Imagine for a moment that in the midst of all the economic gloom, the government was suddenly to gain access to a pot of gold worth about €15bn. Imagine if that money, squirreled away for a rainy day, had been growing into a princely sum, despite the troubles of the stock markets, where it had been invested in the expectation that it would one day help us in our hour of need. When that unfortunate hour came upon us, what do you think the government would do with that money?

This is not an entirely imaginary scenario. The money does exist and the government does have access to it. In fact, it dipped into it earlier this year for a particular purpose I'll come back to in a minute. The money is contained in the National Pension Reserve Fund, which was set up by Charlie McCreevy when he was finance minister in 2001.

At the time, McCreevy was being told by various officials that Ireland was facing a pensions crisis. We would all be living longer, collecting the state pension for an extended period as we did so. Senior citizens would become a drain on the state's coffers. The pension fund was set up with a view to meeting some of that cost when the time came.

When the fund was set up, Ireland's finances were in clover. The possibility that we would need money for the fund by 2009 for purposes which had nothing to do with pensions was unthinkable.

But we do need that money now, and it's time that we had a proper debate about it. The government acknowledged as much earlier this year when it raided the fund to recapitalise AIB and Bank Of Ireland. Special legislation was introduced to allow it to do so; €4bn was subsequently taken from the fund with a further €3bn guaranteed from the state's scheduled contributions this year and next.

That's €7bn taken from the pension funds of our future senior citizens and given to two banks which behaved appallingly in the boom times and which contributed to the recession.

If the fund can support the banks, why not the unemployed? And why not small businesses? One of the most glaring gaps in last week's budget was the lack of any help, or any hope, for the more than 400,000 people who are on the live register and who, by the looks of things, will be joined by about 100,000 more in 2010.

Neither was there very much to help the many small businesses who are starved of credit because the same banks who benefit from taxpayers' largesse will not lend to them.

Judging from the comments of some senior bankers over the last month, that situation will not change anytime soon.

Money from the NPRF could fill this vacuum. A few weeks ago I contacted Tom O'Connor, an economist at Cork Institute of Technology, and asked him about this. O'Connor is not part of the macho-economic consensus which firstly blew the boom, then deepened the trouble we were in, and is now ensuring that we are attempting the unprecedented task of deflating our way out of a recession.

O'Connor suggests we should draw down €7bn from the fund. The government would then set up a "good bank", which would control €2.5bn of that money. The bank would lend €2bn to profitable existing companies, and set up several hundred new companies, which would have been vetted by a panel of experts for growth and profit potential. O'Connor envisages €4.5bn being invested by Enterprise Ireland and a new State Innovation Agency in a combination of new companies and profitable businesses with proven expansion potential. These companies would be expected to have 30% of their finance needs themselves, some of which could come from a start-up loan from the remaining €500m drawn down from the fund. Over time, through a process we don't have the space for here, the pension fund could hope to get back €6bn of the €7bn taken from it. The loss of €1bn would be dwarfed by the huge benefit to the economy of so many new businesses and so much extra employment.

It's just one plan and perhaps somebody else would come up with a better one. But it is the product of the kind of creative and innovative thinking that was missing from Brian Lenihan's budget speech. Don't expect it to happen therefore, but do keep an eye on Anglo Irish Bank and AIB over the coming months, and particularly on where the government might be looking for the money for further recapitalisations.

Listen up, Obama: Kilkenny's where it's at

The visit of the US ambassador to Offaly last week to investigate the ancestral links of Barack Obama reminded me of the story of the tortoise and the hare. Offaly may have got off to the flying start in claiming ownership of Obama, but it is Kilkenny which has now developed the better argument for a presidential visit. Kilkenny contains the only burial place of one of Obama's direct relatives, John Kearney, who was Bishop of Ossory when he died in 1813. He was also a former provost of Trinity College. Any Irish visit by Obama should certainly contain a trip to Kilkenny, therefore, with a pitstop in Offaly if there's time. The fact that I'm from Kilkenny has absolutely nothing to do with that opinion, of course.

ddoyle@tribune.ie