The Road To Hell...

As the world economy begins to regain its footing and some glimmers of hope can be seen on the far horizon, it is interesting to note that the government in Ireland have all but ignored the advice of the country's best economic minds and have embarked on a ludicrous scheme to help out their supporters in the banking and land-development sector. Needless to say the tax-payer will fund this extraordinary bail-out, fulfilling the top priority of the Fainna Fail / Green Party coalition: The Guilty Must Not Suffer! Since the first moments of the fiscal disaster which has befallen Ireland the government has pulled out all the stops to protect the guilty at the (enormous) expense of the working man. The Financial Regulator and the Central Bank of Ireland signally failed to reign-in the dangerous, but highly profitable, lending regime being operated by all of the major Irish financial institutions. Stock-holders benifited, directors benifited and land developers benifited from the many short-sighted lending practices of the banks. Most importantly though: Fianna Fail profited, as grateful developers made generous donations to the party (and, perhaps, to individual members -- in the ubiquitous brown envelope). These donations were made quietly, almost silently, in order to allow the government to remain asleep at the wheel while Ireland's economy gained acceleration. Regrettably we were aimed at a brick wall, and the air-bags had been removed by a Celtic Tiger developer, on the basis that "there is no tomorrow, all that matters is today and how much commission we can make."

Now that the dust has settled and the full awfulness of our financial predicament has been exposed, the clear need is for imaginative, bold and decisive thinking from government - the people want and need an intelligent plan. A way forward. The crisis demands that those in power think outside the box and formulate a strategy which energises the economy whilst fixing the sick banking sector. A tall order, indeed. But government have access to the best advice, the finest economic brains and all of the expertise of the Central Bank.

So, with all of this at their disposal, what did they come up with? What fiendishly clever scheme do they propose? How are they going to solve our problems?

Here is the government plan in full:

Step one: Increase tax on the working man and impose public service and pension levies.

Step two: Give all of the money to the banks which caused the problem in the first place.

Step Three: There is no step three.

That's it. That's yer lot.

Amazing, isn't it? Apparently the finest economic minds in Ireland think not. A total of 46 of the leading economic academics in Ireland penned a piece for the Irish Times in which they opined that the scheme is stupid and dangerous and will not work. In fact, it does not require a PhD in economics to see that it will not work, as the stupidity of the plan is apparent for all to see.

If it were part of the plot of a TV comedy it would be quite funny. But it is the cold, harsh reality for millions of Irish people - and they are finding it difficult to laugh as they lose their jobs and face the terrible reality of negative equity and a crashing employment-market.

The proposed vehicle for this governmental folly is the National Asset Management Agency (NAMA) which, it is proposed, will buy bad loans from the banks - not at current property values, oh no, as this would not succeed in the stupid spending of enough public money. They are going to value the property in question (and most of these toxic loans involve property) based on future projections, which will almost certainly over-value each asset by a considerable margin.

Despite the opinion of the best informed minds in the country and the mass opposition of the electorate, not to mention the concerns of leading lawyers on the constitutionality of the plan, this is the scheme they want to push through the Dail (parliament).

The opposition party, Fine Gael, have proposed an alternative. They think the state should allow stock-holders to bear the brunt of the bank's poor management and lending practices, which is the way capitalism is supposed to work, isn't it?

Many people are wondering why the banks should be saved at all. Are they that much of an asset to the country, when one considers their greedy and corrosive behaviour in recent years? I suspect that whatever the eventual outcome and whichever apprach is finally decided upon, the pill will be much easier for the public to swallow if those who led the banks (and the country) into this perilous situation were seen to suffer. The thought that, throughout this harsh period, the directors and senior managers of the financial institutions have continued to collect huge salaries and bonuses, is most unsettling to the majority who are now struggling to put food on the table and to save their homes from repossession.