Eamon Ryan (Dublin South, Green Party)

With regard to precedence elsewhere, what we are doing is very similar to what the UK is doing and it is within the same timeframe. The UK is not adopting the gradual approach proposed by Fine Gael in the belief that over time and slowly this business will wash itself out. The United States Administration does not believe such an approach is the right one. All the best banking and economic advice declares that we cannot ignore the situation, put our head in the sand and hope it will go away. It is better to address it and the first principle of this approach is to recognise the losses that are real.

We created a property bubble in this country that has done real damage. No political party can stand up in this House and say it did not see this happening or that it did not have a role in keeping it going. In 2005-06 when the property bubble was losing the run of itself parties on every side of this House were calling for cuts in stamp duty, keeping the rise in prices going because we thought it was a measure of success. It was a trap that we got ourselves into and now we must get ourselves out of it, honestly, collectively, collaboratively and with consensus. That is what the head of the European Central Bank said. That is what worked in Sweden before when that country followed the very same process.

I recognise there are different approaches and one might argue for various different ways. I find it difficult to see how the Fine Gael approach would work because I believe that in that fundamental deferral of recognising losses we would see a continuation of the present situation, namely, a shutdown on lending and investment, in development and construction and in key areas of our economy. That would only continue to do damage and would not get us out of the problem. It would keep it going and make it worse.

As I understand it, and it is hard to understand the exact details, it is possible to create a supposedly good bank and declare that it will provide liquidity. However, with the Fine Gael proposal, what would happen to the major serious Irish clearing banks is that at some point they would have to recognise the losses that exist. I presume then they would have to default with regard to their position. What would happen to those banks then? These loans do not disappear. The property bubble existed and will not merely deflate in its own controlled manner. We must recognise this and get over it by managing the various assets. In that way, by doing it quickly rather than gradually, as Deputy Bruton suggests, I believe we will turn the economy round, start recovery and begin to get people back to work.

The Labour Party's proposal for the nationalising banks is very different, as the Fine Gael spokesperson noted. There are real risks in adopting such a clearly considered approach. However, the fundamental problem is that the property bubble was funded by international finance. Our banks got short-term money from Germany and elsewhere. In banking terms they were making a fundamental mistake. They were borrowing short to lend long, and now they have a real difficulty n covering that position.

However, we continue to need international funding in Ireland. It is difficult to be scientific on this and to be precise, but the analysis from expert advice, the NTMA and elsewhere, is that if we nationalise all our banks, as has not been done in any other liberal democracy at the present time, we would have real difficulty in raising funds to keep our banking system going.

The liquidity issue has been the most difficult problem, and it has been difficult in Government-----

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