Try debating with public sector spokespersons and you’ll get a running headache.  The mindset is quite extraordinary, one of denial of evidence, facts and consequences.  It is almost as if they have become institutionalised, incapable of seeing the world for what it is outside of their segregated box.  They deny the huge pay premium over the rest of the economy despite the ESRI reports, they deny the dangerous pay gaps compared to European competitors despite evidence from Eurostat, they deny that they have tax relief on the “pension levy” and continuously talk about a 7% pay cut, which never happened.  Then, on Tuesday, they denied that many of their members went shopping over the border despite the clear evidence coming from Newry retailers to the contrary.  Worse,  they then wrap themselves in the cloak of victimhood when challenged in the media. It’s almost impossible to engage with this mindset as the Government will earn from the current “talks”.

• The tax-the-rich slogan has been exposed as a sham as tax revenues plummet and the low threshold favoured by their unions would mean hitting married couples with ordinary jobs amongst their own ranks. This suicidal nonsense is about to be proven dramatically as the Dept for Finance is hit with a huge November refund as Ireland’s self-employed, hammered by massive cuts in earnings this year, reclaim tax overpaid last year.
• On Tuesday morning on the Pat Kenny Show two union chiefs proposed that the pay-as-you-go method of accounting for public sector pensions was just fine despite the fact that it’s illegal throughout the pensions world because it hides the truth – extra years of service and ever higher pay driven up by increments  is added to the €100 billion mountain of pension debts. This year the 3% pay increase caused by the nonsense of increments added fifteen times that number to the pension mountain. 
• The final plank from the unions is the lets-spread-the-pain strategy proposed by David Begg. This daft idea means we borrow even more, committing ever higher tax revenues to mounting deficits to protect his overpaid members. Not only is this zombie economic strategy unworkable it has not been agreed by the EU nor will it be supported by bond investors at current prices, kind of important since these are the people financing our public salaries.

What’s clear from this sorry episode is that old style unions have become an anachronism. Gains in worker’s rights from EU law meant hard liners moved into the last redoubt – the public sector where the Partnership Process encouraged a sense of omnipotence as Ahern diverted bumper property and construction revenues to meet demands for corpulent pay, allowances and sickies. Strip away all the guff about protecting those on the dole and social welfare and these people act exclusively as agents of those who pay the piper, their members. They have one sole purpose and that is to protect and increase benefits for members. They don’t care who pays. They care more about shopping in Newry.

Be quite clear the subtext to their campaign is to take the money off social welfare recipients if nothing else works. You don’t negotiate with bullies like these, you fight them and that’s precisely what the Government needs to do despite suffering from collective cowardice in the past by caving into them. At stake is Ireland’s economic independence, her international brand as an entry gate into Europe and the future of many of her children. That’s why the unions must not be let win.

There is a tsunami of inflation building up on the horizon but still most of us, rattled by the fire sale of assets and collapsing prices last year, languish in deposit accounts. Fear is the overwhelming emotion now, fed ever  more by dire statements about the public finances, job losses and the glaring vacuum in political leadership. We’re saving like never before and, on the surface, that’s good because a paltry 1% on deposit is still giving real growth above inflation of 8%. How bad is that? 

Well, very bad if you continue to try to hold the real spending power of your stash in cash and very high inflation comes next. That’s because in a short period you could lose a huge chunk of your money to inflation. So why is high inflation looking inevitable despite Ireland’s current deflationary bout and what can you do to prepare? 

• Oil prices are beginning to rocket again as global production plateaus but demand rises on economic recovery. Oil prices, having risen fivefold since 2000 to their their watermark in 2008 collapsed but are now back to $80 a barrel. Expect prices to breach $100 next year and to rise further thereafter.
• Commodity prices across the board are rising, copper, silver and gold. Short of hitting readers with a gold baseball, I’ve been shouting about gold now for four years over which time its risen from $400 per ounce to $1,145 yesterday. Silver’s relative price to gold is at very low levels and responds very strongly to inflation as well so expect silver to follow at some stage.
• The world reserve currency, the Dollar has returned to trend, that’s downwards, as the US Government turns on the printing presses to stave off a US depression and continues to follow a weak dollar policy. Meanwhile foreign buyers of US Government debt are beginning to desert the dollar as a store of value. The Indian’s just bought 8% of the world gold reserve from the IMF. It’s just the beginning. More will follow.

Whichever way you look at it, high inflation is coming next, so what should you do to prepare? Social welfare payments will be inflation adjusted if the Government wants to avoid street riots but  savers should keep no more in cash deposit than is necessary. That might mean one year’s cost of lifestyle if you’re in work or three years if you’re retired. The rest should be going into inflation-linked European Government bonds with some allocation to precious metals. Unlike common Government bonds these index-linked types move with inflation and their capital values are likely to rise as the language of inflation gains common currency next year. There are two fund providers in Ireland, Standard Life and Friends First. Gold can be acquired by investing in Perth Mint Certificates, by investing in a gold fund through a stockbroker or by investing with a life office like Zurich Life. There’s plenty of options, but, whatever you do don‘t ignore this alert and get caught napping a second time – first by the property collapse and second by inflation. 

Eddie’s book ; Energise, how to survive & prosper in the coming age of scarcity, high inflation and peak oil is available as an e-book from www.eddiehobbs.com. All profits go to the Jack & Jill Foundation.

Hard to imagine the hysteria surrounding Ireland’s odyssey at Italia 90 today but it gripped a nation struggling with low self esteem and a crippled economy and taught us that we could be better. The previous two decades had been a disaster. The economy grew at a tepid 2% per year for most of the years following our EEC membership in 1973. Emigration robbed us of our young and talented and even with that exodus, unemployment of up to 18% gripped the country destroying many rural sporting clubs. By the end of the 80’s Ireland’s per capita income was over a third below that of the UK. We were an economic basket case and the poorest country in the EU of the time.

But strangely it wasn’t the economy that got us hysterical - it was football. I couldn’t watch the England match after Gary Lineker scored and went off for a  walk in UCD to calm down. When Kevin Sheedy equalised there was an almighty roar over the capital and I nearly killed myself in the sprint home! But did the World Cup trigger Ireland’s economic revival? It would be romantic to think that it did. It was certainly a contributory factor but the heavy lifting as done elsewhere, alas. By the mid 80’s Ireland was forced to gut public spending, cut taxes, abolish agencies and reduce red tape.   Sound familiar? The top rate of income tax in 1975 was 80% and for most of the 1980’s it was well over 60%. The black economy boomed and PAYE workers were the only ones paying tax fairly simply because they didn’t have the same scope to evade tax as everyone else.  Ironically tax at over 60% is precisely what the loonies in the left now want to do to avoid public pay and pension cuts. They’ve clearly  learnt nothing from Ireland’s revival. By Italia 90 the standard rate of income tax was a crippling 35% but ten years later it was a third less and the top rate was heading for 44%. Corporation tax which stood at 40% was cut savagely to just 12.5%.

For five years following Italia 90 the Irish economy grew 5% per year and then surged to 9% per year until 2000. The Tiger had begun, bookending with an economic depression, a severe three year economic contraction that started in 2008 and will lead to an austerity programme likely to last until 2012. But this time around could qualification to South Africa herald another economic revival? It would be great to think so but unhappily things aren’t that simple. There’s the little problem of the deficit and cutting our spending to fit our shrivelled tax base. Sounds like deja vu indeed, except this time around we’ve experienced far more comfortable lifestyles so our appetite to absorb pain isn’t what it used to be. Perhaps that explains the internecine warfare about who’ll carry the tab especially from the public sector unused to the idea of reversals of fortune and wedded to the fantasy that there’s another way to maintain a pay premium of at least 20% over the private sector and European competitors.

So roll on the French and onwards to South Africa but don’t kid yourself that the Ireland’s soccer team will add much to either the economy or the tournament. In Italia 90 Ireland qualified for the first time along with Costa Rica and the UAE but scored just two goals in normal play to get to the quarter finals. We drew with Holland, England, Egypt and beat Romania after a goalless draw on a  shoot-out just about six months after Romania shot Nicolae Andruţă Ceauşescu, the darling of the European ultra left. Sure, Irish supporters added enormous fun and colour but the team did its bit to contribute to the lowest scoring World Cup ever, a tournament with just one goal every 43 minutes. They banned the back pass to the keeper after that and I’d like to think we helped there too! For what it’s worth France didn’t qualify for Italia 90 and it would be nice to think they’ll sit this one out as well.

The first working day after launching Energise on The Late Late Show, The Guardian Newspaper ran a report validating the book’s hypothesis that the IEA data was taking a “goldilocks” view of energy reserves. Energise suggests that the German Energy Watch Group, ASPO and Jeff Rubbins are right, that we’re past peak which means, according to a major US energy expert, Robert Hirsch we face 20 years of “disruption”, read runaway oil prices and sky high inflation in commodities. An insider is claiming that the IEA falsified its data. Energise covers the key 2008 IEA world oil audit in depth in a chapter in the book but now here is the link to the shock Guardian revelation;

On more positive and investor-oriented stuff  is the acquisition of Burlington Northern Sante Fe railway by Warren Buffet’s Berkshire Hathaway . I wrote Energise two years ago but delayed its launch due to the banking crisis dominating attention. In the chapter on energy efficiency investments this railway was fingered a buy – because, as oil prices rocket, US citizens will ditch their cars and lorries in favour of rail transport and freight which is precisely why Buffet is buying it. You can ignore all the patriotic guff about investing in America, Buffet is investing in peak oil – he knows it’s here too. For a Bloomberg report see here. Energise contains over 60 stocks, Exchange Traded funds and collective investments to help you grow your money despite the impending wave of inflation looming.

Three cats finally popped out of the bag this week that cannot be ignored by public sector workers.  

·         Sustaining Public Sector Remuneration at 20% to 40% above Europe and the Irish Private Sector is impossible without huge job losses. 

In his letter to the troops, Peter McLoone, Chief of IMPACT trade union representing 65,000 public and services workers, has admitted that protecting public sector remuneration can’t be achieved without wide scale job losses. To put that into perspective, the Government target of €1.3 billion in pay cuts equates to a loss of 10% of the public sector labour force. From the outset I’ve been dead against redundancies and campaigned for cuts in the artificially high rates of pay and pensions instead. But the union’s prime objective is to protect pay of its members and that excludes unemployed former public sector workers. Despite their posturing in the Partnership Process, unions cannot and do not represent the unemployed. Will they now sacrifice 30,000 fellow workers to avoid reducing their pay to European levels?

·         The “Rich” are now defined and include a working married couple in the Public Sector, to be hit with tax, levies and higher PRSI that will gobble up at least 63% of earnings above 100k.

ICTU’s Narnian economics is finally revealed. The so-called “rich” aren’t rich at all, just middle income earners. That means two married teachers or Gardai will work for the Revenue Commissioners until 3pm each day for three months to four months of the year. This, of course is nuts. Income tax receipts are about to fall off the cliff again this month as incomes nosedived across the SME sector since last year. Adding a third tax rate will simply destroy tax receipts further, kill any incentive to work longer hours, shackle entrepreneurship and swell the black economy. Surely, for any free thinking public sector worker, this centrepiece proposal from ICTU exposes it as an ideologue shorn of any basic economic competency? 

·         Assets are to be attacked, especially “Trophy Homes” like Pat Kenny’s. 

Jack O’Connor may have apologised to Pat Kenny after RTE’s Frontline programme on Monday night but it doesn’t take away the fact that the former Sinn Fein member and current ICTU president believes that accumulated assets should be attacked by the State. So watch out folks because homes, farms, art and collectibles, pension funds, saving schemes, cash deposits and just about any asset you’ve got is back in the frame despite all the taxes you’ve already paid to get them. These ultra-left ideologues also want what amounts to confiscation of assets by selective targeting of Ireland’s ultra high net worth families, large employers like Dunnes and Michael O’Leary despite the constitutional questions it would raise. So get ready to wave Michael, his wealth and his business talents off at Dublin Airport which is precisely what you would do too if you were selectively targeted by the State.

Shortly the marching begins, but ordinary public sector workers now have to ask if they are cannon fodder in an ideological battle, following an agenda that can’t be won without destroying the lives of one in ten fellow workers or by destroying the Irish economy by swinging it to the far left? Surely it’s only commonsense as soon as it’s humanly possible to cut taxes not raise them and pursue the agenda that sparked the Celtic Tiger before the last Government destroyed it? Put aside your anger and frustration for a minute and ask yourself if it is right to let the democratically unelected ideologues that dominate Irish trade unions dictate how the State is to be governed by threatening to shut it down? If you march with these people you pursue their agenda of a return to the 1980’s; taxes on modest incomes way over 60%, a flight of foreign direct investment out of Ireland with massive job losses, a huge black economy and an anti-entrepreneur culture. Our talented kids will leave in droves and not come back – would you?