Now part of the state guarantee, the government had to find a way of paying back their bondholders and lender banks in Europe.
The two banks were bust, but we had guaranteed their debts and default was not an option we were told, because of the EU policy of avoiding any bank collapse.
So the government wrote a series of promissory notes or IOUs to pay the Anglo and Nationwide debts. These were then cashed by the administrators of the two closed banks, and the money used to pay back all the bondholders and European banks. That's where the €30 billion in promissory notes came from.
What should have happened, of course, is that the debtors of the two defunct banks should have been told, tough, your money is gone. You took a gamble on the Irish property boom and you lost.
But instead of that, all the Anglo/Nationwide bondholders and European banks got all their money back. (Among the last repayments is €750 million that will be going to one of the big German banks this year.)
They have all got their money back and the debt, like the debts of all the Irish banks, has been transferred on to the Irish taxpayer. We will be paying it off for decades.
This scandal has been copper-fastened by what happened last week. Although the promissory notes were a quasi government backed financial instrument, they were not the same thing as sovereign debt.
Promissory notes are not traded like government bonds. So there was still the possibility that they could have been renegotiated.
That possibility is now gone because of last week's deal which has turned them into sovereign debt.
Of course the same thing could be said about the overall Irish bank debt, which eventually resulted in our collapse and us having to get an IMF/EU bailout.
We could have insisted that we get significant debt reduction, not just on these promissory notes but on our bank debt in general. After all, we only got into this mess because we went along with the ECB/EU policy that bank default had to be avoided at all costs.
We paid all the banks and bondholders and everyone else back to keep the European financial system stable. The ECB owes us big time.
Instead of that, the Irish government has insisted that there can be no write down on our debts because of ECB rules. Under these rules, sovereign debt cannot be written down by the ECB because they say that is "monetary financing" (Europe printing money to give to a government).
This is legalistic drivel. It suits the ECB to take this stance at present, but you can be sure they will change it if the banks in a big economy like Spain looks like they are going to collapse the country.
And what about Greece? There have been huge write downs in the debts of Greek banks.
The ECB says that is different because this was "private" debt -- a lot of the money was owed directly by Greek banks to French banks. But our debt -- including the Anglo and Nationwide €30bn -- was "private" debt until we were forced to turn it into sovereign debt!
As I said, it's all legalistic drivel dreamt up by bankers and lawyers on big salaries.
To make all this worse, it has now emerged that the saving resulting from last week's deal will be around €8 billion, not €20 billion. And to get even this much off the debt mountain has meant that we have had to agree to a 25 to 40 year payback schedule.
Which means our children will be paying back this "deal" for years.
Why would anyone think it's a good idea to stay here?
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