We’ve had a thirst for burning things that frighten us ever since putting to death upwards of 80,000 witches across Europe over 160 years to about 1660. Rome approved but that didn’t help much. The call to burn the bondholders is equally useless today, largely because they’ve taken their winnings and fled. That leaves us with the infamous €48bn bill we’re repaying on the €31bn ploughed into IBRC, the zombie bank that holds the mortal remains of Fitzpatrick’s and Fingleton’s handiwork. Designed by our BFs at the EU, the schedule is priced at a truly satanic interest rate of 5% and will cost us €3,100 million each year to 2023, €2,100 million in 2024, €900 million to 2030 and finally a cool €100m in 2031.
But since we’re still itching for the type of bonfire the Greeks were allowed, why can’t we burn that lot? Well, the Central Bank of Ireland will put a match to all that capital the instant we pass it over to them in a vanishing spell straight out of Harry Potter. Mind boggling huh? In a perverse summoning spell all those Euros were created out of thin air by wizards at The Central Bank on Dame Street by uttering the magic words, Emergency Liquidity Arrangement. It was quantitative easing by the back door - money printing to you and me and, represents about 0.3% of Eurozone money supply which stands at a gargantuan €10 trillion.
Surely then to help the Irish economy leap from years of listlessness to growth, to reduce our Debt / GDP from an estimated peak of 113% next year to closer to the European average and which would instantly bounce us out of the bailout programme, we should be permitted NOT burn this money? After all there’s no bondholders, no lenders and you’d hardly notice the extra cash in the undulations in Eurozone money supply.
Technically that would only require one third of the board at the ECB to agree and we can point to the effect of money printing in the US which is lifting its economy out of the mire and to the half a trillion created by the ECB itself just before Christmas which was lent to over 500 banks at 1%pa - practically free money.
Since the game has started with de facto money printing by the ECB, how can they hide behind precedent as an argument any longer? As for moral hazard, where’s the logic in forcing Irish taxpayers to own up to the responsibilities of the State by enforcing a policy that rewards speculative bondholders with zero risk investment? Where’s the logic in burning all that cash when there’s no lender just a principle against monetising debt?
How are write offs to the Greeks who’ve breached their covenants squared with continuing punishment for the cooperative Paddies? These are tough questions, but the toughest of all is to ask our European friends how they justify their implicit policy of piecemeal concessions to a country that’s sacrificed itself to save the Euro in light of their own covenant in Article 2 of the Maastricht Treaty? This says quite explicitly that an economic and monetary union is to be based on a harmonious and balanced development of economic activities whose objective is to raise standards of living, quality of life, social cohesion and solidarity among member states.
The tough question for Enda Kenny and his negotiation team is whether they are so enthralled by the prospect of been thrown minor concessions for good behaviour, that they are suffering from Stockholm Syndrome? Remember that’s where hostages are so empathetic with their captors that they end up defending them. Prove you’re not, Enda, take the Maastricht Treaty make them swear upon it. Publicly like in the old days