It’s going to get a lot worse yet

Posted on

I remain, as ever, both fascinated and utterly perplexed by the financial markets. Take this from the Telegraph this morning:

Ireland’s borrowing costs have begun flashing warning signs again on fears the full damage from the country’s banking crisis has yet to surface.

Of course the full damage from the country’s banking crisis has yet to surface yet. It can’t have done. Although Ireland is going through the most remarkable pain the prospect of those having the desired impact are remote. Massive pay cuts, significant cuts in pension entitlements, cuts across the whole state sector that will in the longer run impact the very core of Ireland's ability to trade – based as it is on a well educated workforce – and so much  more have yet to have their full impact. Savings are still being eroded, people have yet to retire into poverty, health impacts have yet to be seen, nor educational ones, and the ability to service debt has yet to be really tested when Ireland has to maintain Euro membership or its appeal as the conduit of choice for US companies into Europe will be destroyed.

And yet, apparently, the markets haven’t appreciated that. Why not? Isn’t it obvious that announcing these measures is different from the grinding poverty, whether real or of hope and aspiration that they will create as their full impact comes to bear and people live with the consequences of bank failure?

What sickens me in the case of Ireland is that the impact on people is severe and yet some markets refuse to recognise that. Homelessness in Ireland is growing and there are 300,000 empty houses – about 10% of the total housing stock. many say they’ll have to be pulled down to maintain house prices.That is how sick is the damage banking has caused. And still the markets don’t get it.

And you wonder why I think we should do as much as possible to lessen their impact on people's lives?