A Dáil committee debate; someone yet again makes the point that if we selectively burn lenders now, they will remember it if we ever want to borrow again.
The government’s logic seems to be that the bank debts taken on – but not created – by the State are just like all public borrowing now. But they’re not the same. It was money lent into an overheated credit market by reckless lenders. Just as our banks made loans they should not have, those international institutions lent money they should not have lent to our banks. They took unreasonable risks, they stoked a boom, and they helped collapse the entire Irish banking industry.
We want them to remember not to do that.
2 replies on “How Abject Can We Get?”
Was talking recently to an Irishman who said that the government 100% guarantee to the banks was made under EU pressure, as they wanted to be assured of the safety of money lent to/deposited in Irish banks. And as Ireland was one of the first countries to go into the crisis, the EU didn’t recognize the sovereign default risk. Any truth to that?
I don’t think that the bank guarantee was originally made with any EU pressure, or even consultation. Apparently the banks pretty much presented government leaders with an eleventh-hour ultimatum. And even if the EU was in favour of a guarantee, what pressure did they have to apply? This was before it became apparent that Ireland would desperately need to borrow to meet current account requirements.
However I believe they’re keeping that guarantee because of EU (and IMF) pressure. Largely at least – obviously the guarantee is in the interests of a wealthy domestic minority too.