Professor Patrick Honohan:

Ah, yes, and this will be the afternoon session. I think I gave a partial answer to that one earlier. The way to frame the question is to take your thinking back to the beginning of the century, 2000. Supposing the banking system had been restrained and was just like a normal banking system, what would have happened to the economy and how does that compare with what we have now? The €40 billion, or whatever it is, is only a part of that component, and we find that in the early years the economy would have been doing less well, wages would have been lower, employment would have been lower, and house completions would have been lower in the more steady path. However, since the crisis, although there would have been a dip following Lehman's, there would have been a higher level of output, employment would not have slumped as much, unemployment would be lower. In addition, and there is where some of the €40 billion went, there is the distributional effect. The bondholders did not make any difference one way or the other. They would not have invested in Irish banks because the Irish banks would not have wanted the money because they would not have been able to lend, so the foreign bondholders would have said: "Oh, okay, no takers in Ireland, I think I will invest in France."