Let us have some straight answers on bank debt

Two stories which got a great deal of airtime in the past week bring into sharp focus just how tough times are for so many out there. First, there was the story of unemployed actor Joe Purcell who pleaded guilty to stealing groceries, saying he did it to try and feed his family and because telling his three children that there was no bread and milk "was a step too far". A mix-up with children's allowance payments meant the money was stopped for a short time during August and he was left with no money and nothing in the fridge. His plight evoked much sympathy and empathy and is an indication of how many people are simply living a hand-to-mouth existence in these austere times. The other story which saw much commentary was that of the garda sergeant whose wife had written to the government claiming he can't feed his family properly despite earning €75,000 a year, inclusibe of overtime and allowances. The family claimed it has just €109 left per week after income tax, the universal social charge, pension, health insurance, mortgage and utility deductions have been deducted. Repeated cuts to her husband's pay has, his wife claimed, left the family "living a nightmare" and only able to afford to eat cornflakes on some days. Some scepticism has been expressed by media commentators about how a family with a net income of over €4,000 per month could find themselves in such difficulties, even taking into account the fact that they are paying off a hefty mortgage. Nonetheless, the story will strike a chord with many middle income earners in Ireland who have been squeezed almost until the pips squeak and who are also struggling to make ends meet. An Irish League of Credit Unions (ILCU) survey released this week would appear to back up these individual tales of woe from around the country. It has found that close to two million Irish people are left with €100 or less at the end of each month after essential household bills are paid. It found that 70 per cent of people are unable to save money.The ILCU further found that half of all adults are struggling to pay their bills on time and over 40 per cent of consumers were forced to borrow money to pay bills on time. All this is being played out against a backdrop of confusion and ambiguity surrounding a deal on Ireland's crippling legacy bank debt, with mixed messages from Europe in the past week leading to further uncertainty in people's minds. And what people need now is hope and clarity. The government believes it has a deal dating from last June, allowing measures to alleviate the country's €64 billion bank debt millstone; however, comments last week from German Chancellor Angela Merkel appeared to row back on that promise. Confusion reigned after Mrs Merkel indicated that debts racked up in the past would not be covered by the new emergency fund to recapitalise eurozone banks. Thus, the European Stability Mechanism (ESM) would be limited only to future debts and not those in the past, torpedoing any prospect of cutting this country's unsustainable bank debt burden. Recent days have seen a flurry of diplomatic activity between Dublin, Berlin and Paris, however, and a measure of clarity appears to have been brought to the situation. Mrs Merkel has agreed that Ireland will be treated as a 'special case' when it comes to measures to ease the banking burden, though it is far from clear exactly what this will mean. France's president, Francois Hollande, has also strongly backed Ireland's position for a retrospective recapitalisation of our banks. Despite the ups and downs of the past week, recent statements from senior EU leaders means the country's promised debt deal looks like it is still a possibility, something that would potentially mean the Irish taxpayer would be refunded for at least some of the €64bn the State injected into the banks to save them from collapse. This would be a transformational deal for this country and one we desperately need to enable the country to get back on its feet. However, there will be tough negotiations ahead which are likely to focus on whether any such ECB aid to the banks is direct or indirect. Whatever deal is done will have to primarily deal with the massive €30bn Anglo Irish Bank promissory note but will also have to be politically acceptable to the German chancellor in order for her to give it her crucial imprimatur.