Ireland’s Finances

What’s the difference between the government wage-packet and one from a private employer?

Well, one big difference is this: the government immediately gets to take back half the wages it pays out, in tax and social insurance.  It then takes another 20% of every euro spent out of the remainder, and every time a euro of that money is further circulated, the government takes another bite.  In the end it all goes back into the pot.

On the other hand, when a private employer pays wages, the money is gone.  He has to make more profits to pay the workers next week.

Therefore, the effect of public sector pay is exaggerated in two directions.  On the one hand, it doesn’t cost the government anything like what it would cost a private company to employ someone, because the government immediately takes back most of the money and grabs the rest as it filters through the economy.  This is not something a private employer can do.

So the real public wage bill is less than half of what it appears to be, which you would imagine is a good thing, but there’s a downside.  When you cut the public wage bill, the savings are far less than you think.

Anyway, it’s all a bottle of smoke.  The recent pension levy on the salaries of public servants will have almost no effect on the public finances, because it’s such a tiny element of the problem.  It won’t save the €2 billion so much beloved of Biffo.  It might save about half of that, if the affected workers don’t stop spending what they have left, depriving the economy of VAT and downstream income tax.

Did you know that the national debt is about 3% of the total debt incurred by this country through private and commercial borrowing?  Government debt is about €50bn, but the total borrowings of this country are somewhere around €1500bn.

That’s right.  You read it correctly.

One thousand five hundred billion euros.


That’s what this country owes.

€400,000 for every man., woman and child.  If there are five people in your household, that’s €2 million of debt they can pin on you.

Now you have to ask yourself something: did you incur this debt?  Did you remortgage your house to buy an apartment in Bulgaria?  Did you buy into the delusion that the price of a house is the same thing as its value?  Did you borrow €600 million to build a gigantic apartment complex in Dublin 4, or a skyscraper in Chicago?

I know someone who bought a house in Dublin.  An ex-council, semi-detached house in a fairly basic area, and for that he paid nearly half a million euros.  To be more precise, I should say he borrowed half a million euros.  Some bank decided that his newly-acquired ex-council house was worth as much as a beachfront property in California with its own swimming pool, or a chateau in the South of France.  So here we had a situation where we convinced ourselves that we weren’t living in ratty old former council houses with some knacker riding a piebald up and down the footpath outside our door, but instead we were living an Elysian dream.  Half the country thought they were living on the Upper East Side of Manhattan, and kept the curtains closed in case they spotted the knacker on the piebald and the dream dissolved.

And in that delusion, the bankers collaborated.  As did the property programmes on television, and the empty-headed wafflers who presented them, and the celebrity architects, and the estate agents, and the builders and the government.

Now, I’m about to do something you haven’t seen before. I’m going to let the government off the hook, but only a little.  You see, I’ve been saying here for three years, since I started, that the whole thing was a crock of shit, and I’ve been pointing the finger at Fianna Fáil.  This is true.  The politicians rode the gravy train, along with the bankers and the builders.  Every one of them had their snouts in the trough, and every one of them spun us the same line of pseudo-technical nonsense to bamboozle us.

I thought they were cynical, and I was right.  The politicians, the bankers and the builders were as cynical as it gets.

I thought the politicians, bankers and builders were greedy and in that I was also right.

But I never for a minute grasped just how fucking stupid the politicians, bankers and builders were.

It’s only now beginning to dawn on me that none of them a had a clue what they were doing, and the government still doesn’t.  After all, we’ve had a succession of finance ministers with absolutely no knowledge whatever of finance.

We had Ahern, who was nothing more than a political corner-boy with no training, education or expertise, a self-serving, two-faced little toad who could barely write his own name.  He was followed by Charlie McCreevy, a glorified bookie and political chancer, who believed in spending every penny he got.  He was followed by Cowen, the current Taoiseach, a man of better intellect, but with a legal background, and he in turn was replaced by another lawyer, Brian Lenihan.

What’s missing from that list, apart from integrity?

That’s right: what’s missing is any knowledge whatever of anything practical.

These were the inflated, self-aggrandising fools who preened themselves and felt gratified when a billionaire patted them on the head.  Good lads.

Peasants.  Plebs.  Out of their depth and holding on like grim death to the wads of cash.

I’m also letting the bankers off the hook, but only a little, because I think they may have believed their own bullshit.  How often in recent years have you heard an insurance policy, or a bank account described as a Product?  Not a service.  Not a deal.  Not an arrangement, but a Product.

This is self-delusion by bankers, aware of how insubstantial the thing is that they do, and so desperate to make it feel like a real activity that they adopted the language of hard industry.

Did you hear that fool John Hurley who runs the Central Bank last year assuring us that everything was all right? Do you remember him telling us that he’d stress-tested the banks?  More spurious theft of language from real, hard industry.

Will I tell Mr Hurley what a stress test is?  A stress test is where you take a piece of steel or concrete or laminated polycarbonate, and you twist it and stretch it and squash it and stamp on it and set fire to it until it fucking breaks!  And then you know how strong it is.

Hurley didn’t stress test the banks.  What he did was turn to his golfing partners some Saturday afternoon, and say, Eh, look, Fingers, Seánie, could I have a quick word?

And they said, Sure, Johnny.  What’s up?

Well, lads, I was just wondering if you were up to anything dodgy.  Everything ok?

No bother Johnny-boy.  Everythings’s laughin’

Oh all right.  That’s fine then.

Stress-test me bollix!

I’m even going to let the builders off the hook.  Not because I think they were less than greedy.  Not because I think they aren’t ignorant, illiterate gobshites.  Not because I think they’re honest.

No.  Just because they’re a crowd of pigs in the trough, and what would you expect from a pig but a grunt?


Previously on Bock:

Property Values in Ireland

House Prices

I Hate Duncan Stewart

Economic Mismanagement — The Irish Experience

Ireland second wealthiest country

Irish Government’s Budget Deficit


Pay-Cuts : Irish Government Prepares For Public Unrest


(Pic by la Craic)