The Irish banks are in crisis. Anglo has already been nationalised while AIB and BOI are also under pressure.
One of the biggest problems is their loan books. It now appears that a large portion of the loans they have issued will turn out to be 'bad'. Estimates vary hugely but the bad debt provision for Anglo has been said to be between €20 and €30 billion. More precise figures would be nice!
Anyway one issue that emerges is: Who has this money? These loans may never be repaid but it is real money that was given to someone. In the case of Anglo it seems that a lot of loans were issued to property developers.
A lot of this money will have been spent. The biggest beneficaries will have been the land owners who sold the land to the developers. Construction workers, engineers, solictitors and others associated with the sector will also have got a share for work done. The government will also have taken in some through various taxes; stamps, capital gains, income, and VAT.
Without doubt there has been a huge transfer of wealth but who got the loot and who will pick up the tab?
Monday, 26 January 2009
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