In the digital age, edits get noticed. Clearly there are some details about the ECB’s bail out for banks that it didn’t want too widely publicised in Ireland… Jörg Asmussen, a German member of the executive board of the European Central Bank, where he has responsibility for international and European relations…
Perhaps Mr Asmussen has inherited the Danish penchant for speaking plainly from his Flensburg home but on Friday in a speech to the IEA in Dublin, he said:
“…the main reasoning [for the repayment of unsecured bondholders of Irish banks] was to ensure that no negative spillover effects would be created to other Irish banks or to banks in other European Countries.”
The eagle-eyed ones at SSpreadbetting.com noticed that that last reference to banks in other countries was quietly dropped. Too much truth for one speech? (“Sometimes you have to lie”, eh Jean Claude?) Is it fair that Ireland bails out other countries’s banks as the price of bailing out their own?
To hear some of the central bank’s critics you’d almost fall into believing that the bank debt had nothing to do with Ireland. Default too has become almost mainstream as an option amongst some of Ireland’s best and brightest economic minds; regardless of the social and economic let along political costs of striking (or even threatening to) out alone.
The Irish taxpayer has such a large bill because the government of the time believed it was the only way to stop the whole system from keeling over in one night. Time for thought and action were short. And importantly, every single party in the Dail (bar Labour) backed them at the time.
Labour is now trying to deal with the legacy of that decision, whilst Sinn Fein who backed it have changed their minds and are now pulling has hard as they can in the opposite direction.
At the time, the Irish government did not know just how big that debt would prove. At the time, the country acted unilaterally believing at the time, apparently, that it would never have to foot more than a fraction of a maximal bill.
And it was an Irish government which covered the foreign debtor banks (British, French and German amongst others), not the ECB. Regardless of which, it seems there are certain truths that even the ECB feels it cannot be discovered talking honestly and openly about within the Irish public space.