Extending The Debt: The Great 'Promnight' Swindle

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Sometimes you can walk around this city and feel like you are the last sane person left on the island.  On the front page of every single newspaper the spin doctors have gone into their highest setting possible with the great news that we’ve buried the rotten corpse of Anglo Irish bank which had been stinking up the whole economy for years now.   We’d cut ourselves away from this horrible thing, we no longer had to pay out this awful promissory note for a staggering amount of €3.1 billion every year.  We were now going to just liquidate the rottenest bank of all time, transfer it over to the men in black (NAMA) and the plan then was to pay interest only on this astronomical debt (€40 Billion) until 2038.
 

That’s not all, the great news continues from the spin overlords, as we reduce the amount we have to borrow, now only having to pay €1 billion a year for this black hole in the Irish Economy, as opposed to €3 billion and with a bit of magic from inflation this could help make it easier to pay back the principle when we start on that in twenty five years.  The tayto principle, a packet of crisps cost me 2p when I was growing up, now it’s 80 cent – so with a little hocus pocus the €40 billion will be so much easier to deal with in 2038. Sure that’s whole years away.  In this way we are taking a classic traditional Irish attitude towards this debt, we are suppressing it.

Now let’s look at what actually happened.  This time last year Michael Noonan got up and pulled this promissory note out of his hat, and everyone said “ What’s that?”.  He talked a lot about it, but in the end he borrowed the money and paid it back to the ECB, the €3.1b.  So we knew what was coming and people were not fooled this time.  Even Fintan O’Toole was getting his people to sign an on-line petition saying that we were not impressed with Noonan’s magic trick of last year and we did not want to pay it this year.

The ECB, not surprisingly felt the same way.  Look, this promissory note was not ideal in their eyes and as David McWilliams put it “the messy promissory note; it was unorthodox and as long as it was around, ran the risk that the pesky Irish could go rogue, doing a local deal with themselves between their central bank and their government – far away from Frankfurt.”

Then with great drama we were cast into what became known on twitter as #promnight.  The night we dealt with the promissory note. The night they kept the Dáil bar open to all hours so that our great representatives could drink themselves silly and at the same time bring in some stealth legislation (you have 50 minutes to read a 58 page bill) in order to liquidate the bad bank.  Apparently this drama came about because there was a leak about the prospect and our great government had to act fast before the markets opened in the morning.  Then we were subjected to a shouted slagging match between the opposition and the Government on the nature of the way this was being introduced to the house.   This rang a pretty hollow note when it came from the remnants of Fianna Fáil who had really started this whole chain of events off back in 2008 in similar fashion.  For the most part, my viewing the proceedings was with a heavy heart because this was our social democracy in action.  The government, many of them, appeared drunk and abusive to the speeches of the opposition.  They appeared to have spent more time in the bar than reading a bill which was 58 pages long and covered turning private debt into public debt for generations.  They were going to vote the way the party whip told them.  And so it came to pass, and it was whisked off and signed into law by our president.
 

Then the spin doctors went into overdrive and the public relations bill for this work will be almost as big as the promissory note we got rid of.  This was a great piece of work.  Finally we’d killed the Anglo bank and all the rest.

As is so often the case in this little republic, the substantive issue was not being addressed.  We had been subjected to constant speculation that there was going to be some kind of deal done on the debt since this government entered into power.  Does anyone remember the stories about the special relationship which Enda Kenny was building with Angela Merkel.  As with so much stuff in the media, this hype was much ado about nothing.  What prom night brought home to us all was that this former disputed debt was now enshrined via the laws of the land as our, the Irish people’s debt.
 

The substantial question was not how we dealt with the debt.  As the ECB said they ‘took note of our actions’ but what is much more important from their point of view is that this debt is no longer a matter of dispute.  We, the Irish people, and people of this state who are as of yet not born, are now responsible for paying back this debt in full.  There is to be no deal. And on top of that - the 31 billion debt they were expecting us to pay via the promissory notes has now become a whopping 64 billion - to be paid over the next 40 years!

Let’s remember what these debts are.  The loan that the Chairman had managed to get for himself, of €87 million, is part of the debt.  Sean Quinn is another who owes the rotten bank 2.2billion, Denis O’Brien, Bernard McNamara, (Developer) The €8.5 millon that the other banker and former CEO David Drumm is part of the debt.  All of that and more is part of the debt that now has become Irish people’s debt.  Remember the €416 million that some developers paid for the former glass bottle factory.  That’s also part of the debt.  The money that was given to the Maple 10 for the purposes of artificially boosting the stock price of the bank, yes, that’s also our debt now.

This question was the major one which had to be dealt with.  But it was barely addressed in the Dáil. The entire night of drama was played out, enacted upon us, to ensure that it was rushed through, the real substance of this deal was not dealt with.  As usual all the bogeymen were carted out, the markets, the leaks from the ECB, the unmentioned understandings of the troika,  every conceivable distraction in the book to get your mind away from the fact that what they were committing in your name was larceny of future generations.

When the banks were making outrageous profits, there was not a Mercedes pulling up and some dark suit was not throwing a wad of notes into my porch in a bag, but when they made a losses beyond comprehension, they have ended up at my door, and at yours.

So forgive me if I don’t join in the congratulations that the coalition partners in government are so happy to dispense to each other.  Your names will go down in history alright, but not for the reasons that you might think.  I’m going to be telling my grandchildren of your actions but hopefully we won’t have to wait until 2038 to make you answerable for them.

Words: Dermot Sreenan

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