The Spaniards, in the best bullfighter spirit, determinedly preferred not to refer to it as a bailout, but it certainly was. Caught in their own Quixotian condition, our ruling matadors, however, are much less articulate and what we all simply call recession they have been blatantly trying to project it as some sort of economic hiccup caused by the naughty, big-spender boys at Enemalta and, ah, yes, the crisis in the world’s manufacturing sector.
The truth is Malta is in dire straits and there’s no going on about it in a different way. Too many years, whole decades in fact, of financial irresponsibility and the terrifying reality of snowballing debts and gaping budgetary deficits have literally brought the working people and the pensioners of this country to their knees.
While it is hard to escape the sense that with the continuing lurches in the European economy, the eurozone crisis is about to reach boiling point again, and as stock markets continue to tumble to the sobering sound of the drums from the credit agencies, we find our ourselves being fed bits and pieces of nonsensical information on the state of our economy. Even the announcement that we are officially and statistically in recession was met with the usual nonchalant attitude on the part of a finance minister and a prime minister both seeking to lay blame on everyone else except themselves and their predecessors.
The Spanish bailout brought about a temporary respite, but there is still very little sympathy for Greece, what with Greeks retiring at 50 from public service and awarding themselves 40 per cent wage increases in the years after joining the euro. They are now paying the price for the way French and German banks threw money at them before 2008, with the EU monitors even turning a blind eye to obvious deficit problems and fiddling tactics when they filled in their application to join the euro.
We may not have done that to such extremes, because our ministers chose to restrict such goodies like salary hikes and other benefits to themselves, but it does not mean we do not have a price to pay too. It is only fair to say that, unlike their government, most Maltese tend to be wise and prudent with their savings. In most cases where Europe has been struggling to make national ends meet, the average person is the very personification of his or her country. They borrow lavishly, even if it’s just to go on a holiday, and they acquire loans and credit cards that eventually balloon into debts well above their annual basic income.
The resulting situation is that repayments, after some unexpected fall in income, come to about the same amount as one’s monthly income after tax, hence the default on those payments. It is a parallel process to that of governments and politicians. When the crisis hits hard, in come the credit handling agencies and the European Commission to make one work out precisely how much one owed, one’s regular earnings and precisely how much one spent, government or individual.
It is then time for these agencies and the EU economists, egged on by the World Bank and the International Monetary Fund, whose managing director Christine Lagarde earns more, and tax-free to boot, than the President of the United States, to go to the banks and to the credit companies to offer them a system of “affordable” monthly repayments. For them, this is better than getting nothing, I guess.
In a nutshell, Europe and the Europeans are the authors of their own misfortunes, and the problem for us is that we may have been, for far too long, deluded by one Nationalist administration after the other into thinking all is well with the state of Denmark when it was showing clear signs of implosion.
The warnings have been many and various. Well-meaning politicians and economists have been unkindly branded as “merchants of doom” when all they did was rightly insist on the nation keeping within its means. It all started in 1987 with Eddie Fenech Adami declaring “money no problem” (of course, he had millions stacked away in reserves by the previous Labour government), but when he had burned all that to achieve an outright consecutive term in 1992, suddenly money became a problem.
This ostrich attitude continued to be shown by his successor, GonziPN, who is building a new parliament and a roofless theatre, both of which we can ill-afford. And here we are now, with Europe calling it quits, the economy in bitter recession, and most people worried sick over their jobs, their investments and their futures. There should be no doubt that the Nationalists, in power for so long, are the real authors of our misfortunes.
European fiscal weight watchers who in the not so distant past, at the height of one sporadic boom after the other, simply declined to examine the books properly or to query deficit estimates, have finally come out of their stupor and are trying to salvage what remains. They would be the first to admit that the fault also lies with the lenders all over Europe and whose game is also up.
As things stand, there seems to be little hope of us bolstering the ailing economy with a bit of consumer spending. Economic growth needs new ideas, new methods and new ventures, all of which seem to be beyond the present government’s grasp.
We’ve all – individuals and states – been stung by easy credit, but in Malta’s case the problem has been exacerbated by the cowboy tactics of the guardians of our economy and, to no lesser degree, our premature euro membership.
We have had governments and ministers acting as imprudent borrowers just as much as we have had imprudent lenders. It is time to stop and rethink, to re-examine and to reassess before it is really too late.
Just as there may yet be life for Europe beyond an unwinding of the euro, the collapse of which would be an economic cataclysm that would hurt us all, there is hope for Malta as it fast approaches her moment of truth. It lies within the positive concepts and the fresh thinking that today highlight the on-going maturation process of the new socio-political movement spearheaded by Joseph Muscat’s Labour Party.