So, who did benefit from the bailout?

Cantillon: Bundestag finance committee members come bearing intriguing idea

Former ECB boss Jean-Claude Trichet, who has made it clear he is not coming to the banking inquiry. Photograph: Hannelore Foerster/Bloomberg

Former ECB boss Jean-Claude Trichet, who has made it clear he is not coming to the banking inquiry. Photograph: Hannelore Foerster/Bloomberg

Tue, Jun 17, 2014, 01:00

The members of the Bundestag finance committee currently visiting Ireland may not have brought gifts – the opposite, in fact – but they do bring with them an intriguing idea.

Dr Gerhard Schick, the deputy head of the committee and a Green Party MP, has suggested that it might be a good idea to identify exactly who benefited from the Irish bailout. This, in turn, would provide the basis for a discussion on whether Ireland deserves some sort of a break on the resulting debt.

The short answer to the question is lots of people. Depending how far you want to spread the net, they include the still unidentified holders of the unsecured debt of the Irish banks who were made whole by the Irish taxpayer. Honouring the commitment to do so made by Brian Cowen et al in 2008 is arguably what forced Ireland out of the bond markets and into the bailout in 2010. A list of who held unsecured Irish bank debt – or had an interest in it – in 2010 would be very interesting indeed. It would be a worthy topic for a banking inquiry should it ever get off the ground.

One suspects, however, that what Schick is driving at is that, if we could demonstrate how the German taxpayer was a beneficiary of the bailout, then they might be persuaded to support a socialisation of the debts.

The answer of course is that we saved Europe and the euro by propping up the banks at the behest of the ECB and by accepting a bailout when we found out that we could not stand by our promise.

Proving this to the satisfaction of the German public might be difficult. Arguably the person who might be most useful in this regard is former ECB boss Jean-Claude Trichet, who has made it clear he is not coming to the banking inquiry.

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