Subprime Nation

The definition of a Subprime Nation, on the website subprimenation.org is one that is falling short in its duty of care to its citizens. The basis of the term was influenced in 2007 by the subprime lending market in the US, UK and Ireland. The word subprime was added to the Oxford English Dictionary in June 2008.
The term has been used in Ireland since the General Election 0f 2007 under a number of variants Sub-Prime Nation, SubPrime Nation etc. The term was also used by Patrick Buchanan, in the US in 2008 but his reference point was primarily the US$ and may have been better termed Subprime Currency. The website subprimenation.org was registered in December 2007. The most obvious example of a Subprime Nation in 2009 is Zimbabwe.

The prime concern, in Ireland 2009, is that the country may be sliding into Subprime Nation status, not just because of the collapsing property market and the failing banks, but because the current government seems to be favouring the interests of a handful of property developers and prominent businessmen in its restructuring methods.
Background
Ireland (The Republic of Ireland) went through an unprecedented boom during the decade 1998 - 2008. Three key factors led the economic growth; a massive EU structural fund contribution (subsidy) in the 1990’s, a dramatic cut in taxes - especially corporation tax and a property boom fuelled by low interest rates. During the boom years there were a number of allegations, most of which remain unsubstantiated, that there was at best collusion and at worst corruption between key property developers, banks and leading politicians to create an Austrian Business Cycle Theory type housing bubble.
When the international banking crisis developed in 2008 the Irish Government moved swiftly to shore up a banking system that was heavily at risk due to over exposure to the Irish property bubble. The government gave an unprecedented guarantee to all depositors, without limit, that it would underwrite the safety of their monies in the Irish banking system. This guarantee is the financial equivalent of 35 years of (2007) income tax receipts. Whilst this has kept the banks open it has not allayed the fear of the Irish public who have dumped the shares in the major banks to such an extent that they are becoming penny stocks, using the SEC definition.
2009
The Irish government is now working on a plan to recapitalise the banks. There is growing public disquiet that public money is being used to shore up one bank which is not a national main street clearing bank - Anglo Irish Bank. This bank is seen as the developers bank, due to the proportion of its business which is transacted with a relatively few number of builders and developers. The Chairman of the bank had to resign recently as he was found to be borrowing €89M from the bank and concealing this debt from the shareholders by “bed and breakfasting” the loans, when the auditors were due, in conjunction with other banks.
The Austrian Business Cycle Theory, which was first advanced in the 1930’s, indicated that housing bubbles are simply giant scams orchestrated by banks. To quote from the relevant article:-
[The monetary boom ends when bank credit expansion finally stops - when no further investments can be found which provide adequate returns for speculative borrowers at prevailing interest rates. Evidently, the longer the "false" monetary boom goes on, the bigger and more speculative the borrowing, the more wasteful the errors committed and the longer and more severe will be the necessary bankruptcies, foreclosures and depression readjustment]
The concern of large sections of the Irish people is in bailing out Anglo Irish Bank with public borrowing, that future generations will end up paying for, will be the act of a Subprime Nation where the scarce resources of the state will be used to give a “soft landing” to a few businessmen at the expense of many and that in doing so the state will be one that is falling short in its duty of care to its citizens.

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