A DATE AWAITED
In early March 2020, just before the Covid lockdown hit Ireland, the
Ballyhea Says Know campaign presented a Report to the GUE-NGL group of the European Parliament. It was titled 'THE EUROZONE CRISIS: WAS THE EURO ITSELF A PRIMARY CAUSE?' and was commissioned by
Luke Ming Flanagan MEP.
As of today, August 12th 2021, we are waiting for a date from either the Public Accounts Committee or the Finance Committee of the Oireachtas, to enable us present the same report here in Ireland.
This is taken from a chapter
in that report headed ‘Ballyhea Says Know’, and focuses on the Promissory
Notes.
It’s worth going over that
again, because far from this all being water under the bridge, we are still
caught in a full flood. Anyway, the extract from the Report:
PROMISSORY NOTES
Through
2009/10, in spite of ECB rules specifically precluding its use for insolvent
banks, three bodies – Central Bank of Ireland, the ECB and the Irish government
– colluded to use the EU’s Emergency Liquidity Assistance fund (ELA) to create
€30.85 billion for two insolvent banks under immediate threat of bankruptcy, Anglo
Irish Bank (€25.3bn) and INBS (Irish Nationwide Building Society - €5.3bn), plus a mere quarter billion (€250,000,000) for EBS.
The
fig-leaf the ECB used to enable this to happen was the Promissory Notes written
by then Irish Finance Minister Brian Lenihan, literally notes written promising
that if those two banks couldn’t repay those billions, the Irish government (that’s
us, the people of Ireland) would do so.
Those
Promissory Notes, claims the ECB, made insolvent banks solvent. It didn’t, of
course, and everyone involved knew that; just a few years later both Anglo and
INBS ( now combined and known as IBRC, the Irish Bank Resolution Corporation)
were wound up – liquidated, bankrupt.
It was classic switch-and-bait, private
bank-debt transformed to public debt, and the Irish people are the ones paying
the price. I say ‘paying’, because that price is ongoing.
The quid-quo-pro for the creation of
those billions is that the ECB now insists that the Central Bank of Ireland,
having created that €30.85 billion, must now take it back out of circulation –
destroy it, in plain English. And, since March 2011, that’s exactly what it’s
been doing.
In 2011, the Central Bank of Ireland destroyed €3.1 billion;
In 2014 it was €0.5 billion;
In 2015, €2.0 billion;
In 2016, €3.0 billion;
In 2017, €4.0 billion;
In 2018, €4.0 billion;
In 2019, €2.5 billion
In 2020, €1.0 billion;
In 2021 (to date), another €1.5 billion, the last of those on October 27th).
That’s €18.5 billion destroyed by the
Central Bank of Ireland since 2014, a further €3.1 billion in 2011 – €21.6
billion in total, with another €9.25 billion still to go. Bear in mind – a
billion euro is one thousand million euro, that's €1,000,000,000.
BEWARE
OF FALSE PROFITS!
Over the past few years the Irish Times ran
a series of almost identical articles, probably taken straight from a Central
Bank briefing, claiming that great profits were being made for the national
exchequer with the sale of the above-mentioned IBRC Promissory Note bonds. Yet
in an article (2) headed ‘Central Bank’s €17bn profits from
crisis fighting a mirage for taxpayers’ in June 2019, they published
the reality, a reality which they themselves refuse to confront – it’s merely a
sophisticated three-card-trick, those ‘profits’ just a portion of the billions
borrowed from Peter to pay Paul for the ECB Promissory Notes, who then destroys
the bulk of those billions but gives our exchequer a little ‘dividend’, a false
profit (pardon the pun). From that article:
Yes, even the ‘profits’ are borrowed, the so-called ‘premium’, but no, it’s not a ‘zero-sum’ game, as we shall now make clear.
BEFORE THE SALE BY THE CENTRAL BANK
The €25 billion in government bonds received by the Central Bank in 2013 referred to above are the ECB Promissory Note bonds, €6 billion having already been accounted for in 2011 and 2012. Interest rates at the time were higher than they are now, but that didn’t matter; our NTMA created those bonds, they were held by our Central Bank, we were paying the interest on them to ourselves. As long as that situation pertained those bonds would cost us nothing in interest, and when they eventually matured, we would pay the principle to ourselves – this was a zero-sum ‘game’, and thus could the €31 billion that had been created for Anglo and INBS expire, have died a natural debt (pardon the pun).
AFTER THE SALE – NOT A ‘ZERO-SUM’ GAME
All of this changes, and changes drastically, when the Central Bank sells the ECB Promissory Note bonds.
To buy the P Note bonds our NTMA must first raise billions from the markets, for which purpose they issue new government bonds; immediately, we are paying interest on those new bonds, and when they mature, a future generation will have to pay the principle.
Interest rates have gone down in the years since 2013, which is why the NTMA now pays a ‘premium’ to buy the P Note/IBRC bonds; this is the ‘profit’ made by the Central Bank on the sale as outlined in the Irish Times article above, but the truth is that this now becomes a loss to the national exchequer, a huge loss.
You see, what’s not pointed out in the last paragraph of that article above is that as paper-debt has become real debt, this is not now a zero-sum game for the Irish people; in fact it will eventually cost us the full €31 billion, plus interest.
TINA – THERE IS NO ALTERNATIVE
There was no alternative – that’s what we were told. But there was an alternative, as outlined by three senior IMF officials who were involved with the Troika during that period.
First, Ashoka Mody, in an RTE interview with Gavin Jennings in April 2013, the transcript of which appeared in a report (3) in broadsheet.ie:
Echoing the sentiments of Mr. Mody was his IMF colleague in Dublin, Mr. Ajai Chopra. In September 2013, the following report (4) in the Irish Independent headlined ‘You paid too much for bailout: Chopra tells us’ contained the following:
A few months later, in Feb 2014, and per a report (5) headlined ‘IMF wanted senior bondholder ‘bail-in’ for Ireland – Fund official says EU partners in troika rejected bail-in option’ in the Irish Times of a ‘closed’ ECON committee meeting in the European Parliament, yet another IMF official, Reza Moghadam (IMF’s director for Europe), supported the testimony of his two erstwhile colleagues:
EVEN THE BUNDESBANK AGREES!
In an article in the Irish Times (6) from Jan 2014, then Bundesbank president Jens Weidmann said Germany had supported Ireland’s preference to burn senior bondholders in 2010, but was blocked by the European Central Bank.
THE IMF AGAIN
Mr. Weidmann’s view that write-down of debt didn’t pose a great stability risk is borne out in the conclusions of an IMF Working Paper (7) from October 2008 on the ‘Costs of Sovereign Default’:
BALLYHEA SAYS KNOW CAMPAIGN
For nine years, almost on its own, Ballyhea Says Know (originally Ballyhea Says No) has campaigned on this issue, with particular emphasis now on the Promissory Notes.
From the above, had they chosen to fight, it’s clear that the Fine Gael-led governments that were in place from 2011 could have undone some of the massive damage wrought by the Fianna Fáil-led administrations that had preceded them, could at least have challenged the ECB/European Commission on the legality and/or the legitimacy of what we were forced to do, the debt-legacy now passed on to several future generations. In particular, they could have supported us in our various challenges to the EU institutions on the Promissory Notes.
They didn’t.
This Report will now be presented in its entirety at the next GUE-NGL meeting, which will be held on March 4th. It is a comprehensive report, will itemise and summarise all that has driven this campaign since we first took to the road in Ballyhea on March 6th 2011.
On the Sunday after we’ve done that, March 8th at 10am, almost exactly nine years after it began, Ballyhea Says Know will march for the last time, our final regular outing in Ballyhea.
We’ve done our bit – it’s long gone the time for our elected politicians to take up this fight.