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Alternative to bank bailouts and austerity needed to solve Euro crisis – Doherty

5 October, 2011 - by Pearse Doherty TD

Speaking today during a debate on the crisis in the Eurozone, Sinn Féin finance spokesperson Pearse Doherty said that the government’s approach to the Eurozone crisis is clearly failing and that a new approach is needed.

Deputy Doherty said:

“The Minister for Finance today told us that the government’s economic strategy is working

“However on this government’s watch Ireland has been demoted to junk status, unemployment remained over 14% while domestic demand has fallen by 3.6%.

“The government has also continued Fianna Fáil’s policy of using tax payers money to bailout unguaranteed bondholders including the payment of €704m due to be paid on November 2 to an unguaranteed senior bondholder with Anglo Irish Bank. Meanwhile funding for special needs assistants and benefits to pensioners, carers and those with disabilities has been cut.

“These are the indicators against which people are measuring the government’s economic strategy.

“It is time for a new approach to resolving the crisis of the Eurozone and to address the crisis in the domestic economy..

“At a European level we need rigorous and compulsory stress tests to establish the true extent of the toxic debt at the heart of the European banking system. Once we know the full extent of the problem, the banks must be forced to write down the cost of their bad debts as a prerequisite to any recapitalisation.

“We also need the European wide stimulus programme to compliment stimulus programmes in individual member states. Such a programme must mobilise the considerable funds available to the European Investment Bank, a body with twice the lending capacity of the World Bank, to help generate employment and stimulate domestic demand.

“These three steps; cleansing the banks of their toxic debts; using the ECB to stabilise the cleansed banks; and increasing investment in job creation at a domestic and European level provide a coherent alternative to the failed policies of bank bailout and crippling austerity being pursued by this Fine Gael and Labour government and their colleagues in the European Council and Commission.

“It is time to abandon the policies of bank bailouts and austerity. It is time to adopt new policies to cleanse our banking system and stimulate our economies.”

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