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The Green Party… an issue to break on? August 30, 2010

Posted by WorldbyStorm in Economy, Irish Politics, The Left.

I’ve mentioned before how the discourse had been that public expenditure (and on occasion the public sector itself) was being trumpeted as the economic problem we faced and all else, including NAMA and the bank recapitalisations were secondary issues.

Well, seems like that trope is dying a death… starting with the Green Party’s Dan Boyle

While dismissing the recent estimate of ratings agency Standard Poor’s that the cost of Anglo could be €35 billion – €10 billion higher than the Government’s current estimate – Mr Boyle accepted that the final burden was unclear.
“We are talking about how long is a piece of string, or how deep is a hole? The Government policy was never going to be open-ended,” he said. Mr Boyle said the matter was likely to be discussed by Cabinet on Wednesday, as the bank was the “biggest draw on public resources”.

And so the GP has changed it’s mind. They’re agin a lengthy ‘orderly’ wind down of Anglo-Irish Bank and now want it wound down much quicker. Not too quickly according to the comments, which leaves the issue a little moot – no – given that an election in 18 months or sooner is likely to see the responsibility shifting to others.

But why now? Well… the costs have been increasing and perhaps the news released this evening has concentrated minds…

The Greens’ change of policy comes as the bank prepares to report further substantial losses tomorrow – when Anglo publishes accounts for the first half of the year – and the need for further capital on top of the €14.3 billion already pledged to the bank.

And when you set them against the amounts being cut from public expenditure as a means of reducing the deficit (€3bn to be taken out in this years Budget alone) they demonstrate that without them there could have been – and I position this in the context of the orthodox arguments which I for the most part don’t share – a much more gentle approach (including stimulus) to matters financial. Pain? Well even in the orthodox approach had Anglo-Irish not been an issue it could have been significantly diminished.

And for all Dan Boyle’s caution, that final burden still seems unclear.

The Greens’ change of policy comes as the bank prepares to report further substantial losses tomorrow – when Anglo publishes accounts for the first half of the year – and the need for further capital on top of the €14.3 billion already pledged to the bank.
Anglo had to take a writedown of €5.1 billion on €9.25 billion of loans, representing a discount of 55 per cent, sold in its first loan transfers to the National Asset Management Agency (Nama) in May.
The bank took a further write-down of €4.2 billion this month on €6.75 billion of loans sold in the second tranche of loan transfers to the State agency, representing a higher discount of 62 per cent.
The lower value assigned to Nama loans raised fears that the cost of Anglo could rise further.

On the other hand cynics might wonder is this a repositioning of the GP ship prior to ultimate departure – the calculation being that the issue that locked them into this government was acquiescence on NAMA (at least that was for many outside the last straw) so they might as well break on it – or a related matter – too.

And yet, I’m a bit dubious. The economic mood music isn’t improving, if anything it’s getting worse so there’s no reward for them doing this – one way or another. And there’s the small issue of legacy, what to show for the years in government. It’s not as if there have been no achievements. But whether there are sufficient is quite another matter.

Still, interesting to read the comments this evening. And entertaining to read the following:

“I don’t think they’re doing it properly,” he said. “I think the Green ministers should have discussed this in private with their Fianna Fáil colleagues and announced an agreed plan.”

“By doing it they way they’re doing it, they’re adding a political instability to the financial instability and if it’s not concluded quickly they’ll make matters worse rather than better,” he added.

Shares in Ireland’s largest banks opened lower in Dublin this morning although AIB bounced back in afternoon trading.

By 3.15 pm, shares in AIB were up 8 cent at €0.78 while Bank of Ireland was down 3 cent at €0.74. Shares in Irish Life and Permanent, which is not covered by Nama, were down almost 2 per cent at €1.42.

Just a reminder of who the real masters are… though frankly they seem as confused as everyone else.


1. Pope Epopt - August 31, 2010

Even if na glasraí are beginning to get it, it’s too late now for them and for us.

I’d like to think this was a signal of a timely and orderly wind-down of this government as well as Anglo-Irish, but I suspect the Greens are are divided and demoralised to manage that.

The chickens are coming home to roost on the banking crisis with the renewal of €14bn+ of government bonds, on the 11th of September if I recall rightly. Hold on to your hats.


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