From Frankfurt With Love

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trichetJean Claude Trichet

… It is the position of the [ECB] Governing Council that it is only if we receive in writing a commitment from the Irish government vis-a-vis the Eurosystem on the four following points that we can authorise further provisions of ELA [emergency liquidity] to Irish financial institutions:

1) The Irish government shall send a request for financial support to the Eurogroup;

2) The request shall include the commitment to undertake decisive actions in the areas of fiscal consolidation, structural reforms and financial sector restructuring, in agreement with the European Commission, the International Monetary Fund and the ECB;

3) The plan for the restructuring of the Irish financial sector shall include the provision of the necessary capital to those Irish banks needing it and will be funded by the financial resources provided at the European and international level to the Irish government as well as by financial means currently available to the lrish government, including existing cash reserves of the Irish government;

4) The repayment of the funds provided in the form of ELA shall be fully guaranteed by the Irish government, which would ensure the payment of immediate compensation to the Central Bank of Ireland in the event of missed payments on the side of the recipient institutions.

I am sure that you are aware that a swift response is needed before markets open next week, as evidenced by recent market tensions which may further escalate, possibly in a disruptive way, if no concrete action is taken by the Irish government on the points I mention above.

Portion of a letter sent to then Finance Minister Brian Lenihan from ECB President Jean Claude Trichet on November 19, 2010

Jean Claude Trichet letter to Brian Lenihan (Irish Times)

Reuters

Meanwhile…

And…

Screen Shot 2014-11-06 at 09.03.27Screen Shot 2014-11-06 at 09.06.39

Via NAMAwinelake

43 thoughts on “From Frankfurt With Love

    1. Sam

      We were bankrupt? That’s new. Seems the country itself was fine and the banks were in deep shite…
      Then the rule of ‘save the rich’ swapped our places.
      Yes, other countries can look down on us, as most people stood idly by while we were robbed.

    2. ollie

      But we weren’t bankrupt. Our private banking sector went bust, we should not have taken on their debt. brian lenihan was absolutely spineless.

      1. Sparks

        Even if the banking sector hadn’t collapsed, we were in pretty serious trouble. The FF-led governments had hugely increased government spending based on big gains in stamp duty, assuming that that particular party would never end. When the slow-down in housing came along, stamp duty revenue collapsed, and there was no way of making up the shortfall. Even without the bailout, we faced some pretty austere years, and it probably provided the government with good cover to have the excuse of the Troika breathing down their necks.

        Obviously, something had to be done about the banks, or the depositors would have lost all their money. What is so galling is: a) that the bondholders of the banks got any money at all; and b) that most of the people in charge of the banks seem to have got away without even a financial penalty.

        1. Disasta

          I wish they took depositors money instead. I had none but now suffer for something I had no part it.

        2. My Daddy is bigger than Yours

          “Obviously, something had to be done about the banks, or the depositors would have lost all their money”

          you’re not familiar with how banks work are you?

  1. Alfred E. Neumann

    Suing the ECB could take some pressure off the government. It might also give the EU an excuse to do them some favours. A nice pre-election deal could get them in again.

    1. Sinabhfuil

      Favours?

      The country was screwed by a combination of financial crookery and the stupidity of international banks. This is nothing to do with the size of Ireland.

      1. Mario Balotelli

        Only in the fact that we’re a small country so they figured they could put a boot on our throats.

  2. martco

    I love this photo, just plain sinister

    Brian Lenihan RIP seemed a slippery character to me but what must it have been like for him to sit there with the cancer taking a grip and read + sign this architects terms of surrender
    not a good way to leave

    1. Spartacus

      Retrospective canonisation of Lenihan is entirely dishonest. His illness had nothing to do with it, he was a cnut before he got sick.

      1. stev

        Exactly. The attempted rehabilitation of him via that horrible aunt of his and the rest of vested interest is stomach churning.

        1. deliverancecountry

          Filthy Fail put him in charge because they knew everyone would Be Nice to CancerBoy. If they had an honest bone in their bodies they would have appointed one of their former finance ministers to explain how the Soldiers of Destiny betrayed us for a few greasy coins.

          1. martco

            not disagreeing chaps, no FF or Lenihan love here trust me…
            just musing what it would be like to have C and have to be involved in something like that…instead of quit and deal with his illness and spend his valuable time on family…serving neither himself nor his “work”…he was a fool

    2. ollie

      lenihan bottled it. Some day we’ll find out how many bondholders were personally know to lenihan.

    3. Neil

      Am I the only person that thinks it was seriously irresponsible for the Taoiseach and the government of the time to leave someone in the grips of cancer in charge of the financial struggles of the nation and to lead the ‘negotiations’ related to the debt dealings. The man could not have been in the right state of mind for such things.

  3. ahyeah

    This letter gets leaked today…. Enda must be really, really, really rattled by the water fiasco. Classic short-sighted parochial politics – how do you get one drama off the front pages? Create a new one.

    1. Spartacus

      Well, it appears to be working. Our national broadcaster’s primary radio station Radio Pravda RTE Radio 1 has managed to avoid mentioning last night’s escapades on every single news broadcast since 7 a.m. and yet they are all over the JCT letter. Isn’t that curious?

  4. mauriac

    scary trichet stating the obvious and fighting his corner.pity Ireland’s government was incapable of any fightback…

  5. My Daddy is bigger than Yours

    a lot of Fianna Fail apologists here today. WHat gives?

    Ireland decided to give the banks a guarantee in 2008 without any pressure from ECB/EU

    http://www.irishtimes.com/newspaper/finance/2008/1024/1224715115776.html

    Irish bailout cheapest in world, says Lenihan

    MINISTER FOR Finance Brian Lenihan has said the bank guarantee scheme was “a necessary first step” and “the cheapest bailout in the world so far”. Mr Lenihan said the guarantee was “the cheapest bailout” compared with bank rescues in other countries, including the UK and the US, where “billions and billions of taxpayers’ money are being poured into financial institutions”.
    ..

    ..
    ..

    >The Department of Finance said in a market notice issued on its website on Wednesday that a financial institution covered under the guarantee was “not required to indemnify” the State in a guarantee given to any other covered lender that is not part of its group. This will assuage concerns among banks that they would be forced – under the terms of the guarantee scheme – to cover the cost to the State of any other guaranteed lender defaulting on its debt. The rules of the scheme had said the Minister could recoup any losses incurred on one covered institution from all of the institutions guaranteed in the scheme. Mr Lenihan said in his speech yesterday that Ireland had to go it alone by protecting its banks.

    We are on our own in the sense that we have to ensure that our banking system is reformed and restored to the position where it can provide the necessary credit that is essential for the successful operation of Irish businesses.” Mr Lenihan said the guarantee scheme had attracted criticism from major European countries.** He added that the Lisbon No vote had “done us huge damage among our European friends”.

    “Look at what happened in Iceland – if we have no viable banking system in this country or we allow the banking system to fail, we won’t have an economy,” he said. “The disastrous implications of bank failures – we have seen them in every country in the world. “Our Government has a duty to give leadership on this issue and to ensure that we retain that viability in this country.”

  6. Italia'90

    I couldn’t help reading that excerpt out loud in a Herr Flick accent (to the incarcerated bankers here in Mountjoy prison).

  7. Ronan D

    An interesting question I’d have here is why the DOF decided to leak this letter to the Irish Times yesterday, rather than letting the ECB release the letter to Gavin Sheridan today.

    Obviously, since the DOF had the letter since it was originally received, they could have leaked it at any time they chose, but given that it’s most likely they got the confirmation from the ECB yesterday that the ECB would be releasing the letter today, they decided to jump the gun.

    I’ve seen people speculating on Twitter that the letter was released to distract from water charges, or Garda actions yesterday, or to distract from the fact that Labour voted against Fine Gael in the Seanad yesterday.

    I don’t believe any of these are the reason – the only reason it was leaked yesterday was to get in ahead of the ECB today at their meeting.

    So, the question remains, why release to Irish Times and not let Gavin Sheridan get his just rewards for years of splendid work.

    Do the DOF / Government have an axe to grind against Mr. Sheridan because of all his great FOI work over the past few years?

    Have they decided to simply screw him over on the exclusive because of that in an enormously petty move on their part?

  8. mc c.

    German people like Ireland and Irish peoples, the land of lakes and forests and trurnips and spuds but they were genuinely surprised to find that most irish peoples are, secert Billionaires not just millionaires.
    Truely stunned that the irish peoples could afford to pay hundreds of billions to European and German banks.
    Its great they now think irish peoples are very generous.

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