A follow up from myself and Lorcan’s post last month on how much liquidity the Irish Central Bank is providing to Irish banks. November data has just been released and the figures are stark, a jump from €34bn in October to €44.67bn in November:
Of course that’s not the only story. Lending to euro area credit institutions rose as well, from €130bn to €136bn. As Lorcan points out on his blog:
Firstly, banks other than Anglo are now accessing this facility – Total loans from Anglo destined for NAMA were €20bn
Secondly, the ECB is NOT accepting NAMA promissory notes as collateral for repo operations. If it was, there would be no need for this facility from the Irish central bank. Presumably, the fact that NAMA is paying with promissory notes (basically an IOU) rather than government guaranteed bonds means they are not repo-able.
So, what does all this mean?
Well, the first broad point is that the amount of liquidity – both ECB and ‘exceptional’ – being provided to the Irish banking system has reached utterly unsustainable levels. At a combined total of €181.110bn, current ‘extend and pretend’ policies must be close to their limit.
I have an econo-crush on Simon Johnson, I think. Honestly, I giggle whenever anyone mentions his name.
I joke, I joke. Still, this one is well worth a read. I’m not going to bother quoting any specific section, it’s all relevent.
A fair few of the comments refer to Ireland.
Also, close watchers of The Digest – see right hand column of this website – will have already read “The clear correlation between crisis and corruption” by Sigrún Davíðsdóttir. Davíðsdóttir is the London correspondent for RUV (Icelandic national television) and has been spending some time in Dublin of late.
Readers may recall that at the start of this year we submitted two Environmental Information Regulations requests (EIRs, not FOIs). One was sent to the National Asset Management Agency and the other was sent to Anglo Irish Bank Corporation Limited – the nationalised bank. Both organisations replied by saying that they did not consider themselves to be public authorities for the purposes of the Regulations.
I have already blogged extensively about our argument with NAMA, that we believe it is clearly a public authority for the purposes of the Regulations. For a chronological look through that argument try these links
We are now awaiting a binding decision by the Office of the Commissioner for Environmental Information in relation to NAMA’s status as a public authority for the purposes of the Regulations.
Events have also now moved forward in relation to Anglo Irish Bank. In February this year I started the process by seeking information from Anglo in relation to its loan book, and to the travel expenses of its executives. Anglo denied it was a public authority and I appealed the decision to the OCEI. I have now received a copy of Anglo Irish Bank’s submission to the OCEI giving its legal argument as to why it believes it is not a public authority.
However, Anglo has sought to exert confidentiality over its 16-page legal submission (a copy of which I and the OCEI have), stating that the submission contains:
details of the management of the bank, its relationship with the Minister for Finance and the relationship framework established under the Anglo Irish Bank Corporation Act 2009 constitute confidential management information which should not be disclosed further than is necessary for the purposes of dealing with the appeal to the Commissioner
The OCEI have stated that they have not formed a view on the status of the information contained in the submission. However with the help of a very dedicated individual we have now drafted and completed our reply to Anglo’s submission. We will be publishing our submission shortly. We are unsure as to the status of Anglo’s submission in legal terms – but will seek advice from OCEI about whether we have a legitimate right to publish their submission.
I had a brief chat with Wikileaks founder Julian Assange earlier this summer in London, just prior to the Afghanistan war logs being released. He is an interesting character. Not many leaks from the latest release so far have related to Ireland, but here are the three we have found, of over 900 to come:
2. (C) XXXXXXXXXXXX met recently with XXXXXXXXXXXX, who sought UNHCR support in facilitating the movement out of Afghanistan of Brahmdagh Bugti, Nawab Akbar Khan Bugti’s grandson and head of the Baloch Republican Party. XXXXXXXXXXXX reportedly told XXXXXXXXXXXX that the Government of Ireland was willing to receive Brahmdagh Bugti, who “had to get out of Afghanistan and would not be safe returning to Pakistan.” XXXXXXXXXXXX also contended that the USG would be supportive of this transfer. (Note: XXXXXXXXXXXX has met with Embassy poloffs several times to float the idea of moving Bugti, sharing with us that Ireland’s Deputy Prime Minister is willing to help Bugti gain asylum there. End Note.)
Some time ago we sent a request to the Office of Public Works seeking information on how much had been spent by that body on any works at the homes of Irish politicians. We sought a breakdown of this information and sought to understand if anything other than works in relation to security had been carried out at the homes or constituency offices of politicians, particularly ministers.
The OPW initially refused our request citing several exemptions under the FOI Act. We appealed the decision, at a cost of €75. Four weeks later our appeal was rejected. We then appealed the decision to the Information Commissioner. It appears to have taken the OPW some time to deal with the Information Commissioner’s office (we started this process several months ago).
In a settlement reached via the Information Commissioner, it was agreed that information related to expenditure would be released but in an anonymised format, due to security considerations. We agreed to this.
As far as we can understand much of these costs are in relation to some things you can see on Google Street View, such as the green structures outside the Taoiseach’s house, and the home of the former Taoiseach. It also might relate to the laying of cables, triple glazed windows and security systems.
Michael Somers, one of the most powerful civil servants in the State through the boom years;
“… I think we need to be careful that we don’t go in for over-regulation, over-control. I think we need to ease up a bit in terms of political correctness and such likes, I think we’re being unduly politically correct at the moment.”
He also mentioned the possibilities for expanding the financial sector, how banks only came here after the IFSC was set up because the likes of himself “twisted their arms” (offered tax incentives?) and about how great we are that high-tech foreign companies, like Google base themselves here… Google employees how many engineers/coders in Ireland versus administrative workers? Saves how much money by routing its taxes through Ireland?
All in the final interview on The Week in Politics, about 42 minutes in at this link.
The Bureau of Investigative Journalism in London, a Potter Foundation-funded investigation unit, has partnered with the Financial Times to shine some light on how the €347bn of European structural funds is distributed. For eight months the Bureau and the FT have systematically sought details of how EFSF and ESF monies are used in all 27 member states of the European Union, including Ireland.
It came to light in September that Ireland had failed to apply for ESF monies for FAS for over 10 months as a result of investigations into fraud at the agency. The European Commission is reviewing some of the €600m given to Fas over the past 10 years. We might expect more revelations in relation to the investigations from the stories in the FT.
We met Cynthia O’Murchu, the FT’s lead journalist for the story, in Amsterdam at the Data Driven Journalism event organised by the European Journalism Centre over the summer. You can watch Cynthia’s talk at the conference here.
Myself and Mark were happy to provide some assistance to the Bureau of Investigative Journalism in relation to the Irish component of the investigation over the past number of months.
Press release here:
The Bureau of Investigative Journalism in collaboration with The Financial Times, has for the first time traced how the European Union distributes billions through its structural funds, revealing a trail of undetected waste, missed opportunity and even fraud.
As Europeans face the uncertainty of swingeing government cuts, the European Union continues to spend. Its structural fund programme distributes a colossal €347bn of European tax payers’ money across 271 regions in 27 countries. Yet a web of bureaucracy makes it almost impossible to track how the EU’s second largest budget is being spent. Even MEPs have not had a truly transparent view of the data.
Over eight months the Bureau of Investigative Journalism and the Financial Times have created a unique database that traces every penny distributed under the EU’s structural funds programme to date. The research collates information on 646,929 beneficiaries across all 27 member states, to provide a clear view of the EU’s second largest budget.
The research shows how big businesses are accessing grants, despite the fact that the structural funds are intended to provide a helping hand to Europe’s weakest members and smallest businesses. It also shows how EU funds have poured cash into the hands of the Italian mafia.
The key findings will be revealed in the Financial Times over five days from November 30 at www.ft.com/eu-funds and on the Bureau’s website www.thebureauinvestigates.com.
Iain Overton, Editor at the Bureau of Investigative Journalism, based at City University, explains the importance of the database: “In an age of austerity we need to ensure that every penny counts. The EU hands out nearly €350bn, and yet the distribution of these funds has remained opaque. Even MEPs haven’t had access to the detail. Our database shines new light on how the money is spent.”
Lionel Barber, editor of the Financial Times, said: “Our joint investigation raises some serious questions about the way the EU allocates development funds. The European Commission and the EU’s 27 member states need to ensure more transparency and greater accountability over how billions of euros of European taxpayers’ money are spent.”
It’s 2am. I just checked the news for the first time in 24 hours. Forgive the following poorly-written mind-dump. Comments and abuse though are of course still most welcome.
6.7% is a senseless and idiotic figure. You’ve got to think the announced rate will be lower, perhaps so it can be claimed that the negotiations were ‘successful’.
If the figure does turn out to be 6%+ it will have been designed to scare other teetering PIIGS into line in the short term.
Clearly, Ireland cannot afford anything close to such a rate. If the rate turns out anything above about 4.5% it’ll be to make an example of Ireland to ensure Portugal, Spain, Belguim and others stay the course. It’ll be the ECB and Irish government kicking our default date two or three years down the line, while heaping an extra €xbn (who cares what X is anymore? Any number is too big) onto the bill, in a desperate and transparent attempt to stop further defaults in the eurozone. We’re the gangrenous arm and the high rate will be a tourniquet.
Our default is coming, the question is when it’ll arrive. Right now, the answer to that question lies in Irish hands. The question for them is what they’re more concerned about protecting; the Irish taxpayer or Ireland’s relationships with other Eurozone members. The Germans have big exposure to our debt… jus’ sayin’.
Admittedly these are not mutually exclusive options but with the euro looking decidedly shaky, well, it can’t be all fun-and-games in Brussels forever… big-decision time looms.
Before the bank bust, Ireland had little public debt. But with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nation’s creditworthiness was put in doubt. So Ireland tried to reassure the markets with a harsh program of spending cuts.
Step back for a minute and think about that. These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts.
Or to be more accurate, they’re bearing a burden much larger than the debt — because those spending cuts have caused a severe recession so that in addition to taking on the banks’ debts, the Irish are suffering from plunging incomes and high unemployment.
But there is no alternative, say the serious people: all of this is necessary to restore confidence.
So why not restructure some of this debt, particularly as much of what the government will owe is actually debt taken on by overgrown and careless Irish banks?
The government has indicated that it will force a restructuring of some subordinated, relatively junior debt. For at least for one prominent bank, Anglo Irish, this may amount to paying 20 cents in the euro. This debt by itself is too small to make a difference, but why not apply the same principle to other categories of borrowings?
The most obvious answer is: Ireland’s European partners do not want this to happen, because it would expose the really bad decisions made by pan-European banks and their regulators over the last decade and create potential fiscal risks in other euro-zone countries.
FOOTNOTE: Blogging about default being the best option; as Bunk said to Omar, “it makes me sick, motherfucker, how far we done fell.”