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PORTSIDE  November 2010, Week 4

PORTSIDE November 2010, Week 4

Subject:

Ireland Responds - Labor Unions Mount Protest; Argentina as an Example (two posts)

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Date:

Sat, 27 Nov 2010 12:52:50 -0500

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Ireland Responds - Labor Unions Mount Protest; Argentina as
an Example (two posts)

* Irish labor unions mount Dublin march against cuts
   (Associated Press - Nov. 27)
* Ireland should 'do an Argentina'(Dean Baker, The Guardian,
  Nov. 22)

==========

Irish labor unions mount Dublin march against cuts

	"Thousands of marchers - led by a traditional pipe
	band - crowded along the banks of Dublin's River
	Liffey, banging drums and blowing whistles. Banners
	carried slogans including "It's not out fault, we
	must default," and "No country for young men," a
	reference to the squeeze on jobs."

By David Stringer And Shawn Pogatchnik, Associated Press

Yahoo! News

November 27, 2010

http://news.yahoo.com/s/ap/20101127/ap_on_bi_ge/eu_ireland_financial_crisis

DUBLIN - Some 10,000 labor union supporters marched through
Dublin Saturday in Ireland's biggest demonstration yet
against severe budget-cutting plans and a looming EU-IMF
bailout.

The crowd seemed lower than organizers had anticipated. The
march began peacefully as organizers tried to keep
confrontations to a minimum

Union chiefs who represent a third of Ireland's 2 million-
strong labor force had predicted that tens of thousands
would parade along the River Liffey to the capital's central
thoroughfare, O'Connell Street, to hear calls for Ireland's
2011 budget to hit the rich and the banks, not average
citizens already struggling with reduced wages and rising
bills. Police said the crowd numbered "at least" 10,000.

The rally is the first major demonstration since Ireland
last week opened negotiations with European Union and
International Monetary Fund experts on a likely euro85
billion ($115 billion) loan to save the country from
bankruptcy.

"People are very unhappy, and this is their last chance to
protest before the budget," said Pat Kenny, a 45-year-old
postal worker and labor union official, distributing bright
blue banners as the march began.

"But today is just the start of a campaign against the plan.
This government doesn't have a mandate to govern, they
should allow for a general election and let the public say
if they are in favor of the four-year plan."

Thousands of marchers - led by a traditional pipe band -
crowded along the banks of Dublin's River Liffey, banging
drums and blowing whistles. Banners carried slogans
including "It's not out fault, we must default," and "No
country for young men," a reference to the squeeze on jobs.

As part of the crisis negotiations, Ireland published a plan
this week to slash euro15 billion from its deficits over the
next four years, with the harshest cuts and tax hikes
earmarked for the next budget being published Dec. 7.

Prime Minister Brian Cowen admits that the slashing will
lower the living standards of everyone in this country of
4.5 million. But he insists Ireland has no choice given that
the nation's 2010 deficit is running at 32 percent of GDP,
the highest in Europe since World War II.

Saturday's rally coincides with Irish media reports that the
EU-IMF fund could charge interest rates of up to 6.7
percent, higher than the 5.2 percent that applied to
Greece's euro110 billion bailout in May.

Irish government officials insisted that the rate would be
significantly lower than 6.7 percent, while analysts said
the package was likely to include a range of interest
charges dependent on which countries or organizations were
providing particular funds.

The union umbrella group organizing Saturday's protest
march, the Irish Congress of Trade Unions, said it would
lobby up to the last minute for the government to minimize
its planned cuts to welfare, pensions and other benefits.
Its activists distributed protest newspapers along
Saturday's parade route bearing the simple message "Stop!"

"It's difficult to see any justification - either economic,
social, or indeed moral - for what the government proposes
to do, and we'll oppose them in every way we can," said
David Begg, general secretary of the group.

Cowen's 2011 budget will seek euro4.5 billion in spending
cuts and to raise an extra euro1.5 billion in taxes.

He has pledged to dissolve parliament and hold an early
national election in February or March - but only once all
the spending cuts and tax hikes have been passed. Labor
union leaders and opposition leaders are demanding an
election first.

Gerry Adams, leader of the Irish nationalist Sinn Fein
party, said reports of high interest rates on the
international bailout taking shape demonstrate that Cowen's
government "cannot be trusted in any negotiations with the
EU and IMF. They have no mandate to negotiate such terms and
impose such a burden on ordinary Irish taxpayers."

Some have expressed surprise that Ireland's public so far
has staged few rowdy protests. Greece suffered street
violence in the run-up to its own bailout, and Portugal -
rated as most likely to follow the Greeks and Irish in
taking bailout funds - this week suffered a daylong strike
that paralyzed many public services.

Irish commentator and author Fintan O'Toole and Irish folk
singers Christy Moore and Frances Black were due to address
the crowd on Saturday.

Begg insisted the city center protest - a march to the
General Post Office, headquarters of the leaders of
Ireland's 1916 rebellion against British rule - would be
peaceful.

But a commander of the security operation, police Chief
Superintendent Michael O'Sullivan, said officers would be on
guard for trouble. A police helicopter would keep watch and
riot police would be deployed on standby.

"There are individuals and groups who seek to exploit such
events for their own ends," he said.

==========

Ireland should 'do an Argentina'

	The Irish people expected to pay in austerity cuts
	for their banks' sins have another option. Reject
	the ECB and IMF, ditch the euro

by Dean Baker

Guardian (UK)

November 22, 2010

http://www.guardian.co.uk/commentisfree/cifamerica/2010/nov/22/ecb-ireland-bailout-argentina

When a firefighter or medical team make a rescue, the person
is usually better-off as a result. This is less clear when
the rescuer is the European Central Bank (ECB) or the IMF.

Ireland is currently experiencing a 14.1% unemployment rate.
As a result of bailout conditions that will require more
cuts in government spending and tax increases, the
unemployment rate is almost certain to go higher. The Irish
people are likely to wonder what their economy would look
like if they had not been rescued.

The pain being inflicted on Ireland by the ECB/IMF is
completely unnecessary. If the ECB committed itself to make
loans available to Ireland at low interest rates, a
mechanism entirely within its power, then Ireland would have
no serious budget problem. Its huge projected deficits stem
primarily from the combination of high interest costs on its
debt, and the result of operating at levels of economic
output that are well below full employment - both outcomes
that can be pinned largely on the ECB.

It is worth remembering that Ireland's government was a
model of fiscal probity prior to the economic meltdown. It
had run large budget surpluses for the 5 years prior to the
onset of the crisis. Ireland's problem was certainly not out
of control government spending; it was a reckless banking
system that fueled an enormous housing bubble. The economic
wizards at the ECB and the IMF either couldn't see the
bubble or didn't think it was worth mentioning.

The failure of the ECB or IMF to take steps to rein in the
bubble before the crisis has not made these international
financial institutions shy about using a heavy hand in
imposing conditions now. The plan is to impose stiff
austerity, requiring much of Ireland's workforce to suffer
unemployment for years to come as a result of the failure of
their bankers and the ECB.

While it is often claimed that these institutions are not
political, only the braindead could still believe this. The
decision to make Ireland's workers, along with workers in
Spain, Portugal, Latvia and elsewhere, pay for the
recklessness of their country's bankers is entirely a
political one. There is no economic imperative that says
that workers must pay; this is a political decision being
imposed by the ECB and IMF.

This should be a huge warning flag for progressives and, in
fact, anyone who believes in democracy. If the ECB puts
conditions on a rescue package, it will be very difficult
for an elected government in Ireland to reverse these
conditions. In other words, the issues that Ireland's voters
will be able to decide are likely to be trivial in
importance relative to the conditions that will be imposed
by the ECB.

There is no serious argument for an unaccountable central
bank. While no one expects or wants parliaments to
micromanage monetary policy, the ECB and other central banks
should be clearly accountable to elected bodies. It would be
interesting to see how they can justify their plans for
subjecting Ireland and other countries to double-digit
unemployment for years to come.

The other point that should be kept in mind is that even a
relatively small country like Ireland has options.
Specifically, they could drop out of the euro and default on
their debt. This is hardly a first best option, but if the
alternative is an indefinite stint of double-digit
unemployment, then leaving the euro and default look much
more attractive.

The ECB and the IMF will insist that this is the road to
disaster, but their credibility on this point is near zero.
There is an obvious precedent. Back in the 2001, the IMF was
pushing Argentina to pursue ever more stringent austerity
measures. Like Ireland, Argentina had also been a poster
child of the neoliberal crew before it ran into
difficulties.

But the IMF can turn quickly. Its austerity programme
lowered GDP by almost 10% and pushed the unemployment rate
well into the double digits. By the end of the 2001, it was
politically impossible for the Argentine government to agree
to more austerity. As a result, it broke the supposedly
unbreakable link between its currency and the dollar and
defaulted on its debt.

The immediate effect was to make the economy worse, but by
the second half of 2002, the economy was again growing. This
was the start of five and a half years of solid growth,
until the world economic crisis eventually took its toll in
2009.

The IMF, meanwhile, did everything it could to sabotage
Argentina, which became known as the "A word". It even used
bogus projections that consistently under-predicted
Argentina's growth in the hope of undermining confidence.

Ireland should study the lessons of Argentina. Breaking from
the euro would have consequences, but it is becoming
increasingly likely that the pain from the break is less
than the pain of staying in. Furthermore, simply raising the
issue is likely to make the ECB and IMF take a more moderate
position.

What the people of Ireland and every country must realise is
that if they agree to play by the bankers' rules, they will
lose.

[Dean Baker is the co-director of the Center for Economic
and Policy Research (CEPR). He is the author of The
Conservative Nanny State: How the Wealthy Use the Government
to Stay Rich and Get Richer <www.conservativenannystate.org>
and the more recently published Plunder and Blunder: The
Rise and Fall of The Bubble Economy. He also has a blog,
"Beat the Press," where he discusses the media's coverage of
economic issues.]

==========

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