Sunday, 5 October 2014


Shakespeare’s Merchant of Venice tells the tale of a merciless vindictive money-lender, Shylock, calling in a bond against the Merchant of the title, the non-payment penalty for which was
A pound of flesh, to be by him cut off
Nearest the merchant's heart.

The deadline arrived, the bond wasn’t paid, the matter ended up in court where the moneylender demanded his forfeit – the pound of flesh -
My deeds upon my head! I crave the law,
The penalty and forfeit of my bond.

There followed one of the great Shakespearian sonnets, Mercy, which began
The quality of mercy is not strained.
It droppeth as the gentle rain from heaven
Upon the place beneath. It is twice blessed:
It blesseth him that gives and him that takes.

Shylock is heedless, heartless, bound on having his pound of flesh and with it, the life of the merchant. Just as he’s about to plunge in his knife, however, a young lawyer (actually a young heiress, Portia, in disguise, the lover of the merchant's best friend) intervenes:
Tarry a little; there is something else.
This bond doth give thee here no jot of blood;
The words expressly are 'a pound of flesh:'
Take then thy bond, take thou thy pound of flesh;
But, in the cutting it, if thou dost shed
One drop of Christian blood, thy lands and goods
Are, by the laws of Venice, confiscate
Unto the state of Venice.

Thus is the merchant spared.

Take the above tale, put the ECB in the Shylock position, Ireland as the Merchant of Venice, and the same situation applies - through the infamous Promissory Notes, the ECB is demanding its pound of flesh from Ireland.

It was Einstein who said 'Make everything as simple as possible, but not simpler.' The Promissory Note bonds are complex, maybe deliberately so, means most people will simply (pardon the pun!) not bother to even begin to understand them. But it's worth doing so, because they are breaking this country, making debt slaves not just of this generation but of those who will follow, for the next 40 years at least. So please, try to follow this as I try to follow Einstein's directive.

The origin

During 2010 two Irish zombie banks, Anglo Irish Bank and Irish Nationwide, needed €31bn to cover their liabilities, billions they didn’t have. At the time, and eventhough we were now three years into the crisis, there was still no EU structure in place to solve this crisis so the ECB and the EC allowed the Central Bank of Ireland print the €31bn and accepted as collateral the hastily drawn Promissory Notes from the Irish government. In doing so they bent and twisted their own rules and regulations but so be it, needs must and this was an emergency situation. They feared for many of the major creditor banks at the core of Europe if those two Irish banks were allowed go under, the contagion effect, feared even for the survival of the euro itself. So, the money was printed, given to the two banks who duly distributed it to their creditors world-wide – not a cent given to the Irish exchequer.

It worked, the crisis was eventually stabilised and of course we should all live happily ever after. But no.

Four years on, the EC and ECB are in Ireland looking for their pound of flesh – they want that €31bn taken back out of circulation, every cent of it. Already they’ve had €3bn, when the first of those Notes fell due in March 2011, €3bn borrowed and destroyed that year by this broken county. Now another €28bn sits in bonds in the Central Bank, awaiting sale per a schedule that the ECB wishes to see accelerated.

The P Note bonds schedule
Per that current schedule, the Central Bank of Ireland will this year (2014) sell a bond of €500,000,000, then take that money and destroy it. 

This is worth repeating - they take those hundreds of millions of euro raised from the sale of that bond, millions this country sorely needs (think of the water charges now being imposed) and they then destroy those millions.
Immediately, we - the broke Irish people - will start paying interest to that bondholder and in 24 years’ time, 2038, all the interest having been paid, that bondholder will come back to the Central Bank of Ireland looking for the entirety of those millions.

That’s just the beginning.

Next year, another €500,000,000 Promissory Notes bond will be sold, the millions likewise destroyed, then the same again for a further three years - five years at €500,000,000 per year, every cent destroyed.

Obscene, yes, when you consider that all this debt was to bail out the international creditors of two zombie failed banks.

But it gets worse. After 2018 the process accelarates - €1,000,000,000 a year for five years, then €2,000,000,000 a year for eight years; finally, in 2032, a bond of €1,500,000,000, making a total of €25,000,000,000. In words, twenty-five thousand million euro, every euro destroyed, confirmed for us by none other than Patrick Honahan, Governor of the Central Bank.

Also held by the Central Bank at the moment and already being sold (€350,000,000 sold and destroyed in 2013), a bond for €3,460,000,000 to cover the Promissory Note of 2013, which means the Central Bank actually holds over €28bn in bonds - that's €28,000,000,000.

Possible solutions
Those billions were printed for the benefit of the EU and specifically the EuroZone, including Ireland. That money is already in circulation, has had no impact on inflation or on anything else. It should be left there, the remaining Promissory Notes bonds held by the Central Bank of Ireland destroyed, the €3,060,000,000 already destroyed returned to the Irish treasury.

At worst the Central Bank should hold onto the bonds, not sell them into the market, let them die a natural death as they reach the 'maturity' rather than adding to the suffering and deprivation of the Irish people.
But the EC/ECB continues to demand its pound of flesh from us and doesn’t give a damn if in doing so, they drain the lifeblood from the Irish people. And the lifeblood IS being drained. Anything else that Europe and the world is being told is a mixture of lies/half-truths/exaggerations, spin by a dying and desperate government. 

Europe is told Austerity is working, Ireland is the perfect example. 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, corner turned and green shoots, and hopefully this turns out to be a genuine recovery.
What the world is not told 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, and especially when emigration is factored in, the number soars to over 25%.

An utterly spurious claim, debunked by Finfacts and by Michael Taft of Unite. In fact the CSO's own press release refutes it, just over 30,000 more people in employment at the end of June 2014 than in June 2013. An improvement, certainly, but in what areas are those jobs being created? And by whom? Certainly not by the government, whose only job ‘creation’ was in the areas of spin – with their multiple highly-paid advisers – and the new quangos being created.

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. 

In a heart-breaking article titled Purging Ourselves Of Our Young, Michael Taft shows that in the three years up to 2013 nearly 250,000 Irish people under the age of 29 emigrated - a small GAA club in Mayo recently picked a notional starting 15, all of whom are gone.  It’s not just young people leaving either, 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, not the kind of life now being imposed on them.

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.

Look at the number of DIY chains gone into receivership – Homecare, 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. Our GDP and GNP figures are distorted by the multinationals, massaged by the government to appear better than they are but be that as it may, the more pertinent debt calculation formula for Ireland is GGD/GNP, Gross Government Debt as a percentage of Gross National Product. 

Using the GDP formula Ireland’s graph has been rising soaring into the red zone for years, to the point that at the end of 2013 the ratio was at 123.7%. But what would it be if the more accurate GNP figure were used? 

Our GGD at the end of 2013 was €203bn, GDP in 2013 was €164bn, GNP was €135bn; this would give a debt/GNP ratio of 203/135 x 100 = 150%. 

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.

Add in the SME DEBT (€9bn now in default), HOUSEHOLD DEBT (€166bn at end of 2013, 123% of GNP), MORTGAGES IN TROUBLE (we’re world champions apparently), STEALTH TAXES (a raft of these - Universal Social Charge rise, Carbon Tax increase, Water charges, Property Tax, Pension levy hikes, Prescription charges rise, Public transport hikes, Maternity Benefit changes, Excise Duties, etc etc), and STEALTH CUTS, and where are we?

It is claimed that the budgets of the last few years have been progressive, hitting the strongest hardest – untrue, that claim has been dismantled, again by Michael Taft, one of those trying to negate the lies. Even within Ireland itself, a compliant media are contributing to the illusion that austerity is working, that compliance exposed in a comprehensive study by Dr Julien Mercille of UCD. 

The world is repeatedly told that Ireland was bailed out in November 2011, that Germany in particular saved the EuroZone. The opposite is the truth – Ireland has helped to bail out Germany and in particular, the German banks, and no country in Europe has profited from this crisis to the extent of Germany. Where did the Greek ‘bailout’ billions go, to the Greeks? You would assume so – you would be wrong. Much of it went to banks, to German Banks. So who is bailing out who?

Our government says the IFSC isn’t a tax haven – independent studies suggest otherwise, the IFSC facilitating tax avoidance on a grand scale. Those in the most senior positions in the IFSC have the ears of those in the most senior positions in government, outlined in an article in the Financial Times, while that same government is heedless of the cries of its own people.

I could go on, and on and on and on. But enough. No matter how it happens, we – the people of this little nation – will work our way out of this and in doing so, we don’t need anyone’s charity. We do however need to have this unjust burden lifted from our shoulders, we do need someone to step in and challenge the EC/ECB on their determination to have their pound of flesh. 

Diarmuid O'Flynn.