Just like many African nations, Ireland’s debts must be cancelled or a ‘financial bomb’ will go off in its most deprived communities
Activists more accustomed to campaigning against the debts of countries like Zimbabwe, Egypt, Ecuador and Indonesia were instead outside the Irish embassy this morning. Dressed as zombies, we hoped to shed some light on the so-called “zombie banks” whose debts continue to drain resources from an Irish public sector that is being slashed to the bone.
But in Iceland They REFUSED TO PAY
Iceland was ripe for change, having effectively gone bust thanks to the cronyism of a cluster of politicians and bankers who thought that they could turn an island of fishermen with a population of 318,000 into a financial superpower.In less than four years, the most rapid expansion of a banking system in history saw three privatised banks develop assets 10 times the size of the country’s GDP. It was the Icarus economy. Property prices tripled, the stock market multiplied nine times, and people borrowed heavily – often in foreign currencies – to cash in on the boom. The crash was fast, hard and painful, worsened by the collapse of the krona as the state, unable to bail out the banks, refused to pay foreign creditors. The strategy looks smart now, compared with events in Greece and Ireland
Ireland’s financial crisis has much in common with scores of countries across the developing world. The country has been brought to its knees by an enormous debt, which originated not with excessive public spending, but a footloose financial sector that gambled with the future of the country. Without so much as a vote, Ireland’s people found themselves on the hook for tens of billions of euros of reckless investments.
The ultimate symbol of this form of crony capitalism in Ireland is Anglo Irish, the bank that started Ireland’s slide into the abyss. Anglo Irish lent vast sums of money to fuel Ireland’s property bubble, in the process making fortunes for rich speculators. Anglo is believed to have 15 customers who owe the bank more than €500m each.
When the bubble burst, the Irish government stepped in to underwrite the bank – ultimately being forced to nationalise it. This disastrous decision was not based on any assessment of the use of Anglo to the economy. Economics professor Morgan Kelly said at the time that Anglo – as well as Irish Nationwide, which was also brought into public ownership – “were purely conduits for property speculation. They fulfil no role in the Irish economy.” He said it would be “better to incinerate €1.5bn than squander it on Anglo Irish Bank”.
A £963,000 bonus in shares awarded to Royal Bank of Scotland boss Stephen Hester is strongly criticised by politicians and unions.
Today Anglo Irish, rebranded as the Irish Bank Resolution Corporation, is a zombie bank – a bankrupt institution that exists to channel government money to a group of bondholders who the Irish people can’t know anything about, and who themselves were fuelling Ireland’s increasingly speculative economy.