Whether the Oireachtas is, as Brian put it, “performing an awful lot better than the US political system” is open to question. Whereas in the US public concern at the bail-out was reflected in the initial Congressional vote, in the Oireachtas the extension of the tax-payers’ guarantee reflected political concerns in the UK and the EU. The US Senate has now passed the bail-out bill back to the House of Representatives.
But in the Republic of Ireland, despite Richard Delevan’s description of the move as “inspiration”, the sceptics are now starting to be heard. Morgan Kelly, writing in the Irish Times, argues that [added link] – “The Irish Government should have done what the Swedes did in 1991.”
Effectively the Irish banks are heading in the same direction that the Japanese banks were in the 1990s: zombies that are kept on life support by the Government, but without the capital to provide firms and households with the borrowing that they need. However this cosy Japanese solution to an Irish problem could come unstuck if bank auditors refuse to sign off on the valuations that banks are still putting on their dead assets. This would precipitate a new crisis that would make last Monday seem like a picnic.
And Miriam Lord recalls the scene at a July meeting this year of the Oireachtas Joint Committee on Finance and the Public Service.
To a man, they sang the same refrain: there may be a slight squeeze on, but business is doing great. Ireland had nothing to worry about. “We are still very much open for business,” was the universal message. Those committee members who complained they felt the banks were adopting a somewhat arrogant approach to their inquiries were afforded the equivalent of a pat on the head and told not to worry.
If the bankers had a complaint, it was that a “negative sentiment” was being put about by people which “was not borne out by the fundamentals”. Ah yes, the famous fundamentals. That committee room, along the side where the bankers sat, was groaning with bankers boasting about their fundamentals.
Perhaps it’s just a reflection of particular clients’ concerns.. Adds In the comments zone Garibaldy points to Conor McCabe’s post on Dublin Opinion. Update The Ulster Bank applies to join the scheme.. and the European Commission wants to see the details.