Honahan’s ECB Sandwiches…Self Subjugation, Debasement, Slavery!

February 7, 2013

We hear Prof Honahan is preparing yet another proposal for the ECB. His other proposals rejected outright, he’s running out of time and options and doesn’t understand the meaning of NO!.

It’s embarrassing he’s at this point following 2 years of intense negotiations. He’s been so compliant and submissive and persuasive  he risks being compared to Mrs Doyle of Fr Ted fame failing to persuade visitors to  one of her LTRO sandwiches.

The process referred to above of self humiliation of Ireland Inc continues led by our failed negotiators. This time they have surpassed themselves not by liquidating NAMA overnight in Leinster House but in fraudulently pretending this move is good for Irish taxpayers, or that it will leverage support from the ECB to Ireland’s debt negotiations currently unfolding and unravelling.

800 employees of IBRC are pretended to be laid off. Lets open the can of worms, shall we?

It’s difficult to kill a zombie bank that’s already dead, but this is how its done. All assets and liabilities held by IBRC are to be transferred to NAMA, zombie central. Not only that, but the promissory notes currently held by IBRC, a private bank, are also to be transferred to NAMA.

Now you see it, now you don’t. For our next trick, let’s do something about those 800 jobs. Let’s give all these people a job in NAMA to manage the IBRC portfolio currently transferring to NAMA.

Hey Presto, it’s another mess again NAMA in a Hammer Horror move, biting into IBRC taking the whole IBRC vampire into its NAMA fold of the undead.

Will the ECB issue a bond to the Irish government and risk the charge of directly funding sovereign members of the EMU and break its own rules. With NAMA, the current debt profile of Ireland’s banks, looming mortgage default threatening our banks once again, internal devaluation, austerity, is Ireland worth the risk to the EMU by attempting to bail us out with such a move.

Though secrecy surrounds the negotiations it would appear that the Mario Draghi rounds of LTRO funding of banks across the EMU extend only to the interbank market allowing participating banks to issue bonds backed by the ECB. This support of the EMU banking system does not extend to directly funding sovereigns, as a long-term bond issued to cover the promissory notes would entail.

You see there has been some concern that a future government could come in and decide we’re not going to pay the promissory notes. But transferring them to NAMA means the state has made what has been unofficially sovereign debt, official. Whatever future government we or or our children elect if the state exists (they are doing their best to collapse the state), will not have such a choice, the sovereign debt will already be theirs.

Meanwhile the compliance guards eg Prof Alan Ahearne is coaching Ireland not to be threatening  the ECB. Gilmore is saying everything is satisfactory. Heads in the sand. Let’s disregard the threat of the ECB to the very viability of this state and beg, borrow or steal to repay our ‘so-called’ debt obligations however odious they may be.

The IMF and the troika may not see this as a viable course as we have endured financial meltdown only to face a second meltdown risk to our banks because of internal devaluation, austerity and the erosion of a cliff of mortgage default creeping around our banks.

The best option for Ireland, ECB, troika is to allow Ireland default outside the EMU. Attempts to save Ireland could put the EMU further at risk.

Meanwhile bond issues to banks throughout the ECB, Ireland is being treated as the ECB scarecrow taking attention away from Spanish, Italian banks hiding behind our difficulties.



“According to Dalibor Rohac, the deputy director of economic studies at the London-based Legatum Institute, the plan can only do so much if indebted countries do not aggressively tackle their budget-deficit problems on their own.

“Ultimately these countries have to either fix their internal imbalances through internal devaluation, which is proving to be very costly, or they will have to try to find some other arrangement that might even involve an explicit devaluation  by leaving the euro zone,” he says.  “Ultimately the ECB can’t fix these countries’ fiscal problems and can’t fix these countries’ imbalances. And so we are still waiting for a solution to that longer-term problem.”

It would appear logical that we should consider leaving the euro zone if the ECB is intent on ransacking the state without providing an adequate restructuring deal on Ireland’s debt.

Its a risky option fraught with legal difficulties for the ECB to allow the Irish government to issue a 40yr bond guaranteed by the ECB at low enough interest rates to allow Ireland both reduce the principal on its promissory note obligations and pay back the bond at a reasonable cost to the state. Other permutations to such a deal exist but given the rejection by the ECB of deals proposed hitherto, it would appear there is little chance for this or other alternatives.

A major problem is that for Ireland to benefit from such a bond programme it is firstly required to be fully back in the markets,


Problem is that the ECB and troika can see as well as most that Ireland is capsizing because of its debt beyond the point of rescue without default. It’s not clear that under any terms without significant debt write-down including devaluation, that Ireland can be saved as a viable country in the EMU.

For this reason there is good reason to consider ejection of Ireland from the EMU where from outside, default and debt write down is possible, whereas from inside the EMU our currency profile is beyond the limits of sustainability.

The LTRO provision of short-term funding to European banks currently beginning its payback cycle and contributing to strengthening EU banks availing of it should not be confused with the underlying economic conditions in the EMU that continue to deteriorate and show signs of weakness.

The rise of Germany within the EMU is a worrying politicisation of the ECB that is increasingly unchecked. The democratisation of EMU that Ireland signed up for has not materialised.


They created NAMA and are looking for another long term bond, monetary financing, to grow this monster NAMA into Irelandstein.

It’s time to batten down the hatches and prepare for another round of panic and mess from our negotiators.

They’ve come up with the absurd idea that unlike Mario Draghi’s LTRO where institutions including banks lend to each other in the secondary market and these bonds are backed by the ECB thus lowering the risk for investors, that ECB through monetary financing should issue a long term bond to NAMA, a state institution?

Whatever chance IBRC/Anglo/NAMA backed by another deal from the ECB supporting the state through allowing a Greek type write-down, could issue a bond for say 80% of the promissory notes, rest backed by government, that would be backed by LTRO at EMU level, is now lost.

The Irish negotiators have trashed the state and given us a shambles.

If I were sitting on the governing council of the ECB, this move would be sufficient to investigate ejection of Ireland Inc from EMU.



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