Can rigor mortis be catching?
It probably comes as no surprise to find that bank lending – as highlighted by two official reports – is not just dead, it’s in rigor mortis. That rigor mortis has, in turn, now set into various trades, not least the licensed trade.
The Government – still in denial – have adopted a ‘hands-off’ approach to the bankers and as commentators like Shane Ross have illustrated, the same grey superannuated faces remain at the top of the UK and Irish banking structures behind the scenes so don’t expect any pain to be taken there.
In the meantime, the lack of liquid funding has led to the stagnation of new life in the pub, hotel and nightclub trades. Those that can get by are just about doing so and those that can’t – well, as our 1&1 interview with the Irish Nightclub Industry Association’s new Chairman Barney McGill testifies, the drop in INIA membership from 500 two years ago to 300 today tells its own story.
And as LVA Chairman David Madigan stated recently, “The lack of capital means there’s no turnover of pubs taking place as there’s no funding available so young publicans cannot get into the market and the Receivers appointed to the hotels and pubs are having an adverse effect on the entire market”.
Irish Hotels Federation Chief Executive Tim Fenn echoed David Madigan’s sentiments when he stated, “Access to credit continues to pose a major challenge for many of our members. The Government must do more to ensure banks facilitate the economy by supplying much-needed credit to viable businesses”.
But if the banks are simply taking the taxpayers’ bailouts and using them to stop up their losses, naturally, there will be little in the kitty for lending out and many feel that that’s just where we’re at.
Many believe that the banks simply don’t have the cash available to lend, thus the lack of liquidity in the property market.
If there was more liquidity in the property market there’d be a recovery in that market. Property values would bottom out and there would be some degree of activity, not as is – rigor mortis.
It’s the job of the banks to lend – why else are they in business? – while exposing themselves to the minimum amount of risk. That hasn’t changed and they’d probably now claim to be doing the sensible thing (at last).
But let’s face it, without an involved Government, the only way property values will re-inflate is for the EU and IMF to sort out the mess. It looks like the rigor mortis spreading through our economy has to be solved at European level or we’ll have to consider getting out from the €uro entirely and going it alone.
Could that be much worse?
