# Why not call in the IMF? Whats the downside?



## rogeroleary

The usual discussions about gloom & doom over coffee / lunch in the job and people talking about possible solutions, the one thing that keeps coming up is "at this rate we could have the IMF coming in".

What I can understand is, what is the problem with the IMF coming in? As I see it this government, and the possible alternatives and highly unlikely to make any of the seriously radical decisions to curb expenditure and remove unsustainable wastage that they have created over the last 15-20 years.

Bringing in the IMF would mean that they could lend us the cash  but then insist that we address some of the structural issues such as social welfare expenditure, pensions, public service numbers, and many of the other things that make us uncompetitive but no government will ever really address.

By the IMF providing a dictat the government could then turn around to the vested interests, shrug the shoulders and say "it's not us, it's the IMF that's making us do this" and we could all get out of this hole.

So what's the downside?

Roger


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## Towger

*Re: So, what's the problem with the IMF?*



rogeroleary said:


> So what's the downside?



Well that depends on who you are, or who you work for! 
The IMF work on the principle of balancing the books. So, if you take in X euro in taxes, you can only spend X euro. Is this means firing half the Public Servants in the country and dropping the pay of the remaining by 40% and then cutting Social Welfare payments by 50%, then they will do it! No messing about.


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## thespecialon

*Re: So, what's the problem with the IMF?*



Towger said:


> So what's the downside?



Well just search for case studies on IMF interventions in the past..my reading of them wouldnt indicate a great outcome for the countries..But if they did come in and 'fire' half of all public servants(which mainly constitutes Guards,Teachers and Nurses/HealthCare Staff) I dont think that would be good for anyone..Only the super rich would escape unscathed if they came in I think..They could afford personal security to replace the guards,Send their kids to private schools and pay for their private healthcare or go abroad for it !!


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## rogeroleary

*Re: So, what's the problem with the IMF?*



Towger said:


> The IMF work on the principle of balancing the books. So, if you take in X euro in taxes, you can only spend X euro.


 So far so good.............


Is this means firing half the Public Servants in the country and dropping the pay of the remaining by 40% and then cutting Social Welfare payments by 50%, then they will do it! [/quote] *Would it really be that bad - my understanding is that the Public Service bill is around €21bn and Social Welfare is about the same. Cutting both by 25% would save in excess of €10bn which is where the govt has said they want to get to.*

*So, how many former public servants need the pensions they now enjoy? I know several who have pensions several times their outgoings. And in relation to public service numbers - they increased by 100,000 during the Ahearn regime - what are they all doing? In terms of Social Welfare - there are significant poverty traps where "lone parents" or married men with 3-4 kids would need to be paid vastly more than the going rate for them to show any interest in taking paid employment. *

*I would have thought that the IMF would be able to make obvious decisions that the government / opposition will never make because to do so would mean certain defeat at the next election. This is a home grown monster where the TDs don't look at the bigger picture - the game is survival and if they leave behind a legacy of debt to our kids, well that's someone else's problem!*

*Roger*
PS. The IMF would probably identify that we don't need a Seanad, we only need half the number of TDs (and a smaller % of ministers of different flavours) and a fraction of the 270 local authorities I've just heard them refer to on the radio just now.


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## Firefly

*Re: So, what's the problem with the IMF?*

Bring 'em in...the Last Chance Saloon is getting awefully depressing


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## rogeroleary

*Re: So, what's the problem with the IMF?*



Firefly said:


> Bring 'em in...the Last Chance Saloon is getting awefully depressing


 
Agreed, especially when we keep hearing "wait till you see the next budget" and leaks about carbon tax, property tax, water taxes and so on....... Let's just get on with it so we don't have to see & listen the bearded ones and all that social partnership crap as so ably demonstrated in Dublin Bus over the last few days.

If the body need surgery - let's get it over with sooner rather than later. We can then concentrate of electing some form of government that ttries to demonstrate responsibility as opposed to carving up the cake amongst themselves and their cronies.

Roger


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## path

*Re: So, what's the problem with the IMF?*

At least we would know where we stand and what is being done about it


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## rogeroleary

*Re: So, what's the problem with the IMF?*

Sounds like we might have a quorum here....... anyone interested in forming a single issue party for June 5th?   - we should stroll the bye election for Seamus Brennans seat anyway! 

Roger
"Release the IMF Campaign"


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## Artois

*Re: So, what's the problem with the IMF?*

Its a real pity that but it looks like a nailed on certainty that they will end coming in. Our Government knows the ship is sinking and has made no genuine effort to get back on track, the opposition talk a good game so long as it does not involve them being forced to give up their double pensions and increments.

Unfortunately it looks like the IMF is coming to town. If it is inevitable, it is probably better that they get here sooner than later.


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## rogeroleary

*Re: So, what's the problem with the IMF?*

Fully agree... across lunch I keep hearing how much it would reflect on our international reputation if they did come in, but I can't imagine our reputation is being enhanced with quarterly budgets and political inertia because we happen to have encouraged small minded politicians who think short term. And this follows 10 years of a leader who threw money at everything by way of resolving what should have been difficult discussions.

Roger


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## mfh1

*Re: So, what's the problem with the IMF?*

ive been sayin all this for 6 months.the only problem is they need to get here before those buffoons have run up a national debt of 150billion.id be up for that imf party idea


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## csirl

*Re: So, what's the problem with the IMF?*

Why do people want the IMF? Can anyone point to any country they've gone into that has thrived afterwards? Their track record is very very poor.


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## UptheDeise

*Re: So, what's the problem with the IMF?*

If we bring in the IMF, they will butcher public spending and the public sector. but do you really think that people in the public sector would just stand by and take it? They would be strikes all over the place. What about all the cut backs to our services? People will not put up with it, we would end up with massive civil unrest.

Countries that had the IMF come in are giving the status of basket case and we would find it impossible to attract foreign investment in the future.

The rich would up sticks and leave taking they're capital and jobs with them.

Finally, the IMF wouldn't come in as their broke.


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## GeneralZod

*Re: So, what's the problem with the IMF?*

Here's a map of IMF member countries 
	

	
	
		
		

		
			





. North Korea & Cuba are missing.
There must be something worthwhile about the organisation that makes the rest of them want to join.


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## rogeroleary

*Re: So, what's the problem with the IMF?*



UptheDeise said:


> If we bring in the IMF, they will butcher public spending and the public sector. but do you really think that people in the public sector would just stand by and take it?


 
Between the time Bertie "I won the money on the nags" came to power and the time he left we increased the number of public servants by 100,000. Looking at things like health, crime and general bureaucracy I really don't think it would be such a bad thing to get back to where we were if it meant we were more sustainable.

Roger


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## Latrade

*Re: So, what's the problem with the IMF?*

Though on the downside is the long term affect on our reputation. Declaring yourself bankrupt might get you out of an immediate financial problem, but it doesn't bode well for your future and people's trust in you.

In addition we run the risk of losing the things we (or at least some of us) might want to hold on to. Not just a public health service, but those little things that have irked our much bigger cousins for a long time like corporate tax rates. If we want IMF help, there's a chance the first thing they'll do is get rid of the perks of business in Ireland to suit their own needs.


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## Askar

*Re: So, what's the problem with the IMF?*



Latrade said:


> Though on the downside is the long term affect on our reputation. ...


 
Good points. Does the IMF not also have its political agenda - much like Cheney's buddies in Halliburton benefited from 'rebuilding' of Iraq.


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## meatmonger

*Re: So, what's the problem with the IMF?*

No political party is going to have the guts to make the cuts needed in this country.  they (all of them sitting in that chamber (and they should make it a gas chamber)) can't even cut their own payments to themselves for god sakes.

Bring on the IMF before we are debted even more to the necks.

I will vote for any IMF party. Bring them on.


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## ivor james

*Re: So, what's the problem with the IMF?*

and what about the hundreds of thousands of people in neg equity with no job? will the IMF simply wipe away their debt? No I dont think so.  We will end up like latvia or romania or the like except of course we also have all this debt as well!


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## meatmonger

*Re: So, what's the problem with the IMF?*



ivor james said:


> We will end up like latvia or romania or the like except of course we also have all this debt as well!


 
maybe, but both these countries are higher up in the competitiveness league than us.  also I think zimbabwe contracted by 45% and we were next worse in the world by contracting 16%.  much rather be a latvia.

ps.  the imf didn't hand out the big loans for negative equity.  that was the governement & banks at the request of the irish people.


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## ivor james

*Re: So, what's the problem with the IMF?*

All of that may well be true meatmonger,but the fact remains that when people start to get thrown out of their houses en-masse there will be anarchy! Of that you can be certain.


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## VOR

*Re: So, what's the problem with the IMF?*

Or an "IMF RIOT" as this piece calls it. 
[broken link removed]


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## Ethan 1

For all the brave souls wishing the IMF would arrive, take a look at the following documentary.

[broken link removed]

educate yourself before you make naive statements.


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## RMCF

Cant understand those calling for the IMF to come in.

It seems to be based on a vindictiveness towards the public service from what I read into it, which is silly, cos if the IMF come in here, no-one will touch Ireland with a barge pole and the country will go back decades.

Making our own painful cuts is best


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## z107

> Cant understand those calling for the IMF to come in.


They will do a far better job than the current government are.

I doubt anyone actually wants tax increases and swingeing cuts, but they are on the horizon. I'd rather the IMF sorts this out rather than wait for the government to completely destroy Ireland (it they haven't already)

The longer the current government are in power, the more bitter the medicine will have to be.


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## RMCF

umop3p!sdn said:


> *They will do a far better job than the current government are.*
> 
> I doubt anyone actually wants tax increases and swingeing cuts, but they are on the horizon. I'd rather the IMF sorts this out rather than wait for the government to completely destroy Ireland (it they haven't already)
> 
> The longer the current government are in power, the more bitter the medicine will have to be.



The Gov are getting a lot of abuse for their cutbacks and how much pain its causing/going to cause.

You aint seen pain til you've seen IMF pain.


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## thedaras

Who?? who will suffer the pain??
Would it be anyone overpaid and underworked?


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## RMCF

It may be, but these folk are the ones who are going to get hit hardest in the next few budgets I'd say. 

The Gov know the public sector costs far too much, and they will have to try to address this, despite what the unions will have to say about it.

But still would be better for the Gov to tackle it than the IMF.


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## Towger

RMCF said:


> But still would be better for the Gov to tackle it than the IMF.


 
That is very true, but do you honestly see the government (current and future) doing so.  At best they would take years and all the time the problem will get worse and the cuts will end up having to go deeper.


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## thedaras

I doubt very much that any government would tackle this situation.
Mainly because the unions are so strong here,and change would be impossible to implement..
If/when the IMF come here,there will be no negotiating...


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## Shakespeare

Is it not also true though that if the IMF did have to come in, any few cent you may have managed to save in any of our financial institutions could be wiped out?


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## RMCF

The unions will have to decide whether its better to advise their members to take cuts by the Irish Gov with each budget, and keep their jobs, or stand firm and wait til the country goes bankrupt, then see how many survive with their jibs after the IMF arrive.

As for the idea of losing your savings if the IMF intervened, not sure about this. Surely they can't take away peoples savings?


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## csirl

Two points.

Firstly, does the IMF have a magic potion that can be used on unions to stop industrial unrest? My guess is that if they came in here and fired public servants, the remainder would go on strike in sympathy. Ireland is not like some developing nations where you can send the army onto the streets to shoot/detain anyone who protests or goes on strike. 

Secondly, at the risk of starting a constitutional law debate, Ireland is not like other countries where the organs of the state are above the citizens in the pecking order. We are unique in that absolute sovereignty is vested in the citizens, so the organs of the state are below the citizens. This means that, unlike most other countries, the state cannot restrict in law a citizens right to sue and claim compensation. It can also be forced to perform contracts it has with its citizens - unlike other places whereby they can just change the law. People on this thread have alluded to pensions etc. being cut, savings being taken etc.. In a lot of cases this could leave the government, and the IMF itself, open to legal actions that would make the army deafness claims look like small change. 

Wouldnt it be ironic if the IMF was bankrupt by compensation claims? My guess is that the most the government can do is seek non-binding advice from the IMF. If I were the IMF there is no way I'd come to directly run Ireland due to the legal risks involved.


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## Purple

The issue of how debt management, and government bond default, will affect our sovereignty is interesting. The once great Ottoman Empire was carved up not by nations (although Catherine the Great of Russia did give it a go)but by its bond holders, mainly French and British, and culminated in the Anglo-French occupation of Egypt. 
I’m not saying that we will see any gunboat diplomacy but in the end he who pays the piper calls the tune. Without money governments are powerless, leaders cannot lead. The best historic example of this that I can think of is England after the restoration; the only power parliament took from the crown was the right to levy taxes because that’s all they needed.


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## z107

> Firstly, does the IMF have a magic potion that can be used on unions to stop industrial unrest? My guess is that if they came in here and fired public servants, the remainder would go on strike in sympathy. Ireland is not like some developing nations where you can send the army onto the streets to shoot/detain anyone who protests or goes on strike.


Why do you think this?
We're probably going to get some degree of social unrest at some stage. Why do you not think the army will be used? That is one of the main functions of the army after all.
What really separates us from developing countries? - money?


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## csirl

umop3p!sdn said:


> Why do you think this?
> We're probably going to get some degree of social unrest at some stage. Why do you not think the army will be used? That is one of the main functions of the army after all.
> What really separates us from developing countries? - money?


 
I dont think our army would take an aggressive stance against any protests and be willing to kill people - and rightly so. I also dont think that it is right to force people to work or else they lose their life or liberty.


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## Chris

umop3p!sdn said:


> Why do you think this?
> We're probably going to get some degree of social unrest at some stage. Why do you not think the army will be used? That is one of the main functions of the army after all.


No it is not and should never be a funciton of the military. The military's function is to provide protection from foreign aggression. Soldiers are not trained in law enforcement and should never be used for this purpose, especially not in public protests.



umop3p!sdn said:


> What really separates us from developing countries? - money?


By that I assume you mean lack of money. Ireland as a whole is one of the most indebted nations on earth. There are many developing countries that are in far better financial situations than Ireland.


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## Kev

Then why is Ireland sending so much money abroad by way of foreign aid.


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## RMCF

Kev said:


> Then why is Ireland sending so much money abroad by way of foreign aid.



Because it would be embarrassing if we announced we were so broke that we couldn't even donate money to starving people, even though I'd guess a lot of money goes to corrupt officials, Govs etc.


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## Kev

I think charity begins at home, on the site months age there were  pensioners at their wits end because they did not know where the next meal was goiing to come from..

Countries that are getting aid I think is India and I also think China these are big economy now so why is Ireland giving money to countries like this, but there again I could be wrong the counties above may not be getting foreign aid from Irealnd. Does anyone know who is benefiting from Irish aid in foreign countries.


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## Protocol

Kev said:


> there were pensioners at their wits end because they did not know where the next meal was goiing to come from..


 

I find this hard to believe as the typical State pension is 200+ per week.


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## build4less

I think we all may accept that this country is bankrupt and is unlikley to work its way out of this anytime soon. I say bring in the IMF kick out all those asses in the dail and start again. How did bertie get away with all this and leave Cowen with a dirty bed. As for Cowen he needs to step down now he is not wanted and never was but yet he stays there, why cause he is a total biffo and does not care about you or me all he cares about are ratings. Its a joke this country is a joke. 

I say bring on the IMF or ask England to take us back and we should appoligse for the state we left it in.


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## Kev

Protocol said:


> I find this hard to believe as the typical State pension is 200+ per week.




Hear the link hope it opens for you, you will that there are a lot of pensioners on fixed incomes.

http://www.askaboutmoney.com/showthread.php?t=139477&highlight=vincent+st+paul


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## Towger

Kev said:


> Hear the link hope it opens for you, you will that there are a lot of pensioners on fixed incomes.
> 
> http://www.askaboutmoney.com/showthread.php?t=139477&highlight=vincent+st+paul


 
The OP is 71 and has a combined tax free income of over €400 per week, but still seems to have big mortage and other borrowings... Sounds more like Celtic Club syndrome to me.


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## soy

If the Govt can't sort it out, then it is likely that the EU will step in (for political reasons, EU would not want IMF to have to enter a Euro country). Nevertheless the cuts will be savage and they will also use it to end our low corp tax rates. Long term that will be a disaster and will take decades to recover, if at all..


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## dockingtrade

soy said:


> If the Govt can't sort it out, then it is likely that the EU will step in (for political reasons, EU would not want IMF to have to enter a Euro country). Nevertheless the cuts will be savage and they will also use it to end our low corp tax rates. Long term that will be a disaster and will take decades to recover, if at all..


 
is this fact though (EU stepping in) surely they would want the country to grow again, attract investment and reduce unemployement?


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## onq

We need to develop products for export at a competitive rate and we need a serious overhaul and revised taxation of the capitalist systems and in particular the over the counter trading engaged in by the banks.

A ten per cen tax on the 14 Quadrillion dollar annual market in derivatives should soften their coughs and re-finance the governments.

ONQ.


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## shnaek

onq said:


> A ten per cen tax on the 14 Quadrillion dollar annual market in derivatives should soften their coughs and re-finance the governments.



The fact is, we have hard decisions to make, and like it or not we have to make them. There is no magic pot of gold. I wish there were.


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## mainasia

thespecialon said:


> Well just search for case studies on IMF interventions in the past..my reading of them wouldnt indicate a great outcome for the countries..But if they did come in and 'fire' half of all public servants(which mainly constitutes Guards,Teachers and Nurses/HealthCare Staff) I dont think that would be good for anyone..Only the super rich would escape unscathed if they came in I think..They could afford personal security to replace the guards,Send their kids to private schools and pay for their private healthcare or go abroad for it !!


 
They do not need to fire so many, maybe let go 10-20% and cut the pay of everybody else 20-30%. It's pretty obvious what needs to be done!


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## mainasia

RMCF said:


> Cant understand those calling for the IMF to come in.
> 
> It seems to be based on a vindictiveness towards the public service from what I read into it, which is silly, cos if the IMF come in here, no-one will touch Ireland with a barge pole and the country will go back decades.
> 
> Making our own painful cuts is best


 
The 'painful' cuts are not going to work.

Why?

4 billion cuts every year for the next 4 years? Politically I think it's impossible and Lenihan is a complete spoofer having just said he won't touch public service pay/salaries again for years (so what the hell will they cut?), in addition the cuts will further dampen demand and growth in the economy...thereby making it impossible to pay the bondholders and their increasing interest charges (interest payments will be 5 billion a year 4-5 years later). Once the bondholders sense we cannot pay back our debt and cannot grow the economy they will withhold buying and it seems a 99% certainty the ECB will step in soon.

It just doesn't add up and the cuts that are being made, while I agree with them, are too late.


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## Chris

onq said:


> We need to develop products for export at a competitive rate and we need a serious overhaul and revised taxation of the capitalist systems and in particular the over the counter trading engaged in by the banks.
> 
> A ten per cen tax on the 14 Quadrillion dollar annual market in derivatives should soften their coughs and re-finance the governments.
> 
> ONQ.



I believe this has been corrected on numerous threads where you mention this untouched pot of gold. (here's a comment from darag: http://www.askaboutmoney.com/showpost.php?p=1019310&postcount=3)
The derivatives market has a total liability of somewhere around the number you mention. But this is not the value of transactions. Very, very far from it.
I posted the following before, but I can't find it.
The FX market is by far the largest market in the world with about $4tr traded daily. Only about 10% of that is through futures contracts or other derivatives, leaving about $400m per day. Speculators you leverage which can be as high as 500 to 1, which further reduces the actual amount of transactions. The untapped pot of gold just doesn't exist. Governments need refinancing because the messed up, and they should be looking at their expenditure and not the further punish the private sector.


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## rogeroleary

Hi, I started this thread 18 months ago because I thought we were in a dangerous situation and the lack of leadership in government was patently obvious as there was no ability to make the hard decisions necessary.

18 months later sadly the situation is a lot worse, the currrent Taoiseach having to apologose for being "hoarse" after an FF gig in Galway, the previous incumbent hiding in cupboards for tabloid papers after "winning all that money on the horses" and the current Minister for Finance telling us we had turned the corner last December (must have been a 360 degree corner!).

So now we have SIPTU handing back most of the junket slush fund, all the lads who transferred properties to their Mrs(s) pre NAMA apparently were cute hoors and hypocrites like Gormley get the DART to Dun Laoghaire while the limo waits to picks them up in Holyhead en route to the Dorchester. This at a time when he is happy to expose us to huge claims by Covanta for not facilitating the commissioning of the incinerator purely because its in his patch - meanwhile we are happy to use other countries incinerators ....so much for principle!

Meanwhile we continue to borrow like there is no tomorrow.....an the IMF looks like an increasingly attractive option (note to self......should have set up that party in 2009!!!). All this bull about about consensus.....what's all that about......we have a huge democratic deficit in this country, the system is broken forever. Politicians who get elected have 1 agenda - to get re-elected and everything iss doone in that context. Trade Unions who represent about 10% of the population don't give a toss about the other 90% of the population. People who don't perform in the political / public sector are protected or worst case receive crazy payoffs. 

It's over 2 years now since the 2 Brians bet €120,000 on behalf of every man, woman and child with the guarantees. Now they are borrowing an extra €120 per week for every man woman and child. Did anyone get to vote for these kind of policies? They signed the Croke Park agreement with their buddies...no compulsory redundancies and not more pay cuts for 4 years - what a joke! How the hell can these people make these outrageous committments without having to go to the country.....

it's over, bring in the IMF and lets take our punishment for having elected the "cutest most cuning of them all" on 3 seperate occasions and get a new system in place to prevent this happening again.............

Roger


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## Chris

rogeroleary said:


> ...
> it's over, bring in the IMF and lets take our punishment for having elected the "cutest most cuning of them all" on 3 seperate occasions and get a new system in place to prevent this happening again.............
> 
> Roger



You couldn't have summarised it better. Given all the political bovine dung of especially the past couple of weeks I would welcome the IMF with open arms.


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## runner

Well said, Roger.


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## Complainer

rogeroleary said:


> Hi, I started this thread 18 months ago because I thought we were in a dangerous situation and the lack of leadership in government was patently obvious as there was no ability to make the hard decisions necessary.
> 
> 18 months later sadly the situation is a lot worse, the currrent Taoiseach having to apologose for being "hoarse" after an FF gig in Galway, the previous incumbent hiding in cupboards for tabloid papers after "winning all that money on the horses" and the current Minister for Finance telling us we had turned the corner last December (must have been a 360 degree corner!).
> 
> So now we have SIPTU handing back most of the junket slush fund, all the lads who transferred properties to their Mrs(s) pre NAMA apparently were cute hoors and hypocrites like Gormley get the DART to Dun Laoghaire while the limo waits to picks them up in Holyhead en route to the Dorchester. This at a time when he is happy to expose us to huge claims by Covanta for not facilitating the commissioning of the incinerator purely because its in his patch - meanwhile we are happy to use other countries incinerators ....so much for principle!
> 
> Meanwhile we continue to borrow like there is no tomorrow.....an the IMF looks like an increasingly attractive option (note to self......should have set up that party in 2009!!!). All this bull about about consensus.....what's all that about......we have a huge democratic deficit in this country, the system is broken forever. Politicians who get elected have 1 agenda - to get re-elected and everything iss doone in that context. Trade Unions who represent about 10% of the population don't give a toss about the other 90% of the population. People who don't perform in the political / public sector are protected or worst case receive crazy payoffs.
> 
> It's over 2 years now since the 2 Brians bet €120,000 on behalf of every man, woman and child with the guarantees. Now they are borrowing an extra €120 per week for every man woman and child. Did anyone get to vote for these kind of policies? They signed the Croke Park agreement with their buddies...no compulsory redundancies and not more pay cuts for 4 years - what a joke! How the hell can these people make these outrageous committments without having to go to the country.....
> 
> it's over, bring in the IMF and lets take our punishment for having elected the "cutest most cuning of them all" on 3 seperate occasions and get a new system in place to prevent this happening again.............


There are lots of people blaming 'the system' to avoid their own guilt. Put the blame where it rightfully resides - with a generation of Fianna Fail led governments.


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## rogeroleary

Complainer said:


> There are lots of people blaming 'the system' to avoid their own guilt. Put the blame where it rightfully resides - with a generation of Fianna Fail led governments.


 

Couldn't agree more C and it's even worse for me when I'm perched at the bar in Fagan's trying to enjoy a pint and having to look over at the fella in the cupboard and his €7 million pension package!!! Sickening, but at least I have the solace of never having voted for that shower!

R.


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