Monday 18 December 2017

Stephen Kinsella: A chink of light but the banks still hold veto on debt divorce

The State holds the monopoly of organised violence over its citizens. We normally assume this violence is physical, but it need not be. The State can also injure its citizens by instituting legislative processes that damage the long-term interests of large sections of society by favouring smaller sections. This is violence by another route, and potentially more damaging because of the withering effects on the polity such laws create.

I have argued for years that, after unemployment, the largest policy problem in the State is the excessive level of personal debt held by the public. I'm not alone. In a recent speech to the Institute for International and European Affairs discussing the problems Ireland has, the Governor of the Central Bank Patrick Honohan wrote: "high public debt and the working out of the banks' distressed loans remain central."

The ratio of disposable income -- what you've got left over after all the bills -- to outstanding debt in Ireland is one of the highest in the world. More than 10pc of residential mortgages in the State are in some form of distress.

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