Dail fiddles as economy burns

Sinn Fein President Gerry Adams has called for the Dublin parliament to be reconvened immediately to discuss the banking crisis and soaring unemployment.

Mr Adams was speaking in Dublin at a meeting of the party’s ard comhairle [leadership].

“The past week has seen further allegations about what the Government knew but didn’t reveal to the Dail when it introduced the bank guarantee,” Mr Adams said.

“Decisions on Anglo Irish Bank, which will have huge ramifications for taxpayers and the future of the State, and on the renewal of the bank guarantee, should not have been taken while the Dail is on holidays. The Government has no mandate for this.”

There has been a mixed reaction this week to the Dublin government’s new plan to split Anglo Irish Bank into two rebranded banks -- a “funding” bank which woud continue to issue loans, to operate alongside an “asset recovery bank”, to deal with the bank’s gargantuan bad loans.

The 26-County Taoiseach (Prime Minister) Brian Cowen said the bank guarantee scheme -- under which the state underwrites the liabilities of all Irish banks -- would be extended until the end of the year.

Further questions also surround the State’s ultimate financial liability to Anglo, something the government said it will not specify until October. Current estimates generally place the figure at about 30 billion euro, although that number has steadily increased this year.

But a former chief economist of the International Monetary Fund warned this week that the 26 County state is now effectively insolvent.

Simon Johnson, a professor of enterpreneurship at the MIT Sloan School of Management, writes: “The ultimate result of Ireland’s bank bailout exercise is obvious. One way or another, the government will have converted the liabilities of private banks into debts of the sovereign (that is, Irish taxpayers), yet the nation probably cannot afford these debts...

“Ireland, simply put, appears insolvent under plausible scenarios with current policies. The idea that Ireland, Greece or Portugal can cut spending and grow out of overvalued exchange rates with still large budget deficts, while servicing all their debts and building more debt, is proving - not surprisingly - wrong.”

If current policies continued, he concluded, “the calamity of the Irish banking system will lead to a much deeper recession and the consequences will be felt for decades”.

Although on vacation until next month, the Fianna Fail parliamentary party was convening in Galway for a ‘think-in’ this week.

At the meeting, Taoiseach Brian Cowen has described the cost of bailing out Anglo Irish Bank as a “terrible burden” for the nation and said it was “imperative” that the indicated 3 billion euro in spending cuts to be announced n the Budget on December 7th goes ahead.

However, Minister for Finance Brian Lenihan warned of even greater cutbacks in an effort to reassure international money markets, on which the state is increasingly dependent.

The Minister said the figure of 3 billion euro was “a minimum” that would have to be achieved to help address the gaping hole in the 26 County state’s finances.

“The figure of 3 billion euro is a minimum, but clearly Government will have to go through the different departments,” Mr Lenihan told reporters.

“We have to look at what can be saved and what the correct position is.”

Mr Adams said on Saturday the coalition government’s handling of the banking crisis had been disastrous.

“It has failed to do anything to tackle soaring unemployment,” he said.

“It is planning further cuts to public services while it puts almost 30 billion euro of taxpayers’ money into Anglo Irish.”

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