A year ago – give or take a month – the world’s financial system imploded with some of the biggest investment banks in the world like Lehman Brothers and Merrill Lynch, Wachovia and Bear Stearns going bust or being taken over by larger, survivor banks with the US Fed’s blessing (and loans).

Here, as Anglo Irish Bank and the big two Irish banks teetered on the edge of bankruptcy, they too were rescued by the Irish and European taxpayer, and all deposits and loans in the Irish banks were guaranteed. The original €20,000 deposit guarantee in nearly all Irish based banks was raised to €100,000.

So what’s changed in the year, aside from a surge in unemployment, a sharp rise in taxes and levies and the setting up of Nama, the second big intervention by Irish and EU taxpayers to continue to preserve the bankrupt banks?

Unemployment is still rising – the low September job loss figures are a blip as thousands of people already on the dole and entering education or training courses.

Meanwhile, house prices are continuing to fall and the banks continue to hoard what cash they have rather than lend it out.

Yet there has been a surge in the stock markets, with the biggest beneficiaries – the sectors and companies that are the least stable and plunged the deepest like banks, insurers, property and motor industries – the biggest beneficiaries.

Clearly, bail out billions has found its way back into the asset markets though not back onto the high street or into taxpayer’s pockets.

The other thing that is continuing as usual is the stream of forecasts by stockbroker, bank and central bank economists (including at the IMF) who claim that the tiny growth in western economies – most of it generated by government intervention – is a sign of recovery and the end of recession.

Readers of this column know by now that the tea leaf reading record of economists who are paid to help sell financial products (and even the IMF ones who are paid to keep their political paymasters happy) has not been very good.

The western world’s economy, and our own, will pull out of recession when real, sustainable jobs are being created again, when burdensome debts are paid down and people are confident that their incomes are secure and they have sufficient excess earnings to spend on non-essential goods.

So long as earnings are being appropriated by governments in order to bail out bankrupt banks, people will keep their cash in the bank and not in the shops.

This stock market rally will keep going only so long as the traders believe the cash bail-outs will last.

Any latecomers to the market – people who think it’s now time to join the seven month long party – should have a quick exit strategy in mind. Be aware too of the currency exchange risk you take buying US or UK shares with a comparatively strong euro.

While the nation has ratified the Lisbon Treaty, there may be a small surge in the Irish and European stock markets.

Nevertheless, the weakness in the financial sector, a year on, pretty much remains.

Even the cheerleaders at the IMF, who have been unable to make the distinction between GDP growth led by government spending using borrowed or created money and the real thing, admitted in its latest report that world banks still have another $2.8 trillion (yes, trillion) equivalent in debt to write off, compared to the $1.3 trillion written off in the past year. Yikes!

All this information amounts to pieces of a jigsaw in a bigger picture that is probably only partially finished.

The next big piece to be fitted here in Ireland is what happens in the December budget when the government will finally announce the first round of cutbacks.

When combined with all the income, pension, tax, PRSI levies and other changes since last October, those spending cuts reductions in universal benefits and services will probably amount to a real income reduction of 20 per cent or more.

Are you prepared for such a loss? Have you worked out a property financial strategy for yourself and your family? Are you looking far enough ahead – to when your children will need to be educated or trained, or to your own retirement?

Starting next week, this column will be looking at some ‘outside the box’ measures, as well as conventional ones, that you might want to consider to cope with what could be the new, ‘long emergency’ in Ireland.

Everything you own or earn should be put under scrutiny; if this past year has taught us anything, it’s that nothing can be taken for granted anymore.


Jill Kerby welcomes reader’s letters. Please write to her via The Munster Express, 37, The Quay, Waterford or via email at jmkerby@indigo.ie