BBC BLOGS - Peston's Picks
IN ASSOCIATION WITH
« Previous | Main | Next »

Will the ECB pull the plug on Ireland?

Robert Peston | 17:04 UK time, Monday, 15 November 2010

The gap between what Ireland spends on public services and what it receives in tax revenues, the classic public-sector deficit, is substantial and unsustainable, at around 12% of GDP.

A discount shop in Dublin

A discount shop in Dublin

But, funnily enough, that is not Ireland's biggest problem.

Ireland's weakness, what has sparked the pressure from other EU members and the European Commission for some kind of bailout of the Irish state, is its bloated, lossmaking banking system.

The country's banks are largely state controlled, with Bank of Ireland the only substantial Irish bank where the taxpayer shareholding is relatively small.

And yet these banks find it fantastically difficult to borrow from other banks or financial institutions.

The point is that investors and professional lenders are reluctant to lend either to the Irish state directly, by purchasing government bonds, or indirectly, by lending to Irish banks.

And it is their refusal to lend to banks that is the real liquidity crisis for Ireland, in that the Irish government's deficit is fully funded until well into next year.

So it is not an exaggeration to say that there would not be a banking system in Ireland - and therefore not an economy in any conventional sense - if it weren't for the generosity of the European Central Bank in providing loans to Irish banks that the markets won't provide.

The latest published figures, which almost certainly understate the true picture, show that the European Central Bank had lent 83bn euros to Ireland's domestic banks by the end of September and it had lent 130bn euros to all Irish credit institutions at the end of October.

Or to put it another way, ECB loans to Irish financial institutions were more-or-less equivalent to the current annual value of Ireland's Gross National Product.

To repeat, without the financial support of the ECB, Ireland would be bust right now.

According to Barclays Capital, more than 10% of all the loans and investments made by Ireland's banks - their assets - are financed with ECB cash (which looks to me like a bit of an under-estimate).

The important point is that Ireland's banks, and those of Portugal, and even some of Germany's Landesbanks, have been on life support provided by the ECB for many many months now.

So there has already been a European Union rescue of Ireland - and arguably of Portugal too (where some 7.2% of bank assets are financed by the ECB, according to Barcap) - but that rescue has been carried out by the backdoor, by the European Central Bank.

Now standard central banking theology, that goes back to Bagehot in the 1870s, says that central banks are only supposed to provide liquidity support to inherently viable institutions. However the evidence is accumulating that a number of Irish banks are not viable, even after the recent multi-billion euro injections of new capital by Irish taxpayers.

Also, the ECB must be concerned, for example, that Portugal's government may be funding itself by selling government bonds to its banks at a high rate of interest, which in turn may be financing those purchases by borrowing from the ECB at a lower rate of interest. Another article of central banking theology is that central banks should not indirectly recapitalise weak banks or finance over-stretched states.

Which means that the moment is fast approaching when the ECB, if it behaves as many would say a central bank must behave to preserve the value of the currency, will announce that it is phasing out liquidity support for those weaker European banks - in Ireland, and Portugal and even Germany - which have become too dependent on it for loans.

But if the ECB were to be true to its central banking instincts and announced a timetable for removing the life-saving funding drip, what could be done to keep Ireland's banks and economy alive?

The governor of the Central Bank of Ireland, Patrick Honohan, put it like this in evidence last week to Ireland's Joint Committee on Economic Regulatory Affairs: "presumably over-capitalising the banks could help build confidence, but this is not something which the state can be lightly asked to do, given the pressures on its finances".

Arguably, Mr Honohan has given the game away, by saying that investors are taking the view that Ireland's banks need bigger injections of capital from taxpayers, but that Ireland's taxpayers cannot afford to invest any more in the banks.

What follows from that?

Well, it means that if the Irish can be persuaded to take funds either from the European Financial Stability Fund or from the European Financial Stability Mechanism or from the International Monetary Fund, that money should probably be invested in the banks, to provide them with more protection against future losses. As Mr Honohan pointed out, investors don't believe that Irish banks have seen the worst of losses on residential mortgages taken out when Ireland's housing market was booming (them were the days), even if they believe that the worst of the banks' commercial property loans are being shipped out to a taxpayer-backed, specially created toxic bin, the National Asset Management Agency.

This is what it boils down to.

The Irish government does not want a new formal bail out. But if there is the faintest sign that the ECB wants to withdraw the succour it has provided to weak eurozone banks, Ireland will no longer have a choice: it will have to go cap in hand either to its EU partners or to the IMF.

By the way, that choice of whether to go to the EU or IMF will be a nightmarish one for the Irish.

On the one hand, their pronounced communautaire spirit would point them towards Brussels for help; but the IMF is much less likely to bully the Irish government into abandoning cherished pillars of its economic policy, such as its low corporate tax rate (which the German government would dearly love to squish).

And there is one other thing: a conspicuous missing ingredient in the debate about what Ireland should do is about who should shoulder the bulk of the losses in the long run.

Few deny that the Irish state has borrowed far more than it can afford to repay in the form of bank debt, public-sector debt, household debt and corporate debt.

There are going to have to be haircuts and write-offs, big losses, as the debt is shrunk to an affordable size.

The seemingly open question is how those write-offs, those losses, will be shared between Irish taxpayers, European taxpayers and commercial lenders.

Right now, which some will see as unfair, the burden seems to be falling on taxpayers, with the commercial lenders apparently getting off very lightly indeed.

Comments

Page 1 of 2

  • Comment number 1.

    It sounds like the Irish banking sector is about to be eurolised.

  • Comment number 2.

    What I do not understand is given

    - Ireland and its banks are close to disaster; and

    - likely knock on consequences for the other PIGS and German/UK/French banks;

    why is the FTSE rising or at least holding up?

  • Comment number 3.

    "The latest published figures, which almost certainly understate the true picture"

    Ha ha...! Lies, damn lies and statistics huh Robert??? Bit of a tabloidesque throw away comment?!?

  • Comment number 4.

    In a nutshell, Ireland is bankrupt.

    Joining the Euro fuelled the uncontrolled credit and building boom before the crunch and now continued membership is driving Ireland to bankruptcy.

    It is all very well say the Irish Govt doesn't need to borrow any more money to fund their deficit until next year, but what then? How will things have improved by then? And long before then, the Irish banks will be on skid row and unable to meet their obligations.

    Who are the Irish going to balme for their misfortunes?







  • Comment number 5.

    Time for Eire to call in the Favour they did for the EU in preventing the English having a vote on Lisbon or has that already been called in?

  • Comment number 6.

    The big issue is the extent to which Irish mortgage holders will share the pain. If say 200,000 of them throw in their house keys in the face of a 50% decline in property prices then the game will be up very quickly for Irish lenders, depositors in those lending banks, and the Irish state too which cannot afford to guarantee depositor funds on that scale.

    I have the feeling this last weekend was the point of no return for the Irish state. They have enough liquidity to keep going until June, but they are insolvent already.

  • Comment number 7.

    Yet another question mark over the survival of the Euro. How long before the Germans’ bring back the deutschemark?

    No wonder the Czechs’ are betting they will never have to make a decision to join the single currency.

    The real problem for Ireland is the bursting of the Celtic property bubble; with falls in the price of houses of more than 50% without UK style demand, the Irish banks are left high and dry.

  • Comment number 8.

    "Will the ECB pull the plug on Ireland"?

    Well, Robert, apart from your last, and concise paragraph, my eyes were watering from information.

    Bond markets had, perhaps, already decided on this leak on the RoI economy. A bail-out from the IMF to roll-up and consolidate loans will be insurance for Bond speculators and ensure their cash flow margins.

    Naturally, no-one would suggest speculation, or heaven forbid - a done deal?

  • Comment number 9.

    Ireland is not a poor country, but has been bleed of its wealth by a few investors backed by the Irish government. These investors ploughed billions of pounds(owned by Irish savers), borrowed from Irish banks into commercial properties in London (Canary Wharf & Bond St included) and Dubai from 2005 to 2008, when it was becoming obvious that the financial system was getting over exposed by reckless lending. The astronomical profits generated from these investments is not returning to Ireland but is being siphoned off into offshore accounts increasing wealth for the few and no doubt some government officials. The IMF should force the sale of these commercial properties and in doing so return the funds back to the rightful Irish owners and restore stability to the Irish economy. In many respects, the introduction of the Euro has instigated the downfall in the Irish economy. Many savers were forced under the change of currency to take their hard earned saving in punts out from “under the mattress” and into the banks to the joy of reckless bankers. No doubt in 10 years time we will read about the purchases of worthless islands and three legged racing horses to mask the movement of funds taken for the Irish economy.

  • Comment number 10.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 11.

    Ok Ireland - in what way is this the fault of the English? I'm waiting...

  • Comment number 12.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 13.

    We are still in the denial phase of events, but getting closer to capitulation. The creditors of the Irish banks cannot and will not be repaid in full. Irish taxpayers and European taxpayers (through the ECB's "loans" - which will never be repaid) to insolvent Irish banks are already committed to paying the lion's share. The creditors have to take a haircut too.

  • Comment number 14.

    And the Irish government has been busy making life more difficult for the Irish and themselves by cutting everything in sight in the mistaken belief that expenditure must be reduced to nineteen shillings and six pence and assuming income remains at twenty pounds when in fact it will fall to nineteen pounds.

    Mortgage debt will be defaulted by more people and the government finances worsen. Perhaps Mr Osborne will tell us the Irish are setting a fine example!

  • Comment number 15.

    "Right now, which some will see as unfair, the burden seems to be falling on taxpayers, with the commercial lenders apparently getting off very lightly indeed."

    Never a truer word said.

    In once sense dealing with the banks is very simple but politically very difficult. The Irish banks are dead, this has to be recognised. What needs to be done is that the Irish govt. confirm their guarantee of customer deposits and invite third parties to buy the remaining assets of the Irish (in UK this would be some form of insolvent administration). Yes this means a lot of bond holders will lose out and other banks who lent to the Irish but that is just tough. Ireland will end up with a working banking system again, the savers will have kept their deposits and the Irish govt can then appoint someone to spend the next 20 years gradually dealing with the bond holders and lenders to the banks.

    There is a massive difference between UK and Ireland but not much difference between Ireland and Iceland. In the UK the banking crisis may cost UK taxpayer nothing (unlikely but possible) or it may cost it £150bn (probably top end of losses but I admit it is a guess) which is only about 10% of GDP - painful but manageable. In Ireland and Iceland's case the potential losses dwarf the economy. I guess these countries are classic cases of not putting your eggs in one basket

  • Comment number 16.

    > the burden seems to be falling on taxpayers, with the
    > commercial lenders apparently getting off very lightly indeed.

    By "commercial lenders" you mean bankers don't you? Those villains again, eh. They are the bane of our lives, and yet we have not broken them up (yet). Nor have they apologized (yet). Nor have they even appeared humble (yet). All that while we save their skins, for the umpteenth time.

    They occupy a social niche somewhat lower than pariahs. Yet still they go about causing chaos every five minutes. We can't go for a week without exposing some fresh hell that they have been causing.

    They are the very essence of havoc and mayhem. We bailed them out with trillions, but it is still not enough for these bloated, mouth-always-open, weird, greedy good for nothing, be-suited twits. Please, folks, can we not flush these beggars, once and for all, and get rid of this menace for the sake of our children?

  • Comment number 17.

    iam sure the irish will blame the english for the banking crisis as they blame us for most things already (busby2)

  • Comment number 18.

    12. At 6:02pm on 15 Nov 2010, nautonier :
    Have you been dumped by an Irish girl or something ?
    Its not always about the UK taxpayer (even if he/she actually financed anything)

  • Comment number 19.

    I do not know what everyone is worrying about. Why don't they just print it?

  • Comment number 20.

    15:

    I've always been interested in the guarantee of customer deposits comments:

    1. What if I have my money on a money market account? Is that secure?
    2. What about if I have it invested in an share ISA - is that secure? At what value?
    3. What about any other investment product I have with the bank?
    4. What about any loans I have with the bank? Are they also secure? Taken on at the same terms? Offset mortgages?
    5. What about any of the other financial services I have purchased from my bank - life assurance, insurance, travel insurance etc - what happens to those?
    6. Who assumes control over my money and the administration of it? Do I have access to a branch network to get it out? Is the infrastructure of the bank retained? If so, at who's expense? What if my debit card/credit card is due to expire - who is responsible for the reissuance of it? What about the security policy behind my account (maintaining my online account/checking signatures on cheques?)

  • Comment number 21.

    Capitalism on the way up, socialism on the way way way down. Time to put captialism into play before the celtic tiger is a rug. How can anybody refer to Ireland as the 6th strongest economy in the G8. Just how many props are going to be needed. There seems to be very little discussion about the sums the ECB may have to make available throughout the eurozone.

  • Comment number 22.

    How did no one see this coming?i have been following this exact scenario for almost ten years and it was quite obvious to me this day was coming fast.On top of all this uncertainty(actually its for certain but the finance ministers will not admit it because they cannot as it will be the final nail in the coffin for the worlds economy)the shares are rising on the footsie that suggests the unscruplious behaviour of betting on failure is taking place adding to our woes.House prices are dropping,U.S housing market is stagnent,The US Injecting a further 600 billion and probably not the last devalueing its currency, e.u production has stalled(infact decreased considerably)Greece is going backwards after mass cash injections,spain is on the brink with UK and Brazillian over investment and 20% unemployment,G20 failed to come up with any real commitment,(they said they had agreed unillaterally to stop protectionism)and then announce a new policing body to police the activities of self indulgent states which would not be needed if all the countries were sincere,The french about to take over the E.U(and we all know only too well how the French put the French first above all else,Prices rising so fast that the vast majority of people in this country are not earning enough to pay their monthly living soon,people stop purchasing after the usual xmas flurry and before V.A.T goes up to 20%....The list of problems to overcome are numerous and these are just a few and seemingly the Banks still are not willing to do their bit(infact the cheeky gits are debating how much to pay themselves in bonuses).Dark(very dark)days to come from next year and i do not think most people are in any way aware of exactly what we are up against.If it continues down this path no matter how many zeros you have in your bank account its only use is going to be posh toilet paper.

  • Comment number 23.

    "Right now, which some will see as unfair, the burden seems to be falling on taxpayers" - Indeed, and also of course on those who rely on public services which are being cut back so savagely.

    Just letting the banks go bust without compensation for savers would have been fairer than this. At least then the burden would have fallen on those with most savings (who by definition make up the richer portion of society).

    The ones who should really pay though are those who made all the money during the boom : landowners and property developers who benefitted from the meteoric rise in the value of land. Now it has fallen again (in Irelend at least), but all that profit hasn't disappeared. It's out there somewhere, probably in Switzerland of the Cayman Islands or wherever. Is there any way to return the system to equilibrium other than some form of wealth tax?

    The situation in the UK isn't all that different. Our house prices were just as overvalued. It's just they haven't fallen. Yet.

  • Comment number 24.

    #6 is spot on,

    there is an excellent article in the Irish Times regarding the popluation giving up on paying for property. Basically the article said that in years gone buy, handing the keys back was unthinkable however, attitudes have changed and a predicted MASS default looked likely.

  • Comment number 25.

    I remember the boom well, I watched a program where an office worker went out for lunch one day. She came back with her lunch and two flats (They were going cheap at 250k a pop)

    Irish property prices surely must collapse?

  • Comment number 26.

    the irish government baled out the banks and big builders by buying their debts through a scheme called nama (national asset management authority)this scheme relies on property prices rising to pay off debt.irish property has fallen on average 50% over the last 3 years and is still falling.i dont think nama was brian cowens best idea!!

  • Comment number 27.

    Does anyone know if the Irish mortgages are "no recourse" like USa or "chase you until you are dead" like UK?

  • Comment number 28.

    The celtic tiger was hugely funded by the net contributors to
    the EU(Germany,Britain,France) with Southern ireland taking out billions from the pot to fund projects.

    It has now blown up in their faces and they want(already happening) the EU and these countries to bail them out again.

    It is time they were made to pay their own way rather than living off others.

  • Comment number 29.

    I do admire your attempts to make some sense of the never ending downward spiral of bank and sovereign debt.

    It seems an almost impossible task now to segragate the two both in Ireland and elsewhere.

    Every few weeks we are being told that debts are much worse than were anticipated so does anyone really know where the bottom is or how bad it will get and how long it will take?

    It seems not but it is probably time to throw the reality at the people.

    Instead of pretending that all is OK perhaps we should be told what would happen if it all goes pearshaped then we would all know that there is absolutely no point in protesting at something that's too far gone.

    We all know what the deficit is so lets talk about the real problems of just how bad the debt is and how and how long it will take to pay back.

    Or is everyone too frightened to go there?

    Governments made the decision not to let the banks fail but this as we see now has only prolonged the agony and made it worse by heaping it onto the countries themselves. A big mistake

    Being positive is all about knowing where you have to start from and then finding a way back rather than being in denial as it all falls apart around you.

  • Comment number 30.

    the rich have the savings in the banks random thought ?
    you cannot be serious
    bank savings are largely the prudent putting away something for their old age ...or already in own age ...NOT the wealthy who put it elsewhere where they don't see it being steadily eroded

  • Comment number 31.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 32.

    @16 Spot on, Jacques.

    The continuing strife makes used car salesmen look positively saintly.

    Everyone should sell any shares they hold in Banks - and we should all withdraw our money - it's not earning much interest anyway. Hold the beggars to ransom until they clean up their business.

  • Comment number 33.

    Ireland’s Finance Ministry has stated (more than once) that the Government is holding “ongoing” talks “with international colleagues in light of market conditions.”
    The Irish Government added it “has made NO application for external support” and re-emphasized that Ireland is “fully funded till well into 2011" (till June, 2011 to be exact.)
    There's speculation that an aid package could add up to @ €80B between 2011 and 2013, but it's only speculation.
    We still need to see the draft for a permanent crisis mechanism to replace the (EFSF) European Financial Stability Fund, expirong in 2013.
    Irish Finance Minister Lenihan is resisting any and all efforts to push Ireland towards the Stability Fund. While Ireland may have sufficient liquidity to meet its financial requirements through June 2011, Irish banks have borrowed about €130B from the European Central Bank already (= @ 80% of Ireland’s GDP).
    Ireland will likely release its 2011 budget on December 7th. Until then, we cannot know what plan will be formulated, but I would expect a plan that
    - reduces spending and
    - raises taxes.
    ECB President Trichet has made the ECB position rather clear: All the EU non-standard measures help restore a more normal policy mechanism which is necessary to fulfill our primary mandate of accomplishing price stability. IT IS NOT TO BE CONFUSED WITH Q.E. POLICIES."
    I support ECB President Trichet 100%.
    I would be surprised to see Ireland restructure its debt; I would also be surprised to see Spain or Portugal restructure their debt.
    As a matter of fact, today, the EMU-16 September trade balance came in at + €2.9 billion (That's a plus sign!)
    So, I think it's too soon to pull plugs or do anything artificial that may upset the good "natural" things that are starting to happen for the EU.

  • Comment number 34.

    And the Northern Irish Republicans want a United Ireland. Can't see than on the Dáil's agenda anytime soon.

  • Comment number 35.

    31. At 6:46pm on 15 Nov 2010, plamski

    How old are you ?

  • Comment number 36.

    Evening Robert,
    your piece to camera, "will the ECB pull the plug on Ireland", the answer is an emphatic NO.
    I understand that the only reason that the Irish Ministers have refused to ask for help from the EU or the IMF is that they would probably be asked to normalize their corporation tax rate (which is very low by EU standards).
    I understand the political stance being taken but it seems to me that the Irish Government are making a drama out of a crisis. It didn't need to be like this. When the speculators out there smell weakness they tear at the carcass even more.
    The Irish Government insist that they are "fully funded" until mid 2011 but if that's true (and I say if) then why wouldn't one negotiate for future funding from a position of strength rather than when one has to?
    Someone here is not providing the full story and the markets are therefore demanding huge premiums to hold Irish debt. These premiums already assume that ALL of their money will be repaid (by the ECB if necessary). Now imagine what happens if the markets think they will have to take a discount on their debt or that they won't get their money back!
    Ireland has many positives going for it and some very bright politicians also but they appear to be very naive in dealing with the wolves who lend money.
    So what's to be done (if it's not too late already)?
    Ireland needs to bend to the demands of the EU, borrow enough for the next 3 years from them and get out of the firing line. The markets will then turn their attention to the next weakest. We've seen them break Greece, now Ireland, then Portugal then Spain and I don't give much for Italy or even France's chances when it comes to their turn in the spotlight.
    This has been a systematic attack on the EU countries as the speculators search for a higher return on their money.
    By the way, the UK will go through this in about 3 years time but at least we have the fall-back to print more money (oops, I mean provide more quantitive easing which will never be repaid).
    I still don't understand why the people of Ireland (like the people of Iceland) have to pay for the foolishness of a few bankers aided by some deliberately weak regulation and some political sacred cows.

  • Comment number 37.

    Wow Nautonier, hiberno-xenophobic much?
    How has the UK paid for communications in Ireland? And security? Really - do you want to go down that road?
    Double pension payments -I've paid 10 years in Ireland and 10 years in the UK - if the EU wants to agree a transnational change to pension earnings then I'd welcome it, however, I expect to get back what I paid in - irrespective of the nation I'm living in.
    You need to do some research - Irish Universities are rated higher then all of the UK universities. Yes - the Russell Group of Uni's here in the UK are better than most (except Ivy league?) however all of the 'universities'(as a group)in the UK are rated lower. Ireland hasn't poly-nised it's higher education system. As for the NHS - I'll take my private healthcare -thanks.
    By the way - the name of the Country is Ireland (it has been since 1937) or the Republic of Ireland, since 1949, when we left the commonwealth. If you're speaking Irish you would refer to it as Eire - just like you would Espana while speaking Spanish and Deutschland while speaking German.

  • Comment number 38.

    "OK Ireland - in what way is this the fault of the English? I'm waiting..."

    I'd like to sincerely object to this comment as it is neither here nor there. As a very proud, hardworking and educated Irish person, who is well versed in both Irish and European history and politics, I would like to suggest that you focus on the debate at hand rather than poking at wounds of the past. I believe that most Irish people at this point are capable of being objective and can view this issue outside of the England V Ireland bubble. So I would suggest that you review your remarks as they have and will be perceived as ignorant and highly patronising, even if they were said it jest. Please do not make weak jibes about what has been a very difficult history on both sides. If you want to get into the England and Ireland debate, bring it on, but perhaps in another forum and when you are more capable of engaging in an intellectual and informed argument.

  • Comment number 39.

    27 truths33k3r:

    Default on mortgage, repo, bank claim on householders insurance, insurance co then chases ex householder until bankrupt, and therein hangs a problem because the downside of it whilst considerable is for some appealing when weighed against a decade of repayments for what. For some the relief of finding an end point will be attractive. The whole is built on trust and the faith of value. Take those away and there will be problems. This will overhang for a decade. Recessions run in 11 years cycles so it will run into the next downturn. Going japanese. This is not the sacrifice of the Irish taxpayers, it is the sacrifice of a certain minority age/income group who the Irish government can easily identify from the stats.

  • Comment number 40.

    #30 lebesset

    "bank savings are largely the prudent putting away something for their old age ...or already in own age ...NOT the wealthy who put it elsewhere where they don't see it being steadily eroded"

    I wasn't really suggesting that all savings should be wiped out - just that making those dependant on public services suffer the most was even less fair.

    You need to bear in mind that only the richest half of society is able to make any provision for their old age, and an extremely high percentage of pension funds in particular is owned by the richest 2%. A few tens of thousands of individuals have enough wealth to pay off all our public and private sector debt.

  • Comment number 41.

    Public policy everywhere seems solely focused on *how to stiff the plebs".

    When are governments going to wake up and realise this is a *crisis* and stop pussyfooting around?

    We need radical action. Or our kids are going to find themselves up to their neck in debt inherited by some ex-pat living a life of riley in a tropical paradise.

  • Comment number 42.

    Post Office Savings in the UK is run by the Bank of Ireland.
    The Irish government guarantees all savings until 31Dec2010.
    That date is approaching. Watch out.

  • Comment number 43.

    #20 Horned_Devil

    "I've always been interested in the guarantee of customer deposits comments:"

    If you really want to know... Watch Douglas Carswells 10 minute rule bill on Banking Reform... a real eye-opener

    http://www.youtube.com/watch?v=HMGr-OuXihg

    On the 19th of this month his Bill gets it's 2nd reading - not too late to contact your MP and get him to attend and vote in favour of it.

    oh, and Banks do NOT guarantee "your" money - the UK government does.

  • Comment number 44.

    Oh dear! Who really has the money in the World? The IMF?

    Where do they get it from, if they have any?

    Do UK banks have it, err, probably no.

    Is it in China, Russia and the Middle Eastern countries? Well, there is a thought. If so what interest rates will they loan it at?
    Is it all a big game of numbers on paper?

    As someone remarked, a united Ireland does not look attractive to people in the north.

    All very sad, but as my dear old Dad used to say 'In a year's time, it will be just a memory'. Hmm

  • Comment number 45.

    15. At 6:07pm on 15 Nov 2010, Justin150 wrote:
    In the UK the banking crisis may cost UK taxpayer nothing (unlikely but possible) or it may cost it £150bn (probably top end of losses but I admit it is a guess) which is only about 10% of GDP


    The NPV cost of the crisis is several times GDP according to Andy Haldane last July. We cannot start to solve a problem until we acknowledge its scale.

  • Comment number 46.

    Here's how banking works.

    You have £100

    You Put £100 in a bank, BANK A - The £100 is legally no longer yours.

    BANK A lends 97% of your £100 to BANK B

    BANK B lends 97% of the 97% of "your" £100 to BANK C

    BANK C lends 97% of the 97% of the 97% of "your" £100 to BANK D. ad infinitum etc etc

    At the height of the credit-crunch, there was £40 of credit for every £1 held in deposit accounts and when people defaulted on their loans like they did, there simply wasn't enough money to cash in to pay the debts people had racked up. Imagine, hundreds, maybe thousands of people defaulting on their mortgages, the overly inflated housing market that burst and all that "credit" that suddenly evaporated once every greedy bonus-grabbing banker realised what they had done.

    Think about that and think about how it could have been avoided.

    Enter Douglas Carswell.

    http://www.youtube.com/watch?v=HMGr-OuXihg

  • Comment number 47.

    44. At 7:26pm on 15 Nov 2010, Anthony C Seaman wrote:
    Oh dear! Who really has the money in the World? The IMF?
    Where do they get it from, if they have any?

    Funny thing money.
    One minutes its there, the next its gone.
    When a bank creates a loan it also creates a deposit
    When a loan is repaid the loan and another deposit both disappear.
    Like magic !

  • Comment number 48.

    Our problem in Ireland is that the "Celtic Tiger" was always a "Paper Tiger"
    Ireland boosted self confidence with GDP year on year figures which showed phenomenal growth but two factors were often ignored.
    1 was the size of Ireland's total product
    2 was the base from which figures were taken.

    A rapid rise was bound to lead to a rapid fall.

    What worries me is that there is very little scope for wealth generation in Ireland now.

    The much vaunted IT sector (Bertie Ahern used to boast that ireland was the major manufacturer of software in the world) was always going to migrate to a lower cost base as will pharmaceuticals (still quoted by many Irish politicians as a mojor industry in Ireland.)

    What's left?

    Agriculture - already propped up by Europe
    Tourism - Ireland is one of the most expensive european destinations.

    Gloom and Doom I'm afraid

  • Comment number 49.

    I'd like to echo the remarks of Kerrymade (38) who rightly takes umbrage with HORNED_DEVIL's suggestion (below) that 'someone' might blame England for the current financial problems.

    Horned Devil wrote =
    Ok Ireland - in what way is this the fault of the English? I'm waiting...

    We got over England a long (long) time ago but it is down to you (or those like you) now to finally let go. -Peace.

    (I'm waiting...)

  • Comment number 50.

  • Comment number 51.

    What I can't figure out is why aren't we seeing the sort of anger on the streets of Dublin that we've seen in London, Paris and Athens?

  • Comment number 52.

    Contacted my MP earlier this month ref the Carswell bill - comments were: it's not being supported by the Government and is unlikely to become law.

  • Comment number 53.

    robert i m staggered you think any ecb bailout is good for ireland
    its good for irish banks because it keeps the merry go round the giant PYRAMID scheme GOING which is the global banking system
    what irelands gov and irish banks need to do is to collapse the pyrmaid this is the only way and by the way will eventually happen any way they might as well do it now because it cannot and wont continue much longer anyways.
    all irish banks to be nationalised all the toxic debt to be singled out and destroyed
    irish gov to secure the savings of investors and business on asset value ie true wealth
    so the irish people can be free of the burden of debt and begin to work and rebuild there economy bottom up based on prodcutive capacity

    by the way britain next 100% guaranteed

    by the way robert its obvoius to me the people know whats gong on the policticians banks and big business and media think we dont
    thats dangerous for them .

    the end of the PYRAMID is closer day by day


  • Comment number 54.

    Well, it appears that we in the UK should be grateful that our current Chancellor was not in charge earlier.

    He wrote in 2006 in an article entitled "Look and learn from across the Irish Sea":

    "They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn."

    It seems as though we were fortunate that Osborne wasn't in charge any earlier. Mind you, we might also be rightly worried that someone with such poor judgement is in charge now.

  • Comment number 55.

    cassandra wrote

    the ftse is doing well holding up

    Cassandra its because all the bailout money and QE has gone striaght back in to the markets simple

    you may be interested to know next year banks around the world will need bailing out agian

    there is 2 quadrillion worth of financial instruments (like securities) that cannot be redeemed due to the lack of cash in the system — so-called toxic waste

    and the world govs have only pumped in 200 times less than that (10 trillion)

    the problem is immense and the banks have to left to fail its the only way ie too big to fails must fail

  • Comment number 56.

    51. At 8:24pm on 15 Nov 2010, SeanBroseley wrote:
    "What I can't figure out is why aren't we seeing the sort of anger on the streets of Dublin that we've seen in London, Paris and Athens?"

    Don't worry WOTW is rumoured to be getting on a ferry as we speak. He allegedly has bought a new donkey jacket specially.

  • Comment number 57.

    46. At 7:42pm on 15 Nov 2010, Gary Hay wrote:
    Here's how banking works
    ===============
    How does this create credit? as far as I can see in this inlikely scenario the money has just been thinly spread across a lot of banks.

  • Comment number 58.

    Kerrymade (39) and Porlock (49)

    I asked in post 4 "Who are the Irish going to blame for their misfortunes?"

    I never supposed for one minute that the Irish would blame the English.

    My question remains: Who are the Irish in the Republic going to blame for their misfortunes? And more importantly, are they going to put the blame where it belongs ie with their Govt and the decision to join the Euro which created the unprecedented credit and building boom and subsequent crash?

    Ireland was enjoying strong growth before joining the Euro and interest rates were quite high to stop any boom getting out of control. Joining the Euro cut interest rates in Ireland and that was like throwing petrol on a fire because the Irish economy sucked in credit and is now consumed with debt.

  • Comment number 59.

    No. 29 Virtualsilverlady:

    I totally agree with your sentiments!

    Since we are still being fed a diet of misinformation, dodgy statistics, denials and obfuscation, you are bound to ask yourself - "Just how bad is it?"

    Perhaps we're better off not going there!

    I think I'll stick with cash and hope for the best...

  • Comment number 60.

    Ireland does not need to be bailed out by the European community and the Irish governement has taken all the necessary steps to turn the situation around. The question must be asked: in whose interest is it to undermine the Irish Republic by spreading unfounded rumours about the ability of Ireland to deal with the situation? Dominique Strauss-Kahn, Head of the IMF, stated yesterday that Ireland can deal with the situation, The French Finance minister, Christine Lagarde, said the same thing today. The Taoiseach, Brian Cowan, has said the same, as has Brian Lenihan, the Irish minister of finance. Everyone knows how unfounded rumours help to feed the fires and destabilize even the most stable economies. So why spread such rumours? Who stands to gain? What is the alternative? The recent UN Human Development index results place Ireland fifth in the world in terms of human development. This result is not simply due to Irish corporation tax but to Irish culture, society, edication and know-how. I would call on all Irish people everywhere around the world to remember that other countries have faced even greater trials and have survived. We as a nation must never, never, never, never give in, despite the best efforts of the doom and gloom merchants, the gloaters and those jealous of Irish success. What is very surprising is that a lot of negative comments come from those who are least in a position to make comparisons and whose own banking sector conrtibuted to bring about the crisis the developed world is currently having to dela with (think of Norther Rock and RBS as only 2 examples). Ireland will rise again as Ireland always does. Joseph Noone

  • Comment number 61.

    The seemingly open question is how those write-offs, those losses, will be shared between Irish taxpayers, European taxpayers and commercial lenders.

    ===========

    For me this is the most confusing part of the column. How on earth are we other European taxpayers responsible for the financial problems of Ireland? I'm sure they enjoyed the nice SUVs and luxury houses while it lasted, but are they not willing to pay up for the bill now that it's paytime? The same goes for the greek and other mediterranean countries too plus Iceland.

    Hopefully we'll soon see the euro area being split in two parts with the northern ones with responsible economies in one and southern opposite economies in the other one.

  • Comment number 62.

    Isn't it time to put Bertie Ahern on trial? Might not achieve anything tangible, but the sight of him explaining just what the heck he thought he was doing, and trying to justify some of the most ludicrous deals he agreed to, might cheer everyone up a bit.

    Then get U2 to start being the true patriots they always say they are and actually pay their taxes in Ireland.

  • Comment number 63.

    It makes you wonder if there was an alternative to bailing the banks out ? Maybe the outcome is still the same , but in a more controlled manner ie over 2 years rather than 2 weeks.

  • Comment number 64.

    Fair comment Busby2 (58),

    But Kerrymade and I were responding to Horned Devil's gambit (11) who took your question to a very different place.

    Let's blame Horned Devil, lol

  • Comment number 65.

    The burden is on no-one but the Irish. Ireland has a young population and is seen as a cash cow paying interest to countries who have hoards of freeloading pensioners. The Irish should take the money and run.

  • Comment number 66.

    #57 AnotherEngineer

    Come on do the maths!

    How much money exists at any one time during the process?
    Clue: Is it more than £100?

    And of course you have to realize that those people who think they have got money in the bank do actually have money in the bank.

  • Comment number 67.

    #38 and #49 as a plastic myself who reads politics.ie daily I would be careful about being too outraged at these comments as we all know it swings both ways. There is more than enough blame to go round for all these days and those who try too apportion it are swimming against the tide I'm afraid.
    I spent many wonderful childhood holidays in Ireland, stuck in the back of some snug with a pack of taytos and a coke, behind a grocers and below a funeral parlour and from a purely selfish point of view I despised the "Tiger", it took from me the Ireland I loved and gave me England with better Guinness. But worst of all it turned my friends and family in the country into overnight entrepreneurs, and with it came a swagger that seemed unnatural and an almost (dare I say it) English arrogance that was out of place with the country. I don't wish to sound patronizing here and realise I may be but it's not what I'm trying to get at. The Irish as a people deserve better than this, much better, throw out FF, tell the Germans to stuff it and do what you do best...survive under any conditions, but at least they are your own.

    #46 This board had been graced with many better descriptions of FRB but for the record 40:1 is a tad optimistic , as of last week Bank of Irelands deposit to loan ratio was 160%.

  • Comment number 68.

    No. 60 Joseph NOONE:

    Believe me, we all hope that Ireland can somehow overcome this crisis!

    We're all in this together. Maybe that makes the problem a little easier to deal with...

  • Comment number 69.

    Did anybody really know how these matters were going to pan-out?
    We can give our best guess I suppose.
    If we looked at housing units being produced in the UK during the period 2005-2007 we would have seen that house building firms produced on average 170,000 units per year for consumption by a population of approx'60 million people mean while in the Republic of Ireland, for the same period, for a population of less than 5 millions, they were producing close to 80,000 units per year.
    As they say, "I'll let you do the math"

  • Comment number 70.

    This is the problem I have with economists, they tend to see a fast growing economy and assume that it's a sound economy. Thus we had the Irish economy being held up as a shining example just a few years ago only for it all turn out to have been built on sand. And they haven't learned a lesson as they continue to salivate over the dramatic growth of China's economy...

  • Comment number 71.

    61. At 8:59pm on 15 Nov 2010, epazau wrote:
    Hopefully we'll soon see the euro area being split in two parts with the northern ones with responsible economies in one and southern opposite economies in the other one.

    Do you not see how the 'responsible' economies benefit from the 'bad' ones?
    Do you not think the Germans would prefer to bail out Ireland rather than trade on its true exchange rate?

  • Comment number 72.

    55. At 8:37pm on 15 Nov 2010, iain wrote:
    cassandra wrote

    the ftse is doing well holding up

    Cassandra its because all the bailout money and QE has gone striaght back in to the markets simple

    you may be interested to know next year banks around the world will need bailing out agian

    there is 2 quadrillion worth of financial instruments (like securities) that cannot be redeemed due to the lack of cash in the system — so-called toxic waste

    and the world govs have only pumped in 200 times less than that (10 trillion)

    the problem is immense and the banks have to left to fail its the only way ie too big to fails must fail

    ==================================================

    UK Govt debt is currently running at over 4 trillion and rising. The cuts announced by that dimwit Osbourne is akin to sticking a plaster on an amputation. I have said before that those cuts are there to bail the banks out again next year, meanwhile those same disgusting bankers are still paying themselves huge bonuses - why do we put up with this? Next year is going to be truly scary!

  • Comment number 73.

    I am a simple average Irish homeowner, I have been trying to educate myself to what has been talked and written about of our country today and of recent times.
    It is true, we are facing difficult times, more so in what happened over the last few years. We are now facing been damned if we do, borrowing off the EU and been a burden on more tax payers across Europe, or damned if we dont, cause a domino effect with in the EU, that may even effect you the UK taxpayers as your business partners will be effected.
    I would accept EU aid on condition,
    The EU examine where Ireland went wrong and prepare to do something the cowards in our government wont do. In Nuremberg trial fashion, prosecute those people who failed this nation and caused this disaster.
    I would start at those people that were seen at the Galway Races in the Fianna Fail tent.
    Banks
    Builders
    Unions
    Government.

    Once more as every Irish citizen has said facing cuts to pay our neighbours, lets all share the load, nobody should gain, nobody should loose, well too much and protect the vulnerable, it was never their fault.

    To them who made comments about the Irish people are to blame, we didnt get much of the golden years, but we are paying for its sins.

  • Comment number 74.

    Go to the IMF. The ECB aka the Germans, and the Chinese are hovering around our sovereignty and our banks respectively like vultures. If the Brits could swallow their pride in the 70s, why can't we?

  • Comment number 75.

    Busby #58, to be fair, my comment was directed in response to Horned Devil's remarks (quoted in my initial entry.) He directly suggested that Ireland would blame England. Furthermore, there have been a number of remarks on this thread (since deleted) that could only have been described as prejudiced (e.g. that we would replace the Euro with potatoes and trade in potatoes etc.) These comments seemed to take comfort in blaming the stereotype of the Irish 'potato picker' for the situation that we find ourselves in. I felt that this thread should not engage with the England and Ireland debate and accept that your comment was not made in relation to that.
    As a twenty-something year old, Irish graduate and an emigrant, currently residing and working in Scotland, I would like to think that the England/Ireland debate should not be referred to or used as a reason for the situation we find ourselves in. Your specific remarks were not the comments that I was referring to.

  • Comment number 76.

    Ireland's success emantes not from EU (or EEC) financial grants (as some persist in believing) but from the decisions made by the Industrial Development Authority (the IDA) in the 1970's and 1980's to attract companies to Ireland with tax holidays, financial grants and attractive land deals. The urgency then was to get Irish people back to work after the likes of Dunlop, Ford and Sunbeam closed up shop, or reduced their operations.
    As is also well known, development authorities from other countries had been, until relatively recently, visiting Ireland to find out how Ireland managed to rejuvenate its economy.
    Such authorities didn't visit so we could show them how to fill out the forms so they could apply for EU grants. They came to see how a country could get its workforce back to work. That is what we did.
    The current property bubble has hit Ireland hardest because Ireland has always had high home ownership rates. Borrowing against imaginary hikes in one's property value is and was a critical factor. The French protected themselves against this by demanding higher deposits for home purchases. But, the alternative to borrowing and risk and growth is stagnation. Ireland's current difficulties cannot undo the great leaps Ireland has made in terms of education, lifestyle, and quality of life indices. Ireland quite rightly insists that it can and will sort out its own financial problems. It is not in the nature of the people to want or to expect or to welcome charity or bailouts.

  • Comment number 77.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 78.

    46. At 7:42pm on 15 Nov 2010, Gary Hay wrote:
    About Douglas Carswell

    A renegade MP, by all accounts, but all the better for it.

    Don’t give up Douglas Carswell.
    99.9% of those out there don’t understand what you’re trying to do.
    But I do.

    To Devils Advocate, Nautonier, Bob Rocket et al:
    Your country needs you.


  • Comment number 79.

    The Irish economy has had it. It must default and borrow from the Chinese. The euro is not to blame its the Irish banks and politicians. Housing is I still consider 100% over valued. This debt needs to be cancelled. just get on and do it. default! the world will keep spinning. Build a real economy on knowledge, farming and tourism. put a roof on croke park. the irish have been let down by the halwits they themselves have elected. Its time some business men were put in charge. Michael Oleary, Willie Walsh, Alan Joyce we rule the skies.

  • Comment number 80.

    It seems odd that the problems that have come to light with at least two Irish banks about a month ago, necessitating further state funding and pushing up the deficit to some 35% of GDP, didn't come to light three or four months ago during the European bank stress testing.

    This testing only found fault with a few small reginal banks in Spain (?).

    My worry about massive National Debt in general is that the young who pick up our tab for "jam today" may hit back at our generation when they inherit the levers of power.

    My worry about massive National Debt in Ireland is that the well educated young will leave the counrty. If they stay, the burden of sovereign debt servicing will fall heaviest on their shoulders. And yet many Irish will know of some forbears in their family who left for the US at the time of the Potato Blight some 200 years ago. They may even regard some parts of the US as Irish satellite states and natural second homes.

  • Comment number 81.

    I love our Irish neighbours but I'm completely baffled as to how outrageously stupid some of the past economic decisions have been.
    Anyway lets not go over old ground and point the finger (well not till Ireland is back on track atleast) but please lets not make the same mistakes as were made with Greece!
    Why are you dithering Mr Cowen? The Greek problem would not have been anywhere near as bad as it was when it came to a heads had Germany and other Euro members not dithered on what to do. The reason being dithering ceates uncertainty which raises interest rates on government debt amongst other problems. Brian bite there hands off!
    Personally I think the wrong decision was made with Greece, they should have been expelled from the Euro (atleast temporarily) and revive the Drachma, this would have given the government the economic tools back to fix the problem without going over board on the austerity measures which ofcourse makes things worse yet still. Having said that are the incumbent Irish Government capable of using these tools - not too sure but might be the best shot they have.
    I just want to make the point that I am not against the Euro whole heartedly, its great for many parts of the continent, I feel certain countries(namely Ireland & Greece) joined for more political reasons then economic reasons. Think I'm on to a theory here - as a Euro member are you more lkely to fail if you don't share boarders with fellow Euro members? Finland watch this space(only kidding - the Finish should be fine!)

  • Comment number 82.

    73. At 9:33pm on 15 Nov 2010, withadarndalegirl wrote:
    'I would accept EU aid on condition'

    Don't accept it.
    All they offer is more debt.
    •The banking industry has taken Government money to survive.
    •The Government increases tax and cuts jobs to pay for this.
    •The extra tax and/or loss of your job means you can no longer keep up with your mortgage payments.
    •The bank then repossesses your house and petitions the court for your bankruptcy.

    The above is not reasonable.
    It runs against everything that we are supposed to do:
    Namely trying to provide a home and a future for the next generation.
    Tell them No.
    Enough is enough.







  • Comment number 83.

    The UK Govt has no need to finance its deficit spending by borrowing.
    Issue of gilts should stop now. Repay existing gilts as they fall due unless you are deluded enough to think that any Govt cheque could bounce.
    The idea that Govt the UK Govt needs to borrow or tax in order to spend is a myth that has captured 99.9% of the population.
    It can and should create jobs, by spending, up to the point where available resources(that means the unemployed) have been fully utilised.
    This can't happen in Ireland because they are not sole issuers of, and sole tax collectors of their own currrency.
    Ireland either gets out or forces the majority of its population into 'austerity'
    Research the nature of money and the way money flows.

  • Comment number 84.

    The UK should not bail out Ireland. The banks that loan the Irish money know the credit might not be great, so if and when the Irish default on the loans they only have themselves to blame. If anyone bails them out it will be the ECB. The UK should object to paying a penny towards the bail out.

  • Comment number 85.

    71. At 9:27pm on 15 Nov 2010, Morpheus wrote:

    Do you not see how the 'responsible' economies benefit from the 'bad' ones?
    Do you not think the Germans would prefer to bail out Ireland rather than trade on its true exchange rate

    I don't see the benefit until they've paid the full price for their endeavours. A nice start would be reposessing their land and properties. That would be a good reminder to eat only what you earn.

  • Comment number 86.

    Robert says:-
    " ... without the financial support of the ECB, Ireland would be bust right now"

    Is it not Ireland's banks that would be bust and would not Irish taxpayers be better off without the banks, especially if

    "Ireland's weakness, what has sparked the pressure from other EU members and the European Commission for some kind of bailout of the Irish state, is its bloated, lossmaking banking system."

    The Irish government were conned by their bankers into converting their debts into sovereign debts. They did this by persuading the government that if an Irish bank were allowed to fail, Ireland would suffer badly. In fact it would have been those who had lent money to the banks who would have been the main losers, and these were mainly other banks.

    The main arguement was that if an Irish bank were to be allowed to fail then lenders would never again have confidence in an Irish bank. Has not that confidence been lost anyway?

    A bank bought from the administrator and reconstituted as a mainly retail bank, with small depositors' being protected by insurance, and without vast overhanging debts would have been much more likely to inspire confidence.

    The UK government, of course, fell for the same conn. They seem to be following Ireland to disaster, by cutting back public expenditure and thereby weakening the economy and making it impossible to pay back the debts so foolishly and unnecessarily taken on.

  • Comment number 87.

    The worst thing of all is nobody has put up their hands and said they were wrong. We as the Irish taxpayer are going to be paying for the rest of our lives for the cost of the banking crisis. Id prefer an IMF bailout than an EU bailout. If we went to the EU our low corporation tax will be the first thing to go along with numerous multi nationals and jobs. This would result in a higher bailout but the EU officials dont appear to have seen that far ahead yet.

  • Comment number 88.

    # 72. At 9:27pm on 15 Nov 2010, FedupwithGovt
    # 55. At 8:37pm on 15 Nov 2010, iain

    You are both absolutely spot on, the disaster looming next year is huge compared to the problems we've seen so far. I'm also of the opinion that the European drive for austerity is to secure bailout money for EU banks. The US are sitting back on cost cutting because they'll just print their way out of this crisis into a bigger one, namely inflation and "foreclosuregate."

    The trouble with the policy of saving for the calamity to come is that it's a forlorn race against time, governments wouldn't spend a sum sufficient to bail the banks out over the next year let alone save it.

  • Comment number 89.

    Heres another question for you: Is it in Britain's best interests to get involved with assisting Ireland because ofcourse our economies are linked enormously! Would a strong and stable UK bank such as Barclays be interested in buying one of the Irish Banks at a reduced rate ofcourse, similar to the Lloyds/HBOS deal. We must remember that one of our big banks already owns a bank operating in The Republic our very own(quite literally) RBS owns Ulster bank, one of their big 4.

  • Comment number 90.

    people say what should we do

    simple straight forward advice

    cash in the bank is worthless and will be more so
    as inflation hyperinflation takes grip rising interst rates etc etc

    prepare for the worst

    stock a little food dont go mad everyones in this together
    essentials any one remember wars years
    what was short
    butter sugar etc you know the sort of thing essentials

    use your money wisely invest a bit in gold and silver
    for when the new system comes in youll have some asset value
    but be prepared to exit quick the sharks in the fed res will do some sort of scheme on that so you cant sell when you want
    so be carefull when the hedge funds pull follow them
    if the markets and banks are shut which i expect dont be caught without a dime have some reserves at home not in the bank there wont be any money and cap in hands to the gov under some scheme forget it ...........well ill take me chances without them thanks very much
    keep a bit under the bed why not 0.5% in bank whats the point and its being devalued after each bailout and depreciation

    own your own home pay it off so you owe no one
    foreclosures arent funny and cant be stopped
    get a deal on your rent if you can move in with family share the burdens

    want free advice on gettinmg rid of your own toxic debts
    credit card,loans and overdrafts i can definately help

    [Personal details removed by Moderator]
    i will help anyone for free

  • Comment number 91.

    I don’t think Ireland is in a position to fix its finances. The trouble largely seems to stem from lack of control of the banks. Anglo being the biggest failure, with virtually no accountability by those profiteers who created the problems. Look at the case of Sean Fitzpatrick, the former CEO, living, according to his bankruptcy hearing, living on €188 euro a week, but turning up to with a David Dickingson style tan from his house in Spain. This is the individual who allowed millions of Euro to be lent by Anglo to buy shares in Anglo, deceiving regulators for seven years by arranging for the loans to be repaid annually by other Irish lenders thus avoiding the responsibility to declare these muliti-million Euro loans. Mind you, in a country where former Taoiseach Bertie Ahern claimed he had no bank account (while serving as the finance minister) it can’t come as much of a shock (see the Mahon Tribunal for details). The current woes come in the face of a Government who seem determined to hold onto their majority by the unconstitutional (according to the High Courts) withholding the right to representation by not allowing a number of by-elections that would tip the balance (notably Donegal South). But to give you a real feel of whats going on in this shambolic farce, Brian Lenihan, the current finance Minister, notably said Anglo would be “the cheapest bailout in the world so far”. If it takes down the Country, this could arguably be the biggest understatement in the History of Ireland, if not “The World, so far”.

  • Comment number 92.

    37. At 7:09pm on 15 Nov 2010, oneworld77 wrote:

    Wow Nautonier, hiberno-xenophobic much?
    How has the UK paid for communications in Ireland? And security? Really - do you want to go down that road?

    ................

    Yeah!

    Great attempt of dodging the question ... Britain hasn't got an 'opt out' clause on immigration within the Lisbon treaty but I recall that Ireland has ... ??? Some care needed there ... stones and glasshouses come to mind?

    How much/£'s billion is the UK taxpayer going to have to put into your general British taxpayer funded Irish subsidies and bail out and 'general shelter'?

    It's a straight forward question ... I can't see why you need to sensationalize the discussion with matters outside of the UK's 'Irish subsidies'?

    The fact is ... your Irish debt situation is also looking even more costly for the UK as including through the EU rescue funds ... touchy subject ... Britain is expected to just subsidise all of the way

  • Comment number 93.

    What has changed with Irish banks? Way back in the early 1970s I worked overseas for a British company. Partly for Exchange Control (remember when you could only take £25 out of the country?) reasons and partly for taxation purposes, my salary was paid into the Bank of Ireland which promptly went on strike for the better part of a year. The least ineffective way of dealing with the mess they got my account into was by post, even then it took 3 or 4 weeks to get a reply but then not to the question I had asked.

    After six months or so, I was so frustrated that I got on a plane from Birmingham to Dublin one morning and spent part of my £25 on a taxi to the Bank of Ireland head office where I presented them with my version of what my account should look like, including what was probably an overly generous allowance for interest they had failed to credit.

    A great huddle developed in the banking hall to the detriment of all their other customers, nearly all their available staff were poring over my reckoning with a great deal of head shaking apparently in disbelief or perhaps total bewilderment. In due course, a senior manager was delegated to take me for an expensive lunch and when we returned a couple of hours later, my account had been "regularised", that is, my document had been transcribed on to Bank of Ireland paper and signed off by someone of supposed importance.

    I was asked to agree the figures - since they were mine, I had little choice but to sign. Moments later, I asked for and got a total withdrawal in the form of a Bankers Draft payable to my newly opened account with a British bank in Jersey. Into the bargain, I was taken back to the airport in the Chief Executive's limo.

    It seems that the efficiency of the Bank is little changed in the last forty years but perhaps they are now a little less generous with their hospitality!

  • Comment number 94.

    Just for the record , net contributors to the EU do NOT include France which continues largely through use of the CAP to be a net beneficiary - surprise , surprise !!

  • Comment number 95.

    Ten years ago the average man in the bar in the west of Ireland would be describing in casual conversation the huge amounts of money he had borrowed to build a large house or a larger second house or small housing estate. Money borrowed with no collateral but a field, a promise or “concept”. Money loaned on the basis of a phone call. Some bank managers were renowned for making loans in the millions on the basis of a five minute mobile phone call between golf strokes. In a decade the average house in the countryside went from a being bungalow to a hacienda with the footprint of the Taj Mahal. All of it on borrowed money.
    For the last five years the average man or woman in Dublin or Galway bar has been predicting the crisis but the Irish Government has been in collective denial or criminal disregard for the looming “Propertygeddon”. But then most of the ministers were - and still are - up to their necks in shady deals with property developers. There is a level of blatant, “I-do-not-give-****- that-you-know” corruption that that makes our own MPs look like Mother Theresa’s convent. To miss-quote the quote about Charlie Haughey (the role model for the current crop of Irish politicians) – Irish politicians and ministers “have necks like a jockey’s b****cks”. The Irish Government is riddled by systemic dynastic corruption which the population tolerated - and half-admired - but has now cost every man, woman and child very dear.
    Well actually not every man, woman and child. The Irish have never liked paying tax. In that respect Ireland is like Spain, Greece and Portugal but with a decent water supply and sanitation. The crisis will cost every man and woman tax payer very dear. Farmers who pay little or no tax and have billions of Euros in the mattresses and outhouses won’t suffer too much. And there are a lot of people in Ireland with two pet sheep in an adjacent half acre by the house who are still getting subsidised. The farmers and various iterations of the species will put the BMW in the barn and go to Mass in the Skoda. The local councillors and politicians will not pay very dear as their money is off shore, often invested in the UK. The lawyers and bankers who facilitated the disaster will not pay as their money is off shore invested in the UK, Eastern Europe and hidden with cousins in the US and Australia. The young won’t pay very dear as they are emigrating. The public sector workers will be the ones to pay.
    The Irish refer to the Taoiseach as Biffo and it is not just the physical resemblance that prompts the jibe.
    In the west of Ireland there are many lakes. The biggest is Lough Corrib. Ten years ago a ribbon of lights ringed the shores for miles. Five years ago the lights went out in the winter as the money to open the houses all year round began to evaporate. Now only a few lights appear on a late summer’s evening and in the winter there is a darkness that Finn MacCool would have recognised.

  • Comment number 96.

    a suggestion to the irish people and british people

    why do you sit around taking this from your leaders

    educate yourselfs and march on your government show them you wont be slaves to the banking system refuse to pay your taxes and refuse to show your labour until they unburden you from the debt slavery imposed by brussles and the fed reserve

    demand of your councillors and politicians action show your distrust of the system that enslaves you and show them that the wealth of the poeple lies in the people not in some made up security or derivative on the world casino ride.

    you did no wrong you worked hard but you were conned by the biggest fraud of all time the great pyramid swindell

    time for action for your children your childrens children will have no more than utter comtempt for their fathers and grandfathers who let this all happen without a wimper for there enslavement to the banking pyramid system will be sustained and with it the abilty to work hard produce and support your families as free individuals will be lost
    for many generations to come

    all the best to us all

  • Comment number 97.

    To Post 60.

    Take a good look at the situation. No-one is going to say so far in advance what a mess Ireland is in because it will spark concerns and volatility in Irish Stocks and the markets.
    And since when did Politicians become the bastion of truth and reason. Robert Peston's blog is pretty spot on.

  • Comment number 98.

    Nations being sacrificed on the altar of debt?
    Is this reasonable?
    Has a ‘Bank’s’ balance sheet, become more important than a country?

    Whilst I agree that banks have balance sheets, I note that nations have balance sheets to, and long ones at that. And upon a nation’s balance sheet is likely recorded the ceaseless toil of men and women over countless generations, lives dutifully given, great inventions, the construction of everything that there is.

    And having created everything that there is, and being solely responsible for creating everything that there ever will be. Who are the real debtors?

  • Comment number 99.

    stanblogger

    and why arent banks lending to us
    becasue they arent lending to each other and why is that i wonder

    because they think the other bank will go bust as sort of warped catch 22 so all banks are stuck with toxic debts they wont reveal

    TIME FOR THE TOO BIG TOO FAILS TO FAIL simple as cheese on toast

  • Comment number 100.

    90. You have just encouraged people to do something that can only make the situation worse. Put money under the bed, really is that wise? Encouraging leakages from a fragile economy, very dangerous and very unwise. It's almost like your willing the economy to fail. I pray to the good Lord Ireland will prosper again some day but that is no way to achieve it. So people do not listen to comment 90. Thankyou

 

Page 1 of 2

BBC iD

Sign in

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.