The kindness of strangers

Eventually we were found out on the banks. What looked like the cutest move 2 years ago to guarantee al the account holders in Irish banks and the bond holders who leant to them to a total value of €300 Billion has bounced on Fianna Fail, the Greens, Fine Gael and Sinn Fein. Tonight its clear that the EU and the IMF see the down side of this.
Bail Out 1 in 2008 was rolled out to restructure the banks leading to the line under the affair on Black Thursday in September. The problem is that the value of €50 Billion which FF told us would be the cheapest bail out ever and that would ensure Ireland would be the first out of recession has only made matters worse because the €50 B figure isn’t believed anymore by the money market.

So the advance party is on it’s way and will be here by the end of the week. The problem is that the Greens and Fianna Fail nationalised banking debt accumulated by bank rolling the FF developer buddy clique. The prospect of allowing Anglo or the Irish Nationwide to go to the wall was a step too far for FF and the greens. Thence the ultimatum that seems to have been given from EU member states as the prospect of dithering is destabilising the euro and pressurising Spain and Portugal. The big question is has the EU got enough to support the Spanish and Portuguese economies? So when they plane lands at Dublin Airport in the next few days and the officials from the EU or ECB or IMF or more likely all 3 arrive in Merrion St they should consider bringing a bottle of whiskey to break the atmosphere. As the old Irish proverb says “There’s no strangers here only friends who haven’t yet met”

Black Thursday was supposed to draw a line under the past however the markets don’t believe the government’s figure of €50 Billion. Indeed the markets have made their mind up on the government. The humiliation of a nation will follow as Fianna Fail will dress the bail out as a bank bail 2!
They’ll continue with the line that there is no bail out but there is additional support for the bank industry. What they won’t point out is that the bank guarantee scheme backs private debt with the states resources! In 2008 the fiscal difficulties that our government adjusted spending to cope with were caused by a reduction in tax income not by a spending requirement to sustain the unsustainable. Throw in the national fault lines within the eurozone and the internal need to support each states own economy and it’s a short hop and a skip and a jump from the Galway Tent to Anglo Irish to Merrion St and before you know it you’ve the Euro on the slide and the internal economies of 5 states in the melting pot.

As a guide to how we’ve fallen Russia Today has some guy comparing Ireland to a 3rd world dictatorship where the general has made off with the money. In such countries at least a coup usually followed. So how close are we to social strife now? Where will this end for Cowen, Ahern, Harney, McCreevy and the banking elite? The kindness strangers is seemingly more attractive to our society than the greed of old friends.

Bank raid hits mortgage holders for millions

It has emerged this afternoon that 2 Irish financial institutions have decided not to pass on the .75% reduction in interest rate to their customers. It seems that the execs believe that they should hold on to the money, a move that will see the banks financial position improve and make them a more attractive proposition in the context of a merger!

So not only will tax payers provide a guarantee for their activity they are now effectively subsidising their balance sheet to make them attractive to vulture capitalist! My heart bleeds for Anglo Irish Bank who are only making €800M this year off the back of a share price of 50c. At the same time we have to guarantee their bad decisions while not getting to benefit from any of the good ones they made. The arrogance of the CEO when interviewed by Marian Finucane some months ago is breath taking.

So where is our Minister for Finance with his advice to the Banks that we must all live within our means and that in any deflationary episode in an economic cycle that we must reduce our expectations? No sign of reduced expectations here from Ulster Bank or Irish Nationwide. I presume Irish Nationwide is emailing the news with the same efficiency that saw them recently receive a heavy fine for touting on the back of the financial guarantee. Where is our financial regulator or Central Bank? Who exactly polices banks and protects the consumer because government certainly doesn’t ? In the case of Ulster Bank they benefit from being part of a larger UK based bank. The sooner Dick Spring is put on to a bank board to talk some sense into some of these sharks the better.

Once more the ordinary tax payer and consumer is easy meat, with FF not so much a case of he people living beyond their means rather FF not looking beyond their menu’s! Labour Youth has the right idea, nationalise them now, talk money later.