THE latest stage in the complete disintegration of the Irish banking system was described by one analyst of the capitalist market as a ‘death spiral’ after the results of the new stress tests of Irish banks were revealed on Thursday.
This opening of the banks’ books by the new Irish Fine Gael-Labour coalition government was supposed to reveal the true depth of the banking collapse and form a stable platform for them to renegotiate terms with the European Union bankers and the International Monetary Fund (IMF) on previous bailouts.
What these stress tests revealed is that the severity of the crash in Ireland is so deep and so severe that it has become not a debt spiral but indeed a ‘death spiral’ for the Irish working class and rural poor.
When the banks first collapsed back in 2008, as a result of a massive, unsustainable position where they had no capital and existed completely on a sea of worthless paper, the then Irish government stepped in and gave a blanket guarantee that the Irish people would pick up the tab for the bankers’ crisis.
And what a tab it turned out to be.
Since 2008 the government has four times insisted that it has ‘drawn the line’ under the crisis – this week’s is the fifth.
Each time drawing the line has involved pouring billions into the five big banks.
Taxpayers have funded these banks to the tune of 46.3 billion euros (£40bn), plus a further 87 billion euros from the EU central bank and the IMF in the form of loans.
These loans from the EU and IMF are being paid back at an interest rate far in excess of the normal rates.
The price the capitalist system is demanding from the Irish working class, to pay for a crisis created not by them but by the banks and international financial corporations, is massive.
The bailouts are being paid for through huge cuts in social services, huge tax increases and mass unemployment throughout the country, alongside a record number of 35,000, mainly youth, emigrating in search of work.
None of these measures has worked and the latest plan to completely nationalise and restructure the Irish banks is only an extension of the state assuming all responsibility for the unsustainable bank debts.
The national debt of Ireland is well over 100% of GDP (some put it as high as 800%), meaning that the national income is completely wiped out by debt and debt repayments.
Capitalism is now demanding that workers and the poor are screwed even further into the ground, that even bigger cuts are needed to pour more money into the bottomless pit of capitalist debt.
At present more than one in 20 households is more than three months in mortgage arrears – a figure that is steadily rising and now set to increase dramatically.
What is absolutely clear is that the only alternative to mass pauperisation and complete destitution of the working class and rural poor is for the working class to demand the trade unions call an indefinite general strike to bring down the Fine Gael-Labour government, which is acting as an agent of the EU bankers and the IMF.
It must be replaced with a workers and small farmers’ government that will expropriate the banks and the major industries, cancel the debts, and set about building a socialist planned economy that will provide jobs and homes for all and end the spectre of a new mass emigration.