A chara, – I dearly would like to help with the €50 billion plus it will take to sort out the banking issue. All I have to do is win €1 million on the Lotto every single week for the next 1,000 years, give it to the Government, and I will have done my bit for my country. – Is mise,
A chara, – Paul Duggan’s letter (October 1st) contains some very pertinent points, particularly in respect of maintaining a front of strength when negotiating with a lender. However, he perpetuates a widespread misconception when he says that bond-holders are investors, not bankers.
Ireland’s equity and property culture of the last 20 years and beyond has resulted not only in a broad lack of understanding of bonds as an asset class, but also a historical underinvestment in bonds from the Irish institutional investment community that verges on negligence. A typical Irish pension fund has had 75 per cent invested in equities and 25 per cent invested in bonds for most of the last decade. Prudence and conservatism have been tinged by the “get rich quick” attitude so prevalent in the broader investment community.
To Mr Duggan’s point, bonds are merely loans which can be actively bought and sold, sliced and diced into customised size for each investor whether he be a corporate treasurer, pension fund manager, or private individual. Like loans, they come in various forms with one common thread – the higher the risk assumed the higher the interest rate. The bondholder is a lender of broadly equivalent legal stature as the bank lending money. Importantly, while there is certainly a segment of the bond market that specialises in speculative and distressed investments, the typical bond investor is the antithesis of the “professional investor” he describes, and has accepted a relatively low return on his capital in return for a reasonably low risk of default.
There are no “easy choices” at this juncture. Raise taxes and we risk social collapse. Leave the euro and the empirical value of our assets (houses, companies) will fall immediately while most of the liabilities remain in euros, creating a huge once-off negative equity shock. The harsh reality is that not an iota of the growth and development since the 1980s would have been possible without foreign direct investment. The “organic” internal growth of the construction sector was a classic case of “the emperor’s new clothes”, nothing but bluff and bluster. If we cannot secure the long-term commitment of international investors then IMF intervention is a certainty, which would almost certainly result in public sector cuts of mammoth proportions — no more subsidising of loss-making public sector entities.
Michael O’Driscoll’s letter of the same date addresses some similar points. Indeed the government has a constitutional obligation to protect the welfare of its citizens. However, it cannot maintain this sovereignty without the economic power to do so.
Politicians are those who respond to issues as they arise and pander to short-term private interests in their legislation. Statesmen are those who put in place durable policies, who have the vision to think strategically and see beyond parochial allegiances. We have a surfeit of politicians and a dearth of statesmen. – Is mise,
Madam, – The cost of the banking crisis coupled with the fiscal deficit clearly demonstrates the inability of the Irish politicians to govern, or at least regulate, systems that should be beneficial to the general population. I believe there is a historical reason for this failing.
Contrast two groups of countries – Canada, Australia and New Zealand on the one hand, and India, Pakistan, Ireland and the former British colonies in Africa, on the other.
The former group made its way to independence and prosperity without firing a shot, whereas the latter group has been riven with internecine fighting and civil disorder, stymying any chance of political maturity. Add to this the sense of entitlement felt by victorious parties and reasons for the lack of progress is obvious.
In Ireland, since the Civil War, two groups of people have felt intrinsically chosen and entitled to profit on the opposition’s loss of office. As a result the notion of a united Irish society is subconsciously anathema to both groups, leaving room for opportunists and gombeenmen, from within and outside their ranks, to abuse office.
If €50 billion is the price of true independence, ie, the end of the FF/FG hegemony, and gives rise to the emergence of a political system that includes “all” the people, then it may be worth it. Turning our backs on history might be the best revolution. – Yours, etc,
A chara, – So we’re about to waste €50 billion bailing out people who took a punt on our private banks. Heads, the gamblers win; tails, the citizens lose.
A small suggestion: wait for the cold, frosty weather, then burn the €50 billion (in 10,000,000,000 €5 notes) where those who have lost their homes sleep. Then, we’d at least get a bit of heat for our money. – Is mise,
A chara, – Brian Lenihan cannot be allowed to get away with shifting the whole blame for the dire mess we are in onto the banks. I am amazed that more people cannot see that the real problem isn’t the banks – reckless and all as they have been. They didn’t go off on some solo run. They were facilitated and encouraged by deregulation and the promotion of greed and self interest championed by Fianna Fáil and the PDs. It’s capitalism folks! The wounded and dying animal that is Fianna Fáil has previously tried to shift the blame onto the public service – in particular its workers. It’s anyone but them.
The economic philosophy they (and, it has to be said, Fine Gael) enthusiastically espoused, born of the Thatcher and Reagan era, has not just failed, but has done so by sweeping away checks and balances that have protected ordinary working people – the greater number of our population. That’s where we should be focusing our attention. – Is mise,
Madam, – This quote by George Bernard Shaw is as apt today as it was in his time: “The faults of the burglar are the qualities of the financier”. – Yours, etc,
Madam, – Has anyone else noticed that it is those who brought down the economy that are telling us not to talk down the economy? – Yours, etc,