We've lost faith in Government
Sunday August 02 2009
The enormity of Ireland's financial difficulties became clearer last week when the Government published its draft legislation for the creation of the National Asset Management Agency.
The scale of the proposed rescue for Ireland's privately-owned banks is without precedent in this State, yet the Government chooses to publish its legislation when the Oireachtas has already taken its summer holidays and it has no plans to haul deputies back from the beaches to debate it.
Crisis, what crisis? Mid-September, apparently, is time enough to start talking about an essential repair to our economy. Thousands of jobs are being lost each month, yet the Government has no sense of urgency. Consumer and business confidence is shot to pieces, the economy contracts, businesses fail and the State's finances are in freefall, yet it allows the McCarthy report gather dust, and now it drops its Nama bombshell and runs for cover.
The draft contains no clues on precisely how much money the Government will ask us to pay so that the banking system can be returned to some form of normality, but it will be in excess of €60bn, and possibly as much as €75bn. Even in these days of astronomical numbers, those are staggering amounts, particularly since it seems inevitable that much of it will be lost if the Government pays too much for those loans.
It is the price, we are told, of stability. Unless the banks are rescued from the consequences of their own madness, the Irish economy has no prospect of recovery. The banks must be cleansed of their bad loans -- the billions they leant on property developments in the past decade -- so that they can resume lending.
The Nama proposals may represent the best way forward for Ireland's economy and its banks, but it is impossible to know. The Government has failed to make a convincing case, and has failed to demonstrate that it has a coherent and sequential policy for dealing with the banking crisis. It is not communicating with its people yet it expects that its decisions should be taken on trust.
The potential purchase of the banks' property loans is such a massive undertaking for this State that the people deserve far more information. Why is the Government so willing to pour billions into the banks, yet so reluctant to nationalise them? Why should it pay future prices for bad loans, rather than their current value? And why should bank shareholders be protected at the expense of the ordinary taxpayers who must bail them out? There may be valid answers to those questions, but the Government does not bother to engage in a calm debate about its options. It knows best, and we must trust it.
That is not good enough. Today's opinion poll in this newspaper shows how dissatisfied the people are with both Brian Cowen, the Taoiseach, and Brian Lenihan, the Minister for Finance. It shows that they are deeply sceptical about the Nama proposals and who they will benefit, and it shows, too, a clear majority in favour of nationalising the banks. That is not a step to be taken lightly, and it would have to be temporary, but if majority State ownership of our banks is the natural consequence of a proper valuation of their loans, then so be it.
The poll reveals a truly worrying level of cynicism about the beneficiaries of public policy, and that cynicism is poisonous to society. The Government has a duty to rebuild public faith in the political system and it must start by debating its policy decisions openly and honestly. There cannot be the faintest hint of favouritism or cronyism in a decision that could impoverish a generation and it demands justification on a grand scale. The Government is gambling the future: the people need to know why, and they need to know who benefits.
