MARCH 4th - AN OPEN INVITATION

MARCH 4^th 2012 - AN OPEN INVITATION

                When we started marching on the first Sunday in March 2011, it was never our intention that Ballyhea would become the focal point for protest against the bank bondholder bailout – contagion was our big ambition, spread the protest from parish to parish til the whole country was marching.

                Didn’t happen, so now a smaller ambition; Sunday March 4^th is the first anniversary of our first march, and now we DO want to make Ballyhea a focal point for this protest. This is an open invitation to all of you in the media who feel we’re being wronged, to all of you in the arts, to all of you in the world of academia, to all of you amateur and professional in the world of sport (with so many young people leaving, what sporting organisation hasn’t been adversely affected by this?), to all of you in the world of politics, to anyone and to everyone, to join us in Ballyhea on that one day and make this a protest march to remember.

                 With our own Central Bank set to destroy €3.1bn of our money on March 31^st we are reaching a crisis point, a pivotal moment in Irish history. On that one day join us, please, and share this invitation with anyone you think would like to do likewise.

Regards

Diarmuid O’Flynn

Problem solving

PROBLEM SOLVING

                That we have a major problem in the Irish economy at the moment is beyond question. How to solve it? The same way you solve any other problem, using the same basic principles – you go back to the source, then take whatever steps are necessary.

                Leave aside the sloppy introduction of the euro, the easy money that then became available to Irish banks, the lack of oversight here and in Europe on the reckless inter-bank lending; the source of the current Irish problem is the blanket guarantee given to the Irish banks by then Minister of Finance Brian Lenihan. When the mist cleared and the money markets saw the emerging mountain of bank debt that Ireland taken on, on top of its own growing sovereign debt caused by the budget deficit, they did the simple arithmetic and came up with the simple conclusion – couldn't be done. Consequent to that conclusion they raised the rates on Irish government borrowing, eventually forcing us out of the market and into the embrace of the troika. In that embrace we remain.

                Under extreme duress and with seriously deficient information, the government legislated for that guarantee; the situation is now even more serious, we know the full extent of the problem – if we’re to get back into the money markets any time soon the government must now introduce new legislation to right the wrong that was done back then.

                The situation is stark; that bank debt piled on top of our sovereign debt puts us in an unsustainable position, MUST be removed. It is not our debt, was never our debt, will never rightfully be our debt, but is being forced on us by the ECB. If we don’t pay even the unguaranteed bank bonds in the zombie banks, ‘a bomb will go off in Dublin,’ said Minister Leo Varadker. He was speaking metaphorically of course but the threat, also alluded to by many government spokespersons over the last couple of shameful years, is real. That is extortion, ‘the practice of obtaining something, especially money, through force or threat’, the Oxford English dictionary definition.

                When real bombs were going off in Dublin, Belfast and London the discussion didn’t centre around having no choice but to accede to the demands of those who were doing the bombing, it centred around resistance at all costs; within the Irish media, however, what we hear more than anything else is ‘Ah but, what happens if we don’t pay!’

                There should be NO debate, none; in using its financial muscle to extort under threat tens of billions from the Irish exchequer, what the ECB is doing – with the EU and Irish government complicit - is wrong. If there is to be any debate it should be around that fact. We are being forced to pay not just the losses on failed for-profit private inter-bank deals, we are being forced also to pay the profits (the coupons) those bonds would have made, and because we don’t have the money now to pay those bonds, we are being forced into a situation where we have to borrow, assume new loans, on which we have to pay interest.

                This is a crime. It’s happening in full view of the world. The fact that it’s an official major organisation – the ECB – doing this extorting doesn’t make it any less of a crime.

                We should refuse, immediately, to pay a further cent in bank bonds. We should refuse, immediately, to pay a cent on the Promissory Notes. We should introduce and implement, immediately, legislation to undo all the damage that’s been done to our economy. Enough of this false debate; we must start to stand up for ourselves, we must fight back.

Regards

Diarmuid O`Flynn

ECB/Anglo - The Unbearable Burden

                 A few weeks ago I was listening – as I often do – to the Vincent Browne show on TV3. Vincent is the one national broadcaster above all others who understands the fundamentals of what’s being done to Ireland by our so-called partners in the EU/ECB conglomerate. That night, as yet another government minister was parroting out the lines he had been given by the Dept. of Finance about how this government had secured a reduction in the interest rates being charged by the ECB (they hadn’t, this had come merely as a by-product of the Greek bailout), how they were working hard to secure ‘improvements’ in the terms of the payment of the Anglo Promissory Notes, Vincent damn near exploded in exasperation, and cited a cartoon of the fat man riding on the thin man’s back.

                Turns out it wasn't a cartoon at all but a sculpture by Jens Galschiøt titled 'The survival of the fattest' and here it is, with thanks to Marie Moran of UCD.

I’m sitting on the back of a man

He is sinking under the burden

I would do anything to help him

Except stepping down from his back

(Inscription on the staff of Justicia, Western Goddess of Justice, represented in the sculpture Survival of the Fattest by Jens Galschiø)

Let Leo and Sean and all the other government sheeple bleat all they like about reductions and extensions, they are merely following their shepherd's directions; not until the bank debt is removed from our shoulders will we be able to finally progress from the mire. Our government has already buckled under the pressure, we are left to stand for ourselves. We've done this before, thrown off a burdensome yoke, we can do it again.

Regards

Diarmuid O`Flynn

Our Enda - team captain or windbag supporter?

During the pathetic attempt at a heave against him as leader of Fine Gael a couple of years ago and to deflect criticism that he lacked charisma, Enda Kenny trotted out again and again the team captain analogy, how he was building a good team of which he was just the captain and thus didn't need to be the star.

Staying with the sporting theme, I now offer a different analogy.

There's a guy who stands on the terraces, a harmless enough kind of a fella really but because he seems to have been around forever he has sort of fallen into the leadership role of his own little gang - let's call him Enda. Down on the pitch his team are in the biggest game of their lives but they're being pulverised by a bigger, stronger and far more powerful opposition. Safe in his position outside the wire, our hero is shouting abuse at the opposing players, but that abuse pales in comparison to the vitriol he is hurling at his own team. "Cowards!" he roars, "A disgrace to the parish!"

Around him, his own coterie of fellow supporters take up the cry. "Traitors!" they scream, "Ye've betrayed the jersey (green, of course), ye've betrayed the club and the people it represents, ye should all hang yere heads in shame!" In loud and very certain terms they continue to harangue and to criticise, telling those on the pitch in no uncertain terms what they should be doing and how they should be doing it.

Half-time comes and lo, the home team supporters decide they've seen enough, storm the dressing-room en masse, order the team to tog off and feck off, and ask our man from the terraces and his buddies if THEY will throw on the jerseys (still green) and take the field for the second half. Which they do.

Oh, it's a very different scenario now, isn't it? Where previously they were free to shout and abuse from the safety of the terraces, now they're shoulder to shoulder with the opposition. Enda hasn't even taken up his position before his courage leaves him. All around him the same thing is happening; none of them had realised how big these guys were, how intimidating, and soon, very soon, they all start making little whimpering sounds, conciliatory sounds, their bravura gone, their voices silenced.

The team was losing when they came on but now Enda and his boys are afraid to even compete for the ball, and it becomes a rout. "They've whispered to us that they'll REALLY hurt us if we stand up to them!" cries Inda to the baffled and disgusted supporters, ignoring their protests as goal after goal is conceded.

Soon, however, he and his new team are getting little pats on the head, little words of encouragement, but it's from the opposition. "Good lads," they say, "Well done; just do as we say, and keep doing it!"

So - strong captain of a shrewdly assembled powerhouse team, or loud gutless windbag from the terraces? Would Munster be where they are if Paul O'Connell, Ronan O'Gara and THEIR team gave in to intimidation? Would Leinster if Brian O'Driscoll caved in to blackmail? Would his native Connacht have beaten Harlequins a couple of weeks ago if Enda Kenny, and not Johnny Muldoon, had been captain?

You make up your mind, but I've made up mine. That's why we're marching in Ballyhea and Charleville, that's why we've now got to reclaim those jerseys again and take the field ourselves. Not another cent to the bank bondholders, not another cent in Promissory Notes, not another cent paid by us in any new kind of levy or charge; not another inch conceded, and the ECB forced back.

Regards
Diarmuid O`Flynn

Heroes

How often in our humdrum lives do we get an opportunity to become heroes? To throw ourselves in front of the bullet meant for someone else, to dive in front of the oncoming bus and fling a child to safety, or even just to make the long walk to kick the winning point from distance to win an All-Ireland title for your team, or to take the winning pressure-kick in another Heineken Cup game?

The past 15 months have seen many such moments presented to our TDs, those who supposedly represent in Dáil Eireann our best interests.

The vote in December 2010 on accepting the terms of the troika 'bailout' was a pivotal moment in Irish history. If a couple of Fianna Fáil TDs or a couple of Green Party TDs had crossed the line that motion would have been defeated, the bank bondholders would have had to pay the cost of their own mistakes. The government would have fallen, yes, but instead of sinking us all ever deeper in the mire – as they have been doing - the EU and the ECB would have been forced to face the reality of a rapidly deteriorating situation. 

Not a one of those Fianna Fáil/Green TDs had the kind of selflessness needed to take that step, however, not a single one would challenge the whip.

Over a year on and we have a new government, but the same old situation exists. Last year we paid out over €7bn in what are failed private bank bonds; this month we're set to pay a further €3bn, next month in excess of another €1bn, €19bn in total this year, €55bn over the next four years. In March, and for the next 15 years and more, we'll be taking €3.1bn from the Irish Exchequer, turning it over to our own Central Bank, who will then destroy it - the infamous 'promissory notes'.

It is crushing us, this additional burden, killing us. Is there a single government TD who will stand up now and say - 'No! Enough!'? In this time of massive national crisis, a time when heroes are needed, do we have anyone on those government benches, front or back, with the courage to sacrifice themselves for their people? Anyone?

Regards,

Diarmuid O'Flynn.

Oh dem bonds, in layman's language

ELVs, Promissory Notes, senior/junior/secured/unsecured bondholders – if it’s all too much for you to get your head around, here is a summary of what’s happened to us, all in very simple straighforward language.

In the early years of the Noughties Anglo Irish Bank burst onto the Irish banking scene in a big way, began to make massive profits. In doing so, however, it was bending/breaking the most basic rules of banking. It gave out loans recklessly, not just by the hundreds of thousands but eventually by the hundreds of millions; it borrowed recklessly, not just by the tens of millions but by the tens of billions. Soon even the most established of Irish banks followed suit, and we had ourselves a property bubble.

Well, the bubble burst, as bubbles do, and when it did Anglo and the other Irish banks were left exposed, very exposed; in fact they too were burst. Also left very exposed, however, were those who had loaned the money to those Irish banks, the institutions we now know as the bank bondholders.

When the ECB, which had slept its way through the bubble years, woke up to what was happening the alarm bells went off. The bank bondholders – German and French banks especially – weren’t just exposed to the Irish banks, they were also exposed to Greece, to Portugal, to Italy, to Spain. If the Irish bank bonds weren’t paid, the whole house of cards could come tumbling down – one by one those countries would fall, would fail to pay their bonds, and one by one the big German and French banks would be in trouble, big trouble.

Oh, what to do? The ECB decided there was only one thing for it – they would hold back this tide, and the first line of defence would be the Irish banks. 

But, there was a problem – where in all the other nations the debt was sovereign, bonds taken out by the governments, in Ireland the debt was private. Those bonds were deals done between consenting adults in private for-profit arrangements and under normal commercial practice the bondholders would now suffer a hit, a haircut. They had been blinded by the possible rewards, they hadn’t properly assessed the risk, hadnt done appropriate due diligence (in many instances deliberately evading their own more assiduous regulator by setting up a little office in Dublin to close the deal, under the far softer Irish regulator); under another basic rule of banking – WARNING: YOUR INVESTMENT MAY FALL AS WELL AS RISE – they were now faced with the consequences of their failed investment. It didn’t happen – they were bailed out.

The ECB, now the European Canute Bank, stepped in, and to protect those big German and French banks placed a dam across this rising tide of bad debt. WE are that dam, we, the people of Ireland, have been blackmailed, bullied and betrayed. The ECB has used its financial muscle to blackmail a weak government of a weakened member state into making public what is a private debt; the EU – the twin-headed monster Merkozy especially - has used its political muscle to bully a weak government of a weakened member state into accepting this deal; our own governments, this one and the last, has betrayed its own people and bowed to the demands of the ECB and the EU.

IF we had never been burdened with this bank debt the probability is that we would never have needed intervention from the IMF or anyone else. We had a budget deficit, we had problems with massive waste in our public spending (too many politicians for starters, and obscenely overpaid), but we also had massive savings in our National Pension Plan. Without that additional bank-debt burden we would already be growing our way out of this mess; with it, we are crushed.

Our governent must end these payments now, immediately. Playing with the terms of repayment – interest rates or duration – is not the answer. It’s like the cartoon of the big fat man on the small thin man’s back – ‘I’ll do everything I can to lighten your load, but I’m not getting off!’

The ECB were the ones with the problem if those bank bonds weren’t repaid; the ECB should have taken over those bonds themselves, should have built a mechanism (we know how good they are at ‘financial engineering’) whereby they assumed responsibility for payment. Imposing them on the people of Ireland was wrong from the start, and wrong at every level conceivable.

If our government won’t act, then for the sake of ourselves, for the sake of comign generations, it’s up to us. Act. Follow our lead in Ballyhea and Charleville – march, protest.

Regards,

Diarmuid O'Flynn.

The Anglo Promissory Notes explained

PROMISSORY NOTES EXPLAINED

There’s been much talk lately about promissory notes, the Anglo promissory notes particularly. Having been involved in Ballyhea in protesting the bank bondholder bailout for 45 weeks (and counting), I felt it my duty to do some research on this topic. Here is the result, in layman’s terms and with massive thanks to the Namawinelake blog.

THE HISTORY

A few years ago when this vat of worms was first opened up, it quickly became apparent that Anglo was insolvent, in other words its assets were worth less than its liabilities. Banks aren't allowed to be insolvent so Anglo needed more cash, and in a hurry or it would go under. The then Minister for Finance, the late Brian Lenihan, wrote a €30bn IOU and gave it to Anglo, who in turn took it to the Central Bank and asked to exchange it for cash. Did Brian ask your permission, my permission, before he landed us all with this massive debt? Did he even ask the permission of his government colleagues, did he – as required by our Constitution - ask permission of the Dáil? Did he hell. Anyway, off the rails as this request was the Central Bank nevertheless said yes, handed over the money.

THE TERMS

Under the terms of the agreement, the interest payable on this €30bn ‘advance’ by the Central Bank was 6% p/a. Minister Lenihan committed the Irish state (that’s us) to paying €3bn a year to Anglo, who would then pass on that money to the Central Bank, these payments to continue til the original €30bn plus the interest was paid off in full. So no, it won’t be done in ten years (10 x €3bn), rather it will take at least 15 (if you're not into sums look away now: March 2011, 30bn + 6% = 31.8bn, less 3bn = 28.8bn; + 6%n = 30.5bn on March 2012, less 3bn = 27.5bn; + 6% = 29.2bn on March 2013, less 3bn, etc. etc.).

WHAT HAPPENED TO THE €30BN

Anglo got it and uses a huge portion of it to pay off its bondholders - €2.3bn in the next few weeks alone (see bondwatchireland.blogspot for full details)

WHAT HAPPENS TO THE €3bn EVERY YEAR

The Central Bank destroys it – burns it, shreds it, any way you want it, but it’s simply destroyed.

TO WHOM ARE WE PAYING THE INTEREST

We’re paying the interest to Anglo, which we 100% own; Anglo in turn pays interest to the Central Bank on the €30bn loan, and the Central Bank gives the profit it makes (when talking of banks, I can't say ‘earns’) each year to the government, including the interest it charges Anglo (round and round the houses they go - are ye beginning to see how all this can eventually confuse even those who are charged with regulating it?).

SO WHAT’S THE BIG DEAL ABOUT GETTING THAT INTEREST RATE REDUCED?

Exactly – what is the big deal, and why is the government making such a song-and-dance over that when most of that interest finds its way back to government coffers anyway?

SO WHAT IS THE BIG DEAL?

The big deal is that every year we’re going to have to borrow every penny of those billions, with more interest, and real interest this time, to pay back those promissory notes.

THE ROLE OF THE ECB

The ECB’s stamp is all over this, quite literally, down to setting the interest rate. By law, a bank is required to have at least as much in real assets as it has in liabilities (the multiplier depends on the country); on its own the IOU given by Brian Lenihan wasn’t real, no guarantee that the promises made in the note would ever be kept. The ECB had to give its approval but more, it also had to give the Irish Central Bank permission to print that €30bn and give it – in total and up front – to Anglo. This though was against the ECB’s own policy; they didn’t want to print new money because – they believe - it will cause prices to rise and their main objective is to keep price rises to about 2% per year. But they had an even bigger concern – their own major banks in Germany and France, those to whom Anglo and all the other Irish troubled banks owed many of those billions. So, they allowed Ireland to temporarily print money to fund Anglo's losses, but with this massive sting in the tail - as the money is repaid it is destroyed, so that at the end of the repayment of the promissory note there is no extra cash, no new money will have been created.

WHAT SHOULD BE DONE NOW

Refuse to pay another bond, refuse to pay another promissory note, look for repayment from the ECB of the money they’ve already forced us to pay through their blackmail policy.

Regards,

Diarmuid O'Flynn.