COULD there be any greater waste of time and taxpayers' money than the banking inquiry due to start today?
The inquiry was always going to be a political football and it has descended into farce before it has even started. We already have the Honohan, Nyberg and Regling reports – and another report will tell us nothing that we don't already know.
There is a misconception that lending into a property bubble alone brought down the banks, but of Ireland's national debt of approximately €200bn, €64bn is the cost of bailing out the banks. That disaster at least looks likely to be abated now as NAMA starts making profits and the property market recovers. In other words we had made a mess of the economy anyway and politicians are wasting our money in their comfort zone of "inquiries and reports" when they should already have taken action to stop another property bubble.
Two obvious actions to take are to control bank lending into the residential sector by linking lending to long term average incomes or house prices. In the commercial sector it should be made compulsory to procure an independent valuation to "red book" standards.
Here's why the banks collapsed.
Joining the single currency forced our interest rates too low. New European banking rules increased the amounts that banks could lend and Ireland was flooded with cheap money. Banks were making supernormal profits and one of the fastest ways of lending money was into property. The Central Bank, The Department of Finance and the Financial Regulator were completely out of their depth and ineffective. Any dissenting voices were quashed.
A liquidity crisis in the banking system brought down scores of banks around the world. Banks that lent no money into property also collapsed (eg. Depfa had to be bailed out by the German government). The government had no choice but to guarantee the banks and ironically, to save the European banks, which had caused much of the problem.
Unfortunately the government chose the wrong option in guaranteeing bank deposits, rather than guaranteeing the repayment of loans to banks, which is how the UK had bailed out their banks at proportionately lower cost. Which part of this do the politicians not understand?
There is much debate among Dublin retailers about a lack of security and a poor quality environment causing a loss of business to suburban shopping centres. So I spent a few hours in the city centre last Friday and found some surprises.
O'Connell Street was bathed in sunshine and busy with shoppers. It's amazing that our planners allowed the proliferation of fast food outlets and gaming arcades on our capital's main street. I was delighted to find that the entire street was litter free. The southern half of the street is almost fully occupied but north of the Spire there are vacant sites and buildings.
From Christ Church along Dame Street to O'Connell Bridge was also pleasantly litter free. However, all of the roads and alleys into Temple Bar and around the Central Bank were littered, making me wonder if Temple Bar has a different street cleaning regime than the main streets.
Towards St. Stephens Green there were two people begging on Molesworth Street, but again the general area was commendably litter free. Another pleasant surprise was a sandwich eaten outside The Bailey on Duke Street which was not once interrupted by the aggressive begging which has intimidated tourists and locals for years in the cafes around Grafton Street. There has obviously been a crackdown on daytime begging around Grafton Street.
Remarkably, in three hours spent in the city centre, I did not see one Garda. The Gardai are operating with one hand tied behind their backs, under resourced and frustrated with a legal system that endlessly regurgitates the same offenders back onto our streets. If government would operate a smart "zero tolerance" system which jailed the 20% of criminals that cause 80% of the crime, the money saved would pay for houses and rehabilitation for many. And city centre business would boom.