Three key truths about the bailout which we are only learning now
Opinion: Minister crumbled under the threat of financial terrorism from Trichet
Jean-Claude Trichet: threatened that the bomb would go off. Photograph: Reuters
Now they tell us. Isn’t it funny how, now that the troika deal has run its course, we can be told certain truths that had to be kept from us while the boys were still in town? In the last week, a demob-happy officialdom has let slip three rather important things. Between them, they cast a sickly light on the upbeat narrative of the last three years.
The first thing we’ve learned is that, as many of us argued all along, the blanket bank guarantee of 2008 was a catastrophic error. It was not an inevitability or a tough and courageous decision. It was just a mistake. Who says? Well, Olli Rehn, EU economics commissioner and one of the chief architects of Irish strategy since the crash, says so – now: “In retrospect I think it is quite easy to spot some mistakes like the blanket guarantee for banks.”
Thanks a million, Olli – so that means that the whole strategy that flowed from the guarantee is also a mistake and must be fundamentally re-evaluated?
No – “that is now water under the bridge and now we have redirected the river and we are on [sic] a better place for the moment”. But of course, the river has not been redirected – everything continues to flow from the mistake that is now, apparently, so easy to spot. Ireland cannot be allowed to correct a mistake that will harm its people for decades.
The second thing we’ve learned is that Michael Noonan told the public an outlandish fairytale on June 15th, 2011. Speaking from Washington, he informed us that he had a plan to impose losses on senior bondholders in Anglo Irish Bank. He said that he had told the IMF: “Look, it’s no longer a bank. Anglo is now merged with Irish Nationwide. It’s a warehouse for impaired assets. Its deposit base has been moved out into the pillar banks . . . we don’t think the Irish taxpayer should have to redeem what has become speculative investment”.
Oh, how we cheered. The Irish Times began its report: “Minister for Finance Michael Noonan says the Government has a plan to impose ‘substantial’ losses on senior bondholders in Anglo Irish Bank and Irish Nationwide Building Society in a significant policy reversal.” Even the excellent Namawinelake blog, scourge of the bank bailout, headlined: “Well Hallelujah and about time – Noonan signals burning of senior bondholders at Anglo and INBS.”
But Michael Noonan was spoofing. The “significant policy reversal” was just a pantomime for the masses in the cheap seats. How do we know? Because, last week, in the heady atmosphere of the troika’s exit, Noonan admitted to Miriam O’Callaghan on Prime Time that, two months earlier, he had already caved in to instructions from Jean-Claude Trichet of the European Central Bank to abandon plans to burn Anglo and INBS bondholders.