You’d hardly turn up at A&E, tear your shirt off and yell at the nurses to rip your heart and lungs out? Yet three years into the crisis you’ll still hear yells to let the banks go. Maybe that’s the hangover from waves of political spinning recycled by media jocks but it makes no sense. So why pump another €24billion into the banks bringing the running total to €70 bn? Why are we facing restructuring of our sovereign debt as it sprints towards the precipice at 125% of GDP by 2013?

Because most of our national savings are gone -the money doesn’t exist. It’s gone out on loans and lots of it isn’t coming back. The losses aren’t just from development loans but residential housing loans as well. These losses are exacerbated by joblessness which is heading towards one in six of us when you factor in self employed closures  - but like a heavy mascara over a wound, these have been concealed from sight by the temporary ban on repossessions.

There’s about 100,000 mortgages in trouble and in calculating this latest round of fresh capital injections, Blackrock, the consultants used in the study took the US state of Nevada as its model. That means building buffers against a total fall in property prices ranging 55% to 60% by 2012. Nevada has had over 150,000 houses repossessed after a prices collapse of 60% since 2006. Repossessed houses are now selling at a 20% discount to current market value. Eventually Irish distressed housing debt will have to be grasped, either with massive write offs or repossession and resale. Either way it spells more losses.

Faced with this around the corner bank regulators know that without the strong foundation of a capital base, banks will go up in smoke and take most of our savings with them. So when we shovel in money we’re doing so to get our own cash back out in the years to come. No I don’t mean the Government money, I mean your own stash, your mullah, because right now that cash ain’t there – it’s been lost in bad loans and drained out in massive withdrawals of deposits - temporarily replaced by huge injections of cash from the ECB and Irish Central Bank. 

So next time you hear some muppet call for the banks to be let go ask three questions;

Ø  how much of your own wedge are you prepared to flush down the toilet with them?

Ø  what is the economy supposed to do without a set of heart and lungs?

Ø  to whom do you plan to donate your brain, so I can warn them?
 

Eddie Hobbs