Paul Sweeney: The Irish government’s cap-doffing attitude to the speculators who lent money to the reckless bosses of Anglo Irish Bank and the other banks is incredible. It is costly. It is you and I who will pay.
The cost is staggering. It could sink this country. It will burden all of us and our children too. The Irish media is remarkably subservient to Government and banker spokespersons’ opinion that we, the taxpayers must pay all of the lending to all the creditors who lend money to private Irish banks - Anglo, Nationwide and also AIB and BOI. Who is calling the shots?
It is therefore refreshing that at least the Financial Times, a paper which knows a bit about the city and bondholders, in its main editorial on 1st November, sets the record straight for us, the Irish taxpayers. It pits us against the Government and, it seems, the opposition parties too, which are also cap-doffing to their perceived “betters”, the markets.
The FT on 1 November said: "Ireland’s leaders remain convinced they cannot force a haircut on senior bank creditors any more than on depositors or holders of Irish sovereign debt. They are mistaken. Senior debt ranks equal to deposits under insolvency rules. But a government can selectively bail out depositors of an insolvent bank in exchange for their pari passu claims on its estate, as the UK did with Icesave depositors."
“The equivalence of private and sovereign debt is a creature of Dublin’s imagination – though increasingly one of its making: the government has far too promiscuously expanded its legal guarantees of bank liabilities”, said the Financial Times.
Read on here.
Paul Sweeney @paulsweeneyman
Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.
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