Mick Wallace RT @wallacemick: Would mean something for Irish people and the notion of 'Irish Neutrality' if Irish Minister for Foreign Affairs @simoncov
Mick Wallace It would do something for #EU credibility if it were to acknowledge the amazing selfless role that #Cuba has played… https://t.co/I8G0EcxRxz
Mick Wallace RT @wallacemick: EU has supported the #US #Saudi #UAE #Israel Regime Change effort in #Syria for 10 years. And now #EU pretends that it car…
Mick Wallace #Eritrea 's Isaias Afwerki made an evil pact with #Ethiopia President to destroy the TPLF and #Tigray - And then W… https://t.co/9lH2snOfLg

Finance

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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A press release was sent to media outlets this evening regarding tomorrow's payment of over €700 million to Anglo Irish Bank bondholders. The release sets out Mick's thoughts on this payment.

The Government should suspend tomorrow’s scheduled repayment of a €715 million (USD 1 billion) unsecured Anglo Irish Bank bond. It should immediately enter into negotiations with both the Central Bank of Ireland and the ECB to achieve a debt write-down, Wexford TD Mick Wallace has said.

Unless the Government acts now, €715 million will be paid out tomorrow (November 2nd) to senior unsecured bondholders in an institution which, as Minister Noonan acknowledges, is no longer a bank and will never again operate as such.

“The logic of paying unsecured bondholders was always questionable, now it has become ridiculous. The notion that the Irish Government would part with over €700 million to pay someone who should not be paid is difficult to deal with. This is a Government decision and the cost is being borne by cutting much-needed SNAs in primary schools along with teaching support for marginalised groups. Hospitals beds are being closed to meet budget targets and the same Government is now considering introducing a thin end of the wedge household tax on already hard-pressed households”, said Deputy Wallace.

Tomorrow’s bond is not covered by any of the guarantee schemes operated by the Irish Government, nor is there any obligation under the terms of the Memorandum of Understanding with the IMF/EU/ECB to repay bondholders. The repayment of this bond is, therefore, a political choice.

The austerity coming down the tracks in the form of the Comprehensive Spending Review, the Four-Year Plan, and Budget 2012 will be used in part to repay obscene amounts of money to unsecured unguaranteed bondholders – this is a social and moral outrage.

Commenting on recent developments in the Eurozone Deputy Wallace said, “We have just seen holders of Greek sovereign bonds receive a 50 per cent cut - and they'll be glad to get it, if they do. Despite much talk to the contrary, the dogs in the street knew it would happen. And there's more coming. We will soon reach a stage where Europe will take on the sovereign problems of struggling Euro member states, as well as its banking problems. It's time the Irish Government stood up for itself, stopped bending over backwards to prove how good we can be, while forcing the most vulnerable to carry the can. We seem to be consistently behind the curve, it is time to wise up”.

   

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mwOn Thursday October 20th Mick spoke on the Report by the Interdepartmental Working Group  on Mortgage Arrears, more commonly known as the Keane Report. The report was commissioned by the Government to offer solutions to those experiencing difficulty repaying their mortgages. In his statement on the report Mick argues that those who face problems meeting payments and groups who provide support for those people need to be consulted in solving this issue. The relationship between the Government and the people needs to be as close as the relationship the Government has with the banks. You can watch his speech here or read the transcript below.

I was always taught that when reading a factual book, the first thing I should do is see who wrote it, when he wrote it and in some contexts, particularly in history, where he came from and his background. When I looked at the Keane report, I was surprised that it came from people who did not have a direct relationship with the problems they addressed. That was a mistake. I am not sure if any of them is struggling to pay a mortgage; perhaps they are. However, I noticed there was no criticism of the banks’ behaviour towards the borrower, despite the fact that there is much evidence of bullying, threats and intimidation from the financial institutions in their relationship with borrowers. It does not take a rocket scientist to figure out that it is a pretty uneven contest between the borrower and the lender at the moment.

I recently met a group of national organisations who were also very surprised that they had not been involved in this report. I accept that the Government may take some of their ideas on board. Among those present were FLAC, Threshold, Respond, Focus Ireland, the Society of St. Vincent de Paul and New Beginning. It was interesting to hear their opinions because they are at the coalface of the problem. They are dealing with the people who are suffering in a serious way on a daily basis. It would have been a great idea on the part of the Government to involve these people in the report.

The Government needs to connect more with civic groups in general, and not just on this issue. The Government has a responsibility to change the level of disconnection between Leinster House and the world outside. I am a newcomer to this House. I have worked all my life on a physical level and on a business level outside in the so-called real world. I am surprised at the level of disconnection. I am surprised at the lack of understanding in here at times of what really goes on outside and what is really happening. We spoke about Priory Hall only this week and I noticed that people do not understand what happens on a building site, but since they were never on a site, that is probably understandable. They will have to address the lack of regulation in the construction industry. It has been there for a long time, in spite of recent CIF protestations. I do not recall the CIF asking for more regulation over the past ten years. If the Government is to address the problem, its members need to speak to the people who work on building sites and learn from them.

I wish there was a closer relationship between the Government and the people when it comes to mortgages. I wish it was as close as the relationship between the Government and the banks. There is more interaction between the Government and the banks than there is between the Government and the people. The mortgage crisis is worse at this stage, and that is not surprising because things are becoming difficult for many people. They are falling further behind with their payments and they have a great deal of other debt. We still seem to lack a proper way of measuring that debt for some reason. We do not know what they owe, between credit cards, utility bills and so on. We probably do not realise just yet how poor many people are.

The top priority of the Government has to be to keep people in their homes and not to drive them into poverty. Whether the person is in trouble due to his own fault or due to the lender’s fault is a different argument. I am not very happy with the current perception that the borrower is the person who always needs to be forgiven. A great deal of forgiveness is required for the lender as well and we need to have a serious look at how we think about the way banks relate to their customers. I do not see much sense of responsibility shown by lenders towards borrowers, but they should accept responsibility. When a borrower takes money from a lender, there has to be more scrutiny of the agreement and there must be a level of fairness in it. The notion that any lender can demand payment of all money owed at 24 hours notice is outrageous. It is completely unrealistic. Who can come up with it?

In my predicament last week with ACC, it was hardly surprising that I could not come up with €19 million overnight. However, let us say a Member in here still owes €200,000 on his mortgage, can he imagine the banks giving him 24 hours to pay that? It would be very difficult for anybody to do that, and not just the builders and developers who might be in a difficult place. We seem to think there is a stigma attached to people who owe money. We have heard a lot of talk about “can’t pay, won’t pay”. Of course, we do not want people cheating the system, that is, people who could pay getting away with not paying. However, there is an unfair stigma developing about the people who are in trouble. In this regard, I saw two elements in the report. It stated that those who can meet their mortgage obligations must do so. It also said mortgage holders are not entitled to any particular mortgage solutions. There is a sense that borrowers are morally questionable, yet there is not a word about lenders being morally questionable and, God knows, they have not covered themselves in glory.

A point that is pretty obvious to us all was pointed out by the group New Beginning. It is that there is unlikely to be a recovery in the economy until we resolve what is now a mortgage crisis. Until ordinary people can return to economic normality, the real economy will stagnate, which means unemployment, emigration, misery and injustice, too, for a lot of people.

A Dublin man, Michael Lamb, wrote to me and other TDs about his family and his mortgage predicament. He wrote: “As it stands, we can just about cover the monthly repayments and, as such, do not appear as a statistic in the reports that are currently circulating on people who are experiencing mortgage difficulties. My family, including my two young children, make many sacrifices to pay the monthly repayments which would not be possible without the help of our parents.” It is so difficult for so many people, and it is a lot worse than we realise. There will have to be some sort of write-down for some people who really cannot pay.

The mortgage-to-rent scheme is dependent on housing organisations that were not going to get access to money themselves and are already seriously overstretched. I realise it can be difficult to involve a local authority in that situation but it is something the Minister will have to examine.

Looking to the future, we must surely rethink our whole philosophy on housing. In the 1940s, 70% of housing was social but since 2000 it has been 6%. That cannot continue. The notion that everybody will be able to afford a home is unsustainable. The State should change its mindset and consider having a serious social housing programme if it wanted to take proper care of its citizens.

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