David Higgins

On Bailout Tuesday last, the government told us how much of OUR money it was giving to the banks. Anglo Irish Bank, a small business bank is set to get the largest bailout, €18billion.

Much of the debate now focuses on how to deal with Anglo. Let it go to the wall or prop it up. It’s argued that letting it fail now would cost more to the taxpayer. “It’s too big to fail”.

This is a worthy discussion, however we need a bit of perspective here. Why are we bailing it out in the first place???

The government is gaining praise internationally because it is making the “tough decisions”. Bullshit!!

Maybe if Fianna Fáil and the PDs hadn’t let this happen in the first place, we wouldn’t have to bail them out.

People within banking have been saying since 2004 that the system was rotten. Easy credit allowed billions to be lent out with little chance of that money being returned.

Even in 2007 Michael Somers, then head of the National Treasury Management Agency (NTMA), told an Oireachtas committee that Anglo was in trouble, so he was reluctant to deposit money with it.

Somers was one of the brightest people working in government yet nobody would listen to him. Fianna Fáil didn’t have the balls to stop the madness before it was too late. And of course, 2007 was an election year!!

So, maybe FF have it right this time, maybe bailing out Anglo is our only option. BUT, who gave us this option in the first place? Who sent us down this one way street?? Fianna Fáil, and don’t you forget it!

The Celtic Tiger saw a splurge in easy money. If you wanted a loan, you got it! For a car, boat, house, or TV, it was a free for all. Now the banks are out of cash and everything we bought is worth nothing!

The principal of credit is an admirable one. It allows people to get what they want and pay for it later.

However it does not come without a price. Interest is usually applied on a loan but there can be greater consequences.

For some weird reason Shakespeare knows our world better than we do! He saw these consequences quite clearly and many of his great plays detail them.

In 3rd year we studied The Merchant of Venice. This entire play revolves around a loan. The Jew, Shylock, seeks his revenge over Antonio by causing him to default on his loan. Today in Ireland you get sent to jail for this (in the most extreme of cases), but in those days you were removed of a pound of flesh!

Shylock is like a relentless bank that will stop at nothing to get its money back. At least in those days you knew the forfeit of the loan. During the Celtic Tiger the bank told you nothing and the government said that prosperity would last forever!

Even in Hamlet, which I now study in 5th year, the writing is on the wall that loans are to be avoided at all costs.

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

It ruins marriage, you lose friends, and most importantly you can lose everything you own!!!

This crisis has been the wake up call us Irish need.  China, who’s population save a large % of their income, is much better placed to deal with recessions like these. Thankfully some of us are taking the message seriously.

40% of adults are now debt free

This good news story shows that Irish people are beginning to save, but for how long?

If we see a boom again will personal spending rocket and will the loan cycle begin again?

It needs to be stopped and people need to realise that living within their means is the best way to live.

It’s RTÉ radio 1 on a Friday morning and the nation is listening to a discussion on NAMA. In the blue corner is George Lee, one of Fine Gael’s top economic spokesmen. He’s certain to have a cabinet position after the next election and he knows his stuff when it comes to the banks.

Then the green corner, Fianna Fáil. Fine Gael have a heavy-weight out, surely the government will send either a minister, a junior minister or a Green Party TD to debate. No, all they gave us was Frank Fahey! He quite incorrectly described George Lee’s proposals as “11th hour” when all the proposals were made by Fine Gael before George Lee was even a politician, earlier this year. Also considering Fahey is deep in investor circles means he’s not exactly the most appropriate person to debate the NAMA legislation. See here for more information on his conflicts of interest in property and investments.

The most worrying part of this discussion was when Frank Fahey was asked about the property market. He was asked whether the market would rebound. His response was most worrying. “It has already started……”!

Also equally disturbing and alarming was his attitude to spending a suggested 30 billion euro of taxpayers money.
“It’s not. It is ECB money which will be borrowed at one and a half per cent”.

What planet is this guy from?

The Galway West TD was one of the many unknown TD’s we saw this week out to debate NAMA. Where’s the Taoiseach, where’s Brian Lenihan? To be fair the Minister for Finance did make an appearance mid-week to respond to Fine Gael’s bank proposals however it’s clear by the inaction of the rest of the cabinet that NAMA isn’t up for discussion, that it’s a done deal.

It’s not, and the protests scheduled for September 12th and 19th will prove that the public don’t see it as a done deal.

Today the government launched it’s legislation to set up NAMA – the national asset management agency.

This was met by many sound-bites from the opposition and the most of these were seen on the RTÉ 6.1 News. Arthur Morgan of Sinn Féin and Rurai Quinn of Labour both gave their reactions. They were negative and they highlighted the risks involved to the taxpayer. They also, however, drew attention to their own beliefs. They both want to nationalize the banks. Both were vocal on this however Richard Bruton failed to outline the Fine Gael plans.

Instead he gave another opposition style bashing of the government while providing no alternative. Even though we do have an alternative.

It’s very simple. The government wants a bad bank, we want a good bank. Richard Bruton himself wrote our policy document on it, yet he didn’t mention it tonight and it is rarely mentioned by anyone else in Fine Gael either. It must be publicized that we do have policies and we do have a plan for this country.

I think Richard Bruton should be the party leader however he needs to be more vocal on how we would do things. This goes for everyone Fine Gael member in the Oireachtas.

I believe that if Kenny steps down then the front bench would be an unstoppable team of Bruton as taoiseach and George Lee as the Finance Minister. We could even achieve an overall majority in the Dáil. Kenny is the only thing standing in the way.

Today Bank Of Ireland workers went on strike over pay. They are claiming for performance related pay promised to them before the financial crisis. The Bank says that it can’t afford this due to the recession and the fact that the country is experiencing deflation. For once the Bank is right!

Many workers will see this as a stand against the big bankers who were reckless however remember that everyone has recapitalised BOI and so if a pay rise is given that would be our money.

There is absolutely no scope for pay rises in any sector, especially in the financial sector which is the highest paid section of the private sector.

Deflation means that there is scope for everyone in the country to take around 5% pay cut.

However many people are indifferent when they are told that prices are dropping.

Oh well lots of things have gone up

If we’re experiencing 3% deflation then we’re experiencing 3% deflation, no ifs or buts! Some things have gone up but more things have gone down and it has resulted in savings for the consumer. Therefore anyone who wants a pay rise is greedy (read my post on electricians for more).

I think all those who begrudge bankers should take comfort in that the majority of bankers are feeling the pain that many presume they deserve.