Monday 5 December 2011

The Dirty Dozen w/e Dec 11th 2011

And so it begins; no, I'm not talking about the details of another austerity Budget as presented by our puppet government but as dictated by our troika masters, grim as that may be, I'm talking about another month of shame, the December Dirty Dozen, the 12 days pre-Christmas when another €770m is siphoned from us to be paid to bondholders whose failed bets we are being mandated to 'honour'.

Neither Noonan nor Howlin will mention the €43m being paid by Bank of Ireland today, the €24m by Anglo on Wed week, the five individual bonds totaling €52m by EBS on Fri week, all senior unsecured bonds, but all will be paid. Honour?


  1. Lets look at Bank of Ireland:
    Bank of Ireland needed more funds for recapitalisation. If the bank had failed in this task the government would have been forced to pump in more money. As a quid pro quo it would have taken a bigger stake in the bank and imposed haircuts on junior bondholders. Michael Noonan had flagged this on November 23. In fact BOI managed to raise the money by buying back the outstanding junior bonds at a discount so the government did not have to put more money into the bank. So why would Noonan burn the bondholders IN THIS PARTICULAR CASE. Yet he is being unfairly lambasted in relation to this issue. The Irish government has already raised about 15 billion euros by imposing losses on subordinated bank bondholders

    I hold no brief for bondholders. It sticks in my throat but remember that the ECB has us over the barrel of a gun thanks to the bank guarantee. Whether it should have been given by the late Brian Lenihan is neither here nor there now. The fact of the matter is that it was given. I am well aware of the differences between senior and junior bondholders. The ECB is keeping our banks afloat with 130 billion euro. It has made clear what the consequences are for us if we fail to pay senior bondholders.

    Thanks to the bank guarantee money owed to senior bondholders is now part of our sovereign debt. Default on payments to senior bondholders is thus seen as default on the national debt and would thus make it impossible for us to return to the bondmarkets for many years.

    Its all very fine to refer to people as puppets. Would you advocacte default in relation to SENIOR bondholders? If so have you considered the likely catastrophic consequeces if this were done on a UNILATERAL basis? Now a means must be found to ease the burden of bank debt imposed on the state. It is clearly unsustainable.
    Will a solution be found before Cork wins another All Ireland Senior Hurling title I wonder?

  2. Would love to know where you got the figure of ¢15bn saved by the government because of cuts imposed on subordinated bank bondholders.

    The ECB does NOT have us over a barrell, we've simply assumed the position; I've said many times, NOWHERE can I find that so-called threat by the ECB to withdraw funding, not in writing in the Agreement of last Nov, not in any word uttered by anyone from the EU, EC or ECB, and on the tv tonight Stephen Donnelly said the same thing, added that he had actually asked the question officially, to be informed that the actual threat was never uttered. So, I say, let's state that in the case of the non-pillar banks at least, we will NOT pay any more bonds, and let's force the ECB's hand.

    If they're going to bully/blackmail one of the smallest nations in this so-called 'community', then let them do it publicly, let them be exposed.

  3. Source of 15 billion euro figure is Bloomberg. See under heading Shares Rise the following quotation:

    "The state has injected about 62 billion euros into the nation’s banks, including a net 3.9 billion euros into Bank of Ireland. The Irish government has raised about 15 billion euros by imposing losses on subordinated bank bondholders."
    Re Senior guaranteed bank bonds: Thanks to the Lenihan guarantee sadly they are part of sovereign debt. Private debt was socialised. Default on senior guaranteed bank debt is default on part of the national debt and has serious implications for this country in its attempts to return to the bondmarkets.
    Has Stephen Donnelly contacted the ECB DIRECTLY and got a cast iron guarantee in writing that it is ok if we default on senior bank debt which is now sovereign debt thanks to the Lenihan bank guarantee?
    Do you seriously believe that Noonan would not burn senior bondholders if he thought he would get away with it and that it would not have major implications for our return to the bondmarkets?

    In September Michael Noonan met the the president of the ECB Jean Claude Trichet. Minister Noonan sought agreement from the ECB to implement “burden-sharing” with the Anglo and INBS senior unguaranteed unsecured bondholders. Even for this he was blocked by Trichet.

    There is no easy way out of the bank guarantee. The problem is to find a means that will unwind it in agreement with the EU and not unilaterally.

    We are depending on the ECB too keep our banks afloat. It has pumped in 130 billion euros in such a manner as to ensure that we behave. It provides short term liquidity. Sure we are being bullied but we have few carda to play. If we use the nuclear button and unilaterally default the consequences could be catastrophic. We would have to plug a budget deficit of 13 billion euros instantly. Who will lend money in the short term to a ountry that defaults on sovereign debt(even bank debt which has unfairly become part of sovereign debt). Who will provide the liquidity to keep our banks open?
    Who will answer if peoples savings are wiped out as happened in Russia and Argentina?

  4. John, you go down to your local bank manager and ask for a €100,000 short-term loan; bank manager says 'Okay, but you MUST also take on this €72,000 loan on which your close neighbour has defaulted, but to make it easier we're stretch out the repayments for you, though you'll now have to pay extra interest for that little facility'. Would you take on that loan?

    Multiply that scenario by ONE BILLION and that's exactly what's happening here. Now if you want to get lost in the smokescreen argument about what might happen if we DIDN'T all accept this great wrong, then off with you; I prefer to stick to the great wrong, and fight that fight.

    We're depending on the ECB to keep our banks afloat - why are they doing that? So those banks can pay the €55bn that's due to THEIR banks in France and Germany over the next four years.

    Wake up John, wake up. 'The banks were too big to fail', we were told; well then, the banks were just too big. WE are too big to fail, we the people, this sovereign nation, but those banks and their bonds are dragging us under.

    The legislation that was brought in, the Blanket Bank Guarantee, can as easily be revoked, especially given that it was all done under false information to begin with.

    We the people John, we the people; ultimate power rests with us.

  5. This is the way to get the ba***rds Diarmuid....great stuff.
    Big winner last Thursday night...Merkel? Sarko?
    No the more haircuts again ever!
    Unbelievable. God bless Ireland -