Wednesday, 16 July 2014

SUMMER SUMMARY - A CRITICAL TIME



Going to be out of action for a few weeks (date with a knife tomorrow, July 17th, old war-wounds that couldn't be ignored any longer!) so a quick update on the Ballyhea campaign.

EUROPEAN ELECTIONS

The recent European elections threw up a very positive result for us, the election of three independents (Luke Ming Flanagan, Nessa Childers and Marian Harkin), now joined by Brian Crowley, all of whom have stated unequivocally that they will be working towards the alleviation of the bank-debt burden on Ireland. Already, since the election, we've been in touch with all those MEPs, have met with a few, and in the coming months we will be working with them on the bank-debt campaign.

Sinn Féin also had a very successful European campaign, returned four MEPs (Liadh Ní Riada, Matt Carthy, Lynn Boylan, Martina Anderson), and Sinn Féin too have indicated that bank-debt writedown for Ireland will be a priority. That's eight Irish MEPs now actively campaigning with and for us (the people, not just this campaign group), a quantum improvement on the previous Parliament.

PLANNED MEETINGS

On Friday week (July 25th), Central Bank governor Patrick Honahan has agreed to meet a delegation which, along with ourselves, will include representatives from those MEPs, plus representatives of the Technical Group in the Dáil.

At the moment we are also pursuing meetings with a) the ECB (accompanied again by elected representatives from both the national the European Parliaments), b) the new chair of ECON and c), representatives from all the major groupings in the new Parliament.

IT’S NOT TOO LATE – IN FACT NEVER MORE TIMELY OR URGENT

For those who believe that it's too late to address the bank-debt, that everything is done and dusted, I can't stress enough - nothing could be further from the truth. In fact it was never more immediate, never more stark, than it is now. Why? The dreaded Promissory Notes, or more accurately, the Promissory Note bonds, the instruments used by Finance Minister Michael Noonan to transfer responsibility for payment of those Promissory Note billions from this generation to the next, and to the generation after.

PROMISSORY NOTES IN A NUTSHELL

In a nutshell the situation is this: in 2010 two Irish banks - Anglo Irish and Irish Nationwide - had entered zombie stage, had €31bn in liabilities between them and only junk assets to cover those liabilities. If they went under, however, the fear was that this would start a domino effect across a number of other deeply troubled banks and would bring down not just the major banks in the so-called core European countries (Germany and France especially), but would bring down even the euro currency itself.

To avoid this very real possibility the ECB accepted from the Irish government as collateral for the €31bn issued to those two bust banks the now infamous Promissory Notes; theirs was the final say in this and in doing so, they bent (and possibly broke) their own rules.
 
Critical to note here, this money did NOT go to the Irish people, it went to bail out those two banks and by extension, to bail out their creditors. Now, however, the ECB wants its pound of flesh. 'The Central Bank of Ireland printed that extra €31bn,' goes their logic; 'The Irish government acted as guarantor; now we want that €31bn taken back out of circulation.' 

No mention of their own role in accepting the Promissory Notes; no mention of the fact this possibly saved the European banking system, if not the euro itself; no mention of the fact that all those billions went to banks, not to the people. Just this insistence that the entire burden must be borne by us, the Irish people.

Of course we don't have that €31bn (we're broke like - in fact we're over €200bn in debt already!) so, we're forced to borrow it.

THE PROMISSORY NOTE BONDS

We're doing this in the form of sovereign bonds and we're doing it in stages. This year the Central Bank will sell a bond for €500,000,000. That's almost exactly what the government expects to raise from water charges for the year; it is also the projected shortfall in the HSE budget for 2014, a shortfall that will necessitate further cuts in an already critically-stretched health service.

What will the Central Bank do with this €500,000,000 - invest in our water services, in our health service? Neither. It will destroy it, every last cent, the ECB insisting on its pound of flesh.

WORSE TO COME

As noted above however, that is merely the first step. Next year, another €500,000,000 raised by the Central Bank, another €500,000,000 destroyed, then likewise for another three years. And it gets worse.

For each of the five years after 2018, €1,000,000,000 raised by the Central Bank, then destroyed; for each of eight years after 2023, the figure increases to €2,000,000,000, raised and destroyed; finally, in 2032, €1,500,000,000, making a total of €25,000,000,000.

These are telephone numbers, I know - even beyond telephone numbers. On their own they're difficult for people to take in but even more difficult for people to absorb, the fact that all this money, all those badly-needed billions, will be destroyed.

The story doesn't even end there: As each of the bonds are sold, we start paying the interest to the new bondholder, and we pay it annually for the lifetime of that bond. Then, when the bond 'matures' (and the first chicken comes home to roost in 2038), we have to pay the principal, the full original sum of each individual bond, again a total of €25,000,000,000 - again a figure and a concept almost impossible for people to grasp.

CRISIS POINT – A CALL TO ARMS

But that is the plan, that is the vaunted Noonan Promissory Note 'deal', that's how 'gone' those Notes are. The debt remained, in its entirety; the billions are still destroyed, in their entirety; all he has done is this – rather than challenge the ECB on the legitimacy or even the morality of the debt itself, he shifted the payment burden from this generation to the next, and the generation after. Would you, as an individual, do that to your kids, and to their kids?

It can be stopped. It can be stopped now. It can be stopped without cost. It can be stopped without consequence (that money is already in circulation; taking it out of circulation now will have no effect in Europe, it WILL have an effect here).

That's why this campaign is now so critical, that's why there has never been such urgency. The sale of those bonds must be stopped and for this, we need a coming together – of the media, of our politicians local, national and European, of our stars of stage, screen, music and sport, of our people in every organisation at home and abroad. Because this affects us all.

Regards, Diarmuid O'Flynn.


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