The current global banking crisis is a curious thing indeed. Headlines shout doom and we reel at ominous statements like “Banks Stare at Oblivion”. We are concerned as young fellas in smart suits, some who look like they have just made their confirmation, emerging in droves carrying cardboard boxes from places like Lehman Brothers Bank on Wall Street. We are assured it won’t effect us here in Ireland, but at the back of our minds we know that we are part of the global financial structure and while there may not be a need for a consignment of cardboard boxes to bring home the pictures of the kids and the pen you got as a company present, surely the ripple effect from such an implosion will have to have some impact eventually.

Hundreds have lost their jobs and millions have been wiped off shares as banks and insurance companies are being eaten up wholesale. The problem I have with all this is that I can see what’s happening but I really don’t understand the ‘why’ of it all. Nobody has really cared to explain it. We hear strange terms like ‘short selling’ or ‘sub prime’ which, to be honest, may as well be a foreign language.

If I’ve picked it up correctly, sub prime lending was where the banks in America gave mortgages to hundreds of thousands of people who were ‘dodgy’, to say the least. There was a very high risk that they wouldn’t pay back on the loans. Who thought that lending to these people was a good idea? Then when the customers, as predicted, didn’t pay back on the loans the banks packaged up all the bad debt and sold it on to another financial institution! How in the world was that a solution and why on earth did the second crowd take it on? I’m baffled. Short Selling of shares is more like high end gambling.

Here is an oversimplification of how it works as I understand it. On Monday I offer to sell you shares in The Bloggs Company for €5 each and promise to get them to you by Friday. The thing is I don’t actually have any shares in The Bloggs Company at the time of offering them to you, but I am hoping to buy them on Tuesday, Wednesday or Thursday at a price lower than €5 each and therefore my profit comes from the difference when you pay me. Basically I’m gambling on the fact that the share price will go down. Apparently this type of behaviour is also listed amongst the contributory factors in the crisis, so much so that it has been stopped here in the short term.

Short selling and sub prime lending are all well and good but surely even those two combined couldn’t have caused the current meltdown. I’d like some plain speaking person to come out and tell us exactly what has happened and why. Someone, somewhere was profiting from all this. I have no doubt that even if the sub prime situation seems a ludicrous risk to you and me there is something behind it that made sense to the institutions handing out the money. Banks generally do not operate on a social responsibility basis. Banks are not there to mind your money or be benevolent; they are there to make profit. Looking at them individually banks can fail due to poor management and bad decisions from the humans in charge.

There is also the situation where some failures were down to outright fraudulent behaviour. Although I don’t understand the financial world, a basic law of physics tells me that the weakest link or links in the chain will always break. However even the weakest link won’t break unless tension is put on the chain to begin with. So what exactly was that tension? Could it be greed perhaps?

Although the experts here tell us that we’re not facing the same problems as Wall Street, the question remains as to how we avoid putting tension on our own chain while we fix the weaker links here? Especially as some of that strain comes from our own individual consumerism. It’s hard because we have become soft. We now live with certain expectations. Tightening the belt has a very different connotation today than it did in the 1980s. Our standard of living has gone up, as has the number of bathrooms in our homes. All new homes come with at least one en suite, a main bathroom and perhaps a downstairs convenience as standard. While bathrooms are not the problem, they are indicative of what some people consider ‘basic needs’. Other indications also point to our consumerism; walk-in wardrobes and wall to wall mirrored storage spaces. We never needed these before because we didn’t have so many clothes.

While the greater financial crisis blows above our heads most people are wondering how it is going to affect them personally. If an Irish bank does collapse what are the ramifications for the ordinary person? What I find throughout this financial storm is that there are few straight talkers out there who are willing to lay it all out in plain English. We hear an ambiguous sound bite from the Financial Regulator on the news or some other financial analyst, but the nuts and bolts of the problem are ignored. Indeed on one TV programme in the last week a financial analyst predicted Armageddon while the bank representative said ‘there’s nothing really to worry about’. Who is telling the truth? It must be out there somewhere.

Their efforts to cause ‘no panic’ seem to be inadvertently pushing the panic button. Some have good reason to panic, their pensions are going up in smoke and the shares they invested in have almost bottomed out and nobody is saying why. There’s another thing, if millions are wiped off shares in a day where has the money gone?

Fortunately I don’t have a fortune sitting in a bank account to worry about, I don’t have a large portfolio of shares that is now hemorrhaging money and I’m not facing retirement any time soon, but what about those who can relate to any or all of these situations? Honesty is what is needed right now, not this whitewashing that’s going on. Maybe the situation will have ironed itself out sufficiently by the time the ripples from the American fiasco reach our shores but either way, hold on to your hats and your money because there is no doubt that domestically we are in for a bumpy road, strewn with lies and half truths, for at least another twelve months.