Downgrading of Irish debt to junk status brings inevitable default ever closer

We must refuse to pay debts to bondholders and invest to redevelop economy

The downgrading of Ireland’s debt to junk status by ratings agency Moody’s is “yet another nail in the coffin of the economic policy of the Labour/Fine Gael Government and brings us one step closer to inevitable default” according to Dublin MEP Paul Murphy.

The almost-euphoria that Minister for Finance, Michael Noonan told us about this morning now looks more than a little premature. Four months since resurrecting the failed policies of Fianna Fail and the Greens, this Government has got its scorecard from Moody’s rating agency. Despite continuing to implement the savage austerity demanded by the markets, this has still failed to satisfy them.

Moody’s justification for their actions actually confirm the arguments of the Socialist Party. Their statement says, ‘Although Moody’s acknowledges that Ireland has shown a strong commitment to fiscal consolidation and has, to date, delivered on its programme objectives, the rating agency nevertheless notes that implementation risks remain significant, particularly in light of the continued weakness in the Irish economy.’ So, despite doing everything the markets demand, the result of vicious austerity has been to fundamentally weaken the economy.

The markets, like Moody’s, are saying that they believe Ireland will default. It is now time for the government to stop the pretence that everything is ok, remove its head from the sand and stop prostrating in front of the markets. Default is now unavoidable, but the question is when and what kind of default. The government, implementing the diktats of the Troika would like to continue to close hospitals, sack Special Needs Assistants and attack the lowest paid workers, further deepening the economic and societal crisis before inevitably defaulting.

The Socialist Party says that instead of pouring billions more down the black-hole of interest repayments, while savaging the living standards of working people, we must now refuse to pay the debts to the banks and super-rich speculators. Instead, the wealth and assets of the super-rich in Ireland must be targeted through progressive taxation and corporation tax should be raised to close the gap between public expenditure and revenue. Key natural resources like Corrib gas must be brought into democratic public ownership together with the key sectors of the economy to enable a democratic plan to be put in place to get people back to work, redevelop the economy and put the interests of the millions before those of the millionaires.