We’re getting burned just so the bondholders get their cash

IT may have escaped your notice but the country has finally emerged from the economic crisis that has gripped it for over three years.

Well, that’s according to French President Nicholas Sarkozy who, rather alarmingly, seems to suddenly regard bankrupt Ireland as a model of fiscal probity for the other bad boy countries in Europe.

Mr Sarkozy made his comments after yet another eurozone crisis summit on Sunday but, in his defence, he could have been suffering from the phenomenon of “baby brain”. True, it’s more common in mothers, as memory loss is a physiological consequence of pregnancy, but perhaps new father Mr Sarkozy has been stricken with the same ailment.

I mean, how else could he conceivably claim that “Ireland is a country which has exited from the crisis” unless he had suddenly forgotten our 14.6% unemployment rate, our €18bn budget deficit — which has remained virtually static despite the €20bn we’ve already slashed from budgets thus far; the 38 consecutive months that the value of retail sales has fallen and the myriad other economic indicators which scream ALL IS NOT WELL in the domestic Irish economy?

Insanity has been defined as doing the same thing over and over again and expecting a different result. By that definition, politicians all over Europe are bonkers.

It’s been over three years since the sky fell on our heads, after the collapse of Lehmen Brothers, and still the same quack doctors are prescribing the same austerity medicine even as the crisis deepens with every passing month. As December’s budget draws closer, our own government ministers have been speaking in increasingly scarifying tones about all of the tough decisions they will be forced to take in order to scrape together at least €3.6bn in cuts. Fed up of being asked about cuts to disability services and the likelihood of blind pensions being further raided, their latest desperate wheeze involves the tiresome pretence they’ll be forced to cut even more in the hope that we’ll all be strangely relieved when they eventually confirm that a mere €3,600m is being hacked from next year’s budget. So, we have good cop, and Communications Minister Pat Rabbitte coming out and telling us that he can’t possibly countenance more than the €3.6bn of cuts, while bad cop, everyone in the Fine Gael party, tell us that the final figure has yet to be decided but it could be over €4bn.

This tedious pantomime has led to blanket headlines about alleged “tensions” in government circles but it’s really just a ruse to try to give ministers some breathing space as they conjure up cuts. Now, instead of documenting the likely nature of the “adjustments” that are hurtling towards us, the media is gamely devoting acres of newsprint to a notional argument about €400m while virtually ignoring the certainty that nine times that amount is about to be crudely hacked from the economy.

Clever clogs government strategists must be quite pleased with themselves. Of course both Labour and Fine Gael government ministers look equally aggrieved when the are forced to talk about the inevitable pain that’s about to be inflicted on each and every one of us, regardless of the ultimate final figure, and, lower lip trembling, complain about how hard it is to come up with the requisite number of cuts that together make the relatively paltry sum of €3.6bn.

Education Minister Ruairi Quinn must have looked terribly wan when he addressed the National Association of Principals and Deputy Principals (NAPD) conference earlier this month and confessed; “making cuts to education expenditure is anathema to my personal philosophy”.

Unfortunately for students and teachers, personal philosophies evidently get dumped upon entering government because, as well as making severe cuts to the education budget, Mr Quinn and the rest of the coalition are about to quietly hand over $1bn, or €750m, to Anglo’s unburnable bondholders on Tuesday.

Even as government departments contemplate the most draconian of cuts to social welfare, health and education budgets, the department of finance is about to meekly hand over $1bn to private bondholders that we have no legal, and definitely no moral, obligation to pay. Why? Because they have been told to do so and, instead of employing their critical functions and simply refusing, will just go along with whatever mad-capped demands come from the ECB.

Now, you may remember Finance Minister Michael Noonan telling us all a few short months ago that Anglo was more akin to a rotting carcass then a bank and that he’d rather canvass for Willie O’Dea during the next election then flush good money after bad paying unsecured bondholders in that cursed institution but, crucially, that was then and this is now.

To be precise, this is what he told us earlier this year when he went rogue and decided to represent Irish, instead of eurozone, interests. “Look, it’s no longer a bank ... it’s a warehouse for impaired assets ... you can’t put your money on deposit in Anglo Irish. You can’t get a loan from Anglo Irish. As far as I am concerned, this is not a real bank. This is a warehouse and we need your assistance in dealing with the senior bond holders because we don’t think the Irish taxpayer should have to redeem what has become speculative investment.”

That’s the stirring fighting talk we heard from Mr Noonan back in June but, regrettably, his negotiation strategy, when it came to convincing the ECB that it was unwise to use borrowed state funds to repay unsecured speculative investors, was to roll over and allow the Europeans to tickle his belly.

SIMILARLY, Eamon Gilmore once infamously thundered “it’s Frankfurt’s way or Labour’s way” but election promises, as we all know, turn to dust once a government is formed and, according to unconfirmed reports, he’s now wearing lederhosen to his official engagements.

So, the long and the short of it is that Ireland is broke but not broke enough that we’ll stiff private bondholders in banks that no longer exist. After all, we have our pride. This is why, after today’s meeting of European Finance Ministers, Mr Noonan will try to rationalise the fact that Greek debt is being written down by up to 60% while the Irish taxpayer is still lumbered with repaying every single debt our demented bankers racked up — including the $1bn owed to professional gamblers that will duly be handed over in six days.

Essentially, the geniuses in Europe, who have managed to prolong this crisis longer than even the most pessimistic doom-monger thought possible, are telling us that there’s no contagion risk from Greek debt being more than halved but the luckless Irish still have to pay all their bust banks’ bad debts or risk precipitating some kind of pan-global financial armageddon. Worse, our government, the ones we recently vested with a mandate to represent our interests and renegotiate the crippling bailout deal, are determined to go along with whatever is demanded of them.

Now, ministers will tell you that we’re too dependent on the Europeans for our bailout loot, and that we can’t afford to anger Merkozy or else they’ll pull about €150bn in emergency funding from our banks, but Ireland has played ball so far — we simply don’t want to made fools of and, really, some kind of small concession would be nice.

Because, nobody in the financial world can quite believe that these unsecured bondholders are actually going to get their pay day and that the government is going to meekly stump up the cash, even as they devise plans to further crucify their own long-suffering citizens.