The markets don't like uncertainty? They should try living in this country. Here, from the outset of the banking crisis, we have been subjected to the mushroom theory – kept in the dark and fed manure. We don't know what's going on from one day to the next. How can anybody believe a single word that is issued by either the government or the banks?
Day by day, new figures are thrown out, new reasons are given for particular actions, new lines are devised to keep the public onside.
Last week was by any standards extraordinary in this regard. A new plan for Anglo Irish Bank was thrown out on Wednesday. We are now told that the imperative to rescue the bank is that, if not properly handled, it could drag down the whole economy. At the outset, when it was nationalised in January 2009, the reason given for its continuance was to provide funding for business. Which is it?
How much is it going to cost? In December 2008, the cost for bailing out Anglo was put at €1.5bn. It has gone up in increments since then. As each new day dawns, a new estimate arrives. How much is it going to cost? Up until last Thursday, the official figure was coming in at €25bn.
This estimate was based on the following figures: so far, the value of loans going from Anglo into Nama has been reduced by an average of 58%. Yet, according to Anglo estimates, the remaining €19bn to be transferred will have a haircut of only 38%. From which puff of fresh air was that size of a haircut pulled down?
The greed of so few
In any event, by Thursday, it was all irrelevant. On Vincent Browne Tonight, Anglo chairman Alan Dukes revealed that he thought the new figure for the cost would be €4bn in excess of the €35bn estimated by rating agency Standard & Poor's.
This came out of the blue. But by now, we are practically inured to the numbers. Never in the history of nations will so many have to stump up so much for the greed of so few. Never in the history of nations has so much manure been fed to the public.
Last Monday, the RTÉ documentary Freefall highlighted how little trust can be invested in any of the concerned parties. The programme reported that on 29 September 2008, Anglo honchos Seán FitzPatrick and David Drumm visited their opposite numbers in Bank of Ireland, Richard Burrows and Brian Goggin. FitzPatrick and Drumm asked the two other boys to take over Anglo because they had run it into the ground. It is unclear whether or not the Anglo pair confessed that the bank was actually insolvent. If that was the case, they were involved in an attempt to commission a crime.
Nobody is saying whether the Anglo boys also approached AIB honchos with their begging bowl. But we do know from David McWilliams that FitzPatrick once told him "no f***ing protestant" bank was going to take over Anglo. This was a reference to Bank of Ireland. Can we take it from that that, if forced, he would have preferred AIB? This lends weight to any suggestion that FitzPatrick also approached AIB.
Either way, that evening, the four bankers of the apocalypse showed up in government buildings looking for the state to save their asses. According to Lenihan and Cowen, there was no mention from any of the parties about an approach by Anglo at that meeting.
The taoiseach and finance minister were deliberating on whether to mortgage the future of the country, and at least some of the bankers who petitioned them were not imparting all they knew about how perilous the situation in Anglo was. That was a serious omission. If the politicians had been made aware of that, they might have acted differently, and saved the country from at least some of the mess in which it now finds itself.
Either that, or Cowen and Lenihan were not telling the truth. Or, somebody from one of the banks told officials in the departments of either taoiseach or finance, and the officials told their bosses the news. This would mean that both Cowen and Lenihan are telling the truth. Technically. The point is we don't know who to believe.
The day after the guarantee was issued, Lenihan insisted it was all about liquidity, telling the Dáil, "were liquidity to dry up in the Irish banking system in the weeks ahead, the inevitable result would be economic catastrophe for this country." Somebody, somewhere knew the problems went far beyond liquidity, yet the Irish people picking up the bill were being kept in the dark. We were also told at the time that the guarantee would make a profit for the exchequer. You couldn't make it up.
The mushroom theory was alive and well even before the economic crises came crashing into the country. Two months before the guarantee, as bank shares headed south, Brian Cowen told the Bloomberg news agency: "It's important to point out that our banking system in Ireland is very well capitalised." It is entirely possible that Cowen believed the state of affairs to be exactly as he stated. If so, he obviously hadn't an iota about what was afoot in the economy over which he had presided for the preceding four years.
Another issue which has been the subject of truck loads of manure is Nama. When the institution was set up, Brian Lenihan was adamant what its purpose was. Introducing the draft Nama bill on 20 July 2009, he told the Dáil: "We must address the health and stability of our banking system to ensure that the credit required by the economy is provided and that people's savings are protected."
Credit flowing in the economy? So far, that has proved to be another myth. The common belief is Nama's primary purpose is to bail out the banks, come what may. It may well be that this strategy is being pursued in what is regarded as being the national interest, but as any small business will tell you, none of the banks are lending.
Just like the bank guarantee, Nama was also sold as something that would be of financial benefit to the citizenry who are paying for it.
As recently as 5 July, Cowen was telling the Dáil that Nama would make a profit "somewhere in the order of €1bn". He said there had been some misunderstanding of the Nama plan in advance of its publication. "It is not true to say that Nama expects to make a loss," he told the House. Not expected by who? The same geniuses who told us Anglo would cost around €1.5bn.
Sometimes, the fare lapsed into high farce. On Tuesday, as the bond markets screamed blue murder about the state we're in, jacking up interest rates, Cowen put it down to the "ebb and flow of the markets". The what?
That evening, on Prime Time, Paul Somerville of Delta Index, an asset management company, was asked for his analysis. Like most independent commentators – in fact all commentators outside banks, stockbrokers and the government – he has been pessimistic for a long time about the country's prospects.
Once again, he painted a bleak picture. "The markets are saying they don't believe the things Ireland is doing to get out of the crisis are working," he said.
"There is an absolute vacuum and paralysis in leadership. Every single decision has been wrong or they have overestimated and have run out of credibility now. Bond markets don't believe we have any credibility."
Sitting opposite him, the minister for social protection, Eamon Ó Cuív, was nonplussed. "It's not true," he said. "The reality is we have taken firm decisions from the very beginning, the first of those was to guarantee the banks. We need to once and for all crystallise the losses in Anglo Irish Bank."
He went on: "There's a great scare here tonight. Figures are being thrown around like snuff at a wake." As a member of the government, he should know all about throwing around figures, even if snuff has gone out of fashion at wakes and elsewhere.
This is what the spin coming out of government has been reduced to. Eamon
Ó Cuív wants to crystallise the losses in Anglo. The markets can rest easy. Losses are being crystallised, and the rest of us are still in the dark.