Tom Molloy: Our stress tests must be up to scratch
JUST when we thought it was safe to worry about second order issues, the banks have come back to haunt us.
Fears about the condition of the nation's lenders, and their counterparts elsewhere in Europe, are now likely to dominate the listless summer months and could well linger until next spring.
Fitch, Goldman Sachs and Goodbody Stockbrokers all published chilling reports on our banks this week with the Goldman Sachs report on Bank of Ireland sending shares in our biggest lender into a tailspin.
Goodbody meanwhile became the first domestic broker to say yesterday that Allied Irish is likely to stiff us for another €3.5bn, which robs the Exchequer of a sum equivalent to all the money due to be raised in October's Budget.
Goodbody should know; the country's second-largest brokerage belonged to AIB when most of the bad loans were made.
Michael Noonan (inset) has been blowing hot and cold on the necessity for further stress tests before we limp out of the bailout this autumn but this week's analysis and the harsh reaction on the bond markets, where the cost of borrowing has soared, have probably served to remind the finance minister about the necessity of domestic stress tests within months.
The reality is that these stress tests will be as trustworthy as a TD's unvouched expenses. After the hames we made of the last tests, the next tests won't carry much weight overseas but they are better than nothing at all.
It is difficult not to have some sympathy with those conducting the tests. What is a realistic worst-case scenario these days?
The ECB base rate at 5pc? Another 20pc fall in property prices? Another few years of declining consumer spending? We simply don't know what is coming down the tracks.
What is clear at this stage is that the foreign-owned banks have taken a much more clear-eyed view of the situation here and planned accordingly.
Perhaps the next stress testers could do worse than touching base with their counterparts at Ulster Bank or KBC.
Nothing short of a fully blown European stress test is likely to set minds to rest but a year is an eternity in Irish finance these days and the last few days serve as a reminder once again that we need to ensure that our own tests are as credible as possible.
Why 'good' news is just plain nonsense
AN occupational hazard for any reporter is the odd lecture from a government minister or business titan about the media's alleged failure to report "good" news.
Most of the time, the reporter usually stares at his feet, the steak, glass of wine or whatever other delicacy the reporter or minister happen to be sharing at the taxpayer's expense.
The best response is to say nothing. Like an Irish summer, these outbursts soon subside; especially after the minister loses office.
Chance meetings are then dominated by complaints that the media is too partisan or cowed to report just how bad things have become.
There are several other reasons, of course, why good news is rarely reported. One reason is that so much "good" news is pie-in-the-sky nonsense.
The State is perhaps the most egregious sinner in this regard. Editors and reporters still feel the duty to report the words of government ministers even when what they are saying is patent nonsense.
This is true in business reporting and pretty much every other area of public life as well.
This Government has been no slouch when it comes to announcing all manner of schemes to help business, cut red tape or boost employment.
Hardly a week goes by without some announcement from this Government heralding some new scheme that will allegedly save small businesses.
In almost every case, we read about the large sums of money just waiting to be given away to lucky entrepreneurs. The schemes are so well capitalised that it is something of a mystery that any company still needs money.
Last October, the Government announced with much fanfare that it planned to provide more than €500m to small businesses unable to get credit through from the banks.
Taoiseach Enda Kenny (inset) said it was part of his "mission of getting Ireland working again".
The credit guarantee scheme was meant to provide €150m a year over the next three years, while a micro finance scheme was set to lend €40m over five years and a further €50m in the following five years.
Guess how much money has actually been lent to small businesses by the middle of last month? A measly €3.7m for the first scheme and a further €1m for the second scheme. And the Government thinks the media is cynical!