That we have a major problem in the Irish economy at the moment is beyond question. How to solve it? The same way you solve any other problem, using the same basic principles – you go back to the source, then take whatever steps are necessary.
Leave aside the sloppy introduction of the euro, the easy money that then became available to Irish banks, the lack of oversight here and in Europe on the reckless inter-bank lending; the source of the current Irish problem is the blanket guarantee given to the Irish banks by then Minister of Finance Brian Lenihan. When the mist cleared and the money markets saw the emerging mountain of bank debt that Ireland taken on, on top of its own growing sovereign debt caused by the budget deficit, they did the simple arithmetic and came up with the simple conclusion – couldn't be done. Consequent to that conclusion they raised the rates on Irish government borrowing, eventually forcing us out of the market and into the embrace of the troika. In that embrace we remain.
Under extreme duress and with seriously deficient information, the government legislated for that guarantee; the situation is now even more serious, we know the full extent of the problem – if we’re to get back into the money markets any time soon the government must now introduce new legislation to right the wrong that was done back then.
The situation is stark; that bank debt piled on top of our sovereign debt puts us in an unsustainable position, MUST be removed. It is not our debt, was never our debt, will never rightfully be our debt, but is being forced on us by the ECB. If we don’t pay even the unguaranteed bank bonds in the zombie banks, ‘a bomb will go off in Dublin,’ said Minister Leo Varadker. He was speaking metaphorically of course but the threat, also alluded to by many government spokespersons over the last couple of shameful years, is real. That is extortion, ‘the practice of obtaining something, especially money, through force or threat’, the Oxford English dictionary definition.
When real bombs were going off in Dublin, Belfast and London the discussion didn’t centre around having no choice but to accede to the demands of those who were doing the bombing, it centred around resistance at all costs; within the Irish media, however, what we hear more than anything else is ‘Ah but, what happens if we don’t pay!’
There should be NO debate, none; in using its financial muscle to extort under threat tens of billions from the Irish exchequer, what the ECB is doing – with the EU and Irish government complicit - is wrong. If there is to be any debate it should be around that fact. We are being forced to pay not just the losses on failed for-profit private inter-bank deals, we are being forced also to pay the profits (the coupons) those bonds would have made, and because we don’t have the money now to pay those bonds, we are being forced into a situation where we have to borrow, assume new loans, on which we have to pay interest.
This is a crime. It’s happening in full view of the world. The fact that it’s an official major organisation – the ECB – doing this extorting doesn’t make it any less of a crime.
We should refuse, immediately, to pay a further cent in bank bonds. We should refuse, immediately, to pay a cent on the Promissory Notes. We should introduce and implement, immediately, legislation to undo all the damage that’s been done to our economy. Enough of this false debate; we must start to stand up for ourselves, we must fight back.