Some commentators seem perplexed as to why Irish consumers, who provide up to around 60% of national income, won't spend money and why they don't have any faith in a national economic recovery. It's called confidence, stupid.

There are two core assertions that Irish consumers don't believe. One is the government's assurance that there will be no more tax increases on their income. The second is that the banks will resume lending at levels required for a national economic recovery.

In that context the language used by finance minister Brian Lenihan last week during the Nama debate, on the subject of lending targets for banks, seemed most curious. The minister said he would "take suggestions" to the banks about lending targets and seek their views. It seemed a rather passive posture for a finance minister in the current environment.

Is it not time to look at some blunt mechanisms to force banks to lend to export-oriented sectors of the economy? One mechanism would be to tie capital requirements for banks to their ability to hit government targets on lending to sensitive sectors. Spread your credit into key areas of the national economy and you get rewarded; hoard cash and become dangerously risk-averse and be forced to pay for it in higher capital cushions.

That sort of mechanism could cut both ways, of course. Another approach would be simpler. Simply increase the cost of the bank guarantee scheme on any bank not lending into the four or five key areas the government and other agencies select. Obviously a supervisory body would be needed to make sure the government itself is selecting the right targets, but it should be feasible.

The present situation where €54bn of state bonds will be transferred to banks without any guarantees on lending is totally unacceptable. The government needs to exhibit some belated toughness in its negotiations with the lenders they're bailing out.