region in America. In other words, he has chosen a very untypical example hoping we won’t notice the slight-of-hand! Needless to say, he says nothing about the way such a wealthy American homeowner, like his rich Irish counterpart, benefits from a whole raft of tax reliefs and loopholes that are closed to the people who were outside the National Convention Centre a week ago. Never let the facts get in the way of a good story Jim! But Power’s most blatant piece of fantasy comes when he turns to our recent history. ‘We had created a totally unsustainable fiscal situation characterised by unsustainable levels of spending and a tax base that is way too narrow’ he says, explaining why he supports the austerity program, without even mentioning the FACT the Ireland still had a budget SURPLUS and money in the bank (the National Pension Reserve) until the night the bankers told their lackeys, Lenihan and Cowen, to take THEIR debts onto our balance sheet. This FACT is the great reality which spin doctors, official and unofficial, are desperate to obscure. We should take heart from their desperation; our success against Phil Hogan and his house tax HAS set a precedent, one that IS dangerous to the troika, the Irish government, and the media lapdogs like Jim Power who serve both those masters. Let’s make his nightmare, and theirs, come true, by defeating their referendum as well!