Thursday 27 December 2012

THE DIRTY DOZEN w/e Dec 30th 2012

Final week of 2012 and boy, was it a good year to be bondholder in an Irish bank. The last of the €20+ billion will be paid out this Friday, Dec 28th, a bond of nearly €40 million, unsecured, from Bank of Ireland - more very happy failed punters cashing in at our expense. I wonder, whatever happened to that much trumpeted separation of bank and sovereign debt agreed to last June?

Anyway, Happy New Year to you all, though that much is already guaranteed for those whose bonds 'mature' in 2013, €17bn in total in 2013. Add that to the €9bn in government bonds that fall due in 2013, throw in the projected budget deficit of €14.5bn and lads - we'd better get down to work. That's a hell of a lot of additional debt on top of the debt we already have, don't ye think?

Looking through the next 12 bonds, shown in the table below, I hope the good people in Irish Life & Permanent have been putting a few bob aside over the Christmas, two big bonds coming up on Jan 14th, each for $1.75bn. That's right, a total of $3.5bn due in one day, from a bank we now own outright. What's the budget 'adjustment' for 2013 again???

Sunday 16 December 2012

THE DIRTY DOZEN w/e Dec 23rd 2012

Two sides of the same coin - those pesky Promissory Notes just won't go away.

 I hate to go back over well-harrowed ground, but there still appears to be much confusion over what exactly happened last March. Herewith then one final attempt to explain, using the allegory above - two sides of the same coin.

One side of the coin, and let there be absolutely no doubt about this - the Promissory Note was paid in full to the so-called IBRC (Anglo etc), who then paid it to the Central Bank, who destroyed it as per the terms of the agreement with the ECB.

Second side of the coin - by whom was it paid, and how? Deep breath here: 

1) The government issued a sovereign bond which matures in 2025, which Minister Noonan 'asked' NAMA to purchase; that was the €3.06bn given to IBRC to give to the Central Bank - our money, as we effectively own NAMA;
2) Bank of Ireland then 'bought' that bond from NAMA, earned interest of 5.4% on it for the year;
3) However, there is a 'repo' clause in the bond, under the terms of which IBRC must repurchase the bond at face value (€3.06bn) before Mar 31 2013 - again, our money.
4) If a buyer can be found for the bond in the meantime, the next generation will pay, and because the bond actually cost €3.46bn (don't even ask...), that's what the kids of 2025 will pay on Mar 31st that year; in the meantime, we'll be paying interest of 5.4% on that €3.46bn.

Put very simply, we've taken out a loan at exorbitant interest to make a payment on an existing loan on which we're already paying interest - chasing our own tail, and it looks like this government is planning to do exactly the same for the 2013 Promissory Note. What Pat Rabbitte means when he says 'we didn't pay in 2012, we won't pay in 2013' is that 'we the government' didn't pay. One way or another, however, we the people will pay, and will continue to pay, thus persevering with what is now the most expensive bank bailout in history, a nation enslaved.

On that note, a link to a little video, an application just submitted to the Guinness World Records people. A humourous video, a deadly serious situation

No change in the bonds this week but please have a look at what's coming on Jan 14th 2013.

Sunday 9 December 2012

THE DIRTY DOZEN w/e Dec 16th 2012

Any of you who may be tempted to believe the bullshit being peddled in the last few days from the government spokespeople on the Promissory Notes of 2012, please read this extract from the report  from the Comptroller and Auditor General's office on the Gross Government Debt, Item 2.11, page 20:

The level of Government bonds in issue increased in March 2012 when bonds were issued to meet a promissory note payment of €3.06 billion due to Irish Bank Resolution Corporation Limited (IBRC). The bonds issued will mature in 2025 and have an annual interest rate of 5.4%. As the market value of the bonds at the time was just over €88 per €100 nominal, the State issued bonds with a nominal value of €3.46 billion in order to meet the payment. The yield on the bonds and, therefore, the effective interest rate on the repayment of €3.06 billion, is just over 6.8%.

Contrary to the outright lies being told by various Ministers and allowed go unchallenged by our mainstream media, not alone was the 2012 Promissory Note paid in full to the Central Bank of Ireland, who then destroyed the €3.1bn, it actually cost us as a nation €400,000,000 more than it needed to, at the time.

Read the above; because the 'market value' of the bonds were only €88 per €100 'nominal' at the time, the State (that's us, people) issued bonds of €3.46bn to get their hands on the necessary €3.06bn to give to the Irish Bank Resolution Corporation - Anglo - which Anglo then gave to the Central Bank, which then - under orders from the ECB - destroyed that money. That's the extra €400 million.

Compounding the additional cost of what was done last March, and again referring to the above, the effective interest rate on the €3.06bn is just over 6.8%; we could have got that money from the ECB emergency fund at around 3%. So, not alone did we pay an extra €400,000,000 to get the money, we are paying an additional 3.8% per annum on the €3.06bn - that's another €116,000,000 per annum until 2025, when that bond is due to mature.

That, my friends, was Michael Noonan's vaunted 'deal', that's what it cost. As stated in black-and-white above, the P Note WAS paid; to give the appearance of a 'deal' however Michael went to a new and far more expensive source for the money, issued a sovereign bond that will NOT be paid by this government or even by this generation but now forms part of the legacy we will leave our children.
To give the appearance of having done a 'deal' Michael and Enda engaged in their new favourite sport, 'financial engineering'. The only 'deal', however, was on how they got the money; the P Note WAS paid, on time and in full, but at much greater cost to us, the people.

Now, they're planning to do the same again. The lies, the lies, the lies, the ongoing betrayal of the people at so many levels - it is almost beyond words.

Monday 3 December 2012

THE DIRTY DOZEN w/e Dec 9th 2012

Budget week and if you really want to know the absolute injustice of what's happening to the people of this country,  read Stephen Donnelly and Gene Kerrigan this week, far more eloquent than I.

The next bond due for payment is this Tue Dec 4th, a subordinated bond from Irish Life & Permanent, €10,000,000; after that, a series of six unsecured unguaranteed bonds on Dec 17th totalling €63,000,000, before rounding off the year - fittingly - with yet another unsecured unguaranteed bond of €37,259,146 on Dec 28th. NONE of these fall under the bank guarantee scheme but no matter, all will be paid.

That Dec 28th bond payment is the last of the €20bn+ that will be sucked from our banks this year, all of which we own bar Bank of Ireland and we have a sizable stake in that (15.1%). Only another €17bn then next year, 2013, and sure that's the back broken on dem pesky bank bonds; our backs broken also but who gives a damn about that?

By the way, all these totals in here do NOT include the 'coupon' or interest paid on those bonds but if you take an average of even 2%, then on the €35bn due over the next three years in bonds, our banks will be paying interest of around €700,000,000/annum. That's our money, for the most part, but no mention of it, ever.

Again and again I've made the point here; regardless of whether they are guaranteed or not these bonds are crippling the economy. The money for those payments is generated here, those bond payments are the absolute priority of the banks - why then do you think there is no 'risk' money available to business? If you can prove you don't need you'll get it - not otherwise.

Anyway, there was a little event in the week just past that probably slipped yere notice but then that's understandable - it wasn't highlighted in any of our major media; THIS government renewed the bank guarantee. The banks, you see, still have priority over the people; deeper and deeper into debt this government will lead us, bloodier and bloodier the bites in the austerity budgets as the bailout continues unabated.