OK, screw this! Let’s solve the problem and stop blaming others (there’s plenty of time for that); we must not let the country sink.

We -that is, my generation – don’t want to be the first Irish people who have had to emigrate twice in their working lifetime. Those who were born in the mid1960s to mid-1970s face the very real prospect of having emigrated in the 1980s and early 1990s, coming back in the late 1990s and early ‘noughties’, and now having to go away again. Some might argue there is nowhere to go in a global depression, yet we all know someone who will take his or her chances in a bigger pond than be stuck here, ruled by people who don’t seem to know what they are doing. It is clear that the government is completely out of control. It is also clear that this country is far too important to be left to those with their fake patriotism, which simply masks endemic cronyism. It is not about them, their careers or their political parties any more. It is about us, our lives, our parents’ retirement and our children’s prospects. If these people’s grasp of basic economics is so pathetically challenged that they cannot govern, then they should just go. Leave us alone, please. In the name of Ireland, go.

We need to rebuild, and most of us do not care who the builders are, as long as they do the right thing. Whether it’s Fianna Fáil, Fine Gael, Labour, whether it’s Brian Cowen, Enda Kenny or Eamon Gilmore -w e don’t care. Just do something, draw up a plan, tell us what we have to do and we’ll all go to work. The only way out of this is hard work – from all of us. We need to get back to basic commerce and play the game as it should be played.

Whether we like it or not, the economic recovery plan must start in the banks. As this column has argued from the start, shoving capital into contaminated banks is not the answer. In November, this column suggested that a solution was to isolate a ‘bad’ bank which, in turn, would create clean, ‘good’ banks. This is still the way to go. If the government is thinking in this direction, it is about bloody time. Why did they waste so much time, pay so many second-rate advisers and, by prevaricating, directly cause the loss of jobs?

Let’s focus on the issues. In the madness of the past few days, AIB’s profit warning, which was announced last Thursday, went unnoticed. It was the most significant news of the week.

Granted, the ‘golden circle’ got more airtime, but the AIB warning told us something about today, not yesterday. AIB -a bank with a chairman and chief executive who are scandalously still drawing salaries -admitted that its loss charge (ie its bad debts) for 2008 was €1.8 billion -o r 1.37 per cent of its loan book. This is up from a figure of €950 million estimated three months ago. The ‘mistake’ -the difference between the original bluff figure and last Thursday’s new estimate – was €850 million. Just to remind you, this represents 24 per cent of the bank’s recapitalisation of €3.5 billion announced two weeks ago. That means 24 per cent of the money -our money – poured in by the government has gone already! (How many A&E wards could we staff, or how many special needs teachers could we fund for our national school pupils, with this money?)

At this rate, AIB will have burned through all our cash in a matter of months just by sticking to the current rate of adjustments to its estimated bad debts. A few months ago, this column said that the bad debts for the whole banking system were likely to be €40 billion. This is 25 per cent of our GDP -just as it was in Japan during its 1990s bust. So what are we going to do about it? Here is a five-point plan to get us out of this.

1. Create a ‘financial skip’ and throw all the bad debts of all the banks into it. This bank will be given the mandate to work out the bad debts over ten years. It should be staffed by the best liquidators and recovery experts in the country. These are people who know how to get value out of an asset. They know, not how to lend, but how to sell. Today, everyone is talking about debts, but there are real assets in this financial skip and, over time, these assets -if managed properly – will become valuable. In effect, the new bank will be the Irish property market. It will control the price and control development.

2.The skip has to buy the assets from the banks. It must do this at a deep, deep discount. In reality, this figure could be as low as 20 per cent of the original price. Let us assume the bad bank needs a huge whack of cash; where are we going to get the stuff? Where could we get €40 billion?

3. Here’s where we play the EMU card. We go to the European Central Bank (ECB) and say: ‘‘You lend us the cash. We, after all, gave up our interest rate and exchange rate policy to join the euro, now you have to help us out. You have to prove that the EU is a community of nations, in reality. Show us some practical solidarity.

Otherwise we default and undermine the euro.”

In addition, the ECB is already committed to the Irish financial system. It is drip-feeding money into our contaminated banks every day, keeping them alive. We should suggest they lend us the money at 4 per cent for ten years. This is money that the ECB is spending on the financing of our banks anyway as the lender of last resort, so it should not matter to it. In fact, lending to the solution should be much smarter than lending to the problem.

The ECB would be crazy not to go for this. We then have money for ten years at 4 per cent with which to work out bad loans.

4.The old banks are now clean. They are free of contamination and they can go about raising money from the market, such as our own pension funds, through the normal channels, like rights issues. This means that they can start lending again to good businesses.

The old banks pay the new bad bank a fee for managing their old debts and dealing with their old clients. If the new bank charges 7 per cent for the service, the old banks need to provision for this charge over the next ten years. This means that their profits will be affected, and they must adjust their costs at the beginning of every year to account for the charge. But 7 per cent of €40 billion is manageable. It could operate like a bank tax.

The state then makes money on this plan -a s it would be getting the difference between what the bad bank charges and what the old, forgiven banks pay. So it gets tax revenue of 3 per cent of €40 billion every year -or €1.2 billion. You can build a lot of schools with that sort of bread. 5. Obviously all senior management of the banks must be fired right now to facilitate this financial renaissance.

So let’s get on with it. Stop protecting your mates. Stop borrowing from tomorrow to pay for yesterday. The government has not only the power but, more important, the responsibility to do the right thing. And don’t give the new jobs to your political friends who turn up at your ard fheis masquerading as objective experts, when everyone knows it’s their proximity to the party that gets them the gigs. This plan could save the country. Over to you, Mr Lenihan.

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