Thursday 17 November 2011

Upside-down logic

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November 17th 2011
LOGIC TURNED ON ITS HEAD

I’m one of those of the persuasion that there’s a logical explanation for almost everything but when it comes to this bank bailout issue, I think even Stephen Hawkins would be bamboozled. Riddle me this please, anyone:
  • ·         To enable our Central Bank continue to borrow c.€100bn from the ECB, we agree to assume, in full, over €70bn in bank bond debt, a sum that itself will exceed €100bn before it’s finally paid off. That makes some kind of economic sense?
  • ·         €55bn in bank bonds due over the next four years, from banks which we own almost in their entirety (four fully, two majority shareholder) – where will that money come from, if not from us?
  • ·         All that money will be borrowed from the generous ECB of course, on top of our already massive and still growing sovereign debt – how in heaven’s name is this sustainable?
  • ·         How did the wrong thing to do on February 24th 2011, one day before the general election, become the right thing to do on February 26th? Less than a year ago every single member of the Fine Gael and Labour parties spoke vehemently against the imposition of the November 2010 Agreement with the troika (IMF/EU/ECB), talk of betrayal and treason bandied about, voted en-masse against it in the Dáil; now, if another vote were held on the imposition of that same agreement, every single one of those same two parties would vote in favour, not a single voice stating categorically that we should NOT carry out its terms. They don’t WANT to do it, any more than any of the discredited FF/Greens coalition wanted to do it, but they’re doing it nevertheless.
  • ·         Cowen, Kenny, Noonan, Gilmore, Howlin, these are direct political descendants of Eamon de Valera, Michael Collins, William T Cosgrave, James Connolly, Jim Larkin, men who risked life and limb to win independence, who fought and overcame phenomenal odds, yet these modern heroes hand over sovereignty without a fight. Oh, with a whimper alright, pleading to be allowed burn SOME bondholders and in the process humiliating themselves and the nation they supposedly represent, but that isn’t a fight, it’s not even an argument – just burn them, THEN it becomes a fight.
  • ·         Greatest mystery of all – the Irish have a long and world-wide reputation as a proud, intelligent, independent-minded nation of fighters, and yet with the exception of a stubborn few, we’re allowing this pillage of our economy happen without real protest. €3.8bn in cuts/taxes in Budget 2012, €3.77bn in bank bonds to be paid just in the next two months alone. No money to keep our most venerable in their usual hospital beds, no money for badly-needed extra front-line public service staff, no money for third-level education, no money for infrastructure, but we can find billions for the failed bank bondholders.
Logic? Where this bank bond bailout is concerned, there is none.

Regards, Diarmuid O'Flynn.

Sunday 6 November 2011

Blazing Saddles

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November 6th 2011

BLAZING SADDLES
There’s a scene in the spoof western Blazing Saddles where a town has gathered to welcome its new sheriff, hoping he’s going to be the man to end their troubles; when the dark-skinned Cleavon Little rides up, however, the all-white crowd quickly transforms into a lynch mob, only for the quick-thinking Cleavon to pull a gun, point it to his own head, and threaten – ‘One move and the niggah gets it!’

A hush descends, a woman’s voice rings out – ‘He means it, he means it!’ The crowd slowly parts, Cleavon edges away to safety. His own gun, held to his own head, threatening his own life, to escape a lynch mob. Classic Mel Brooks, classic comedy.

In the matter of the continuing payment of the failed bank bonds, I can’t help thinking of that scene; you see, I believe we’re pulling a Mel Brooks, I believe we’re holding a gun to our own heads, threatening our own financial lives – ‘One move and the Paddy gets it!’.

The argument we hear trotted out over and over again against burning the bank bondholders is that if we do, the big, bad ECB will pull the rug from under us, leave us destitute and unable to pay our ‘nurses, teachers and guards’, the great emotional triumvirate (no mention of being unable to pay the exorbitant salaries and pensions of our politicians, our judges, our mid-to-higher civil servants, but let’s not split hairs here).

Well, I’ve looked and I’ve looked, and nowhere can I find a single word in the agreement with the famous troika of last November stating that if we don’t pay the bank bonds, the ECB will pull all its cheap funding to the Irish Central Bank (by the way, how much of that €100bn is actually in circulation, being loaned to our hard-pressed businesses, and how much is held in reserve so the banks can pay the €62bn in bonds due over the next three years? Just a thought, that’s all). Nowhere either can I find a single word of actual threat along the same lines uttered by any official, high up or low down, from any of the EU, the EC or the ECB.

Oh they’ve stated time and again that they feel the people of Ireland should pay those failed bank bondseu, though we have no responsibility whatsoever for them; they’ve stated time and again that they really WANT us to pay those bonds, have patted us patronisingly on the head as we’ve done so, and why wouldn't they? The Germans and the French - Merkel and Sarkozy specifically - are now running the European show, all pretence at democracy gone; the reason they want us to keep paying these bonds is twofold, a) to help preserve the euro and b) to fend off a run on the German and French banks.

Nowhere, however, do they make any actual threats, no-one in Europe has ever actually put a gun to our heads. We’re doing it to ourselves. Our government politicians (in this regime and in the last) lead the charge, our compliant national media take up the running. ‘A nod is as good as a wink to a blind horse,’ the famous Michael Noonan line, but is it?

The reason there has been no word of threat is that the EU/EC/ECB have an eye to history, and as things now stand, in 20 or 50 years when this whole sorry episode is recalled, no-one will be able to point a finger at Europe and say – ‘Ye blackmailed and threatened a small and helpless country into borrowing tens of billions of euro from yourselves, money they absolutely could not afford, to pay off bank bonds to your banks, bonds for which they had no responsibility.’ Not a word of threat uttered or written, not a word.

I'm not a believer in playing Russian Roulette, I do believe in hard, calculated thinking. There comes a time in any negotiations when a bluff is so obvious it MUST be called – this is such a time. The ECB will NOT pull the rug from under Ireland. Proof? Look at Greece; they cooked their own books to get into the euro, they cooked their books for the first bailout, still hadn't things right by the second bailout, were playing hardball as recently as a few days ago, and still the EU/EC/ECB bends over backwards to ensure they remain in the euro, chopping their debt and throwing all kinds of bailout cash at them.

Do you really think that if, after three years of putting its own people through repeated austerity budgets, this government were to finally stand up and say – ‘Enough, we’re now putting our own people first. Time for these bank bonds to be dealt with as they should have been dealt with from the outset and treated as the commercial failures they are.’  You really think that if our government did that, the ECB would pull the plug, start their own domino effect and thus almost guarantee the early failure of the whole euro project?

We’ve gone above and beyond the call of duty to the euro and to Europe. We’ve been straight with them from the start, we’ve met every target set. It’s time we took the gun from our own heads and aimed it where it should be aimed. Blazing Saddles was comedy, this is tragedy, and with another €787m in 15 bonds due before the end of this year alone, €62bn due over the next three years, becoming ever more tragic by the day.

Regards, Diarmuid O'Flynn.

Wednesday 2 November 2011

Billion-Dollar-Heist, response to the stock TD response

 LETTER TO TD TOM HAYES IN RESPONSE TO HIS STOCK RESPONSE TO THE REQUEST NOT TO PAY THE BILLION-DOLLAR ANGLO BOND OF NOVEMBER 2nd 2011:

Tom, thanks for your comprehensive reply, which I would now like to fillet point by point:
Thank you for your query regarding Irish Bank Resolution Corporation (IBRC), formerly known as Anglo Irish Bank.  You call it what you like, I'm not buying into this alias business, the nom-de-plume; Anglo it was when it helped to demolish the Irish economy, Anglo it will always be to me and mine.
I’d like to state that the obligation on the State to redeem bank bonds arises from the decision of the previous Government to guarantee bank debt under the terms of the guarantee from the 29th of September 2008. Ye knew full well of that decision before the last election, voted en-masse against it; if the same vote on the same issue were to be put to ye now, every man jackass of ye would tick the opposite box, and bow – as the gombeens of Fianna Fail and the Greens did before ye – to the bully-boys of the ECB. There isn't a single TD of principle among ye, not a one.
More specifically, the obligation on the Government to redeem unguaranteed bondholders in Anglo Irish Bank arises from the previous Government’s decision to subsequently nationalise Anglo Irish Bank thereby taking on the responsibility not only for all of its assets but also all of its liabilities. This is your second use of the word ‘obligation’; NOWHERE in the document of last November does it state that we have to bail out the bank bondholders, NOWHERE has anyone from the EU, EC or ECB stated categorically that if we don’t pay these bonds they’ll pull their bank funding. The only ones making those statements are our own – we’re blackmailing ourselves, like the black sheriff in Mel Brooks’ Blazing Saddles, we’re holding the gun to our own heads. ‘A nod is as good as a wink to a blind horse’ says Minister Noonan – sorry Michael, not in this instance. When the bank guarantees were given it was on the back of false information from the banks themselves; that guarantee is invalid. If the legislation isn't already in place to wind up the zombie banks such as Anglo (and I believe it is) it should be done now, and all those bondholders told where to go. If you want to talk of ‘obligations’ Tom, what of your obligation to the Irish people, those whose interests you are supposed to represent - does that not supersede all else? Would you seriously tell me it’s in the best interests of the Irish people to assume the responsibility for these bank bond debts, taken out when all the banks were privately owned, without a single cent of a haircut?
The Minister for Finance has set out the Government position on this issue on numerous occasions. The Minister met with ECB President Trichet on the 17th of September to discuss this specific issue. During the meeting Mr. Trichet voiced his opinion that he is against such action for two reasons:
1.        Private sector involvement in Greece had a very quick knock on effect into Italy and Spain and private sector involvement didn’t seem to be the way forward if you were trying to encourage the markets.
2.        He also added that Ireland had done particularly well over the summer. He mentioned the narrowing of the bond spreads and he said he felt that anything to do with the burden sharing might knock to the confidence of the market and the spreads would go back out again and that we might lose the ground we had gained. So, what do you expect from a pig but a grunt? What do you think – what did you EVER think – Mr. Trichet was going to say? The major difference between Ireland and  Greece, Portugal, Spain, Italy is that their major debt is sovereign, their crazy borrowings from the big German and French banks were by their respective governments - ours was private, €100bn lent to our banks by those foreign financial institutions, private transactions between consenting adults. The bondholders assessed the risk, took the plunge, lost; according to the most basic rules of the bond markets, according to the fundamentals of the capitalist system, they should then have taken their haircut. The EU/EC, though the jack-booted ECB, has decreed otherwise. We are being used as a buffer to prop up the Euro, to protect the big German and French banks. If this IS under threat – as claimed by Minister Noonan - then that is a blatant abuse of its power by the ECB. We should challenge that and expose it for what it is.
The Government and the Minister have always set out that burden sharing with senior bondholders in the former Anglo Irish Bank and Irish Nationwide would only occur with the agreement of the ECB. What is clear from our meeting with Mr. Trichet in September is that the ECB would not favour such an agreement. I'm glad you specified ‘The Government and the Minister’; before ye became ‘The Government and the Minister’, when ye were campaigning in the election, it was a very different story. Then again that isn't the only broken promise from ye.
The redemption of this specific bond is a matter for IBRC (formerly Anglo Irish Bank) as the redemption of the bond will be made by IBRC and will not be funded by the exchequer. It should be noted that IBRC has recently announced that sale of its $9.2 billion US loan book has begun and that approximately $3.5 billion has transferred to buyers. The money from the sale will allow the Bank to repay these guaranteed bonds and will also allow the Bank to reduce its borrowing, including Emergency Liquidity Assistance (ELA) from the Irish Central Bank. This one, Tom, really sticks in my craw. There are lies, damned lies, and then there are the pronouncements of politicians – this is world championship form, fair dues to ye. As pointed out by yourself above, we – the people – OWN Anglo, 100%, we’ve committed nearly €30bn to it. Every cent that comes into it is ours, every cent that’s paid is from our purse. To state ‘will not be funded by the exchequer’ is simply dishonest Tom, an outright, blatant lie and an insult to the intelligence of the people; our exchequer, our bank, our money, incoming and outgoing.
The Government has made clear that technical discussions are underway with our European partners to find the most cost effective way of resolving the promissory notes that were the means by which the previous Government recapitalised Anglo Irish Bank. It’s not to find the most ‘cost-effective’ way, it’s so our European ‘partners’ can find a way to ensure they get that money, all of it, every red cent.
Through a long negotiating process to the end of July, the Government has successfully reduced the interest costs on the funds that we are borrowing from the EU and IMF by €10 billion over the lifetime of these loans. Utter BS Tom – the Government didn’t reduce the interest costs, the EU/EC/ECB did so all by themselves, a by-product of the Greek bailout, and only when even they could see that the original interest rate was going to leave us very quickly in a position where we wouldn't be able to pay anything. Tom, the interest (or coupon, as it’s known) on every one of these failed bank bonds is already paid by the time of ‘maturity’, so the interest we’re paying on the borrowing to pay the final principal sum is interest on top of interest.
The value of the support that we are receiving from our European partners now and in the future far outweighs any short term gain from imposing burden sharing on these senior bonds. Really? We’re getting support to the value of about €100bn (the final cost of the €70bn bank bonds, when interest is added)?
This support allows us to pay for essential public services for citizens, including amongst others pensions, social welfare, education and health. In 2011, we will borrow over €15 billion to pay for these essential services. Ah yes, the hoary ould ‘How will we pay the Guards, the Nurses, the Teachers’ frightener. The Guards, the Nurses, the Teachers, have all seen drastic cutbacks in their numbers but with no cutback in the service they’re all expected to provide; meanwhile the paper-pushers in the civil services, those up the line from the Nurses for example, stay in place, getting in each other’s way. Tackle the problems of a) the number of top-level civil servants, in the HSE especially, b) the rates of pay for those individuals, c) the pension levels and conditions of those same people, tackle especially the levels of salary/expenses/pensions for yourselves (I know, not hugely significant money-wise in an overall context, but morally – yes) and ye’ll go a long way to tackling that budget deficit.
I hope this response has addressed some of the issues you have raised and I thank you for your communication. No Tom, it hasn’t.  Until we get out from under the bank bond debt there won’t be a cent for the banks to lend to business, all their reserves held to pay off these bonds as they come due, and until the banks start lending to businesses there will be no growth. No growth, no hope - you don’t have to be an economist to understand that piling the bank debt on top of our existing Gross Government Debt on top of the borrowing we’re going to need to close the deficit over the next few is going to lead to default – dammit you don’t even need to be a mathematician, it’s simple arithmetic.
I now have a number of questions for you, and if you can't answer them directly, then don’t bother:
1)    Justify to the Irish people the unprecedented interference in the most fundamental rule of financial trading, the one we hear time after time on all those glossy ads – the value of your investment can fall as well as rise. That rule wasn’t just broken, it was smashed to smithereens, the bank bondholders getting out not just with their original investment intact, but with full profits.
2)    Justify to the Irish people why the institutions whose billions fuelled the inferno that engulfed us should escape without even being singed;
3)    Justify to the Irish people the transference of private debt to public shoulders.
4)    Justify to the Irish people the failure by this government to stand up to the implied blackmail tactics by the ECB.
5)    Justify how a so-called community can tolerate a situation where the big and the strong bully the small and the weak into assuming a debt to the big and the strong that was never theirs.
6)    Justify to the Irish people how, less than a week after the HSE announce a 10% cut in funding to those who care for the homeless, due to lack of funds, we can pay €1bn to the vultures who feed on the carcasses of the crippled bonds on the secondary markets.
I could go on Tom, but I won't. Yere actions shame us all now, but they will shame ye for eternity.
Regards, Diarmuid O'Flynn.

Tuesday 1 November 2011

The Billion-Dollar-Heist protest in Ballyhea

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November 1st 2011

THE BILLION-DOLLAR HEIST – BALLYHEA PROTEST
Today in Ballyhea a group of us blocked the main Cork/Limerick road for 15 minutes, sat ourselves down across the two lanes and held up our fellow-citizens as they were going about their daily business. Not a one of us wanted to do this, not a one of us ever thought we’d see the day when we’d be involved in something even remotely like this.
We’re ordinary people, from across the broad spectrum of Irish life – the genders, the age-groups, the various political parties, the employees, the employers, the growing number of unemployed. We don’t want to disrupt anyone’s life, we don’t want to confront our Gardaí, who come from among us – our brothers and sisters, our sons and daughters, our neighbours and friends, all of whom are suffering with almost everyone else in this country.
What has moved us to protest is the on-going bank bondholder payouts, and on that single issue we in Ballyhea and Charleville have been marching since the first Sunday of last March, 35 weeks now and counting. What moved us to take this drastic (for us) action yesterday was the payment of the billion-dollar Anglo bond today (November 2nd).
If anything crystallises what this protest is about, it’s that bond; if anything crystallises the values of the New Order as now being dispensed by our government, where the poor must pay the rich, it’s that bond; if anything crystallises the injustice of what’s happening, the immorality, the wrong, it’s the payment of that unsecured, unguaranteed bond, a bond now entirely in the hands of the financial bottom-feeders, the sharks, the vultures, the vampires, those who gamble on what are seen as junk bonds – this particular bond was trading in the secondary market within the last 12 months at 52%, a profit of $480,000,000 within a year.
Later this week we’re going to have the announcement of the budgetary targets for the next three years, more billions in cuts, billions dwarfed by these regular bank bond payouts (€20bn in 2012, €17bn in 2013, €25bn in 2014). For three years we’ve worn the hairshirt, for three more years at least we’ll still be wearing the hairshirt; when, oh when, will this government see fit to apply the haircut to the bondholders? Michael D for decency, please, intercede for us.
Yours sincerely,
Diarmuid O'Flynn.