Time and time again we are fed the line that Anglo was included in the bank guarantee because it was of systemic importance to the Irish economy. When questioned not one person from Government was able to explain why precisely Anglo is of systemic importance. It is simply a mantra put forward by those who do not understand the issue and who are seriously out of their depth.
The truth is that our Government has ceded its authority to Brussels and Germany. Brian Lenihan would have had no choice but to discuss the plans to guarantee the banks with Angela Merkel on that fateful September night in 2008. A guarantee that was most appropriate for Ireland would not have been one that that was in Germanys best interests. She had to take action.
If we had just guaranteed the big two banks and let Anglo and Irish Nationwide fail, as we should have, Germany would have had a major problem. For if we successfully told the bondholders that they were not getting their money back we would set a precedent and open the floodgates for other countries and banks to follow. Given that a very high proportion of the bondholders are European, a precedent for default would have serious repercussions for the economic security of these nations, hence for the EU as a whole. Germany especially would have been in big trouble.
In short if we got away with defaulting on the bondholders many other countries would follow suit. This would have major repercussions for the German economy and there would be a very real chance that the euro as a currency could have been fatally undermined. Other major EU economies ,especially Germany would end up in similar or greater economic trouble to Ireland. Angela Merkel could not countenance such a scenario arising. She knew she had to act decisively and she did. She is a competent leader and she has her priorities right.
Her primary responsibility is to the security of her country. Angela Merkel and her colleagues placed huge and unrelenting pressure on the Government to ensure that the floodgates to an economic pan-European Armageddon did not open. To do this they crippled the Irish economy for years to come. They did this without a thought. Ireland has been sacrificed in a bid for German economic security. From her perspective this is an entirely reasonable course of action. If I were German I would be delighted with my leader’s determination.
But I am not German. I am Irish and I am not delighted I am angry. Our Government capitulated under pressure and Ireland has been sold to protect the interests of other nations. They were outmanoeuvred and did not have the courage to stand up for the Irish people. They are absolutely guilty of moral and professional cowardice. They are also guilty of incompetence on a massive scale, but we already knew that.
If we were to accommodate Germany and Brussels we should have demanded a much greater package in return. We held all the aces. The security and future of the EU was in our hands. We should have held our nerve and continued with the best course of action for Ireland. We could and should have demanded major economic concessions for our willingness to support the bondholders. That we did not is an indictment of Brian Lenhian’s ability. He was tested and was found seriously wanting. Our future has been sold in order to guarantee German prosperity. Make no mistake about it Brian Lenihan and Brian Cowen are guilty of economic treason.
Anglo was and is of systemic importance. To Germany! It had the potential to kick-start a series of asymmetric shocks that would have a greater negative influence on the German economy than it would ever have had on Ireland.
Our situation is now so weak that we must default on all the bondholders because it is too late for us now to do anything else. If Germany wants our support they must pay because our support must have its price. Angela Merkel may not like it but she understands this because managing the domestic economy is what she does best.
We still have a chance to save Ireland. We must stand up to the Eurocrats and display courage and resilience. Angela Merkel has more balls that the entire Irish Government. We need a stronger character managing our finances. Someone with full underpants. New balls please!