A chara, – Tuesday, March 30th, 2010. A memorable day for all the wrong reasons.
Early morning radio programmes were full of trade unions and their successful negotiations for people who are already lucky enough to have a job.
Afternoon and into the night radio and TV programmes were reporting on the disaster that is called Nama. Some people’s greed knew no bounds and politicians stood by. We are being drip-fed about how much we will have to pay – and pay, we will, in one way or another, for many, many years to come. The disaster that is Ireland is beyond comprehension.
Oh and by the way, after 20 years, due to Government cutbacks it was my second last day at work. – Yours, etc,
Madam, – The most startling news to emerge in the last week is not Nama, Quinn Insurance or the public sector “reform” agreement, but the fact that a quarter of the population are still prepared to vote for Fianna Fáil.
This party under Bertie Ahern and Brian Cowen has effectively bankrupted the State and burdened us with massive debt and interest payments for decades to come. Many of its supporters attribute its ongoing support to what they see as a poor alternative, but the real reason is that they are still living with a Civil War mentality and have no interest in even looking at other parties’ policies. One can only hope that their children are prepared to open their eyes and make choices on politics that are not weighed down by historical baggage. – Yours, etc,
Madam, – The Taoiseach takes umbrage at being accused of “economic treason”, arising from his part in the decision to rescue Anglo Irish Bank from collapse by guaranteeing not only deposits, but also the amounts owing to bondholders. At that time we were told repeatedly that the bank had to be saved because it was of “systemic” importance.
How things change. There is no more mention of its systemic importance. Now we are told it must be supported because it would cost too much to close. Of course, the reason why it would cost too much to close is that depositors and bondholders have been guaranteed, and the full weight of the costs of closure would fall on the neck of the taxpayer.
Where is the systemic importance of the bank now, when so many bemoan the fact that the institution cannot be closed quickly enough? It was never of systemic importance. Many commentators will insist that its rescue was, at best, a knee-jerk reaction to save an institution that was near and dear to the hearts of Fianna Fáil and their supporters, and for no better reason. Its rescue cannot be regarded as an act of undiluted patriotism, whatever about treason. – Yours, etc,
Madam, – Ironically the carefully choreographed announcements made on Tuesday by Nama, the Financial Regulator and the Minister for Finance have conspired to create an immediate freeze on bank lending. While the media spotlight has been focused on Anglo Irish Bank since then, this issue has received little analysis.
First, the decision to increase the bank’s capital ratios to 7-8 per cent will necessarily result in a frantic scramble to reach these targets. Banks have no option but to go into a lending lockdown. There is already evidence that repayments of bank debt exceed the amount of new lending taking place. This trend is likely to accelerate.
Second, the scale of the discounts announced by Nama serve to crystallise bigger losses on the books of the banks. In the case of AIB and Bank of Ireland, the discounts of 43 per cent and 35 per cent respectively create immediate losses not foreseen under the widely held view of 30 per cent discounts.
Furthermore, the actual discounts announced on Tuesday suggest heightened future losses as the bulk of the loans transfer to Nama.
It is widely accepted that Tuesday’s measures will not result in Anglo being restored to a position of lending. In the coming weeks the SME sector will come to appreciate that the measures will not rehabilitate the two mains banks either. – Yours, etc,
Madam, – In relation to the banking crisis, and the solution proposed by the Government, has anyone thought of the implications of Article 45.2 (iv) of our Constitution? The State shall, in particular, direct its policy towards securing: “That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole”. – Yours, etc,