Our politicians are putting bondholders before the Irish people they are meant to represent.

Go to any dole office in the country this week. Just have a look. You will see young people. Our fittest and best able have become the number one victims of the recession. Given that this recession was almost entirely based on home-grown economic mistakes, the real victims of the back-slapping Celtic Tiger years were the very people who were supposed to inherit it.

Youth unemployment in Ireland has risen 170pc in the past two years. There are more than 85,000 people under the age of 25 on the dole. These idle youngsters are the ‘outsiders’ who don’t have a stake in the society, or who don’t have the ‘pull’ to get a cushy gig during the slump.

Do you remember only a few years ago all the blather about how our young people and our superior demographics would ensure that Ireland achieved a soft landing? Do you remember government ministers urging people giddily to get “on the ladder”? Holding the ladder was usually a builder or auctioneer, who was making a fortune, and some bank manager who threw borrowed money at these first-time buyers like confetti.

The bank manager’s Christmas bonus was based on how much money he stuffed into the pockets of the first-time buyer which went straight to the builder, who in many cases wrote cheques for cabinet ministers in corporate donations to a party the builders knew would support them all the way.

And who paid? Well, the young of course. They paid by buying over-expensive shoe boxes and they are paying even more via unemployment. This unemployment ensures that the demand for the extra thousands of shoeboxes that were built in the boom will not be there. Therefore, the negative equity many are suffering will simply get worse as house prices continue to plummet in 2010.

The boom years involved a massive transfer of wealth from the young to their parents’ generation. This was the first transfer, which although disastrous for the young, had at least the benefit that the money was staying in the country as their parents’ houses increased in value. But here is the snag. The money that was increasing the value of the parents’ properties, increasing the debts of the young buyers and being skimmed off by the banker/developer cabal with the full support of the Government, wasn’t our money. But whose money was it?

To find out, you have to look at the banks’ balance sheets. Once you do this, it will dawn on you just how criminal the financial situation in Ireland really is — because the bank bailouts ensure that even those young people who didn’t believe the hype and didn’t buy houses will pay for the housing slump by increases in taxation to pay foreign bondholders.

Let’s examine how much money we are talking about. The two big banks in Ireland have deposits of €175bn. But against this deposit base they lent €376bn. They borrowed the difference between what they lent out and what they had on deposit. It’s an enormous figure of close to €200bn — or more than 150pc of our total GDP. If we take out shareholders’ capital — the amount shareholders own — which is only about €17bn between the two, we are left with a huge figure, most of which is being financed on a weekly basis by the European Central Bank (ECB). The ECB is protecting us from ourselves, but it is doing us no favours because the borrowed money has to be paid back and withdrawn from our economy.

This is where the young come in, because due to the Government’s obsession with paying back all the speculators who took a punt on the Irish banking system, our politicians are putting bondholders before the Irish people who they are meant to represent.

When the guarantee was originally conceived, it was supposed to be temporary in order to avoid complete banking meltdown — the Government would then call in the bondholders to negotiate a settlement. The final settlement between the banks and the bondholders brokered by the State should instead see the bondholders lose significantly — as any investor would if he took imprudent decisions.

This is normal capitalist practice and is termed “co-responsibility”, whereby the people who lent money to the banks are as responsible as the people who borrowed money from the banks. However, the Government has decided that the people who lent money to the banks bear no responsibility. So whatever they made in the boom they could keep and in the bust we, the people they lent to irrationally in the upswing, should pay them for all their troubles. How does that make you feel?

The ‘insiders’ within the system in Ireland decided that the young people of Ireland were less important than their bondholders. As a result, the Government has deemed that our workers will pay the bill. In short, we are in the process of being robbed by the people who are supposed to protect us.

The Government sees only two solutions to this banking disaster. One is the NAMA solution, which is based on a hope that the bad assets on the banks’ balance sheets will turn good through another land boom. So not only will the banks get away with it, but another land boom will be stoked up by the same management who just got out of jail. As a result, the next generation of young workers will pay.

The second solution is that if there is no reflation of land prices, the banks’ balance sheets will then have to be sorted out by writing off all the property loans and the bill is given to the taxpayer. Once again the young people of Ireland pay for the mistakes of the ‘insiders’.

The figures are astounding for this catastrophe. In the extreme, if the loans didn’t perform at all (which is unlikely) the taxpayer would have to pay. Every worker in this country would pay €94,736 just to bail out the two big banks.

We can’t pay this. So we should stop the pretence and let the guarantee lapse as was originally envisaged. We should do a deal with the creditors, paying them back 10pc of their cash along the lines of normal capitalist business.

If we don’t do a deal, the cost of bailing out the banks will be felt in every hospital and school in the country, for years. The choice is ours. Either we side with the people or the bondholders. Either we believe in “co-responsibility” or we give the bondholders a one-way bet.

Unless the Government comes to its senses, the cost of the mess it caused will be felt by the young of our country in higher unemployment. Could things be any clearer?

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