ON SUNDAY MARCH 6 2011, the weekend after the General Election, 18 of us took the first steps in this protest, in Ballyhea.
Enda Kenny hadn’t even begun to form his coalition government with the Labour Party but already he was reneging on one of Fine Gael’s most fundamental election promises, that there would be burden-sharing with the bank bondholders (apparently we hadn’t read the small print). It was time for direct action.
A few months later we were joined by Charleville and every Sunday since then, at 11.30am, alternating between Ballyhea and Charleville, we march. (Details of the next march are on Facebook here.)
It’s single issue – end the bank bondholder bailout. The ECB are the ones who dictated that all of Ireland’s banks – through us, the Irish people – should pay all their bonds in full, coupon and all; the ECB should now pick up that tab. Those were private interbank deals between consenting adults who trade on the risk/reward principle that underpins capitalism. In insisting that those failed bonds in failed banks be paid, the ECB undermined capitalism. (Or perhaps, as with us and the Fine Gael election promises, the mandarins in the ECB simply didn’t read the small print that accompanies such bonds: ‘Warning, your investment can fall as well as rise’.)
In September 2008, acting under misinformation, the true bank debts grossly understated, Brian Lenihan gave a blanket bank guarantee. The value to the banks of that guarantee?
- Bond payments September 2008 to April 2012: €103.7bn
- Bond payments April 2012 onwards: €40.6bn
- Total bond payments (according to Michael Noonan): €144.3bn
Up to April 2012, again according to Mr Noonan, the bank recapitalisation – what we’ve put into the banks, mainly to enable them keep paying these bonds – is €62.8bn (Anglo/INBS €34.7bn; AIB/EBS €20.7bn; BoI €4.7bn; IL&P €2.7bn). That figure has since increased to €69.7bn, with an additional €5.6bn contributed from NAMA to the banks, and an extra €1.3bn pumped into IL&P.
Given that according to Mr Noonan himself those banks still have over €40bn to pay (we reckon the figure is closer to €55bn), there is a good possibility we will have to recapitalise again. Also, the above figure does NOT include interest lost on the money taken from the National Pension Reserve Fund, nor the interest we’ll have to pay on the borrowings needed to fund all that recapitalisation.
We were told all this was done for our benefit, that we had to ‘rescue’ our banks or our world would implode. Check the second table below – four years on from 2008 our debt has quadrupled, our unemployment has doubled, emigration is back with a bang, services cut back, our deficit is STILL there. The real cost though, in human misery and suffering – who has a measure for that?
Our banks are still there, all six of them (there have been amalgamations but no winding up), still functioning – but only if you’re a bondholder. They’re not lending to business but they are paying their bonds, with our money, sucking the lifeblood from our economy, the ECB-mandated transfusion to foreign banks.
As outlined above we have so far paid €69.7bn, there are (or will be) billions more in lost interest (NPRF), billions more again in accruing interest (loans from ECB to pay those billions), and yet more billions (probably) in further recapitalising if we stay on the current track. (You really think the six remaining banks can pay €55bn in bonds in four years? Oh, they’ll be back for more!)
Put all that money together, then ask yourself – what kind of lunacy is this? The moral issue aside (and believe me, when it comes to money the ECB has no problem brushing moral issues aside), what kind of government accepts a deal that imposes that entire debt burden on its people just to enable it borrow cheap money, much of which goes to paying that additional debt anyway?
TABLE 1: The bonds
(Michael Noonan says €40.6billion yet to pay; we say €55billion)
- €109.7bn Bank Bond payments September 2008 to June 30 2012
- €39.9bn Bank Bond payments June 30 2012 to end 2015
- €149.6bn Total bank bond payments, September 2008 to December 2015
- €44bn Possible future exposure (per Namawinelake)
- €69.7bn Bank recapitalisation to date – what we’ve paid
- €15,213 Individual bailout cost to date for every Irish resident
TABLE 2: The damage to our economy to date
I say the damage to our economy ‘to date’ very deliberately, because with that bank debt now accumulating interest at an alarming rate, this is set to get a lot worse.
A couple of weeks ago Enda Kenny came back from a summit of the eurozone leaders trumpeting a seismic breakthrough (Mount Enda erupts) – he had negotiated on behalf of Ireland. Typical Enda; first, claiming credit where he was due none (he and Michael Noonan made similar claims in the aftermath of the interest rate reduction granted to Ireland as a direct result only of the Greek bailout negotiations); second, exaggerating what had in fact been agreed.
In the first place the breakthrough was due only to the fact that the Prime Ministers of Italy and Spain stood up to Angela Merkel and flatly stated, ‘No!’. Unlike what had been agreed to by Ireland’s negotiators in the past, they would not tolerate the bank bailouts in their countries being put through the sovereign books.
In the second place, what was agreed by the eurozone leaders was all notional. “We affirm that it is imperative to break the vicious circle between banks and sovereign” they said. “The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme,” they added. Then, significantly: “Similar cases will be treated equally.”
Let no-one be under any illusion – we still have a major battle on our hands. The eurozone leaders have acknowledged that the policy forced on Ireland by the ECB was wrong. We must now fight to have returned to us, by the same ECB, the money they have forced us to pay out in pursuance of their failed policy.
Until such time as that has happened, in Ballyhea and in Charleville we will continue to march, every Sunday.
Diarmuid O’Flynn is a spokesperson for the Ballyhea bondholder bailout protest. You can follow the protest on Twitter at @ballyhea14; on Facebook; or through the blogs The Chattering Magpie and Bondwatch Ireland.