Progress on Promissory Note\ELA Issue?

Hopefully, this story is a sign that the €3.1 billion payment on March 31 can be deferred.

74 thoughts on “Progress on Promissory Note\ELA Issue?”

  1. We can but hope, but having seen the ECB press conference today, I think any optimism is misplaced. Ireland is a teensy element within the EuroZone universe. Any deal on deferring the promissory note or reducing the interest rate on the provision of funds to Ireland to pay to Anglo is a default. I can see why we want it, for both economic and ethical reasons.

    But if the ECB allows it in Ireland’s case, then it opens the door to special pleading across the EZ, from Spanish cajas to troubled saving & loans/credit unions. If Ireland’s debt:GDP is “only” going to rise to 120% after paying for the promissory notes – less than Greece’s and the same as Italy’s – then why allow a default?

    By the way, Minister Rabitte’s comments comes a couple of weeks after Europe junior minister Creighton said she was “certain” there would be some easing of the burden of the promissory notes. If you saw Sr Draghi’s stony-faced response to the Independent’s Laura Noonan in Frankfurt today, your heart would have sank.

  2. @ Jag

    Yep, I noticed that Draghi completely ignored the question about the promissory notes in his answer. Fair dues to Laura for raising it but she’d have been more likely to get an answer if the question had been more pointed and hadn’t mentioned Greece.

    Interesting also to see German financial journalists now bugging Draghi about Target2 balances!

  3. “The signs are propitious.” Minister Pat Rabbitte

    @KW

    Would be neat to see a ‘note’ published by Draghi on this Target2 … a sonnet from The Governor even ….

  4. Promissory notes aren’t even going to save us anything in the long term – but boy will we be made beg!

  5. @KW,

    Did you notice Draghi’s answer on TARGET2?

    “TARGET2 imbalances do not imply any more risk”

    Probably wishing too much to expect it to make a difference..

  6. @Eureka
    That was a beautiful video – the Germans have played a stormer , they have used the Greed and willingness of the peripheral elite to keep their precious euro accounts against the interests of the majority of the populace withen these sorry little countries.
    Thereby transferring the remaining energy credits into the German economy.

    People will never know how vulnerable Germany really was during this crisis – not only was it dependent on demand from European consumers but it held a large amount of its deposits withen these second world jurisdictions.
    Sweet Jesus what a Treacherous 2 faced crew we have running this sorry ship of state.
    They are no better then Killarney Jarveys – all smiles from one end of their Janus face & begrudgery from the other.

    The Beal Bocht routine in the States was pitiful to watch.
    We are sorry little creatures floating on a global credit sea.

  7. Hopefully it will be a little more than just skipping a few payments, though that would have some short term funding benefits. A few weeks ago Simon Coveney made the suggestion that the cost of the Promissory Notes could be reduced from €47 billion to “around €36 billion” but did not indicate how this might be achieved.

  8. @ Seamus

    By the time €36 billion (or perhaps less) has been doled into IBRC, all its liabilities will have been paid off. The extra payments next decade that make it add up to €47 billion are never going to happen, so the €47 billion is a red herring.

  9. @ Karl,

    I presumed that the IBRC will need the €31 billion capital amount to be paid and that this would be sufficient to cover the liabilities. My doubts about the Coveney claim are that unless the savings come from a reduction in the capital amount they are not real, or as you more succinctly put it, any amount over the €31 billion is red herring.

    Rabitte is more specific but does not suggest there will be any reduction in the capital amount, merely a rescheduling of the payments.

  10. @ Jag

    “Any deal on deferring the promissory note or reducing the interest rate on the provision of funds to Ireland to pay to Anglo is a default.”

    Well thats debateable, but even if it was, who’s it a default by and who is being defaulted on? Two Irish state entities, not the ECB.

  11. @Jag
    “Any deal on deferring the promissory note or reducing the interest rate on the provision of funds to Ireland to pay to Anglo is a default.”

    The same could be said of reducing the interest rate and lengthening the term on the official EU loans.

    And this could be why the troika rather than Ireland is preparing the technical paper on what can be done with the promissory notes.

  12. @Jag, I don’t think the deferring of payment of the notes would be akin to a default event as unlike say sovereign bonds, the schedule of repayments of the notes are entirely notional and simply agreed with the ECB–the ECB can choose to allow the repayment schedule to slide, as long as they are sure they will get their money back at some point.

    That said I do take your point about the wider view the European authorities must take. One argument I’d have on that is that austerity type policies have to work in Ireland if they are going to work anywhere, and so anything the European authorities can do to help Ireland out of its combined banking/fiscal/regulatory/political/credibility crises and back to something approaching fiscal sustainability makes sense, because the EU authorities can then point at Ireland (as they did during the 1990s) and say ‘look, it worked over there’. to other nations. The need for a totem for austerity policies is pretty strong I think.

  13. I know this totally unjustified fiscal leakage that the Anglo/INBS legacy is imposing attracts a lot of comments and engages a lot of attention, but I suspect we can now take it as given that the penny has finally dropped with the Troika that Ireland’s ‘poster boy’ status which they are so keen to project runs the risk of being destroyed by growing, and perfectly understandable, popular revulsion.

    They should, by now, know that ‘something has to be done’; and that only they can do it. It probably makes sense to keep up the pressure here and elsewhere, but there are oh so many other things we should be attending to and which, unlike this, are entirely in Ireland’s control.

  14. Morning,

    To me personally, this is a totally Kafkaesque scenario. Then again I night have got it all wrong, so please correct me if I am wrong in my simple line of thoughts, but as soon as the ELA is paid back to CBoI it is expunged. Right?

    To pay these 30bn PN’s, the state has to borrow the money of course. Right?

    Sub consequently, it is another forced and direct transfer from the people of Ireland. Right?

    Now, what I know is, that all this was never a condition of the Memorandum of Understanding.

    Get the Hell out of Dodge! Not a single penny should be paid!

  15. Enda Kenny:

    “It’s very clear that Ireland has not sought and will not seek any writedown,” Mr Kenny said in an interview with Bloomberg Television yesterday in New York. “We’ll pay our dues in full and on time.”

  16. @Paul, I don’t think that’s the issue really as much as having a conversation with our EU partners about the best way in which these notes can be paid off in the context of any Irish recovery, that conversation has to take place with due regard to the needs and constraints of both sides, but I think in the end the EU representatives will recognize this doesn’t make sense as a moral hazard reduction mechanism, nor does it make sense from a ‘take your lumps’ position. They do want Ireland to get out of its current difficulties as soon as possible, and this is one more way they can help us do that.

  17. Sometimes I have to imagine I’m wearing a leprechaun suit on a jarvey to Tir na N’Og to understand the Irish negotiating position and address questions such as 10:58 Jagdip Singh “then why allow a default?”

    At one level, this question assumes Ireland’s debt profile is manageable. There must be those who believe this is so. This might explain our tentative, subservient and mouse like negotiating stance hitherto.

    Another level, might have those who believe like Enda, our debt is a debt of honour, we can pay our way; we must pay down all debt.

    Another level, might be occupied by those in thrall like a serf or slave to our debt paymasters, who believe, we mustn’t upset our masters. If we are good, they will deal kindly with us. We might achieve some concessionary favours: they might lend us a handkerchief, a tiny haircut off interest rate, or the magnanimously charitable, ‘defer payments’. This might sum up the Karl Whelan and Fine Gael position. A little bit of salt and we get technical negotiations that continue forever to provide some veneer of respectability.

    I’m not saying we should adopt the negotiating strategy of the Greeks. Further details will emerge on the latest Papedemos gambit of agreeing to a ¢350 ml pension cut; then signalling they had agreement on a deal; hoping EMU didn’t notice a ¢350 ml shortfall and decide to let it go for the sake of agreement; but it was noticed because of Germanic obsessive attention to detail and now they have another 6 day Valentines Day massacre deadline 🙁

    Nope, just a faint hope our land of Tir Na NÓg debt serfs can do the sums and figure out what debt restructuring needs to be done to avoid perpetual austerity and perpetual debt paid for with the keys to the Irish Constitution and whatever else they can manage to give away.

    What is more likely to happen is we will be suffocated by the euro exchange rate, upward only rent reviews holding NAMA and the banks from tottering, our CT will be taken away; austerity will grow and turn Ireland into an austerity slum and a peculiar, non capitalist, socialist, Albania type virtual state held together by the Bundestag debt extractors, who want their money back 🙂

    A good time to leave the doomed setup of the EMU would be Valentines Day 🙂

  18. @Jagdip
    “If you saw Sr Draghi’s stony-faced response to the Independent’s Laura Noonan in Frankfurt today, your heart would have sank.”

    It seems to me that Draghi has done exceptionally well so far. Imagine having to get the three year bank loans past the hawks in Frankfurt.

    And just look at what he is up against in the Bearded Bavarian Mullahs who have it seems full support from the German Financial press.

    Interesting also to see German financial journalists now bugging Draghi about Target2 balances!

    It seems to me the Germans want Greece out. The Financial firewall is probably in place because Europe is now owned by the financiers.

    But it is unlikely that the people of Europe will look on with equanimity as a pariah Greece is deliberately thrown to the wolves post exit.
    On the positive side the extent of the devaluation should be sufficient to deter Germany from wanting to pursue its hardline policy with too many other countries.
    Greece and Portugal gone and Spain considering its options should be sufficient to sideline the mullahs.

  19. Apologies to Karl Whelan re above (KW is first sentence of blocked quote only). I must relearn how to do those blockquotes properly!

  20. The Irish side needs to prepare arguments for these and probably other points:

    @stephen K

    “the schedule of repayments of the notes are entirely notional and simply agreed with the ECB–the ECB can choose to allow the repayment schedule to slide”

    How can they be entirely notional if a) the “sovereign signature” was instrumental in the ECB and CBI agreeing to the repo, and b) the interest rate and schedule were used by the CBI to value them so as to decide how much ELA to advance?

    @Dreaded e

    “The same could be said of reducing the interest rate and lengthening the term on the official EU loans.”

    The two things are not the same. The ELA printed on repo of the pro notes was newly created money (and we all know how reasonable the Germans are about this sort of thing). The ‘official loans’ are money that already exists, say, being borrowed from the market by country A ands lent on to country B.

    It may be inconvenient, but the Irish negotiators need to address the following question before arriving at a table somewhere. If a state cannot borrow, and is not allowed to finance its deficit by printing by its central bank, Ireland demonstrates that the thing to do is to write an IOU that states a payment schedule, repo it with its central bank which then prints the funds, then reduce the value of the repo’ed asstets by altering the terms later – hey maybe even say you might never repay it.

    @Eoin

    “who’s it a default by and who is being defaulted on? Two Irish state entities, not the ECB.

    Maybe an agreed default / agreed haircut / writedown. The state defaults on its central bank, but our Teutonic friends might be expected to look at that and see the ECB having been tricked into not objecting to ‘the ‘print and then unprint’ of ELA and re-pay – ie as soon as you let them print, they will start wanting to forget about the ‘re-pay’ bit.

    If the Germans are to go for this, how are the Government to persuade them that none of the other countries that would like to monetize some debt will not do the same thing?

  21. @Stephen Kinsella,

    Agree. And I have absolutely no desire to seek to foreclose informed comment. But I suspect there are many who use this ferment of comment to distract attention, in a self-serving manner, from matters which deserve as much, if not more, attention. Perspective, proportion and balance are virtues in any context. But those who should be wlling or able to provide these appear to be vanishingly few.

  22. à la recherche de l’argent perdu

    http://www.ibrc.ie/About_us/Financial_information/Archived_reports/Annual_Report_2007.pdf

    In 2007 Anglo Irish Bank delivered its 22nd consecutive
    year of uninterrupted earnings growth, with underlying
    profits increasing by 44% to E1,221 million.
    This excellent performance is grounded in the Group’s
    disciplined and focused business model, prudent risk
    appetite and very limited exposure to areas affected
    by current credit market issues. These results reflect
    controlled organic growth with all divisions contributing
    strongly. Key highlights of the Bank’s performance
    include:

    Positive earnings momentum
    • Record underlying profit before tax of E1,221 million,
    a rise of 44%

    • 46% increase in profit before tax to E1,243 million,
    including a E22 million profit on the disposal of our
    Isle of Man trust activities

    • 41% increase in underlying earnings per share
    to 131.7 cent

    • Cost to income ratio of 22.3%, an improvement
    of 4.2 percentage points

    • Specific impairment charge unchanged on 2006
    at 9 basis points

    • Continued strong return on equity of 30%

    • Total dividend of 19.49 cent, an increase of 20%

    The annuity and low
    volatility nature of the Group’s income stream and its
    highly efficient operating structure will sustain significant
    incremental capital generation year on year. Accordingly,
    the Bank is well placed to maintain its progressive
    dividend policy in 2008 and future years.

    Our adherence to a strategy of controlled organic growth
    will enable the Bank to take good advantage of potential
    opportunities to increase market share, particularly in the
    UK and the US, and to meet successfully any challenges
    arising in the future. We are confident that our stringent
    risk management standards will maintain the high
    quality of our asset base. Our proven lending model, a
    diverse funding franchise, excellent liquidity and a robust
    capital base combined with a uniquely efficient operating
    structure will underpin continuing strong earnings
    performance.

    Your Board anticipates underlying earnings per share
    growth in excess of 15% in 2008 and looks forward with
    confidence to the sustained delivery of above market
    returns in subsequent years.

  23. @ Paul Hunt

    “They should, by now, know that ’something has to be done’; and that only they can do it. It probably makes sense to keep up the pressure here and elsewhere, but there are oh so many other things we should be attending to and which, unlike this, are entirely in Ireland’s control.”

    Paul if they get this deferring of promissory agreed it is a huge plus for our chances of avoiding default. 3.1 billion less of a deficit each year for the next few is a very big help.

    Karl were you the first to come up with the idea of asking Europe to extend the repayment Schedule?
    If so you have done the state some serious service.

  24. @ BEB
    “Well thats debateable, but even if it was, who’s it a default by and who is being defaulted on? Two Irish state entities, not the ECB.”

    Is that not a bit simplistic.
    Yes it would be the state defaulting on the Irish Central bank but the Irish Central bank would then have to default on the ECB.
    The ECB gave the ICB permission to create the money and loan it to the state on the agreement that it would later be collected with interest and destroyed.
    Delaying this collection or reducing the interest is asking them to amend the agreement. Some would call it a default. But its a very grey issue IMHO

  25. @ grumpy

    …repo it with its central bank which then prints the funds, then reduce the value of the repo’ed asstets by altering the terms later – hey maybe even say you might never repay it.

    This would assume there is some benevolent kindness that should be extended to us; it also assumes there would be some form of transfer payment system put in place to unburden us.

    The plain truth of it is, the German people, the Bundestag have signalled clearly through opposition to eurobonds and similar suggestions, they will not pay the debts of the PIIGS. The Bundestag has to clear anything Merkel agrees to that amounts to a German liability.

    What the Germans want is closer political union, more austerity, more fiscal control of sovereign budgets. One way of achieving this would be for Greece, Ireland and Portugal to give over the control of their states much in the way of an East European cold war member of the USSR where budgetary control was vested in the Kremlin. We therefore have the ‘Compact’.

    It won’t work, but hey, just because it doesn’t work, wont stop, us Irish, from trying it out again, to be sure, to be sure 🙂

  26. @Eamonn Moran,

    Completely agree. I’m just trying to make a few points. First, by going into orbit with the blanket guarantee, rather than sticking them with a requirement to share the burden of insolvent banks, the then government gave the EU’s Grand Panjandrums a different problem than the one should have been dealing with and it allowed them to kick the can down the road with Irish taxpayers taking the IBRC’s legacy costs on the chin.

    Second, I’m pretty sure that they now know the can kicking has to stop and that they have to step up to the plate. As Stephen Kinsella puts it, they desperately need a ‘totem for austerity’, but perfectly justified, and increasing, public revulsion runs the risk of felling and shattering this totem pole.

    Third, the EU’s Grand Panjandrums are off the pace in getting to grips with what needs to be done. Extend and pretend has proved extremely convenient, but it has woven a tangled web and untangling it will take time. But it will be untangled only in the rooms off the corridors of power – assuming the necessary effort is being applied. And I suspect it is. There are times when we have to accept that certain matters will be resolved ‘over our heads’ as it were.

    Finally, we have to resist the temptation that, if this egregious and unjustified burden is reduced, all the pressure is off and that there will be no real requirement to pursue meaningful structural reforms, and it’ll be back to ‘business-as-usual’ in two shakes of a ram’s tail. I’m not saying that view is widely held here, but I fear it is being propagated by various vested interests in a blatantly self-serving manner and has secured some traction in the public sphere. We should view any amelioration of this burden as providing the opportunity to do some serious heavy-lifting.

    But I suspect I’m in a small minority on this.

  27. @Paul Hunt 11:10

    “assuming the necessary effort is being applied. And I suspect it is.”

    “Second, I’m pretty sure that they now know the can kicking has to stop and that they have to step up to the plate. ”

    Nope, this is all Stockholm syndrome. Don’t assume ANYTHING. Its Maths. You don’t have to. YOU do the math, you state your terms. Greece does it, Iceland does it, Argentina, Russia….

    I don’t know if this is some weird colonial legacy of ours that we have to assume our betters in Frankfurt know best;
    but, they are neither your betters, nor do they know best.

    As far as the NTMA, DoF and their legacy of decision making re IBRC, blanket guarantee, assume instead they are useless. They need to be turfed out. Will this happen, no.

    Assume instead there will be no structural reforms, bankers will get their bonuses, if their salaries cannot be raised high enough, they will be sweetened with expenses and tax writeoffs. thinly disguised looting and stealing from the Irish public service will be served up as reform.

    No bankers go the jail, the financial sector will be protected and served up the public service to feast upon. In return for this, the Irish will be financed by the Troika.

    All the evidence is in that all necessary efforts are not being applied 🙂 No more Stockholm syndrome, Paul.

    You need to go up some gears and adopt the mind set of a Grissom from CSI or a Grimsson of Iceland and put your own assumptions aside, just let the evidence speak for itself.

    It wont speak to you if you don’t; it’ll only hide and send rubbish to fool you like ‘all the necessary effort is being applied’ 🙂

    Not by those gombeens who got us into the mess who negotiated an unconscionable bailout. At least let’s not hope so; the more effort they make, the more mess we’re likely to get into.

  28. What is the likely impact of any reduction of the interest rate payable on the promissory notes?

    Let’s say we borrow a further €28 billion from the EFSF to pay off the promissory notes at an assumed 3.5% interest rate. That would imply an interest bill of approx €1 billion in 2013.

    Under the current arrangement, the scheduled amount of interest payable on the promissory notes is €1.8 billion. See here:

    http://www.finance.gov.ie/documents/publications/reports/2010/noteprommissory2010.pdf

    The government’s latest fiscal plan (page 20 of link below) forecasts fiscal adjutments of €3.5 billion in 2013, €3.1 billion in 2014 and €2 billion in 2015 in order to meet the 3% deficit/GDP target.

    http://budget.gov.ie/Budgets/2012/Documents/Medium%20Term%20Fiscal%20Statement%20November%202011.pdf

    Am I correct then in assuming if we do get a reduction in the interest rate payable on the IBRC recapitalisation to say 3.5%, that the main impact will be to reduce the amount of the necessary fiscal corrections over the coming 3 years (and beyond) by approximately €750 million?

  29. @ Colm

    “One way of achieving this would be for Greece, Ireland and Portugal to give over the control of their states much in the way of an East European cold war member of the USSR where budgetary control was vested in the Kremlin.”

    Yes, cos they’re the exact same thing…

  30. @ KW

    Re “Suggestions for the casting of Baldini and Wally are welcome. Leonardo di Caprio has expressed an interest in playing the minor but crucial role of Lorenzo Beeni Silly.”

    Nope, suggest additional episode with script given to Blackadder team.

    Baldini played by The Baldrick(Tony Robinson) “underscrogsman” (apprentice dogsbody) to Mr. E. Blackadder (Wally) Rowan Atkinson

    As for what happens next. On the one hand, the ‘cunning plan’ of Baldrick is presented as take it or leave it. The German Bundestag are delighted to hear of the plan and vote immediately to expel Ireland from the EMU; to everyone’s relief.

    But what is likely to happen is Blackadder invites Baldrick to some technical negotiations that prove to be somewhat complicated as follows. Lol

    http://www.offbalance.com/art4.html

    But there could be trouble: perhaps a phone call from Schauble to Kenny:

  31. @Ger
    “Like a circus dog”

    Good spot and link. And I thought all decisions were made by the Troika (EC/ECB/IMF).!! How naive of me.
    Interesting too how decisions are made and communicated. No memo, no exchange of papers etc. Just a thumbs up or down from the seated emperor.

  32. @ Karl
    I was on Holiday last may so missed that.
    Unlike most good ideas it came in the form of a one act Play.

    There is something poetic about one southsider coming up with with an economic plan that was followed (way beyond what the author thought wise) by government and caused our damn near ruination and then a another plan adopted by another UCD man that may even help save our skins.

    The road is long and there are plenty more twists in this tale but I think they will have to give your character a small speaking part when the final blockbuster is written.

  33. @ Paul
    “First, by going into orbit with the blanket guarantee, rather than sticking them with a requirement to share the burden of insolvent banks, the then government gave the EU’s Grand Panjandrums a different problem than the one should have been dealing with and it allowed them to kick the can down the road with Irish taxpayers taking the IBRC’s legacy costs on the chin.”

    We will never know if that’s true. We gave them a much smaller problem “than sticking them with a requirement to share the burden” and there is some evidence to suggest they made efforts to deter us from giving them the bigger immediate problem. Trichet’s ‘protect your banks at all costs’ springs to mind. Also isnt what Karl is suggesting an effort to avoid “Irish taxpayers taking the IBRC’s legacy costs on the chin.”

    I understand your and Michael Hennigans fears about back to business as usual. In fact Brendan McDonagh’s interview on Newstalk this morning calling on banks to lend again and saying that one of Nama’s objectives is to give the property market a kick into life, sounded a little like a rallying call for the return of the good old days.

    But I think the troika have got your back. We still have a massive deficit and at least some of the structural reforms, while being diligently evaded by vested interests will be brought in kicking and screaming into place.

  34. @karl whelan

    It continues to grind on me that Anglo creditors have received so much yet retail investors in its shares who were deceived so much have received nothing post-nationalisation. The appointment of an assessor was promised, but not delivered.

    To put it another way, if you had some of your pension tied up in bonds, you were fine. If you had some of your pension tied up in shares, you were f***ed, despite the yards of official bills of health issued by the CB the ‘Regulator’.

  35. El Erian

    “What Greece needs, of course, is an economic, financial and institutional overhaul. Such a reset is not easy; it is also risky. But until it happens, repeated rounds of negotiations will be the rule – as will derailed agreements and finger-pointing.”

    Most of the Greek bailouts so far have gone to EZ banks. The ELA is all about paying off creditors too. It seems that trick has had its day.

    The question is whether or not Ireland can get out of the mess without the institutional overhaul and the ELA being restructured . How many deficit reduction feathers can be plucked from the fat turkey ?

  36. @ Alchemist

    “To put it another way, if you had some of your pension tied up in bonds, you were fine”

    obviously if you were a subordinated bondholder, thats not quiet the case…

  37. @bond e b

    For those issued with preferential shares that is the case as I understand it and you put it. I am familiar with one fund in the IFSC which plunged into Anglo via pref shares and had a the devil of a time getting official confirmation that they were not covered.

    My point however still stands. Activities of certain kinds in Anglo would have been intolerable, questionable and criminal in other jurisdictions. The risk to shareholders didn’t fall into the range of normal risks.

    For example, directors borrowing money to buy shares in their own outfit, off balance sheet loans, etc???

    Of course, it wasn’t only Anglo that went down various dark routes on those fronts.

    The government has decided effectively not to compensate shareholders but to compensate, with a premium, certain classes of creditor.

  38. Alchemist,
    You can have a reasonable debate about whether senior bank debt holders should get all, some or none of their money back. However what is beyond dispute is that equity holders are on the hook after reserves and pre provision profit. Ignorance of the facts is not a defence.
    Equity holders have lost almost all their equity in Irish banks. That is capitalism.

  39. @tullmcadaoo

    I am not complaining about capitalism.

    It is financial gangsterism that I have a problem with. What occurred, the internal dynamics, in Anglo was different from what occurred in BOI and AIB.

    When I read recently that only 11 police officers had been devoted to Anglo investigations, it answered a lot of questions I had about the seriousness of official Ireland to white collar criminal investigations.

  40. “What has particularly bothered me is the humiliation of the country,” George Karatzaferis, whose Laos party has 16 members in the 300-seat parliament, said in televised comments. “Clearly Greece can’t and shouldn’t do without the European Union but it could do without the German boot.”

  41. @OMF
    Nearly a quarter of a trillion Euros………….. Sweet Jesus – that will be a impressive number.
    This can not be but a massive transfer of real resourses from the periphery to the core using monetory means as a mechanism to drive us into extreme surplus.
    Its a truely spectacular financial engineering event when looked at from orbit.

    My question is what exactly is this country ? , its always been such a strange place for me – and I am born here !!!
    Something very dark lurks beneath this buffoonery as nobody can be that stupid.

  42. @ OMF

    ‘Many of the Nama loans are “non-performing”. Think moulding ghost estates in the midlands’

    As Namawinelake will point out this isn’t exactly true. Nama isn’t as involved in the residential property market in the south of Ireland as many think.

    Also I’d say that extroplating from the Bank of Ireland sale to give you an 80% capital loss isn’t great science. I’m not saying Nama won’t make a loss, I don’t know if it will, but I’d say a better starting point for guessing if it will can be found from Namwinelake

    ‘Following Swc 2011 CSO index, used to calculate the NWL Index shown at the top of his page (http://namawinelake.wordpress.com/) page which aims to provide a composite reflection of price movements in NAMA’s key markets since 30th November 2009, the NAMA valuation date. Residential prices are now down 26.6% from November, 2009. The latest results from the CSO bring the NWL index to 831 (20.3%) meaning that NAMA will need see a blended average increase of 20.3% in its various property markets to break even at a gross profit level’

  43. @John Foody
    I will ask a simpler question – why tie the fate of the national money supply to assets that do not produce anything ?
    We now have the absurd situation of the national money supply falling because these units of little apparent value are falling ?

    The loses are much grater then the headline figures for recaptilisation – the losses are the defered investments hoping against hope these Dodos can produce wealth.
    Its a form of deep sickness – this belief in products of a Bank credit / oil bubble – they are dead DED dead.

    Its not logical Captain – by themselves these houses do not produce any wealth – they consume wealth as they are a consumer durable.

    A country whose money supply was completly divorced from these absurd creatures would not care a jot what value was put on them.
    I ask you what concern is it to a rational functional nation ?

  44. Ah yes. What a craven state we’re in! Begging for a change in the debt that we owe to ourselves.
    I’m sick of Enda and his garden gnome Eamonn. (The photos from new York looked like something out of Amelie.)
    Current model doesn’t work.

  45. @ Colm Brazel

    ‘What is more likely to happen is we will be suffocated by the euro exchange rate, upward only rent reviews holding NAMA and the banks from tottering, our CT will be taken away; austerity will grow and turn Ireland into an austerity slum and a peculiar, non capitalist, socialist, Albania type virtual state held together by the Bundestag debt extractors, who want their money back ‘
    + 1

    German political parties have been captured by creditor interests. They have succeeded in setting European citizens at each other’s throats, while evading any enquiry into the malfeasance in the financial sector. Absent change in power relations at the core, reforms in the periphery, will come to nought.

    ‘In more modern times, democracies have urged a strong state to tax rentier income and wealth, and when called for, to write down debts. This is done most readily when the state itself creates money and credit. It is done least easily when banks translate their gains into political power. When banks are permitted to be self-regulating and given veto power over government regulators, the economy is distorted to permit creditors to indulge in the speculative gambles and outright fraud that have marked the past decade. The fall of the Roman Empire demonstrates what happens when creditor demands are unchecked. Under these conditions the alternative to government planning and regulation of the financial sector becomes a road to debt peonage’

    http://michael-hudson.com/2011/12/democracy-and-debt/

    As Dork points out, we have chained the domestic economy to a zombie property function. The CT gambit is the only nail holding the edifice together. By the time that cloak is finally whipped off, the many of the main players will have already extracted their assets, leavinga crippled state in a chronically depressed peripheral region.

  46. @ Paul Quigley
    One of the best articles I have read in a very long time!
    Thanks for posting that link.
    I like the line “It always is easy to annul debts owed to oneself”
    Seems particularly apt in this context.
    The overall article sums up the situation wonderfully.

  47. In a week when we have the Michael Hasenstab ‘confidence’ in the Irish economy puff of smoke and mirrors; Bill Clinton hosting of FDI leads for the Irish three stooges, populated probably with reps from a load of hedge funds under guillotine of Irish default, to help their confidence, KW’s excellent work on ELA, consider this:

    http://www.independent.ie/national-news/new-head-of-fraud-bureau-will-lead-anglo-investigation-3012740.html

    We now have musical chairs pass the parcel loss of experience and accumulated knowledge besetting the pathetically small team investigating Anglo.

    In the event of default, we have a good case against Anglo in any International Court of Settlements review of our liabilities against our ability to pay.

    Its a scandal Seanie is not in jail but probably enjoying a game of golf in Marbella as this is written. IF I buy a second hand car and later discover there are payments against it not stated in the original agreement, this is fraud. Lenihan was led to believe losses were of the order of ¢3 bn, they’ve jumped to ¢36 or possible ¢47 bn with PN’s. With B&B loan shareboosting, directors caught illegally boosting share prices, we have no hope of prosecutions in the near future and less information on the causes of our crisis than you will get from the US inquiries into its own meltdown. http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

    Karl Whelans work on drawing attention to the unconscionable nature of PN’s is to be congratulated, but similar to the burial of the criminal investigation into the banks; though a good plan to demand Anglo PN’s be forgiven, the Baldini’s, Wally’s, Baldricks and Black Adder’s who run the compromised Irish political and financial system, are likely to bury that demand as well.

    Instead, we get the Hasenstab propagandists and government window washers turning black into white !

  48. @ Paul Quigley, tks for Hudson link, from which:

    “To put matters bluntly, the result has been junk economics. Its aim is to disable public checks and balances, shifting planning power into the hands of high finance on the claim that this is more efficient than public regulation. Government planning and taxation is accused of being “the road to serfdom,” as if “free markets” controlled by bankers given leeway to act recklessly is not planned by special interests in ways that are oligarchic, not democratic. Governments are told to pay bailout debts taken on not to defend countries in military warfare as in times past, but to benefit the wealthiest layer of the population by shifting its losses onto taxpayers.”

  49. Also I’d say that extroplating from the Bank of Ireland sale to give you an 80% capital loss isn’t great science.

    It’s not extrapolation. There’s only one data point.

  50. If we owe the promissory notes to ourselves why the big deal about asking the troika for permission. Why not just do.it?
    Or is this just political grand standing to keep our eyes off the real news?
    Or is Karl wrong and we actually owe the money to the ECB and that is why this has not been done?

  51. @ Dork

    Agreed. The oppurtunity cost is disgustingly massive. We could be building the Dart underground, Fiber to the home, those train lines on Cork you like etc.. Perhaps I wasn’t clear, I was merely pointing out to OMF that his extropolation from the BOI loss to give an 80 percent loss on Nama isn’t great science. The NWL index is a better starting point for determining how hosed we’ll get.

  52. @ Shaun Byrne
    I’m no expert but I think that it can be summed up like this:
    Short term – modest significance in that it reduces the amount of money we need to borrow to pay ourselves
    Long term – no significance
    It’s an internal loop with an external hook to feed the money in in the first place.
    Ultimately apart from picking fights with the Vatican it’s the only thing our government can win on and they’ll spin it as a victory.
    Fact is our government is irrelevant. Eamonn and Enda our little more than Punch and Judy glove puppets with the Troikas hand firmly up there…Pathetic thing is they seem to enjoy it…….

  53. PS – its best to watch the top video collection while listening to Hudson – things become a lot clearer for some reason

  54. @ Dork
    Second link was interesting.
    Disagree with some of his thinking but most makes sense.
    The oligarchy piece has begun. The tyrant piece is slowly taking off judging from things like events in Hungary.
    It’ll be a very tricky few years. Strategy should be work on deficit reduction, aim for energy independence and default when the time is right

  55. @Eureka
    Yes he is more of a old style banker – so remains irrationally hostile to the landed classes.
    Everything is such a mess now – I think things have become too complex to control this implosion.

  56. @ Dorc,

    Tks for Guns & Butter link. Hudson I’ve wondered if he is involved in the Peter Joseph award winning Zeitgeist movies, his views are similar: but Zeitgeist attribute the perpetuation of a current power structure using the instruments of banking to self perpetuate, Hudson, on the other hand, stays away from such critique focusing purely on usury and banking schenanigans, but I guess one implies the other:

    These are good documentary style films that can be enjoyed as video projects even if you disagree with the philosophy:

    http://zeitgeistmovie.com/

    Zeitgeist Movies Link:

    “Both full length Zeitgeist films can be found at the above link, as well as a PDF source reference guide.

    The full audio version of President John Kennedy’s speech, some of which begins this video, can be found at the following link. Just scroll down to the April 27,1961 speech by President Kennedy and click on the play button there:

    http://millercenter.org/scripps/archive/speeches

    If you haven’t seen AMERICA, Freedom to Fascism, from Aaron Russo and two interviews with him, check out the video for this film in the My Videos section of this channel’s page. Just click on the spacetimewarp link above. Highly recommended.

    Another related and very informative film can be found at the following link. It runs 47 minutes. It is called “Monopoly Men”.

    http://video.google.com/videoplay?docid=-7065177340464808778&hl=en
    .
    Video: They Want Me Dead! Link follows…

    http://www.youtube.com/watch?v=U_M3Eny9wPk

  57. http://darwinday.org/about/

    Yesterday was Darwin’s anniversary, some events on in TCD today. I’m noting this to affirm the fact science can penetrate through the fog of coverup and fraud even in this country; that scientific investigation of schenanigans can be successful, one shouldn’t give up effort because of perceived failure or lack of success.

    “Darwin Day is an international celebration of science and humanity held on or around February 12, the day that Charles Darwin was born on in 1809. Specifically, it celebrates the discoveries and life of Charles Darwin — the man who first described biological evolution via natural selection with scientific rigor. More generally, Darwin Day expresses gratitude for the enormous benefits that scientific knowledge, acquired through human curiosity and ingenuity, has contributed to the advancement of humanity.”

    http://darwinday.org/

    “that conversation has to take place with due regard to the needs and constraints of both sides, but I think in the end the EU representatives, Stephen Kinsella, Feb 10 10:00am”

    Speaking re scientific objectivity, having read Stephen Kinsella’s piece in the Sindo yesterday, could I take issue with the term ‘EU’ Representatives.

    I’ve sort of ignored this Fine Gael spoon feeding, Lucinda Creighton, euro propaganda which links the euro to the EU as if the two are indistinguishable. But it appears to me
    this propaganda is spreading with Stephen’s piece yesterday recalling our long association with the EU.

    For the record, I’m a huge supporter of the Euro project and a deep critic of the euro and the EMU. YES, its possible to be both. The euro has done profound damage to the EU project and the EMU is vectoring the EU into a totalitarian, style cold war, east european type agenda with Germany playing the role of Russia.

    But there are differences. The difference is the destination of the vector will not end with a EUSSR; instead, it will continue towards a South American style banana republic model with present power structures, the 1%, fed by the banks, dismantling the welfare states and their democracies with banking and financial structures designed to perpetuate the new banking socialism model.

    So, we need to distinguish between the ideals of the EU targeted towards peaceful coexistence, unity in diversity, of distinct nationalities living together in harmony and prosperity; and an EMU spawned by financial interests exploiting the EU ideals and destroying these ideals as these ideals are twisted into an unstable, undemocratic, elitist hegemony of the rich exploiting the poor.

    No better a European structure incubator of this newly designed financial Frankenstein than Ireland with its NAMA. In order to get paid a salary in the 6 figures, lose six figure sums on property and head up to Frank Daly of NAMA, to give you a job. NAMA represents the new world order, anti capitalism, socialism for the corporate elite.

    Anyone able to persuade Hudson to come over to Ireland and write a book Roger Boyes, Meltdown Iceland

    In a nutshell, the project unfolding in EU right now is nothing other than the transformation of EU into a Germanic satellite of Wall Street, with Europe run like a South American Banana Republic.

    PS, can the Irish embassy in the Vatican not be reopened, but the money spent on the Vincent De Paul in Ireland. They’re going to need it.

  58. @ EV

    Tks for that link and great info. Allowing Greece to go bankrupt and remain in the EMU is not a runner. Greece needs assistance to build itself under new drachma outside the EMU.

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