The people who we should seek not to reward or protect in the Irish bail out are the executive and management of the banks and developers with outstanding loans sitting on lands banks and unsold properties. Properties unsold because they won't lower the prices. A comfortable enough position they find themselves in because the banks are refusing to call in the loans.
However there is another group of people that are currently benefiting massively from the bail out.
The new shareholders of Bank of Ireland, Allied Irish Bank, Anglo Irish Bank and the others. Since the furtive conclave on Monday morning of bankers and the Government that cobbled together the plan, there has been a four fold increase in the volume of these banks shares traded.
In the past three days Anglo Irish share price has more than doubled, Bank of Ireland has risen from €3.26 to nearly a fiver and Allied Irish Bank has seen a nearly 50% rise.
The "deal" that the Irish Government put together ensures, that by not taking an equity stake in the banks, that the state will not garner any of the hundreds of millions in value that the Irish taxpayers have added to the value of the banks.
Its safe to assume that some of the most recent trades are new. They bought into a risk free investment. Yet the Irish taxpayers are the ones underwriting this.
What needs to be done is the introduction of a targeted capital gains tax on bank shares to accompany the bill. As the legalisation stands the profit on any capital gains is merely 20%.
For the banks lets increase this to 50% for the lifetime of the state guarantee.
The bail out is appartenly only about liquidity. If so and also to reduce the short term speculation and bring stability to the share price lets see a chunky tax introduced that ensures the Irish state itself can directly benefit from our taxpayers insurance policy.
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