Remember all those warnings about what would happen if we didn’t bail out the sharks who owned our banks’ bonds? The ATMs would stop giving out money, the banks would all collapse, little children who could neither walk nor talk would be running in the street, cursing their maker, the sun would rise in the north and sink in the south, the world would end. And KPMG would get no more fat government contracts.
The people of Foxrock huddled by their plasma-screen radios listening for the crackling words of our leaders from deep in the Merrion Street bunker, not knowing from one moment to the next if their second Merc was safe, nor even how many buy-to-let properties they might be reduced to.
Dark days indeed but in the end, the elected representatives did the right thing by KPMG and turned the debts run up by a few crooks into a legal obligation on all of us. The Battle of Ireland was won, if only by a whisker, and the people of Foxrock rested easy again. Young Fiachra would have that month in Zermatt with his school pals after all and Dearbhfhorgaill could afford to buy that Lexus SUV and still repeat Second Orts. Because she’s totes, like, worth it?
Never was so much done by so many for so few.
Guess what, fools? As pointed out widely at the time by many sensible folk and also by me, it was all a scam, as the Cyprus parliament has shown.
In the face of similar threats from the ECB, they said no. They voted unanimously to reject the moronic, idiotic, ham-fisted attempt to rob the people who held deposits in Cypriot banks, and quite properly so too.
Now, I don’t know how many Russian oligarchs have money in the banks of Cyprus. And I don’t know how much of that money is dirty, though it seems obvious that most wealthy Russians got there by dubious means,, but it doesn’t matter. Collective punishment is wrong, especially when that punishment is inflicted on small people who have their life savings on deposit.
It’s theft, in other words, and here’s the irony of it. According to a recent paper by Lee Buchheit and Mitu Gulati (with thanks to the Prof), a large chunk of the next Cypriot bond to mature has been bought at a discount of up to 30% by international hedge funds, otherwise known as sharks. What does this mean? Simple: it means that the original bondholders have already been stiffed, and the bailout serves only to give the sharks a huge return on their investment. I wrote about this some time ago in relation to Roman Abramovich’s purchase of Irish bonds, for which we, the patriotic Irish, paid him full face value.
Cyprus is not playing the ECB game and guess what? The ECB blinked first. They backed down.
This gives the lie to every word of nonsense Fianna Fáil, Fine Gael, and, to their endless shame, the Labour Party, used to intimidate the Irish people and it shows quite clearly that all the threats were hollow. We could have safely allowed Anglo and Irish Nationwide to collapse, with no consequences at all, since these were not real banks, but instead our elected representatives chose to cower beneath ECB threats and inflict their losses on us and on our grandchildren.
The leading actor in this farce in Germany, and so much for the myth of German efficiency. At every stage of this crisis, all their politicians and technocrats have demonstrated is a heavy-handed unimaginative arrogance. Inflexible, overbearing and domineering, they’re reinforced every stereotype we’ve ever known and added a few, since we wouldn’t normally associate stupidity with the Germans.
Study the Cyprus farce and be very angry for what the ECB, driven by Germany, has done to Ireland.
Elsewhere: Germany’s dilemma