Question: “in light of the commitments made by the Irish government and borne by the Irish people, is it reasonable or not at this point to expect that there will be an agreement to recast the Anglo-Irish Bank promissory note scheme before the next payment falls due in March, and why?”
Answer: “I think we have discussed this in the past. The ECB cannot undertake any agreement, cannot enter into any agreement that is being viewed as monetary financing and is forbidden by Article 123 of the Treaty. But other than that, there is plenty of good will.”
The above exchange took place in Frankfurt yesterday at the press conference following the monthly meeting at the ECB where interest rates are set. The questioner was the Irish Times journalist, Arthur Beesley and he was questioning the president of the ECB, Mario Draghi. The Irish Times was the only organization, seemingly, to field a journalist at yesterday’s news conference but if you look back over the past 15 months, there were monthly attempts by the Independent’s Laura Noonan to get some reassurance from the ECB that the elusive prize of a debt deal for the historical cost of Ireland’s bank bailout, would ultimately come to pass.
“I do not want to see a situation where we have to pay out in excess of €3 billion next March, as is the requirement following on the introduction of promissory notes. Deputy Adams is aware of what the Government did this year in respect of the payment which was due in March 2012. I am being serious with Deputy Adams. Some very clear discussions have taken place and are taking place at ECB level with our Minister for Finance and his officials. We have had support for a restructuring of that from many quarters which are not just confined to Europe but beyond” said An Taoiseach, Enda Kenny in the Dail on Wednesday this week.
It seems the “clear discussions” with the ECB have resulted in a position of complete negativity from the president of the ECB. And you can’t finance a country with “goodwill”
Remember that it has been 15 months since Minister for Finance, Michael Noonan had those discussions/negotiations with former ECB president, Jean Claude Trichet and that subsequent talk of “technical papers”, “reengineering”, “complicated” matters have resulted in no agreement. And it has been five months since the June EU summit with Enda Kenny claiming to be a “hard grafter” and that “some of them found out tonight that I shouldn’t be tangled with too often” whilst An Tanaiste talked about a “game changer”. More seriously, there was a commitment from the EU that “similar cases would be treated equally”. Since then, Greece has seen another debt writedown and Spain has obtained a €39.5bn bank bailout without fiscal conditionality on the country. And of course previously, Portugal saw a reduction in its bailout interest rate without having to agree to enter into constructive discussions on its corporate tax arrangements.
It has been observed on here recently that German politicians when questioned about their attitude to a debt deal for Ireland seem to use almost identical phraseology in their responses, which (a) acknowledge the scale of the bailout and the burden placed on the shoulders of each individual (b) sympathise with our motivations and the assistance and support given by our country to the European banking system and (c) offer very vague suggestions of a nebulous deal. All the time, bonds in bust and bailed out banks continue to be paid, and we paid the €3.1bn Anglo promissory note this year with an Irish government bond, which converted a private bank debt to a sovereign debt.
It’s time to be realistic – there is no Santa Claus in Europe who will gift free money to Ireland for historical actions. It is ridiculous to even contemplate EU partners entertaining “poor mouth” requests for a debt deal from some of the highest paid politicians and civil servants in Europe. The best we will get from Europe is “goodwill”, something the ECB gives all its members, and probably gives more to other countries which don’t pester it on a monthly basis with pesky questions about a deal to which we have no right.
Remember that the promissory not wheeze was cooked up by the late Brian Lenihan as a transparent attempt to pull wool over the eyes of the general public with regard to how much Anglo will cost. There were few protests or questions by journalists at the time. Irish politicians and civil servants are still paid a lot more than those in Europe. That doesn’t strengthen our negotiating position either.
“highest paid politicians and civil servants in Europe”. They clearly don’t give a hoot so long as their inflated pay, allowances, lump sums and pensions remain in tact. Either that or they are toally incompetent and living in a state of complete denial. They can’t say they were not warrned in my letter in the IT in 2009:
“For starters, the Minister of Finance should announce an immediate reduction of about one-third in the salaries, pensions and other perks enjoyed by politicians and across the upper reaches of the public service. This might seem Draconian, but it would only deflate a big bubble and bring things into line with other comparable countries with which Ireland is expected to compete.
If the Government makes such an announcement on or before budget day, it will send the clearest possible signal to the electorate and international observers that it understands the seriousness of the situation and is leading by example.
If it fails to do so, there is every chance that it will not secure the electorate’s support for the budget measures. In these circumstances, it is possible that even more painful medicine will be imposed unilaterally by the ECB or IMF as a precondition of a financial bailout.”
It’s not just misleading, it’s downright counterproductive for Enda & Co. to keep harping on about a deal on debt restructuring. The original agreement stands and stands solidly – the money is as good as handed over.
As has been stated repeated by NWL, there is no Santa Claus!
Re salaries: Imagine the moral authority Enda would have if he took a realistic cut to his salary. There would be little austerity he couldn’t impose on the islanders then.
The Irish government,politicians and senior public servants have no moral authoruty to look for a better deal from our EU partners as long as they refuse to benchmark their own pay and pensions against other EU countries, and at the same time continue to cut the incomes of the carers and lowest paid in their own country. Shame on them for their hypocrisy and greed.
Draghi answered a question he wasn’t asked. There can be no reasonable expectation for a change that is monetary financing and in violation of the treaties.
The current arrangement has been allowed and so is obviously not monetary financing. There is no reason why a recasting of something that is already in place but with an extended payment horizon would be monetary financing.
Maybe next month Arthur Beesley should ask if an extension of the current arrangement by 40 years would be viewed as monetary financing and, if so, why.
@Seamus Coffey
“The current arrangement has been allowed and so is obviously not monetary financing. There is no reason why a recasting of something that is already in place but with an extended payment horizon would be monetary financing.”
+1
Carers allowance V Anglo promissory notes.
It was always going to come down to Bondholders 1st, everything else 2nd i.e. LAST.
You guys are current,paying on time and on schedule,PM is all over the press as “turning the corner” or the “worst is over”,why would any creditor change the terms to their detriment?
Cause you are special….of course there’s loads and loads of goodwill…if i was a creditor “My Cup Runneth Over” with goodwill.
So looks like best case scenario,extend the term and rate on the IRBC PN’s that’s it folks….does the recent budget factor in the PN payment or is IRBC paying this from its ahem own resources ?
@NWL here you go have fun,hot off the press…. the new,new road map..WSJ reporting on it,but behind pay wall had quick glance at it.
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/134069.pdf
oh you guys missed the bus………
“He also wants the framework for any direct bank recapitalizations from the stability mechanism to be decided by March, although he doesn’t specify when it would become operational.
Perhaps more importantly, Mr. Van Rompuy didn’t take a stance on what the recapitalizations should actually look like. By staying silent, he lent no support to Spanish and Irish politicians keen to eventually offload their own stakes in banks they have already rescued onto the bailout fund, or to the Germans and Finns, who have rejected the idea of taking financial responsibility for other countries’ banks bad lending decisions of the past.”
http://online.wsj.com/article/SB10001424127887324640104578163301959437628.html?KEYWORDS=NTMA+Ireland+cancells+bonds
Draghi has to think of his German critics. I’d imagine there’ll be a re-engineering of the notes, a spreading of the cost over many years, just not a reduction in the cost.
The question is, will the ‘deal’ be worth it? Who knows, but the current arrangement is only backed up by dodgy dodgy ‘assets’ and a pinky promise letter. Now say things get really bad, another shock event etc, wouldn’t defaulting on one institution, that may have ‘bounced’ us in to such a deal be a lot more palatable (easily sold) to our European ‘friends’ that defaulting on loans from them? After all the result of the ECB absorbing the PNs would be minuscule inflation, not something the average European would write to their local representative about.
They got a deal, it was called the Croke Park agreement and the Germans know this and are probably thinking if I were them I would keep quiet. Where do the government and unions think this money is coming from to fund Croke Park? They are shameless people who think that Germans would buy into their specious nonsense. Sorry lads in any other country you would be eaten alive for the sort of stuff you have done in Ireland.
@ Robert and John F any reporting on this back ‘home’ hit my screen yesterday,beg’s the question why.The NTMA ‘spent’ 500 million on an early redemption,have the lunatic’s really taken over the asylum..
“The National Treasury Management Agency (NTMA) announces the cancellation of €500 million of the 5% Treasury Bond due to mature on 18 April 2013”
http://www.ntma.ie/news/ntma-cancels-e500m-of-2013-treasury-bond/
http://online.wsj.com/article/BT-CO-20121206-709607.html#articleTabs_article