Economists define sunk costs as a cost that has already been incurred and cannot be recovered. When thinking about the Irish government’s shareholdings in the pillar banks, it may be useful to start think about the initial outlays as sunk costs. In my view, there is little chance that the government will recover its initial investment in the banking system. The collapse in net interest margins and the prospect of an extended period of financial repression mean that banks will find it exceptionally difficult to make profits over the medium term. Consequently, it is timely to begin a discussion about…

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