The Anglo deal: smoke and mirrors or a game changer?
Tuesday 5 March 2013by John Douglas
If at this stage like me you have had it up to the “eyeballs” with spin and counter spin on the Government’s Anglo Bank promissory note deal, then read on and we will try and give you some simple facts.
First, the cost of bailing out the Irish banks as of 2013 is just over €64 billion, this equates to more than €9,000 per Irish citizen, as opposed to the EU average of €190 per EU citizen. Ireland is shouldering over 40% of the total European banking debt.
Of the €64 billion, over €29 billion is debt related to Anglo Irish Bank and €5 billion is Irish Nationwide Building Society. And yes, you might well ask what has this banking debt got to do with me?
The answer is nothing whatsoever – it is not your debt, you did not run it up, but the Irish Government chose to guarantee all private banking debt, thereby making it a debt on every citizen of Ireland.
The Government in the case of the Anglo Irish promissory notes previously decided to repay all of Anglo’s debt to the tune of €3.31 billion per year, each year up to 2023 plus interest.
This money has to be found, and both this government and the previous one finds this money either through borrowing, cutting services, welfare, increasing taxes/charges, attacking wages and conditions of workers in general but, in particular, public sector workers.
These austerity policies are crushing the Irish economy, forcing tens of thousands to emigrate, condemning thousands more to a life of poverty and ensuring that the 400,000 workers unemployed remain unemployed for the foreseeable future.
Now back to the promissory note deal. The main point to note is that Ireland/we will still have to pay back every cent of the €30 billion debt which was not ours in the first place, but we can now spread the payments over a longer period – 40 years. This gives us some short-term relief but the debt will be passed on to our children and grandchildren so that they may face the prospect of living in austerity.
During the talks on a deal at no time did the Irish government seek to write off the debt or threaten not to pay or stall payments. They fully accepted responsibility for it and, in doing so, have turned this private banking debt into a debt owned by the Irish State and Irish people.
So this is the scenario as I see it, your neighbour buys a house on your road for €500,000 financed by a bank mortgage over 20 years, with monthly repayments of €1,000 per month. Unfortunately, your neighbour dies, the bank calls you in and tells you that you must take over the neighbour’s mortgage and guarantee the mortgage of all your other neighbours and you agree (the bank guarantee scheme).
You are now faced with paying your own mortgage and your neighbour’s mortgage and you sign up to promise to do so (the promissory note). After a number of years scrimping, saving and going without it all gets too much for you so you go to the bank and tell them you can’t afford to pay both mortgages anymore. They offer you a “deal” which spreads your neighbour’s mortgage over 40 years, the repayments on which are reduced to €500 per month, but – critically – you must still pay off the total cost of your neighbour’s mortgage. You go home and tell everyone that you got a great deal.
Now that is what the Government did with the Anglo Irish promissory notes – the sting in the tail is that after 40 years of scrimping and saving to pay your neighbour’s mortgage, you will not even own his house and furthermore, in the case of Ireland’s €64 billion banking debt, you are not only paying for one neighbour’s mortgage but a whole road of neighbours’ houses and their mortgages.
The banking debt heaped upon Ireland is simply not sustainable and not fair. It is undermining our society, destroying our jobs, living standards, welfare and services – enough is enough, it is not our debt.
I ask you – smoke and mirrors or a game changer? You decide. I did, and that is why I marched and my children marched on the trade union Jobs Not Debt demo on February 9. Did you???
