Tuesday, 30 May 2017


1)      In 2009/10, using Promissory Notes (government guarantees issued by then Finance Minister Brian Linehan), the Central Bank 'created' €31billion for Anglo Irish Bank (€25.5billion) and INBS (€5.5billion);
2)      Those two banks were insolvent and were thus prevented by ECB rule from access to the Emergency Liquidity Assistance programme (ELA);
3)      The P Notes were accepted by the ECB/Irish Central Bank as collateral - clear breach;
4)      Everyone involved – the Irish Central Bank, the Government and most critical of all, the ECB – knew all this, knew those P Notes were literally papering over not just cracks but a fatal hole below the waterline of the two banks involved; however, in the absence of any formal structures to deal with troubled banks within the new euro currency area (fatal flaw in its design), needs must – it was a crisis situation;
5)      The banks went under, as was inevitable;
6)      The ECB insists that the €31bn 'created' as a result of the P Notes must be taken back out of circulation – Ireland forced to pay for the euro design flaw;
7)      Rather than challenge the ECB on the legitimacy of all this, in 2013 new Finance Minister Michael Noonan transposed those bonds to sovereign debt, created a schedule of destruction;
8)      Chunk by chunk, €500million by €500million, that schedule is now being followed (accelerated even) by the Central Bank;
9)      The process is this:
                                          i.      Using previously borrowed money, our National Treasury Management Agency (NTMA) buys one of the P Note bonds issued under the Noonan 2013 ‘deal’ from the Central Bank (usually a tranche of €500million);
                                        ii.      The Central Bank destroys that €500million (probably just the push of a computer button), declares that element of the €31bn P Note debt 'cancelled';
                                      iii.      The €31bn is reduced by that amount – we still have over €20bn remaining to be thus destroyed;
                                      iv.      The money that was used by the NTMA to buy that P Note bond will eventually have to be repaid and in the meantime we pay interest on it;
                                        v.      The critical thing to know, however, is that the Irish people get absolutely no benefit from that €500m. 

Burning billions but it's no joke...