There's a letter writer in Dublin who plagues the pages of the broadsheets with what can only be described as Government propaganda. A Mr A. Leavy is the ultimate in political correctness who is quick to slap down any criticism of the establishment. I have read his utterances now for years and actually have silently agreed with some of his points. But then this morning in the "Examiner," he presents the so-called Irish bailout in terms I'm not letting him away with.
In response to a letter by another contributor, A. Leavy writes, "He also left out the fact that when this country was bankrupted by the decisions of a small number of its own most powerful citizens, the taxpayers of other EU countries, some of them poorer than us, contributed to an €85bn bailout in 2010." This of course, is the official story put about be those in charge and it has been bleated almost constantly since by our own Government lest we think something else happened.
Well, something else did happen. Pre-2008, European banks in Germany and France were awash with saver's money and banks don't make money themselves on deposits. Banks make their profits on loans so that was the first thing to understand about the collapse and subsequent alleged bailout. Up to the early noughties, Irish banks did not borrow from Europe. But word got out here about the cash mountain and Anglo-Irish Bank in Dublin duly made enquiries. That was the second thing to understand. Mainland European banks were willing and able to loan of own banks as much as they liked at preferable rates and that started the rot. It was banks lending to banks and no Governments, (or ordinary people), had anything to do with that. It was an outbreak of banking recklessness.
With access to what seemed like a bottomless pit of money, our bankers went looking for big borrowers. Enter the builders and developers and contracts flew around like confetti. Loans were taken out to pay the interest on other loans and the whole thing went mad. The theory was that it was all too big to fail, the mantra was build it and they will come and the belief was that property would always go up in price. So the German banks kept giving and out home grown go-boys kept taking. That feeble Fianna Fail Government were delighted because tax monies were flowing in without any effort from them but they did not have any control over any of it. It was happening despite them. The bank regulator was asleep and never raised alarms so the Celtic Tiger purred on.
The pyramid had to come crashing down because the bubble could not continue to inflate forever. Houses that cost €100,000 to build were selling for €500,000 and were clearly overpriced no matter what people thought. The day of reckoning happened when the panicked Irish bankers secretly met out Government and told them they were broke on paper. The gamble had exploded, there was nobody paying back their debts and the anxious Germans were beginning to demand they loan repayments.
We need to understand that banks, both national and central, are private companies and even the EU itself in at the mercy of the ECB. Governments have no control over their currencies and that is the great evil at the heart of modern capitalism. We were up to our necks in it with nowhere to turn. That was the moment that Brian Cowen and his front bench had the chance to ditch the existing irish banks, dissolve the Irish Central Bank and set up a State bank to guarantee an amount of deposits. Instead, they opted to bailout the existing banks. That started the real rot and we're still feeling that decision eight years later. In Iceland, they jailed their bankers and in Ireland, we rewarded them. But that was never going to be the end of it. While the banks had the State guarantee behind them and billions transferred from the exchequer to the bank vaults, (so to speak), there were bigger fish to fry.
Banks are the ultimate business. All other enterprises expend time and effort in order to make money. They borrow to invest to make profits. Banks however, create all the money and I mean 'create.' Banks uniquely create money out of nothing and this process is called, "Bringing money into existence." They have the levers to increase or decrease the money supply at any given time of their choosing so that they can squeeze or inflate as suits them. Central banks regularly bring money into existence that was not there before and your local bank also does the same when you apply for a loan or mortgage. They don't have it for you so they simply make it up. The only "REAL" money in the economy is that which is traded for real work. Not mistake then that this is the money the banks get paid back in return for their illusory money.
As regards the bailout, we have been led to believe that the EU countries bailed Ireland out of a financial problem and that is not what happened at all. The EU 'Instructed," Ireland to accept a staggering set of loans from private banks, (The ECB & IMF), and give that money to our banks. The IMF, (another private bank), and the European Central Bank, (private), effectively got their fellow bankers here out of trouble by corrupting the EU politicians to force the Irish to socialize a private debt because the alternative would have been the collapse of private banks around the world. The Irish banks then returned the imaginary money to an imaginary account in Europe to balance the bank's books. So my gripe with A. Leavy centers around his statement, "The taxpayers of other EU countries, some of them poorer than us, contributed to an €85bn bailout in 2010." They didn't Anthony. The ECB invented nonexistent money, made it end up with our banks in return for real money that was worked for by the Irish taxpayer. It was a scam from start to finish but on an enormous scale. It was daylight robbery and what our politicians are guilty of is their complicity in this robbery of the Irish taxpayer by the banking sector at home and abroad.
I don't ever want to hear that word "Bailout," again!