The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton
The other day I met a German radio presenter from ARD, the German public radio station. I’ve known her for quite a while — since a brief spell working on the German economy in the 1990s for an investment bank. She, like many other foreign correspondents, has been sent to Ireland to see what is going on here.
After a while, I wondered why she hadn’t asked me anything about the Government, or the prospect of an election or what new political constellation might emerge here. She joked and in an exaggerated German accent laughed: “David, it doesn’t matter who your next prime minister is, he will have no power — we own you now, and he will do what we tell him.”
The problem is that the joke is on us. She touched on the nub of the issue: the Irish elite is prepared to sell the sovereignty of this country to protect the likes of Roman Abramovich and other vulture investors who bought up third-rate Irish banking debt at a discount and are hoping to get paid in full.
In the world of debt, these people are referred to as ‘rogue creditors’. Typically, they are treated as rogues. They are nothing to us and should be treated as nothing. As the clever economist Karl Whelan observed, if we are happy that our tax is used to pay Frank Lampard’s wages, then that’s more of a reflection on us.
People such as Abramovich, like the other creditors, can be told to line up in an orderly queue and wait for the liquidator to give them the morsels that might remain from the broken Irish banking system. The crud Abramovich owns — an IOU from Irish Nationwide Building Society (INBS) — is not the same thing as Irish government debt.
The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton.
Any political party that fights the election on that premise of protecting the Irish taxpayer from vulture investors will get my vote. Not only will that party be doing the right thing, but it will begin the process of giving back to the people the country that we built. This country and our future income needs to be ripped from the grip of the ‘political elite’ (a group the governor of the Central Bank identified the other day) who are selling us to the lowest, not highest, bidder.
My German friend was amazed when she saw Abramovich’s caper and she observed that the Irish parliament kept genuflecting to some crowd called bondholders. She asked me one of the most insightful questions I have heard throughout this long saga: “Do you Irish need to be loved so much that you will stand up for nothing?”
With Germanic precision and with the benefit of distance, she touched a nerve. The Irish weakness for not causing any trouble (bar a few theatrically drunken songs for the audience late at night) has led us to a situation where we are embarrassed to admit that we messed up. We don’t want to stand out. We don’t want to draw attention to ourselves for serious reasons. Is it because we want to impress the foreigner and above all make life easy for him?
Is it fair to say that over the years the language of resistance has been replaced by the language of compliance?
What is clear is that some countries fight, some make nuisances of themselves, but the default position of Ireland, or at least the Irish elite, is to comply — no matter what the cost.
So take the example of euro membership. Denmark and Sweden — two great European countries whose bona fides as EU members was never in doubt — decided to keep their own currencies because they were perfectly happy with them and the euro’s case wasn’t compelling enough.
Meanwhile, what did our elite do? They went along for the ride — one which the evidence would suggest was an extremely ill-advised ride. Ireland had much greater cause for concern about joining the euro, but we hardly made a noise. Why?
Could it be — to follow my German friend’s line of enquiry — that we didn’t have the self-confidence to stand on our own two feet and do some hard analysis about the consequences of this currency or any other decision?
Did we just want to be a mute member of the club — unlike the pesky Danes, Swedes or, God forbid, Brits?
It is difficult to answer these questions. They are fraught and can lead to lots of heat and sometimes not too much light, but you don’t have to be a conspiracy theorist to see a pattern.
Take, for example, Abramovich owning a huge amount of INBS debt. How did he get his hands on it? Who sold it to him? Would it be too much to conclude that whoever — whichever broker — sold the debt to him, also sold it to some other mega-rich clients elsewhere?
That would stand to reason. If so, could it be that the mega-rich who are closer to home find themselves in the same position as Abramovich?
Could it be that the only people benefiting from the Government’s blind rush to impale the small guy with the debts of Fingleton et al are our own “high net worth” individuals? Could they be pulling the strings?
In all this haze, allegation and counter-allegation, can the “cui bono” question help us at all?
A clear domestic banking resolution law would clear all this up. But we have no such law. So the people are left in the lurch wondering who to believe.
We do know that, for example, the EU Commission gave its opinion on Friday at the wind-up of a Danish bank where it enthusiastically supported the principle of burden sharing.
Here’s the quotation from the EU Commission regarding bust Danish banks: “Moreover, burden sharing is ensured by excluding shareholders and subordinated debt holders of the failed bank from any benefit from the aid.”
There you have it in black and white. This is what the EU has advised Denmark to do. It clearly states that they won’t give any state money to the troubled bank until the subordinated debt holders are burnt.
So let’s get back to my German friend’s observation: is it because we need to be loved or are we protecting someone big?
The EU says burn them and move on. Logic says don’t sacrifice your sovereignty to bail out the hyper-rich, democracy says it is unfair to penalise the poor for the mistakes of the rich. What do you think?
David, It looks like the subbies are toast.
http://www.bloomberg.com/news/2010-10-05/anglo-irish-default-swaps-may-be-triggered-amid-lenihan-s-burden-sharing-.html
A stupid question from a non economist. Why is there not a euro bond? surely this would kill the bond vigalanties.
We need an army of David Mc’s ………
Hear, hear. But how much of the 45-50 billion for the banks is irreversibly committed? Imagine the difference it would make if such an investment could instead be diverted towards education, innovation and enterprise. Our government’s bank bailout and cutbacks strategy is akin to ripping the engine out of the car and selling it for parts to pay the bills (largely other people’s bills, at that), rather than tuning the engine to win the economic race and claim the prize money. Our government would prefer that we sell both our kidneys to clear the overdraft and live the rest of… Read more »
Has noone heard the urban rumor that someone has seen the Russian Mafia arrive on our shores ‘with snow on their boots’ to bring retribution upon any politician who reneges on the INBS bonds?
Brian Lenihan indicated, when asked by Miriam O’Callaghan on Prime Time why the taxpayer should foot the bill for the investors/bondholders in the failed banks, that to make the investors/bondholders pay was akin to a nuclear option and he was not prepared to push that button. How exactly is that a nuclear option? Who are the bondholders we are so resolutely protecting? Might they be closer to home than one might hope? Is it still possible to change the course of action? Is it not a done deal?
subscribe.
We get the government we as a people deserve; we were bought off with trinkets and pretty, shiny things during the good times and were happy to go along with the charade. No use acting shocked that the power elite and their state show anything but naked self interest.
Shame more people weren’t interested in Chomsky than treating homes as commodities during the boom.
David,
Isn’t it the case that subordinated bondholders will be burnt but the senior bondholders are the ones the government are protecting? This aside, I find your articles and the comments on this forum very interesting and informative. Keep up the good work!
We need to take lessons from Brazil and not just in football. Screw the creditors – caveat emptor as they say
Of course the German government would put Fingleton in jail, tell Abramovitch to clear off, and hardball the bondholders with the minimum possible return. What is really impressive is that everybody is treated the same. There is none of this “well his dad played …. with my dad in the old days”. Because they see no alternative, for fear of pissing off the population. Same with the yanks. And the scandinavians. And the Brits. Remember Lester Piggot’s time in jail. Here the elite seem more confident. Like the guilty in the Annabels case – they know that they will get… Read more »
Very good article. And the article in the Sunday Business post was top drawer. I read it several times. Printed it off for others to read.
Really getting the important issues. Very important issues.
Behaviour breeds results they say. Well we need to examine our thinking and our behaviour. And this articles is telling us this, right up front and honest. We need to resolve the thinking and the behaviour that will get above this crisis.
I firmly do not believe anything will ever change in Ireland until there is a new government party elected without any rotten apples in the barrel inherited from another party. The Unions represent the nurses, teachers..etc..you can be sure they will be out in force when there is a hint of another illusion of cuts to their pay. Who is representing Joe Bloggs with his 2.5 kids and 750 3 bed semi? Do we look to FG to be the next party of choice…Labour….I mean FFS…450K plus unemployed …no marches nothing…25% people still support FF. Why the hell are 25%… Read more »
Denmark and Sweden know what they are doing. Our elite are clueless. They know how to screw us, though, that much they are totally clueed into.
Brilliant piece of writing and one of the best I’ve read for a long time “David, it doesn’t matter who your next prime minister is, he will have no power — we own you now, and he will do what we tell him.” They may be laughing now but they would never be able to own a nation who point blankly refused to be turned into slaves. I am prepared to eat seaweed rather than be a slave of faceless powers, corporations and other mafias “if we are happy that our tax is used to pay Frank Lampard’s wages, then… Read more »
Quote from article : “Here’s the quotation from the EU Commission regarding bust Danish banks: “Moreover, burden sharing is ensured by excluding shareholders and subordinated debt holders of the failed bank from any benefit from the aid.” Isn’t this very close to the Irish situation? Shareholders in Irish banks got wiped out, and subordinated debt holders are being targetted for burden sharing. Here is a quote from Lenihan’s Black Thursday statement. “The principle of appropriate burden sharing by holders of subordinated debt, however, is one with which I agree. ….. I expect the subordinated debt holders to make a significant… Read more »
I absolutely agree with the sentiment of this article and many of the comments. A couple of items: I feel the bondholders (senior and subordinated) should be burned. They made bad investments, they should lose – that’s the game their playing. It’s sheer lunacy for our governing class (and I would argue not within their right) to drown ourselves and future generations in debt. Are they protecting someone big? I think this is largely irrelevant to the urgency and facts of the situation. Unless David knows something more than he’s saying here, the question becomes a distracting sideshow and one… Read more »
yes – that is the question….it can be talked to death, but someone needs to rally the people to the streets. David you would be in a prime position to do this with your media contacts etc…publicity wise it might work to get enough people out marching….hell I would even fly back into the country to attend.
The EU says burn them and move on. Logic says don’t sacrifice your sovereignty to bail out the hyper-rich, democracy says it is unfair to penalise the poor for the mistakes of the rich. What do you think? Simple question from an avid lay person & DMW fan…. Why has the EU not told/advised/directed Lenihan, from the outset, to let the bondholders in all these Irish zombie banks burn and take the hit thus preventing any sovereignty issues for an Euro member state? Surely, such a step would less undermine the credibility of the Euro i.e. the impact of a… Read more »
Here we go again DMcW crying over spilt milk…its too late…Lenihan has already sold us the pup. There is no way even a new government will reverse what has happened. As for Abramovich owning bonds in INBS I am not surprised. I dont subscribe to the conspiracy theory that the rich are being protected. I subscribe to the theory that Lenihan simply does not know what he is doing, the numbers are so mind boggling that a few extra billion is neither here nor there. Lenihan & Cowen are winging it big time. We all shared in the boom our… Read more »
paddyjones .. please let’s get rid of this myth once and for all that we all shared in the boom .. not of all of us thought it was a smart idea buying a one-bedroomed end-of-terrace house that was clearly overvalued by global standards .. some of us didnt do it, presuming (naively it now seems) that when the sh*t was to hit the fan, we wouldn’t be saddled with the mortgage on a ‘dream’ home in a decaying half-finished ‘commuter’ estate in the midlands that’s worth half what was paid for it .. however now we are expected to… Read more »
David you said “Any political party that fights the election on that premise of protecting the Irish taxpayer from vulture investors will get my vote.” I couldn’t agree more. Yet none are saying this, all we get from FG and Lab is that they will be a “nuanced” version of FF. “WTF” is my response. If Lab of FG said “we will get rid of the 35 – 50 bn that anglo costs” ” The people do not own this debt, the effin gamblers do” then yes i will of course vote for them. But they don’t have the balls.… Read more »
Oh will you M A N up!???!!! What happened was you got your feelings hurt by the little german lady so now we all wallow in self pity and discuss how Ireland is going to spontaneously combust and we are all going to die lonely old shrivelled up wrecks. Enough! Tell your lady friend to get stuffed! Tell her germany does not own us! They don’t even own Austria anymore! She doesn’t get to tell us how to run our country and we dont tell her how to lose wars. Capish David? Enough of all the boring sad ballad lyrics… Read more »
http://bankermathews.com/blog/
For people who like to know about ALTERNATIVES, I posted one at above link in January last.
This is not my “MOST BEST” solution. It needs a bit of updating and further tweaking, but however naive it may seem to be, I am convinced that it is workable or could be made so in the same way that rationing in a wartime situation can be made to work.
Let us eat cake.
Your right David , why are we giving billions of Euros to these bondholders? Follow the money.This country is going down the toilet & Brian Cowen & Lenihan are flushing the chain. But would a change of government change anything? They would still bailout the bondholders & comply with everything Europe wants from them. It looks like we are caught in tidal wave of thinking that will send us toward financial disaster & nobody in the political elite will jump ship. They seem incapable of thinking outside the box.
I do not think the elite are preparing to sell the country down the river they have already sold us and in the process lined their own pockets. Actually I think they processed a sale without realising that they actually making a sale but cute enought to secure a commission. We must look very stupid to the rest of Europe. The Irish political system is not alone impotent but vexatiously impenitent. The political stock occupying the Dail are spineless parasites and there is not a man among the senile witless dross. This is not about wanting to be liked it… Read more »
Thanks Deco for the additional context to the lorry driver incident. The media and our current politicians will do their utmost to portray any legitimate protest as nothing more than mindless criminal activity. It doesn’t matter what his motivations were or that he too played a role in the housing boom as a small developer. What are Irish youth afraid of? This is not an ideological battle that needs to be waged against the government (It doesn’t matter whether you think you’re a Marxist, Capitalist or a Neoliberal) which are vague concepts that most ordinary people don’t understand anyway. It’s… Read more »
It must be a week for catching up with German friends.My friend wouldn’t be as illustrious as your’s David but we were discussing this little isle of pooh all the same.During the course of the conversation the subject of music was discussed.He wasn’t too familiar with the Irish music scene except for that plc called U2.Well he now calls them ME2 after their hasty retreat to the Dutch haven.First score to him.So I threw in the Dubliners as I knew they were big in Germany.Ah “Seven Drunken Nights” he threw back at me.That said it all.His English is not too… Read more »
Hmm, Moon Wobble tomorrow and not a peep from JA all week?????????????
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Logic says don’t sacrifice your sovereignty to bail out the hyper-rich, democracy says it is unfair to penalise the poor for the mistakes of the rich. What do you think? I think…. Beyond the shadow of a doubt, this is the biggest cover up I ever came across. What is buried in our Banks is dynamite, and not only on Anglo Irish. There is a reason why Hawks of immense proportions such as Maples & Calder are the legal representatives of senior bondholders, this is not a coincidence! The county banks from Germany, played Citi! Dublin known to be financial… Read more »
We have to think fast. We also have to DO fast. A lot of calls for thinking we should do this and that but no one wants to act. We perhaps need to set up some meeting of minds.An initial pressure group expanding out to the people. Such a meeting could be convened within the next few days. All those interested need to say so by friday 5pm in order to meet this weekend.And please do not run away and attend the races like they did in 1916 when our patriots spilt their blood!This demands action but also serious thought.I… Read more »
The righteous indignation against bondholders which has become DMW’s stock in trade risks getting things out of perspective – especially when national sovereignty is invoked as the guiding light for policy. When the Euro was established, the member states refused any idea of European bank and financial regulation. Not only was each member state going to regulate its own banks and financial institutions but, in addition, each member state would recognise the right of a bank regulated by a member state to do business in all the other member states without additional local regulation. Each state placed absolute confidence in… Read more »
The last line in the previous comment came out somewhat garbled:
it refers to a “European response using democratic European institutions”. The recent emergence of European financial regulators (albeit working alongside but not replacing national regulators) is a timid first response. Much more democratic European, and consequently much less national, power is required if Europe is to adjust, prosper and remain an actor in the world order of the 21st century.
Some people never pay any attention to what they read. Sad.
Its refreshing to read Davids articles which make the dodgy goings on quite clear. It is obviuos that the powers that be do not want the average Joe knowing whats going on. The information they release is dishonest and very confusing. For example Mr. Lenihan said that they would only need 4.9 billion for Anglo when he knew that this untrue. The national papers don’t make any attempt at making things clear. I much prefer to read comment from outside publications. For example EL Pais who say ‘Irelands people are paying just to hide the shame of their banks’. The… Read more »
David, Your parables and simple deliveries are what makes you unique amongst our economists. On this one you have gone for “tabloid” status by stirring the Abramovich story which transpires to be small change in the grand scheme of things. Nonetheless your points are well made with the exception of a strange use of the word “default” in a statement of immense importance. Quote -“What is clear is that some countries fight, some make nuisances of themselves, but the default position of Ireland, or at least the Irish elite, is to comply – no matter what the cost.” Unquote. We… Read more »
I observe this from Australia with the comfort of a Australian passport . Its like some kind of theatre of the bizarre . I watched stunned as Frank Fahey took on Peter Mathews . Along with everything else that has happened and in turn has been mismanaged now we have the Russian mafia involved . To borrow our hosts phrase . You really could not make this up ‘
I wonder will David get angry enough to name names ?
I have a friend here who is a finance expert . He has worked in the markets and impresses me because he can tell me in detail what a credit default swap is ( he loses me after 2 minutes ) Anyway when we meet I tend to avoid finance and markets as its not only his job , its also his hobby and give him an opening and he will discuss at lenth some little known fact of Goldman Sacks . So we only ever discuss the crisis in Ireland in passing and he tells me that while its… Read more »
[…] Full article at source http://www.davidmcwilliams.ie/2010/10/06/elite-is-preparing-to-sell-country-down-the-river […]
I heard Elderfield the other day indicate subordinated bondholders in Irish banks would get burnt, but government policy was to protect senior bondholders. However, he elaborated on senior bondholders somewhat disingenuously by saying that while they wouldn’t be compelled to negotiate, they might indeed voluntarily enter negotiation. Make of these comments what you will. http://bit.ly/dnMjmK Already there is a backlash against the mild regulatory reforms Elderfield has proposed re NEDS. As for Dukes, ‘more bankxster than the bankers themselves’ he’s already ‘cribin and moanin’ re regulatory reforms. Overall, David’s article is making it too hard going to understand why government… Read more »
“is it because we need to be loved or are we protecting someone big?” I personally think we are protecting someone big. I also wonder how many Fianna Fail TDs and senior civil servants at the Department of Fiance had invested in Anglo. As citizens of this country we have a right to know every bond holders name. And they can no longer say this is classified as the bank is bust and we own the feckin’ thing. Remember this, Fianna Fail have a history of robbery and corruption. Some members have even served time. And finally, if the EU… Read more »
Furrylugs : You can listen to recordings of limerick live 95fm for 9am show with Joe Nash for Thursday 10th October ……..the subject was ‘banking’.
The astrological prognosis for xmas week to xmas day is horrific .
We need to name names of those who are “suspects” where economic sabotage and treasonable activity surrounding public funds are concerned. First into the cell block should NOT be Seanie or Fingers (because they are very much water under the bridge), but those among the elite who are sanctioning the buyback of Anglo bonds with taxpayer funds: http://bankermathews.com/2010/07/23/anglos-paper-profit/#comments The culprits are, at the moment, making arrangements for further purchases. Lock them up in the SLAMMER! Sooner or later, we have to DEFAULT. The choices are 1. To default BEFORE the FF/G coalition casts further billions into the black hole. OR… Read more »
Michael O’Leary went to Wall Street in 1993 [1]. His boss, Tony Ryan, owed Merrill Lynch £35,000,000 and O’Leary was sent to negotiate on his behalf. After tough negotiations Merrill agreed to write off £31,000,000 (88%) of Ryan’s debt. The rest (Ryanair) is history. O’Leary described the Wall Streeters as “tough bastards” but he is proof that sometimes there are better options than supine compliance. Its ironic that Merrill, who were happy to write off their own bank debt in 1993, are currently advising the government that writing off any bank debt is a no-no. [1] Alan Ruddock, “Michael O’Leary:… Read more »
The same thing happened in the mid-nineteenth century. The Irish landlords were up to their necks in debt to European banks and so Ireland exported vast quantities of food to generate money to make the mortgage payments while it’s people were left to starve. Georg, to your point about Ireland’s soul – it doesn’t have one. George Bernard Shaw said “an Irishman’s heart is but his imagination.” Countries with courage go to war to protect their national security. An Irishman would open the gate at night and let the enemy into the castle while his fellow countrymen were asleep, for… Read more »
Bird’s eye view of unfinished estates. Ireland in the Age of NAMA. (post the Age of Binge).
http://irelandafternama.wordpress.com/2010/10/05/the-bust-from-a-birds-eye-view/
We see partially completed developments.
I think that the governments standing point in this crisis has been flawed, from the begining. Calamity says that the government needs a strategy. But I reckon from day one the strategy has been CYA. The whole thing has been such a momental coverup. (By the way this is not just Ireland, look and the UK, spain, etc…. However, the nonsense in Ireland is what we have issue with. I assume that the intelligent starting point, when administering state policy for a complex economy, with many economic sectors, would be to devise a policy to limit the contagion from the… Read more »
The argument presented by those who supported the bailout at the beginning, which was then the dominant consensus of economic commentators, was that if the bondholders were forced to take their losses, there would have been an increase in interest rates on government borrowing from the international money markets which would cause chaos. But the gap between what Ireland pays on its debt and what Germany pays has risen to record levels anyway!Would the the increased spreads we are told would have arisen in these circumstances have come anywhere near the cost of the bailouts over the past two years?No.So… Read more »
The Irish concept of management again. When somebody of genuine ability comes along, it seems that the clique suceed in driving him out of the country. Luxembourg is not a low cost country. http://www.independent.ie/business/irish/glass-tycoon-coulson-passes-out-rival-quinn-2368624.html We also have the largest Irish managed public company, by market capitalization, listed on the London Stock Exchange – but with no listing on the ISEQ. This is of course, Tullow Oil – named after a hill town in Co. Carlow. It has kept loyal to it’s humble beginings. The point of this is so that the directors of Tullow don’t have to deal with NEDs… Read more »