Fianna Fáil deservedly clobbered in Irish election

The Fianna Fáil party in the Republic of Ireland has been comprehensively ejected from power by the Irish people, having enjoyed a near monopoly on power since the early 1930's - literally a Fianna FAIL! The Irish tax payer has been left with a 85 billion euro bill following the EU/IMF bail out due to Fianna Fáil's decision to underwrite Irish banking debt in 2009. This was a debt built up by reckless residential and particularly commercial property lending whilst Ireland was seen as the "Celtic Tiger". Unfortunately the banks over leveraged themselves, were swamped with bad debts and ultimately had to be nationalised. The party in power failed to control the excesses of the banks and the property industry and eventually the whole rotten state of affairs came close to bankrupting Ireland itself.

To service the massive state liabilities, Ireland's 1.8 million workers has had to suffer draconian cut backs in state spending as well as heavy tax increases. It is difficult to see how the Irish state can fund the interest on the EU/IMF bail out, never mind payback the capital.

It is not difficult to see why the new Irish government (Fianna Gael/Labour Party) will try to restructure these liabilities, but how successful they will be with Germany and France resisting pressure to be seen to be rewarding reckless mistakes of the past, is the $64 million dollar question!

A lesson to us all. When things seem to good to be true, they often are! 

Irish people left picking up the pieces after banking disaster

One of my favourite books on the financial sector is Andrew Ross Sorkin's "Too big to fail". Sorkin's book analyses the financial crisis post Lehman Brothers from a U.S. perspective. I have been reading Shane Ross's, "The Bankers: How the Banks Brought Ireland to Its Knees" over the last couple of weeks. Ross looks specifically at the factors behind the collapse of the Irish banking sector.

After being staggered by the sheer greed of some of the leading bankers on Wall Street which led ultimately to the Federal Reserve bail out known as TARP (Toxic Asset Relief Programme), I am even more sickened by the situation in Ireland where the Irish population has been blighted by an IMF/EU bailout. Ireland's Fianna Fáil party seemed to have overseen an unprecedented period of over lax regulation over the banking system. What's  more cosy relationships with property developers helped foster a drive for over generous tax breaks which benefitted a few wealthy individuals in the commercial and residential property market. The likes of Allied Irish bank and Bank of Ireland paid their management teams huge bonuses by pumping up profits by investing in the real estate sector. Of course when the Collateralised debt obligation (CDO) and sub-prime mortgage disaster started in the U.S. in 2007 the whole game in Ireland fell apart with the major banks collapsing with huge debts and having to be bailed out by the Irish tax payer.

In late November, Ireland finally agreed to a 85 billion euro bail out from the European Union and IMF which has coincided with a severe austerity package with pay cuts for government staff and tax increases. Irish property prices have collapsed near to 50% in the last 2 years after being pumped up on steroids during the "Celtic Tiger" boom years. It is a sorry tale that ordinary Irish people have been left to pick up the pieces of so much corruption and mismanagement. I am almost relieved that the U.K. situation with the banks seems almost benign compared with across the Irish sea. The Irish have a right to be very angry indeed.