Wednesday, 19 August 2015


A headline in today’s Irish Times (Aug 19th 2015):

Central Bank accelerates sell-off of bonds issued after IBRC liquidation

The first two paragraphs of the article (which is anonymous but probably printed verbatim from a Finance Department press release) are as follows:

The first clear sign has emerged that the Central Bank is to sell down the bonds issued as part of the IBRC liquidation at a pace faster than the minimum commitment given to the ECB. The National Treasury Management Agency (NTMA) announced yesterday that it had cancelled €500 million of one of the bonds which it had bought from the Central Bank.
The Central Bank had already sold another €500 million of this 2038 floating rate bond to the NTMA at the end of June. At the time of the IBRC liquidation in early 2013 it had indicated that it would sell a minimum of €500 million a year of these bonds between 2014 and 2018. So the sale of €1 billion this year – following a €500 million sale at the end of last year of the same 2038 bond which met the 2014 commitment– suggests that the Central Bank is moving to sell down the bonds more quickly than the minimum commitment. 

Further down the article, we have the following:

The Central Bank pointed out in an information note issued with its 2014 results that at a time when the NTMA could refinance the bonds at such low interest rates, selling down the bonds led to increased profits to the Central Bank. The bulk of these profits are then returned to the exchequer via an annual dividend. The December 2014 sale led to a €180 million gain to the Central Bank and each of the two recent transactions will have yielded similar or greater profits.

The writer goes on to note that there is a minor downside to all this: 

However there is also a cost to the State of early disposal, as the interest paid on the bonds by the NTMA is now paid to a third party, and not the Central Bank, as was the case with the special floating rate bonds. The Central Bank argued in its note that this interest rate gain of holding on to the notes and refinancing them at a slow rate could be offset in future if interest rates rise and it cost the NTMA more to raise replacement debt.

So there we have it, another €500m bond ‘cancelled’, resultant ‘profit’ of another €180m (if not more!) for the exchequer, albeit we are now paying interest to a third party for the lifetime of the bond.

MISSING from this report however is the most crucial point of all, the whole raison d'être for this entire exercise – what happened to the €500m that the Central Bank received to enable the ‘cancelation’ of that bond? What happened to the €500m – real money, even if it is all borrowed – that it received in June?

That money was destroyed, every last cent. A broke and broken heavily indebted country borrowing billions, to destroy. An ECB Quantitative Squeezing programme imposed on Ireland, even as that same ECB is engaged on a trillion-euro Quantitative Easing programme for the rest of the Eurozone.

MISSING also from the Irish Times report, the fact that beginning in 2038 and in chunks of billions, future generations of Irish citizens will begin paying off the €28.3bn worth of bonds now being sold and ‘cancelled’ by the Central Bank/NTMA. And for what? To bail out the failed creditors of the failed Anglo Irish Bank and Irish Nationwide, at the behest of the ECB/European Commission, to prevent a contagion of bank collapse throughout the EU.

The ultimate cost of all this to generations of Irish citizens will run into many tens of billions. When this is presented as a good-news story, what does that say about the ‘Paper of Record’? But sure look, what's a little omission between friends...

For 233 weeks – four and a half years – we in the Ballyhea Says No campaign have been battling to shed a light on the gross injustice that has been done to Ireland vis-à-vis the bank-debt in the name of the EU. This Irish Times article is a perfect example of what we’re up against. 

The best chance we have is that over and over again, people share blogs such as this, where the half-truths are filled out, the full truth is told.