Brian Cowen (left) and the late Brian Lenihan
the bank guarantee is their legacy..
The day of the "bank guarantee" doesn't have the ring of a momentous occasion, the sort that will feature in history books for generations. Yet, in Ireland, the day of the "bank guarantee" ranks right up there with all the other tragic dates in Irish history.

Granted the bank guarantee doesn't rival the Famine in terms of epic tragedy, nor does it really compare with any of Ireland's lamentable, failed uprisings or the Civil War, but nonetheless that date of the Irish bank guarantee will be one that will live pretty much "in infamy" for generations to come.

September 30, 2008 was a black day for Ireland. From that day what remained of Ireland's sovereignty and independence was doomed. The guarantee Ireland into a financial straight-jacket that gradually morphed into shackles.

On that day the Irish government pledged that all the debts owed by Ireland's banks were backed by the state. €400 billion - most of it owed to banks in other EU states or the US - was now guaranteed by us, the taxpayers of Ireland, so that those non-Irish banks would not experience the pain that the free market would have imposed on them.

I remember that morning very clearly. I remember listening to the news as I drove, mumbling to the radio. Two weeks earlier Lehman Brothers had collapsed and that was bad enough, but suddenly, with the Irish government's announcement of the bank guarantee everything seemed much darker.

I was still sitting in my car listening for reaction and trying to understand exactly what the bank guarantee meant when I heard popular talk show host Gerry Ryan proclaim his pride in the Irish government for taking so bold an action. I knew what he meant - the guarantee did seem like a massive preemptive strike to deaden talk of bank failures - but I remember practically shouting at the radio that the government better have had a good, long look at the banks' books before they guaranteed them. "We're all on the hook, now Gerry", I shouted before I finally turned off the radio and got out of the car.

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To be honest I didn't fully grasp all the implications at the time, but I knew Brian Cowen (Taoiseach - Prime Minister) and Brian Lenihan (Minister for Finance) had just bet the house - our house - on the banks. I trusted that they knew what was in the banks' books. They didn't. I trusted that the top bankers had been straight with the Cowen and Lenihan. They hadn't. I trusted that the people at the top of Ireland's political and financial food chain would not squander Irish independence. They did.

Now four years on it is clear that the bank guarantee was a calamity. Perhaps there were no good answers at the end of September 2008. Perhaps we were facing a disaster regardless of what path our government took. We will never know for sure, but we do know that things could hardly be much worse.

Over the past four years the economy has declined sharply and unemployment has exploded to around 15% and now that other age-old Irish phenomenon - emigration, which most of us had thought was gone for good - has surged back into the headlines. Last year the net emigration figure was 34,000, up from 27,000 the year before.

That figure will not fall any time soon either. Once emigration gets going it is hard to stop. In fact, if the economy in Britain begins to pick up the outflow from Ireland will only accelerate. Some people like to point out that a large chunk of those who have left recently are "foreign nationals." That is true, but the rate that "Irish people" are leaving is also rising.

Regardless, what matters is not the origins of those leaving, but the age and it is mostly young adults who are leaving. This is only going to worsen Ireland's economic situation because people in their 20's pay the most taxes compared with what they demand from the state.

As the number of young people declines so does the amount available to the state to pay state workers, whose salaries the state has vowed not to cut, and to fund education, health and the social programs for the elderly, the disabled and the young.

This is generating a dependency bubble in Ireland, where more people will be relying on fewer people paying into the system. It's unpalatable but inevitable that cuts are coming to all those dependent on state funding. Otherwise the bubble will burst.

All of this can be dated back to the bank guarantee. Of course the guarantee was a reaction to a crisis created by mismanagement and malfeasance over a number of years, but the guarantee was the wrong step at the time. Too few questions were asked of the bankers. Too little of the burden was passed on to the non-Irish banks that had lent - recklessly - to Ireland's banks. Cowen and Lenihan understood too little about banking and finance and risk and, as it turns out, too little on gambling. They bet; we lost.