I just don't think this is a very good idea:
Using a new mandate that gives the government unprecedented power over banks, Ireland’s finance minister, Brian Lenihan, said he would transfer 3.7 billion euros, or $4.85 billion, from the country’s pension reserves into Allied Irish to guard against loan losses, and delist it from major stock exchanges, largely wiping out shareholders.
This is money that the Irish people set aside to assure a dignified retirement in their elder years.
And yet it goes -- poof!
Off to cover losses made by a private for-profit bank. (Albeit one that, because of this action, has effectively now become the property of the Irish state.)
And it might not work.
After all, Ireland has now been pouring tens of billions of dollars into its private banks for years and they still haven't filled the bottomless pit. Funny thing is, the austerity program mandated in the terms of earlier rescue schemes by Europe and the IMF are contributing to the problem, not helping:
The biggest concern is whether that the bill will continue to rise, especially if a government austerity program, intended to save 15 billion euros over four years, weighs on homeowners’ ability to pay their mortgages, causing unanticipated new losses at the banks.
...
Still, there is a concern that even this money may be at risk, as requirements for new capital at the banks continue to grow. Allied, for example, is expected to need another 6 billion to 7 billion euros in new capital within coming weeks, despite the capital infusion on Thursday, and an earlier sale of its prized overseas assets to raise money.
Ireland has put up nearly 85 billion euros so far in attempts to rescue its failed banks, all the while imposing more and more severe austerity measures on its people.
The number is staggering -- with respect to population, this is like the U.S. spending $6 or $7 trillion.
The global financial system has done a Sherman's march through Ireland.
Hard to imagine how the Irish will pull through this.