In the Irish Times Mon 22 Feb, Brian Lucey argues that the government’s ‘Micawberish’ hopes that ‘something will turn up’, coupled with ideological obsessions, has hindered any long-term solutions to the banking crisis.
One of Dickens’s great characters is Wilkins Micawber, in David Copperfield, who was wont to say “something will turn up”, and it appears as though such sentiments are at work still in Government thinking on the banks… Government handling of the banking system has been marked by an unwillingness to face up to this fundamental problem – the banks are effectively bankrupted by the losses that they face on speculative lending.
Lucey points out that there is unlikely to be any source for recapitalisation of the banks from the private sector, leaving the State holding the bill:
the State, when it steps in further to take shares in the banks, will have to dilute its existing shareholdings gained by the share dividend payment. In saving the banks it will destroy the value it has now taken.
The almost obsessive zeal with which the government has evaded considering nationalisation is more than a little strange, seeing as dropping values and market disinterest will likely force the State into nationalisation anyway. But the zeal itself draws up an observation: is the government evading this discussion to defer admitting how mcuh trouble we’re in?
Second, throughout the banking crisis a deliberate and calculated rhetorical device has been employed: Iceland nationalised its banks; Iceland is in deep trouble. This is an argument known as post hoc, ergo propter hoc (a happened after b, therefore a was caused by b). Iceland was in such trouble that it had to nationalise its banks. If we are now forced to nationalise the banks how can the Minister say we are not in massive trouble?
