Published: Thursday, 12 Nov 2009 | 9:21 AM ET

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A winter of discontent is in store, as the Irish fume at a bailout plan which could burden a generation, and they say is way too generous to the banks who lent so freely when the "Celtic Tiger" was roaring.

Nurses, fire-fighters, senior civil servants and thousands more public sector workers are threatening to strike if their pay is cut to limit the damage on public finances, which economists see as inevitable in next month's budget.

While the public complaints echo criticism of bailout plans around the world, the options facing Ireland's government are limited.

Its economy will shrink by 7.5 percent this year, a steeper fall than any advanced country aside from Iceland, according to the International Monetary Fund's latest estimate.

A euro member, Ireland has one of Europe's biggest budget deficits. The European Union has given it until 2014 to start shrinking it, but spending cuts are unavoidable.

"There is huge fury among ordinary people, who sense that the taxpayer is being made the patsy for what went wrong," said Richard Bruton, finance spokesman for Fine Gael, the main opposition party.

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Prime Minister Brian Cowen's ruling Fianna Fail party, its majority in parliament thinned by resignations and by-election defeats, may face a snap election if backbenchers and coalition partners the Greens break ranks in the face of wide protest.

A lightning conductor for the problem is NAMA, or the National Asset Management Agency, the euphemistic name of a complex "bad bank" deal the government is trying to push through. Parliament is expected to approve it on Thursday.

A 54-billion-euro ($81 billion) sink for toxic assets to complete the clean-up of ailing banks, it shows taxpayers paying for the banks' recklessness and greed, people say.

"If you were passing by a bank or a building society here you were in danger of being lassoed and brought in for a loan," said John Roche, 70, a retired insurance worker.

Now students and the rising ranks of unemployed find it tough to get credit.

"We were offered overdrafts every single month. Now, even if you have the ability to repay and can state that clearly, there's no money. From a student's perspective all I can say is thank goodness for credit unions," said Tiarnan Byrne, 19, a law and business student at Trinity College in the heart of Dublin.

Radio phone-ins and TV chat shows discuss the crisis and planned rescue with burning intensity; workers are taking to the streets and the country's largest public sector union has already called a 24-hour strike for later this month in protest at proposed cuts in public spending.

"There's inevitably going to be a burden, and there's a worry it's not going to be shared equally," said Byrne at Trinity. "The main fear is the banks will use it to balance their books and not ship it into the economy."

NAMA Time

The "bad bank" is needed to save the economy, says finance minister Brian Lenihan, who masterminded the plan.

It has already staved off nationalization of more lenders and provides some much-needed certainty and clarity, but will spark another wave of change in an industry that has already been radically shaken up in the last year.

Anglo Irish Bank has been nationalized and the state holds indirect 25 percent stakes in both Bank of Ireland Plc and Allied Irish Banks Plc, in return for 3.5 billion euros provided to each.

With the European Central Bank behind it, NAMA has been designed to inject liquidity into the wider economy.

People are confident the country will emerge from a calamitous property collapse that contributed to the recession, but after 15 years of unprecedented success, it stings.

The scheme's capacity for kick-starting growth is viewed warily by the public, including by many younger people -- or "Celtic Cubs" as they have been dubbed -- who have not seen any of the boom and busts of the past.

"The job market has completely shut down," said Peadar Donnelly, 24, who has just graduated from Trinity as a software developer.

The IMF predicts a further 2.5 percent fall in the economy next year which would be worse than in any other developed country, and contrasts with such fellow eurozone economies as Germany and France already emerging from recession.

It expects unemployment to leap to 15.5 percent from 4.5 percent in 2007.

Ratings agency Fitch last week cut Ireland's credit rating by two notches, citing the burden of the "bad bank" plan on top of its deep recession, but said the outlook was stable and at least Dublin was taking action.

There is little room to bargain on the cost cuts expected next month, the government says, given the deteriorating fiscal deficit.

"The patient has finally stabilized in intensive care," Lenihan said last week.

More Expensive then Manhattan

Banks are not alone in attracting blame. Aggressive speculation by property developers, politicians encouraging growth as tax coffers swelled, pressure from shareholders, and too-lax regulation also helped inflate a bubble that saw Dublin real estate prices surpass property values in Manhattan.

The crisis also uncovered a series of scandals at the banks. Most swirled around Anglo Irish, including secret loans to directors and to a group of investors dubbed the "golden circle," which critics say reflected the excesses of the era.

Anglo set the pace of the lending charge that created the property boom and bust, and many Dubliners want justice.

Ministers have said everyone found responsible for the scandals should face the full force of the law, though investigations into the scandals surrounding Anglo are being carried out by several authorities, and none are expected to yield a result for some time.

Former Anglo chairman Sean FitzPatrick has become public enemy number one, in the same way that the former head of Lehman Brothers Dick Fuld and the Royal Bank of Scotland's Fred Goodwin attracted public ire in the United States and Britain.

"We got it badly wrong. Trust in our sector is at its low ebb," said Pat Farrell, chief executive of the Irish Banking Federation. "We will have to rebuild our reputation brick by brick."

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