Irish Money Travails

The financial bail out being proposed for Ireland at present appears to me to be more of a financial millstone around innocent citizens' necks than a lifebouy.

The Irish financial crisis has arisen mainly from national banks lending hugely unwisely to greedy property speculators, with other nations' banks, eg the Royal Bank of Scotland, lending again hugely unwisely, to Irish banks and speculators.

Many international lenders seem to have been motivated not only by the chance of making some fair profits but also by prospects of making huge financial gains. The evidence for this view includes the subsequent collapse of property prices - in some pricier parts of Dublin by as much as 66%.

Mostly ordinary Irish citizens are innocent. In a democracy innocence sadly is not always a defence. Thus when the democratically elected Irish government led the international bidding wars to provide the best lifeboats for banks, that broke out after runs such as those hitting England's Northern Rock, its open ended guarantee for Irish banks risked virtual financial servitude for the ordinary population which had voted its government parties to power.

That risk seems now to be materialising and is being compounded in my view by the EU lending what appears to be prodigious sums of money for Irish banks at excessively high rates of of interest. Letting some of the international speculator lenders fuelling the Irish property boom and bust whistle for their money, would have been a fairer option for the nation's ordinary workers. I doubt that EU non democratically elected powers that be, would have permitted such a course hence the risk of financial servitude in Ireland.

What is surely required for such a situation, is an arrangement similar to that which applies to an individual who borrows so much that he cannot possibly repay his debts. Such people are able to enter into Individual Voluntary Arrangements under which creditors agree to settle for a percentage only of what is owed to them. To encourage creditors to agree is the prospect that without a 'voluntary' agreement, the borrower may become legally bankrupt. Bankruptcy has the distinct advantage of enabling the individual to emerge debt free although as part of the process his creditors may only be repaid an even smaller proportion of their debts or perhaps none at all.

Corporate bankruptcy involves similar arrangements although the sanction for complete financial failure by companies is that of being wound up ie liquidation - thankfully British debtor prisons for individuals have long been abolished.

The EU needs to redeem its overbearing attitude in my view by investigating the possibility of introducing rules for managing national insolvencies in ways which share the burdens resulting from the recklessness or greed of a few rather more fairly than simply piling the resultant financial agonies on the mostly innocent many.