An encounter with a bigot

Yesterday I mentioned a conversation I recently had with a member of the Labour Party about the state of the British government’s finances. When I suggested he might be a bit “iffy” on the subject I got the following reply

“Yeah ..a bit like your relatives who took the soup when the going got tough in Ireland and you having “schizophrenic” tendencies over supporting the Cats in GAA when you’re clearly a Prod. You’re just a plastic Paddy”

Some of this might need a little explanation. My Irish ancestors, so I gather, converted from Catholicism to the protestant Church of Ireland at the time of the Irish Famine (about 1850) as the Church of Ireland had a better famine relief program (they “took the soup”). G.A.A. is the Gaelic Athletic Association which was founded in 1884 as part of a revival of Irish cultural nationalism, and the Cats are my team, Kilkenny.

Now, I could explain that I myself am not religious. I could explain that, while nationalist, the G.A.A. has a long history of protestant involvement (indeed, the All-Ireland Senior Football trophy is named after a Prod; Sam Maguire).

But I’ll simply ask this; why should the religious choices of my distant ancestors dictate which sports I watch today?

Beats me. But then, that’s bigotry for you.

Cyprus: The ghost of the West yet to come

Get used to it

When the European Union (with German money) mounted its most recent bailout of Greece, one of the conditions was a 75 percent write down of Greek government debt. For the Cypriot banks, which had made loans to the Greek government totalling 160 percent of Cyprus’s GDP, this was disastrous.

With their capital bases smashed the Cypriot government felt obliged to bail them out. Lacking the funds to do so (in 2011 the IMF reported that the assets of Cypriot banks totalled 835 percent of GDP) it turned to the European Union (in reality Germany again) for a bailout.

The Germans are reluctant to lend money without conditions. If the terms of the bailout are accepted by the Cypriot parliament, in return for the €10 billion corporation tax will rise from 10 percent to 12.5 percent and interest on bank deposits will be subject to a withholding tax.

But the most controversial aspect is the proposal that bank deposits will be subject to a one off “solidarity levy”, amounts under €100,000 at a rate of 6.75 percent and those over €100,000 at 9.9 percent.

This is the eurozone crisis at its most extreme but it only differs from events in Ireland, Greece, Spain, Italy, and Portugal, by degree. And in as far as  government eventually has to tailor its outgoings to suit its income it is really just an extreme version of the situation which will also eventually face Japan, Britain, and the US, probably in that order.

So what lessons does Cyprus hold for those who still have all this to come?

The first concerns the relationship between banks and our politicians. Over the last few years politicians elected to represent the people have rarely missed an opportunity to dump debts on those people in the interests of saving banks and other financial institutions which have hit trouble. We have been told that banks occupy a unique position in our economy such that the laws of economics don’t apply to them as they apply to Woolworths or Blockbuster. They are too vital, we are told, too big to fail.

Functioning banks certainly are a key part of a modern financial system but why should the same be said of the toxic zombies who are blundering round the current financial landscape?

And how did these rotten banks get so big in the first place? It’s because governments and central banks prop them up. Bad banks rarely go out of business, they just lumber on, soaking up and destroying more wealth. Goldman Sachs and JP Morgan were bailed out five times in the 20 years before 2008.

The second lesson is that there really is no such thing as private property. In extremis the government considers itself entitled to any amount of your property it desires even if, as in the Cypriot case, it means revoking its own commitments to protect bank deposits.

But then this is the logical outcome of taxation. If you think that a shortage of government revenue can be solved by the government simply helping itself to someone else’s revenue you really can’t have a philosophical problem with this. If you believe in the 50p tax rate this is where you end up.

The third lesson is the limits of democracy. The Cypriot Prime Minister, Nicos Anastasiades, ran at the last election on a promise to protect depositors. Now he stands behind a lectern explaining why he cannot protect depositors. The greater a country’s debts the fewer are its options and in the euro, with no possibility of devaluation, this problem is exacerbated.

The Cypriots will probably feel much as the Irish or Portuguese did to have their economic policy decided by the Troika of the EU, the International Monetary Fund, and the European Central Bank. They may feel a touch like the Spanish or French did when they elected an anti-austerity candidate only to find that they get some measure of austerity anyway. They may end up feeling like the Greeks or Italians who skipped these intermediary steps and went straight to having their governments foisted upon them by the European Union.

This isn’t just a lesson for eurozone members. Labour currently lead in British opinion polls, appealing to soft-headed types who think that we can back to the big spending and even bigger borrowing days of Gordon Brown if only we tick the right box on a ballot slip. In the United States Barack Obama won re-election last year on the promise that the Chinese will continue to lend the US the money to live it up.

British and American voters might not have been slapped in the face with reality in the same way as the bottom half of the eurozone has thanks to their ability to trash their currencies, but it will come. Sooner or later they will be faced with the fact that a country cannot indefinitely live beyond its means and that voting for snake oil salesmen who tell you there is, is a sure fire recipe for disappointment.

The final lesson though, and perhaps the scariest, is that those in charge are no smarter than the average bloke in the street. It is difficult to find the words for the stupidity of trying to shore up Cypriot banks with a policy which will cause a run on those very same banks.

Cyprus offers a grim glimpse of a possible future for the wider western world: politicians who will sacrifice the people for banks, the expropriation of private property to pay for it, the diminishing options offered by the political process, and idiots in charge. Let’s hope they aren’t coming to a crisis near you.

This article originally appeared at The Commentator

Crisis of statism, not capitalism

In search of that magic money tree

t might not have been the ‘crisis of capitalism’ which some have been waiting so long for, but it is widely thought that the last few years certainly represent a “crisis of capitalism”. But if you think of capitalism as a system whereby profits and losses acting unhindered by the hand of government guide capital to its most productive uses, this is difficult to sustain.

The sectors which blew up and took the rest of the economy with them were riddled with intervention. Banks have their capital adequacy rates set and their bad investments covered by government. The housing market is kept inflated with all manner of tax breaks and politically motivated distortions like Fannie Mae, Freddie Mac, and the Community Reinvestment Act. Behind it all interest rates are set by a small panel of political appointees, much as the price of alum keys was set in the Soviet Union.

But as we see violence on the streets of Athens and Madrid, the Occupy protests in the United States, and unadulterated rage on the pages of The Guardian’s Comment is Free (Cif), there is certainly some sort of crisis afoot. It is, however, a crisis of big government.

Over the last few decades governments throughout the western world have made extravagant spending commitments. In Ireland the welfare budget was tripled. In Greece pastry chefs, radio announcers, hairdressers, and steam bath masseurs were included among 600 professions deemed so “arduous and perilous” that workers could retire at 50 on a state pension of 95 percent of their final salary.

But it wasn’t just small basket case economies doing it; big basket case economies were doing it too. France decided that its workers could work no more than 35 hours a week and still generate the wealth to pay for everyone to retire at 60 and spend a third of their lives as state pensioners. In the United States the Bush administration launched the largest expansion of Federal spending since Lyndon Johnson’s Great Society program of the 1960s. In Britain the Labour government increased spending by more than half in six years.

As long as you didn’t look either too closely or too far ahead, these massive spending commitments looked just about affordable as long as there was plenty of money to spend. And there was. In Britain tax receipts rose by 40 percent between 2001 and 2007. In the United States, Federal tax revenues rose by 30 percent between 2000 and 2007. French tax revenue increased by 30 percent between 2002 and 2008.

But these were the effects of the bubble. These were taxes swelled by property values, house sales, and bank profits on those house sales and the myriad ancillary transactions such as securitisation. With the bursting of that bubble that wealth is gone, if it was even there in first place, and it is not coming back. Nor should it.

That does mean, however, that lots of the extravagant government spending promises made before the bust now stand revealed for what they are; unaffordable in the absence of bubble taxation. And given the undesirability of bubbles, that just makes them unaffordable full stop. No amount of general strikes, protesting, occupying, or posting on CiF will change that. We do not have a mighty oak of a money tree, but a bunce bonsai and, in truth, that’s all we ever did have.

Since the crisis hit we have seen both the unavoidability of this truth and the reluctance of electorates to accept it. In the last few years the voters of Greece, Spain, and France have voted out ‘austerity’ governments only to have ‘austerity’ visited upon them anyway by their replacements (at least they were asked, unlike the Italians). There is a very good chance that this November and in May 2015 the voters of the United States and United Kingdom will discover that reality doesn’t just disappear because you tick a box marked ‘Obama’ or ‘Miliband’.

The amount of money spent by the government has grown inexorably. We have reached its limit. In Britain, since 1964, whether top rates of tax have been at 83 percent, as in the 1970s, or 40 percent, the percentage of national income paid in taxes has never exceeded 38% of GDP.

Whatever the designs of the politicians, the social democrats, the Labour party, the Guardian, or Polly Toynbee, the British people, collectively and unconsciously, seem to have decided that they are not willing to fund a state sector any bigger than this. When the share of state spending as a share of GDP reaches 45 percent or 50 percent, as it has recently, the only way is down. That is where we are now.

If the extravagant spending promises of politicians outstrip both the capabilities of even a well-functioning capitalism to generate the necessary wealth and the public’s willingness to pay for it, that is not capitalism’s crisis, but a crisis of big government. Its time is up.

This article first appeared at The Commentator

The battle of the euro – how much will Germany stomach?

Ever further union

Our European neighbours used to sneer at us Brits for our apparent obsession with World War Two. But the unfolding Eurozone crisis has shown that those same feelings have been always been present in continental Europeans, they just hid them behind a wall of rhetoric about shared futures and broad smiles at places like Maastricht. The question of wealth has shattered the façade.

Back during the wars that it’s now ok to mention again, the Germans used to worry about fighting on two fronts, quite rightly as it turned out. Now the struggle over the future of the euro is also settling down to a war on two fronts: the monetary and the fiscal. At the heart of the struggle is the question of whether, and if so, how German wealth can be transferred to heavily indebted PIIGS.

On the monetary front the Germans are trying to hold the line that the job of the European Central Bank is to fulfil its mandate of price stability.

On the other side of the hill are those – the PIIGS, most eurocrats (though few have the bottle to stick their head over the parapet), the Obama administration, and the British government – who think it should be focusing on employment or GDP growth. To accomplish this they want the ECB to print money which, the Germans believe, would be inflationary and scupper the ECB’s price stability mandate.

This is what lays behind the bond buying plan which the ECB announced recently.

When yields on Spanish or Italian bonds reach a given level the ECB will step in to buy these bonds with newly created euros in an attempt to drive these yields down. Crucially, the programme is, on paper at least, effectively unlimited. Under this programme the ECB can expand the monetary base of the eurozone as much as it likes as long as it is used to buy the sovereign debt of PIIG – something which isn’t in short supply.

The other front, the fiscal front, has also been far from all quiet lately. The German Constitutional Court recently ruledthat the European Stability Mechanism does not violate the country’s constitution. This gave the green light for a program which will see Germany liable to bail out stricken PIIGS directly. The German judges did leave one potential poison pill however; they ruled that any increase in German liabilities beyond €190 billion be subject to a vote in the Bundestag.

Both the ESM and unlimited bond buying represent ways by which German wealth can be moved to PIIGS. The ESM is a frontal assault while Mario Draghi’s bond buying is an oblique approach. Creating money does not create wealth, it only redistributes it. In this case debtors would benefit from having a devalued currency in which to pay back their creditors. In many cases the debtors are PIIGS and the creditors are German. Either way, the result is the same.

Last week the BBC broadcast a show about John Maynard Keynes. The host, Stephanie Flanders, attempted to draw parallels between the reparations imposed by the Allies upon Germany at Versailles at the end of World War One (which Keynes famously opposed) and the demands made by Germany now for fiscal restraint in PIIGS in return for their money.

This is a pretty inexact comparison. The war debts of the Allies were exogenous to the German economy; they were just dumped upon it in 1919. The debts of PIIGS, by contrast, were incurred by them quite consciously. Nothing the Germans did made the Greeks promise to pay pastry chefs and hairdressers to retire at 50 on 95 percent of their final salary.

A more exact comparison, in fact, in comparing the sudden requirement to pay exogenously incurred debt which Germany faced in 1919, is with Germany now. As at Versailles, Germans are being asked to foot the bill for the spending decisions of others.

Given the aggression of Wilhelmine Germany you could even argue that ‘reparations’ are less justified now. Germany’s invasion of Belgium in 1914 might have necessitated Britain’s war expenditures, but what German action could conceivably have necessitated the Irish tripling their welfare budget?

Germans seem to have some inkling of this. The court case against the ESM was brought after a petition was raised with 37,000 signatures. According to a recent poll, 49 percent of Germansnow see the EU as a hindrance.

Keynes wrote of Versailles that “If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp.” This is not to say we are about to see a rerun of 1933 in Germany, but it is worth reflecting how long Germans will continue to abide by the economic and political arrangements of the euro and EU that exist to redistribute its wealth to others.

This article originally appeared at The Commentator

The sack of Berlin

Time for the return fixture?

Behind the current rebellion against ‘austerity’ lies the idea that we can carry on as before if only we can screw the money to pay for it out of someone else. But if the bond markets won’t continue to fund them, who do the anti-austerity activists think will?

The most popular answer is ‘the rich’, AKA ‘the 1 percent’. Musing on the Sunday Times Rich List recently, eccentric Labour MP, Michael Meacher observed that “the richest 1,000 persons…increased their wealth over the last three years by £155bn. That is enough for themselves alone to pay off the entire current UK budget deficit and still leave them with £30bn to spare.” Meacher clearly doesn’t know or doesn’t care how wealth works; the £155bn might not be in the form of cash but (more likely) in the form of assets which would have to be sold for cash which could only then be used to plug the deficit. However, there is no guarantee that these asset values would hold up if these 1,000 rich folks tried to sell £155bn worth at once.

But you also wonder how closely Meacher scrutinised this list. The top six on the list weren’t even born in Britain and attempts to expropriate their earnings so that our government can carry on spending could well see them skedaddle. Francois Hollande’s plan for a 75 percent top rate of tax will see a wave of latter day economic Huguenots flee France, taking with them the capital and entrepreneurial expertise that their religious forebears did when Louis XIV kicked them out.

But at the European Union level, for ‘the rich’ read ‘the Germans’. The backlash against EU austerity amounts to the argument that Germans should hand over more of their money to their Mediterranean partners.

There are two programmes which are widely trumpeted as being able to take the edge off European austerity. The first is the provision of liquidity by the European Central Bank. In practise this means that the ECB will begin printing money to buy the bonds of the squealing PIIGS, much like the Quantitative Easing carried out by the Bank of England. The effects are likely to be just as inflationary. The purchasing power of German incomes will be reduced to help out their Greek and Spanish neighbours.

The other is debt mutualisation. This essentially means that the debt of the eurozone members will be spread around more evenly. This is great if, like Greece, your debt is way above the average. It is less great if, like Germany, your debt is way below it.

Debt as a percentage of GDP

Source: The Guardian

But since the anti austerity activists are all about fairness how fair would it be to the Germans to have them fork out for everyone else? We hear that the “social fabric” of places like Greece, Spain or Ireland is tearing asunder but wasn’t that always the inevitable fate of a social fabric woven from easy credit and borrowed money?

Over the past decade, German workers, with the cooperation of their trade unions, accepted wage restraint and a rise of the retirement age from 65 to 67. As a result German unit labour costs fell by 16 percent between 1999 and 2007.

It was a different story elsewhere in the EU. With Germany running a current account surplus, it was sending capital abroad, essentially lending foreigners the money to pay for German goods, like a mini China.

This money flooded into the nations at the fringes of the eurozone who got German interest rates along with the single currency. And they knew how to spend it.

In Ireland, the boss of Dublin airport was awarded a salary double than that of the Chancellor of Germany. Government spending rose between 2000 and 2008 by 144 percent; welfare spending tripled. In Greece the public sector wage bill doubled. Pastry chefs and hairdressers were placed on a list of 600 professions deemed so “arduous and perilous” that they could retire at 50 on a state pension of 95 percent of their final year’s earnings.

So when you hear cries for the ECB to provide liquidity or for debt mutualisation, you are hearing cries for German workers to work till they’re 67 so Greek crimpers can retire at 50.

Sensibly you know that Angela Merkel will balk at turning her electorate into the galley slaves of Europe.

But then the EU and the euro have never been run on good sense. Between 387 and 455 tribes swarmed from modern Germany, across the Danube and carried off the wealth of Rome. The existential question for the euro is whether Angela Merkel will allow a return fixture.

This article originally appeared at The Commentator

Meet the new boss in Ireland

It would be hard to imagine a more rancid collection of chisellers running a developed nation than the Fianna Fáil government which ran Ireland until a year ago. They were involved in corruption scandal after corruption scandal. And when Irish banks which had gambled on property (and donated to Fianna Fáil) got into trouble in 2008, Fianna Fáil, in a locked room, late at night and probably over a couple of drinks, guaranteed not only their deposits but the investments of their bondholders. The Irish public was put on the hook for billions of euros of bad investments. With one or two noble exceptions Fianna Fáil were, as a Dublin friend of mine put it, “Greedy, unprincipled gobshites”

In February 2011 the bums were kicked out. Fianna Fáil lost 24% of their vote and over 50 seats in the Dáil Éireann. They finished in third place and a coalition of Fine Gael and Labour swept into office with a record majority.

But what was any of it for? In what way was Ireland or its political life different after 2.2 million Irish men and women voted?

One of the most craven aspects of the Fianna Fáil government was its slavish obsequiousness towards the European Union. A party which claimed to be heirs to the nationalist spirit which is such a key part of the foundational myths of the Irish Republic, they gave Brussels whatever it asked for.

In June 2001 the Nice Treaty was put before the Irish people in a referendum. They rejected it. In the EU, votes and referendums don’t exist to discover the will of the people but simply to rubber stamp whatever decision the political elites have already taken. So the EU told the Irish to vote again and the gutless lackeys in Fianna Fáil facilitated it. The Nice Treaty passed at the second time of asking in 2002.

But Ireland’s constitutional requirement to put major changes to the Constitution to the vote remained. In 2008 the Lisbon Treaty was put before the Irish people and they rejected it. Again, the EU elites were dismayed that the people had given the wrong answer and Fianna Fáil was ordered to hold another referendum. The Lisbon Treaty passed at the second time of asking in 2009.

But any notion the Irish might have had that this supplication to a foreign power had ended with Fianna Fáil government has lately been rudely disabused.

The momentum behind the collapse of the Euro has proved less responsive to EU elite diktat than EU member governments. The latest useless attempt to stop it is the proposed ‘Treaty establishing the European Stability Mechanism’. In effect, this is simply a beefed up version of the old widely ignored and selectively enforced Stability & Growth Pact.

But in Brussels the Irish voters, unlike their politicians, have a reputation for thinking for themselves won in those two brief EU rejections. This makes giving them a say very dangerous, so the EU is looking at ways it can avoid doing so.

And, disgracefully, the Fine Gael government is proving every bit as accommodating as Fianna Fáil ever was. Enda Kenny’s government believes that, legally, they can just about get away with the argument that the new treaty does not represent a large enough change to the Irish Constitution to necessitate a referendum. But there’s not much in it, the government is rehearsing its arguments for the eventuality that they are challenged on this point in court.

That’s how democracy works between the EU and Ireland. The EU and its servants in the Dáil either give the Irish people too many votes or none at all.

Ireland is not the only country whose political class is acting on the bidding of Brussels rather than its people. The new EU imposed Italian government contains no elected officials and the Germans want the EU to take control of Greek fiscal policy away from the Greek government.

This represents a real danger for Europe. How long will the peoples of European nations tolerate a situation where, whoever they vote for, they end up being run by the EU? Democracy is never more vulnerable then when it is seen to be dysfunctional.

For their part the Irish might have expected rather different treatment after handing Fine Gael a landslide last year. But that’s democracy in the EU for you. It was never better described than by The Who ; “Meet the new boss, same as the old boss”

This article originally appeared at openDemocracy

Ed Balls and Irish austerity: what you didn’t hear at party conference

May the growth rise to meet you

Ed Balls used to cite Ireland as exhibit A in his argument that ‘austerity’ would cripple the British economy.

A year ago, when Ireland’s economy had just shrunk by 1.2% Balls, then making his unsuccessful run for Labour leader, said

“These figures are a stark warning to governments across Europe including our own. An austerity programme of deep cuts now, when our economic recovery is not secure, risks lower growth and higher unemployment”

Perhaps he was busy drawing up his plan for British economic recovery which he announced at the Labour conference this week (easily summed up: spend more money) or maybe he was keeping his head down following poll numbers from ComRes which showed just 27% of voters thinking he would make a better Chancellor than George Osborne with 43% disagreeing.

Either way we were denied his reaction to the latest set of figures from Ireland; second quarter GDP figures showing growth of a healthy 1.6%.

A lively (in economic terms anyway) debate has kicked off over what these figures mean.

Free market economist Tyler Cowen led by claiming that such growth following such cuts disproved the Keynesian theory. Paul Krugman responded for the Keynesians arguing that Keynes always said this would happen, it was just question of how much damage was done in the meantime and how long it took. In the long run we are all dead, after all.

There is much truth in what Krugman says. The problem in Ireland, as in Greece and elsewhere, lies mostly on the monetary side of the economy. As Patrick Honohan, a former Trinity College academic now governor of Ireland’s central bank, wrote

“Until about 2000, the growth had been on a secure export-led basis, underpinned by wage restraint. However, from about 2000 the character of the growth changed: a property price and construction bubble took hold. This boom sustained employment and output growth until 2007 despite a loss of wage competitiveness”

A slump in interest rates when Ireland joined the euro saw a borrowing boom which bid up prices and wages. As a result, given that Irish prices are now relatively high, Ireland will be unable to export. It will need to get its prices down to a level approximating those of its competitors. This devaluation can be internal or external.

An external devaluation works by inflating the money supply so that prices rise and the real wage (the amount of goods and services the money wage can purchase) falls that way. Britain has eagerly pursued this course and sterling has lost about 25% of its value since 2007. This was not an option open to Ireland. As a member of the euro the money supply of the Irish Republic is controlled in Frankfurt.

This left the option of internal devaluation where prices and wages are reduced to competitive levels by simple cuts in nominal wages and, thus, the real wage.

There are two things to note.

First, both internal and external devaluation are different paths to the same destination, devaluation. Both entail a fall in the real wage and a decline in living standards. The difference is that if it is not possible to reduce nominal wages (if they are ‘sticky’ in the odd Keynesian parlance), say because of trade union opposition, then any attempt at internal devaluation will only succeed at the price of great unrest and unemployment; as falling prices depress companies’ incomes they will reduce their wage bill with layoffs if they cannot cut wages.

Secondly, it should be clear that Ireland’s problem was a monetary one not a fiscal one. For Ed Balls to point to Irish austerity as a warning for Britain is either breathtaking cynicism or economic ignorance. Take your pick.

This article originally appeared at The Commentator

Greece, Ireland and the euro – How we got here and where we go

Welcome back

Greek town squares and streets have erupted in violence. A Socialist government has incurred the wrath of the left by forcing through a package of fiscal retrenchment which would have made Margaret Thatcher blush. Greek interest rates are skyrocketing yet borrowing still grows. Even so, many commentators from both right and left doubt it will be enough. Greece will almost certainly default on its debt. It’s a good bet that it may even be forced to leave the euro.

How did we reach this state? What will happen next?

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Don’t fear to speak of Easter Week, but speak the truth

Speaking for himself

“The only solution is to kill 600 people in one night. Let the UN and Bill Clinton and everyone else make a scene – and it is over for 20 years”

Such was the late Alan Clark’s prescription for dealing with the Provisional IRA. It says much for the peace process and the changed state of Northern Ireland that yesterday’s ‘rally’ by the Real IRA drew only half that amount.

The gathering was held to commemorate the Easter Rising of 1916. The 300 souls in attendance, clad mostly in tracksuits as befits such a somber occasion, listened to a speech read haltingly from a crumpled bit of paper by a fat man kitted out from Millets. Many of his words were lost in the strong wind which whipped the hillside cemetery.

What could be made out was chilling. With the Queen due to visit Ireland next month this tubby masked man claimed to speak for “the Irish people” and warned that “The Queen of England is wanted for war crimes in Ireland and not wanted on Irish soil. We will do our best to ensure she and the gombeen class that act as her cheerleaders get that message”

This mans grand claim in front of his smattering of followers to be speaking for “the Irish people” is rather undone by opinion polls suggesting that the majority of Irish citizens actually support the visit. But then men dressing up in military uniforms and issuing declarations which claim their opinion is shared by all “Irishmen and Irishwomen” and that they are “entitled to…the allegiance of every Irishman and Irishwoman” is something of an Easter tradition in my ancestral homeland. At least Patrick Pearse had a way with words and enough personal bravery to show his face.

More chilling given the recent murder of young policeman Ronan Kerr was the warning that the Real IRA would target police officers

“Oglaigh na hEireann (the IRA) call on any young nationalist who may have been sold the lie that the RUC/PSNI (Royal Ulster Constabulary/Police Service of Northern Ireland) is somehow an reformed, non-political police service to think again, those who think they are serving their community are in fact serving the occupation and will be treated as such. The GAA (Gaelic Athletic Association), Catholic Church and constitutional nationalism will be unable to protect those who turn traitor, they are as liable for execution as anyone else regardless of their religion, cultural background or motivation”

Threats to the Queen and threats to police officers; why did the police not swoop in and arrest these people?

Sadly, despite the pitiful crowd yesterday and all the outrage over PC Kerr’s death, the answer is that a strong police response to these people would probably have been condemned. ‘Counter productive’ and ‘harmful to the peace process’ are phrases which would, no doubt, have been quickly on the lips of even supposedly respectable nationalists like Sinn Fein.

This is because even now Sinn Fein are not anti violence, they are just anti other people’s violence. Violence, after all, got them where they are so, unsurprisingly, they take a pragmatic rather than moral view of it. Gerry Adams condemned the murders of two soldiers in 2009 as “counter productive”

But even mainstream nationalism is tainted with this equivocation. As my friend Ruth Dudley Edwards pointed out recently the men of 1916 “were a clique within a clique within a clique”. The Irish Volunteers who, along with the Marxist Irish Citizen Army, mounted the 1916 rebellion, numbered 180,000 men on the outbreak of the First World War. 170,000 of these joined the British army. Of the 10,000 left only 2,000 went out with Pearse at Easter Week. Yet Pearse, like the sweaty terrorist yesterday, claimed to speak for the Irish people.

Yet these men who, acting on their own, unleashed violence on the streets of Ireland are venerated by mainstream politicians in the south. Until this changes we will never hear a true condemnation of dissident Republicanism. As Dudley Edwards puts it “as long as we continue to glamorise 1916 and any of what followed, we legitimise the activities of those who believe they carry the torch lit by Patrick Pearse”

This is why we wont yet see strong action taken against the Real IRA. Newly respectable Sinn Fein and long respectable parties in the Republic might well look at the Real IRA and see only an unwelcome, distant, grubby and deluded cousin, but they see a cousin all the same.

The failure of Fianna Fáil

So long Soldiers of Destiny

Fourteen months ago Fianna Fáil were in a coalition government with the Progressive Democrats. The PD’s no longer exist and on 25th February Fianna Fáil was wiped out at the ballot box.

The defeat was seismic. Going into the election Fianna Fáil had 70 seats out of 166 in the Dáil Éireann ruling in coalition with 6 Green Party members. Afterwards the Party was reduced to 20 seats having lost 24% of their vote, the worst result in the party’s history. The Green Party lost all its seats.

The defeat was also historic. Fianna Fáil were founded in 1926 by Eamonn De Valera who had fought in the Easter Rising of 1916 and been a leader of the Anti-Treaty forces in the Irish Civil War of 1922-1923. The winners of that war, the Free State government established by the treaty with Britain, formed a party named Cumann na nGaedheal, later Fine Gael, which dominated Irish politics in the first decade after independence.

Formed to rid Ireland of what it saw as lingering British influence Fianna Fáil became one of the most successful political parties in the western world. In the 79 years since the election of its first government in 1932 Fianna Fáil has been in power for 61 of them.

Beyond its commitment to Irish Republicanism Fianna Fáil never had much in the way of a coherent ideology. Its perennial opponents, Fine Gael, were generally described as ‘centre right’ but whereas they often worked in coalition with Labour in their rare spells in government it was Fianna Fáil which allied with the free market PD’s in the 1980’s and 1990’s to enact a raft of reforms which reinvigorated Ireland’s moribund economy.

If a party has no clear ideology what sort of person does it attract? Sadly for Fianna Fáil and Ireland the answer was all too often crooks and chiselers on the make. The business dealings of the notoriously corrupt Charles Haughey, Taoiseach on and off between 1979 and 1992, prompted two separate public inquiries. His successor but one, Bertie Ahern, was embroiled in yet another corruption tribunal.

It was this ceaseless quest to line its own pockets that did for Fianna Fáil. They schmoozed with Ireland’s bankers who were getting rich thanks to the low rates they could borrow at following euro membership. And when the banks got into trouble in 2008 Fianna Fáil agreed, late at night, behind closed doors and with almost no consultation, that the Irish taxpayer would cover their losses. The party of De Valera’s ‘frugal comfort’ lashed themselves and their prospects to the fortunes of the banks and as the banks losses spiraled Fianna Fáil’s electoral prospects withered.

The prospects for Fianna Fáil are not good. The rump left in the Dáil are mostly the party’s old hands, linked with the government that bankrupted the country. A party which has relied on patronage (also known as kickbacks) will find this power deserts it in distant opposition. A party founded on Republicanism has been crowded out by Sinn Féin. They have no flag left to rally round.

The prospects for other parties appear better. With 37 seats Labour had their best election result ever and look set to join Fine Gael in government. But that could just be the start of their troubles. They are closely linked to Ireland’s trade unions which are unlikely to suffer the implementation of EU dictated austerity in silence. Unless there is significant give in the conditions of Ireland’s bailout from Brussels Labour could end up skewered like the Liberal Democrats across the Irish Sea.

Fine Gael has not been in such a commanding position since the late 1920’s but they too could find a warning in Britain. There a coalition elected to clean up the fiscal mess of a previous government is struggling in the polls against the party which left it. People have short memories and the more unpleasant the medicine the more they are inclined to discount the illness that necessitated it.

For Labour and Fine Gael triumph might be short lived but Fianna Fáil, once the natural party of Irish government, will struggle to capitalize. A sad impasse for the Soldiers of Destiny, but an utterly deserved one.

This article originally appeared at Global Politics