How do you boil a live frog (had you a cruel enough mind to do so, of course!)? You put it in cold water under a low flame, and with the temperature rising only very gradually the frog will sit happily in the pot until – well, until ‘hopping it’ is no longer an option.
In the matter of the bank bondholder bailout we’re the live frog. We were placed in the pot in September 2008 when we were told that the blanket bank guarantee was going to cost us ‘only’ €5bn – this was all it was going to cost us to ‘save’ the Irish banking system.
Gradually the temperature was raised, the true cost emerging a few billion at a time. We began to get a bit antsy in the pot, talk of letting one or two ‘zombie’ banks go to the wall. In November 2010 the IMF came to town to ‘rescue’ us, and the IMF planned to do what it always did in such cases – force a write-down of debt through burden-sharing with the creditors to enable us to get comfortable again.
Riding shotgun with the IMF on this occasion however was the ECB, together with the EU, and they had a different agenda entirely. Nominally they were here for our benefit; the truth is they had one thing and one thing only on their joint mind – to protect their own banks in Europe. The Irish? They had to settle us in the pot again and so all those billions were put out there, ours to borrow from as we needed over the next few years.
A bailout it was called, a bailout for Ireland, and everyone settled back. Did anyone notice the temperature still rising? Did anyone notice that in stark contrast to the normal IMF modus operandi in every bailout there ever was before November 2010, not alone did we not get a cent of a debt write-down, we emerged from that ‘bailout’ with additional locked-in debt, private bank debt being made sovereign? Bailout? Oh there was a bailout alright – we bailed out the banks.
We continue to do so. On Wednesday this week AIB pays out a senior unsecured bond of €1.5bn; it marks the end of an eventful six weeks for a bank we own 99.8%, and to which we have already contributed €20.7bn from our Pension Reserve Fund; ‘recapitalising’ is what it’s called, robbery is what it should be called. On February 20th AIB also paid a bond of £750,000,000; on March 2nd, a bond of $250,000,000, on March 19th a bond of €1,000,000,000; added to the €1.5bn on Wednesday that’s over €3.5bn in the last six weeks, €3.5bn of our money, and not a whisper of protest from any of our national media.
Yes, we’ve ‘saved’ our banks, five of them with their doors still open, but for what? To service Irish industry, to finance small and medium enterprise, to facilitate those who would like to take out a mortgage? Or to service the billions in bond debts still remaining in those five banks, an average of €14bn/year for 2012/13/14/15?
We can continue to sit complacently in that pot, and in time the ECB will enjoy some sumptuous frog’s legs. Or we can jump, because there IS still time.
Even as the Promissory Notes argument is sidelined for the moment (and tell me – how many of ye would settle a debt you were disputing with your bank by taking out a loan with a different bank for your children to pay? Because that is exactly what Michael Noonan did at the end of last month, a government bond of €3.06bn that will ‘mature’ in 2025 – he claims that as a victory?), let no-one tell you that the bank bonds are a dead issue, unless of course you consider the silent and uncontested payment of €1,500,000,000 this week to be of no importance to us.
While the closure of A&E wards around the country, the cuts in education, the inequitable Household Charge, etc. etc. are all worthy causes, all roads lead back to the bank bailout and the unbearable burden that was thus placed on our shoulders.
59 weeks now we’ve been protesting this in Ballyhea and Charleville; tomorrow in Charleville we are holding a special march to mark our anger at the payment of that €1.5bn bond, meeting at the Library plaza at 5.15pm (appropriately, opposite the AIB bank); on Sunday next we march in Ballyhea, meeting at 11.30pm outside the church. Take that leap, join us before it’s all too late.
Yours sincerely,
Diarmuid O'Flynn.
