Memex 1.1

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Morgan Kelly is an Irish academic economist who warned two years ago that the absurd lending of Irish banks to builders and property developers would sink them if the property bubble burst. Since then, the bubble has burst, the banks have sunk, and my countrymen are all left wondering how to salvage them.

Two ideas for fixing the banks have been suggested: a bad bank or National Asset Management Agency (Nama) and nationalisation. “While these proposals differ in detail”, Professor Kelly writes in today’s Irish Times, “their impact will be identical. Irish taxpayers will be stuck with a large bill, and in return will get an undercapitalised and politically controlled banking system”.

He continues:

The taxpayer is likely to lose well over €25 billion on Anglo alone. Among its “assets” are €4 billion lent for Irish hotels, and almost €20 billion for empty fields and building sites. In fact, I suspect that the €20 billion already repaid to the casino that was Anglo represents winners cashing in their chips, while the outstanding €70 billion of loans will turn out to be worthless. And it is well to remember, as the architects of Nama have not, that although the problems of Irish banks begin with developers, they do not end there.

The same recklessness that impelled banks to lend hundreds of millions to builders to whom most of us would hesitate to lend a bucket; also led them to fling tens of billions in mortgages, car loans, and credit cards at people with little ability to repay. Even without the bad debts of developers, the losses on these household loans over the next few years will probably be sufficient to drain most of the capital out of AIB and Bank of Ireland.

Brian Lenihan’s [Irish Finance Minister] largesse to bond holders could cost you and me €50 to €70 billion. What do numbers like these mean?

The easiest way to put numbers of this magnitude into perspective is to remember that in 2008 the Government generated €13 billion in income tax. Every time you hear €10 billion, then, think of paying 10 per cent more income tax annually for the next decade.

In other words, the fiscal capacity of a state with only two million taxpayers, and falling fast, is frighteningly thin. Ten billion here, and ten billion there and, before you know it, you are talking national bankrutcy. Even without bankrupty, Nama will ensure a crushing tax burden for everyone in Ireland for decades.

Kelly’s view is that “the drift into national bankruptcy looks increasingly unstoppable”.

Wonderfully sharp and surreal column by Harry Pearson in today’s Guardian. Sample:

During a Test match between New Zealand and South Africa in Wellington in 1994, the Springboks forward Johan le Roux bit a chunk out of the All Blacks captain Sean Fitzpatrick’s ear. Le Roux reacted to his punishment by commenting that if he had known he was going to be banned for 18 months he’d have ripped Fitzpatrick’s lug off in its entirety and taken it home as a souvenir. As you will judge, this was before the evil wand of professionalism had cast its sordid, cynical spell over the gentlemanly world of rugby union.

Thankfully, it seems that at least some vestige of Le Roux’s Corinthian ideals lives on in the Rainbow Nation, even in this dread age of image rights and sponsored shorts. Following an altogether predictable fuss about Schalk Burger’s gouging antics, De Villiers nailed his colours, and probably several of his fingers, to the mast and declared that any young man who doesn’t want to go out on Saturday afternoon and have his eyes poked out should dress up in frills and call himself Jessica.

As someone brought up in an era when any chap in full possession of all five senses was regarded as a mummy’s boy of the most foppish stamp, I can only applaud De Villiers’s words – albeit with only one hand, the other having been lopped off during a typically bruising beetle drive at the local WI a few years back.

Any road, it is plain De Villiers is a man of the old school – several faculties short of a full university and justifiably proud of the fact. One thing I must take him to task for, however, is the suggestion that wearing a tutu would somehow preclude violence.

Ballet, or “the posh blokes’ football”, as the former Stoke manager Tony Waddington so memorably called it, is perhaps not top of the agenda with the Springboks. Otherwise they would surely be aware of the notorious business in 1962 when Dame Margot Fonteyn was banned from Sadler’s Wells for eight months after a “bag-snatching” incident involving Rudolf Nureyev during a matinee of Lac des Cygnes.

Made my day. Hope he writes in tomorrow’s paper about the defeat of the plucky, er, Scottish hero Andy Murray at the hands of some American whose name escapes me just now. If Murray had prevailed this afternoon he would, of course, be a British hero. Or perhaps even an English one.