Mick Wallace (Wexford, Independent)

One of the weaknesses of financial regulators is that they must lie. Central bankers and treasuries must swear there will not be a devaluation or default until such time as they suddenly agree there will be a devaluation or default. Each time they lie, they damage their credibility. However, even as they continue to lie, they must also be trusted to control events behind the scenes. Trust, however, is in short supply. Just as our banks lied to secure a bank guarantee and for a long time thereafter, which completely undermined the moral justification for the State stepping in to bail them out, Spain is now in the same boat. I do not know for how long the Spanish authorities have told us that everything is grand. Two years ago when Banco Santander was threatening to mount a takeover of another large European bank it was lying about its financial position.

It no longer makes sense to continue to handle the crisis as it is being handled now. That the taxpayer must pay for the bad management and business practice of financial institutions is outrageous. Rather than seeking to obtain funding through the State, Spain is seeking money from the European Stability Mechanism. I, too, would seek money if I were in Spain's shoes but it would probably be better to seek it from the European Central Bank. If the banks will not repay the money over a long period, those that are needed should be nationalised. It is nonsense to continue imposing austerity on the most vulnerable in Europe to try to solve the banking crisis.

The message from Germany in recent days that eurobonds are out of the question as they do not suit the agenda and would give the wrong impression is hard to take. Speaking on joint guarantees or borrowings such as eurozone bonds yesterday, one individual stated they would give the wrong incentive and reduce pressure on debt laden countries to cut their budget deficits. Some people will not be happy until countries have been reduced to dust. According to the unelected President of the European Commission, José Manuel Barroso, Greece must respect its commitments, by which he means the package of pulverising privatisations, tax rises and cuts in jobs, pay and services demanded by the European Union and International Monetary Fund in exchange for loans which cannot be repaid and are reducing the country to beggary.

Eurozone leaders appear to believe they can resolve the crisis through internal devaluation, an approach that will not work. Germany is more than keen to remain in the euro. Based on its annual surplus of €160 billion, it is reckoned that the euro undervalues German exports by 40%. The reintroduction of the Deutschmark would, therefore, increase the price of German exports by 40%. Would Germany be able to sell Volkswagen cars in Spain, Italy or Greece for 40% more than the current price? That prospect is not a runner. Germany benefits from the current arrangement more than any other country. Chancellor Merkel argues that borrowers must pay up and sort out their problems. She may not like it but the lender carries as much responsibility as the borrower. Until she understands that, we will continue to travel down the wrong road.

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