Mick Wallace (Wexford, Independent)

I accept that the Government in 2008 was probably bounced into the bank guarantee, given the manner in which it was established. History will come down on the side of the view that the banks were pretty economical with the truth. The notion that they had a liquidity crisis no longer stacks up.

Over the following three years, we have slowly learned more and more. Things were far worse than they pretended. The banks all over Europe had one great comfort of the time, namely, lenders of last resort. Countries would back them to the hilt with unlimited support. Things have changed and the banks are calling the shots and deciding what happens. Sovereign countries are in difficulty and need help but do not seem to have a lender of last resort, unless the Germans decide to change their mind and allow the ECB to become such a lender. All the talk suggests they will not but perhaps the future might dictate otherwise.

September 2008 was a case of the tail wagging the dog and nothing seems to have changed. We are at the mercy of banks and the current banking squeeze on the real economy, which is a result of the problems in the banks, is causing huge problems all over Europe. The prospects of growth are constantly diminishing. Everybody agrees that growth is essential if we are to make any inroads into the unemployment figures or progress in creating jobs. Every Government in Europe would like to see more jobs but as long as governments, who have been the lifesavers of the banks, cannot tell the banks what to do, it is hard to see them playing ball.

The notion that taxpayers are paying for the poor decisions of the banks and we now cannot access funds is difficult to take. The chances of people, especially those running small and medium businesses, of getting money today are very small. Apart from financial issues, the financial markets are now interfering dramatically in the democratic process. There are unelected leaders in Greece and Italy. There has been a change of government in Spain and more people abstained or spoiled their votes than voted for the new Government. A democratic deficit is developing on the back of the crisis.

The editorial in today's Financial Times states:

The mother crisis – bigger even than the banks' woes – is of course the run on sovereign debt. Ireland found out the hard way that if a stressed sovereign tries to bear the excessive losses of banks, it breaks the back of sovereign and banking system alike. There is no need for the eurozone as a whole to make the same mistake – provided it prioritises securing governments' liquidity over the bottomless taxpayer rescue of banks. Central banks clearly meant to send the markets a message of global readiness to act, and to act together. One hopes that eurozone leaders got the message too, and that they will heed the example at their summit next week.

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