Irish lessons for Britain
Saving the Anglo Irish Bank has cost Ireland £29bn and other financial institutions (notably Irish Nationwide and the Allied Irish Bank) bring the total up to £43bn – the equivalent of a third of GDP. The government has been forced to talk about “sharing the pain” with the banks’ creditors and “restructuring” the debt (not meeting interest payments on time).
Unsurprisingly, institutions holding Irish government debt are getting twitchy, and on Friday, Citigroup held a conference call where Finance Minister Brian Lenihan was to reassure hundreds of City of London investors. According to the Daily Telegraph, the initiative was disastrous.
City finance institutions, hedge funds in particular, have lost nothing of their arrogance and sense of entitlement; they are angry that Ireland, which has accepted an extraordinarily heavy burden to rescue AIB, expects the industry that was complicit in inflating the bubble to pay part of the bill. According to the Telegraph’s report (denied by the Finance Ministry) Mr Lenihan was soon being heckled, with traders making “chimp noises” and one yelling “short Ireland”! Citigroup was left with no alternative to closing the line, opening up 20 minutes later – and now claiming there were “technical problems”.
This is an important story for Britain. It is possible that Brian Lenihan’s experience could one day be shared by Danny Alexander (who bears the same relationship to George Osborne as the smile did to the Cheshire Cat).
Conservative commentators should pay particular attention. Less than a year ago, Daniel Hannan MEP famously wrote “Alistair Darling should learn from Ireland”. A lot can change in ten months – but the Opposition can still point to Ireland as somewhere the Chancellor should visit to learn a thing or two.