Tuesday, 30 September 2008

Government bails out Irish Banks in financial crisis

It is interesting to note that while the US Congress debated and turned down – for now – a proposed 700 Billion Dollar bailout for its banking system, the Irish Government has pushed through a measure which will hold taxpayers responsible for banks’ liabilities, should one or more of them go under. And the first thing we knew about it was when we woke up this morning to reports of the Government’s largesse with our tax money.

The Irish business and landlord class has got to be one of the most pampered in the world, at this rate. Landlords and property developers have benefited from State subsidies and tax breaks for years, leading to asset price inflation funded by reckless borrowing and careless lending. And all the time, the impression given was that our economy’s boom was the result of some new-found, go-getting entrepreneurial spirit that had hitherto lain dormant in the collective Irish psyche.

Actually, despite what the advocates of simplistic right-wing economic “theory” maintained, it was caused by the exact opposite: State socialism for the wealthy, in the form of distorting the tax system and corporatism via the IDA’s inward investment campaign. And let's not mention all the subsidies from the “socialist” EU.

Now the pick-and-mix approach to laissez-faire is well and truly exposed, as the State effectively immunizes the banks from the worst effects of their imprudence. It should be remembered that Irish banks are among Europe’s most profitable. AIB, alone, reported pre-tax profits of EUR1.28 billion for the first half of this year, while bank bosses have enjoyed extravagant financial rewards for leading their businesses into the worst financial mess in living memory.

Privatising profit and nationalising loss – Irish style.

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