Everyone in Ireland has known for quite some time that the Celtic Tiger party is long over. Property prices are down c.50% on the peak, unemployment has risen from under 5% to just under 13%, public sector take home pay is down 15-20%, etc. What we weren't sure about is the size of the banking hangover and how long its going its going to give us a financial headache. The picture is starting to become a little clearer, although its still a little hazy and will probably stay that way for some time yet.
Yesterday turned into a 'Super Tuesday' where one big headline followed another, and opposition politicians and the general public were sent reeling at the scale of the banking problem (see here for an overview and also the blogs Irisheconomy.ie, progressive-economy.ie and IrelandAfterNAMA). Not only is NAMA (the new toxic bank) taking €81 billion euros of property loans off the banks for a cost of c.€46b (c.47% haircut), but a huge programme of recapitalisation is taking place, which in effect is nationalising the banks. So far over €33b has been committed to recapitalisation, and the need for another €10b already flagged. That's c.€89b in bailout monies in a country consisting of 4.5m people (c.€20,000 per person). The US bank bailout was $700b (€517b) with a population of 340m people (c.€1,520 per person).
The taxpayer is now footing the bill for the excess of the bankers and property developers, and it's going to take a generation to pay off (even if NAMA does manage to recover its debts). Someone please pass me some aspirin, we're suffering from one hell of a collective hangover.
There has to be a few good crime stories to written about this mess.