By Colum Kenny
Sunday October 05 2008
If Ted Poe of Texas were Ireland's Minister for Finance, then Irish people might have more confidence in the Government's massive guarantee for Irish bankers. As Brian Cowen and Brian Lenihan last week bet the family silver -- and much more besides -- on a shaky financial future, Congressman Ted Poe caught the public mood on both sides of the Atlantic.
Poe told the US House of Representatives on Monday, "Small businesses, mom and pop grocery stores, don't get this break. When they make bad financial decisions, they go out of business. But the rich and famous Wall Street New York City fat cats expect Joe Six-Pack to buck it up and pay for all this nonsense."
And Sean or Brigid Six-Pack could be bucking it up even harder for Irish nonsense, as the deal for Irish fat cats may end up costing more than the American bail-out, relative to our economy.
People are worried, and they should be. Putting the future of the State on the line was only responsible if there was no other choice. It is a high-stakes gamble, no matter how much or how often the Government tries to sell it as a "sure thing".
Minister for Finance Lenihan claims that there is "a very significant buffer before there is any question of the guarantee being called upon", because the six banks involved (he claimed) have total assets worth 80bn more than the guarantee.
But a bet is a bet, and who knows what those assets are now really worth, or will be worth when the chickens come home to roost?
The minister ultimately relied on the banks' own valuation of their assets, which the National Treasury Management Agency told me last week comes to 438bn, just 38bn more than the figure of 400bn cited as the value of the guarantee, and not 80bn as the minister reportedly claimed. But, sure, what's a few dozen billion between bankers and their friends in Government? And can we rely on the banks' own valuation of their assets, calculated long before the current crisis?
Politicians mounted their high horses to defend the guarantee last week.