Until I read Ian Kehoe's report in yesterday's Sunday Business Post I was unaware of the great nationalization project that we're currently undertaking.
Thanks to the actions of everyone's favorite state-owned bank, Anglo-Irish, we are in the process of nationalizing all sorts of businesses. I suppose I shouldn't be surprised that a nationalized bank would think nothing of nationalizing other businesses, but somehow I'm shocked that this has been allowed.
Many of Anglo's corporate customers are unable to make their loan repayments so Anglo has been doing debt for equity swaps, which means that they're willing to write off loans in order to become owners in these businesses. They've already taken ownership of Arnotts, a number of hotels, golf clubs, service stations, etc. And, of course, there's the Quinn Group, which is the (sort of) sister black hole to Anglo.
Kehoe says that Anglo is well down the road with other businesses, which means that you & I will soon become full or part owners of the following: Calyx (ICT services), Champion Sports (footballs, Manchester United shirts, etc.) and more hotels and, I think, a chain of pharmacies.
All of this is really disturbing because it means that all these companies' employees are now only a small remove from civil service. Sure, they don't have permanent contracts, but you can bet your life that there are opposition TD's or prospective TD's only waiting to denounce any move to close these state-owned "assets" because of all the jobs at stake and what have you. All the political pressure will be to keep these dead businesses alive via artificial life support.
But, of course, keeping those companies alive artificially only threatens other competing businesses that might well survive the current calamity if the competition is thinned out. So, while we're bailing out Champion Sports maybe we're damaging Elvery's (or whomever).
It's one thing to keep Anglo alive - and I don't agree with that - but we must insist that Anglo stop using our money to breathe life into other dead or dying businesses. Or, as Brian Lucey puts it, "You have a zombie bank propping up zombie companies. This creates a zombie economy."
Zombie economy or (I'm sure it's soon to be known as) the "Celtic Zombie."
