Slí Eile: Banking is at the heart of the economy. It should serve two core social needs:
- A place of security for those who deposit savings
- A source of funding and investment to meet societal needs
Our present system of banking in Ireland together with the global financial system is mortally wounded. The speed at which the earthquake of September 2008 spread like fire and throw bond and stock markets into chaos illustrates that the global financial world is:
- More inter-connected and inter-dependent than ever
- Out of control because funds can be converted, re-priced and shifted in minutes without regard for the global consequences for millions of people across the world.
The meltdown in banking in Ireland has led to the most extraordinary and bizarre outcomes unimaginable before 2008:
- Effective nationalisation of the majority of retail and wholesale banking in Ireland
- Transfer of bad banking debts to the Irish taxpayer
- Gigantic loans of liquidity from the European Central Bank and the Central Bank of Ireland (the latter on behalf of Irish citizens) with little prospect of most of it being paid back for years
- A seizing up in the 'real' domestic economy due to domestic deflationary policies, lack of credit flow and continuing competition from low-cost selling.
Two foundation principles are needed:
1. As much as possible the fall-out from this economic crisis must not be placed on the backs of the poor, the sick, the old and the very young
2. Resources - financial, physical, environmental and human - must be directed to creating new opportunities and socially productive wealth.
As part of ensuring that the crisis is not used to punish citizens it is necessary to reverse and prevent in the future socialisation of (bad) private debt - in other words separate private banking debt from public sovereign debt. It is also necessary to protect and defend deposits and current bank infrastructure including jobs.
Seven practical steps are required:
I. Conduct a three-month audit of debt ('know in detail who owes what to who, when, where, how and why' starting from 2008 up to the present day)
II. Escalate the issue to the global through identification of common interests by forming progressive smart alliances with forces for equality and change across Europe
III. Clear out the governance of banking with new personnel, transparent reporting and democratic accountability
IV. Then hold a referendum to clarify the democratic mandate of a progress government within six months of today
V. Finally work towards an agreed approach to cancelling some debt, re-structuring other debt and sharing the impact of losses between debtors and creditors over a period of 10-15 years ('we will still be negotiating in ten years...')
VI. Re-direct savings and investment towards green, job-hungry and socially useful ends
VII. Develop a new third force banking based on credit unions, the Post Office and solidarity bonds