This article was written in 2010 and may contain out of date information. Browse more recent articles.
In a couple of weeks, Guinness returns with their Arthur’s Day gig, a brilliant marketing campaign to get millions of people simultaneously drinking pints-o-plain. It a bit of a Hallmark event really, mark the calendar, make up an event and a reason to celebrate your brand, and see if you can get it to catch on. Then repeat every year! Genius!
Another calendar style marketing event on the go at the moment is EBS’s National Savings Week. Its a drive to get people thinking about saving, and to support their campaign, EBS has launched a couple of new products, made some videos (they’re on YouTube) and run a number of initiatives across the country. They haven’t quite built it into a street party just yet, but I’m sure that’s not their style.
EBS put a lot of effort into this drive, and I’m sure they were hoping for some good press coverage, a bit of TV and radio and most important of all, a tide of cash flowing into their coffers. Sadly, they couldn’t have picked a worse week. But sometimes that’s just how it goes with calendar campaigns, you just don’t know what’s going to happen on your big day.
What happened was Anglo Irish Bank… Anglo has dominated every broadsheet front page. The lead item on every broadcast news show has been about Anglo. The timely launch of RTE’s Freefall documentary on Monday was mostly about Anglo. And of course there’s the numbers. Numbers so large that they are pretty much incomprehensible. Mike Aynsley, the boss at Anglo said last night that €25 billion was “a pretty good estimate” of what it should cost to bail out the bank.
But it might not even be €25 billion that the Irish taxpayer has to cough up to sort out the Anglo mess. Apparently we’ll know the true cost “within weeks” but Standard and Poors who recently downgraded Ireland’s credit rating reckon that the true cost will be closer to €35 billion. Thirty-five-billion-euro.
And that’s just Anglo’s slice of the pie. S&P also reckons that the overall cost of providing support to the banking sector could top out at €90 billion. Now we’re talking.
I’m a bit weary of hearing these numbers tossed about as if they were just a few grand here and a few grand there. What the heck is €25 billion, or even €35 billion? Or €90 billion for that matter. And what will happen to us when we slap that onto our already maxed-out national overdraft?
Well, to give a perspective on just what €35 billion actually is, last year’s TOTAL Irish tax receipts came in at €33 billion. That the lot. Everything from income tax and excise to corporation tax and VAT.
So the cost of the Anglo bailout/split/run-off/wind-down (call it what you want) will cost as much as the entire country takes in tax in an entire year. Brian Lenihan said yesterday morning that he believed “the figures will be manageable”.
Manageable? I’m not an economist, but I don’t see how a country that is already €85 billion in debt (and rising) can claim that socking another €35 billion (or as much as €90 billion) onto the pile can claim that it’s no bother really. Where the heck is it going to come from? How the is it supposed to be paid back? We’re spending way more than we’re making as it is.
Look at it this way. Every penny of PAYE deducted from your paycheque for an entire year, the VAT on everything you buy, the duty on your petrol, the tax on your pint. That's what it's going to cost you and me to pay for just one bank bailout. If that's manageable I'm not sure I'd ever want to see what un-manageable looks like.