WHAT HAS NOT CHANGED
Per this document, the EU/ECB policy whereby every bondholder in every bank in every country will be paid in full still stands but now (at their discretion), directly through the ESM mechanism. Who funds the ESM? Why we do, all those nations that have signed up to it, so the bank debt is still being transferred to public shoulders. That is STILL wrong, the bondholders SHOULD still be made to take their own pain, but let’s leave that aside for another day.
We affirm that it is imperative to break the vicious circle between banks and sovereigns. With that one short sentence the EU has finally acknowledged that the policy it has adopted for the past four years, the policy whereby Ireland has been blackmailed into pumping €67.8bn of public money into failed private banks (mostly to enable them to pay failed bondholders in European, British and American banks), has failed, is wrong.
HOW IT HAPPENED
Mario Monti (Italy) and Mariano Rajoy (Spain) did what our Taoisigh Brian Cowen and Enda Kenny didn’t have the guts to do, they stood up to Angela Merkel and to the ECB and said ‘NO!’ to bank debt being made sovereign debt. If the ECB wants those bonds paid and those banks bailed out, said Mario and Mariano, then they will have do so themselves through the various mechanisms (EFSF, ESM) set up to deal with such emergencies. The subsequent debt will be bank debt, owed by those individual banks; critically, it will NOT be sovereign debt, it will not be owed by either Spain or Italy.
WHAT OUR GOVERNMENT MUST NOW DO
Monti and Rajoy have opened a door for us, we must storm through. No more pussy-footing – we’ve seen where that has left us. Even the 'Ireland' clause Enda is so excited about that was inserted – The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Will someone please explain to me what the blazes that actually means? As someone whose stock-in-trade these days is the written word I see only vague gobbledegook. If it had been along the lines of ‘The Eurogroup accepts that what was done in Ireland is wrong and will now right that wrong’ then yes, that’s clear, concise language. But the statement above?
WHAT WE MUST DO
We must march, we must protest what was done to us, we must demand our money back. How much money?
- c.€21bn taken from our National Pension Reserve Fund;
- €31bn in Promissory Notes, two of which have already been paid, €6.2bn of our money destroyed by our own Central Bank;
- c.€12bn borrowed from the ECB itself to fund the banks;
- €5bn "state aid so far" from Nama to the banks;
- All interest paid so far on the money we borrowed;
- All interest lost on the money taken from the Pension Fund.
There’s an expression in sport, in life – ‘you make your own luck’. What we’ve been given is a Lotto ticket but unlike the real Lotto we can work to ensure a win here, we can make our own luck.
Firstly, we must know that those who are negotiating on our behalf are demanding all the above, and it is NOT acceptable to be told – as we were again my Junior Minister Brian Hayes this week – that this will be kept secret. ‘Paddy likes to know’ – remember that remark by Enda Kenny? Well, tell us, because based on what you've done so far we just don’t trust ye anymore.
After the Greek bailout deal Ireland got a subsequent cut in interest rates, a cut we had repeatedly failed to negotiate for ourselves but which fell into our laps as a result of the deal done for Greece – this government claimed it as a triumph of their negotiating strategy. After this Euro Summit Statement Enda Kenny claimed a similar great negotiating victory for Ireland – neither was any such thing. We’re in the bind we’re in vis-à-vis the additional bank debt burden because of our passivity, we have this opportunity now because of the courage of others.
Now more than ever we ourselves, the people, need to make our voices heard. An opportunity has been presented to us, we must grasp it, we must become active. In Ballyhea and Charleville we’ll continue to march, we’ll continue to keep up the pressure. This Sunday, week 71, we’re in Charleville, meeting at the Library Plaza at 11.30am. Join us.
Regards, Diarmuid O'Flynn.