Will the banks sink Ireland?

October 11, 2010

Irish journalist and socialist Eamonn McCann describes the increasing furor and fallout over the Irish government's bailout of the banking industry.

COULD THIS be the worst piece of business in the history of the world? Last Thursday, Dublin Finance Minister Brian Lenihan handed Allied Irish Bank $4.2 billion of taxpayers' money to save it from going under. He could have bought the entire bank that morning for $832 million.

Paying 500 percent above the odds for a property which you won't own afterwards may seem as mad to you as it does to me. But it's not the worst piece of business in the history of last week.

The Government of the banana Republic also committed itself to pouring $40 billion--or at the absolute outside, Lenihan says, $47 billion--into Anglo Irish Bank, which, as a result, will be worth the same as it was beforehand: zilch.

A number of analysts maintain that the final figure for Anglo is likely to be $58 billion. But, hey, $40 billion...$47 billion...$58 billion...who cares when the saps in the queue at the accident and emergency can be counted on to keep coughing up?

Anglo isn't even a bank. Not as you or I would understand it. Not in the sense of offering current accounts to customers or arranging a loan to pay for the new kitchen unit or changing your euros into rubles for the return match with the Ruskies.

Dublin Finance Minister Brian Lenihan poses for the cameras
Dublin Finance Minister Brian Lenihan poses for the cameras (Mario Sughi)

Its only clients have been builders and developers who seem to know one another and Anglo's directors and Fianna Fail ministers very well, and for whom figures with fewer than seven zeros are suspect.

At this stage, it may be legally permissible to describe Anglo Irish as a scam, a racket, a rip-off, an outrage, an insult to common decency.

Lenihan says everyone will have to accept the arrangements for Allied and Anglo--as for Bank of Ireland, Nationwide, EBS, and Irish Life and Permanent--because the Republic would otherwise be sucked down the Swanee.

He'd made the same point back in September 2008 when the decision was made from which all else has flowed--to underwrite the deposits of the state's main six banking institutions. Any refusal to go along with this strategy, he averred, would be "unpatriotic."

Patriotism. Sure, where would we be without it--apart from a lot better off?

NOBODY EXCEPT incorrigible Fianna Fail loyalists now admits to having swallowed the 2008 Lenihan line. But in fact, in the Dail, only the Labour Party voted "no." We can date the rise of Irish Labour to the top of the polls to that moment.

Labour has more recently been boosted by the promise from Lenihan that, in order to pay for the bail-out, he will have to introduce a four-year budget in December of a sort which will inflict not so much pain as excruciating agony.

So Labour leader Eamon Gilmore will romp home as Taoiseach just as soon as Brian Cowen steadies himself for the thump of the axe on the back of his neck (calls an election), and a new era of recovery and responsible radicalism under Labour will be ushered in. Right?

Not at all. Some hours after Lenihan's $4.2 subvention to Allied Irish, Gilmore's predecessor as Labour leader, Pat Rabbitte, was laying about him with gusto on Vincent Browne's late-night TV3 argy-bargy. (It's worth persevering with TV3's snowstorm reception in the North for Browne's regular transformations from irascible terrier to slavering Rottweiler whenever he senses weakness.)

Fianna Failers, Fine Gaelers, Shinners, the lot, Rabbitte was taking lumps out of them for believing Lenihan back in 2008...until Browne intervened to remind him that he might well be the Republic's Minister for Finance in a couple of months: what would he do differently, eh?

Rabbitte seemed momentarily struck speechless by the impertinence of the question, but hesitantly explained that the four-year budget then in place would have been approved at the outset by the money markets. And the money markets wouldn't be one bit pleased if anybody tried to change any of its provisions at that stage.

So there wasn't a lot actually, to be perfectly honest, that he or any other finance minister could do. "Tweak things here and there" was as far as he would go.

Rabbitte's confession that a Labour-led government would make next to no difference helps resolve the most glaring contradiction in a recent rash of opinion polls: while the popularity of the Cowen government has sunk so low it takes a seismograph to detect it, fewer than half of the Republic's electorate (45 percent) want a quick election.

The people know voting won't do it. Which raises the more fundamental question, as relevant here as down there: what, then?

First published at the Belfast Telegraph.

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