Finance Minister Michael Noonan and Minister for 
Public Expenditure Brendan Howlin at a press conference last Thursday 

What a week!  You will have read about the dramatic events in Ireland last week, culminating in a deal with the European Central Bank that the government claims is a significant victory in our battle to get some of the massive debt burden we carry lifted off the nation's shoulders. 

The deal means that our borrowing will be cut by €20 billion, the headlines said.  

The hated annual €3 billion promissory note payments over 10 years are being replaced by a much longer 25 to 40 year repayment schedule which will significantly lessen the amount we have to repay every year.  That is a big relief because these promissory notes were a noose around our necks. 

Last year the government did a financial three card trick by taking the money from one of the banks here to make the payment. But that has to be replaced this year, so as well as the €3 billion payment for 2013 due at the end of March we were also facing last year's €3 billion payment a couple of months later.  

That adds up to an incredible €6 billion we were supposed to cough up on the promissory note debt in 2013.  Our total deficit this year will be around €13 billion, which gives you some idea of the scale of this.

It simply was not possible which is why, as the March deadline drew near, the government was getting frantic in its negotiations with the ECB to find a way out.

Of course, these promissory notes are only around half of our total bank debt.  But they were the immediate problem and they were so huge that there was no way we could pay them.  

So it's worth remembering where they came from -- Anglo Irish Bank and the Irish Nationwide Building Society, the two small rogue banks that played lead roles in the toxic boom and bust that crippled Ireland. 

The drama last week included a late night sitting of the Dail (Parliament) to rush through legislation to liquidate what was left of Anglo and Nationwide.   No one is sorry to see them finally removed from the financial landscape here.  

They were already in wind-down mode and it's good they are gone for good.  But they have left a poisonous legacy in their wake, the bad debts of €30 billion, which the last government covered by issuing the promissory notes. 

It's incredible to think that these two small institutions are responsible for around half of the total mountain of bank debts here, including those in the two main banks, the much bigger Bank of Ireland and Allied Irish Banks.  

That the regulator allowed these minnows to swim so far out of control is a disgrace, but that is what happened.  They achieved their infamy by a record of reckless lending to fuel the property boom that was not just outrageous, but stupid.

The money they were lending out was, of course, all borrowed from European banks and the money market players who piled in here in search of the higher returns that were on offer.  They all wanted a slice of the boom in Ireland.

When it all started to go belly-up in 2008, the then minister for finance stepped in with the blanket state guarantee for the Irish banks.  The Irish banks were the first in Europe to go broke as the crisis as developed across the continent. 

Terrified of what any default by Irish banks would do to confidence in the financial sector across Europe, the EU put the muscle on the Irish government to shore up our banks here. 

We were told initially that it was a temporary liquidity problem, that the Irish banks were solvent and that the state would only have to put in a few billion to keep the show on the road until the banks could sort out their problems.  

Little did we know. 

The "temporary" crisis turned into a catastrophe for the Irish economy and the Irish taxpayer who was left holding the can as billions and billions were poured into the banks.   Within a year or so, the depth of the €30 billion hole in Anglo and Nationwide was being exposed.  

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?