Mick Wallace So #Biden will start as #Trump left off - continuing to impose 'collective punishment' on the people of #Venezuelahttps://t.co/9gtWc2M5Yw
Mick Wallace #EU wants to talk about Western backed protesters in #HongKong where - unlike #US - police have killed no protester… https://t.co/0NaZRH0LxN
Mick Wallace RT @wallacemick: Very significant amendment for us to win - by just 2 votes - Tax Havens are largely responsible for helping to enshrine po…
Mick Wallace RT @wallacemick: #EU - Latin America gig talked about reducing inequality + overcoming #COVID19. During a pandemic one would expect all cou…

mwOn Thursday November 17th, Mick raised a topical issue in the Dáil - 'Given that Angela Merkel is unreceptive to the plight of Europe's smaller nations, is it not time for the Irish Government to start working towards withholding the next unsecured bondholder payout'. In his address Mick suggests that if the Germans do not agree that the ECB should become a lender of last resort, there is no doubt that we will be staring the end of the euro as we know it in the face. You can view the discussion here.

Mick Wallace I commend Deputy McCarthy for raising the previous matter. I wish I was at the mercy of NAMA rather than the ACC. Mick Wallace I would like to speak about the banking crisis and the latest reports from Europe. The French and the Spanish are paying more for their bonds today than they were yesterday. The sooner we acknowledge that things will not continue as they have been, the better it will be for ourselves. If the reports are true, I commend the Taoiseach for challenging Mrs. Merkel yesterday. If the Germans do not agree that the ECB should become a lender of last resort, there is no doubt that we will be staring the end of the euro as we know it in the face. It will be difficult to sustain it in its present manner. Very few economists of any stature in Europe see a bright future for it. It seems that if we do not accept the German model, we will end up in the second zone of Europe - that is the best case scenario - or else we will see the break-up of the EU. The Government seriously needs to think about the €1.25 billion we are supposed to give to more unsecured bondholders on 25 January next. The goalposts are moving in Europe every day. The Government does not need me to tell it what it could do with that money. It would be manna from heaven for Irish society at this stage of the game. Many areas are screaming out for assistance. That €1.25 billion would go a long way towards alleviating some of the misery that is being inflicted on many of the more vulnerable people in our society. The European project was originally based on the idea of Europe as a family of nations. That is really not the case anymore. It is not feasible for us to think we can be like Germany. Our costs will always be higher than those of the Germans. There are 80 million of them. It is hard for us to match them for productivity. I do not see how we can play in the same league. Initially, the whole notion underpinning the eurozone was that the bigger countries would carry the weaker ones with them. That is not really happening anymore. There is a lack of real labour market mobility. Europe’s mechanisms for shifting resources from rich parts of the eurozone to poor parts of it are inadequate. The high cost we are paying for that is the economic failure that has transpired. The youth unemployment rate in Spain is 50% and in Greece is 40%. We have our own difficulties, with 450,000 people unemployed. That figure is probably going to increase. I will conclude by quoting from an article by Larry Elliott in last Monday’s The Guardian, which summed it up very nicely: So much political capital has been invested in the euro project that it is perfectly understandable that policy makers have been desperately trying to buy time until they can piece together a fiscal union to buttress monetary union. There are a number of problems with this idea: it would take time Europe doesn’t have to organise; it would involve the weaker countries being dictated to by the strong in an even more direct way than they are at present; it would involve not just years but decades of austerity, and it would mean ignoring the seemingly obvious conclusion that monetary union is – and always was – rotten economics. Larry Elliott is a serious economic commentator. Brian Hayes I wish to state clearly that there is nothing to suggest from yesterday’s meeting between the Taoiseach and Chancellor Merkel, or from any statement or utterance made by Chancellor Merkel, that she is unreceptive to the plight of Europe’s smaller nations. She, along with the European Heads of State, is working to resolve the crisis in the eurozone. I would draw a distinction between Anglo Irish Bank and Irish Nationwide Building Society, now named IRBC, and the other covered institutions. No consideration is being given to burden sharing with senior bondholders in any of the other covered institutions. In regard to the repayment of unguaranteed unsecured senior debt, it has always been the Minister’s position that, given the significant cost of IBRC to the State and the taxpayer, there should be a sharing of the burden of debt with bondholders. To avoid such repayments, the most logical option would have been to put the bank into administration. This option was available to the previous Administration but instead, it put the taxpayer on the line for the liabilities of Anglo Irish Bank. If we were to suspend payments to creditors in Anglo Irish Bank, this would have a significant impact on both the bank and, ultimately, the State because it is a totally guaranteed and a nationalised bank. This senior debt, unsecured as it is, is an obligation of the bank. If the bank does not meet such obligations, it would lead to a default and following that, most likely, insolvency. Insolvency would result in a significant increase in the cost to the State to resolve Anglo Irish Bank, or IBRC as it is now known. After the Minister’s recent meeting with the previous European Central Bank President, Mr. Trichet, and Commissioner Rehn, our European partners expressed strong reservations about burden sharing with senior bondholders in IBRC. Mr. Trichet voiced his opinion that he was against such actions for two reasons. First, private sector involvement carries very significant contagion risk and may be inconsistent with encouraging private investors to return to markets. Second, he said Ireland had done particularly well over the summer. He mentioned the narrowing of bond spreads and he said he felt that anything to do with senior debt burden sharing might knock the confidence of the market in the absolute commitment of the Government to once again take its place in normally functioning markets and, as a result, bond yields could widen again and we might lose the ground we had gained over the past number of months. Mr. Trichet’s views were echoed by Commissioner Rehn. The positive international commentary on Ireland has been created by the Government’s successful renegotiation of the memorandum of understanding, the introduction of the jobs initiative, the sizeable reduction of the interest rate on the EU-IMF programme and the reduction in the cost of the banks to the taxpayer. The value of support, present and future, we receive from our European partners far outweighs any short-term gain from imposing burden sharing on these bonds in the face of European opposition to such a move. For example, €110 billion of funding is provided by the ECB and the Central Bank of Ireland to the Irish banks at a cost below which they could borrow in the market. This is in addition to the €85 billion set out in the programme with the troika. Nonetheless, as the Minister and the Government have made it perfectly clear, we still have unfinished business with our partners to find the most cost-effective way of resolving IBRC over the long term. The Government’s aim is to ensure that the overall cost of resolving the bank’s debt and the costs of resolving the difficulties in the banking sector generally are kept to a minimum. Discussions have commenced with the relevant authorities at a technical level but, as yet, there is no indication of a successful outcome. The Minister will consider the future repayment of maturing bonds in the bank in this context and in terms of what is best for the overall position of the State. I draw to Deputy Wallace’s attention and that of all Members the motion approved by this House last week and to indicate that nothing has changed in the meantime to alter our position and that of this House. Among other things, the motion acknowledged that the Government should not act unilaterally in regard to the repayment of unguaranteed senior debt and should have regard to the views of our partners who are providing the requisite funding for the financial institutions; acknowledged that the Government is working with our partners in the EU and IMF to address the situation and is actively involved in discussions with a view to reducing the overall cost to the State; and affirmed that the approach being pursued by the Government is, given the situation with which it has been presented with by the former Administration, the optimum approach which will produce the best medium to long-term outcome for the State and the Irish taxpayer. Mick Wallace I accept the Government is in a very difficult place. Ruairi Quinn The country is in a very difficult place. Mick Wallace Yes, it is and it is getting even more difficult. I do not accept we have turned any corners. From my experience of the domestic economy, things are getting more rather than less difficult. People have less money in their pockets when they walk through the doors of most retail units in this country. I understand we have become financially very dependent on the ECB and the EU because we agreed to bail out the banks, lock, stock and barrel. I am not saying it is all this Government’s responsibility but I do not believe what is happening is very fair. We are prepared to borrow crazy money to rescue the financial institutions but we will not even conceive of the idea of borrowing crazy money to invest. I understand it is very difficult given that we are already borrowing too much and that we are in a very difficult place. However, I do not accept that things will continue as they are and that it is fair for us to part with €1.25 billion. The Minister said it would upset the apple cart but I do not accept that he would be throwing the baby out with the bath water. I do not believe Europe will pull the plug if we refuse to pay unsecured bondholders in order to take a little bit better care of the less privileged in our society who are suffering dearly. This would not be a draconian measure. This country has obeyed so many of the rules and adhered to the obligations of Europe that it would not be so draconian for us to withhold this money. It is legally possible. Brian Hayes The best way to ensure some security for the most marginalised in this society is if we can meet the bills of our social protection system. If one forgets all about the bank debt and Anglo Irish Bank for a moment, the fundamental issue is that, every month, there is a €1.3 billion deficit between what we spend and what we take in. Mick Wallace I understand that. Brian Hayes The only way we can resolve that issue is if we get our public finances into a sustainable position. The way to do that and to get through these difficult years is to work with those international partners who are providing €85 billion so that we can get through this difficult period because we are not in the markets. The ECB is keeping the Irish bank afloat to the tune of €110 billion. Deputy Wallace knows this and I put it to him that it is not just the responsibility of this Government to get us through this appalling mess, which we will get through, but it is the responsibility of every Member of this House to be realistic and to be honest with the public about the scale of the challenges we face and how we will get to that better place. I am sure the Deputy appreciates that the only way we can get to that better place is by taking a step-by-step approach to those negotiations. The Government can point to some success. Does it need to do more? Of course, it does. Much is being done in bilaterally, quietly and distinctly but nonetheless winning the argument. The only way for this country to show to our international funders that there is a future for it is to ensure we make that progress. I look for the Deputy’s support and that of the Government in attempting to do that because it is the only way we will get to a better place.

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Namaleaks is a project that seeks to uncover possible injustice and poor practice related to NAMA (National Asset Management Agency) and financial institutions in Ireland.


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