Madam, - It is still too early to assess the effects of Ireland's recourse to a Japanese-style policy of guaranteeing liquidity for Irish banks, whose fundamental problem is the weakness of their balance sheets when the true value of their property related loans is exposed.
We know that Ireland's membership of the Eurozone helped Irish banks access wholesale funding, without exchange risk, from other Eurozone banks to feed Ireland's almighty borrowing binge.
If Ireland were not a member of the Eurozone, it could never have contemplated last week's bank guarantee scheme. If Ireland still had its own currency, such a scheme would have created a run on the punt and severely downgraded Ireland's sovereign debt rating. Those who doubt this need only look at what is happening to Iceland.
Those thrifty Germans whose savings helped finance the Irish borrowing binge also help to sustain the credit rating of Ireland and every other Eurozone member.
There is some appreciation in Europe of the sheer boldness of the Irish action, but that is overshadowed by perception that the Irish did a solo run without much consideration that they are supposed to be playing on a team. There is also a feeling that Ireland might have abused its Eurozone membership both in leaving its entire banking system in thrall to property developers and then in taking a major unilateral step, going far beyond depositor protection, without genuine consultation — a step which could not be taken by the larger members of the Eurozone without putting the entire zone in danger and risking a severe devaluation of the euro.
Whatever may be their differences on the policies to be adopted, European leaders know that in the current credit crisis, as with all other significant economic and political problems, Europe cannot adequately respond unless there is as much co-ordination as possible so that member-states do not work at cross purposes, especially when they share a common currency. The events of recent days have demonstrated the need for better regulation at Eurozone level, to match the extent of the activities of the financial sector and the consequences of any significant disturbance to the banking system. Approving the Lisbon Treaty would facilitate such improvements.
When Lisbon returns to the EU leaders' agenda - and return it will - Ireland's position will not have been strengthened by last week's action.
Some may even wonder if the Irish should be asked to decide whether they really do want to play on the team and whether the second Lisbon referendum should be a referendum on Ireland's continuing full membership of the EU. - Yours, etc,
JAMES LEAVY,
rue de la Baume,
Paris.
Madam, - The furious reaction of our European neighbours to the Government's decision to guarantee deposits in Irish banks belies an uncomfortable truth about EU integration: we now have unified markets without unified political accountability.
Accusations of "economic nationalism" levelled by the Financial Times and others miss the point that EU members, collectively or individually, had neither the political will nor the institutional capacity to take action to save the Irish banking system. That other EU states (particularly Germany) have taken similarly individual approaches to the financial crisis in recent days emphasises this fact.
The democratic deficit at the heart of the EU is now revealed as much more than a trivial academic problem. Perhaps it really is necessary to revisit the Lisbon Treaty: we need either more political union, or less economic union. - Yours, etc,
PATRICK O'BRIEN,
Lecturer in Law,
Oxford, England.
Madam, - I used to laugh, whenever I watched a repeat of the first Boris Karloff Frankenstein film, at the cinematic plot device of focusing on the jar containing a "Criminal Type Brain". Not any more. I now realise there was a whole laboratory of such jars and Igor has been busy ferrying them to Victor Frankenstein for installation in latter-day bankers and other leaders of financial institutions.
Those who came up with the idea of packaging irredeemable debt as a product that could be sold back to us, generating enormous bonuses for the brain-enhanced bankers and massive profits for their respective institutions, surely each merit that classic title "criminal genius".
Sadly, there aren't enough old mills about, to be set alight by the local peasantry. Even sadder is the thought that there will, perhaps sooner than we think, inevitably be a sequel. - Yours, etc,
SEAMUS HAYDEN,
Loughros Point,
Ardara,
Co Donegal.
Madam, - I read that Robert Fuld the chairman of now defunct Lehman Brothers bank took home $300 million since 2000. Irish bank directors have also been very generous to themselves in recent years.
It is astonishing that there have been no sanctions against the directors of banks that have got us tottering on the edge of the financial abyss. Instead our collective governments have been conned into bailing out these rotten institutions.
These same institutions were entrusted with the husbandry of the world's financial systems and the safe handling's of people's pensions and life savings. With a callous disregard for their responsibilities they have speculated wildly and lost, their only motivation being greed.
The directors of these institutions must pay collectively for their reckless behaviour. They must not be allowed to retire on huge pensions and "golden parachutes".
The forced retirement without benefits of all directors of Irish financial institutions would be a first step in cleaning out the Augean stables. Prosecutions under company law, where appropriate, should commence immediately.
Governments may not want to act now for fear of increasing turmoil, but I for one would see prompt action as sending a positive message to investors and depositors that real reform in financial markets had begun.
Members of the Irish Government, for their part, would do well to remember that it is the interests of the ordinary people of Ireland they represent - not the "golden circle". - Yours, etc,
GREGORY PYM,
Ardrahan,
Co Galway.
Madam, - Is there no limit to the arrogance of the chairman of Anglo-Irish Bank, Sean Fitzpatrick, who in Monday's edition is quoted as calling for a "brave budget," targeting such "sacred cows" as over-70s pensioners? This is from a man whose bank put nearly all its shareholders' — and depositors' — eggs into one basket, ignoring a piece of common sense of which even children are aware. He also calls for a reduction of corporation tax to 10 per cent.
We have become low-taxation junkies in this country. We need desperately to get off this trip, raise taxes, and spend the money on the education of our youth, the only long-term policy which will work.
One would think that humble pie would be on this fellow's menu, but, realistically, it probably features more of the champagne and caviar to which he and his ilk, and indeed some of the rest of us, have become far too accustomed. - Yours, etc,
PETER THOMPSON,
Ferrybank,
Arklow,
Co Wicklow.
Madam, - Since the sky fell in on the financial world the media seem to be seeking the views of academic economists as least as often as they seek out those employed in the financial sector. Why did it require a meltdown of 1929 proportions for the media to make this very necessary policy change?
Unfortunately, many of those who flooded the airwaves and opinion columns with talk of a "soft landing" are still being canvassed for their views on how to solve the crisis! Surely if these people are ever to be inflicted upon us at all, their pronouncements should at least be preceded by a kind of health warning.
Viewers, listeners and newspaper readers have rights too. Do they not deserve to be informed just how far off the mark these people were when something could still have been done to mitigate the impending disaster? Even within the past year anyone who doubted the sustainablity of our housing bubble ran the risk of being branded "unpatriotic". Bertie Ahern ventured that such sceptics suffered from some depressive illness.
Yet yesterday's ill-informed cheerleaders can now be found among those characterising the Labour Party's reasoned questioning of the banks' sweetheart deal as (you guessed it) "unpatriotic". I tend to think that those who want to stifle debate by this kind of bullying are desperate to avoid have their own actions subjected to any scrutiny.
Many people will have a lot of enforced leisure time in the next few years, not through any fault of their own, but because the policy-makers and the electorate listened to neo-liberal economists. While trying to fill their day by reading the newspapers or listening to the radio, they will no doubt have to endure these same economists and politicians parrot the same tired and dated Thatcherite clichés.
For amusement, may I suggest they have a little harmless diversion by Googling "soft landing" combined with the names of these great thinkers. I'm sure they'll get a kick out of reading the pompous, but as it turns out, ludicrous views (pre-2008) of these self-regarding idiots, now frozen forever, as in aspic, on the internet.
Why wait? Try it now! It's great fun. It's a pity it's so serious. - Yours, etc,
TIM O'HALLORAN,
Ferndale Road,
Dublin 11.
Madam, - Banks are cold heartless institutions which have caused and presided over untold amounts of misery and shame by their enforced liquidations, repossessions, bankruptcies and the legal bullying of their customers down the years.
When they feel the icy chill of redundancy, liquidity problems and the very real possibility of bankruptcy, I for one, rejoice. Take away the plush offices, take away their bonuses, take back the golden pay-offs. Let them feel the reality of the balance sheet.
As Corporal Jones in Dad's Army liked to say while brandishing a bayonet, "They don't like it up 'em!". However, I think they should have had it up 'em a long time ago. - Yours, etc,
JOHN BURKE,
Oak Park,
Ennis,
Co Clare.