Per Nama Wine Lake blog - an unparalleled true public service site on Irish debacle called Nama and many matters economic and financial, Irish Government (err... aka ex-Anglo Irish Bank, aka Irish Bank Resolution Corporation*) is on track to repay USD $1bn (€725m) unsecured unguaranteed senior Anglo bond on 2nd November 2011.
The gutless, completely irrational absurdity of this action being apparent to pretty much anyone around the world obviously needs no backing by numbers, but in the spirit of our times, let's provide some illustrations.
According to the latest QNA, in current market prices terms, Irish GNP grew in H1 2011 by a whooping grand total 0f €307 mln from €64,337 mln in H1 2010 to €65,012 mln in H1 2011, when measured in real terms. This means that Anglo bondholders payout forthcoming in November will be equivalent of erasing 28 months and 10 days worth of our economic growth.
According to the CSO data on national earnings, released on September 8, 2011, Ireland's current average earnings across the economy stand at €687.24 per week, implying annualized average earnings of €35,736.48. Irish tax calculator from Delloite provides net after-tax (& USC) income on such earnings of €28,287.39 per annum. This means that Anglo bond payout in November is equivalent to employment cost of 25,630 individuals.
According to CSO's latest QNHS data, in April-June 2011 there were 304,500 unemployed individuals in Ireland. This means the jobs that Anglo bond payout could cover are equivalent to 8.42% of the current unemployment pool.
I am not suggesting for a minute that we should simply use the money to 'create' government jobs - anyone who reads this blog or my articles in the press etc would know I have no time for Government-sponsored jobs 'creation'. But, folks, the above numbers are startling. We are about to p***ss into the proverbial wind the amount of money that is enough to cover our entire economy's growth over 2 years, 4 months and 10 days! For what? To underwrite 'credibility' of the institution that is a so completely and comprehensively insolvent?
* Note 1 that Anglo still calls itself Anglo (until October 14th) and still insists it is a bank as the web page http://www.angloirishbank.ie/ states clearly [emphasis mine] that: "As a Nationalised Bank since January 2009, the key objective of Anglo Irish Bank’s Board and new senior management team is to run the Bank in the public interest... The Bank continues to provide business lending, treasury and private banking services to our range of customers across all our locations."
Note 2:
The above, of course, assumes that €725mln exposure is hedged against currency fluctuations. If not, as Nama Wine Lake points out, the exposure rises to ca €740mln. The above figures therefore change to:
- GNP growth equivalent of 2 years, 4 months and 28 days
- Number of average earnings jobs of 26,160, plus one part-time job
- 8.59% of currently unemployed
Constantin, very well done. Surely this demonstrates the impact of the mad idea of repaying "unsecured" "unguaranteed" senior Anglo bonds. The country is in dire straits and yet we are prepared to, as you point out, to wipe out "28 months and 10 days of our economic growth" - not to mention the costs to employment. Why are we so insistent on this. In an "insolvency" situation, which Anglo obviously is, it really puzzles and frustrates me that the EU/ECB just can't see the sense to making such bondholders suffer the loss.
ReplyDeleteYes!
ReplyDeleteI am sorry to be blunt, but as the one who started a petition to close down Anglo, and reject any extension to the banking guarantee, on the day after the Irish Government voted in the Dail, on March 30, 2010 on what they called "Motion on Stability of Banking System", I think I have to throw up.
SICKENING!
15th June 2011, RTE News
ReplyDelete...Finance Minister Michael Noonan has said Ireland will go to our European partners with a plan to impose significant losses on some senior bondholders in Anglo Irish Bank and Irish Nationwide Building Society.
He was speaking in Washington after meeting the IMF and the US Treasury Secretary Timothy Geithner....
17th June 2011, breaking news dot ie
...The president of the European Central Bank has advised Michael Noonan that burning senior Anglo Irish Bank bondholders would damage Ireland's position in the markets. Jean Claude Trichet met the Finance Minister today in Poland.
Following this afternoon's talks, Mr Noonan said the ECB boss made "fairly good arguments" against any measures to impose losses on investors....
Ireland is de facto without a government, it is manhandled by ECB-EU-IMF compliance managers, pretending to be government.