Real bailout cost hidden in spin and subterfuge

TWO years ago it was reckoned, according to the Comptroller & Auditor General, that the cost to the people of Ireland of the bank bailout was almost €42bn.

This enormous topline figure didn’t include the interest to be paid into the future, which was estimated at between €1.1bn and €1.3bn each and every year. Rising inflation will almost certainly result in higher interest rates, meaning the cost of this banking debt will eventually be even more disastrous than it already is.

Of course, the largest portion of that bailout cost can be attributed to the infamous Anglo Irish Bank and Irish Nationwide, which between them came to €36.4bn.

The C&AG report also detailed how we were still out of pocket to the tune of €9.5bn arising from the government injecting a total of €22.2bn into AIB.

Now Paschal Donohoe intends, over the next six months, to reduce our 71% AIB stake by up to 15%. The Government’s official statement on the sell-off is silent on the current, up-todate cost of the AIB rescue, maintaining a deliberate fog of confusion on this crucial issue.

Public policy couldn’t conceive of circumstances where the actual public would be kept in the loop.

The decision to downsize our shareholding in AIB follows a similar sell-off of part of our much smaller stake in Bank of Ireland, now reduced from about 14% six months ago (when it was worth about €700m) to below 9% today. Last June Mr Donohoe was anxious to spin that our ‘investment’ in Bank of Ireland had already recorded a surplus.

Funny how it doesn’t exactly ‘feel’ like that. And neither should it. Because Mr

Donohoe’s calculations take no account of the ‘opportunity cost’ of our bank bailout – services we would otherwise have used and benefited from if we had spent all that money elsewhere such as in education, housing, environment and, of course, healthcare.