Lenihan should beware of toxins

ARE the payments made by the State to many thousands of now unemployed house buyers, in order to finance the interest element of their loan repayments, sustainable in the long term and, if not, will these homes be repossessed by the banks in due course?

If Finance Minister Brian Lenihan pays the banks a price for their toxins amounting to more than the the generally accepted present values (40% of peak property prices), what new economic miracle is he expecting during the next decade that will return the price of a tiny, one-bedroom apartment in the Dublin area to 60% of its peak value of €320,000 or thereabouts.

If Irish banks ever reopen for business again they may find fewer customers applying for property purchase finance. Government employees will be their main customers. Neither employment nor peak wage levels will ever approach boom levels again.

Taking on board the crippling taxation and spending cuts that will be required to redeem the banks, it is inconceivable that even well-located houses will ever rise above 50% of their peak prices a few years ago.

Small apartments and houses in towns, and particularly in outlying areas, may fall by much more.

The banks must be taken into ownership by those who will pay for their redemption with hardship and suffering in the coming years.

John McDermott

Puerto Rico

Gran Canaria

Spain