Tomás Ó Flatharta

Looking at Things from the Left

Good Days for Financial Parasites, Friends of the Fine Gael-Labour Government

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In case you were wondering where the €427 million to be ‘saved’ by the cuts in welfare spending in 2014 (€390 million in 2013) is going (childrens allowance, respite care grant, PRSI increases for low earners, etc) or where the household and ‘property’ tax money is going – here’s a snapshot of today’s activities: payments to bondholders on Dec 17.
Check out who’s paying out, by hitting ‘A good day’ below.
http://cedarlounge.wordpress.com/2012/12/17/a-good-day/
BoI (Bank of Ireland) and EBS (now merged with AIB). They are paying ‘Senior Unsecured’ bondholders – rich people who bought bonds from the banks with no associated collateral to guarantee repayment – and therefore a higher rate of interest. The banks used the money raised from these bond sales to fund the developers – and together they drove up land and house prices. Since the crash, these bonds have been trading on the bond markets for anything up to a 50% discount – but the banks are paying out full listed price to current bondholders.
There again, let’s not think the bankers are losing too much sleep over giving a euro for a bond bought for 50 cent: the money they’re using to pay the bondholders is state / your money (the state is the payer of last resort, because it can raise the money by taxing you and me), or money borrowed from the ECB with the state / you standing as guarantor. And the state, Labour and Fine Gael, the EU and the ECB, are all insisting that full payment is made on what are otherwise almost worthless bonds.
As to who decides these matters, you might think that the state would act in the interests of citizens. It does indeed do that – but for the wealthy citizens. So when you hear that well-hackneyed phrase ‘protecting the most vulnerable’, have a think about how vulnerable those bondholders must be – coz they’re sure getting a lot of protecting.
The state put €5,000 million into BoI since 2008 (when it was bankrupt and nobody else would give any money) and got 50% of its shares in return. 35% of those shares were sold earlier in the year by Michael Noonan to billionaire Wilbur Ross for €1,000 million. In doing so the government agreed to give him a little prezzie of €2,500 million: he only paid €1,000 million for shares the state paid €3,500 million to the bank for. The state still owns 15% of the bank and has a ‘public interest director’ on the board. But he hasn’t met the minister for finance for over a year (he’s been busy working out the bonus payments for the other directors).
That €2,500 million discount to a billionaire is an interesting contrast to the respite grant cut to the full-time carers of people with disabilities – at a ‘saving’ to the state of €26 million.
As to AIB-EBS, the state owns 99.9% of it. And put in over €20,000 million. So the bondholders are getting the whole whack from state ‘injections’ of capital; or from borrowings made with the state as guarantor. The Irish banks have been ‘recapitalised’ (given money or had borrowings guaranteed by the state) with €17,400 million set aside for next year’s bond payments alone. And more again for the following years.
Did I hear you say ‘child benefit’?
The €500 million Labour and Fine Gael hope to get from ye through the ‘property’ tax in 2014 will help out with the €9,100 million interest payments on the money borrowed by the state to fund the banks and their debts to speculating bondholders.
So as you can see, your money’s going to good use – sure wouldn’t ye only waste it on food or drink or keeping warm if it didn’t go to ensure payment to those ‘most vulnerable’: bondholders – the people who are really being protected. Check out the Indo a while back for the wages and expenses of Ireland’s bank directors. And as you may have heard, the Financial Regulator (state employee) has told the banks that they must increase their charges and interest rates to get back into profit asap. So you’ll be helping the ‘most vulnerable’ in multiple ways: cuts, taxes, and bank charges. Mother Teresa couldn’t do more!
If all this has you feeling a bit irritated, put Saturday, Feb 9, 2013, in your diary – it’s the day of protest being convened by ICTU against the austerity required to keep the rich well provided with Prada bags (running out the door of Brown Thomas at €900 a go). And tell your friends. If we don’t have a big turnout in Feb – and another big demo before the €3,060 million ‘promissory note’ payment for Anglo on March 31, we can kiss goodbye to any hope of stopping the home tax – or repudiating debts which are not ours (or our children’s).
Brendan Young

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