Joe Higgins MEP column

The following is a quote from an article in The Sunday Business Post (February 14, 2010): “Dublin based Glas Securities said that any decision by an Irish bank to default on subordinated debt would, depending on the documentation and specific characteristics of individual bonds, result in breaches of so called ‘cross default’ provisions attached to the bank’s senior unsecured paper. ‘This would be quite clearly a ‘no-go area’ for Irish banks’”, according to Jim Ryan, Managing Director of Glas.

You don’t need to understand all the lingo to get the drift. Banks should not dare say “Go to Hell” to those who lent masses of funds to them so that they could reap some of the obscene profits made on the back of the speculation orgy that quadrupled the price of an ordinary home for working people in the space of a few years. More pertinently, the Irish government, which is assuming more and more responsibility for the burdens of private banks in the name of the taxpayer should not dare contemplate telling the speculators to go to Hell.

By the way, Jim Ryan who is quoted “is a former fixed income and bond specialist in German bond Depfa and the bond trading arm of ABN Amro.” He is certainly qualified to speak on behalf of the speculator bondholders whose only remit is to make a quick buck irrespective of the social consequences.

Meanwhile, the National Asset Management Agency (NAMA) bail out of the big bankers, speculators and builders goes ahead apace. The Irish taxpayers are being burdened with responsibility for €52 billion of toxic debts accumulated by a handful of major land speculators and developers courtesy of a few major banks.

The EU Commission has very recently approved the NAMA arrangement in a display of breathtaking hypocrisy. This is the same Commission that pushes privatisation of public enterprises at every opportunity and to facilitate this tries to restrict state aid to such enterprises so as not to disadvantage private capitalists. Yet in the case of NAMA, it is going along with the transfer of billions of taxpayers funds to private banks in order to bail them out.

This is the same Commission also, which is hammering working people in countries like Ireland and Greece, by insisting on savage cuts in public sector workers wages and in public services in order to bring Budget deficits and government borrowing down to 3% and 60% of Gross Domestic Product respectively in the shortest time possible. The bad debts being taken into NAMA are of course hugely increasing government debt and blows these EU rules out of the water. But in a blatantly dishonest ploy, the Commission is trying to pretend that NAMA does not constitute government debt. This trick was put into effect by getting the Irish government to set up a “Special Purpose Vehicle” to take nominal ownership of the bad debts, thus pretending that it is separate.

It will not be too long before it will be very clear that the amount being paid to the banks for the bad debts is away above anything that will eventually be recouped as the crash in property prices continues. That was signalled by a recent High Court case where it was reported that a plot of land in Athlone, previously valued at €31 million, is now worth a mere €300,000!

The government should not be allowed go any further with its policy of bailout of the speculator and the big banker at the expense of the worker. The banks should be nationalised under democratic control with investment policy of a publicly owned banking system dictated by the need for major public investment to create tens of thousands of jobs and provide areas of infrastructure still badly needed.

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