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By ATWadmin On October 3rd, 2008

First Ireland, now Greece. We are watching the EU suffer a convulsion as politicians do that which comes naturally – cover their own backs from an angry electorate.

“Europe’s dispute over how to protect the banking sector from the
financial crisis deepened yesterday when Greece joined Ireland in
offering to guarantee savings in domestic banks.

Alogoskoufis, the Greek finance minister, said deposits “in all banks
that operate in Greece” would be “absolutely guaranteed”, amid signs
that savers were becoming restless. The move by a second
eurozone country presented a big challenge to European leaders meeting
at an emergency summit tomorrow in Paris to hammer out a coordinated
response to the threat of meltdown among European banks.

move, which passed through parliament after 30 hours of debate, amounts
to a €440bn (£313bn) underwriting exercise that has been criticised as
anti-competitive. The European commission has said it is not yet clear
whether the Irish move is legal. Market experts said there was growing
concern of a rift between those guaranteeing their banks and those
refusing to write blank cheques.”

Look – I don’t blame the Irish of the Greeks. They are trying to sustain confidence in THEIR banking systems, to ensure that cash does not haemorrhage from them. However the EU thinks that IT should be in control and so we now see the predictable national self-interest versus supranational EU control freakery that lies (and boy does it lie) at the heart of the entire European project. How would Irish people feel if they see the decision by their government to protect their savings declared illegal? Wonder would that impact at all in any looming Euro-constitution referendum re-run? 😉


  1. It can’t be sustained by the Irish, this money amounts to three times the gross national product,not only are they covering savings but investors. Anyone who thinks this is about securing the savings of the electorate isn’t fully informed of the full situation. They are also underwriting all money in the banks no matter who it belongs to, this isn’t about ‘joe six pack’, and if the government are called on to uphold this guarantee it could cost the tax payer dearly.

    The economy in the republic is bleak, with rising unemployment and it’s in the throes of recession, as unemployment rises the tax payer will be burdened enough without underwriting the mistakes of foolish banks.

    It is illegal, it creates an uneven playing field, and interferes with the market – thats not right no matter what way you look at it. And if the EU overlooks it due to the effort of getting the Lisbon treaty passed, howls will be heard from other member states, or else they’ll have no other option but to offer the same guarantee – in which case why not do what the Swiss did and nationalise the whole thing?

  2. Is this financial crisis going to tear the EU apart? If so some good will have come out of it.

  3. "The economy in the republic is bleak, with rising unemployment and it’s in the throes of recession, as unemployment rises the tax payer will be burdened enough without underwriting the mistakes of foolish banks."


    It looks bad but, on the other hand, there has been job creation announcements as well: a medical devices firm in Limerick and Facebook in Dublin.

    The Republic is suffering more than others because of its open economy and links with the US but, hopefully, its pro-business ethos will turn things around eventually.

    On the banks issue, I think it was a confidence-boosting move for the (small) Irish market – and it worked. You’re right though: while the Govt could underwrite the collapse of one of the Irish banks, if they all collapsed, the country would be bankrupt. We’re all "banking" (cough, sorry!) on that not happening.

  4. Reg it looks bad because it is bad, even with the few jobs being created that you mention. Britain is not far behind, manufacturing is down, the construction industry is struggling,electric and gas is up, house prices have fallen dramatically and sales are being hit. According to the boss of M&S things are going to get worse.

    This wasn’t called emergency bill for nothing, did you see the headlines in the papers the day before this was announced, Irish banks were on the brink of failure, lets hope the govt isn’t called upon to honour it’s guarantees.

  5. The EU doesn’t want governments to do anything but they have no proposals themselves.

    Let’s be clear about what caused the problems in the Irish economy. We had a boom and instead of being able to raise interest rates we were stuck with our lowest interest rate in history.

    The Celtic Tiger boom started when we broke with Srterling and ended (to be replaced with a property boom) when we joined the Euro.

    Now that we could do with a 2% interest rate we find it’s at 4.5%. Those of us who opposed joining the Euro were worried about exactly this kind of situation.

    Thank God we defeated Lisbon. If we had passed it the Commission would now be forcing us to reverse the banking guarantee.

  6. Reminds me of the old question:

    What’s a Grecian urn?

    Oh, about 50 Dracma a day.

  7. If you have any Euro notes, check the first letter of the serial number as it designates the country (and supporting national bank) of issue. E.g. X is Germany and Y is Greece. It may soon matter.

  8. I have a German fiver, two Irish fivers and an Italian twenty in my pocket now. I think I’ll break the twenty and hold on to the German fiver.

  9. C’mon. I thought that the Europeans were so perfect. Sarkozy said so. The Anglo Saxons have it wrong bleh bleh bleh

  10. Britain is hypocritical in it’s tone towards Ireland. They guaranteed N Rock & National Savings and no one squealed anti competitive. Everyone knows that Britain will not let a bank collapse but at least Ireland had the stones to say it and stand over it. In addition, they are charging for the service and instilling confidence which will make a collapse even less likely.
    Finally, they are not protecting banks or their shareholders. They are protecting the interests of the general public whose hard earned cash rests in these banks. This will enhance balance sheets and free up capital which will hopefully kickstart the economy rather than everyone languishing in doom and gloom.

  11. I’m now going to accept only ‘hard’ Euros – from Germany, Holland, Finland.

  12. Congress has voted yes !

  13. Irish banks lent heavily to property developers in Ireland and GB and supplied mortgages for all those overpriced houses that are tanking.

    This is a proxy for raising savings rates to get the cash flowing in to rescuse the balance sheets. It is protectionsitc and drives a cart and horses through the rules of the Euro club.

    Clever though!