When Michael Noonan announced his
Promissory Notes ‘deal’ in February of last year it was hailed by our media as
a triumph. ‘Promissory Notes destroyed!’ screamed the headlines; ‘€20bn saved
over the next ten years!’
Big news indeed, but what our
media didn’t tell us was even bigger.
1) The Promissory Notes were indeed
destroyed, the little bits of paper the ECB had accepted at their convenience
to bail out the European big-bank creditors of two bust Irish banks, Anglo and Irish
Nationwide; the Promissory Notes debt wasn’t, not a cent of it.
2) On the €20bn ‘saved’ over the
next ten years – absolutely not true. If you buy an item that’s been reduced
from €40 to €20, you have saved €20; if you alter a debt schedule so that you
pay €20bn less in the next ten years but pay €60bn over the following 30 years,
that is not ‘saving’ €20bn.
THE REAL NOONAN DEAL
What Michael Noonan did was this;
to take the pressure off his budget for the remaining years of this government
from 2012 onwards (because had had actually pulled this same stunt for the 2012
Promissory Note – a practice run, if you like), he restructured the Promissory
Notes payment schedule such that the burden of payment would be shifted from
this generation to the next, and to the next. No more no less.
It was betrayal, not just on a
national level but on a human level – what parent, rather than challenging ‘totally’
illegal debt (Michael Noonan’s own description of the Promissory Notes), debt he had previously eloquently and forcefully rejected and
simply to make life easier for themselves, passes the burden of payment to
their own children and grandchildren? Under the terms of this deal, that is
what Michael Noonan has done but not just on his own behalf – on behalf of us
all. Thanks to Michael Noonan, that is the legacy of this generation of Irish people
to the next.
BURNING BILLIONS
There was something else we weren’t
told, either by Michael Noonan or by our media, something of even greater
import.
The money raised from the sale of
the new Promissory Notes bonds, all €28bn of it (including the €3bn from the
2012 bond) is destroyed, every cent of it. Why? Why is a broke,
massively-indebted small nation destroying the equivalent of the entire tax
intake for 2010, the year the Promissory Notes were issued? Because the ECB,
who facilitated the original issuance of those notes (feared contagion across Europe
if any bank in the EuroZone was allowed fail), is insisting that the entire
€31bn printed that year by the Central Bank of Ireland and given directly to
the two bust banks to bail out their creditors, must now be taken back out of
circulation. By us.
And it has started.
Buried in the back end of a
report from RTE yesterday, Tuesday December 22nd, an early Christmas
present for the nation. Again, as has become so typical for the official
spinner of government half-truths, it wasn’t so much what was said, it was what
was left unsaid.
‘Separately, the NTMA has announced the cancellation of €500m worth of bonds relating to the Irish Bank
Resolution Corporation. The Irish Floating Rate Treasury Bond was issued as
part of an arrangement that saw the Anglo Irish Bank promissory note replaced
with new debt. Its issuance was part of the process that has ultimately led to
IBRC’s liquidation. Today the NTMA
purchased €500m worth of the bond - which was due to mature in mid-2038 - from
the Central Bank. It said the cancellation
of this amount will leave €1.5bn worth of the bond outstanding.’
Reading the above, would you have
any idea that this country has just borrowed and destroyed €500m, dwarfing what’s
going to be raised from the ill-fated (it will fall) Water Tax? But we have. ‘Cancellation’,
that’s what the RTE report says; ‘destruction’, that’s what it means.
3-in-1
But there’s more – it's a
triple-whammy. As soon as that €500m was
received by Patrick Honahan in the Central Bank on Tuesday:
- It was destroyed
- We start paying interest on it
- In 2038 the new bondholder (wouldn’t it be some irony if it’s one of the same bondholders we bailed out back in 2010???) will come looking for the entire €500m principal to be repaid.
JUST THE START
The €500m borrowed/burned on Tue is just the start of the new Noonan P Note bond schedule.
- 2014-18 (incl - five years): €500m/yr borrowed/burned
- 2019- 23 (incl - five years): €1,000m/yr borrowed/burned
- 2024- 31 (incl - eight years): €2,000m/yr borrowed/burned
- 2032: €1,500m borrowed/burned
- Meanwhile, €3bn bond from 2012 also sold, those billions also destroyed.
- And all the while, as the bonds are sold the debt-clock ticks faster and faster, the interest increasing, the debt-burden piling up. Over the next 40 years, on the entire €31bn, we won't have any change from €80bn. Some legacy.
No matter how you read it, it’s
obscene.
In Ballyhea we’ve been protesting
this for nearly four years, joined now every week in their own places in that protest by Charleville,
Ratoath, Dublin. This coming Sunday, December 28th, is our 200th
week. If this has angered you enough, if you have the time and the inclination, you're welcome to join us in Ballyhea
– 11.30am, at the church car-park.
Regards, Diarmuid O'Flynn.
