EU-IMF Programme Documents & Secret Side Letter on the Banks - Update: Lenihan's Letter of November 9th Released

[disability student]

Here's the memorandum drawn up by the EU/IMF.


Source:http://www.finance.gov.ie/documents/publications/reports/2010/EUIMFmemo.pdf

Haven't read these yet and will do so later re my comments.

[disability student]

Special resolution programme by Feb 2011. What programme was that ??

I would strongly argue for a constitutional challenge to EU-IMF as GP should be allowed to pull out. Why are they afraid to pull it out purely out of the national interest??

Cowen has started calling Mr Gormley now instead of Minister Gormley at press conference. :D:D:D

[Andrew49]

Says Brian Lenihan: Nonetheless, we enter this Programme not as a delinquent State that has lost fiscal control. We enter it as a country that is funded until the middle of next year; as a State whose citizens have shown remarkable resilience and flexibility over the last two years in facing head on, an economic and financial crisis the severity of which has few modern parallels.


And: we have every reason to be confident about the future of this economy.

Source (http://www.irishtimes.com/newspaper/breaking/2010/1201/breaking58.html)

He's describing this crisis NOT as an 'emergency' but as 'our current difficulty'

We have a delinquent and lunatic government in charge.

[C. Flower]

Memorandum of Understanding - 40 momentous pages.

[C. Flower]

Full text of Brian Lenihan's statement to the Dail today

Minister for Finance Brian Lenihan has today announced the details of the Government's EU-IMF bailout contract.
Statement by Minister for Finance Brian Lenihan to the Dáil on the EU/IMF Programme for Ireland and the National Recovery Plan 2011-2014

First of all, a Cheann Comairle, I want to inform the House that I am circulating to members the five documents which set out the policy conditions for the provision of financial support to Ireland by EU member states and the International Monetary Fund. These documents underpin the three year Programme of banking and economic measures on which we have now embarked.

The documents are:
* the Memorandum of Economic and Financial Policies 2010 (MEFP)
* The Memorandum of Understanding on Specific Economic Policy Conditionality (MoU)
* the Letters of Intent to the IMF and the EU Authorities
* the Technical Memorandum of Understanding (TMU) attached to the Letter of Intent (LoI) to the IMF.

These documents are not yet finalised but they are not expected to change in substance. The Memorandum on Economic and Fiscal Policies (MEFP) is the foundation document of the IMF and EU elements of the programme. It sets out the reasons for the programme along with its principal policy objectives which are:

- banking reorganisation
- fiscal consolidation
- renewing growth
And it outlines the substantial external financial assistance to support these policy objectives.

The Memorandum of Understanding on Specific Economic Policy conditionality sets out the conditions for the disbursement of the assistance being provided under the European Financial Stabilisation Mechanism), the European Financial Stability Facility and the bilateral loans by the UK, Sweden and Denmark. So this document relates to the EU element of the Programme although it does refer to the IMF. The memorandum sets quarterly targets for the achievement of the specified policy objectives and requires detailed quarterly reporting in respect of the achievement of these objectives. This document closely reflects our own National Recovery Plan.

It also requires the Government to consult with the European Commission, the ECB and the IMF about the adoption of policies that are not consistent with this Memorandum.

The Technical Memorandum of Understanding, as its name suggests relates in the main to the definitions and reporting for fiscal aggregates. It also requires that foreign debt arrears are not be incurred.

The letters of intent are Ireland’s formal applications for support to the EU authorities and to the IMF.

The question has been raised as to whether this support programme has the status of an international agreement. I am advised by the Attorney General that the Programme, and these supporting documents do not represent international agreements and do not require the approval of the Dáil. I am presenting the documents to the Dáil, for information and to inform discussion of the programme.

A Cheann Comhairle, amid the sometimes hysterical and contradictory reaction to the external assistance programme, it strikes me that one quintessential point has been overlooked and it is this: without this Programme, our ability to fund the payments to social welfare recipients, the salaries of our nurses, our doctors, our teachers, our gardai, would have been extraordinarily limited and highly uncertain.

Fifty billion of the €67.5 billion we are receiving from our European partners and from the IMF will go to fund those vital public services over the next three years. In those circumstances, the only responsible course of action for any government was to accept the EU/IMF financial assistance fund.

Nonetheless, we enter this Programme not as a delinquent State that has lost fiscal control. We enter it as a country that is funded until the middle of next year; as a State whose citizens have shown remarkable resilience and flexibility over the last two years in facing head on, an economic and financial crisis the severity of which has few modern parallels.

The team with whom we have negotiated has acknowledged our success in stabilising our public finances and they have endorsed our banking strategy. This is borne out in the documents I have just circulated. They have also accepted our four year Plan for National Recovery and have built their prescribed Programme around that Plan.

This needs to be emphasised because it shows that we do have the capacity to get out of our difficulties and that we have already made considerable progress in that respect. The fact is our economy is showing signs of recovery. As I have already reminded this house last week

* GDP will record a very small increase this year based on strong export growth.
* Exports are expected to grow by about 6 per cent in real terms this year, driven by improvements in competitiveness and a strengthening of international markets.
* Conditions in the labour market are also beginning to stabilise.

The outlook for next year is much improved. As forecast in the Plan growth is expected to be around 1 ¾ per cent next year again driven by a remarkably robust export performance.

The Fine Gael leader referred to the European Commission’s less optimistic forecasts in the Dail yesterday which he suggested had undermined our Four Year Plan. He ignored the substantial upward revision of the Commission’s forecast on international trade which will benefit a small open economy like ours in which growth, by common consent, will be export led.

It is also the case that, under the Programme, we have been given an extra year to reach the deficit target of 3 per cent of GDP precisely to take account of the Commission’s lower growth forecast. I welcome this step but it does not alter our budgetary plans as set out in the Plan. In other words the target of €15 billion of adjustments by 2014, remains but there is further room for manoeuvre in the event that growth is lower than expected.

In the later years, the Commission’s growth forecasts are similar to my Department's. It is also the case that others - such as the ESRI for example - believe that the Department of Finance forecast is too pessimistic.

The Programme has adopted in its entirety the measures set out in the National Recovery Plan as a roadmap to return our economy to sustainable growth. The adjustment of €15 billion by 2014 has been accepted as has the breakdown of €10 billion in spending reductions and €5 billion in revenue raising measures. The details of the first €6 billion of this adjustment will be contained in the budget which I will present to the House next Tuesday.

The programme of structural and labour market reform aimed at improving our competitiveness has also been endorsed by the Programme. It set out a detailed quarterly schedule for the achievement of the agreed measures.

The negotiations on the Programme which took place over a ten day period were intense and at times difficult. They were conducted under my direction and that of the Governor of the Central Bank by the most senior officials from my Department, the Central Bank and the Financial Regulator, the National Treasury Management Agency and the Office of the Attorney General.

There has been the usual barrage of criticism of the outcome accompanied by the personal abuse of those involved that has become common place in our debased public discourse. But none of the critics explains how we could have secured the funds we require at less cost to the State.

Indeed the arguments put forward have been patently wrong. For example, it has been claimed that we are paying a higher interest rate than Greece even though Greece is now seeking our terms. The interest on Greek loans is 5.2 per cent for three year loans. Ireland’s interest rate will be 5.8 per cent for loans that are on average for seven and a half years. A basic fact of sovereign borrowing is that the longer a country borrows money, the higher the interest rate paid.

Of course, if at any time during the three years of the Programme, it emerges that we could borrow at a lower rate in the markets, there is nothing to stop us from doing so.

I want to clarify the position of the €85 billion funding package and its impact on our debt levels. Of the total, €50 billion is to provide the normal budget financing: in other words, it is money we would have had to borrow over the next three years in any event. The Programme provides these funds at a much lower rate than currently available to us in the market. This level of funding is already included in the plan. Of the remaining €35 billion - €10 billion is for immediate additional bank recapitalisation and the remaining €25 billion is to be used as a contingency fund, only to be drawn down if required based, for example, on the results of the updated capital assessments.

Furthermore, the State is in the happy position of being able to contribute €17.5 billion towards the €85 billion from its own resources, including the National Pension Reserve Fund. It can do this without prejudicing the commitments in the four year plan to use funds from the NPRF for projects such as the water metering programme and retrofitting.

This use of the NPRF has provoked the most bewildering criticism of all from parties who, having for years fundamentally disagreed with the very existence of the Fund, have now become its most ardent protectors. And on this point the arguments make absolutely no sense. Why would we borrow expensively to invest in our banks when we have money in a cash deposit earning a low rate of interest? And how on earth can we ask tax payers in other countries to contribute to a financial support package while we hold a sovereign wealth fund? We have a large problem with our banks which has forced us to seek this external assistance. In these circumstances, it is surely appropriate that our cash reserves should be deployed to help solve that problem.

The reason we had to seek external assistance is because the problems in our banking system simply became too big for this State to handle on its own. Our public finance problems are serious but we were well on the way to solving them. The combination of the two sets of difficulties in circumstances where the entire eurozone was under pressure was beyond our capacity.

So the primary aim of the Programme agreed last weekend is to support the recovery and restructuring of our banking system.

It has been clear for some time that our banks were facing serious challenges in terms of their liquidity position. Lingering concerns in the market regarding their capital position led to negative market sentiment.

This was despite the substantial transfer of the banks’ riskiest loans to NAMA and the detailed capital adequacy assessment made by the Financial Regulator in the summer as well as the significant recapitalisation measures that flowed from that.

But the Programme does not propose any departure from existing policy: its prescription is an intensification and acceleration of the restructuring process already being undertaken for the Irish banks. A key objective is to ensure that the size of the domestic banking system is proportionate to the size of the economy and is appropriately aligned with the funding capacity of the banks overall taking into account stable sources of deposit and wholesale funding.

The programme also seeks to demonstrate the capacity of the banks to accommodate any unexpected significant further deterioration in asset quality so as to rebuild market confidence in the robustness and financial resilience of the banking system overall.

The Central Bank is requiring the banks to meet a Core Tier 1 capital ratio of 12 per cent - a key measure of capital strength. If the banks cannot source it themselves, the State will inject the necessary capital. This can be drawn from the €10billion which is available immediately from the overall Programme fund. As I have outlined above, a further remaining €25billion. euro will be available on a contingency basis.

It is important to point out that a detailed and extensive review of the financial status of the Irish banks was undertaken by the external authorities in advance of the agreement on the EU/IMF Programme.

There was a very sharp focus in this work on the results of the Central Bank of Ireland's assessment of the capital position of banks - the Prudential Capital Assessment Review (PCAR) - carried out earlier this year and updated in September last. The Governor of the Central Bank recently confirmed that the external experts had found no fault with the methodology used for the PCAR

[C. Flower]

The Central Bank will under the terms of the Programme carry out an updated PCAR exercise on the capital position of the banks in early 2011 based on stringent stress testing and detailed reviews of asset quality and valuation. This exercise will take into account updated assessments of the macroeconomic environment. It will ensure that over the coming years, the banks’ capital ratio do not fall below 10.5 per cent. This is a high standard in international terms and it should give confidence to the market that our banks will be in a strong financial position. This in turn will provide the necessary reassurance to allow the banks to attract greater market funding in due course.

The Government will also undertake a process of significant restructuring and right-sizing of the banks to reduce their balance sheets. In this context, all land and development loans below €20million in Bank of Ireland and AIB will be transferred to NAMA.

Further work will be undertaken in the short-term with the banks to identify how the sector can be reorganised to ensure that we have a viable and financially strong banking system which meets the needs of the real economy and has the confidence of international markets. This strategy, developed in collaboration with the various international organisations and endorsed by them, builds on the measures adopted by the Government over the past two years to resolve our serious banking difficulties.

The Programme allows for an integrated approach to the restructuring of Anglo Irish bank and Irish Nationwide Building Society, building on the proposed Asset Recovery Bank structure to seek to maximise value from their loan books.
Revised restructuring plans for the two institutions will be submitted to the European Commission in early 2011 detailing the resolution of the institutions, in particular the arrangements for working out of assets over an extended period of time

I would like to reiterate that all deposits held with the domestic banking system are safe and covered by the Deposit Protection Scheme for sums up to €100,000. In addition, deposits in participating institutions under the Eligible Liabilities Guarantee Scheme are guaranteed in line with the terms of the Scheme for sums over €100,000. The Scheme has been extended in national law to the end of 2011.


There has been much commentary about the need for senior bondholders to accept their share of the burden of this crisis. I certainly raised this matter in the course of the negotiations and the unanimous view of the ECB and the Commission was and is that no Programme would be possible if it were intended by us to dishonour senior debt. The strongly held belief among our European partners is that any move to impose burden sharing on this group of investors would have the potential to create a huge wave of further negative market sentiment towards the eurozone and its banks system. That apprehension was confirmed by Professor Honohan in an interview last Monday when he said there was no enthusiasm in Europe for this course of action.

There is simply no way that this country, whose banks are so dependent on international investors, can unilaterally renege on senior bondholders against the wishes of the ECB. Those who think we could do so are living in fantasy land. Worse still, those who know we cannot do so but who nonetheless persist with the line are damaging this country and its financial system: and all for the sake of a cheap headline. It is a case of politics as usual even at this most difficult time.

The idea which is now commonplace, that some how there are no costs associated with default is entirely incorrect. Ireland is hugely dependent on Foreign Direct Investment. These companies have large funds and investments in Ireland and directly and indirectly employ a quarter of million people in this economy. Any default on senior debt and the uncertainty that would cause would undoubtedly impact on the future investment decisions of these companies.

Subordinated debt holders are in a different position. As I said in my statement on the 30th of September last, there will be significant burden sharing by junior debt holders in Irish Nationwide and Anglo Irish Bank. These two institutions had received very substantial amounts of State assistance and it was only right that this should be done.

My Department has been working with the Office of the Attorney General to draft appropriate legislation to achieve this and this is near finalisation. Parallel to this Anglo Irish Bank has run a buyback operation which will offer these bondholders an exchange of new debt for old but at a discount of at least 80 per cent. This process is still underway and will be concluded shortly.

Obviously this approach will also have to be considered in other situations where an institution receives substantial and significant State assistance in terms of capital provided to maintain their solvency ratios. I hope to be in a position soon to announce this legislation.

We need a properly functioning banking system for this country. As I have indicated in the past we need to shift to a banking system commensurate with the economy but one that is strong and capable of meeting our needs. That has been the overriding objective of all our efforts since this crisis began two years ago. I believe the considerable funds provided by this Programme, will enable us to bring this crisis to an end and to secure the future of the Irish banking system so that it can play its full role in supporting the development of this country.
Conclusion:

We have been through a traumatic two years. Of course, we would have preferred to avoid resort to external assistance. But we can emerge from it a stronger and fitter economy. The attributes that brought us the boom: the quality of our workers, our entrepreneurship, our pro-business environment; all of these remain in tact. During the boom we built a top class transport infrastructure, sport and cultural facilities and educational sector. Over the last two years, we have won back much of the competitiveness we lost during the boom.

This three year EU/IMF Programme will provide the basis for funding us through our current difficulties. It provides the funding to restructure and recapitalise our banking system. And it will guide us through the implementation of the necessary budgetary and reform strategies set out in the National Recovery Plan. A Cheann Comhairle, we have every reason to be confident about the future of this economy.

[C. Flower]

STATEMENT BY JOAN BURTON TD

Deputy Leader of the Labour Party, Spokesperson on Finance
Wednesday, 01 December 2010

SMALL PRINT OF EU-IMF DEAL DETAIL ‘PROGRAMME OF PAIN’


The Programme Documents relating to the EU-IMF bailout, published today, set out in gory detail the wide-ranging programme of pain negotiated by the Fianna Fáil-led government.

These documents confirm that the entire bill for Fianna Fáil’s disastrous bank guarantee is to fall on Irish taxpayers.

Minimum budget reductions, made up of painful tax hikes and spending cuts, of €6bn and €3.6bn respectively, are foreseen for the next two years.

The Labour Party remains convinced that it is not possible to frontload the budgetary adjustments to such an extent without seriously compromising prospects for jobs and growth.

The Labour Party has instead proposed a twin track approach: balanced consolidation of the public finances with strategic investment in infrastructure, growth and jobs. Unlike Fianna Fáil, the Green Party and Fine Gael, all of whom support a draconian €6bn budget for 2011, Labour proposes a €4.5bn package which leaves room for growth.

We also propose using €2bn from the National Pension Reserve Fund to finance a Strategic Investment Bank that would channel funds to important competitiveness-boosting infrastructure projects and to innovative start-up and growing businesses.

For months, the government protested that frontloading the budgetary adjustment would bring down Ireland’s borrowing costs because the markets demanded austerity. In fact, the exact opposite has happened – the more our government protested austerity, the less the markets were willing to lend to us at reasonable rates.

This framework negotiated and agreed by government allows little capacity for the sort of growth our economy will need to be able to support this debt burden.

This cack-handed deal was designed to ‘kick the can down the road’. It buys time for the rest of Europe to get its banks in order, but it makes Irish taxpayers the sacrificial lambs for European financial stability.

Distinguished economist, Professor Barry Eichengreen, wrote in Germany’s financial daily, Handelsblatt, today that: “Ireland will be transferring nearly 10 per cent of its national income as reparations to the bondholders, year after painful year.”

It became clear during the Labour Party’s meetings with the troika of the Commission, ECB and IMF that it was the IMF who wanted the more holistic approach to supporting Ireland. This may come as a result of recent studies by the IMF indicating that there is little evidence that a developed economy can deflate its way out of the sort of onerous debt burden now being imposed on Ireland.

It is deeply ironic that Fianna Fáil have signed us up to introduce a ‘Fiscal Responsibility Rule’ by the end of next year. Coming at the tail end of 13 years of mis-rule, this is surely an extraordinary case of closing the stable door after the horse has bolted.

In the context of the Finance Committee’s recent debate on its ‘Report on Macroeconomic Policy and Effective Fiscal and Economic Governance’, I received legal advice to the effect that a constitutional referendum may be required to introduce binding multi-annual spending ceilings as is envisaged in the draft Memorandum of Understanding published today.

This is a bad deal for Ireland and a bad deal for Europe. We need a new government with a mandate to renegotiate the terms of this agreement. The sooner we have a general election the better.

Contact Joan Burton @ 087-2369485

www.labour.ie/press

[TotalMayhem]

Jean-Claude Trichet: "The Irish people have proven their ability to cope with difficult periods."

http://img98.imageshack.us/img98/2436/20101202212550capture.jpg

[wickedfairy]

you got it in one Total, they are queuing at the soup kitchens as we speak. Anything in the plan for insulating houses to pacify Eamo?:rolleyes:

[recycled employee]

i find it hilarious how we had an initial debt in 1985,we were bailed out the theives responsible were running in the opposite direction,and when we were nearly got by having them try to get us to sign insurance contracts,fortunately some were good enough to see sense and not sign the contract,our initial debt in the 80's wont be fully paid off until the year 2025,when people talked about a celtic boom all i could see was masses of maxed out credit cards,and banksters trying to sell us the idea that money doesn't really matter,its all credit and assurances anyway and of course our sucessive government supported them.Of course the only people having a great go of this recession are the IMF.Given all of this,isn't it clear nothing will change with our unreformed governments,(who don't have what it takes to make a robust stand against the EU and the demands of the financial crooks?)and our corrupt county councillors,we have too many councillors in each county for a start and bad management,where were the salts on our roads those past few mornings?

Personally about this debt i wont be doing ''my bit'', i never contributed to any of these problems..

[C. Flower]

i find it hilarious how we had an initial debt in 1985,we were bailed out the theives responsible were running in the opposite direction,and when we were nearly got by having them try to get us to sign insurance contracts,fortunately some were good enough to see sense and not sign the contract,our initial debt in the 80's wont be fully paid off until the year 2025,when people talked about a celtic boom all i could see was masses of maxed out credit cards,and banksters trying to sell us the idea that money doesn't really matter,its all credit and assurances anyway and of course our sucessive government supported them.Of course the only people having a great go of this recession are the IMF.Given all of this,isn't it clear nothing will change with our unreformed governments,(who don't have what it takes to make a robust stand against the EU and the demands of the financial crooks?)and our corrupt county councillors,we have too many councillors in each county for a start and bad management,where were the salts on our roads those past few mornings?

Personally about this debt i wont be doing ''my bit'', i never contributed to any of these problems..

What do you think we should do ?

[recycled employee]

get a new barter system going P O T A T O :D,buy more houses,stocks/shares..?

[C. Flower]

I'd like to keep this thread if possible on topic for discussion of the loan Programme.

NAMAwinelake has posted a blog today which says some things about the Programme itself and the way in which it was released. The secret side letter on the banks is discussed in it.

As he rightly points out, the "bailout" Programme is all about the banks. The banks information has yet to be released to the Dail or anywhere else.

NAMAwinelake also proposes alternatives to the IMF/EU Programme that need to be looked at and discussed and I'll be posting them on a different thread for that purpose.

http://namawinelake.wordpress.com/2010/12/02/the-imfeu-bailout-deal-%e2%80%93-%e2%80%9cthis-way-to-the-gas-ladies-and-gentlemen%e2%80%9d/#comment-2034

"This way to the gas chamber, ladies and gentlemen"



There’s a book by a then young Polish man, Tadeusz Borowski, which deals with his own real-life experiences during the Second World War and in particular his detention in the Auschwitz camp in southern Poland where millions were gassed to death in chambers built to resemble a showering facility. Tadeusz was a worker in the camp and even though denied his freedom, his conditions were better than many because he wasn’t one of the groups targeted for murder by the Nazis. He was either a teenager or in his early 20s during this period and his story is brutally blunt and without the frame of reference or restraint that an older person would bring – it’s well worth reading. There is one episode I recall in which Tadeusz is playing soccer in the camp when a trainload of new arrivals comes in, some 3,000 men, women and children are led from the train towards the gas chambers. Unlike the popularised images of brutal guards using rifle butts and alsations snarling, the whole process is quite civilised. There is no rush as the 3,000 make their way past the makeshift soccer pitch towards the chambers. One middle-aged man, a professional and dignified man, drops his bundle and apologises profusely to the Nazi officer for the kerfuffle, no problem says the officer acknowledging the man and indeed waits patiently as the man gathers up his belongings and he tips his cap in a kindly way. Tadeusz has a throw-in of the ball and remarks to himself that between that throw-in and full-time, those 3,000 will be murdered. The book is called “This way to the gas, ladies and gentlemen”. And the present IMF/EU bailout deal which is presently before us for agreement instils a more general sense of that same dread that it will lead to our national ruin.

Yesterday the Minister for Finance published a statement (http://www.finance.gov.ie/viewdoc.asp?DocID=6602) and a set of documents (http://www.finance.gov.ie/viewdoc.asp?DocID=6601) which set out in some detail parts of the agreement reached over the past couple of weeks with the IMF and various parties from within the EU. I say “some parts” because it seems a secret side letter (http://www.irishtimes.com/newspaper/frontpage/2010/1202/1224284574676.html) dealing with the banks is not being published at present. It seems bizarre that the documents were published only after statements on the agreement in the Oireachtas where Opposition parties were forced to comment on documents unseen. Why weren’t the documents published on Monday last before the matter was dealt with in the Oireachtas? For interest, the PDF consolidated document was created at 1.51pm yesterday. And I am still at a loss as to why the letters at the top of the consolidated document are dated “[] December”.

It was of course predictable that Opposition parties might attack the bailout plan in the Oireachtas on Tuesday. And it must be said that the Taoiseach gave a robust defence in which he pointed out that 5.8% was less than the rates practically available to Ireland at the moment, that the State was a half year away from running out of the cash to fund day-to-day spending (including pensions, social welfare and public sector pay), that Greece was now seeking the same bailout terms as Ireland and that we need a functioning banking system. He even managed to get a few laughs when he responded to Sinn Fein’s speech and remarked at how ironic it was that just as Sinn Fein were coming round to the idea of the State that they still weren’t aware that the State needed to be funded (unfair yet funny nonetheless). But he deployed at least three tactics in dealing with the onslaught from the Opposition which are worth examining:

(a) He didn’t reveal all of the terms of the deal. In particular we don’t know what has been agreed with the ECB from whom Irish banks appear to have €90bn+ of emergency liquidity assistance. He didn’t reveal why the banks need further capitalisation at this stage. He deployed misdirection as far as I was concerned to try to focus the bailout on “Garda and nurses salaries” instead of what it is really about : the banks. The interest rates are just now becoming known though they are not included in the document set published yesterday.

(b) He challenged the Opposition to produce a better alternative to the unpublished agreement. In principle this was a fair tactic because it is very easy to knock a solution to a difficult crisis without proposing an alternative. It would have been fairer though if the Opposition knew what deal was being proposed.

(c) He specifically challenged the notion that has gained mainstream traction in the State supporting “burning bondholders” and default. The Taoiseach claimed that the Opposition regarded these options as “cost-free”. Again a fair challenge but it would have been fairer if he didn’t use the extreme of claiming that supporters of default say it is cost-free, a more accurate assessment is that they said it would cost less than the present course.

So having studied the consolidated document published yesterday, is there an alternative and would default cost less than the proposed agreement? Before starting it needs to be acknowledged that we do not have comprehensive facts on what has been agreed with the IMF/EU and in particular we do not know what is proposed in detail with the banks, including the European Central Bank.

[C. Flower]

Report from today's IT covers some of the obligations that the deal places on Ireland.



THE GOVERNMENT will have to account for itself in detailed quarterly reports setting out the economic, policy and legislative proposals it is adopting in return for the EU-International Monetary Fund bailout.
Draft documents setting out the arrangements were published yesterday by Minister for Finance Brian Lenihan in a surprise move before the end of the Dáil debate on the bailout. The documents commit the Government to providing all the information requested by the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). The Government is committed to consulting these bodies on any policies not consistent with the agreement.
In an interview with The Irish Times Mr Lenihan stressed last night he was in good health and able to do his job. He expressed the view Brian Cowen would lead Fianna Fáil into the forthcoming election.
Mr Lenihan said officials in his department were already working on the Finance Bill and he expected it would be ready by mid-January.
Mr Lenihan rejected the claim the interest rate being paid by Ireland for the bailout was too high and he said Greece was now looking for the same terms. He said there were different rates from the three funds. The European facility was 6.05 per cent, the commission 5.7 per cent and the IMF was also 5.7 per cent.
The draft memorandum, which will give legal effect to the rescue deal, runs to 40 pages. Included are letters of intent sent jointly by Mr Lenihan and governor of the Central Bank Patrick Honohan to the European authorities and the IMF.
In the letters, it is conceded the Government stands ready to implement further austerity measures beyond the €15 billion in the four-year plan, if the stringent quarterly targets set out by the EU-IMF in its three-year programme are not met.
The letter to IMF managing director Dominique Strauss-Kahn, states: “We stand ready to take any corrective actions that may become appropriate for this purpose as circumstances change. As is standard under fund-supported programmes, we will consult with the fund on the adoption of such actions.”
The targets set out in the documents include budget adjustments of €6 billion, €3.6 billion and €3.1 billion respectively in the next three budgets. A total of €6 billion in social welfare and public sector cuts, including pensions, will be required.
In detailed conditions for each quarter until the end of 2013, the memorandum specifies property taxes must be introduced in 2011 and the transfer of water service provision from local authorities to a water utility must be advanced before the last quarter of next year. Other changes include a Bill to increase the retirement age, measures to cut legal and medical costs, and significant cuts in social welfare payments.
There is a stipulation that very detailed monthly, quarterly, and weekly financial, banking and fiscal data be provided to the commission, the ECB and the IMF. In all, some 22 sets of data will be disclosed, encompassing almost all the information normally available only to the State. The data includes monthly updates on adherence to budget targets; quarterly data on the public service wage bill and employees; weekly information on the Government’s cash position; a weekly statement on the assets and liability of the Central Bank; and monthly financial stability indications by the Central Bank.
The Government has committed itself to “consider an appropriate adjustment” in the public sector wage bill, if the Croke Park agreement does not deliver.
By the end of next year, the Government will undertake an “independent assessment” of the electricity and gas sectors. When complete, the authorities will set targets for their possible privatisation. The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget.


This morning in the Dáil, Gilmore stated that Labour would not be bound by the agreement if elected. Worth noting that support for the Government is at 13% according to the Red C Poll published in tomorrow's Sun.

[PaddyJoe]

Great blog post from NamaWineLake. He has hit the nail exactly on the head. We are being nudged quietly to the trapdoor by our government and the EU. They must be delighted with the weather. Its a godsend for the people who want to distract us from what's going on under our noses.
Again any pretense of democracy has been abandoned with this secret side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes.

[C. Flower]

Great blog post from NamaWineLake. He has hit the nail exactly on the head. We are being nudged quietly to the trapdoor by our government and the EU. They must be delighted with the weather. Its a godsend for the people who want to distract us from what's going on under our noses.
Again any pretense of democracy has been abandoned with this secret side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes.

I feel utterly unbound by this "agreement" :D

[PaddyJoe]

I feel utterly unbound by this "agreement" :D

A agreement arrived at by people who can't even muster 15% support in the latest opinion poll. I don't see the slightest reason why any Irish person should think themselves bound by something like this.
No Dail vote, no proper debate, no legal test of its constitutionality, no referendum: this concedes much more control of our own affairs than the Lisbon referenda ever did:mad:

[C. Flower]

I don't feel that this is just an Irish issue, but the signs are going up.

http://s3.amazonaws.com/twitpic/photos/large/198271255.jpg?AWSAccessKeyId=0ZRYP5X5F6FSMBCCSE82&Expires=1291335831&Signature=eKSApPrSFupMBqAkisjSnpn7y%2FM%3D

[C. Flower]

The IMF has formally agreed the Irish loan package this morning (reported by Sky).
Germany is officially out of recession :)

[tea drinker]

The IMF has formally agreed the Irish loan package this morning (reported by Sky).
Germany is officially out of recession :)
Coincidence? :-)


Lenny:

This use of the NPRF has provoked the most bewildering criticism of all from parties who, having for years fundamentally disagreed with the very existence of the Fund, have now become its most ardent protectors. And on this point the arguments make absolutely no sense. Why would we borrow expensively to invest in our banks when we have money in a cash deposit earning a low rate of interest? And how on earth can we ask tax payers in other countries to contribute to a financial support package while we hold a sovereign wealth fund? We have a large problem with our banks which has forced us to seek this external assistance. In these circumstances, it is surely appropriate that our cash reserves should be deployed to help solve that problem.
What have the problems in the banks got to do with ANY taxpayers? What is this WE business? It's a problem for bankshareholders / investors and depositors (I am one). He might worry first about stealing money from Irish pension to pay for the bank failures. Has anyone been found guilty of fraud?
It's like some variation on incest, better to bone your own family - it feels so familiar :rolleyes:
I'd prefer my deposits in BOI to be reduced by 50% than have 100% of this.
Who are the depositors? how come the Nuclear option guaruntee is so expensive? Have the deposits been overestimated in order to make the loan book better? Are the banks still shuffling billions from to the other like a guy with overdrawn credit cards?

[C. Flower]

The obvious solution would have been to use the NPRF for day to day expenditure while we quickly sliced out non-productive waste from our spending.

The IMF, as NAMAwinelake said, is with us to make sure that banks are paid and to avail of our vulnerability to have our public assets sold off.

[C. Flower]

IMF Press Release

http://www.imf.org/external/np/sec/pr/2010/pr10496.htm


IMF Executive Board Approves €22.5 Billion Extended Arrangement for Ireland

Press Release No. 10/496
December 16, 2010
The Executive Board of the International Monetary Fund (IMF) today approved a three-year Extended Fund Facility (http://www.politicalworld.org/external/np/exr/facts/eff.htm) (EFF) arrangement for Ireland to support the authorities’ economic adjustment and financial stabilization program. The Fund arrangement amounts to SDR 19.5 billion (about €22.5 billion; or US$30.1 billion), or the equivalent of about 2,322 percent of Ireland’s IMF quota. The arrangement forms a critical part of a substantial financing package amounting to €85 billion (about US$113 billion) from Ireland’s European partners through the European Financial Stabilization Mechanism (EFSM) and European Financial Stability Facility (EFSF), and bilateral loans from the UK, Sweden and Denmark, and Ireland’s own contributions.
The EFSM, EFSF and bilateral European lenders will provide €45 billion on similar maturities as the IMF’s EFF (http://www.politicalworld.org/external/np/sec/pr/2010/pr10462.htm). The Irish authorities will round out the total financing package through a contribution amounting to €17.5 billion from the nation’s cash reserves and liquid assets. European Central Bank liquidity support is also an essential component of the overall economic and financial program.
“The Irish authorities have designed an ambitious policy package to address the economic crisis facing the nation,” IMF Managing Director Dominique Strauss-Kahn stated. “It is a multi-year program targeting vulnerabilities in the banking system and aiming to restore prospects for growth—without which there can be no enduring solution to the crisis. The authorities designed a program with fairness in mind so that the burden of economic and financial adjustment is shared across all levels of society, with the most vulnerable groups the most protected.”
Exceptional financial assistance from the IMF and Europe will support the authorities’ efforts by providing sufficient financial resources to allow time for Ireland to restore market confidence and foster renewed growth and job creation, Mr. Strauss-Kahn noted.
The extended arrangement under the EFF for Ireland was approved under the Fund's exceptional access policy and fast-track Emergency Financing Mechanism procedures. As a result of the IMF Executive Board action, SDR 5 billion (about €5.8 billion) is immediately available to Ireland from the IMF.
Following the Executive Board’s action on Ireland, Mr. Strauss-Kahn, who also serves as Chairman of the Board, stated:
“The Irish economy faces a crisis without parallel in its recent history. The new program, building on the authorities’ recent efforts, steps up the pace and range of measures to address financial and fiscal stability concerns. A clear and realistic package of policies is set in a multi-year policy framework to restore Ireland’s banking system to health, place its public finances on a sound footing, and reclaim growth.
“The strategy for the financial system rests on twin pillars: deleveraging and reorganization; and ample capitalization. In addition, structural measures—a special resolution scheme for deposit-taking institutions and a further strengthening of the supervisory system—will enhance stability.
“The National Recovery Plan forms the basis for the 2011 budget and also details fiscal consolidation measures through 2014. The fiscal plan makes pragmatic choices, and maintains Ireland's due regard to a social safety net. The process of budget formation will be reformed to safeguard these gains.
“To restore strong, sustainable growth the program includes a strategy to remove potential structural impediments to enhancing competitiveness and creating new employment opportunities.
“A financing package of €85 billion (about US$113 billion) will support the comprehensive set of policies. Of this, the European Union and bilateral European lenders have pledged a total of €45 billion (about US$60 billion). The Irish authorities are to contribute €17.5 billion from the nation’s cash reserves and other liquid assets. The IMF contribution would be through a three-year SDR 19.5 billion (about €22.5 billion; or US$30.1 billion) loan, representing about 2,322 percent of quota, under the Extended Fund Facility (EFF). The EFF ensures a realistic repayment schedule, given the time needed to complete an orderly overhaul of the banking system and broader structural reforms”.
ANNEX
Recent Economic Developments
Despite the authorities’ efforts to implement bold economic policies in a difficult environment, Ireland has faced intense economic and financial pressures in recent months. At the root of its problems is a critically-weakened banking sector that has yet to be restored to health and stands at the center of a negative dynamic that dampens economic recovery while creating further significant fiscal challenges.
The authorities have taken major measures to strengthen the banking sector but vulnerabilities remain acute. The National Asset Management Agency is taking over banks’ land and property development assets; substantial capital has been injected, and sovereign guarantees have sought to reassure banks’ creditors. However, market pressures continue to pose challenges to large rollover needs, threatening banking system solvency and placing a severe burden on the sovereign’s finances. Layered on these real difficulties is the fall in domestic consumer and international investor confidence, with implications for growth and the cost of funding.
Moving early, the Irish authorities implemented sizeable fiscal consolidation over 2009–10. However, public finances were weighed down by a deep structural deficit, commitments to bank support, and weak growth. Public debt is, as a result, projected to end up close to 100 percent of GDP by end-2010. To help stabilize public debt, the authorities’ fiscal consolidation plan includes another €15 billion in consolidation measures over 2011–14, equivalent to 9 percent of GDP.
The authorities’ program aims to restore Ireland’s banking system to health and put the nation’s public finances on a sound footing, thus stimulating renewed confidence and a return to strong, sustained growth.
Program Summary
The authorities’ program focuses on the following priority areas:
• Fundamental restructuring of the banking sector will entail extensive deleveraging and reorganization. While this process will take time, it will start immediately and will move with deliberate speed. A smaller, more robust, and better-capitalized banking system will emerge to serve the needs of the Irish economy. To support the banking sector’s transition, banks will maintain higher capital adequacy standards to minimize market perceptions of weakness, and thereby achieve improved access to funding.
• The National Recovery Plan will form the basis of 2011 and subsequent budgets. The Plan strikes an appropriate balance between consolidation to achieve fiscal sustainability while mitigating adverse effects on growth and protecting the most vulnerable.
• Structural impediments to business environment that might underpin competitiveness in the years ahead, supporting growth, will be addressed under the program.
To achieve the program objective a multifaceted approach will be undertaken:
• A fundamentally restructured banking system that downsizes the banking sector (while addressing market perceptions of weak bank capital positions).
• Safeguarding the fiscal consolidation plan to lower the deficit and debt over the medium term.
• Institutional reform to improve the shock-absorbing capacity of the economy: a special resolution regime for banks, stronger supervision, and greater budgetary oversight.
• Further reforms to improve the economy’s efficiency to enhance growth potential.
• Large external financial assistance to manage the transition and reestablish much-needed policy credibility.
The stability thus generated—along with improved competitiveness and increased credit flows—would underpin a return of confidence, and, hence, brighter employment and growth prospects.
Background
Ireland, which became of member of the IMF on August 8, 1957, has an IMF quota of SDR 838.40 million.
For additional information on the IMF and Ireland, see: http://www.imf.org/external/country/IRL/index.htm (http://www.politicalworld.org/external/country/IRL/index.htm)

[C. Flower]

Not sure if this letter has emerged yet. Also, I haven't seen the IMF Treaty amendment proposed wording....

[NAMAwinelake]

Just to be clear on the side letter, reference to it first occured in the Irish Times (link below) which said "The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget."

We don't know how the banks will deleverage up to €90bn of loans and what effect that would have on the economy, not to mention the terms of the ECB's emergency assistance programme which was signposted as ending in Jan 2011, nor how NAMA will raise €5bn of funding, nor IMF estimates of losses in the banks or the outlooks for the banks which are getting capital at 6% (does that mean that our mortgages are set to rise to 8% so that the banks make a profit?). There is neither a credible starting position for the banks (non-NAMA and off-balance sheet losses) nor a published plan for restructuring the sector nor evidence that the effect of the restructure might have on the wider economy.

http://www.irishtimes.com/newspaper/frontpage/2010/1202/1224284574676.html

[C. Flower]

Just to be clear on the side letter, reference to it first occured in the Irish Times (link below) which said "The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget."

We don't know how the banks will deleverage up to €90bn of loans and what effect that would have on the economy, not to mention the terms of the ECB's emergency assistance programme which was signposted as ending in Jan 2011, nor how NAMA will raise €5bn of funding, nor IMF estimates of losses in the banks or the outlooks for the banks which are getting capital at 6% (does that mean that our mortgages are set to rise to 8% so that the banks make a profit?). There is neither a credible starting position for the banks (non-NAMA and off-balance sheet losses) nor a published plan for restructuring the sector nor evidence that the effect of the restructure might have on the wider economy.

http://www.irishtimes.com/newspaper/frontpage/2010/1202/1224284574676.html

The ECB "Opinion" seems to be that the Credit Institutions (Stabilisation) Act will not provide for the kind of wind up of the Irish banking system that the IMF/EU wants to see.

My impression from an interview I heard with Honohan is that the idea is that we should heftily recapitalise the banks (although there is a question over liquidity) and have a firesale of them. I see no concern for having a functioning bank system that can sustain the Irish economy.

On the other hand the ECB is saying that Lenihan is trying to keep Ango Irish and a building society afloat, via CISB provisions, contrary to their understanding with him.

Is it possible that the "secret letter" was not published because Lenihan was planning to ignore aspects of it ?

http://www.ecb.int/ecb/legal/pdf/en_con_2010_92_f.pdf

I would seriously wonder at this stage what Lenihan wants to cover up inside the Anglo Irish shell.

[Captain Con O'Sullivan]

To be honest I'd say Briano can sign whatever document he likes with a 'secret' element to it.

Gives the incoming regime an opportunity to turn around and declare that it was unconstitutional and a great opening for a renegotiation.

I'm pretty sure that neither of the bankers rentboys at the head of the Irish government nor the IMF want to see that side letter made public.

Cracking lever there for a reopening of talks.

[C. Flower]

Just to be clear on the side letter, reference to it first occured in the Irish Times (link below) which said "The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget."

We don't know how the banks will deleverage up to €90bn of loans and what effect that would have on the economy, not to mention the terms of the ECB's emergency assistance programme which was signposted as ending in Jan 2011, nor how NAMA will raise €5bn of funding, nor IMF estimates of losses in the banks or the outlooks for the banks which are getting capital at 6% (does that mean that our mortgages are set to rise to 8% so that the banks make a profit?). There is neither a credible starting position for the banks (non-NAMA and off-balance sheet losses) nor a published plan for restructuring the sector nor evidence that the effect of the restructure might have on the wider economy.

http://www.irishtimes.com/newspaper/frontpage/2010/1202/1224284574676.html

Your own excellent blog is very helpful in pointing to the problems with the the EU/IMF agreement and the ECB Opinion on the CIS Bill is very negative. There is no real agreement in the EU over what to do about the crisis. I can see all this coming to a horrible crunch in a few weeks.

http://namawinelake.wordpress.com/2010/12/19/that-was-the-week-that-was-%e2%80%93-the-imf-bailout-and-the-credit-institutions-stabilisation-bill/

[Captain Con O'Sullivan]

So if the details of the side letter were to be published in the Budget- what were they? We've had the Budget.

Unless of course the side-letter deals with the grab for extra powers that Mrs FF is pretending up in the Aras is keeping her awake at night?

Interesting manouver- political representative attempts to sign contract with secret clauses on behalf of the Irish people.

Great grounds for unwinding the whole thing I'd have thought. No-one could blame us for rejecting or overturning a proposed agreement in which the details have not been released.

Gives us a get-out narrative anyway. Would that even be constitutional? Since when do Irish politicians have authority to sign up to finance deals with secret clauses?

[ang]

It also appears that the IMF are insisting on different accountancy firms and auditors for the next lot of banking stress tests coming up, they do not want companies who have previously been involved with these banks to play a role.

Where will we look for the new team ?


Irish accountancy firms and auditors who've worked with the Irish banks during the past three years have been barred from doing key stress tests on behalf of the Central Bank and the IMF.

The IMF has instructed the Central Bank and Financial Regulator to do a new "diagnostic study'' of bank balance sheets to identify how adequate current capital levels are.

But according to the IMF report on Ireland's rescue package -- published yesterday -- this study "should not be conducted by an audit or consultancy firm that has provided such services to the banks in the last three years''.

http://www.independent.ie/business/irish/imf-puts-bar-on-auditors-that-did-the-banks-books-number-of-firms-prevented-from-working-on-new-stress-tests-to-get-fresh-independent-view-of-situation-2465638.html

[Captain Con O'Sullivan]

Haw haw ... another stress test. Didn't Irish banks pass with flying colours on the last one based on the criteria laid down by the ECB?

And within weeks start sticking the hand out again for public money? I'd love to see the stress test results for Deutsche Bank and Unicredito in Italy. They don't need accountants- they may have to fly in Rolf Harris to do a rough sketch and hope that'll do!

[PaddyJoe]

Once again thestory.ie is making all the headlines today. Good work by Gavin Sheridan

The European Central Bank has refused to release a letter sent to former Finance Minister Brian Lenihan in November 2010, stating that the release of the letter’s contents would “undermine the protection of the public interest as regards the monetary policy of the Union and as regards the stability of the financial system in a Member State”. I submitted a request to the ECB for all letters sent to Brian Lenihan or his office in November 2010.

In April last year the contents of an interview between Dan O’Brien of the Irish Times and the late Brian Lenihan were published, in which Lenihan said Ireland had been “bounced” into the EU/IMF bailout and that the first hard indication he had of the ECB wanting Ireland to accept a bailout came in a letter he received from the head of the bank, Jean-Claude Trichet, on November 12. In the letter, according to Mr Lenihan, Mr Trichet “raised the question about whether Ireland would be participating in a programme at that stage”.
http://thestory.ie/

[C. Flower]

Just to be clear on the side letter, reference to it first occured in the Irish Times (link below) which said "The Government has withheld from publication a side letter agreed with the EU and IMF outlining confidential measures for the banks and tax changes to be included in Tuesday’s budget."

We don't know how the banks will deleverage up to €90bn of loans and what effect that would have on the economy, not to mention the terms of the ECB's emergency assistance programme which was signposted as ending in Jan 2011, nor how NAMA will raise €5bn of funding, nor IMF estimates of losses in the banks or the outlooks for the banks which are getting capital at 6% (does that mean that our mortgages are set to rise to 8% so that the banks make a profit?). There is neither a credible starting position for the banks (non-NAMA and off-balance sheet losses) nor a published plan for restructuring the sector nor evidence that the effect of the restructure might have on the wider economy.

http://www.irishtimes.com/newspaper/frontpage/2010/1202/1224284574676.html


Well, an interesting development that you've written about in your blog today - Gavin of "The Story" has done the necessary thing, and requested the ECB to release the letter. The reply was that if they released it, the sky would fall in, so they will not.

The letter was sent by the ECB to Lenihan at a stage at which he was still trying to avoid the burden of unguaranteed debt falling on the taxpayer, and trying to do a separate deal with the EU/IMF on domestic, rather than bank debt.

http://namawinelake.wordpress.com/2012/01/09/ecb-refuses-to-hand-over-november-2010-threat-letter-sent-to-brian-lenihan/

The decision is going to be appealed I am delighted to read and will be emailing the ECB with my own support for its release.

[DCon]

Well, an interesting development that you've written about in your blog today - Gavin of "The Story" has done the necessary thing, and requested the ECB to release the letter. The reply was that if they released it, the sky would fall in, so they will not.

The letter was sent by the ECB to Lenihan at a stage at which he was still trying to avoid the burden of unguaranteed debt falling on the taxpayer, and trying to do a separate deal with the EU/IMF on domestic, rather than bank debt.

http://namawinelake.wordpress.com/2012/01/09/ecb-refuses-to-hand-over-november-2010-threat-letter-sent-to-brian-lenihan/

The decision is going to be appealed I am delighted to read and will be emailing the ECB with my own support for its release.


Could a fair minded MEP request same, and then release it?

[C. Flower]

Could a fair minded MEP request same, and then release it?


I don't know if MEPs have any special authority in relation to the ECB.

It would seem like a very good idea for them to ask for it, anyway.

Here's the post in The Story, with the ECB reply in full.

http://thestory.ie/2012/01/09/ecb-refuses-access-to-trichetlenihan-bailout-letter/

[TotalMayhem]

The letter’s contents would undermine the protection of the public interest the debt collectors' a$$es from a pitchfork wielding public.

[C. Flower]

Anyone want to have a shot at their own version of what the letter says ?

[PaddyJoe]

Anyone want to have a shot at their own version of what the letter says ?
Maybe it said:

....“we don’t want you to default on these payments, it is your decision ultimately but a bomb will go off; and the bomb will go off in Dublin and not in Frankfurt.”
;)

[Captain Con O'Sullivan]

The ECB is just a front for investment banks, remember. And therefore will happily spend its time ensuring that its paymasters, the bondholders, get paid no matter what happens.

[ang]

Once again thestory.ie is making all the headlines today. Good work by Gavin Sheridan

http://thestory.ie/

Karl Whelan raises the spectre of that letter again -


By announcing it is only willing to purchase Spanish and Italian government bonds if these governments apply for funding from the EFSF bailout fund, the ECB is now exerting pressure on these countries to sign full bailout agreements. Officially, Mario Draghi’s position on how the ECB engages with governments (as explained at his June press conference) is :-

"I do not view it as the ECB’s task to push governments into doing something. It is really their own decision as to whether they want to access the EFSF or not".

In reality, the record of the ECB’s role in Ireland’s bailout application (admittedly at the time under the leadership of Draghi’s predecessor) suggests it is an organization that is not at all averse to pushing governments into bailout funds. As the facts below illustrate, this record also doesn’t provide encouragement that the ECB will act in an open and transparent manner when doing so.

http://www.forbes.com/sites/karlwhelan/2012/08/17/the-ecbs-secret-letter-to-ireland-some-questions/

[C. Flower]

Karl Whelan raises the spectre of that letter again -

http://www.forbes.com/sites/karlwhelan/2012/08/17/the-ecbs-secret-letter-to-ireland-some-questions/

We had a couple of threads going at that time in which it was clear that there was coertion.

Lenihan was trying his damndest to get a loan to cover everything but the banks.

Lenihan had already made sure that much of the bondholder debt had been paid.

I'm struggling to imaging what the ECB might have said that would be so deeply embarrassing to them, if made public.



http://www.politicalworld.org/showthread.php?t=5402&highlight=Ireland+Bailout

[PaddyJoe]

Karl Whelan raises the spectre of that letter again -



http://www.forbes.com/sites/karlwhelan/2012/08/17/the-ecbs-secret-letter-to-ireland-some-questions/

Richard Curran of the SBP tried to FOI these letters last year but was refused by the DOF.

[MPB]

People need to ask the question.

Did we join the EU or the ECB?

I did,nt vote for Goldman Sachs in the last election. But then again I did,nt vote for FG either.

However FG stood for election and were democratically elected by the people of Ireland.

The fact that FG would prefer to be run by Goldman Sachs is their problem and one I intend to highlight at every opportunity.

[C. Flower]

To the government . The DFA. For the following reasons:

(a) access to the record could reasonably be expected to have a serious adverse affect on the financial interests of the State or on the ability of the Government to manage the national economy,

I have a fairly good imagination, but am unable to envisage what kind of horrors this letter must contain, for it to represent such a threat.

[MPB]

Are elections necessary anymore?

It,s obviously a waste of public money, when the ECB are able to dictate the policy of sovereign states.

[MPB]

To be more exact.

"Having reviewed your request, I consider that the records you have requested are covered by Section 31 of the Freedom of Information Act 1997 (extract copied ,below, *for ease of reference)* and are, therefore, exempt from disclosure under the Act as they would undermine the protection of the financial, monetary and economic policy of Ireland as a member State of the European Union.

I too am trying to imagine but clearly the reasons are serious in some way

It,s a pity they did,nt apply that line of thinking to the blanket bank guarantee.

[C. Flower]

To be more exact.

"Having reviewed your request, I consider that the records you have requested are covered by Section 31 of the Freedom of Information Act 1997 (extract copied ,below, *for ease of reference)* and are, therefore, exempt from disclosure under the Act as they would undermine the protection of the financial, monetary and economic policy of Ireland as a member State of the European Union.

I too am trying to imagine but clearly the reasons are serious in some way

Possible reasons...
...the ECB used unparliamentary language that would be politically embarrassing
...the ECB presented data that contradicted the publicly stated position, and concealed it to prevent a spectacular run on the euro and/or the Irish banks
...the ECB said "sorry for your troubles, it was all our fault" (lol!)

Any others ?

[Greengoddess]

I am sorry guys, but I may have out this on the wrong thread. I am on holiday in Iceland at the moment. Relying on wi fi in hotels etc. My FOI was on the following:

I refer to your request of 19 July, 2012 for access to records concerning “the five submissions made by the Government to the European Council during the negotiations for the fiscal compact treaty”.

This is also intriguing.

[C. Flower]

I am sorry guys, but I may have out this on the wrong thread. I am on holiday in Iceland at the moment. Relying on wi fi in hotels etc. My FOI was on the following:

I refer to your request of 19 July, 2012 for access to records concerning “the five submissions made by the Government to the European Council during the negotiations for the fiscal compact treaty”.

This is also intriguing.

I've moved the rest of your posts on this to the thread on the Fiscal Compact Treaty negotiations.

http://www.politicalworld.org/showthread.php?t=11247&highlight=iceland

[DCon]

Rabitte is lying surely that he hasn't heard about the ECB's letter ?

Noonan says the "top secret" letter should be released by the Department he controls



Finance Minister Michael Noonan has said a secret "threatening" letter from the European Central Bank to his predecessor Brian Lenihan, which forced Ireland into the troika bailout in 2010, should now be released.

The letter has to date remained top secret and both the Department of Finance and the ECB have repeatedly refused to make it public.


Speaking exclusively to the Sunday Independent yesterday, Mr Noonan said that he had seen the "very direct" letter which left Mr Lenihan with "little or no option" but to admit defeat and lead Ireland into the €85bn troika programme.

It is now beyond doubt that Mr Lenihan was threatened directly by Mr Trichet, and that Ireland was bounced into the troika programme by unelected officials at the ECB.

Mr Noonan said he had no authority to order the release of the letter, given the decision of the Freedom of Information unit in his department to withhold it.

http://www.independent.ie/national-news/michael-noonan-ecb-threat-letter-will-be-released-3210209.html

[C. Flower]

He has said it "should be made available to whatever Banking Inquiry is established by the Government in the coming months." Still not necessarily public.

"Mr. Noonan said the implication was always there that the emergency liquidity extended to Ireland's banks would be pulled if any move was made on the bondholders unilaterally."

Draghi of the ECB claimed the letter was "a strictly confidential communication between the ECB President and the Irish Minister for Finance and concerns measures addressing the extraordinarily severe and difficult situation of the Irish financial sector."

The letter was a side letter to the Memorandum and Articles was it not?

What exactly is its legal status, I wonder ? If the Irish Government signed off on it, then surely we have a right to see it ?

[PaddyJoe]

Noonan has kicked that one nicely to touch.

should be made available to whatever Banking Inquiry is established by the Government in the coming months
Yes, Minister.

[Dr. FIVE]

Gurdgiev - what Minister Noonan's latest conversion tells us about the State

http://trueeconomics.blogspot.ie/2012/08/2682012-ecb-letter-what-minister.html

[C. Flower]

Gurdgiev - what Minister Noonan's latest conversion tells us about the State

http://trueeconomics.blogspot.ie/2012/08/2682012-ecb-letter-what-minister.html

A useful article. Interesting to see the ECB letter to Italy.

The letter to Draghi in Italy is peremptory in tone and dictates to Italy a set of right wing economic nostrums that have demonstrably done horrible damage when implemented in Greece.

The Irish letter reputedly concerns the banks, so is different in content.

Noonan is attempting to hide behind the Freedom of Information Act to withhold the letter. Gurdgiev thinks he has the power to publish it if he wants to.

http://trueeconomics.blogspot.ie/2012/08/2682012-ecb-letter-what-minister.html


The FoI Act is about access by individuals to Government information. It does not tell the Minister what he can or cannot make public.

There is a tradition of Cabinet confidentiality, otherwise, there is very little that should be concealed from the public.

It is shocking, looking at Lenihan's diary, to see the scores of meetings blacked out, as unfit for public view.

[DCon]

It is shocking, looking at Lenihan's diary, to see the scores of meetings blacked out, as unfit for public view.

If he was meeting his personal Developer friends, and the Developer friends of his party, I am sure he would not want this to be known

Especially when he was pushing through NAMA legislation to ensure their finacial lobgevity

[Greengoddess]

If he was meeting his personal Developer friends, and the Developer friends of his party, I am sure he would not want this to be known

Especially when he was pushing through NAMA legislation to ensure their finacial lobgevity
Then there were Mr Cardiffs meetings with stockbrokers. Why was he meeting them anyway?

[Captain Con O'Sullivan]

Cardiff was Lenihan's winged monkey- and for the specific attention of Biffo on this forum, no I am not interested in the highly theoretical nonsense put about about the independence of senior civil servants in Ireland. That horse bolted long ago.

[DCon]

from the Journal


The Department’s response cites three provisions under Ireland’s Freedom of Information Act, 1997 which allow requests to be refused.

In summary, they are:

Section 24(2)(e) – This allows requests to be refused if “access to it could reasonably be expected to affect adversely” the security, defence and international relations on the state; this applies to communication sent in confidence to and from international bodies like the EU;
Section 26(1)(a) – This allows requests to be refused if information within it was sent “on the understanding that it would be treated by it as confidential” and if its release would probably prejudice the communication of similar information in future;
Section 31(1)(a) – This allows requests to be refused if its publication “could reasonably be expected to have a serious adverse affect on the financial interests of the State or on the ability of the Government to manage the national economy”.


http://www.thejournal.ie/department-of-finance-foi-ecb-letters-573104-Aug2012/

[C. Flower]

from the Journal

http://www.thejournal.ie/department-of-finance-foi-ecb-letters-573104-Aug2012/

The Government can refuse requests from the public.

The Minister, on the other hand, can publish it if he likes.

Given that the ECB is opposed to releasing it, it would require some independence and bottle on the part of Noonan to publish.

[Dr. FIVE]

Given that the ECB is opposed to releasing it, it would require some independence and bottle on the part of Noonan to publish.

Actually being on our side would help also

[DCon]

The Government can refuse requests from the public.

The Minister, on the other hand, can publish it if he likes.

Given that the ECB is opposed to releasing it, it would require some independence and bottle on the part of Noonan to publish.

bottle and FG Minister are rarely seen together

Especially when dealing with Europe where Enda seems happy to be patted and have his head rubbed

The letter must be damning to the ECB or else FG would be only too happy to condemn FF with it

As a reminder


The European Central Bank has refused to release a letter sent to former Finance Minister Brian Lenihan in November 2010, stating that the release of the letter’s contents would “undermine the protection of the public interest as regards the monetary policy of the Union and as regards the stability of the financial system in a Member State”. I submitted a request to the ECB for all letters sent to Brian Lenihan or his office in November 2010.

http://thestory.ie/2012/01/09/ecb-refuses-access-to-trichetlenihan-bailout-letter/

[disability student]

Blog from Constain worth reading:http://trueeconomics.blogspot.ie/

We can only speculate as to Minister Noonan's motives for promising, at last, to publish this letter. My suspicion is two-fold:

1.
Nothing penetrates the skulls of Irish establishment other than bad publicity in international press. Frankly put, years of criticising Governments policies have taught me several lessons. One of them is that an article in the Irish Times causes an 'outrage' and 'indignant' denials. An article in the likes of Forbes or Wall Street Journal or FT causes real 'concerns'. Ireland's elites are incapable of reassessing their adopted positions (on policy or transparency or anything else) unless their silence can damage their standing with the MNCs and within international community.

2.
We might be getting a pre-management of what is likely to be a fizzling-out of the Government efforts to deliver on the 'seismic' June 29 EU summit commitment 'to re-examine' Irish banks bailouts.

The above are speculative arguments, solely to raise some questions, but the change in Minister Noonan's rhetoric is indeed rather dramatic.

Italy received a similar letter and it was leaked to the press back in August 2011 (see here). The world didn't end and Italian economy did not collapse. ATMs still function. The ECB sent a similar (in nature) letter to Spain, and that letter remains undisclosed to the public. Minister Noonan could, in my view, make the letter fully public at any moment in time by simply ordering it to be published. All that stands between Minister Noonan's stated intention of publishing the letter and the actual publication of the letter is... err... Minister Noonan's will.

As an aid to securing Ireland's future, it is relevant only in so far as it raises real questions relating to the competence of our permanent 'elite' - the Government advisers and the senior civil servants.


The alleged threat contained in the ECB letter is that the ECB were to turn off the liquidity taps to Irish banking system because imposing haircuts on banks bondholders would have risked a full contagion from Irish banks to the Euro system or its financial system at large. Suppose this is so. Surely, turning off the liquidity tap in such a case would have risked a full-blown and immediate collapse of the entire Irish banking system (as opposed to the partial insolvency triggered in some banks by bondholders actions) - the very same system that is, allegedly, so vital to the European banking system that even a handful of disgruntled bondholders relating to Irish banks could trigger a run on the European banking.


This is (a) highly alogical, and (b) unlikely to have passed the ECB council vote.

Worse than that: such a threat would have forced Ireland to exit the Euro system and monetize the banking system with own currency - an event that would have threatened much more than just the stability of the Euro area banking system, but the existence of the Euro as a currency.

Thus, if the threat contained in the letter is that of the liquidity starvation, such a threat could not have been credible when it was made. Which implies that either the letter contains some other threat, or that the Government at the time was simply out of its depth in dealing with the crisis.Setting aside, for now, the possibility of the former, the latter, if true raises another set of questions: Where were the Government advisers (especially the ones who are today still in the position of considerable power and authority)? Where were the senior civil servants (pretty much all of whom are still in the positions of considerable power and authority)?

You see, incompetence of the Government ends with the Government replacement by the voters. Politicians, in the end are accountable.

Incompetence of the permanent elite (senior civil servants and advisers in charge of steering the Minister response) continues as long as they remain in the positions of authority and then, beyond, into their handsomely rewarded retirement. The former aspect of the letter is stuff for historians, the latter is for us.

[DCon]

Noonan says, "well FF did not release it either"


Meanwhile, Minister Noonan said that Fianna Fáil had plenty of opportunities to publish a letter from former ECB president Jean-Claude Trichet when it was in Government.

He said that the Government has decided that all documents will be provided when an investigation into the banking collapse is carried out.

Mr Doherty called for the immediate release of a letter from the ECB to former finance minister Brian Lenihan, which reportedly left Ireland with no choice but to accept a bailout.

http://www.rte.ie/news/2012/0827/minister-noonan-says-no-property-tax-detail.html

[Dr. FIVE]

http://www.businesspost.ie/#!story/Home/News/COMMENT%3A+The+ECB+letters+up+Noonan%27s+sleeve/id/19410615-5218-503b-9fd2-e2ff39948605


However there is confusion, too , about timing. The FOI data released to us and other media said that there was a letter sent from Trichet to Brian Lenihan on November 4th, another on November 18th and another on the 19th. Minister Noonan's comments reference the one of the 19th. However at this stage the die was pretty much cast - as Central Bank governor Patrick Honohan had given his famous Morning Ireland interview on the 18th. By the 21st, Lenihan had formally requested a bailout. It is possible that the letter of the 19th was designed to push the government finally over the line to a full bailout, I suppose. Remember there had been some talk that we would receive cash just for the banks, not the exchequer.

To complicate matters further, interviews given by Lenihan referred to correspondence around November 12th from Trichet as being crucial in the decision to go for a bailout. However the FOI data make no reference to any letter between the 4th and the 18th.

Perhaps there is no importance to this and Lenihan was, in fact, referring to the letter sent on November 4th. By this state Deauville was over, the markets were in chaos and the debate about Ireland was well and truly on. Or was there some other communication on the 12th, perhaps by phone or email which was not strictly "a letter?"

[disability student]

Bet that verbal thug politician have no intention of releasing that letter whatsoever. Why was he bringing it up even though ECB was/is against it?

Was he playing for more time or create a distraction to fill in column inches of any paper? Remind you that decision would have to be made this October re debt write off or what or deferred debts?

Tell me which is more important .. September 2008 or November 2010? I would regard September 2008 was critically important than November'10.

[MPB]

The simple fact is that many of us have been saying for 2 years that the actions of the ECB/EU in forcing Ireland to take on the debt of private Banks, by threatenining to refuse liquidity to the Irish banking system was an illegal act.

Of course until the equally slow to cop,but far more important commentators like Karl Whelan and Colm Mc Carthy started to point it out, the Irish Govt was quite content to pay those private bank debts with our taxes, wages, jobs and services.

FG and Noonan have been every bit as culpable in trying to protect higher civil service and politicians pay and pensions, at our expense.

This letter has existed for 2 years and the only reason it was not published was to preserve the staus of senior civil servants, Bankers, consultants, law firms, auditors, regulators, central bankers and politicians.

Until we are rid of all, this country will remain in the mire, financially and morally.

[PaddyJoe]

Looks like Stephen Collins has had an official briefing on the letters between Trichet and Lenihan. About time a trusted journalist set the record straight;)

Three critical letters were dispatched by Mr Trichet to Mr Lenihan in the run-up to the bailout.

They were sent on October 15th, November 4th and November 19th, 2010. It also appears likely that an email or fax reinforcing the message was sent to Mr Lenihan on November 12th, prompting his conversation with Mr Trichet.

The Department of Finance made reference to the letters in response to a freedom of information request by The Irish Times.

The October 15th letter spelled out the ECB’s worries about the rapid increase over the previous few weeks in the funding it was providing to the Irish banking system. Mr Trichet pointed to the extraordinarily large provision of liquidity by the euro system to the Irish banks.

The letter pointed out that this liquidity was subject to rules about the provision of adequate collateral. It said that Ireland’s access to such funds could be limited or even terminated completely.

Mr Trichet also pointed out that there were worries among the members of the governing council of the ECB about the appropriateness of its exposure to the Irish banks.

In particular, the letter referred to the provision of emergency liquidity assistance by the Irish Central Bank and said the governing council would assess whether there was a need to impose specific conditions to protect the integrity of monetary policy.

Mr Trichet emphasised that the large provision by the ECB and the Irish Central Bank to Anglo Irish Bank could not be taken for granted as a long-term solution.

On November 4th, Mr Trichet wrote another letter to Mr Lenihan. He repeated many of the points made in the earlier letter about the massive exposure of the ECB to Irish bank debt.

He focused again on the concerns of the governing council of the ECB about its exposure to the Irish banking system for such enormous sums, and he repeated many of the points made in the earlier letter.

This time, however, he pointedly said that the ECB was monitoring the Irish government’s commitment to its four-year plan, still in preparation, and said that continuing ECB support was contingent on the plan being implemented.

On the same day, Mr Lenihan announced a targeted adjustment of €15 billion over four years, with €6 billion of that coming in 2011. The full detail of the four-year plan was to follow at the end of the month.

The decisive conversation with Mr Trichet followed on November 12th, and it is possible that this arose following a fax or email reinforcing the points made on November 4th.

In an interview with Irish Times economics editor Dan O’Brien, conducted after Fianna Fáil had lost power, Mr Lenihan was adamant that a communication from Mr Trichet had arrived on November 12th.

The final letter from Mr Trichet urging Mr Lenihan to accept the bailout was sent on November 19th. However, by that stage, the governor of the Irish Central Bank, Patrick Honohan, had publicly said a bailout was necessary.

The Trichet letter of November 19th urged Mr Lenihan and his government colleagues to accept the necessity for a bailout and agree to a programme with the troika.
http://www.irishtimes.com/newspaper/frontpage/2012/0901/1224323462647.html?utm_medium=twitter&utm_source=twitterfeed

[PaddyJoe]

Collins analysis:

ON THE morning of November 12th, 2010, the late Brian Lenihan rang the president of the European Central Bank (ECB) Jean-Claude Trichet to seek clarity about the contents of a letter that hinted strongly that funding for the Irish banking system could be at risk if Ireland did not enter a bailout programme.

In conversation, Trichet was far more blunt than he had been in a number of written communications. He told Lenihan quite simply that the ECB could no longer provide unconditional support for the Irish banks unless the government in Dublin accepted the need for a bailout.

At that stage the ECB had pumped €130 billion into the Irish banks and underwritten another €34 billion in emergency liquidity assistance from the Irish Central Bank to the country’s dead banks, Anglo Irish and Irish Nationwide.

Trichet told Lenihan the governing council of the ECB was becoming fearful that the whole European banking system was being put at risk by Ireland. Continued support would have to be conditional on Ireland entering a bailout programme.

It took another week for Lenihan and his colleagues to accept the reality that there was no alternative to a bailout, but the die was cast on November 12th.
http://www.irishtimes.com/newspaper/ireland/2012/0901/1224323462435.html?cmpid=morning-digest&utm_source=morning-digest&utm_medium=email&utm_campaign=digests

[MPB]

Collins analysis:

http://www.irishtimes.com/newspaper/ireland/2012/0901/1224323462435.html?cmpid=morning-digest&utm_source=morning-digest&utm_medium=email&utm_campaign=digests

The die was cast on Sept 29th 2008.

Here we are in Sept 2012 and we still don,t know what happened on the days leading up to, or the night of the Banking guarantee.

If Trichet was so concerned with saving the European Banking system and felt that pushing the Irish Sovereign into a bailout, how come the interest rate for this so called bailout was upwards of 6%.

It was not a bailout, it was reparations. It was a punishment.

The ECB is rotten to the core. It is stuffed full of corrupt carpetbaggers, doing the work of the criminals that permeate the worlds banking system.

[Dr. FIVE]

http://namawinelake.wordpress.com/2012/09/01/leaked-at-last-the-ecb-extortion-letters-to-brian-lenihan-in-octobernovember-2010/

[Dr. FIVE]

Good exchanges between, Karl W, NWL and Gavin Sheridan this afternoon

https://twitter.com/gavinsblog

[PaddyJoe]

Good exchanges between, Karl W, NWL and Gavin Sheridan this afternoon

https://twitter.com/gavinsblog
It looks like the usual Dept. sources briefed Collins. But did they get their story straight? Gavin Sheridan isn't convinced..

Gavin Sheridan ‏@gavinsblog
@WhelanKarl if Stephen's article is true then the ECB lied in an access to information request about a Nov 4 communication

[Dr. FIVE]

Goes to show where arse kissing and cheerleading will get you in journalism.
Safe pair of hands also, Collins wouldn't tell us anything he decided we shouldn't know

[PaddyJoe]

Goes to show where arse kissing and cheerleading will get you in journalism.
Safe pair of hands also, Collins wouldn't tell us anything he decided we shouldn't know

Just another example of the way that the IT and RTE get briefed when the government need to spin a story.
Seamless transition from the old regime.

[Dr. FIVE]

true true

[C. Flower]

http://namawinelake.wordpress.com/2012/09/01/leaked-at-last-the-ecb-extortion-letters-to-brian-lenihan-in-octobernovember-2010/

A soft leak, to take pressure for release off, and to take the freshness out of any future release of the letters, to create a possibly false narrative ?

Hard to see why the letters as reported by the IT should not have been released earlier.

[disability student]

The letters from Trichet were written in French as IT made no mention of it.

I don't trust Collin's story as it has the hallmarks of a whitewash. I rather see real evidence of these letters out in the open- print instead of seen these letters. Irish times paper have been long favored by successive govts as they were compromised by the govt.

Collin's article wasn't & isn't a full story as he was selective on what to write and what to omit & briefed by his editor etc. Take it as a pinch of salt as IT aren't to be trusted at all.

No mention of the bondholders, which would give credence that FG/FF/Lab had made their decision rather than the troika, on the payout of all bondholders -secured or otherwise.

It was curiously strange that they leaked it prior to payment of the bondholders today as it seems to be strategically planned?

[Dr. FIVE]

Gurdgiev on CNN shortly talking this

[C. Flower]

Gurdgiev on CNN shortly talking this

Did he have anything to add ?

I think our DS made a good point. There was no mention of a threat to Ireland if the bondholders weren't paid.

Was this not strongly suggested by the Government at the time, and the current Government ?

[DCon]

Trichet says do not publish Letters. Also says BIFFO and Lenny knew help was needed


Mr Trichet told CNN that the letters were "confidential at the moment they were sent". He added that Brian Cowen and Mr Lenihan knew they needed help before they sought a bailout in November 2010.

"I think that the overall sentiment of all the responsible persons in Ireland, those that were at the helm, was that they really were needing some help in terms of help of the IMF and other Europeans," Mr Trichet said in the interview which was aired yesterday.

http://www.independent.ie/business/irish/trichet-says-letters-to-lenihan-should-not-be-published-3220159.html

[Dr. FIVE]

Noel Whelan and Mammy there casually telling the JFK summer school they know about the "bullying" that went on prior to the bailout then they are prepared to let on at this juncture.

[Dr. FIVE]

http://anony.ws/i/2012/10/17/oIr2.png
http://anony.ws/i/2012/10/17/SF2wy.png

https://www.documentcloud.org/documents/470096-01b-2010-11-21-ie-minfin-to-ec-imf-ecb-formal.html

[C. Flower]

Noel Whelan and Mammy there casually telling the JFK summer school they know about the "bullying" that went on prior to the bailout then they are prepared to let on at this juncture.

I find it hard to imagine what is so awful, that we don't already know ?

Did they threaten to kill shoot Mammy's cat ?

[C. Flower]

Trichet says do not publish Letters. Also says BIFFO and Lenny knew help was needed



http://www.independent.ie/business/irish/trichet-says-letters-to-lenihan-should-not-be-published-3220159.html

Knew that help was needed, but did not want the banks tied in to the arrangement - pretty much as Spain does at the moment.

Historically, a lot of fudging had gone on around Irish banks - McCreery said they had often been allowed to operate insolvent in the past and in the 80s and early 90s borrowing for a house or business was not much easier than it is now - unless you were a crony or in public service. Lenihan probably still hoped that we could muddle along some how in the same way.

[Greengoddess]

Could we actually remember that, apart from the morality of the bullying, these people allowed themselves to be bullied?

[Captain Con O'Sullivan]

Mammy and co will do the bullying line when in fact GG is right in saying that it is very hard to bully a cabinet minister unless they want to be bullied. This will be the 'blame deflection' policy from the Rourkes/Lenihans. Sir Dead should have been buried under a tax rebate form and not a Tricolour.

Then again the Irish cabinet minister has no experience of how to say 'no' to business interests. That is what has the state in the situation it is now- captured by corporations, an offshore tax haven and sight has been lost as in many another country that business interests should serve the nation's economy and not the other way around.

Politicians don't care about such things as long as they are being fed by the business interests involved- and they are now in Ireland as elsewhere entirely the captives of those offshore business interests.

They have become servants of the corporation rather than the nation- Facebook, Google, Pfizer, Diageo all have de facto 'first class citizenship' and a veto over regulation and policies in Ireland. If you don't believe me keep an eye on the next Company Law Act to reach the Oireachtas. It was actually written by lawyers for IBEC and the Institute of Directors.

Keep remembering on this subject a passage from Roy Jenkin's 'Churchill' in which he mentioned that Churchill as Home Office Minister in his first meeting after WW1 was 'confronted by businessmen who looked as if they had done well out of the war'.

I think that conveyed the attitude that was properly there towards the 'business interest'- at the time merchants were sent to the back door of middle class houses and certainly not allowed to ponce in and out of Downing Street like some kind of faux celebrities as they are these days.

There was a lot to be said for that old attitude.

[disability student]

Mammy and co will do the bullying line when in fact GG is right in saying that it is very hard to bully a cabinet minister unless they want to be bullied. This will be the 'blame deflection' policy from the Rourkes/Lenihans. Sir Dead should have been buried under a tax rebate form and not a Tricolour.

Then again the Irish cabinet minister has no experience of how to say 'no' to business interests. That is what has the state in the situation it is now- captured by corporations, an offshore tax haven and sight has been lost as in many another country that business interests should serve the nation's economy and not the other way around.

Politicians don't care about such things as long as they are being fed by the business interests involved- and they are now in Ireland as elsewhere entirely the captives of those offshore business interests.

They have become servants of the corporation rather than the nation- Facebook, Google, Pfizer, Diageo all have de facto 'first class citizenship' and a veto over regulation and policies in Ireland. If you don't believe me keep an eye on the next Company Law Act to reach the Oireachtas. It was actually written by lawyers for IBEC and the Institute of Directors.

Keep remembering on this subject a passage from Roy Jenkin's 'Churchill' in which he mentioned that Churchill as Home Office Minister in his first meeting after WW1 was 'confronted by businessmen who looked as if they had done well out of the war'.

I think that conveyed the attitude that was properly there towards the 'business interest'- at the time merchants were sent to the back door of middle class houses and certainly not allowed to ponce in and out of Downing Street like some kind of faux celebrities as they are these days.

There was a lot to be said for that old attitude.

Well said Cptn, MNC's and big business interests take precedence in Govt's eyes and tax take dictates it as well re Corporation taxes. Ire Inc wouldn't survive if most of it of all of it left to take advantage of another country's tax position.

The fear now is that MNC (Multi-national companies) and big business dictates our govt's foreign policy in order to appease them and dovetail their business interests.

Compnay Law review group here:http://www.clrg.org.

[Captain Con O'Sullivan]

On that subject DS, one tantalising thought that has been revolving around in my mind for some time is that just as with Regulatory Impact Assessments, a tool which is used by legislators increasingly to try to scope out proposals and their likely effect, there should be a system in Ireland and elsewhere where all costs and benefits of a company like Google, Facebook, Pfizer, and Kerry Foods- essentially anything big enough to be called 'systemic' in the Irish economy are listed and rolled forward in a single updateable economic footprint to show whether it is profitable or not to have these companies in the state.

The benefit of that is obvious- firstly we would get away from this nonsensical assumption that because we have a big brand company in the state it is automatically profitable for us. Let's call that the 'De Lorean Clause':)

Secondly ministers should be able to face down local TDs banging on about wanting new infrastructure for an employer in their constituency by using that cost/benefit document- if the country is paying for an employer to employ people we should be able to have the figures to hand to fend off expensive 'porkbarrel' businesses in the national interest.

I have this horrible feeling that when you look at some foreign Multinationals in Ireland they are actually costing us money to have them in the state.

The benefits are supposedly (a) jobs (b) corporation tax (c) onward economic activity domestically and exports abroad.

If Irish taxpayers are effectively subsidising any of that for a major employer I'd want to know where the line is between national profit and national loss in kowtowing to them.

The point is at the moment that there is an assumed narrative around this kind of thing that MNCs take advantage of and I'd like to be able to point to any company of size in the state and say 'this is how much we can support this company before moving into a loss on it'.

[disability student]

Membership of the Company Law Review Group 2010/2012
Dr. Thomas B. Courtney (Chairman)
Arthur Cox
Paul Appleby
Director of Corporate Enforcement
Deirdre-Ann Barr
Matheson Ormsby Prentice
Jonathan Buttimore
Office of the Attorney General
Jim Byrne
Revenue Commissioners
Marie Daly
Irish Business & Employers’ Confederation (IBEC)
Helen Dixon
Registrar of Companies
Mary Doyle (replaced Mike Percival)
Irish Banking Federation (IBF)
Ian Drennan
Irish Auditing & Accounting Supervisory Authority (IAASA)
Paul Egan
Mason Hayes + Curran
Mark Fielding
Irish Small & Medium Enterprises Association Ltd (ISME)
Joseph Gavin
Central Bank
Michael Halpenny
Irish Congress of Trade Unions (ICTU)
Tanya Holly
Department of Jobs, Enterprise & Innovation
William Johnston
Arthur Cox
Brian Kelliher
Irish Funds Industry Association
Aisling McArdle (replaced Mike Duignan)
Irish Stock Exchange
Ralph MacDarby
Institute of Directors
Vincent Madigan
Department of Jobs, Enterprise & Innovation
Kathryn Maybury
Small Firms Association
Declan Murphy
Bar Council of Ireland
Conall O’Halloran (alternate Aidan Lambe)
Consultative Committee of Accountancy Bodies – Ireland (CCAB-I)
Mark Pery-Knox-Gore
Law Society of Ireland
Nóra Rice
Companies Registration Office (CRO)
Jon Rock
Institute of Chartered Secretaries & Administrators (ICSA)
Noel Rubotham
Courts Service
Conor Verdon (appointed March 2012)

[Captain Con O'Sullivan]

I'd just like to apologise to SIPTU as I had previously claimed there was a SIPTU monkey in a fez playing piano and eating bananas while the above lot planned the next bit of Progressive Democrat style deregulation around Irish Company Law.

It was in fact not a SIPTU monkey in a fez but an ICTU monkey in a fez. Glad to be able to clear up who owned the cute little rubberstamper monkey in the room.

[Captain Con O'Sullivan]

I hope nobody minds. It usually IS a SIPTU monkey playing the piano and I thought the ICTU had retired years ago. Last time I saw that rare breed was on a march in the 1980s.

[Captain Con O'Sullivan]

But anyway- back to Transparency in politics and the astonishing arrogance of a clerk in Brussels withholding, in cahoots with the corrupt Irish establishment, a document committing the Irish people to odious debt.

[disability student]

On that subject DS, one tantalising thought that has been revolving around in my mind for some time is that just as with Regulatory Impact Assessments, a tool which is used by legislators increasingly to try to scope out proposals and their likely effect, there should be a system in Ireland and elsewhere where all costs and benefits of a company like Google, Facebook, Pfizer, and Kerry Foods- essentially anything big enough to be called 'systemic' in the Irish economy are listed and rolled forward in a single updateable economic footprint to show whether it is profitable or not to have these companies in the state.

RIA is new to me but that is the way forward here as regards to cost benefits analysis. I understand that RIA have been starting in some govt depts as it had started last year or so. RIA being used to frame policies but would need an expert trained in RIA.


The benefit of that is obvious- firstly we would get away from this nonsensical assumption that because we have a big brand company in the state it is automatically profitable for us. Let's call that the 'De Lorean Clause':)


+100


Secondly ministers should be able to face down local TDs banging on about wanting new infrastructure for an employer in their constituency by using that cost/benefit document- if the country is paying for an employer to employ people we should be able to have the figures to hand to fend off expensive 'porkbarrel' businesses in the national interest.



Found some TD's quite useless as they aren't able to make an impact.

I have this horrible feeling that when you look at some foreign Multinationals in Ireland they are actually costing us money to have them in the state.

The benefits are supposedly (a) jobs (b) corporation tax (c) onward economic activity domestically and exports abroad.

If Irish taxpayers are effectively subsidising any of that for a major employer I'd want to know where the line is between national profit and national loss in kowtowing to them.

Lot of subsides offered as a carrot stick as it was in the case of Kerry Group's jobs last week . Strong feeling that MNC came here to take advantage of our tax laws with minimum job creation just in the case of IFSC. There was one member of IFSC in law review consultative group as you only have to look up at Funds association.

[Captain Con O'Sullivan]

Might start a separate thread on Regulatory Impact Assessments and the benefits ... it would be gas in Ireland watching the chancers trying to fill in what is in effect a risk analysis matrix/form calculated to shake out what the impact of a proposal might be.

I have a feeling in Ireland you'd get some civil servant carefully inspecting the document and trying to figure out how to make it look like an authentic analysis while leaving room for the Minister's second cousin to get the Portakabin contract...:)

RIAs where social legislation is concerned would have the churchers in screaming fits as there would only be a requirement for visible impact on legislation and likely effect of same and no room for the 'holy spirit' in it .... they'd shyte themselves at the notion of actually assessing any social move without taking into account what random passing angels might want.

[disability student]

Might start a seperate thread on Regulatory Impact Assessments and the benefits ... it would be gas in Ireland watching the chancers trying to fill in what is in effect a risk analysis matrix/form calculated to shake out what the impact of a proposal might be.

I have a feeling in Ireland you'd get some civil servant carefully inspecting the document and trying to figure out how to make it look like an authentic analysis while leaving room for the Minister's second cousin to get the Portakabin contract...:)

RIAs where social legislation is concerned would have the churchers in screaming fits as there would only be a requirement for visible impact on legislation and likely effect of same and no room for the 'holy spirit' in it .... they'd shyte themselves at the notion of actually assessing any social move without taking into account what random passing angels might want.

That would be my take on this as they would want to cover their backsides before they publish for public consumption. Don't give away too much here as they might get some ideas from us. They may read this forum.:eek:

[Captain Con O'Sullivan]

Asking the Irish establishment to actually analyse anything with taking into account 'considerations' would be like trying to teach a monkey to drive.

They wouldn't comprehend it. I strongly suspect they'd get upset because no-one was telling them where the 'fix' was. They'd feel left out. Isolated. 'Imprescriptably' so.

[DCon]

moved to new thread

[DCon]

moved to new thread

[disability student]

Facebook too



http://www.guardian.co.uk/technology/2012/oct/10/facebook-uk-taxes?utm_source=dlvr.it&utm_medium=linkedin

Keep up good work Dcon as it focuses the spotlight on IFSC's activities.:D

[Dr. FIVE]

I find it hard to imagine what is so awful, that we don't already know ?



Well, and there is no better two you can count on to spin a line for FF, but it was just the way they were able to stand in a room full of people and say look there is more then you all know about this huge in event in your country's history. We know, but are not going to tell you. People who are largely culpable still holding that privilige over everyone and not seeing anything wrong with it.

[Dr. FIVE]

more here

Lenihan letters: What’s been released, and what hasn’t

http://www.thejournal.ie/brian-lenihan-freedom-of-information-ecb-commission-imf-648241-Oct2012/?utm_source=shortlink

[C. Flower]

Could we actually remember that, apart from the morality of the bullying, these people allowed themselves to be bullied?


They did. But Lenihan near as dammit asked for public support and got none, for many reasons. Only about half a dozen people went to the Dail to protest.

[ang]

They did. But Lenihan near as dammit asked for public support and got none, for many reasons. Only about half a dozen people went to the Dail to protest.

Never forget Honohan publicly "giving in" to bailout ? What advise did he offer Brian Lenihan on the bullying and the fact that maybe just maybe we should call Trichet bluff on withdrawing Irish bank liquidity bearing in mind of course that this would at that time have undoubtedly have brought down the euro.

Brian is gone now but........

[C. Flower]

Letter released today under FOI to the Sunday Independent and Gavin Sheridan.

http://www.independent.ie/national-news/scale-of-lenihans-defeat-laid-bare-3312127.html

http://www.independent.ie/opinion/analysis/revealed-full-extent-of-lenihans-capitulation-to-trichet-and-europe-3312005.html

I have not yet located the full text of the letter of December 9 2010 from Lenihan to Trichet of the ECB.

[C. Flower]

Letter released today under FOI to the Sunday Independent and Gavin Sheridan.

http://www.independent.ie/national-news/scale-of-lenihans-defeat-laid-bare-3312127.html

http://www.independent.ie/opinion/analysis/revealed-full-extent-of-lenihans-capitulation-to-trichet-and-europe-3312005.html

I have not yet located the full text of the letter of December 9 2010 from Lenihan to Trichet of the ECB.


Trichet was not for turning. Only five weeks earlier, he had bullied the Finance Minister into the €85bn Troika bailout and he was not about to give an inch on sharing the burden of fixing the broken Irish banking system.

Lenihan's commitment, contained in the letter, that "any additional capital requirements for restructuring Anglo Irish Bank and Irish Nationwide must be covered with cash injections by the Government", along with a similar promise for the other "viable banks", ultimately cost the Irish taxpayer €24bn, as revealed by his successor, Michael Noonan, in late March 2011.

An initial reading of the letter would suggest that this was the Irish minister acting off his own steam, affirming commitments to the troika, when, in truth, the penal commitments signed up to by Lenihan had been agreed following intense dialogue over several weeks.

They illustrate how poorly the Irish team performed in those negotiations.

"The Irish authorities agree the following additional clarification regarding the implementation of the measures agreed [with the troika]," Lenihan wrote.

Paranoid about the impact this letter would have on the financial stability of the Irish State, Lenihan said it was not possible to make the contents of the letter public for fear that it would undermine government authority.

The Plan would "threaten financial stability of the State and the markets" if released (this is not a quotation from the letter, which mentions market stability and the costs of the letter being made public).

"These clarifications are being provided in respect of a limited number of specific issues, which it is not possible to disclose publicly on account of legal risks, commercial, market and financial-stability considerations, which would undermine the authorities' ability to implement those measures or render them more costly," he wrote.

The letter formally committed Ireland to a number of key measures, which have been followed rigidly by Lenihan's successor Michael Noonan. They include:

- The creation of the pillar-bank scenario. "Viable banks will undergo significant downsizing and operational restructuring," the letter stated.

- "The Irish authorities shall draw up a schedule of assets to progress early deleveraging by asset disposals and/or credit enhancement, to be achieved by end March 2011," he wrote.

- "Irish authorities will appoint external professional advisers to recommend the best structure that would achieve this timeline." This ultimately saw US consultants Blackrock engaged at huge cost to oversee the latest bailout.

- Under severe pressure from Trichet, Lenihan put the cost of that bailout on the shoulders of the Irish taxpayer. "It has been agreed that any additional capital requirements above the existing restructuring costs for Anglo Irish (€29.3bn) and INBS (€5.4bn) must be covered with cash injections by the Government." He added: "Similarly any additional capital requirements for other credit institutions which may be provided by the government will also be in cash and not as promissory notes."

- Crucially, in a further sign of how weak his position was, Lenihan consented to having to "consult with the ECB, the EC and IMF prior to agreeing on the final nature" of the bank recapitalisation and asset sales.

- Lenihan committed to consigning both Anglo Irish Bank and Irish Nationwide, the two most toxic banks left standing in the world after the 2008 crash, to history. He wrote: "Swift and decisive action will be taken to resolve the position of Anglo and INBS in a way that protects depositors and strengthens the banking system.

"Legislation will be introduced by end January 2011 to transfer assets and liabilities to viable institutions. Deposits and Nama bonds of Anglo and INBS will be transferred to other institutions, leaving the remaining loan books to be unwound in an orderly manner."

WHAT THIS LETTER MEANS

The most telling aspect of this letter is that it placed the future burden of bank bailouts on the Irish taxpayer – without any reference to any European institution or bank sharing any of the burden.

This is despite the latter's continued gamble on Ireland during the boom.

Lenihan, on the direct orders of Jean-Claude Trichet – and despite having saved Europe in 2008 by not allowing Anglo or Irish Nationwide to go to the wall – was at this point in 2010 having to accept the full cost of any future bailout. We later found out that this would be €24bn.

We know from Finance Minister Michael Noonan in early September that Lenihan was directly threatened by Trichet by way of letter that unless Ireland went into a bailout emergency funding from the ECB would be cut off.

Noonan said he had seen the "very direct" letter, which left Mr Lenihan with "little or no option" but to admit defeat.

The letter makes it very plain that all the talk in 2010 of a "bailout" of the Irish economy, the real purpose of the agreement was to protect lenders to Ireland, shift the debt burden onto the working population and away from speculators, and to take advantage of Ireland's position as beggar to enforce neo-liberal privatisation of assets.

[C. Flower]

Letter in full via @gavinsblog

http://thestory.ie/2012/12/02/another-bailout-letter-released/

[PaddyJoe]

Interesting to see that the Troika insisted that any additional bail outs for the banks after September 2010 would have to be made in cash by the Irish government. No more promissory notes or funny money.
I assume that's still the case today.
If any of the guaranteed banks need more money at any stage we're still on the hook for it.

[Dr. FIVE]

Kinda funny in a way that Fianna Fáil could have sunk the European Union

[Dr. FIVE]

eejits

[ang]

Yes they almost bankrupt the ECB.

Took time for the ECB to realise it too.

[C. Flower]

Interesting to see that the Troika insisted that any additional bail outs for the banks after September 2010 would have to be made in cash by the Irish government. No more promissory notes or funny money.
I assume that's still the case today.
If any of the guaranteed banks need more money at any stage we're still on the hook for it.

The shock of the bailout was such that I think not much attention was paid to the agreement made on the Irish banks and that was sealed in the Memorandum and in subsequent legislation like the CIS Bill.

What was required by the EU/ECB was

- a massive contraction of the Irish banking sector
- sell off of any profit making "non core" business (like the successful and profit making Polish bank that was sold)
- and also over capitalisation of the banks - stuffing them full of Irish government cash, after which they should be sold off in a give away to private buyers, apart from the two "pillars."

Everything to be privatised asap, so that there was no hope even in the very long term of recouping anything from them.

So we would be left with a couple of crippled banks, and enormous costs of having "saved" them.

Bond holders, and buyers of assets, would be laughing.