Michael Noonan (Limerick East, Fine Gael)

Some months ago, the headline "Can a Bank Bring Down a Country?" appeared in the New York Times. The answer to that is, I regret, yes it can if the Government collaborates with the bank. We have almost reached the point of the rescue of Anglo Irish Bank bringing down this country with the Minister being forced this morning to announce the closure of the bond markets. The closure of the bond market means the sovereign State is in deep trouble because it cannot borrow money.

Anglo Irish Bank was supposed to be too big to fail. On reflection, it was too big to save; that is the real position. Because it was too big to save we should not have gone there. In going there, we should not have covered all the debt. Fine Gael has for two years proposed that bond holders should share the pain of the Anglo Irish Bank rescue and that the taxpayer should not stand alone as the only agent of rescue. The Government has continually argued it cannot do that as to do so would send bad signals to the market and result in a loss of confidence in Ireland. We have followed the Government strategy. Month after month the Minister has given assurances that senior and subordinated debt will be covered in full. Where has this got him? It has got us to the point of not being able to have a bond auction next month. This proves that the Government's guarantees to protect senior debt holders and subordinate bond holders is a failed strategy. The bond holders have been protected by the Government and the Government would not negotiate discounts until after the announcement today. Despite the altruistic policy, we have reached the stage whereby the forthcoming bond auction has had to be cancelled and the credit worthiness of the sovereign State is gone. The Government, like a losing gambler, is doubling its bet in the vain hope of a win on the last race.

This morning's announcement continues with a failed Government policy. The Minister for Finance is committing a further €16 billion or thereabouts of taxpayers' money to the banks and signalling that he will impose further pain on the taxpayer. If I understand his statement correctly, the €3 billion adjustment he has signalled for the forthcoming budget of 7 December will be insufficient and he will have to make adjustments of substantially greater than €3 billion. He has also signalled that he will, in November, profile in detail the tax increases and expenditure cuts he or his successors will introduce in the three subsequent budgets. My understanding of the nature of this type of profiling is that the Government will not be able to do as it did three days ago when it announced plans to create 300,000 jobs because Brussels will not accept smoke and mirrors on budgetary profiles. On the contrary, when the Minister nominates the cuts he will have to underpin every one of them with a policy decision.

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