Stephen Donnelly, on how the ECB actually owes Ireland €64 billion!

Ghandee

I seen the video on Stephen Donnelly adressing Martin Schulz at the oireachtas on Friday, and I am very surprised that it didnt garner more attention than it has tbh.

In the video (if someone can find link, please post it) Stephen simply, and in lay mans terms explains how Irish tax payers have been subjected to a scam, a dirty scam at that, by the ECB and various influential people in Europe.

Donnelly basically tells Martin Schulz that Ireland was never bailed out, and that in fact, we were mere 'middle men' saving the whold of Europe from banking contagion.

This is the extract from Donnelys speech.

The perceived wisdom among Europe's creditor countries is that Ireland mismanaged its affairs, was bailed out by them, and is now looking to be let off some of its obligations. There are moral overtones to this. A few months back our finance committee met with a delegation of the German finance committee. The tone was unmistakable -- you got yourselves into this, now stop whining and pay your debts. The Germans have no tolerance for debt, with 'schuld', the German word for debt, also meaning guilt.

We did make mistakes -- of that there is little doubt. And we are paying a very high price to correct those mistakes. But the bank debt is not one of them. Here, the numbers tell a very clear story.

Ireland is borrowing €67.5bn from the Troika. To date, we have given €64.1bn to the banks. The banks have in turn passed this on to the bondholders. At the time of the bank guarantee, Irish banks held €124bn in senior debt. All of this is being paid out in full.

Had the market been allowed to work, the banks would have been declared insolvent, and a creditors meeting would have been called. At this, an agreement to pay out less than the face value of the bonds would have been reached.

It is impossible to know what haircut would have been applied to the senior bondholders, but we do know this -- many of them sold on their bonds at a 50 per cent discount. In other words, they took a voluntary haircut of 50 per cent. It is not unreasonable therefore to suggest that a haircut of 50 per cent could have been agreed. In this case, the senior bondholders have been overpaid by €62bn.

So let's join the dots. First, €67bn goes from the Troika to the Irish Government, then €64bn (so far) goes from the Irish Government to the banks, and then €62bn in unnecessary payments goes from the banks to the senior bondholders.

Give or take a few billion, the Troika money essentially went straight from the troika to the bondholders. It was not used to run the country, to pay for teachers and nurses. And it was not used to keep the banks open, or to keep "money in the ATMs". The Irish banks could have restructured their debts while continuing banking operations for individuals and businesses. In fact, this is exactly what they did with the junior bondholders, and the ATMs worked just fine.

So if the Troika money was of absolutely no benefit to the Irish people, who actually gained from it?

Europe as a whole gained, by avoiding the possibility of contagion within the European banking system. But we're on the hook for it. We have temporarily surrendered our sovereignty over it, something a group of Irish men and women sacrificed everything to regain for us not so long ago.

Virtually nobody I speak to in the creditor countries understands this. It is not reflected in their mainstream media. They believe they have loaned us their hard-earned money to keep the lights on in Ireland, and that we are showing our gratitude by asking them for even more.

This can be tackled in two ways. First, our political leaders need to stop making public statements like people went "mad with borrowing" in "a system that spawned greed".

Instead, they need to start explaining to the citizens of the creditor countries that the troika money went straight to international financial institutions. Angela Merkel is up for re-election next year -- what her voters think about this issue matters a great deal.

Second, we should look for the return of the €64bn, not from the ESM, but from the ECB. The problem with looking for it from the ESM is that this is a fund of real money from the creditor countries. So any mechanism which uses the ESM to refund our €64bn really would end up costing German citizens money.

This would not be right -- they are no more responsible for the socialisation of financial sector losses than we are. The ECB, on the other hand, is.

We are told by the Government that it is the ECB which continues to insist senior bondholders are paid in full. A certain letter from Jean-Claude Trichet to Brian Lenihan may even provide documented proof that they forced us into the troika programme. And as luck would have it, the Irish banks still have in excess of €64bn of the ECB's cash on their balance sheets.

Were that amount to be written down by €64bn, the Irish State could then extract the same amount from the banks, leaving the balance sheets of the banks, well, balanced. And, usefully, smaller.

For very good reasons, central banks do not go around printing money and then writing it off. But in exceptional circumstances they do.

The ECB forcing the Irish people to provide €62bn of free cash to international investors in order to avoid contagion of the European banking system is just such a circumstance. In other words, if the ECB wants to cover the losses of professional investors, let it do it with its own money (and critically, at zero cost to any European citizen).

'If the ECB wants to cover the losses of professional investors, then let it do so with its own money...'

So this was my message to President Schulz: Ireland was not bailed out, nor is Ireland looking for a bailout. We do not seek charity, or benevolence from our European partners. But we do want our €64bn back.

In fact, we need it back.

If we don't get it, our debt to GNP ratio of 150 per cent means that we will inevitably, unwillingly, default on our sovereign debt. That would be very bad news for Ireland -- and for Europe.

If we do get it back, then as a country with a modern, hi-tech, efficient, export-oriented economy, we can contribute to the recovery of Europe.

Simple really.

http://www.independent.ie/opinion/analysis/stephen-donnelly-heres-why-the-64bn-is-ours-for-the-asking-3251469.html

Now, their will probably be a few posters (ususal suspects) that will immediately accuse Donnelly of basically talking a load of nonsense, and 'spouting a load of freeman nonsense'.

What i have read, and admittedly I have a limited understanding of economics, but what Stephen has said makes perfect sense to me, and I'm sure it will to lots of other folk reading it.

Now, let me break something down to possible doubters on these threads.

Who do you trust on serious, economical matters in Ireland, or the world for that matter?

Stephen Donnelly:, a 37 year old graduate of the Harvard Kennedy School of Government, having complete a Masters’ degree in Public Administration and International Development in 2008, who spent most of his career as a management consultant with McKinsey & Company (American global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions. It is recognized as one of the most prestigious consulting firms in the world, has proportionally produced more CEOs in large-scale corporations than any other company, and has been a top employer for new MBA graduates since 1996.)

Or,

Michale Noonan; Minister for finance, a 69 year old former school teacher.

Personally, I'm with Stephen Donnelly.

Pottler

It is very well put, but wiser/slyer heads than Stephens beat him to the punch with the structure of the loan. It was a deliberate action to head off this VERY rational argument and in effect, a very sneaky move by the ECB. NONE of the bailout money went to the banks - that was a strict condition of the "loan".
The loan went directly to the soverign and the soverign was expected to "find" the capital from its own reserves to give to the banks, which it did. The fact that our leaders were too dopey to see that this was a move designed strictly to undermine arguments like Stephen is putting forward and cut them off at the ground should they ever in the future decide that the terms were too harsh or that the loan was even unneccesary - the money went to the Irish State, the state then forwarded "other" money to the banks.
Cock-up number two. Cock-up number one was guaranteeing the banks in the first place. Sneaky by the ECB, IMF, but there you go.

connundrum

Speech is on his Facebook page, hopefully this link works.

http://t.co/i3Ln4fPD

Ghandee

connundrum wrote: »

Speech is on his Facebook page, hopefully this link works.

http://t.co/i3Ln4fPD

Works perfectly conundrum, thanks.

This video needs publicised and shown to the millions of Europeans out there who've been foolishly led to believe that they actually 'bailed the Irish out'.

There may have been a different headline to accompany Enda' s photo on time magazine if the truth was more widely broadcast.

Rotten to the core.

Biggins

*Awaits for the apologists and government enablers to appear with excuses*

Ghandee

Biggins wrote: »

*Awaits for the apologists and government enablers to appear with excuses*

The bat signal is about to shine ever so brightly Biggins.

washman3

We've already cut a deal with the ECB. we keep quiet about it and they'll see to it that our 'prime minister' gets his picture on the front cover of Time magazine..:D

donvito99

Who cares (even if true)?

Its not like Schultz was gonna write a cheque on the floor of the Dáil, won't happen either way.

Perhaps Donnelly could use his Harvard education and masters degree to suggest ways of fixing the huge problems inherent to Ireland that got us into this mess, that may or may not have been worsened by this unlikely scam.

Dockington

Biggins wrote: »

*Awaits for the apologists and government enablers to appear with excuses*

Dont think very many could argue with Donnelly's rationale Biggins. Even government supporters would have to agree that Ireland was never bailed out, Ireland had its arm twisted into covering the banking debt. Very good point by Donnelly that the ECB rather than the ESM should cover the 64bn. I am glad we have people like Donnelly still willing to go into government and fight for the Irish people.

Ghandee

donvito99 wrote: »

Who cares (even if true)?

Its not like Schultz was gonna write a cheque on the floor of the Dáil, won't happen either way.

Perhaps Donnelly could use his Harvard education and masters degree to suggest ways of fixing the huge problems inherent to Ireland that got us into this mess, that may or may not have been worsened by this unlikely scam.

Are you serious?

We know how much was given to the govt, we know how much they in turn gave to the banks, we also know (only to bloody well) how much the banks paid to bondholders.

Donnelly basically pointed out to Schulz that what was bestowed on Ireland was a scam.

What bit are you basically doubting may be true?

Biggins

Dockington wrote: »

Dont think very many could argue with Donnelly's rationale Biggins. Even government supporters would have to agree that Ireland was never bailed out, Ireland had its arm twisted into covering the banking debt. Very good point by Donnelly that the ECB rather than the ESM should cover the 64bn. I am glad we have people like Donnelly still willing to go into government and fight for the Irish people.

Its one of the few times that independents really can do some good.

Sully

Its the civil servants that run the country IMO.. The Ministers can be qualified in their respective roles but it wont make much of a difference.

Anyway, the Irish public wanted someone with a medical background in Health. Ye got it and now people say it was a bad idea.

*shrrugs*

Pottler

Ghandee wrote: »

The bat signal is about to shine ever so brightly Biggins.

The signal is a huge "C" that they shine onto the Spire. Couple of minutes later, out come the C....

donvito99

Ghandee wrote: »

Are you serious?

We know how much was given to the govt, we know how much they in turn gave to the banks, we also know (only to bloody well) how much the banks paid to bondholders.

Donnelly basically pointed out to Schulz that what was bestowed on Ireland was a scam.

What bit are you basically doubting may be true?

The idea of a conspiracy, a scam, Ghandee.

Ghandee

donvito99 wrote: »

The idea of a conspiracy, a scam, Ghandee.

I think the major scam might be the term that 'Ireland was bailed out'.

Millions of European citizens, from our 'creditor countries' falsely believe they bailed us out, they've been led to believe we got billions handed to us, so that we could continue to function as a country, so that public services would still operate, atm's would still have cash in them, the country could, at least function by hedging the necessary cash in order to do so.


However, the truth is, Ireland wasn't bailed out. The Irish govt were given money to give to the failed banks to give to bondholders.

The money, as Donnelly stated, didn't go to pay Gards/nurses/teachers/health services etc etc etc etc etc. the money was handed to the bondholders, using the Irish tax payer (as the middle man) to shoulder the weight.

Property taxes, water charges, cuts to services, wage cues, mass emigration, the list goes on and on and on.

The above mentioned problems are not as result of us 'being bailed out' we, the Irish public weren't.

Anonymous bondholders, multi Billionaires from countries we, as of yet don't know where, were bailed out,

Yet its us, and our children, and probably our Childrens children that will repay the cost of it.

Understand the scam now?

squod

People won't listen. I've been trying to get people to understand the simple concept of a ruse, scam, fraud etc. for ages.

https://www.youtube.com/watch?v=lSC2U2yYESw

ArmaniJeanss

Biggins wrote: »

*Awaits for the apologists and government enablers to appear with excuses*

Pottler wrote: »

The signal is a huge "C" that they shine onto the Spire. Couple of minutes later, out come the C....

Ghandee wrote: »

The bat signal is about to shine ever so brightly Biggins.

Not sure why anyone would bother explaining some of the flaws in Stephen Donnellys article, if they are going to pre-labelled as government agents, enablers or whatever for merely doing so.
It's a really petty way to debate imo.

shedweller

Debate all you want. The numbers speak for themselves.

RoundyMooney

I think Stephen Donnelly is possibly the brightest political figure that this Dáil has produced. I don't remember him putting a foot wrong once, since he started. And I don't agree with everything he says, but he sure says it well.

A pity we don't have another sixty or so of him.

oppenheimer1

Ghandee wrote: »

I seen the video on Stephen Donnelly adressing Martin Schulz at the oireachtas on Friday, and I am very surprised that it didnt garner more attention than it has tbh.

In the video (if someone can find link, please post it) Stephen simply, and in lay mans terms explains how Irish tax payers have been subjected to a scam, a dirty scam at that, by the ECB and various influential people in Europe.

Donnelly basically tells Martin Schulz that Ireland was never bailed out, and that in fact, we were mere 'middle men' saving the whold of Europe from banking contagion.

This is the extract from Donnelys speech.



http://www.independent.ie/opinion/analysis/stephen-donnelly-heres-why-the-64bn-is-ours-for-the-asking-3251469.html

Now, their will probably be a few posters (ususal suspects) that will immediately accuse Donnelly of basically talking a load of nonsense, and 'spouting a load of freeman nonsense'.

What i have read, and admittedly I have a limited understanding of economics, but what Stephen has said makes perfect sense to me, and I'm sure it will to lots of other folk reading it.

Now, let me break something down to possible doubters on these threads.

Who do you trust on serious, economical matters in Ireland, or the world for that matter?

Stephen Donnelly:, a 37 year old graduate of the Harvard Kennedy School of Government, having complete a Masters’ degree in Public Administration and International Development in 2008, who spent most of his career as a management consultant with McKinsey & Company (American global management consulting firm that focuses on solving issues of concern to senior management. McKinsey serves as an adviser to many businesses, governments, and institutions. It is recognized as one of the most prestigious consulting firms in the world, has proportionally produced more CEOs in large-scale corporations than any other company, and has been a top employer for new MBA graduates since 1996.)

Or,

Michale Noonan; Minister for finance, a 69 year old former school teacher.

Personally, I'm with Stephen Donnelly.

The minister doesn't work alone in his office. He has mandarins in the department of finance qualified in macroeconomics who will advise him on what decision to take. If he doesn't have the expertise at his direct disposal in the CS he seeks outside guidance form consultants. Ultimately the final decision lies with the minister but I would argue the real power lies with the Civil Servants who frame his options.

The minister and his team also have access to all the information necessary to take such decisions unlike outside commentators. This is what really separates them from the rest of us. They also have to take into account political considerations and how their plans interact with their partners.

The idea that an irish politician is taking a difficult course just to please his partners and not because he has to is laughable. If there was any way Noonan could avoid placing pain on the electorate and lessen damage to his partys re election chances he would do it in less than a heartbeat.

Also the idea that the ECB can write off a €64bn loss without effect to the european taxpayer is simply not true. Firstly if it didn't print the money it would need to be recapitalised by european taxpayers. Secondly if it did it would dilute the value of money already in circulation. However more importantly it would undermine confidence in the currency. If they can do something like this for a small country like Ireland, whats stopping them printing Italy or Spain out of trouble?

Donnellys thesis is fundamentally flawed and is a piece of populist trash.

K-9

Pottler wrote: »

NONE of the bailout money went to the banks - that was a strict condition of the "loan".

Excellent post, the amount of people and politicians who don't know this is staggering. The troika washed their hands of any bailing out bank debt, probably because the ECB was keeping Irish banks alive.

Dockington

ArmaniJeanss wrote: »

Not sure why anyone would bother explaining some of the flaws in Stephen Donnellys article, if they are going to pre-labelled as government agents, enablers or whatever for merely doing so.
It's a really petty way to debate imo.

Cool, no prejudgements so. Please proceed in pointing out the flaws.

K-9

oppenheimer1 wrote: »

The minister doesn't work alone in his office. He has mandarins in the department of finance qualified in macroeconomics who will advise him on what decision to take. If he doesn't have the expertise at his direct disposal in the CS he seeks outside guidance form consultants. Ultimately the final decision lies with the minister but I would argue the real power lies with the Civil Servants who frame his options.

Didn't it come out about how few economists worked in the Department of Finance? As Sir Humphrey would put it in Yes, Minister, "why would economists be needed in the Dept. of Finance?"

Biggins

Biggins wrote: »

*Awaits for the apologists and government enablers to appear with excuses*

You do realise that by providing pretty poor-quality opposition to everything a government does that you're a pretty big part of the government-enabling machinery?

Sorcha16

Stephen Donnelly is a breath of fresh air in a vacuum of bullsh*t

jimmycrackcorm

It's a pointless argument as it is too late now to undo.

petersburg2002

Asking too much I suppose to expect to have Ministers with his qualifications. Guess we are stuck with the teachers. English MPs make our bunch of TDs look like inarticulate illiterates.

squod

jimmycrackcorm wrote: »

It's a pointless argument as it is too late now to undo.

I disagree. We'll have to keep the pressure up if we want convictions in the future for shananigans like this. Pieces like this keep the topic in focus.

Biggins

Deleted User wrote: »

You do realise that by providing pretty poor-quality opposition to everything a government does that you're a pretty big part of the government-enabling machinery?

I disagree about the quality of my opposition.
However your entitled to your opinion of my opposition. Fair enough.

That said, at least be it bad or somewhat good, at least I (and others) are at least trying and not accepting to go total complacent like others, when they feel something needs further looking at.

Jev/N

While it's hard to argue with the points made by him, regardless of the numbers and possible eventualities, what would have been the story is the banks failed i.e. descended into full-blown insolvency?

Would the deposit guarantees have kicked in? And been successful?
Would there have been a run on the banks, notwithstanding said guarantees?
Or would the government just seek to buy selected insolvent banks i.e. main consumer/deposit banks?

the groutch

is this supposed to be a secret?
this is all it was ever about from day 1, protecting our European "friends" who inflated the bubble by throwing cheap money at our banks.