The Tuesday 12 noon payment of €700,623,555 to the unsecured, unguaranteed bond-holders of Anglo-Irish Bank is yet another instalment of a programme of sacrifices demanded of the people of this country as their contribution to saving the Euro.
Joining the Euro-currency in 1999 was the biggest mistake ever made by an Irish Government because among other effects it put us under the rule of the European Central Bank whose policy is to prevent insolvent private banks going bust anywhere in the Eurozone and which in September 2008 insisted that Anglo-Irish Bank must be kept in being at Irish taxpayers’ expense and which is clamping austerity on this country and other so-called PIIGS countries even though they need economic growth and not deflation.
The Eurozone is a flawed and reactionary project which prevents deficit countries like Ireland from protecting themselves by having its own currency, and through that currency having control over either its rate of interest or its exchange rate. It thus made us adopt unsuitably low interest rates at the height of the ’Celtic Tiger’ boom of the late 1990’s because that suited Germany and France at the time but which precipitated the Irish property bubble.
Fine Gael, Labour and Fianna Fail pushed us into the Eurozone in 1999. Staying with a currency with which we do little more than a third of our trade – exports and imports combined – remains core beliefs for these parties.
Those who now urge us to “put Europe before country” are in effect urging an state of affairs where our public services are decimated and where saving banks and finance houses take priority over the weakest and most vulnerable in our society.
Last week’s EU Summit may have bought some time for the Eurozone while the markets digest the outcome but in a few weeks time they will be in crisis mode again, as the shallowness of their agreement emerges. (See Note below)
The Government, supported by Fianna Fail are soon going to try to foist on the Oireachtas an amendment to the EU Treaties and ratification of a new Treaty that would formally subordinate Ireland’s interests to those of “the stability of the euro area as a whole” and the imposition of “strict conditionality” without limits on recipients of financial bailouts from a permanent fund to be established from 2013 and to which Ireland will be required to contribute some €11 billion in paid up and callable capital.
All this is to be done without reference to the people in a referendum.
The time is long overdue for the start of a real debate in this country about the alternatives to the now discredited line pushed for decades by this countries euro-federalists and euro fanatics.
With regard to the deal itself, the IIF may be unable to deliver voluntary participation by the bondholders to secure a 50% write – down on Greek debt. This will be particularly difficult in the case of French banks which have exceptional exposure.
The bank recapitalisation will total 106bn Euro, rather than the IMF recommended target of 300bn.
The ‘leveraging’ of the EFSF is entirely dependent on the newly-created special investment vehicle (SPIV). The raising of the additional 860bn Euro is not guaranteed and talks that have opened with China, if successful, are likely to be accompanied by significant ‘conditionality’ in order to encourage investors.
Germany capped its EFSF exposure at 210bn euro, so there is no guarantor of last resort, which investors will be seeking. Any losses will be insured for only up to 20% of value and in the context of 50% haircuts, this is hardly an attractive deal.
The plan calculates that it will reduce Greece’s debt to GDP ratio to 120% by 2020. Greece’s GDP is shrinking rapidly, and it is very unlikely that this target can be met given that the country faces years of austerity.