Sir, – The Irish Times featured a telling cartoon by Martyn Turner (Opinion, March 6th) predicting years of hardship for the people of Ireland. Your Editorial “Cheques and balances” also goes to the heart of the fiscal and societal problems now afflicting Ireland. As you and your readers know, these problems are not peculiar to Ireland, and as you also know, there is not just one world economy.
There is an economy of austerity and an economy of wealth. The latter continues to do well. Meanwhile, the Dow Jones index reached an all-time high, and recently Forbes published its 2013 list of billionaires – 1,426 made the list this year. Last year, the number was 1,226, so that the year of street protests in Europe, of grinding poverty for many and of austerity for many more, resulted in a 16.3 per cent increase in the billionaires list.
Help wanted ads in the US often carry the caveat, implied or overt, that no unemployed need apply. Meanwhile, large corporations continue to automate and to squeeze every last cent and drop of fear and perspiration out of their reduced workforce.
A tiny ray of sunshine: one of Anglo Irish Bank’s follies, the Beekman Tower Hotel, was sold recently to a New York consortium – some little relief for Europe’s suffering bankers, no doubt, but little help for the plain people of Ireland. – Yours, etc,
Sir, – I doubt the cap on bonus payments to bankers voted by the European Parliament will achieve the desired effect in Ireland. To get where we want to be, we need as a nation to better understand what we want from our banking system, as we recover from the mess of the last decade. The Central Bank knows the desired shape, however that is not sufficient. The population in general and politicians in particular need to understand the road map.
Prior to the crash, investors and pension funds were very happy with their Irish bank share prices driven by returns on capital of upwards of 20 per cent, and in the case of Anglo well in excess of this. The capital markets which in part were responsible for driving the Irish bank management teams into this space did Ireland no favours. Few commented that these returns were unsustainable and generated on the back of excessive risk and prolific property lending. In truth, anyone who questioned this would have been shouted down.
Domestic banking in Ireland will ultimately evolve into a pretty straightforward business. Its role will be to prudently recycle national savings in support of the local economy.
In this our banks will be like utilities with returns on capital in the 12 -15 per cent range. Nothing exciting. The spreading of risk and stability of earnings will be the watchword. While a cap on bonus payments sets a tone for the future, I’d be more interested in seeing bankers’ pay and bonuses linked to five-year stability benchmarks. Some banks already do this, but it needs to be well articulated and widely understood. – Yours, etc,