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Thursday, February 7, 2013

The Zombie is dead

In the last 2 years the expression “Labours way or Frankfurt’s Way” has been thrown back at Labour from the right wing cynics.  Often these people take the term out of context.  It was a line contained in a speech by Eamon Gilmore during the 2011 General Election.  He was speaking about how Fianna Fail and Fine Gael had accepted the financial straight jacket of the bail out terms set out by the Troika.  Of the troika it seems the IMF & EU are capable of being flexible in relation to the conditions of the bail out. The EU needs a country to emerge from the fiscal hell of bail out.  The IMF was not the boogie man it was held up to be. It’s the end of 2 things, Anglo (IBRC) debt and the promissory note by which FF & the greens bailed out the failed bank.

It’s the ECB, our friends in Frankfurt that Eamon Gilmore identified who need to get real in relation to the impact of the bail out.  Liquidating IBRC or Anglo is something that should have happened in 2008. It’s exactly what the ECB may not like but austerity isn’t just for citizens, perhaps it’s for institutions too. The dry reference to the Irish operation and taking note of the arrangement between the Irish government and the Irish Central Bank can cover a multitude of things now and into the future. Our friends in Frankfurt may need to swot up Irish politics.

The politics of the liquidation is interesting. Labour opposed the bank guarantee on the basis of a liquidation being a better than the state bailout.  The logic of that position is to liquidate. Sinn Fein supported the bail out and now oppose the liquidation. There is a perverted logic in that too if you’re a banker, developer or believer ion socialism for the rich and capitalism for the poor.  Strange given that the party is concerned at the number of state employees earning more than €100K and IBRC has a significant number of them. Predictable given that the legislation halts any legal actions against IBRC and there still remains the matter of the Quinn assets to be decided by the courts. Sinn Fein have been hugely supportive of Quinn.  What happens to Quinns properties now will be a matter for the court and the liquidator.  It’s not the first time company law has needed emergency legislation.  Administration was brought in to save PMPA, Examinerships to save Goodman.  The more convoluted and complex the fiscal shambles becomes the more exposed Sinn Fein policy is exposed for its naivety. Are they spooked by the independents right and left?    

The liquidator will pass on performing assets to NAMA and then dispose of the left overs.  Many employees may be re-employed at NAMA but under different contracts and salaries.  Ironically Libertas who opposed the Fiscal treaty argued voting No would lead to a better deal on bank debt.  In fact the opposite has proved correct. The beast is dead, deeply regretted by Gerry Adams and Libertas but I for one, shed no tears. Time to move on.

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