Workers Solidarity Movement

Recently bond holders in Anglo Irish Banks agreed to a voluntary reduction to 20% of face value on 2017 junior bonds.  This morning the ISDA Determiniation Comittee (International Swaps and Derivatives Association) announced that this constituted a restructuring credit event, triggering CDSs (Credit Default Swaps) on Anglo Irish Bank.  Restructuring credit events trigger what is known as the "Small Bang Protocol" for CDSs which cover some events which are not complete defaults.

Eric Cantona, French actor and former footballer, has recently been calling for a run on the banks.  The idea is that the bankers generated this crisis and since our democratic institutions are either incapable or unwilling to hold the bankers accountable, we should take matters into our own hands.

Why is the director of the IMF complaining that the rate of progress of the IMF negotiations in Dublin is going too slowly? What's wrong with this picture? The answer is nothing, so long as you understand that the IMF are not the driving force in these negotiations.

Despite the newpaper headlines, what is happening is not an IMF bailout. This is a European debt restructuring process in which the IMF are playing a merely supportive role as consultants. This is a Eurozone process and although the political masters of the Eurozone, through their EU Commissioners, have the final say on passing or vetoing the final agreement, the true driving force behind this process is the ECB.

Last Friday we reported on the mounting crisis of Ireland's sovereign debt bond yields. Particularly how the announcement of Lenihan's "Shock and Awe" 6 bn cuts plan had failed to move the markets.  This week, as bond yields have moved from the business pages onto the front page, the search for an explanation for this failure began. By the middle of the week, the story was set - blame the Germans!

The purpose of this text is to try and tell the story of our current economic situation, how we got here, and what we can expect from the near future, so as to better understand the tasks facing us.

This is neither an academic text on history, nor yet, god forbid, a treatise on macroeconomics. So in the interests of telling a listenable story we will use the old storytelling technique of jumping directly into the middle and exploring outwards in flashback and flash-forward vignettes to build the big picture. But where is the middle?

National Irish Bank used to have an advertising slogan which said "We're different because we care". Following recent revelations about tax-dodging offshore accounts and their robbing of money from customers' accounts, perhaps they should change it to "We're different because we got caught". Or maybe even "We're not different at all because we care (about our profits)".