by Frank Schnittger
Wed Oct 10th, 2012 at 04:51:09 AM EST
It's not often I praise the contributions of Irish politicians. However my local independent TD (Member of Parliament) deserves an honorable mention. Both in public and private he has offered a very cogent explanation of Ireland's currently very dysfunctional relationship with the EU. Here he is addressing Martin Schultz, President of the European Parliament.
The essence of his argument is that Ireland did not receive, and does not want a bail-out. It got 64 Billion from the Troika which it gave to banks which are now either defunct or intent on squeezing the remaining lifeblood from Irish consumers to cover their losses. This was done at the insistence of the EU Commission and ECB regardless of whether or not those banks were included in the Irish state bank guarantee scheme. These banks in turn gave that money to other (mostly European) banks, investors and bondholders - despite the fact that they were otherwise insolvent.
front-paged by afew
Under normal business circumstances those investors (who were getting a risk premium for investing in those banks) would simply have lost their money or had their bonds converted into almost worthless shares in the banks. By paying them in full (note not 50%, as in Greece) the Irish state saved the EU from the contagion which would have spread had there been a complete Irish banking system collapse and a default on payments to other banks resulting in a much wider EU banking system collapse. In essence Ireland "took one for the team".
However Ireland now needs that money back - both to reflate its own economy and to contribute to a much broader EU recovery. Good luck with that. But the message that Ireland was never bailed out - rather that it was professional European investors who took risks in investing in private companies that went sour - who were bailed out cannot be repeated often enough, if only to deflate the absurd nationalist propaganda currently being used to undermine EU solidarity.
This was not a case of virtuous Germans bailing out profligate Greek, Portuguese, Spanish and Irish Governments. Rather it is a case of Greek, Portuguese, Spanish and Irish Governments bailing out profligate German, French, British (and other) private banks, hedge funds and investors.
Meanwhile the Irish Government fiddles while the country burns and enjoys lying on it's back having it's tummy tickled by the titans of austerity economics.