BANKING CRISIS

The state will have to pump another €20 billion into the banks, government stress tests will reveal this week, according to the main story in The Sunday Business Post. During the election, the coalition partners believed the figure was only half of this amount and €10m had been set aside as a result.

The newspaper points out that although this means more money from the taxpayer, it is good news as even worse figures had been expected.

Goodness only knows what Sunday Times columnist Damien Kiberd would have made of the €20 billion figure. His doom-laded piece is based on the existing €10 billion figure and even this makes for very grim reading indeed.

“The Irish state’s capacity to subvent its clapped-out banking system is almost exhausted,” he writes. “If you take Central Bank emergency liquidity, Nama bonds and ‘own use’ bonds together, the money guaranteed by the Irish government to keep the ATMs churning out cash on the high street is now in the order of €120 billion.”

Kiberd goes on to conclude:

“While Irish people agonise over whether to ‘burn’ bondholders, the capital markets are treating Irish gilts as a type of junk, pricing them in a way that suggests a sovereign default is now a certainty, and likely in the near term … something has got to give.”