Question 26: On the Vincent Browne programme last night, you mentioned the bank bailout. What’s your position on bondholders?Posted by in Answers
On the Vincent Browne programme on TV 3 last night I said that public money should go to public services. The situation whereby our tax (past, present and future) is being used to cover losses made by private banks is extremely unfair. Unfortunately the bank guarantee voted for by Fianna Fail, Fine Gael, the Green Party etc. has linked sovereign debt to private debt. In this regrettable scenario it is essential that any bank that receives public money should be made to account for it publicly (eg. before a joint Oireachtas Committee).
I also said that while promises of burning bondholders might get you elected, we need to think about the long-term consequences for Ireland of any election promise we make. Irish banks have failed beyond hope. Bailing them out is likely to bankrupt Ireland, and defaults on our loans are likely unless the EU/IMF debt is re-structured. Unfortunately, even this might be too little, too late and we may be forced to default. In that event, those who took the biggest risks should be the first to be hit by a default.
In the meantime, we need to open our national accounts to scrutiny and make those who receive our money accountable for that money. This debate doesn’t end when the polls close on Friday; bailing out banks is a much longer process than that. That’s why transparency in our financial markets is so important.
The ANSWERS series will be updated daily until Feb 25th. All answers were those given by Dylan to questions received online or on the doorstep.
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