Dear sir/madam,
as the Irish people existentially and philosophically prepare to exercise their unequivocally constitutional right to self-determine the direction of our society, and while we may all wish we did so on a more than a few of the more ever-so-slightly-multi-generational-handicapping decisions made by Dr Bertie and not-so-Mini-Me-Cowan, please consider the following thoughts, in the context of the following media articles...
http://www.irishtimes.com/newspaper/breaking/2012/0315/breaking153.html
"You could take it that the ECB were never particularly happy with the level of collateral provided by the promissory notes and would like stronger collateral," said Minister for Finance, Michael Noonan.
http://www.irishtimes.com/newspaper/breaking/2012/0314/breaking70.html
"pacta sunt servanda"
Folks,
So, while the Irish people have repeatedly been instructed that the Anglo Irish Bank promissory notes are de facto (yes Ollie, there are some Irishmen who have some Latin) Irish sovereign obligations which Ireland must honour, the ECB tells us that the collateral backing them up (eh... Ireland) is insufficient, and that therefore they will not accept them as eligible for ECB repo financing. Meanwhile, the same ECB is throwing 100's of billions of Euros in 3-year repo finance facilities for any residential mortgage, corporate loan, or sovereign exposure that absolutely any bank in the Euro-zone can throw at them. All of which begs the question of why the Anglo/INBS (IBRC) prom notes aren't given the same laissez-faire treatment. If Ollie Rehn thinks so highly of these 'obligations' that he feels compelled to deliver a free lesson in Latin phraseology, one wonders if the ancient Greek equivalent includes a clever sub-clause in the event that one only feels like honouring about 30% of it's obligations.
Seeing as the ECB wont accept these prom notes as eligible collateral, IBRC has to use the more expensive ELA repo facility from the Irish central bank. This ELA funding has already been universally described as "significantly" higher in cost to the equivalent ECB facility by all of the Irish covered banks. At first glance this sounds harsh however, when we consider that this "significantly" more expensive cost to IBRC was already considered egregious even before the creation of the magic ECB 3yr super-mario-willy-wonka-magic bean-LTRO, then we begin to see how this situation impacts on a work-out institution who's past sins have been punishing the average Irishman for a number of years now. After all that, when one concedes that this super-expensive structure was especially designed to support this ICU patient of a 'bank', and support the fundamentally sacrosanct european belief in senior bank bonds, it is slightly confusing as to why it has been deliberately kept at arms-length by the ECB.
Now, even if we were to disregard the higher cost of such an arrangement this scenario smacks of a duplicitous treatment of ireland by the ECB. They will crack the whip on senior unsecured Anglo bonds to be repaid but, they won't accept as collateral, the single biggest asset keeping the same zombie bank artificially afloat. So, as institutional European investors get paid pack at par for senior unsecured Anglo bonds on the ECB's order, the massive prom notes which facilitate these windfalls are considered substandard collateral by the same institution. Anyone else feel like they are being taken for a ride..?
So, if Ollie Rehn says the prom notes are sovereign obligations, but the ECB won't accept them as eligible collateral for repo funding, there would seem to be a serious disconnect with regard to the orders that the (Ollie Rehn) Troika bark at Ireland, and the solidarity which the ECB is willing to extend in return. Clearly, what's good for the goose, is not so good for the ECB, ahem gander.
Solidarity brother..? Don't make me laugh.
The Euro-zone fiscal compact treaty is based on the concept of a collective responsibility for the honourable stewardship of the EU. It's requirement is undisputedly realised as joint admission of the flaws of excess which caused the current debt crisis.
The troika need to acknowledge the massive €3.1bn-Anglo-Irish-Bank-prom-note-payment-shaped elephant in the corner of the room. If the Troika continues to treat Irish taxpayers with the same arrogance as Ollie Rehn, then the EU will get the no vote it deserves. Climbing the EU ivory tower and pontificating to the one country which is genuinely trying to pay it's dues, including an obligation which you refuse to take any risk on, less than seven days after negotiating another country's free-pass on about 70% of it's obligations, is at the very least.... Baffling. The EU is simply taking advantage of misguided Irish honesty.
God bless Bunracht na h'Eireann,
Waldorf.
