From :Christopher M. Quigley
to: Thomas For your attention:
Sent To All Dail Member Today:
“Pacta Sunt Servanda”
“Article 4 states that a country must not have a debt bigger than 60%of what it produces in a year (its GDP). If it does, it must reduce its debt byone-twentieth of the excess each year. This is an existing EU rule.”
Seeking ClarificationPlease. This is my understanding ofArticle 4 of the Stability Treaty and its implications for the Irish economy.If I am wrong will somebody please elucidate.
Theabove statement regarding Article 4 is on the Government’s referendum website. Please notice that it says that the60% provision relating to GDP and debt level is ” an existing rule”.
CurrentlyIreland is breaking this rule but has had bonds backed by the old”Stability Facility”.
Underthe new treaty we are told the letter of the law will be applied. (“PactaServa Sunt”: Olli Rehn is so quoted as saying that the Euro Community”is a community of laws” and as such “all written commitmentsmust be fully adhered to”). Thusgoing forward, under the new paradigm, Ireland will not be allowed to havetotal government borrowings in excess of 60% of GDP. Ergo:
Our total debt isapprox: 148 Billion Euro
Our GDP is approx: 156Billion Euro
60% of GDP is approx: 94 Billion Euro
GDP Austerity Cutsapprox: 54 Billion Euroover 20 years which means 2.7 Billion a year.
Source: CSO Press Release November 2011. Seeattachment.
Thus additional cutsof 2.7 Billion Euro will have to be added to the cuts already beingadministered by the Troika. When this IMF/ECB/EU facility expires in 2013yearly “GDP Austerity Cuts” in addition to the current “FiscalBudget Austerity Cuts” will apply for the foreseeable future (possibly for20 years or as long as 60% Gross Gov. Debt/GDP deficit applies). Given that major economies are now in doubledip recessions it is unlikely that “growth” will be able to mitigatethese cuts which now have to be set in unbreakable constitutional terms. Ittherefore appears to me that this treaty is an “austerity treaty”
and it would appearthat this is why it was not backed by Britain and is being fought against byHolland, France and Spain as we speak.
Thanking you all foryour assistance in this critical matter.
- Debt and economic growth (tobolds.blogspot.com)
- Going Dutch: The Netherlands to abandon the euro? – RT (2012indyinfo.com)
- McCarthy: This burden of bank debt is simply not sustainable (thepressnet.com)
- While the Irish economy burns, NAMA fiddles atop a €5bn cash mountain (namawinelake.wordpress.com)
- Yes, Austerity in Europe is Making a Major Fiscal Crisis Not Less But More Likely. Why Do You Ask? (delong.typepad.com)
- Here’s How Europe Turned Into a Train Wreck (dailyfinance.com)