So much has happened in the last 48 hours, what’s the most important? By far the biggest development isn’t the final butchers bill for the banks or the black hole now appearing in the insurance market as Quinn Insurance goes into administration, it’s the remarkable deal between the public sector unions and the Government.

If ever Ireland needed leaders to finally step up to the plate it was this week, albeit after a year of phoney warfare. In a week where international attention is shifting from Greece to Ireland where the economic numbers are worse, we have an agreement between two crucial parties to our economic recovery just when the true extent of our banking collapse was crystallising.

Fair dues to the union leaders and God knows I thought I’d never say it but as Brother Dominic who taught me history in Colaiste Chriost Ri used to say, always give credit where credit is due.

Without this dramatic step, make no mistake Ireland’s borrowing costs would be going through the roof this week adding a huge burden to our interest repayments and burying any talk of a sustained recovery over the next few years.

Yes, the devil will be in the detail and public sector pay must never again be allowed to inflate way above the private sector, yes the agreement has to be rubber stamped by members and yes the thorny issue of pension reform is postponed. But by heavens it’s a great start and a credit to all concerned;

• In return for no further pay cuts until 2014 when we hope to reach the 2014 target of 3% debt to GDP borrowing, public sector efficiency is to be transformed with new working arrangements and cross – sector staff mobility.
• Savings, over and above those needed to meet the reduced deficit targets are to be prioritised to lower paid workers.
• Advancement is to be based on merit rather than age and each spring, beginning next year progress is to be revisited.

Banks

To be financed by a combination of asset sales and by Government borrowing we know the full extent of butcher’s bill from Ahern’s crazy vote buying policies, incompetent regulation and euphoric greed. Another €22 billion is needed to recapitalise the banks. That’s twenty two thousand million.

Divide by the number of taxpayers and each of us owe at least €11 grand more today than we did yesterday – that’s on top of all the extra taxes we owe to pay for the budget deficits.

Well how does it feel to be a banker? You now effectively own AIB and Irish Nationwide to be added to Anglo Irish and 40% of Bank of Ireland. Euro for Euro, Irish Nationwide was as bad if not worse than Anglo in recklessly gambling money on commercial property speculation. That Michael Fingleton has walked off with a €28 million pension pot and left us with nearly €3 billion of debt is nauseating.

Insurance

That Quinn Insurance has been forced into administration by the financial regulator doesn’t come as a surprise to those watching the general insurance market closely. It signals a get tough policy from the new regulator clearly frustrated by the light touch of the past. After a period of State involvement expect the business to be parcelled up and sold.

Depending on the extent of the problems we yet be saddled with a new insurance levy for years to come like PMPA.