Scandalcentral's Blog

Is the end really in sight? November 21, 2010

The past few days have been historic for Ireland. They will go down in history books as being one of this proud nations darkest and bleakest days. The problem, is that the worst is yet to come.

Over 2 years ago, this Government offered us a hurried solution to an unfolding banking crisis: an irrational bank guarantee scheme followed by a ghastly “recapitalisation” programme and NAMA. Today, more than ever, the question must be asked, why was Anglo Irish Bank not allowed to fail? Why were subordinated bondholders protected? Why were the bondholders not ‘burnt’? If the above questions were properly answered 2 years ago and appropriate actions taken, we may not have to come to see the events of this week unfold. A combination effort may have even worked. Anglo and Irish Nationwide should have been wound down. AIB and other systemically important banks should have been nationalised, at a cost much less than the now famed recapitalisation disaster. However, it is now sadly far too late for what if’s. The Government made irrational decisions in the middle of the night September 2008 and ever since we are paying for their gross incompetence. This week, we began paying a price simply too high for the vast majority of voters: our sovereignty.

The issue I have with this whole bailout, is reality. The Government this week initially declared that the IMF were not here to bail us out. By the end of the week, they were only here to offer us a ‘loan’ of sorts but it was certainly not a bailout. It is a bailout. The issue is, that a bailout is not the required solution.

A bailout will buy this nation time. Very expensive time, that will be paid back for years to come at interest rates that I don’t believe this nation can afford. What should be done is far more complex. Perhaps we will yet see this happen. Firstly, we need to tackle the issue of the banks bondholders. No banking bondholders in the world has ever seen its money so well protected, this must end. The Government needs to totally redraft its macro banking policies which are fatally flawed. The markets will continue to over price us unless this is sorted. It’s somewhat ironic, that all this week the EU-IMF team are looking through the books to find out how bad the situation really is, before telling Brian Cowen what needs to be done. Why did Brian Cowen not get his team to do this 2 years ago? If a full analysis of the banks, economy etc had been done, perhaps some of the flawed decisions of Brian Lenihan would not have been made. This week ended the idea that Brian Lenihan was doing a good job. I personally never believed he was doing a good job, many of my avid readers are well aware that I felt he was a joke candidate for the most important position in Government. He has no relevant qualifications are hasn’t had a clue what he was doing over the past 48 months. He relies on a few advisors who prep him well. The only thing he is good at is seriousness and sincerity. I’m afraid our need for that is long gone. I would love to ask Lenihan about quantitative easing or the fact that interest rates will rise over coming months and what he expects this impact on Ireland too be. The sad fact is that he was always out of his league. As much as Cowen and McCreevy were in their days. When we employ buffoons to run our economy, the result is inevitable.

What saddens me further is that we never learn. I read an article in B&F magazine yesterday to my horror. It ran a story on the merits of Joan Burton (Recently described as the human vuvuzela) as the next Minister for Finance. The very thought of yet another unqualified trumpet running our economy is mind-boggling. In the above mentioned article I read, Burton herself admitted that Labour if in Government would not look to ‘burn’ the bondholders, even though every major economist in the nation including the likes of Dr. Constantin Gurdgiev has called for exactly this action to be taken.

The end of the crisis is not in sight, unless Ireland is forced to make serious reforms to our banks, economy and public service. I don’t believe the IMF will force us to close hospitals, however I do believe they will examine our public service in detail and decide to slash and burn the endless waste that exists. Ireland partied with the big boys during the boom, now that we have crashed it’s time to pick up the tab. It’s a great pity that this all could have been avoided, if the Government had taken the right decisions over the past decade.