Closing the stable door before the horse has voted

After the weekend’s orgy of ball sports, the fun continued in Ireland last night with the blood sport of democratic debate around the Fiscal Treaty referendum – and by extension, Ireland’s ability to access ESM funding – beamed live and direct via the Frontline.

The outcome of the debate, and with it the referendum, are irrelevant.

The ESM is essentially a mechanism designed to save the euro; alas, events have in Greece and Spain have overtaken it, and it is now not worth the paper a Yes or No poster is printed on.

Quite simply, it no longer adds up – if it ever did.

Should there be a run on Spain’s and/or Italy’s banks and a bailout of either or both is needed, the cupboard will be bare when Ireland returns for its inevitable second bailout.

No Yes vote in the world will bring stability to that situation; in fact, the only thing that can bring stability in that situation is massive blood-letting from investors who, faced with the bankruptcy of Europe and the end of the European project as we know it, would finally be forced to realise the risks we have until now taken on their behalf.

For the most important question in this referendum is not a new one; it has simply been posed to the wrong side thus far in the debate.

From the outset, the No side has been asked where the money will come from if we vote No. The real issue is where the money will come from if we vote Yes to enshrining austerity in our constitution and to signing away our fiscal sovereignty forever.

Once all this is done, where will the money come from when the Spanish and Italian banks have hoovered up every available cent?

Once again, events have overtaken our lumbering democracy and our slow-witted politicians, whose lemming-like inability to understand the situation puts the European and global economies in clear and present danger.

The ESM is no magic bullet. Even if it was, it is nowhere near capable of bringing down the runaway beast that is Europe’s debt problem.

For over three years governments have tried and failed to put a sticking-plaster of austerity on the gaping wound of bank debt, and they are still stunned that it doesn’t seem to be working.

What is needed now is to do the unthinkable and embrace a very radical solution that will bring this crisis to a shuddering halt and let us get on with recovery. That solution would be to let banks fail, write down sovereign debts that have been taken on in an attempt to save them, and let states make an organised exit from the euro if they wish.

Not only is the ESM not the radical solution that is needed, it’s no longer any sort of solution at all.

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