Back in February, Enda Kenny said that if elected to government Fine Gael wouldn’t put “another cent” of taxpayers’ money into Anglo Irish Bank. Kenny also said “The junior, and senior, and non-guaranteed bondholders are going to have to pay the price”. These populist statements and promises were cynically made during an election campaign simply to get votes. Now that he is Taoiseach, Enda Kenny has done another u-turn and is handing over not just a few cent to pay off Anglo’s debts – his government is handing over billions!
The decision to pay €727 million to unsecured, non-guaranteed bondholders on 2 November has disgusted working class people struggling to deal with the consequences of austerity. “Don’t Pay the Bondholders Campaign” has claimed that TDs and Senators received approximately 220,000 emails in protest against the payment of these bonds. The holders of these bonds purchased them at a considerably lower price earlier this year taking a risk and a gamble based on the possibility of the Irish government not paying out. They need not have worried – the government paid out and the current holders of the bonds made a massive profit – some of them doubled their investment in only a matter of months! Unfortunately this is only the tip of the iceberg when it comes to the scandal of the bailing out of Anglo Irish Bank – a scandal which Fine Gael and Labour are now up to their necks in.
The government claim that no exchequer funds are being used to pay off the Anglo bondholders. This is a lie. These bonds are being paid from the money received for the sale of Anglo Irish Bank assets. Remember, Anglo Irish (or the Irish Bank Resolution Corporation, as they now call it) – is fully state owned. It’s assets are state assets – that are in fact owned by you. When they are sold all monies received belong to the state – to the exchequer and therefore every cent being paid to these bondholders is being paid from state funds. Billions more is due to be paid to bondholders – a further €2.8 billion is due to be paid in 2012. These bondholders are super rich.
It is estimated that Anglo Irish Bank bondholders manage assets worth more that €20.8 trillion. What they are owed by Anglo Irish Bank accounts for only one 5000th of their fortune. Between them, these bondholders have 100 times more wealth that the whole of Ireland!
These super-rich parasites are being paid off with money that could be used to pay for Special Needs Assistants, or to keep open A&E departments, hospital beds or to invest in job creation. Unfortunately that is far from the whole story. The last government issued a promissory note for the debts of Anglo Irish Bank – an IOU that accounts for 15% of Ireland’s national debt. Fine Gael and Labour have promised to “honour” this IOU – and the consequences will impact on the lives of every person in Ireland for years to come. The Department of Finance estimates that over the next 14 years paying back this promissory note, including interest, will cost €65 billion!
The government has made all sorts of spurious claims as to why it must pay off these debts – debts that were incurred in the speculative lust for profit that was fuelled by the criminal lending of banks like Anglo Irish. Claims by Minister Leo Varadkar that paying these debts is linked to the EU/IMF bailout deal are false. In an article for the TASC Economists Network 20 September 2011, economists – Tom McDonnell, Michael Burke and Michael Taft, stated: “In dealing with Anglo/INBS debt we have advantages. First, the promissory notes are not part of the EU-IMF Memorandum of Understanding. Therefore, further payments under the IMF-EU bail-out deal are not contingent upon maintaining the current promissory note schedule.”
In the same article these economists also dispute another government claim that not paying the debts of this zombie bank would lead to financial contagion – causing a crisis throughout the European banking system. “Second, Anglo/INBS is for the most part detached from the European financial system; the issue of contagion to other financial institutions is extremely limited.”
The bondholders are not pension funds as claimed by Enda Kenny but massive institutions like Goldman Sachs, the billionaire Greek shipping magnate Spiro Latsis, Deutsche Bank, Barclay’s, PNB Paribas, Societe Generale and so on.
Ireland is now the most indebted country in the world – combined debts are equivalent to 490% of GNP. The government’s strategy of repaying the banking debts will guarantee mass unemployment for years to come and austerity, cuts and suffering for working class people for more than a decade.
Not another cent!
The Socialist Party says that not another cent should be paid to Anglo Irish Bank’s bondholders. These billionaires gambled – they lost – let them take the consequences they can afford it we can’t! The promissory note which is set to cost the state €65 billion should not be paid. This money is owed to the Central Bank of Ireland and the European Central Bank. The ECB and the CBof I should write off this debt – and this millstone should be lifted from the necks of ordinary people.
The exchequer deficit for the first ten months of 2010 is €22.2 billion. This is 6 billion more than the same time last year. Despite all of the cutbacks and the sacrifices that working people have made the deficit is getting worse. Austerity is not working!
Revenue from income tax is down, VAT is down, corporation tax is down, unemployment is up – all signs that austerity is strangling the economy. But the biggest contributor to the increasing budget deficit is due to the payment of Anglo’s debts and the last bank recapitalisation.
Debt default and / or a second bailout are inevitable for Ireland if the government continues with this disastrous deflationary austerity programme and debt repayments. The governments’ strategy will bankrupt the country and create a disaster that will dwarf current difficulties.
The capitalist market has failed. Austerity will not work. The only way to create the wealth needed to eradicate the budget deficit, end mass unemployment and fund public services is through public investment to create jobs. This investment should be funded by increased taxation on the super-rich and the massive profits of the multinationals. We need a government based on working class people that implements genuine socialist policies to create a better life for all.