If ECB wants Anglo to survive, let it bear the cost
The only reason left for saving Anglo is the EU and ECB must have decided no European bank can fail. We can’t afford to do it, so Mr Trichet will have to, writes FINTAN O'TOOLE
IN LITTLE Britain, Vicky Pollard is a delinquent teenager who begins every answer to an awkward question with “yeah but no” before plunging into a stream of incomprehensible drivel.
In Little Ireland, Vicky Pollard is a member of a delinquent government who begins sentences with “yeah but no” before plunging into a stream of incomprehensible drivel.
Here is Eamon “Vicky” Ryan on Morning Ireland last Thursday, attempting not to answer a straight question from Aoife Kavanagh.
Aoife: “Does that mean you favour a faster winding down of Anglo Irish Bank than had originally been proposed, ’cause that’s exactly what Senator Dan Boyle said and he was very clear about that?” Vicky: “Yeah but no, he wasn’t, yes of course, you would, would want, we want, to move on quickly from the mistakes that were made . . . ”
He may or may not have added, “Oh my God! I so can’t believe you said that.” I’m not sure, because at that point, his voice was drowned out by the screams in my head.
Eamon Ryan is one of the brightest people in Irish politics. If he can’t articulate Government policy on Anglo without going adrift on a sea of verbal slurry, it is safe to assume that no one can. It cannot be articulated because it is irretrievably mired in nonsense.
Propping up Anglo is one of the most momentous decisions an Irish government has ever made and it can no longer say why it is doing it. Yet, by a process of elimination, we are at last getting to the truth at the core of this policy. We have been given, in all, five different explanations by the Government of why we must continue to pour money into Anglo and, lest we forget, its mini-me Irish Nationwide.
The first was that these institutions were basically sound but needed temporary rescue from a liquidity crisis. No one needs to be told how stupid that was.
The second was that we needed to give them the money to get credit flowing into the economy again. This was always a cynical line spun for the supposedly gullible masses – Anglo and Nationwide never lent significantly into the real economy and will never do so in the future.
The third reason we’ve been given is that it was vital to avoid having zombie banks. This actually has been achieved – as the Financial Times pointed out last week, Anglo is nothing as lively as a zombie. It’s a “rotting corpse”.
The fourth proposition was that saving Anglo and Nationwide was necessary to maintain Ireland’s “credibility” with the international financial markets. In fact, watching a State borrow endless billions at high interest rates to shovel them into a grave has merely enhanced our incredibility.
Which leaves us with the fifth reason for the strategy, and the only one that makes any sense: that the European Union, and more specifically the European Central Bank, have decided that no European bank should be allowed to fail.
Strip away the drivel and the spinning and this is the one truth left standing. At least if we clarify this much, we can also clarify the nature of the decision that now faces us.
The choice is now stark: do we go on being “good Europeans” at the cost of destroying our own society or do we become “bad Europeans”, lose the trust of some of our European partners, but save ourselves?
There are costs to be paid whichever choice we make, but we know which side we have to pick. In the appalling state we’re in, there is just one rational course of action: tell the ECB that if it wants Anglo to survive, it can save it.
Otherwise, we are calling in the bondholders and negotiating a debt-for-equity swap in which this brat becomes their baby.
And yes, this will be most unpleasant. We’ll be accused of causing a new crisis for the euro, German magazines will run cartoons of greedy Irish piglets sucking on the teats of the German taxpayer, German politicians will issue statements telling us to sell off the Cliffs of Moher and Skellig Michael.
Brian Cowen won’t get ego- boosting profiles in Time magazine and the Wall Street Journal will rip down its posters of Brian Lenihan. The initial market reaction will be terrible. Everyone will hate us – until they find someone else to hate.
But we have to do it anyway. Whatever the ECB’s Jean Claude Trichet says, Anglo is not merely an Irish problem – it was European banks that fed its frenzy for cash and the ECB is now its biggest debtor – and Ireland has done its best. We’ve tried the “good Europeans” track and it has led ever further into the wilderness.
There comes a point of existential crisis when even the meekest of countries has to put its vital national interests before its international obligations. We are at that point now.
If Trichet is determined that Anglo should not fail, the message from Government must be: “La clé est dans la porte. Voici le numéro de téléphone de Monsieur Dukes.”