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Thread: Should Ireland Take the ECB to the European Court of Justice over Guarantee

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    Default Should Ireland Take the ECB to the European Court of Justice over Guarantee

    Colm McCarthy on Trichet

    According to Leahy, the Government planned to impose losses on the unsecured and unguaranteed bondholders in the banks which had been closed. Had the Government done so, its liabilities would have been reduced by several billions of euros and the value of its support to the surviving Irish banks enhanced. The solvency of the surviving banks would have improved since their guarantor, the Irish Government, would have benefited from the savings in not paying bondholders. But ECB president Jean-Claude Trichet objected, threatening to withdraw liquidity support to the Irish banking system which would have resulted in a disorderly collapse of the surviving Irish banks.

    Leahy reports Trichet as having told Finance Minister Michael Noonan that if the Irish proceeded to haircut unguaranteed bondholders in the defunct banks, it would mean that the surviving Irish banks were insolvent and the ECB could not support insolvent banks. If this is an accurate account of what Trichet said, he can hardly have believed what he was saying. Leahy reports that Noonan's aides regarded Trichet's argument as "bullshit". However, the threat of liquidity withdrawal could not be ignored and the lucky bondholders, including hedge funds which had bought the bonds at large discounts, were paid 100 per cent of face value. Some expressed on-the-record surprise at their good fortune.
    It is perfectly understandable that Trichet, as president, would consult with the other five ECB executive board members about any important decision, and not all may have been in Frankfurt, hence the conference call.

    But what was Weidmann doing on the call? He is just one (out of 17 at the time) non-executive members of the ECB governing council.

    It is difficult to believe that this conference call did not include all governing council members, although rather easier to believe that Trichet regarded some as more equal than others.

    No German politician or public official could come to this discussion free of conflicts of interest.

    Germany, after a decade of large payments surpluses, was the largest creditor country in the eurozone, and its citizens the largest ultimate owners of distressed financial assets in other European countries, in the US and elsewhere.

    It is perfectly legitimate for the ECB to promote eurozone financial stability as it sees fit. It is another matter entirely to take sides in debtor/creditor conflicts, particularly if this was done covertly through back channels.
    There is provision in article 35.1 of the ECB statute for judicial review of the acts or omissions of the ECB at the European Court of Justice. Last week, possibly in response to Leahy's revelations, Tanaiste Eamon Gilmore suggested that Trichet be invited to appear before the upcoming Oireachtas inquiry.

    It would be far more effective for the Irish Government to initiate judicial review proceedings at the European Court, insisting on full discovery of all communications between Trichet, his executive directors and the German government and central bank and records of ECB contacts, if there were any, with holders of unsecured Irish bank bonds.
    http://www.independent.ie/opinion/an...-29596621.html
    Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer

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    Default Re: Bank Guarantee Enquiry - Cowan to be Called to Give Evidence ?

    Read on Twitter that Trichet refuses to consider appearing. Who has asked him I wonder ?

    Yes, every legal remedy possible should be used. However, I'm much less sure than McCarthy that the Irish banks were not insolvent. They were stuffed full of ELA.
    “ We cannot withdraw our cards from the game. Were we as silent and mute as stones, our very passivity would be an act. ”
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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    it would mean that the surviving Irish banks were insolvent and the ECB could not support insolvent banks
    lol, a bluff in anycase but..is this not the second or third time there has been question marks put over the conduct of the ECB and it's legality. All well and good but show me the Irish Government willing to even contemplate doing anything about it.



    Prevailing opinion would suggest any such action would be inadvisable as we strive for stability

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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    In December 2009 McCarthy wrote that :

    "The Irish banking system enjoys roughly €100
    billion in emergency liquidity support from the European Central Bank, equating to
    about 75% of national income. In relative terms, Ireland has had the largest banking
    collapse of any Eurozone member, and any pretence that the problem is merely one of
    liquidity, as distinct from solvency, has long since been abandoned by all independent
    observers."


    http://researchrepository.ucd.ie/bit...pdf?sequence=1

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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    o
    Quote Originally Posted by Spectabilis View Post
    In December 2009 McCarthy wrote that :

    "The Irish banking system enjoys roughly €100
    billion in emergency liquidity support from the European Central Bank, equating to
    about 75% of national income. In relative terms, Ireland has had the largest banking
    collapse of any Eurozone member, and any pretence that the problem is merely one of
    liquidity, as distinct from solvency, has long since been abandoned by all independent
    observers."


    http://researchrepository.ucd.ie/bit...pdf?sequence=1
    Look at this nonsense. If we brought back the punt we wouldn't need to rely on the ecb as a last resort lender as our own central bank could do that. Why do we persist with this stupid overvalued tyrannical currency.

    Sent from my GT-I8190 using Tapatalk 2

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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    Chopra

    THE European Central Bank acted in an "outrageous" manner and went beyond its remit when it pressured Ireland to commit to years of austerity, according to Ajai Chopra.

    The International Monetary Fund's former Ireland mission chief made the damning assessment during an address at Oxford University.

    And he also claimed that the possible effects of burning the bondholders that were put forward by Europe were "exaggerated."


    http://m.independent.ie/business/iri...-31152447.html
    Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer

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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    Wouldn't we have to go through the Supreme Court here first?

    I'd imagine, though, that the SC would delay any decision for as long as they could but in the end - as they are a creature of the State - would strike the case down in support of the Government.
    Give me a misty day, pearly gray, silver, silky faced, wide-awake crescent-shaped smile

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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    Quote Originally Posted by Andrew49 View Post
    Wouldn't we have to go through the Supreme Court here first?

    I'd imagine, though, that the SC would delay any decision for as long as they could but in the end - as they are a creature of the State - would strike the case down in support of the Government.
    The Supreme Court are surprisingly independent when they want to be; given that they're still smarting over the pay issue, I wouldn't underestimate their ability to give our glorious leaders a bl00dy nose. The government, in their view, may be overdue for a wee reminder re judicial independence.

    Remember the X case?
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    Default Re: Should Ireland Take the ECB to the European Court of Justice over Guarantee

    Quote Originally Posted by Andrew49 View Post
    Wouldn't we have to go through the Supreme Court here first?

    I'd imagine, though, that the SC would delay any decision for as long as they could but in the end - as they are a creature of the State - would strike the case down in support of the Government.
    Anyone can take a case on infringement of their rights by EU institutions to the ECJ.

    http://europa.eu/about-eu/institutio...e/index_en.htm
    “ We cannot withdraw our cards from the game. Were we as silent and mute as stones, our very passivity would be an act. ”
    — Jean-Paul Sartre

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