Anybody who thinks that bankers respect democracy were not in Ireland last week. Leaked transcripts of a September 2008 conversation between two Anglo-Irish bank executives were really hitting the newsfan. This was two weeks before the then government`s decision to issue a bank guarantee. The `Celtic Tiger` era of speculative expansion had just ended with the Lehman Brothers collapse. Panic stricken executives from Ireland`s six major banks eventually persuaded senior politicians and civil servants to act supportively.
In essence the government would guarantee all bank liabilities; customer and interbank deposits along with the vast majority of bonds. Major international investors were reassured as the Irish taxpayer was exposed to a net liability of 440 billion euros. This arrangement was later institutionalised by the National Asset Management Agency (NAMA). They would purchase development loans from the banks at a discount from their book value,the banks would receive government bonds in exchange. Without bad loans and recapitalised via government bonds, the banks would, in theory, be freed up to lend again. Other, outside banks would also restart lending to Irish institutions as toxic debt was excised. Effectively, therefore, financial interests, regulators and compliant politicians closed ranks and transferred private debt on to the general population.
Before this turn of events, however, private banks, including Anglo-Irish were in meltdown. Now, you might think that liquidity collapse, investor pull outs and depositor panic would lead to a rethink. Where did we go wrong? How should we amend our business model? No such questions were raised, instead the taped transcripts reveal venal cynicism and a disdain for a government whose perceived role was to serve the financial class.
One Anglo-Irish executive, John Bowe told another, Peter Fitzgerald, about an appeal to the central bank seeking 7 billion euro; “the reality is that actually we need more than that`, `you pull them in, you get them to write a big cheque and they have to keep, they have to support their money….”
Chief executive David Drum`s conversation with Bowe was more colourful; “We won`t do anything blatant but….we have to get the money in..get the fuckin` money in, get it in”. When Peter Fitzgerald, then head of Anglo-Irish`s retail funding arm, asked Bowe where the 7 billion figure came from the latter replied, “just as Drummer (David Drumm) would say, I picked it out of my arse”.
Fintan O`Toole`s column in the Irish Times (June 29) provided the best and bleakest account of these revelations. The Anglo-Irish executives, he reports, knew that they had destroyed their bank and that thousands of jobs were threatened. They knew that they were about to cost the Irish people billions of euro. In this context what is really shocking about the tapes,O`Toole notes, is that “there is not a single moment of embarrassment or regret,not the slightest undertone of shame”.
Well, during my week in Dublin the revelations never stopped. They were a sure conversation starter in taxis and local pubs. And no wonder, the financial and property crashes, business bankruptcies and tax funded bank bailouts have been socially devastating.
In 2008 the Irish stock exchange shrunk by 28 per cent. During 2009 and 2010 Ireland`s gross domestic product (GNP) shrunk by 13.5 per cent. In 2011 the officiial unemployment rate was 14 per cent. Debt levels among Irish companies and households are now the highest in the European Union. In Dublin, approximately 20 per cent of office space lies empty.
In these circumstances the Irish state serves as a conduit for international finance, as a tax haven for domestic and foreign enterprises and as an enforcer of IMF/EU austerity policies. After socialising private debt in response to the banking crisis successive governments have cut public sevices and introduced new taxes and levies on the general population.
What then has been the political response to bank bailouts,economic recession and the austerity regime? What activist initiatives are developing? Answers to these questions will form the next part of this story in my next Daily Blog.
http://www.positivemoney.org.nz has a viable plan that will stop this happening here. This is also outlined in detail in the book “Modernizing Money” by Andrew Jackson and Ben Dyson (of Positive Money UK). People need to know that the system is broken and no amount of “tweaking” can fix it. The only solution is a new system that is fair to everyone.
Bankers have owned increasing numbers of governments since 1694. Now they own practically all of them. And they own most political parties.
Bankers have only ever had one agenda: fraudulent transfer of wealth from the general populace to themselves. Their various Ponzi schemes worked tolerably well when there were nations to colonise and when there were abundant natural resources to loot’ That game is now over.
Persuading government to create money out of thin air and give it to them to lend to other people worked until those at the top got especially greedy.
Peak Oil and the accelerating collapse of the global environment mean that every nation is now on the slippery slope that leads to complete societal collapse.
Bankers are now concerning themselves with thinking of ways to maximise the profits they make from that collapse.
Whilst not criticizing any of the many salient points you make I do wonder if you’re correct about Peck Oil. These days even people like George Monbiot are acknowledging that there’s plenty of oil to extract now that the price is high enough to make it profitable. The problem is that if we just burn the oil we already know about we are screwed. Kinda make you wonder why our stupid government is looking for even more reserves.
No matter how you look at it, if there had been no bail out, there would have been an even worse, immediate economic crash of unseen proportions. So the socialising of debt can be criticised, but it is a bit short sighted to see things as if this should not have been allowed at all.
Of course the huge injustice is that the ones earning high salaries, being the CEOs and managers of the banks, being the share-holders that invested part of their wealth in them, and that were issuing credit to borrowers, be those real estate investors and buyers of such, or business operators, they were let off the hook.
The injustice is that the main stake- and shareholders always come out of it rather unscathed, while the majority of the people pay the bulk of the price for things that went wrong.
To be fair, while the economy was growing, and while credit was given, taken and somehow “affordable”, nobody complained, as businesses and jobs were there and keeping things moving.
What is a worry is that since the GFC only bits of what was discussed and promised the last years, to avoid the same happening, have been implemented. In general all continues more or less as it had before, and so we are facing new bubbles, new busts and new crisis down the road.
The most worrying thing is the huge debt hanging over citizens in the US and many European countries will keep most people there tied into debt slavery for decades to come, possibly dragging the rest of the world economy down again. Quantitative easing can only help for limited periods, it may have gone on for too long, and the end result will be painful, if not brutal.
Then the states will have to take control again, to sort out the mess.
“the end result will be painful, if not brutal.”
So – should we just keep trying to stave it off, giving those at the top more time to insulate themselves from the effects, to even further detriment to the general populace, or bring it on sooner……force their hands, as it were. Appeasement only works for so long, after that…….
“- I hold it, that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical. – Thomas Jefferson – Jan 30 1787
[…] mental images of Anglo-Irish bank executives privately sneering at their political servants – `…get the money in, get the fucking money in…`. Seven billion Euro? ` I picked it out of my arse… These were the taped excerpts of financial meltdown before the government`s guarantee of bank […]
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