Tonight at 8pm in Charleville there will be an event to mark the 100th week of bank bailout protests by the communities of Ballyhea and Charleville – it’s free and promises to be an entertaining and enlightening evening. And after the Reuters exclusive this afternoon, it promises to be electrifying particularly if the Fine Gael TD, Deputy Peter Mathews speaks, as was announced by lead-organiser Diarmuid O’Flynn on the Claire Byrne show on RTE Radio 1 today.
One of the original demands by the Ballyhea and Charleville protesters was that there be a complete stop to the repayment of bonds in our bust banks. There are a number of reasons for taking that aggressive stance but “possession being nine tenths of the law” was one. If the cash wasn’t transferred from our banks, then we would have a stronger position in one sense, even if it would generate legal action by burned bondholders,
This Government’s policy has been to try to work consensually with the ECB in alleviating the burden of the bank bailout, and burning the senior bondholders was certainly on the agenda; after all, that’s precisely what Minister Noonan announced when he was on a visit to the IMF in Washington in the summer of 2011. But the ECB rejected this approach and so we have 100% repaid unguaranteed and unsecured bonds in our banks, including about €4bn in Anglo and Irish Nationwide Building Society, since the start of 2011.
The consensual approach has taken a knock this afternoon with Reuters exclusively reporting that the ECB has rejected the Irish government’s proposal to alleviate the burden of repaying the €31bn of promissory notes in Anglo, INBS and EBS. Reuters reports “sources familiar with the talks” saying today that the Irish preferred solution has been rejected. We don’t know what the preferred solution was, and if there were alternative solutions and what those are and if they are still “alive”. However, on 16th January 2013, the governor of the Central Bank of Ireland appeared before the Oireachtas finance committee and alluded to “an initiative” – in the singular – which would be “novel…, while not taking other decision makers too far out of their comfort zone”. The Governor said
“Taking into account both the statutory position and wider policy stance of the ECB, an initiative of this type will be novel and, as such, challenging. Using our knowledge of central banking law and practice, we have been working carefully to build understanding and confidence around a set of proposed transactions designed to deliver for Ireland, while not taking other decision makers too far out of their comfort zone. The ECB is an organisation that seeks to proceed as far as possible by consensus, and it is not surprising that this work has been taking quite a while. In fact, what we have designed from our side is, I believe, largely in the interests of the euro system as a whole. On work in progress, I have nothing to add today to what has already been said by the Minister for Finance about the prospects and timing of the conclusion to these discussions.”
Despite the general mood music of there being “no doubt “ about a debt deal, and the “confidence” which has been promoted at parliamentary party meetings, the view on here remains skeptical. Remember, Ireland is not unique and there are other countries who want to alleviate their own bank bailout burden also, and the ECB risks opening the floodgates if it approves an individual way-forward for Ireland. After all, other countries might legitimately point to the EU communiqué last June which said “similar cases will be treated equally” – always remember that any proposal that comes our way might have a cost to Ireland because we are not alone in our problems despite the scale and severity.
What now for the promissory note deal which needs to happen in the next nine weeks if the 31st March 2013 payment is to be avoided? We don’t know, the Irish Department of Finance is not commenting this afternoon.
UPDATE: 26th January, 2013. Sean Whelan at RTE is reporting that he has obtained a comment from the ECB, though it remains the case that Irish “interlocutors” are not commenting. The ECB has said that no deal has been rejected, and it seems from sources that there might be a prospect of “tweaking” the preferred Irish option. It’s all very muddy.
NAMA Wine Lake 
If Ireland were to default on its sovereign or bank bonds the holders would face tangible losses because “real cash” is involved. However, if Ireland were to refuse to pay promissory notes linked to Anglo, no cash loss would be incurred by either the Central Bank or ECB because the full €31 billion will be effectively written off in the Bank’s books irrespective as to whether it is paid or not.
Morgan Kelly, writing in the Irish Times on 23rd December 2008 about the Anglo bailout, suggested that “the money might as well be piled up in St Stephen’s Green and incinerated”. Well, unless a write-off deal on the promissory notes is struck, this is exactly what will start happening in March, albeit at a different location, when €3.1 billion of “real cash” is passed to the Central Bank where it will disappear in a puff of electronic smoke.
Any “initiative” that might have simply extended the repayment interval on the PNs or replaced them with bonds would have only pushed this senseless roasting of Irish taxpayers onto another generation. On the other hand, a full write off, which is in the gift of EU central bankers and would result in no loss for their banks, would transform the Irish economy and its prospects. Accordingly, the next tranche should not be paid under any circumstances..
Best wishes for tonight’s meeting to Diarmuid and the Ballyhea and Charleville protesters.
The Government PR response to this should be rather amusing… for about a millisecond. I wonder will Pat Rabbitte be sent to pirouette over the top on this one.
My own suggestion would be to pursue the line of argument that says the pn’s were no more than a political stroke by rats with their backs to the wall, facing immenent destruction of their own personal dynasty, and therefore an odious debt. In other words, a time-bomb that ensures the other side cannot win, even if it ruins the country….. call me crazy, you wouldn’t be the first
The Ballyhea protest reminds me of Occupy in two ways:
1.they are branded heroes before they have achieved their goal, and
2.they seem to be one dimensional in the sense of tactics and personnel.
Peter Matthews is the much lauded special guest – God help us…I am sure Tepper is quaking in his boots.
As with occupy I am sure these constructive criticisms will be met with insult.
Of course I wish them luck, who wouldn’t? but as with Occupy, pricking the consciousness of the traditional media, is a lot different from success.
If you are going to protest, do it properly,…. shut down the whole country for a few days. and throw some politicians in jail.
Rebel nation? try ‘divided nation abused by a fractured union’.
You’re crazy. The PromNotes are simply a result of the government making it up as it goes along, the same way it has done throughout the crisis. There is no grand scheme beyond “Save our pensions no matter what the cost”.
Those are respectively the jobs of the trades unions and the courts. Unfortunately both organisations have been bought by the banks.
We are, as we have ever been, a nation ruled by a detached and corrupt ascendancy. However, hopefully organisations like Ballyhea can induce Irish people to engage in their periodic, once per century mass movement against the system. It’s either that or another famine/1950s disaster level outcome.
While we as a population continue to acquiesce we are hamstringing the negotiating position of the administration.
Here and in the UK history doesn’t play the same cards as on the continent. The big fear there is revolution of the people against the administrative structure. Should the embassies report back home that we as a people are on the move like in north Cork things would change pretty rapidly.
I admire the tenacity and the stamina of the Ballyhea protesters, but like Don Quixote, they are tilting at windmills. Until we have a notional revolution against payment, the protest is useless.
A national debt of €169 billion and rising by 20 billion per year.
The gig is up guys. We’re screwed no matter what happens.
At least Mathews had the tenacity to travel to the Bundestag with Stephen Donnelly having been told there was no room for him and that he was surplus to requirements, to try and explain to our overmasters the scale of the millstone that had been placed on the backs of the Irish taxpayer. “The Germans jaws dropped” but, I suppose the next line of defence was, “well, the Irish seem well pleased with their lot, not one of them out on the streets protesting”. One thing I’m sure of, despite liking Peter Mathews, is that he did not explain to them the surrender of the Irish Trade Union movement’s ideals and their cosy little arrangements viz. Croke Park 1 deal with the government that are higher paid than those with whom he was talking. I’m sure that issue too was discussed as soon as they left the building. So far, we have had surrender on behalf of the banks, gravy trains for bankers and accountants in the form of NAMA and IBRC betrayal of the Irish tax payer by pumping taxes, NPRF and Bailout money into banks in return for nothing. Wilbur Ross gets 35% of BoI for what was it? 1.35bn and we are left with 15% after investing over 5bn and the coco’s are handed to them on a plate.
Tonight I savor another failure from our dishonest politicians and look forward to the next instalment of spin in the papers tomorrow. You see, I like many people, actually want the government to fail because if they are allowed go on with their absurd juggling tricks those responsible for this crisis are going to get off scot free as they have so far. First, we need to deal with our own politicians and bankers then we can carry our case to Europe from a position of not covering up the truth of what happened.
@NWL
Peter Mathews proposed not paying the next instalment of the PN/ELA at tonight’s meeting. He advocated inviting the ECB to discussions, post the due date and post not having made the payment.
The Michael Taft ‘Unite’ Chart 1, European Bank Debt per Capita’ is worth putting online. A real eye opener.
As Diarmuid O’Flynn said, when the Troika leave, they will have grins all over their faces. They came for the money; the private bank bonds on behalf of the private creditors. They got what they wanted and stuck generations of Irish with bank debt.
It was an act of war, with the ECB as the advance Panzergruppe. Our own politicians and elite acted as quislings in the whole episode, and were well paid for it.
An act of war is exactly what it was and is. And our response is to send in a few washed up teachers! No offense to teachers.
We need a war time response and war time governance. This joke has gone on for long enough.
@NWL
Clarification on above, in case of misunderstanding.
“It was an act of war, with the ECB as the advance Panzergruppe. Our own politicians and elite acted as quislings in the whole episode, and were well paid for it.”
That paragraph is my opinion, and not a paraphrase of anything that Diarmuid Flynn said tonight.
http://news.yahoo.com/exclusive-ecb-rejects-irish-bid-promissory-note-sources-152427166–sector.html
“The ECB has said that no deal has been rejected”
Perhaps there was never any deal to reject?
However Ireland could improve costs / expenditure for running the country, take Singapore for example, crime rate is very low, they don’t tolerate bad behavior or drug trafficking.
In Ireland due to a toleration of crime we have to spend large amounts of taxpayers money every year employing Gardai to investigate criminal activity.
Perhaps if Ireland got it’s problems under control… the books would balance quicker and less tax rises / service cuts would have to be made.
But no……….. lets tolerate the Criminal Class, after all, we have DEEP POCKETS.
@Sporthog, yep, if we executed about 60 people per year – which we would if we adopted Singapore’s capital punishment regime – that might drive crime down.
http://en.wikipedia.org/wiki/Capital_punishment_in_Singapore
We would no longer be EU members however.
If we executed sixty bankers, I think it would drive financial crime down substantially.
@ NWL,
Indeed, within Europe there is a reluctance to capital punishment, however this will change over the next 50 years.
We cannot afford to keep the criminal class in clover anymore. Eventually the message will get through.
@ OMF,
You crack me up with laughter at times…
“We cannot afford to keep the criminal class in clover anymore. Eventually the message will get through.” Considering the amount that we have repaid bondholders and other financial institutions, we seem to be keeping them well stocked in clover right now…
‘Getting a deal’ was set by FG-Labour as a criterion by which to judge them.
Failure to do so not only reveals them to be poor negotiators, but also exposes them as sub-standard project managers who can’t set achievable (i.e. realistic) deliverables.
On a related note, does the sight of Government figures traipsing around Europe looking for sympathy remind anyone of FAI chief John Delaney asking to be the 33rd team at the World Cup a few years ago?