Leading economists urge full nationalisation of Ireland’s banks
April 19, 2009 by Infowars Ireland
Temporary nationalisation is fairer to tax-payers than taking on €90bn of toxic loans, they argue
A group of leading economists is urging the Irish government to ditch its “bad bank” plan in favour of a temporary nationalisation of the financial sector.
In an opinion piece in The Irish Times, 20 of Ireland’s leading academic economists argue that the government has got it badly wrong.
“In normal circumstances, none of us would recommend a nationalised banking system,” they wrote. “However, these are far from normal times, and we believe that in the current circumstances nationalisation has become the best option to the government.
“Furthermore, we explicitly recommend nationalisation only as a temporary measure. Once cleaned up, recapitalised, reorganised with new managerial structures, and potentially rebranded, we recommend that the banks be returned to private ownership.”
The news came as Moody’s credit ratings agency warned it could cut Ireland’s triple-A rating within the next three months as the country’s debt levels are set to soar. Standard & Poor’s and Fitch, the other two major ratings agencies, have already downgraded their ratings on Ireland’s sovereign debt.
Moody’s said: “Should Moody’s come to the view that Ireland will emerge from the crisis with relatively weak growth prospects and a much higher debt burden for the foreseeable future, Ireland would be downgraded to the mid to high Aa rating range.”
Ireland’s historically low debt levels could surge to 100% or more of GDP next year, compared with 41% last year, under the government’s plans to cleanse the banking sector of bad property loans.
Last week Dublin announced what will be the first nationwide “bad bank” plan in Europe since the financial crisis started two years ago, with the creation of an asset management agency to take over toxic property loans with a book value of up to €90bn (£79.5bn). The government has said it will buy the loans at a substantial discount, and Dublin could end up taking majority stakes in some lenders to boost their capital ratios.
The group of economists said the government was grossly underestimating the scale of losses at the country’s banks and could end up overpaying for land and development portfolios.
“We see nationalisation as being the inevitable consequence of a required recapitalisation of the banks done on terms that are fair for the taxpayer,” they said.
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Here is an idea that none of those economists thought of. How about not throwing money,( that will have to be paid back in taxes)at the same banks that caused this economic mess and let who deserves to fail, fail. I’m looking in your direction Anglo.