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Snippet Contents:

This has been funded by their parent companies and the citizens of other countries who supported Lloyds Bank, Royal Bank of Scotland Group and so on. Add it all up and it comes to €125 billion in losses due to the credit-pyramid bubble overseen and created by the boards of the banks between 2001 and 2008. What is the value of our gross domestic product? It comes to €160 billion or thereabouts. The losses in the domestic banking system amounted to 65% of our GDP. The United States has a GDP of €12 trillion. According to all of the books, including Timothy Geithner’s Stress Test: Reflections on Financial Crises, Too Big to Fail, All the Devils are Here, the Americans thought the whole world financial system was collapsing. Its total bank losses were contained at €1 trillion, one eight, or 12.5%, of its GDP. Ours came to 65%.
The Trichet letter to the late Brian Lenihan printed today is not really important. It was just setting out the framework for what had to happen to fund and bridge the Government’s expenditure for three years, while the revenue figures could be brought around for normal budgetary purposes. Of the €125 billion in losses, €31 billion arose because of Anglo Irish Bank which was funded by deposits and issues of senior secured and subordinated bonds. We were told by the European Central Bank and the European Union, by Mr. Joaquín Almunia, Mr. Olli Rehn and Mr. Jean-Claude Trichet, that we were not allowed to incur losses on the funders of that bank, as well as the others. That was wrong.
On 28 September 2008 the guarantee for all of the liabilities of the Irish-owned banks, an exposure of €400 billion, was entered into under duress. It was based on negligent and fraudulent information supplied by the banks. In insurance, as the Ceann Comhairle will know, if someone supplies information on a risk that is not truthful and comprehensive, it voids the contract of insurance. A guarantee is a contract of insurance or indemnity. We had every right in the world to selectively choose which liabilities would be guaranteed. Customer deposits should have been secured but not the senior secured and subordinated bondholders.
A budget is about taking a picture of revenue against expenditure which we think we should fairly maintain to provide services such as schools, hospitals, water, buses, trains, health and education. Anglo Irish Bank was a completely busted flush around the time of the guarantee. Mr. Trichet and others in Europe did not want the system to be strained beyond its survival. The Government was headlocked into writing three promissory notes, an IOU, to resuscitate the busted Anglo Irish Bank, with Irish Nationwide Building Society, to the tune of €31 billion. This coincided with the requirement of the bank to redeem bonds that had initially been issued to the original subscribers and sold into secondary markets to risk-takers. The only way the ECB could lend money to this busted bank to wrongly redeem all of these bondholders was if the Government stepped the people up to the scaffold to the tune of €31 billion. We are still on the scaffold for €25 billion of that figure in that horrible story.
These bonds are now called prom-bonds. There was no deal on the promissory notes. Instead of a vest with grenades with a ten year fuse, we have one with a 40 year fuse. The Government does not have the guts to get this story across and tell the ECB it is justified in tearing up these bonds.