Why don't banks pass on the benefits intended by monetary and fiscal policies? The Irish Experience

In his column in the Independent, Shane Ross looks at what is happening in the Eurozone and concludes that Ireland was played for the fool when dealing with its banking crisis.

Specifically, he looks at Ireland's willingness to defer to the bankers and what Ireland did not receive in return.

I knew that our world was going to end last week ... 

We share similar views about the banks, the euro and we condemn the identical, but failed, policies being pursued by the last government and the current coalition. 

Above all, free marketeers and socialists unite in the belief that the Irish government has put the interests of Eurocrats and bankers above those of Irish taxpayers (free market speak) and workers (Joe Higgins speak) . 

Happily the conflicting ideologies want to put Ireland first, insisting that both governments have surrendered the nation's independence to the threats from outsiders. Both regimes relentlessly practised the doctrine of deference. 

Events last week confirmed our worst fears. Too late. The chickens have come home to roost. 

The doctrine of deference has delivered all right, but to our detriment. This weekend, the devil is at the door. 

The devil struck with venom on Thursday when RTE's news led with the story that Germany and France were in intense talks about the possibility of an exclusive, but strong, eurozone. No doubt they will include Holland, Finland, Belgium and Austria in the new club. They are seriously pondering a relaunch, a strong currency. 

Ouch. Where would that leave Ireland? 

Well first of all Sarkozy and Merkel do not care a hoot. We will be dumped. In Angela's and Nicolas's 'Plan B' Ireland can go jump in a lake. Ireland can join other basket cases like Italy, Greece, Portugal, Spain and maybe Cyprus in a second, ultra-soft eurozone. We will bring our troubles and our debts to the party hosted by the successors of Berlusconi and Papandreou. 

We will be thrown to the European rubbish heap, facing a crisis a week with the other club-med cowboys. A nightmare beckons.... 

It could all have been so different. Imagine if we had burned the bondholders back in 2008, 2009, 2010, or even under Enda's government in 2011, the crisis would have been over by now. We would be in the recovery room. 

On the downside, we would have been in the European doghouse, ticked off by Nicolas and Angela and deeply unpopular with European banks. Not a bad place to be. 

The European banks are now smirking at our doctrine of deference to them. Ditto Angela and Nicolas as they chart their betrayal. 

Even at home the major banks, true to form, eyeballed our most powerful ministers at last week's meeting over interest rates. They told Ireland's sovereign government to jump in a lake. 

They too were ingrained with the doctrine of deference.