Sutherland advises us what to do!

Peter Sutherland is an overpaid hurler on the ditch. If he said that the interests of the European Banking system were placed before those of the people of Ireland and elaborated, I would prick up my ears and listen. No chance! The September 2008 bank guarantee was the critical error. The moral hazard in capitalism went out the door. The Irish workers would be mugged and mugged again. Brian my boy(s), you wanted it both ways! The European verdict is 6.546% IOU interest cost for 10 year money. Unaffordable. I know that you have to go to the auction every month. I know we are funded for this year. etc…. Blah, blah, blah!

Stephen Collins wrote the following on Saturday 24th September 2010 Irish Times.

“Irish borrowing costs hit a new high of 6.546 per cent yesterday and have been rising for the last month. The extra yield investors demand to hold Irish bonds over German bonds has surged to record highs due to investor concern about the State’s ability to manage its budget deficit and the bank bailout.

Former EU commissioner and attorney general Peter Sutherland, now a non-executive chairman of Goldman Sachs International, said the Government may need to cut more than €3 billion in next year’s budget.

“The figure of €3 billion has been postulated as the improvement to be sought in the next budget,” Mr Sutherland said in a speech in Dublin yesterday.

“We are told that this is all that the political system can bear, but if all the mainstream political parties accept that more is required and are prepared to say it, we can find a way.” One bright spot for the Government came from a research note by Goldman Sachs Group, which said Ireland was “very unlikely” to experience a financial crisis as severe as the one that forced Greece to seek an international bailout earlier this year.

“A repeat of the Greek debt turmoil in Ireland is very unlikely,” Michael Vaknin, a senior fixed-income strategist at Goldman in London, said.

“With Irish spreads already at all-time highs, we would argue that refinancing risks in the Irish debt market are aggressively priced-in already,” he added.”

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We know that the national debt is rising fast. We know that the banks have a lot to do with this. We know we have to borrow money to bail out the banks. We know we have to repay the interest and principal. We know that this may strangle the next generation. I know that the Croke Park Agreement is unaffordable and is a political funk. I know that HSE reform needs a management cull and a culture change to openess and accountability by us all. It needs a change in the Consultants Contract and also in the GP financial relationship with patients. It needs a reconfiguration of services by statutory and voluntary agencies in the social provision to reduce and streamline the number of different providers in housing and special needs.

Then in another report in the same paper, Southerland is quoted.

“Mr Sutherland said a default on State debts would leave the Government without the capacity to manage its affairs or raise finance. “It simply is not an option to choose,” he said.

Mr Sutherland, chairman of oil giant BP until last year and former attorney general of Ireland, warned there was “no way” the country could walk away from the cost of Anglo Irish Bank.

He criticised repeated calls by the Financial Times – echoed by other commentators – for the Government to let the bank’s losses fall on the institution’s bondholders.

The newspaper has, among others, put forward “the classical market economist case”, he said, warning that removing protection for Anglo bondholders might not be a wise course of action.

Mr Sutherland said the national debt was rising “at an alarming rate” due to Government spending and this was overlooked in the public debate by the “constant and intense focus” on the bank crisis.

The two issues needed to be separated, he said – the country’s running costs were “still far too high” and were way above the European average in the public sector.

“We have to recognise that as currency devaluation is not an option, downward flexibility in wages and prices is essential to avoid unemployment,” he said.”