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The Psychology of an Irish Meltdown
By TANA FRENCH
DUBLIN — FOR the past month, Ireland has been outraged by tapes of Anglo Irish Bank officials, back in 2008, discussing lying to the government about how big a loan they needed, and how they knew there was no chance that the loan would ever be repaid. That loan was the first domino in a sequence that ended with the whole Irish economy flat on its face.
It’s not the bankers’ actions that have outraged people — pretty much everyone had a fair idea that this was what had gone down. It’s the overpowering sense of amorality revealed on the recordings, which were released by the Irish Independent newspaper. The bankers have a great laugh about the situation. It genuinely never seems to mean anything to them that the taxpayer is going to be forced to pay their bills, to the tune of tens of billions. More than that: it never seems to occur to them that their actions might harm people.
I write psychological crime, so I spend a fair amount of time thinking about morality and amorality and what underlies them. And it seems to me that this amorality could be a symptom of something deeper: a total disconnect between action and consequence.
Ireland’s population is just over half that of New York City’s. Our ruling class — including many of the politicians, bankers and property developers who wrecked the economy — is a tiny community, interwoven by friendship, marriages, education, sports and financial transactions to a degree that would be unimaginable in a bigger country. That interweaving has created a safety net that won’t let any of the ruling elite fall. If you’re a banker and your golf buddy’s kid wants to be a banker, then it doesn’t matter if the kid is an idiot, or if he kills cats for kicks: you’ll take him on, and you’ll keep him on.
For many of these people, action and consequence don’t apply; their lives are mapped out from birth, and nothing they do will alter that map. It seems to me that that would be intensely disempowering, even terrifying. Instead of being a series of interlinked actions, life is made up of a scattering of events that have no discernible relationship to one another and that you don’t influence in any real way. In that climate, it would be difficult to develop the sense that your actions make any difference, that you have any responsibility for the consequences. Without cause and effect, there’s no foundation for morality.
I’m not saying this is an excuse. It isn’t. But, like everyone in Ireland, I want answers — for the taxes piled on taxes, for the enormous cuts to essential services, for the dole queues and the flood of emigration, for the desperation in the voices of people who are trapped in ghost estates and don’t have the money to buy their kids shoes. And I wonder if this could be one small facet of one of the answers.
Another question, maybe a more interesting one, is how people who weren’t part of that powerful elite got sucked into the property pyramid scheme that fueled the boom. Some commentators have implied that the answer is basically the same: people got deep into credit-card debt, or took out mortgages for 10 times their income, because they were temporarily sucked into the psychosis of the powerful and it didn’t occur to them that there might be consequences.
But I wonder if, for these people, the truth might actually be the opposite.
Throughout the economic boom, the politicians and bankers and property developers, along with the news media, were telling all of us that cause and effect were perfectly, inextricably linked: “If you buy a vastly overpriced and shoddily built house in the middle of nowhere, the economy will keep growing, and in a few years your house’s value will have doubled, and you can sell it to some other sucker and buy something you actually want and live happily ever after and UTOPIA!!!” It was as simple and certain as sticking a coin into a vending machine: insert Action X, and the life machine will inevitably whir and beep and spit out Future Y.
THE Irish are notoriously cynical, but the Utopia myth hit at exactly the moment when we were most open to unquestioning belief. The majority of Irish people were so desperately poor, for most of the country’s history, that when suddenly we weren’t broke any longer, the cynicism was washed away by the flood of prosperity. We needed to believe that the Celtic Tiger hadn’t simply wandered in, because that would mean it could wander out again. We needed to believe that we had somehow made it happen, and that therefore there were things we could do, like buying overpriced houses, to make it keep happening. We needed, basically, to believe in that chain of action and consequence.
And so the Irish tendency to raise an eyebrow at anything that’s presented as certain paradise dissolved just at the moment when it was needed most.
A lot of my generation believed that chain was unbreakable. When it shattered, so did they — not just financially (although that too), but also psychologically. Their whole sense of a world governed by coherent cause and effect, of their ability to have any agency in their own lives, came under attack.
Those people, the ones who trusted too deeply in action and consequence, were the ones who got utterly, shamelessly destroyed by the people who had no such belief. I’m pretty sure the effects of that betrayal, for Ireland, will take decades to fully unfurl.
Tana French is the author, most recently, of the novel “Broken Harbor.”
Public Inquiry · It is practically impossible to challenge the power of state corruption
The following editorial in today’s Irish Examiner is worth reproducing in full.
The header asks: Why are we pathetically complacent?
I don’t’ think the Irish people are complacent. I think rather they have, over the decades, being rendered totally powerless by the sheer weight of corruption within the political/administrative system.
Irish citizens can see the corruption, they are extremely angry about it, particularly since September 2008, but because the governing system is so infected with the disease it is, short of a revolution, almost impossible to make any serious challenge to the power of state corruption.
Challenging corruption – Why are we pathetically complacent?
Friday, July 26, 2013
It is not an exaggeration to say that the country was convulsed in the run up to the passage of the Protection of Life During Pregnancy Bill through the Oireachtas.
Tens of thousands of people marched, every media platform was dominated by debate on the issue. Croziers were dusted off and swung like broadswords in a way that once commanded obedience. Taoiseach Enda Kenny showed an unexpected ruthlessness to get the legislation passed.
We had, in Irish terms at least, a spectacular and almost unheard of form of protest — politicians risking careers on a point of principle.
It was, whichever side of the debate you stood on, a matter of right or wrong. A position had to be taken, remaining neutral was not an option.
Yet, and though the ink is barely dry on the abortion legislation, another manifestation of this society’s justice system’s dysfunction and ongoing failures, our seeming indifference to allegations of corruption — or the innocence and good name of those accused of it — presents itself and there’s hardly a game-changing ripple across the public consciousness.
There is certainly no prospect of 40,000 people marching through the streets of our capital to protest at yet another Irish outcome to an Irish problem.
Is it that we don’t care? Is it that five years after our banking collapse and not a single conviction to show for society-breaking years of Wild West banking that we are a beaten, abject people who have come to accept that for some people accountability is as remote and unlikely a prospect as levitation?
The collapse of the planning and corruption trial earlier this week because a witness is too ill to give evidence has served nobody well, not even the businessman, the councillor and the two former councillors in the dock. Though the principle of innocent until proven otherwise must always apply, too many important questions remain unanswered.
This one case may put the issue into a sharp, if fleeting, focus but there are myriad examples of our failure to adequately deal with the whiff of corruption.
Speaking to the Dáil’s Public Accounts Committee, former financial regulator Matthew Elderfield put it in the gentlest terms when he chided that we do not have a system capable of holding individuals to account or tackling white-collar crime.
How could it be otherwise? A report from that committee suggests that fewer than 60 state employees are focussed on white-collar crime. This figure includes all relevant gardaí, Central Bank officials and the Office of the Director of Corporate Enforcement staff assigned to the problem. We probably have more dog wardens.
It is surely, despite the occasional protest from cornered politicians, naive to imagine this is accidental. If it is, like our tribunals, it is profoundly under-whelming and utterly unequal to the challenge. More likely it is another example of our enthusiasm for rules but our fatal distaste for implementing them.
There is great, chest-filling talk about political reform, about a new political party even and changing the culture of how a citizen interacts with the state. Sadly, all of that will stand for nothing more than a cynical diversion unless we have a policing, regulatory and justice system capable of, and most importantly, enthusiastic about, investigating allegations of corruption.
It is said that a society gets the politicians it deserves and that may well be true, but it is absolutely certain that a society must suffer the consequences of the behaviours it tolerates. The evidence is all around us.
via Public Inquiry · It is practically impossible to challenge the power of state corruption.
You Don’t Earn Much Money – Get Used to It
It is reported that the Minister Richard Bruton will propose that tax cuts are needed to keep the economy on course. Well, at least this has the virtue of consistency since this is the same Minister who proposed that high-paid company executives should pay hardly any taxes at all. Over the next few months we will get a Goldilocks debate over taxation – is it too hot, is it too cold, is it just right. But there’s an elephant in the room ready to stomp on the poor girl – and this will hardly get a mention.
For we are a low-waged, low-earning economy – and it is getting worse.
According to Eurostat Irish earnings have always been below EU averages. Even in 2008, when Irish earnings peaked, we were still well below average. Today, after four years of wage stagnation, we are falling further behind. In 2012 average earnings for:
- Other EU-15 countries was €38,525
- EU-15 countries not in bail-out: €41,963
- Other Small Open Economies: €45,123
- Ireland: €32,626
Since 2008 Irish earnings have flat-lined. In other EU-15 countries, earnings have increased by 10 percent while in other small open economies, earnings have increased by 13 percent.
To give another perspective, average Irish earnings would have to rise by 18 percent just to reach the average of other EU-15 countries. They would have to rise by 29 percent just to reach the average of core EU-15 countries. And they would have to rise by a phenomenal 38 percent just to reach the average of other small open economies.
Of course, there is that little matter of the ‘recession’. Many might argue that in a recession, what can you expect? Yes, recessions don’t help average earnings. But neither do discretionary pay cuts. To what extent that pay cuts or freezes are opportunistic on the part of the employer is difficult to assess. The rise in profits, however, is not. The EU AMECO database shows profits in Ireland rising by 24 percent since the profit trough in 2009; in other EU-15 countries the rise has been 7 percent – in line with growth in average earnings.
As always, we have to be careful when comparing data like earnings. Much depends on the composition of the workforce. For instance, if more people are working in manufacturing, the wage will be higher than in economies where the number of hospitality workers is high. So one would have to do a sectoral comparison to get more insight.
Further, if there are high levels of part-time workers, this will reduce the average.
However, there is strong support from other data coming on stream for the proposition that our wages and earnings are well below the European averages. The following is from Eurostat which measures hourly labour costs in the business economy, which is essentially the private sector.
Private sector hourly labour costs in Ireland are 14 percent below the average of other EU-15 countries. This falls to 21 percent when compared with the core EU-15 countries; and when compared to the average of other small open economies, it falls to 30 percent below average. Are we seeing a picture here?
We are a relatively low-waged economy, we are a low-earning workforce. And such economies find it hard to generate tax revenue. But you don’t get that perspective to the agenda and you certainly won’t hear it from Government ministers. They are too busy trying to drive down wages – whether it is in the public sector, the banking sector (where 40 percent of bank staff earn €30,000 or less), in the low-paid sectors where many of the protections under the Joint Labour Committee have been undermined under Government ‘reforms’. All this talk about ‘increased competitiveness’? Cut wages.
So when you hear some commentator or Minister, pretending to champion the hard-pressed workers by calling for tax cuts, just remember: the tax cut is a diversion.
The real issue is pay and earnings.
– See more at: http://www.irishleftreview.org/2013/06/19/dont-earn-money/#sthash.hAPPL3Jg.dpuf
The Feral Irishman
I Think I Might Have To Try A Good Irish Dinner Tonight….Typical Irish 7 course diner
via The Feral Irishman.
Price of Injustice
British Occupied Ireland(N.Ireland)
A commoner in British Occupied Ireland, can be designated a “terrorist” on the secret, unaccountable dictat of the unelected British Viceroyal Villiers, without notice and without a trial. Under CMPs(Closed Material Procedures) any Irish person may be jailed, simply on vaguely-defined, highly paid “material support,” against any person or group, labeled by the Viceroyal as “terrorist.” Any political dissent, such as wearing green, as in a recent incident, or singing a ‘Celtic Song’, or holding a piece of paper at an Easter ceremony, can be labeled as “terrorism” or “material support for terrorism,”
Two essentials are driving the trampling of democratic rights in British Occupied Ireland and the shift towards authoritarian Viceroyal fascist rule there. The first is the massive social inequality, which the British Chief Constable in Ireland, Matt Baggott, referred to recently, when pleading for greater efforts to counter the economic and social roots of Irish republican dissent, in turn driven by the historic crisis, of British sponsored sectarianism, within their capitalist system of further inequality. Britain as usual, looks to sponsored state terrorism, police state repression, wartime political internment without trial, as a means to preserve their status, power and wealth.
The second is that real democracy is incompatible, with such high levels of sectarianism, social inequality and injustice, it is also incompatible with low intensity imperialist war, such as Britain is still conducting in Ireland, under the guise of a fake Peace Process. The UK military and intelligence agencies, have for centuries been wading in the blood of every country in the world, with the exception of just 10, in a drive to plunder the world’s resources. The dead, wounded, interned and displaced numbered in the millions, with Ireland its first colony of 800 years suffering incessant genocide and invasions.
A knock on the door! In the early hours of the morning. A door smashed with British jackboot of state terrorism, and armed men breaking into your home. They call them military and British paramilitary police, as you are dragged from your bed. Jail, internment camps, no charge, no trial, indefinite detention. This has been the institutionalized pattern of political internment in Ireland, for more than a hundred years now. It is still happening today, as the well documented cases of Marian Price and Martin Corey still testify, despite a much touted Peace Process.
The current international struggle against real and state sponsored “terrorism” is the latest political cover, misused by the British, for their centuries old, worldwide arrest and murder of tens of thousands of political opponents, youth, workers, intellectuals and other enemies of their colonialism or pirate rape of worldwide communities along with their resources. The UK government, currently asserts the power, to subject anyone Irish who disagrees, as a designated “terrorist,” subject to arbitrary arrest and detention without trial indefinitely. Political internment without trial has become institutionalized in Ireland.
Leaving to one side for a moment, how morally grotesque all of this is, one does not have to be particularly bright, to see, that such obvious injustice, has no place in building a genuine peace process.Those secret service puppets, stooges, who are called politicians in British Occupied Ireland, who have curried favour and made lucrative careers, by exclusively condemning non British state violence, are quite comfortable with all of this institutionalized violence, to the point where a mercenary British Chief Constable was forced to highlight some of it, in a one party British sponsored kleptocracy .
It is vital where ever we are, to oppose such criminal British assaults on freedom, in the first instance, no matter who is targeted, because such state kidnap, when unopposed, has become institutionalized. Now that it has happened, this is difficult to stop, because once it happens, it inevitably occurs, that internment without trial, will expand way beyond just the Irish and other groups originally targeted, to include all of the people of no property, wherever criminal privilege, ensnares.
Anyone Irish who has been paying attention, knows that British concepts of “guilt” and “innocence” are quaint relics of a dead Magna Carta and a discarded habeas corpus. All that matters today in British Occupied Ireland, is how many convictions a prosecutor can get and how many secret service careers are advanced in the secret “injustice” system, of a scum sectarian state, sponsored by supremacist British Tories, under the watch of Viceroyal Villiers. “Justice,” just like everything else in ” British civilized” society, is an industry and a product, that keeps the British Tory ruling classes happy with the restless Irish natives still under the colonial jackboot.
Freedom and truth are not part of the equation as with the ruling class worldwide, now in the advanced stages of preparations for the inevitable confrontation with the international people of no property. We need to make our own preparations, conscious of the examples elsewhere, of progressive, evolutionary, political struggles to genuine government by the people of no property, for the people of no property. It is they and only they, who can be trusted to avert the threats of dictatorship and guard a genuine democracy, with social equality and real justice.
After World War II at the Nuremberg Tribunals, the principal Judge said of the purpose of Nuremberg: “We must make clear to the Germans that the wrong for which their fallen leaders are on trial is not that they lost the war, but that they started it.” The intent was to establish a precedent against aggressive war like, Iraq, just 57 years later. Jackson said: “Let me make clear, that while this law is first applied against German aggressors, the law includes and if it is to serve a useful purpose, it must condemn aggression by any other nations, including those which sit here now in judgment.
“We are able to do away with domestic tyranny and violence and aggression by those in power against the rights of their own people only when we make all men answerable to the law. This trial represents mankind’s desperate effort to apply the discipline of the law to statesmen who have used their powers of state to attack the foundations of the world’s peace and to commit aggression against the rights of their neighbors.”
On April 24, 1946, one of the Nazi defendants Wilhelm Frick, told the Tribunal, “I wanted things done legally. After all, I am a lawyer.” Frick drafted, signed and administered laws that suppressed trade unions and persecuted Jews. He insisted he had drafted the Nuremberg Laws for “scientific reasons,” to protect the purity of German blood. Frick also knew that the insane, aged and disabled (“useless eaters”) were being systematically killed, but did nothing to stop it.
Frick was sentenced to death by the Nuremberg Tribunal and hanged on Oct. 16, 1946.
I do not advocate capital punishment, even for the likes of Viceroyal Villiers and her ancestor also called Viceroyal George Villiers, 4th Earl of Clarendon, who ruled over the genocidal holocaust, that murdered millions of Irish people, in what they call the Great Hunger. I simply want the Villiers and Tories held accountable, as their faux-lawyer Nazi counterparts were. Otherwise Britain has made a liar out of Justice Jackson and made a mockery of the Nuremberg principles, which so many working class people, gave their lives for, including their loyalists in Ireland, which will be revealed as just another case of “victor’s justice” despite promises to the contrary. Their own Churchill called internment, an Act of War in the highest degree Odious and the mark of an authoritarian regime.
I do not know how British law, hold it’s supposed professionals to account but I do know that Viceroyal Villiers obtained a Bachelor of Civil Law (BCL) from Jesus College, Oxford, in 1991. After graduating she worked as a barrister and as a lecturer at King’s College London (1994–99). It is understandable that these international colleges may simply be places of ill repute and vice, bearing in mind the British track record, of not honouring it’s Royal pardons and their SS shredding her Majesty’s writs. But if by chance, they even aspire to any claim of morality in their lawless neo-colony, then they sshould not need me to explain to them, how to commence what the Price of Justice requires.
As with freedom of speech, freedom of assembly, is also meant to be guaranteed, in a democratic peace process, with the reality, however being, that political assembly is a semi-criminal activity in British Occupied Ireland. Political protests are routinely met with vastly disproportionate police mobilizations, “kettling” (in which protesters are surrounded and forcibly moved in one direction or prevented from leaving an area), beatings, tear gas, pepper spray, stun grenades or plastic bullets are the standard British response to a peaceful, political protest, in a massive show of force, complete with riot gear and police snipers on rooftops. What is this but a police state, repression, combined with internment without trial, death squads, that murder human rights lawyers and journalists. A foundation for a Peace Process?
Ask the people of no property ghettoized across the neo-colony. They will tell you justice is locked up, it is political interned right now, in the form of Marian Price and Martin Corey. Like a slow burn fuse, internment without trial, is an instrument of war that burns in the Irish psyche and heart. It has no place in a peace process. Nobody can be that stupid, not even the Brits but to realize, it guarantees more war, especially in the instance of icons of Irish street resistance, to British colonial occupation in Ireland. It hasn’t worked in a hundred years and it will not work now. No, like recent British aggressive wars in Iraq, Afghanistan, Libya and now Syria the British industrial war complex, demands permanent wars of profit and political research laboratories for their state terror in police state neo-colonies, such as British Occupied Ireland.
Related Link: http://bit.ly/13C9IdY
Ireland was Germany’s off-shore tart — A look back in Time
AN ARTICLE WELL WORTH A READ
by Golem XIV on JANUARY 24, 2011 in LATEST
Now that Mr Cowen has lost control of his party, coalition and country, the Irish can expect to be bullied and hectored from all sides. It is more important than ever for Ireland to defend herself against the claims that she owes the rest of us. She doesn’t.
Every European bank exposed to Irish loans, every bond holder holding Irish debt – both bank and sovereign, and every foreign central bank concerned for the solvency of its own banks will start to crank up a barrage of propaganda and threats. It will be top of everyone’s propaganda agenda to make sure the Irish election offers no choices that could destabilize the unexploded ordinance of European bank insolvency.
The European financial class will be desperate to ensure that the Irish have an election that is carefully constrained so as not to offer anything that might actually help them. As far as the banks, the ECB and all the leaders of nations whose banks would suffer losses if Ireland were to default or restructure, the Irish people are NOT to be exposed to ideas of default.
All parties must be told, and if that fails to convince, made to feel directly via the bond market, the consequences of any alteration of the course followed so far. And, of course, it has already started. Here is what senior ECB banker, Lorenzo Bini-Smaghi, said on January 15th regarding Ireland’s electoral choices.
“It would be dramatic for Ireland if just by changing government you renege on the promises that Ireland as a sovereign has made.”
Not that he would dream of making veiled threats to try to frighten Irish public opinion into choosing what would be best for the banks over what would be best for the Irish people.
“Look at those countries which defaulted, like Argentina, Pakistan, Ukraine, Zimbabwe, Cote d’Ivoire. Do the Irish people want to go through the same experience?”
No mention of Iceland there. Funny that.
The foreign press will run story after story about the dangers of ‘contagion’, of the need for responsibility and resolve. The Irish Central bank will step in to make grave pronouncements if the political parties seem not to be holding the line.
Foreign leaders such as , Merkel, Olli Rehn, Barosso, Trichet and our British clowns, all with their own national interest, will give talks and be quoted in their papers about the need for steady fiscal responsibility and the unthinkable consequences of any waivering.
If there is any rumbling of popular discontent, then scape goats will be found – people upon whom some anger can be harmlessly vented. But if that does not work then the rhetoric will get more pointed. Ireland will be reminded that ‘it’s their fault’ and they ‘have no one to blame but themselves’. In the German press any hint that Ireland may be thinking of restructuring will be met with dark reminders of how ‘Ireland’ in the form of Depfa had to be bailed out by Germany.
In short I don’t think the Financial class is pleased that the politically unreliable (when it comes to European questions) Irish are going to have an election at this delicate time. I think the run up to the elections will involve a lot of propaganda designed to shout down any opposition to bail outs and debt payments.
So I thought this might be a good moment to get a few things on record regarding Depfa, HRE (Hypo Real Estate) and the banking crisis blame-game.
For those who aren’t already familiar with the Depfa and HRE story, here it is in a very small nut shell. Hypo Real Estate was the huge German bank which we were all suddenly told, back in 2008, had to be bailed out by the German State at vast cost. But, they said, they had no choice, because Hypo (HRE) was so large and its debts so huge that if it collapsed it would, at the very least, bring down German banking. It was Europe’s AIG – to big to be allowed to fail. Then the back story emerged. HRE had bought ‘Irish’ bank Depfa at the top of the market at almost the same time as RBS bought ABN Ambro. Both purchases were insane and both killed the purchasing bank.
It was then put about that the collapse of HRE was in fact due to a huge funding crisis at Depfa always referred to as ‘its Irish subsidiary’. From that came the notion that Depfa must have hidden its true state from HRE. Why else would HRE have bought a bank which couldn’t fund itself?
And that is how the story firmed up. Irish Depfa must have lied about its true state in an effort to sell itself to Hypo, so that when Depfa’s hidden financial problems surfaced, the cost of them killed Hypo and then fell upon the German rather than the Irish tax payer.
It is sometimes easy to forget with all the sordid and ruinous business of Anglo Irish, that the beginning of the whole crisis in Ireland and in Europe was intimately tied to Depfa and HRE. Thus I think it is worth reminding ourselves of some of the misinformation and perhaps offering a few less well known facts. Facts which might help the Irish defend themselves.
It was often said, particularly in the German press, that Depfa ‘brought down HRE’. Had HRE not bought Depfa when it did in 2007, then it would have been the Irish, who had incubated the problem, who would have had to pay for it, not the Germans. There is always this undertone that somehow Depfa must have lied to or misled HRE.
Was DEPFA really an Irish Bank which the Irish should have bailed out?
Less than 1% of Depfa’s business was Irish. Virtually no Irish Banking money flowed into Depfa or its deals. Depfa was not a major employer in Ireland. A couple of hundred jobs at most. Few of its senior positions were held by Irish people. Thus in purely bloodless financial terms there was virtually no reason for Ireland to bail out Depfa. Depfa was not systemically important to Ireland or the rest of its banking sector. Depfa was, however, vital to the continued health of the German banking sector. Add to this that the size of any bail out of Depfa was quite beyond what Ireland as a nation could have done. Ireland’s total IMF bailout stands at €85 billion. All on its own the HRE/Depfa bail out has already cost Merkel well over €100billion. Depfa, like one or two other banks in Ireland, was simply too big for its host. It was a financial cuckoo in the nest.
The German’s, however, would have bailed out Depfa even if it had not been bought by HRE because Depfa’s failure would have crippled something essential to the entire German banking sector – the Pfandbrief business. The Pfandbrief is a German ‘covered bond’. A covered bond is simply a super safe kind of bond. It is considered as safe as Sovereign bonds but gives a higher return. Germany invented the Pfandbrief and its banks relied on it.
The Pfandbrief/covered bond is considered super safe because, unlike other bonds, the Pfandbrief is backed by a ring-fenced set of assets which cover the total value of the Pfandbrief/bond. So even if the bank issuing the Pfandbrief were to go under, the Pfandbriefs themselves would never default. And it has been the bed-rock of the Pfandbrief’s reputation that in 250 years no Pfandbrief has ever defaulted.
At the time of the Depfa bail out there were €806 Billion in Pfandbrief outstanding. The third largest chunk of the German bond market and the section that had been growing rapidly and which everyone wanted to be a part of. The German banking sector wanted to grow and compete with the British and the Americans on the international stage. They saw the Pfandbrief as an important part of their strategy. This article from 1999 gives a great feel for how the markets were then, as they stood on the cusp bubble years.
If Depfa had gone down, it would have taken the AAA rated dependability of the Pfandbrief with it. Ireland could let that happen, Germany could not. That is why, I think, Germany would have bailed out Depfa no matter who owned it.
Why did Depfa move to Ireland if it was still a ‘German’ bank?
Depfa was always a German bank, that had simply chosen to locate itself in Ireland for funding and regulatory reasons. Does this mean that Ireland was stealing Germany’s banking sector? No. The best way to think of Ireland is as German’s off-shore tax haven banking centre with one significant feature – it was within the Euro zone. Every country has one. The UK has many. Germany needed one and Ireland was happy to oblige. Thus it suited Germany as much as it did Ireland. It was a partnership.
Of course Ireland made itself everyone’s honey. But I think it is fair to say that of her many customers she had a special relationship with Germany. Think about it. Depfa, HRE and HVB (Now UniCredit), Deutsche Bank, LBBW, DZ bank, Commerzbank, Bankgesellschaft Berlin, Landesbank Sachsen, WestLB all gravitated to Dublin.
The fact that this arrangement/partnership has fallen apart in acrimony doesn’t alter the fact that when the money was flowing the Germany banks, German bankers and all their politicians were every happy with what was going on in their Irish subsidiary. Ireland does not owe Germany an apology.
In fact I think Ireland should be asking Germany some hard questions over the sometimes abusive relationship German banks have had, and some still have, with Ireland. See here for how WestLB after it collapsed created an SPV called Phoenix, as a means for parking/dumping €23 billion of toxic ‘assets’ in Ireland. This, it seems to me, is the Toxic Debt Wasteland I wrote about, becoming real.
How did the Irish Funding work?
Depfa had always raised its cash through its own Pfandbrief bank. It’s source of funding were the Landesbanks who in turn got the cash from the bottom of Germany’s banking system the Kasse, deposit banks. They had all the cash.
But there were limiting factors. German money was the spur to Depfa’s early growth but the bank, according to a former board member I have spoken to, wanted more. They wanted better access to international funding and international customers. Neither, as more than one German banker has told me, was readily available in Germany.
Ireland made itself a meeting place for those with money in need of investing and those looking for loans. For Depfa in particular it was an attractive place. Depfa had decided to target Russian and East European public investments (investing in publicly funded works) and Ireland had made itself attractive to Russian and Eastern money. Money in various shades of shadiness flowed to Ireland. The timeline of German banks and for that matter all European banks (thinking of UniCredit here) going to Ireland runs parallel to East European and later Russian money beginning to flood out of the former soviet states looking for a new home in the West. Ireland met that need. Ireland become THE favourite investment destination for Russian money.
Money was placed in the East. There were and are plenty of subsidiaries there who could pass it along to be funneled westward through Austria (Bank Austria) or Cyprus onward to Ireland where it could find its way to the heart of European banking in Ireland.
Depfa set up a brand new bank Depfa ACS bank, specifically to tap into all this new money. It even got the Irish parliament, in agreement with the European authorities and German banking sector, to write a new law making it possible. Ireland created its own version of the Pfandbrief – the Asset Backed Security. This allowed lots of new money to join with the steady flow of Germany money from the Landesbanks to unite in Ireland to the benefit of Ireland AND Germany.
Of course Europe has access to all sorts of Off Shore Banking so what made Ireland special? Ireland was physically close, was already a corporate centre, was English speaking (good for the Americans), was low tax, used English Law (good for London) and had the same ‘we can do if for you’ attitude of Luxembourg. What gave Ireland the edge over Luxembourg was it offered faster turn arounds on setting up deals and far more lax regulation. Ireland was perfect.
Ireland and Luxembourg are banking competitors. But Luxembourg is not English speaking, is slower and worst of all has a regulator who occasionally regulates. The Luxembourg regulator has all his own teeth. Ireland’s had his removed along with his balls a long time ago.
As long ago as 2005, Charlie McCreevy, Ireland’s former Minister of Finance, (another Fianna Fáil man who was at the Ministry of Finance before Brian Cowen took over that job and showed everyone how it should really be done!) who then became European Commissioner for Internal Market and Services (nothing like failing at one job in order to get a better job…) addressed an esteemed EU/UN gathering in New York in 2005 in which he famously stated
“As Finance Minister in Ireland I saw what great entrepreneurial energies that a “light touch” regulatory system can unleash. 25 years ago we were the sick man of Europe. Today we are among the richest countries in Europe. Ireland is indeed testimony to the fact that you don’t need to be rich in natural resources to generate real wealth.”
That was shortly before someone shouted ICEBERG!
For those of you whose German is better than mine you will enjoy this German television (ZDF) expose of German Banking in Ireland and Depfa/HRE in particular*. Apart for revealing interviews with senior people in the German banking world, it also contains a brief interview with David McWilliams who famously referred to the fact that the German bankers behaved in Ireland “like men in a brothel” – with the blind eye of the Irish Financial Regulator seeing no evil. WhistleblowerIRL’s roller coaster experience as UniCredit Ireland’s risk manager illustrates the extent of the Irish regulator’s incompetence and/or criminality, and refusal to actually enforce regulations.
You can find more on Ireland’s regulatory cess pit and WhistleblowerIRL’s story in Why Bank Regulation is a Joke, and Who Bankrupted Ireland. For more the details of WhistleblowerIRL’s very much ongoing story see his blog here.
Of course if you want no regulation why not just go to the Caribbean? The answer comes back to the German banks again.
Much of the money flowing into Europe looking to be invested would end up in Special Purpose Entities/Vehicles (SPE, SPV) or Structured Investment Vehicles (SIVs). These are the legal containers which house and run the securities in a Collateralized Debt Obligation. You securitize debts, you put them in a CDO you house the CDO in an SPE/V or SIV and you need somewhere to set up and domicile the SPE/SIV. What Germany wanted was to have the dubious advantages of off shore combined with the above board respectability of Europe. German investors, the Landesbanks, wanted their money inside the OECD cordon of respectability while getting all the perks of off-shore. Ireland provided both.
A former, very senior banker from Depfa told me the Landesbanks could not buy Depfa’s debt/Asset Backed Securities fast enough. Any issue Depfa made would be pre-sold to and wolfed down by the landesbanks before the ink was dry. This was a partnership.
Now before I wrap this first part up, I would just like to note that,
Another banker, based in Germany, has recently pointed out to me that in all of the discussion about the Greek-Ireland-Spain/Portugal bailouts, the debate over the tax-payers’ money that was, and still is, being poured into the now-nationalised HRE/Depfa has mysteriously been silenced. I wonder why? The banker referred me to this documentary which raises some interesting questions about why and how HRE was bailed-out. It makes the importatnt link to Akerman at Deutsche Bank and how he appears to have told, not advised, but told, Merkel what to do. Merkel might be more of a tin wind-up model of an Iron lady rather than the real thing.
As I have very basic German-language skills, I would welcome any comments readers might have about these documentaries. This would help me to learn more about the HRE/Depfa saga.
On that note I am going to break the story here to stop this becoming too large. I will continue in the next part with the question:
So what went wrong? And why did HRE buy Depfa when it was already going wrong?
In which we will meet once again our old adversaries AIG and Goldman Sachs.
* I think no longer available
Part Two Tomorrow
via Ireland was Germany’s off-shore tart » Golem XIV – Thoughts.
The Sun Always Shines On Vincent Browne
A Festival of Cruelty curated by as pure a curmudgeon as ever sprang from Eire’s grassy hills. Culturalfatwa looks beyond the haranguing to the true message of Tonight with Vincent Browne.
By any measure Tonight with Vincent Browne at the unearthly hour of 11pm on TV3 is a weird yet wonderful phenomenon. In fact, in a political landscape almost completely devoid of genuine debate, it might just be said to be unique.
Stranger still the fishies that swarm and nibble about in the associated twitter hashtag, #vinb. Here extreme lefty meets dedicated republican, hard core begrudger and random Twitter smartarse, and all on a roughly even footing. Within this tag swim small schools of wrigglers of the anti-bailout right (the Karl Wheelan/Paul Somerville shoal for want of a better term), and occasionally, even in these shallows, drifting thoughtlessly under a bridge you hear a faint shout, “TROLL!” Too late! A doughty rock lobster of the Fianna Fáil, Labour or (horror) Fine Gael variety has you held in its vice-like claws.
The #vinb tag, rightly described recently on Twitter by @soundmigration as a genuine social/sociological phenomenon, would repay study – maybe someone is already on it?
Moving out of ‘virtual pools’ for a moment what we have is simply a TV panel show presided over by the mighty Vincenzo. It’s extraordinarily hard to describe to the uninitiated this man of (apparently) lefty-liberal leanings. Of course his arsenal of ticks, shudders and eye-browy moves and gestures have been well mimicked, if not quite equalled, by the short-lived Mario Rosenstock sketches on the show. But beyond the baleful sighs and the eyes up to a heaven he doesn’t believe in, to a god that’s not taking calls, Vincenzo is as pure a curmudgeon as ever sprang from Eire’s grassy hills.
Besides a photographic memory stretching back eons there is his most dreadful weapon, the phrase “Just answer the question”. So strong is this stinger that it seems to have been the main reason that the Troika refused to meet either opposition or press on their last tour of inspection. It is deployed with limpet-like tenacity, the hapless victim (be they left, right or centre) is allowed to blather on at will for a brief period. Then “the question”.
“The question” is always of a “have you stopped beating your wife?” nature. It might be nice to think that a simple yes/no could be returned as an answer, but that would be far too easy! Rarely has the harried victim even the microseconds to draw breath, yet alone stretch to audible sound. “The question” is always completely ‘loaded’, entirely and intricately of arch Vincenzo design and almost never, ever, drawn from whatever has been the media pre-approved ‘argument’ or ‘side’ in any particular debate.
Some choice examples of this include asking Leo Varadkar, “Why did you put the ‘gun to head clause’ in the preamble to the Fiscal Compact Treaty?” (he also deployed this particular bludgeon during the first Compact Treaty debate with Micheál Martin and Simon Covney), asking Troika member Klaus Masuch, “did your taxi driver tell you how the Irish people are bewildered that we are required to pay unguaranteed bondholders billions of Euros for debts that the Irish people have no relation to or no bearing with, primarily to bail out or to ensure the solvency of European banks? And if the taxi driver had asked you that question, what would have been your response? That’s my first question”, or September’s evisceration of the hapless Kieran O’Donnell, “are you proud of what your party colleague, Phil Hogan, did in this instance – reassuring or assuring neighbours in this area that a Traveller family wouldn’t be housed in that area?”.
There are many other things that you are liable to see on Tonight with Vincent Browne that you will never see anywhere else on the Irish airways or, possibly, anywhere in the world.
There are the Festivals of Cruelty or bloodings, horrible rituals in which one of the major political parties supplies a young innocent for the specific purpose of a verbal savaging by Vincenzo. This seems to be based on the misguided notion that the victim will be steeled/tempered or toughened in some way. The repeat throwing of FG TD Paschal Donohoe into the metal box shows that particular theory up as a complete non-starter. The casual savaging of doe-eyed Paschal only seems to draw him back for more and at times even this seasoned anarchist antichrist feels like throwing a towel into the ring on his behalf. Seasoned ministers and party leaders generally will not be found even accidentally within a 50 mile radius of Vincenzo under any circumstances. In our lovely wee democracy in the year 2012 they are basically terrified of a ‘mere’ TV presenter. This is, obviously, hella cool.
There are times when an ‘ordinary head’, be they homemaker or community activist, is allowed to spout forth at and, occasionally, annihilate some stuffed shirt or other. There are times when an academic or expert is called out, though mind you one or two (Diarmuid Ferriter springs to mind) take to it like ducks to water. There are live embedded outside broadcasts from within protests ignored elsewhere on the airwaves. They have a presenter who reads viewers’ tweets, texts and comments out live, later reproducing them fully credited on a blog (politico.ie), responding in detail and often using that to generate debate in future shows.
This show never so much ends as fizzles out – usually in a bad-tempered, inconclusive and incoherent morass. Each ending is a tiny, beautiful example of another glib and easy closure (the sine non qua of most political broadcasts), deliberately and successfully elided. As a resigned Vicenzo stares directly into the void and mumbles something about the weather forecast the message is clear: if there is to be resolution or closure, indeed change of any stamp, it’s gonna have to come from out there beyond the TV screen, from you (yes, you!), the humble viewer.
A vicious attack on the poor
Instead of confronting the system that creates poverty and causes environmental degradation, the population controllers aim to eliminate the poor.
by Richard Mellor
By sheer coincidence, after blogging the other day about the Neo Malthusians or populationists as they are called (they do differ from Malthus on some of the specifics but agree with him in general) I watched a report on Al Jazeera about the efforts in India to limit population growth.
As I pointed out in that earlier blog, I have always been against this view (in my conscious political life anyway) that the crisis of society, both social and environmental, is women having too many children.
I recall as a young kid in Catholic school in Britain and the “too many kids” argument being used to explain why Irish people were so poor. Too many children, too stupid, dirty, ignorant etc. That the country was one of the first colonies of the rising British capitalist class which meant the ownership of the land was in foreign hands so Ireland was but a source of cheap Labor and cheap food for export by British concerns was never brought up. Hundreds of years of occupation, plunder and a racist war by British capitalism is why Ireland remained an impoverished country way in to the 20th century.
The problem is not that the need for food is greater than human society and the planet’s ability to provide it. The problem is in the way food production is organized; there’s plenty of food but it is not for those that need it. Capitalist food production is inefficient and wasteful. Food is a commodity just like a car or a refrigerator. The reason whole societies in the third world are incapable of providing basic health care or of eliminating diseases that were eliminated long ago in the advanced capitalist countries is because there is no profit in investing in such things. As one author points out, ”Food goes to those who have money to buy it.” [1]
But even in the US, capitalism cannot provide these things.
Not everyone espousing the populationist argument is a racist or hates the poor. Some may well believe that they are helping the poor in the long run. But when I was watching the video above it confirmed in me the need to take these ideas up very strongly because, as we wrote earlier, the too many babies argument blames the victims.
India does not have mass hunger or mass poverty because women are having too many children. India is poor for the same reason the Congo, a resource rich country is poor, because of a couple centuries of colonialism and the continued existence of an economic system where production is set in to motion for the sake of profit.
The solution to the population problem is always an attack on the rights of the poor and a racist one as it is not in the US or Rotterdam (a high density area) where women are being offered fridges, mobile phones or TV’s but India or Bangladesh. It is always the uneducated and “impoverished” as the woman in the video says. It is also inevitably women. The young woman says it will improve her life. But her having children is not the cause of her impoverishment, capitalism is. The so-called free market is the cause.
Think of this tragedy, one woman in another video says good fortune has come to her as she is ”Lucky enough to have her name picked” so she could win a car for her sterilization. Attacks on women in India like these have a sordid past as the video points out. In the 1970′s forced sterilizations caused many deaths and disfigurement. In Uttar Pradesh, the people from the lowest caste represented 29% of the population but were 41% of those sterilized.[2]
Poor women, often women of color in these United States, have been sterilized also but no matter what the public explanation, the main reason is the fear the rich have of the poor and as a means of obscuring the real problem.
“Blaming such socially generated scarcity and ecological degradation on ‘overpopulation’ or ‘underproduction’ has long provided the more powerful with an explanation for human misery that does not indict themselves and that legitimizes various ideologies of exclusion.”[3]
The strategies for dealing with population control so that we can supposedly save the planet are always designed in the universities and populationist think tanks in the advanced capitalist countries. The UN, a capitalist club dominated by the western industrial nations exports these methods in to the former colonial world. Aid or political favors are often denied if these policies are not adopted. ”I’m not going to piss away foreign aid in nations where they refuse to deal with their own population problems.” said US President Lyndon Johnson. And as Angus/Butler point out, Indira Gandi was awarded the UN Fund for Population Affairs’ World Population Prize in 1983.
The capitalist class is concerned that as market induced poverty increases the more chance of social unrest and animosity toward the market and capital as we are seeing around the world including in the US. As this occurs, people become more critical of the system and more open to socialist ideas. The way to deal with poverty is eliminate the poor, not the economic system of production that creates the scarcity or causes the environmental degradation. This idea only makes sense if you are one of the 1%.
The other aspect of this is that where I live, one family of two probably has a more damaging carbon footprint that 100 Ethiopians. We consume more lumber and therefore forests. We consume more steel, more rubber, and more energy. The US with 5% of the world’s population consumes some 25% of the world’s energy. Then there is the meat, as we pointed out yesterday, 40% of the world’s grain harvest goes to feed cattle to feed beef to western populations.
This video made me angry in that it is reported in a very matter-of-fact manner. These population control measures are a vicious attack on the poor by the wealthy and are racist and sexist. Most important of all, they let the real culprit off the hook.
[1] Nicholas Hildyard, quoted in Ian Angus and Simon Butler, Too Many People? (Haymarket Books 2011), 76.
[2] Too Many People?, 92
[3] Hildyard in Too Many People? 76
The Future for Irish Politics
Where we are now
We are entering the sixth year of recession which is being managed by a coalition of Fianna Gael and Labour who were elected on policies they have now reneged on. Prior to the election that put them in power Fianna Fail had been in Government for over a decade and managed to turn the Celtic Tiger economy into an economy that has been so badly managed that it has bankrupted the country for decades to come.
The only national party left is Sinn Fein who have a tainted past and no experience of government in the Republic.
We are now at the point where there is no suitable party to elect….
and even if there was, there is 3 years to go before the next election..
We have exhausted all current political options.
The Irish people voted and gave a clear and strong mandate to the Government and the Government has deliberately turned its back on the will of the people.
The Future
suggest we rethink politics in Ireland and I have a suggestion of what the way forward should be. We are now moving into an era when technology can transform the way people are governed and can offer an avenue for the government of the day to connect directly with the people they govern.
Dispense with full time politicians and parliaments except for those who make up the Government of the day.
Introduce a Peoples Assembly that is a forum for the debate of policies before we, the people vote. Those attending will be people with interest in the policies being voted on that week. The assembly is televised and streamed live on the internet. Anyone can attend with a weeks notice. The Assembly can move around the country. I envisage that it will be a continuously changing population that will attend as the topics being voted on will vary wildly week from week.
Place policy decision making in the direct hands of the people who will vote via unique electronic voting cards (similar to bank cards) once a week on matters of policy only. People may vote online, by phone or via email/ post. For better or worse the people will decide if they wish to have abortion in Ireland, property tax without regard to ability to pay, water taxes, stay in the EU, stiffing the bondholders, cancelling public service giant pensions etc.
Policy details are worked out by the Civil Servants who meet with interested parties to thrash the finer details.
The Government will be a suite of ministers appointed annually by the people to carry out the policies passed in the People Assembly. It is largely a position of honour and ministers will be modestly remunerated for that year and will return to being ordinary citizens at the end of their term of office. These minister’s employers will have undertaken to keep their jobs open for them to return to at the end of their year in office.
Action:
Dismiss the present political parties and politicians
We can ask the politicians to resign or present the Government with a petition signed by a million Irish residents demanding them all to resign.
The petition must be of a size that cannot ignored.
The Union bosses are the mafia that keeps the government in power
By Thomás O Cléirigh
The Union bosses are the mafia that keeps the government in power and not the troika .These wolves in sheep clothing are nothing more than the real collaborators doing the biding of the faceless moneymen that allow the union bosses to extract enormous funds from their members and suck the country dry as they or their pals sit on the various guanos boards of course for hefty fees. The Union bosses are taking salaries equivalent to the Minsters of government and they have the perks and pensions to match. These sell-outs have betrayed the workers and the Irish workers are still like sheep following these leaches as they milk the insider system for all they can get.
Workers of Ireland wake up don’t you see these union bosses are part of the problem and are in no way going to rock the boat. They are out for themselves! Get out of these unions or kick out these puppets of the Labour party now.
These same union bosses have stood ideally by as our health services were dismantled ,over the last 5 years they have done nothing for the ordinary man in the street they have watch and done nothing as new taxes were imposed on families to pay for private debts of corrupt bankers .These unions are nothing more than puppets of the political system , a extra insurance the government of the day has against workers going out on to the streets and demanding true democracy just like they have in Iceland. We need people power and not hidden planted insiders who run the unions on behalf of the government of the day.
The unions have abandoned the unemployed and they are out to keep themselves in their plumb top jobs! It is totally immoral that workers should be accepting Austerity while these sell-outs continue to pay themselves lottery salaries. When I hear of old folk dying in each other’s arms because they cannot afford to heat their homes I say it’s time to take the fight to the streets and kick these leaches off our backs now .Every decent worker should down tools and go on a general strike with or without the unions now. No more Austerity do as Iceland did tell the Government and their Union insider pals to get stuffed we don’t need their permission to take back our country from gangsters!
Have you ever wondered why Irish workers are not joining other European Workers in demonstrating against the imposed austerity that is paying the gambling debts of hidden faceless moneymen?
Simple: The union bosses are bought and paid for by the real power brokers who rule over us now!
via The Union bosses are the mafia that keeps the government in power | Machholz’s Blog.
via The Union bosses are the mafia that keeps the government in power | Machholz’s Blog.
Irelands Collapsing Authority of old patriarchs now an International Epidemic
Patriarchy, literally the rule by the fathers, is a social system in which the male is the primary authority figure. Daddy calls the shots in political leadership, moral authority, the control of property, and over women and children. Sound familiar?
If you haven’t noticed, patriarchy is not what it once was. In the Irish context the experience of patriarchy has played out for centuries in the empires that ruled us, the church that molded us and in the state that (most often) sent us to war or sent us packing.
Good little patriots that we were, we did what we were told too, didn’t we? We were well trained.
In life, apparently, you get one of two choices — to live in a historical age that is restrictive and repressive, or one collapsing under the weight of its own hubris. There’s no doubt about which we’re living in now, is there?
The only question is when will the principle players, the ones who had it so good for so long, quit the stage to make way for the sweeping change that is increasingly inevitable? I think it’s become clear that it’s going to take more than a little cast change to fix what’s ailing in patriarchy now.
We are in a new and uncharted situation, after all. Daddy’s not looking like the imposing authority figure he once was.
Thanks to two decades of unprecedented crisis where the deep rot in the Irish system is now in daily public view, ordinary Irish people suddenly possess something novel — a voice in their own affairs.
So what are those voices saying? In regard to the church those ordinary Irish people are saying we were abused or brutalized by religious orders who depended upon our silence. They’re saying a compliant state choose to look the other way.
They’re saying for decades Ireland had a golden circle that simply froze out the rabble to protect their own good fortune.
They’re saying what happened to me and to thousands like me was wrong.
They’re saying they want an apology, but more than that they’re saying they don’t want thus to happen to anyone else any more.
They’re not being listened to, of course. In life, where you stand determines so much of what you’re willing to see. Nothing puts the blinders on like an inchoate threat to your purse strings.
That’s why we need artists. Artists live beyond the margin of things, they stand outside the daily struggles, that can tell us what they see from their unique perspective. So far the news isn’t good.
For decades Ireland’s most distinguishing characteristic was repression. That was the signature element of our powerlessness. Daddy (the state, the church) called the shots.
But remarkably, in a moment that underlines just how far we have moved away from the repressive
certainties of even a decade ago, it was the Irish Taoiseach (Prime Minister) Enda Kenny who admitted as much last week.
“We lived with the damaging idea that what was desirable and acceptable in the eyes of the church and the state was the same and interchangeable,” Kenny told the nation last week.
“This moral subservience gave us… the compliant, obedient and lucky ‘us’ and banished the more problematic, spirited or unlucky ‘them.’”
Shocking things could happen to you in Ireland if you were one of “them.” I know this with certainty, because I was one. Figuratively and literally.
That’s what some people used to call me when I lived in Ireland. It was a badge of shame. It was the equivalent of a passport too.
Once you were called it your fate was already being parceled out. You were being stamped for rejection or export or worse.
The jig’s well and truly up now though, isn’t it? Oh, the organizers of the St. Patrick’s Day Parade on Fifth Avenue and the elder statesmen of the Republican Party and the cardinals on their way to the concave can still pretend they haven’t received the memo, but we’re in a new moment.
They know it. The whole world knows it.
The lesson of the last decade, where patriarchal hubris led us to war on false pretenses, where it sought to divide natural allies to protect itself, where it tried to cover up its own sins whilst loudly condemning others, has not been lost on us. Daddy can take a number now like the rest of us had to.
R
The people never agreed to pay €3.1bn a year
We are duty bound to ask ourselves if it is acceptable to pay €3.1bn in March to get nothing in return, writes VINCENT P MARTIN
Last week our Government presented a crippling budget in an attempt to save €3.5 billion next year.
In 2010, the government of the day provided promissory notes, made by the State, to fund the bailout of Anglo Irish Bank and Irish Nationwide, now merged as the Irish Bank Resolution Corporation (IBRC).
This financial rescue was in the form of IOUs at a cost of €31 billion to the taxpayer. The promissory notes were given to make a zombie bank solvent as it now had an asset and it was on this basis that the Central Bank lent the IRBC €31 billion, which is then paid on to third-party bondholders.
Under article 123 of the Treaty of the European Union it is expressly forbidden for a Central Bank to lend to an insolvent credit institution like Anglo. The clever promissory note ruse circumvented this prohibition.
While matters were kept within EU rules, Anglo was made to look solvent so that the Central Bank could give it the money to repay its bondholders.
The European Central Bank had no banking default nightmare to deal with, but the Irish people were on the hook for the whole amount. And so every March the Irish people must repay over €3 billion.
And the payment is not to anybody. The money is just destroyed (taken out of the system). The sick are not treated, the young are not educated, hundreds of thousands face unemployment and emigration and at least one in five private residential mortgages are in severe trouble – and we burn €3.1 billion!
This is a truly staggering amount of money. A billion is a difficult number to comprehend but one US marketing agency helped demystify its sheer magnitude as follows: “a billion seconds ago it was 1959, a billion minutes ago Julius Caesar was alive, and a billion hours ago our ancestors were living in the Stone Age”.
Seven hospitals
The sum to be paid in March could build seven national children’s hospitals – and we are to repeat this insanity every year!
This all-too-smart accountancy trick destroyed our national finances and has led to the loss of our economic sovereignty.
So in this context we are duty bound to ask ourselves whether it is acceptable to pay out the €3.1 billion next March to get nothing in return.
To answer such an important question we ought to look at both sides of the story.
There is an established argument which supports the payment. It is this – we agreed to pay and we are bound by that agreement. There is force to this argument. If we cannot be sure that people will honour their commitments this makes us less likely to trade or exchange with them and that is damaging to us all.
But the law has always recognised that a party to a contract must have agreed to its terms. If a party has not agreed then the contract is not a contract at all and the party is not bound.
Did the Irish people, who must make these staggering payments year on year and for no benefit, agree to be bound in this way? It appears to me that the Irish people did not.
The Constitution, which forms the basis of how we operate as a nation, created a number of institutions of State and mandated those institutions to operate according to defined roles.
One of those institutions is Dáil Éireann. It is the most important of all the institutions for it is the “law-making” body. Apart from making the laws the Dáil has a very important power. The Dáil holds the chequebook.
Like all other democratic systems around the globe the people’s elected representatives must agree to the spending of public monies and that is a solemn responsibility placed on the Dáil.
Put simply, no minister can spend a cent of public money unless the Dáil has approved such spending.
Did the members of Dáil Éireann vote to make and provide the promissory notes or did they vote on any payment made on foot of the notes? It is critically important that the people of Ireland realise that the answer to this question is that the elected members of the Dáil never voted to make those promissory notes and have never authorised payments on foot of them.
It was the minister for finance alone who made the notes and who then made payment on foot of them. The lawfulness of this unprecedented situation will be tested in the courts early next year.
In simple terms, the question posed to the High Court relates to the essence of our democratic system. Can the elected representatives of the people of Ireland be bypassed when making such monumental decisions affecting the people for generations to come?
‘Inability to pay’
Pat Rabbitte is the first senior member of the Government to flag the country’s “inability to pay” argument. Provided this does not turn out to be a dressed-up reinvention of “kicking the can down the road”, it is to be welcomed.
But surely the same principle can and should be applied to our own people struggling to save their homes?
It is expected that the latest Central Bank figures will show a further escalation in mortgage arrears for homeowners and this is when the Government has decided to unleash a property tax.
There is no reality in expecting people in significant mortgage arrears to pay this tax when they already are unable to pay their mortgages.
This tax will only pile on further misery on middle-income Ireland, and is akin to throwing water on a drowning man.
Surely our country’s struggling homeowners also should be entitled to plead “inability to pay”.
Vincent Martin is a practising barrister and co-founder of New Beginning, an advocacy group founded to campaign for Ireland’s financial recovery by reaching a fair solution to over-indebtedne ss
via The people never agreed to pay €3.1bn a year – The Irish Times – Thu, Dec 13, 2012.
via The people never agreed to pay €3.1bn a year – The Irish Times – Thu, Dec 13, 2012.
misebogland 