Bad sums

May 31st, 2009 | By | Category: Ireland

Good teachers are going to lose their jobs this summer as a result of Government spending cuts; class sizes are going to increase and grants for necessary work are going to disappear.  The teachers’ problem is that they did not pursue the path of reckless greed and irresponsible borrowing; had they done so, the Government would have found money to assist them.

A country that is closing wards in children’s hospitals, a country that can’t afford a proper out of hours service to protect children at risk, a country that imposes levies on working people who are already struggling, can still find €4 billion to assist the Anglo-Irish Bank, in the full knowledge that €4 billion might only be the first sum required:

RTE reported on Friday:

Anglo said the asset quality of its loan book has deteriorated substantially with impaired loans increasing to €10.7 billion and a significant increase in the specific impairment charge to €3.7 billion.

It also warned that its loan loss outlook until the end of September 2011 came to €7.5 billion. It added that if there was another 10% fall in land prices there could be a further impairment charge of €1.5 billion.

Yesterday’s Financial Times carried comments from the Finance Minister that are truly frightening if you are an ordinary person:

The Irish government is investing up to €4bn (£3.5bn) in Anglo Irish bank in an attempt to save the scandal-hit property lender that Dublin nationalised in January.

Brian Lenihan, the finance minister, said the investment, which is more than the government has put into either Allied Irish Banks or Bank of Ireland, would “protect the economy from the wider losses that would occur in the event of the failure of the bank”.

Mr Lenihan said the alternative of winding down the bank would “imply some element of default” on the bank’s debts.

“The bank is not itself of systemic importance but it has €64bn in deposits and bank debt that is clearly of systemic importance. [Following] the state guarantee, we would have to stump up €64bn immediately rather than €4bn sometime [in the future]. So that was not a feasible option for the country,” he said.

The ‘investment’ is not an investment in any recognizable sense of that word – it is money to prop up the bank.  Mr Lenihan acknowledges that fact; it’s to prevent ‘wider losses’.  In fact, if we don’t pay up and the bank collapses, we are liable for €64 billion; that is equivalent to one-third of the annual income of the country.

When people are dying for want of critical surgery, we are potentially liable for a sum beyond the comprehension of most people.  The FT does not hesitate to remind its readers of the nature of this bank:

The bank, which was raided by anti-fraud officers in February, is facing a number of investigations into directors loans, the controversial share placing, and the circumstances behind Irish Life & Permanent’s decision to provide €8bn in overnight deposits apparently to bolster Anglo’s books, just days before the bank’s financial year end.

€4 billion plus a further €1.5 billion if land prices fall by another 10% , plus how much more? And what is there to show for it?

Deceit on the part of the bankers and measures that hurt the vulnerable on the part of the Government are deeply moral issues; they are issues that should demand attention from anyone who believes in justice; they are profoundly ethical questions; and what response is there from church leaders? Silence.

Now, if there was a bit of sex involved, those upholders of biblical values would be leaping in.

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  1. They did leap in! Sorry Ian, that was an unfortunate use of words in the final sentence. 😉

    I think we need to go back to the Barter system for goods ans services. Bankers and politicians have been working from the same rule book for years – Take, take, take!

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