We have watched this week as the Irish Government bail-out of the banks, through a Guarantee Scheme, led to a rebound in the Irish Stock Market.
We really don't know what is going to happen next. Will the government bail-out work in the longer term? What will happen if it does? What will happen if it doesn't? Will the tax-payer have to take a large hit? Will a bank fail? No one knows for sure what will happen.
People asked me all week how this will affect the local housing market. At this point I don't know. Anyone who says they do know is just guessing. I think that if the plan works and credit is freed up a bit, then more houses will sell. No-one expects house prices to rise on account of it though!
I've been involved with bank guarantees many times over the past 20 years. The one thing all guarantees that I've seen have in common is that they are for an amount of money rather than a period period of time.
ReplyDeleteThe bank guarantee that the Government gave last September was supposed to be for a two year period. Our Minister for Finance is a Barrister. He of all people should realize that in real terms the guarantee granted will have to be rolled over indefinitely if we are to avoid the original guarantee being called in in August 2010.
Irish Nationwide have already declared that their ability to continue trading is based on the Government Guarantee.
Watch this space. Watch this government and successive Governments rolling over these guarantees. To me this looks like a Nationalized banking system by another name?!?