Friday 19 July 2013

MEETING WITH THE ECB Dublin, July 16th 2013

Fiona Fitzpatrick, Charleville Says No campaign group
Diarmuid O'Flynn, Ballyhea Says No campaign group
From the ECB: Two officials who wished to remain anonymous.

The meeting got off to a dodgy start, yours truly blundering right into a gaffe of my own unthinking creation, expressing my disappointment that we weren’t meeting more senior officials (Diego Rodriguez, ECB Troika mission chief, had suffered a family bereavement in Spain and wasn’t able to make it back to Dublin in time); the two officials who had actually taken the trouble to meet us took it well but I spent an uncomfortable few moments trying to extricate myself from that one. Turns out anyway they were a lot more senior than we knew.

First off, it should be said that in the near 90 minutes we were with them we did most of the talking, they did most of the listening; that's not a ‘wishful thinking’ statement, it’s fact – they did listen, were both very much tuned in to what we had to say, took copious notes as we went along.

We began by outlining who we were and where we were coming from. Before we even got to our proposals, however, we said we felt there were two great lies we had to address, two great lies being told across Europe and around the world about Ireland and the Irish people.

During the bubble inflationary years (I hated the Celtic Tiger term even then) Ireland was awash with money and yes, too many Irish people did party, did piss and puke their way outside the pubs and clubs of Ireland right through that period.

Too many people went away and bought the big four-wheel-drive fuel-guzzling monsters, that's true too.

Many of us headed for sunnier climes a few times a year, many bought the holiday home in France/Spain/Portugal, many invested in second and even third houses here at home, the retirement nest-egg. 

Many first-time buyers took out mortgages they can’t now afford on homes that were massively over-priced.

We overpaid ourselves also, many of us, in both the public and in the private sector.

But did we all 'party'? No, we did not. Did we all engage in all or even any of the above? No, we did not. Did everyone in Ireland profit during those years? No, absolutely not.

A question though - are we Irish not entitled to drive big cars, not entitled to a holiday home, not entitled to a standard of living enjoyed by many of those who would criticise us? No? That old Irish guilty/inferiority complex is being exploited yet again.

Because here's the thing; even accounting for those who did engage in all or some of the above, did that cause the world-wide banking crisis in which we found ourselves caught up? No, it did not. Did it cause the euro currency crisis in Europe? No, it did not.

We elect people who select people to do certain jobs; if those people don’t do their jobs properly (and patently the Irish Regulator did not), what can the people do about it? What do the people even know about it? If those we elect make false promises, what are we supposed to do when they turn around and renege on those promises?

NOTHING the mass of the people did or didn't do in Ireland during those cursed years caused this crisis. It was the money, the cheap billions flowing in to the cowboy banks after the launch of the euro, that money then swamping this economy. That was the source of Ireland's problem.

Between the bankers and their developer and political friends, probably not much more than 100 people at the very top were the link-men between Ireland and the foreign banks and financial institutions from which came those billions. From the recently released Anglo tapes we get a flavour of what those guys were like - cowboys, gamblers, wide-boys on one hand, incompetents on the other.

Even after a cursory listen, are those the kind of people who should have been entrusted with the savings of hard-working Germans/French/Dutch etc? But they WERE entrusted with those savings, and here is probably the most relevant question of all - by whom? By those to whom those depositors had entrusted their money, the banks and financial institutions of Germany/France/Netherlands etc.

They were the ones who poured those tens and hundreds of billions into Ireland - why is the finger never pointed at them? Where was their duty of care to their own depositors? Where was their due diligence? What about the party they were having in the early years as the profits flowed back from Ireland?

No sir, the notion that we all partied, that we brought this on ourselves and thus now must pay the price - nonsense.

And speaking of Germany and the idea that this is costing them billions: no country profited like Germany in the first decade of the euro; no country has profited like Germany since the crisis broke. €80bn the national government has saved in its bond dealings; add in what the regional governments have likewise saved, add in also the profits now being generated in German banks and financial institutions as deposits have migrated to there from the affected European countries, throw in the billions their bondholders have shared from the €69.7bn given by the Irish people, plus their chunk of the €60bn likewise given and now likewise being paid for with interest by the people of Greece – against all that additional income, how much has Germany actually given (as opposed to loaned) to Ireland?


We can see how this impression is being created, the headline numbers being quoted to back up that assertion. But look behind those numbers.

The world is told that Ireland's unemployment numbers are finally falling, dropped below 14%, corner turned and green shoots.

The truth is that when all the various government schemes are taken into account, when all those who are on welfare but in part-time employment are taken into account, the number soars to over 25%.

Never spoken of when the above headline figure is being quoted but were it NOT for emigration, where would Ireland be? People are leaving Ireland at levels not seen since the 1840s, the Great Hunger, when the population almost halved in only a few years. It’s not just young people leaving either, though they are and in droves, a small club in Mayo recently picking a notional starting 15 who have all emigrated. It’s entire families, it’s people in their 50s and even in their 60s, forced out by the circumstances created by these austerity programmes.

Yet another statistic overlooked when Europe, having been so misinformed by our own officials, talk up how Ireland is doing under the austerity programme. There are so many casualties at the moment but these are the ultimate, a growing number of people who feel trapped, can’t see any other way out and thus act, not because they wish for death but because they can't handle life anymore, not this life anyway.

You want to know how a country is doing, look at the retail sales, look to commercial vehicle sales and see how much confidence business has in the immediate future; in Ireland’s case, little or none. They’re the ones doing the highest and the heaviest mileage, they’re the ones who need to keep their fleets up to date; they’re the ones now hedging their bets.

This week another DIY chain, Homecare, went into Receivership, joining Atlantic Homecare and B&Q; not alone has the construction industry folded, people can’t even afford to maintain what they have.

Another myth. Aside from the fact that as pointed out by the EU itself, many of those exports aren’t actually fully produced here at all, there is a growing trend away from Goods exports to Services exports, the latter far less beneficial to the Irish economy – high-end jobs, many of them filled from outside the country anyway but certainly having very little impact on the local unemployment figures.

The normal formula used when calculating national debt sustainability is GGD/GDP, Gross Government Debt as a percentage of Gross Domestic Product. Given what’s already been pointed out vis-à-vis the skewing of GDP in Ireland by the multinationals, however, the more pertinent formula for us would be GGD/GNP, Gross Government Debt as a percentage of Gross National Product. 

According to this Sunday Business Post article, at the end of 2012 Ireland’s national debt stood at just under €192 billion, equivalent to 118 per cent of gross domestic product (GDP). Apply the debt figure to GNP, however, and we get a truer picture for Ireland – 192/133.4 x 100 = 144%. 

Worse, that’s not even the true national debt figure. With its own remaining bonds of around €25bn, with IBRC and its exposure now in its lap, though NAMA is nominally privately owned (51% in ‘private’ hands) in reality it’s our baby, fathered and mothered, bred and buttered by us. Add in those bonds to the figure above, where does that leave us?

Sustainable? Given that we’re in recession, unlikely to see any real growth for years, that debt figure increasing in bounds? Economist Michael Taft puts it very succinctly – a bloody disaster. Constantin Gurdgiev, an economist from the another side of the field, puts it as colourfully – the light at the end of the tunnel is an oncoming train.

The ECB representatives gave us all the time we needed to outline the above, without interruption. It took up a sizable chunk of time, time that was very precious – when we began this campaign we hadn’t expected to have to actually present Ireland’s case for debt writeoff ourselves and here we were spending all these precious minutes in a preamble, having to debunk lies about Ireland, lies being spread by our own government. In the circumstances, however, we felt it was necessary.

Having finished the opening statements, we then got to present our proposals for bank-debt write-off for Ireland. There are three items in those proposals but only the first pertains to the ECB, the destruction of the €28.06bn in Promissory Note Bonds currently held by the Central Bank of Ireland.

Those bonds are what’s left of the €30.6bn bailout of two banks in 2010 (Anglo Irish Bank €25.3bn, Irish Nationwide Building Society €5.3bn), at a time when they were known to be already insolvent. The Irish government of the time issued the notes, the ECB gave the okay; the legality of those Promissory Notes is now being tested in the High Court but the even bigger question is their legitimacy, at any moral or ethical level.

Just as with the original Promissory Notes themselves, this is €28.06bn being borrowed to ‘burn’; that’s worth repeating, it’s billions being borrowed only to be destroyed, and by an already massively-indebted economy, every cent of which was for the benefit of zombie banks to pay failed investors, not a cent of which went to the people who are now expected to pay interest on all those destroyed billions and whose kids and grandkids will then have to pay the original €28.06bn. Obscenity piled on obscenity.

We want the ECB to allow the total destruction of these bonds. It was done, it can and must be undone. How? How can this be done within the ECB's own parameters? We don’t have the answer to that; we weren’t consulted when this debt was being imposed on us in the first place - don’t ask us how it can now be lifted.

Up to now the meeting had been almost completely one-sided; at this stage an exchange of views began. 

As is included in the proposals, we stated our position that we believed this crisis goes back to the launch of the euro.

It was a flawed design, stated as such as far back as 1998 in a Financial Times article by renowned Belgian economist Paul de Grauwe, who then created a fictitious scenario that subsequently turned out to be not so fictitious at all. There were major structural flaws in the design, all of which was known even within the EU itself at the time, and still it was launched. That was a grievous error.

However, because we were part of the Eurozone, signed up to all this, we share the blame and thus must share the cost. Sharing is the key word here though; as yet no-one seems to have taken any blame for the flawed design – so be it. But Ireland has been hit disproportionately, massively disproportionately, with the cost.

How massively? Our gross bailout cost (not including either the assets we now hold – a few billion – or the interest paid on the loans, the coupons on all the bonds, the interest lost on the €20bn taken from the National Pension Reserve Fund) is €69.7bn. From the 2011 Census, that amounts to over €15,000 per capita in Ireland. The equivalent for Germany? Over €1.1tn, that’s over €1,100,000,000,000. Would Germany tolerate that? Never. Yet we’re expected not just to accept that burden but even to be grateful to our European partners for their assistance.

As with Mr Honahan in our meeting of the previous day (report here), Ireland’s legal obligations were put to us, the fact the ECB is duty-bound to implement the various Treaty rules; as with Mr Honahan, we asked where the legal protection for the people stood in all this.

The ECB reps spoke of Ireland’s unilateral action in 2008, the infamous Blanket Bank Guarantee, spoke of other Irish government actions taken on their own; they explained also that the ECB didn’t get involved officially until 2010 by which time much of the damage was done. 

We countered with the argument that in circumstances where there were no European-wide structures, no guidelines even, Ireland’s leadership were acting as best they saw fit to protect Ireland’s interests. Misguided actions as it turns out, deliberately misguided as shown in the Anglo tapes but irrelevant; the real fault lay with us as Europeans, all of us, and with that seriously flawed currency launch, the lack of foresight, oversight and structure.

Insurmountable legal barriers, that’s what we’re told we face, and it was pointed out to us that if Ireland unilaterally decided to destroy the Promissory Notes bonds now held by the Central Bank of Ireland, there would be serious repercussions. 

Daniel O’Connell (Catholic Emancipation), Abraham Lincoln (slavery), Nelson Mandela (apartheid) all faced ‘insurmountable legal barriers’, ‘serious repercussions’; we know what happened. Our government has balked at these challenges; Ballyhea, Charleville, Ratoath, Tralee etc – no-one in this campaign will be thus stopped. Debt slavery for us and for several future generations? This is odious debt, we will rid ourselves of it.

We have done a lot of research on all of this, we link to many experts in the above counter-arguments to the lies being told about us, and as we explained to the ECB officials when we sat down with them, in terms of economics/high finance/politics we know we’ve wandered miles out of our depth here. Ultimately however we rely on no-one but ourselves in all of this. 

We began this campaign on a single, simple, very fundamental premise – what’s been done to the Irish people, what’s still being done to the Irish people, is wrong. This was private debt, private commercial deals with all that implies (risk/reward, profit-and-loss), between private commercial institutions, no involvement whatsoever of the Irish people, yet we now find ourselves landed with the entire cost, plus interest.

Our own official institutions – banking, regulation, government – have all already let us down, under the previous administration and under this. We are forced now to go directly to Europe ourselves to ask for justice for Ireland.

Time and again Fiona appealed to them to look at this at the human level, explained that despite what they were being told, there was no feeling of recovery on the ground – quite the opposite, there is growing anger, growing despair.

We asked them to factor in to their various calculations the impact their policies are having on people, on their fellow citizens. We can quote all the various indices mentioned above but where is the index of human misery, of human stress?

All kinds of laws are being thrown at us in relation to why this bank-debt must be paid by the people; what of the higher laws enshrined in all our constitutions including that of the EU, what of human rights? What of the right to education, to health services, to a job, to a home, to water and electricity? Bit by bit these rights are being squeezed, sacrificed on the altar of high finance.

Trade apart, the original idea behind the establishment of the European Coal & Steel Community (1951) and the European Economic Community (1958) was to create a Europe of reduced nationalism, of enhanced understanding and appreciation of each other. The new EU/EC/ECB and its policies is having the opposite effect now, polarising people again, entire nations demonised (the feckless Irish, the reckless Greeks, the ungovernable Italians etc etc). 

A change of direction is needed, new thinking is needed, new policies are needed, people-first policies, an end to the diktats of the money markets.

All of this we presented to the ECB officials. We don’t know if we made any impression; if we did, we don’t know how much of an impression, or if it was positive or negative. We did, however, leave the meeting with more hope than when we entered. Why? Because they had heard us out.

The meeting was also constructive in that previously, the ECB was this disembodied organisation somewhere out there; now we’ve come face-to-face with them, and they’ve come face-to-face with us. Hopefully we’re both the better for it.

They made no commitments, nor did we expect any. This is a process, that’s all. We thought when we started that the media would quickly be on board with us as they saw the massive injustice being perpetrated, that they would help alert the people who would take to the streets en-masse and we’d have all this done and dusted in short order, our government pressured into taking a stand. Now we know better.

We are forced to fight our own government, though we would prefer to have them with us; with only a few prominent allies (they know who they are) we are forced to fight our own national media, who ignore those of us who are trying to tell the truth but instead consistently repeat the government lines; ultimately, we have been forced to go to Europe directly ourselves.

This is now a long war but we’re in it for the long haul. It is taking a lot of personal sacrifice by so many of us but we’re heartened by the support gathering around the country, the heroic little groups like our own that are now marching in so many different locations.

We want more to join us. It’s not too late – it’s never too late to do the right thing. Our march takes place every Sunday, same time, 11.30am; our aim has never changed, the lifting of this bank-debt burden.

We don’t know what happens next. We asked to meet the ECB again, will go to their HQ in Frankfurt (again!) if needs be. But at least now, and for the first time (which Michael Noonan had already told us but which the ECB officials confirmed), someone from Ireland has asked for bank-debt write-off.

Apologies for the length of this report but you know, with €31bn at stake with the ECB, there’s a lot involved!

Regards, Diarmuid O'Flynn.