State is ‘facing ruin’

A large majority of the people of the 26 Counties believe the state is headed for bankruptcy, according to a new opinion poll.

The telephone poll for the Sunday Independent asked the public if they believed the cost of the bailout of Anglo Irish Bank, which will cost a minimum of 23 billion euro, would ruin the 26 County state. Almost three-quarters of respondents, 73 percent, said it would.

Calls for an immediate end to the bailout increased last week following the announcement of further heavy losses at the bank, over 8.2 billion euro for the first six months of the year.

Most observers have now estimated the total cost to the 26 County exchequer will come in at between 35 and 50 billion. However, the Taoiseach, Brian Cowan warned at the weekend that the cost could hit 70 billion if Anglo is not wound down over an extended period of time.

There is increasing nervousness in international financial circles over the potential threat to the global economy of a failure by the 26 County state, which currently has a debt of just over 100 billion Euros.

Concerns have also mounted over the viability of the main Irish banks, particularly Allied Irish Bank, amid anecdotal reports that residential mortgage holders are opting not to repay their negative-equity loans.

Minister for Finance Brian Lenihan insisted today the Anglo bailout will not bankrupt the State and refused to rule out its continued operation in the form of a “good bank”.

While acknowledging the bailout cost was “infuriating but manageable”, Mr Lenihan said he was concerned at the public’s fears of a state bankruptcy.

This is “simply not the case”, he said.

In an interview with RTE Radio, Mr Lenihan said the bank’s management have devised a plan to reduce the cost of the bailout to the taxpayer. The plan involves even more lending by the fraud-hit bank.

“[The new management] have put forward a case that if the bank were allowed to engage in lending, it might reduce the cost to the taxpayer further,” he said. “We have to evaluate that case . . . We have to make a final decision on this in a matter of weeks and give a strategic direction to the bank.”

Mr Lenihan is meeting European Union competition commissioner Joaquin Almunia in Brussels today to discuss the ongoing rescue of the now State-owned bank. He said today it was important that the 26 County state “holds its nerve” and honour all of the debts incurred by the Anglo management.

“We will not be distracted by those who suggest that there is some kind of quick fix where you can bust the country and magically stage a resurrection,” he said. “There is no economy in the world that has done that.

“It has been tried in various Latin American countries and it has led to a deep freeze for a long number of years in any country where it was attempted.”

Urgent Appeal