Peter Mathews (Dublin South, Fine Gael)

I want to add a few points. There are two imperatives at present. One is the crisis in the eurozone. We are missing the big crisis. Every country is in its own compartment on the Titanic while we are all sailing towards an iceberg. There is a shadow banking system as well as the obvious banking system of which we are all aware. The shadow banking system is connected with the Wall Street and investment banks and their subsidiaries, most of which are in London, doing business, which is re-hypothecation of funds and assets which are used as security for loans and doing business, with gearing of four, five and six times. London is the least regulated place in the financial world for carrying on this business. In fact, in the United States re-hypothecation is restricted to 140% of the original hypothecated assets.

I do not want to get into technicalities. There is an article in Thomson Reuters dated 7 December - only last week - which explains this in the microcosmic example of MF Global, which failed and left its clients out to dry for $1.2 billion. It is a microcosm of what could happen on the macro scale. The banks of Europe are extremely fragile. Deutsche Bank has a leverage level of about 52 times, which is higher than Lehman Brothers was. JP Morgan has off-balance sheet exposures under these re-hypothecation liabilities of about €500 billion. It is these sort of figures in the greater architecture of the financial world that are mind-bogglingly risky at the moment.

The eurozone needs to make sure the ECB or whatever institution can do it - I think the ECB can do it - has probably at least the size of the eurozone's GDP - €8 trillion or whatever it takes - to provide the liquidity to the system. If not, there could be a surprise bank failure anywhere in the system and, because there is so much off-balance sheet exposure by banks, related investment firms, primary dealers in Wall Street and so on, nobody knows where the explosions could occur. That is why it requires leadership, statesman-stature leadership, in Europe at present to stop the noise, the phony summits and the phony meetings that are taking place. I use "phony" in the sense of noisy voices. The origin of the word "phony" is voice. That is why it was called the phony war before the Second World War. There were voices everywhere, documents, administrators, meetings and more meetings. Now, we need action so that confidence and trust is restored.

People holding paper do not know what to trust. People say "Buy gold". However, if one does not physically own the gold, who says the paper a person is holding is any good? It is the same with sovereign debt. Germany is the largest and strongest economy in Europe at present. Ironically, two of its banks are extremely fragile. Deutsche Bank has assets of €1.85 trillion, which is nearing 80% of the entire German GDP. The House will remember we were all frightened that our banks were five times larger than our economy. Everybody at a responsible level in politics and leadership needs to snap out of it and get down to doing what is needed. Intergovernmental treaties and agreements can be worked out over the coming months.

By the way, we should not be frightened of sharing responsibilities and mutual accountability. For instance, in all the airports of Europe there is a common standard of safety in air traffic control, take off and landing. That is what we want in fiscal behaviour. Of course, we want Governments to keep to balanced budgets. Of course, Ireland should have the right to visit and see that the German Government is behaving in drawing up its budgets as much as it has to come and see what we do. Let us get real. Medications are sold in pharmacies all around Europe and we trust that the standards that we are used to here apply also in Rome.

Europe is an important large community of people with different traditions, different languages, different mentalities and different ways of viewing the world and they all are very worthy and we should value them. We should ensure that whatever the framework, the architecture, the plumbing-----

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