THE Government will need to find €150 billion over the next five years to steer the country out ofrecession — the equivalent of doubling the current tax take.
Professor Brian Lucey, who was speaking at a business lunch in Cork yesterday, said the country is not in danger of going bankrupt this year, but 2010 is a different story if the economic situation isn’t rectified.
“We face a generational challenge in relation to the public finances which if not sorted out will take us to a place worse than the 1980s,” Prof Lucey said.
The professor of the School of Business at Trinity College Dublin said the banking crisis isn’t over, as Des Peelo has claimed.
“Irish banks may be technically insolvent with losses from toxic assets at least in the €20 billion range upwards. Equity is less than this,” Prof Lucey said.
He said the Government must face recapitalisation of the banks and nationalise them on a temporary basis.
He proposed a “one time only” injection of state non-capital assets to the banks in exchange for toxic assets.
The key would then be to determine the value of the bad assets and he insisted the only way to do this would be to employ non-Irish loan-loss assessors and property experts and have final decisions taken out of the hands of politicians.
Prof Lucey said all bank boards must go. He said their primary duty is to protect depositors and shareholders and they had failed in this.
The professor also criticised the financial regulation system in this country. He said it was “grossly inadequate” and needed to be replaced by a single, independent external operator “with teeth and the willingness to use them if required”.
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