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IMF was in favour of Government burning senior bondholders

Image: Photocall Ireland

THE CHIEF NEGOTIATOR for the International Monetary Fund (IMF) has said that his organisation told the Irish Government it was in favour of burning senior bondholders at the time of the bailout.

Ajai Chopra, speaking tonight in an exclusive interview on the RTÉ Prime Time special: The Bailout, said:

We looked at the matter… of how burden sharing should be done and if certain conditions were (met), we thought sharing the burden with unsecured senior creditors of banks was an option that ought to be explored.

In June of this year, current Finance Minister Michael Noonan had threatened to impose losses on some senior bondholders, at Anglo Irish Bank and the Irish Nationwide Building Society, to the tune of €3.5bn. He said at the time that the IMF supported the strategy.

Chopra’s interview tonight with Prime Time’s Robert Shortt shows that the IMF had been advising that strategy of imposing such a haircut on bondholders as far back as last year, when Ireland had to seek a bailout from the EU/IMF/ECB troika. The late Brian Lenihan was Finance Minister during those discussions. (Noonan said in the Dáil this month that Fine Gael never promised unilaterally that it would burn senior bondholders).

However, the European Central Bank is known to be still firmly against such a course of action. Noonan told the Dáil on 15 November that the ECB would need to approve burning senior bondholders at the financial institutions and that “the ECB’s consent was not forthcoming”. One of Brian Lenihan’s economic advisors, Alan Ahearne, and EC bailout negotiator István Pál Székely both confirmed last night that the ECB had been against burning bondholders in November 2010.

The Prime Time programme also reported that US Secretary of the Treasury, Timothy Geithner, was not in favour of Ireland making senior bondholders sustain losses. This stance by Geithner and his colleagues was confirmed by Székely.

Read: Discussions for potential bailout happened months before announcement>

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Comments (94 Comments)

  • Paul Beggan 28/11/11 #
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    Fianna Fáil’s policies in the final months and weeks of their “government” – LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES. LIES.

    I’m really tired of all these revelations.

    Reply
  • Michael Hegarty 28/11/11 #
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    I was shocked hearing that. Surely, the IMFs opinions and muscle should have been listened to over the Germans and French. Jesus, Cowen and especially Linehan should have been tried for treason….we could still get Cowen I guess!!!

    Reply
    • Paul Curran 28/11/11 #
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      Don’t think there are any laws for treason against the state in Ireland so they couldn’t be charged even if the will was there to try them before courts?

    • Michael Hegarty 28/11/11 #
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      Treason Act 1939, ammended 1998 should cover it… I think….that a very I THINK though….lol….if not, lets legislate!!!!

    • Tim Henchin 28/11/11 #
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      The other one can still be tried posthumously.

    • Report this comment

      Michael, it’s not that the IMF offered better advice than the the ECB, it is more that the ECB was holding a gun over our heads. If the Brian committed treason (which I actually don’t think they did, as they could easily claim that he believed that he believed he was acting in the interests of the Irish state) they did so under duress. If we didn’t agree to the ECB, we wouldn’t have gotten our bailout, and our country’s banks would have collapsed long ago.

      Whoever pays the piper names the tune.

    • Cal Mooney 29/11/11 #
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      Fiachra, th IMF would have lent us the money, The banks would not have run out of money. That is what the IMF do in other countries … You are still swallowing the crap from FF/FG/Labour that said we had no choice but to pay the bond holders etc etc …
      Look at what the Germans and French are doing now… they are ready to pull up the draw bridge and lock the gates to protect themselves, rather than put in the necessary actions required to support th Euro in ful. Ireland has been sold the biggest pile of lies by Maerkel/Sarkosy, FF, FG and obviously Labour…… Eyes wide opn. There are alternatives.

    • Report this comment

      The ECB would have stopped providing liquidity to Irish banks, we would have been cut loose, our economy in tatters. The money provided by the IMF wouldn’t be near enough to solve all our problems.

      Like it or not, given the state of the Irish banking system last November, we NEEDED the goodwill of the ECB.

  • Mark Kirwan 28/11/11 #
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    It’s not just that Geithner ‘was not in favour’ of banks taking losses, he vetoed it according to Morgan Kelly’s account of the bail-out from last May:

    ‘Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

    The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.’

    http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

    Friends like these….

    Reply
  • Danny D 28/11/11 #
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    Jesus this is really scary stuff. So essentially France and Germany did eat us alive after all…

    Reply
  • Kevin Carroll 28/11/11 #
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    its mind blowing that the IMF of all organisations seems to have been the “Good Cop/ Honest Broker” in all of this debacle. I am now officially anti-european (union).

    Reply
  • Graham Mace 28/11/11 #
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    Burning times. And I thought it was only witches in the firing line.
    All the same, the public would probably have a few suggestions who needs burning, if we could have a collection for the fuel which we can’t afford.

    Reply
    • Tim Henchin 29/11/11 #
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      That is not a can do attitude. Where is the knowledge that you should have gleamed from generations past. Ash wood is the only timber that will burn while green, no seasoning required.

      We’ll get the bonfire going alright, we’ll stand on our feet, know that we have to.

  • Brian Walsh 28/11/11 #
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    It’s like paying the bully to kick you in the balls, repeatedly. So what are we waiting for, burn ‘em now?

    Reply
  • Brian Walsh 28/11/11 #
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    Just a thought, Enda’s going to give his “State of the Nation” address this week, anybody care to speculate on what he’s gonna say. I’m betting a few cupla focal, some historical anecdotes and the usual, “we’re all struggling in this together, and together next year we’ll turn the corner” oh and I’d say we’ll hear the word sacrifice once or twice. Anyone care to speculate?

    Reply
    • Martin Mc Cormack 28/11/11 #
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      he surely has to mention Bill clinton, he even did at his mothers funeral today,, Some gobshite

    • Réada Quinn 29/11/11 #
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      His speech will be great and full of hope! But don’t be fooled – Enda doesn’t write his own speeches…

    • Ann Illing 29/11/11 #
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      Brian here is my state of the nation speech. To everyone in Ireland stand together against the brainwashing crap we are fed from not only our own egotistical puppet politicians but also the power crazed bureaucrats of euope. Germany is determined to run the show any which way it can.

  • Daniel O'Sullivan 28/11/11 #
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    Europe is a joke and is killing this country very quick. they take everything from us that’s worth money .ie our fisheries and gas supplies. we need to also get out of this euro currency

    Reply
  • Anthony Mc Glynn 28/11/11 #
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    will the shit hit the fan now..or will we all sit back and say……sure nothing we can do about it now

    Reply
  • Kevin O'Sullivan 28/11/11 #
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    “if certain conditions were (met)” – my question is, what were these conditions?

    Reply
  • John Murphy 28/11/11 #
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    I always thought that Chopra chap was doing a lot of grinning and mooing to the cameras on his walks down Dame St. No doubt thinking to himself ‘if you poor plebs could only know what was going on behind your backs’ and wondering how we could elect such idiots!

    Reply
  • Mickey Kenny 28/11/11 #
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    LIES LIES LIES

    Reply
  • Dave finn 28/11/11 #
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    Why did we not opt to exclusively borrow from the IMF and tell the others to go jump?

    Reply
  • Kieran Dunne 28/11/11 #
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    This was reported in the days before the last paying of Anglo bondholders. Chopra gave a press conference at summit. News now; why?

    Reply
  • Aidan Geraghty 28/11/11 #
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    Government might have been stupid but not as stupid as people paying half a million for an apartment. People make mistakes. Fianna Fail were a top class government

    Reply
  • Tigerisinthezoo 28/11/11 #
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    We must remember that Europe is keeping us afloat at the moment. If the bonds were burnt surely this would mean major issues for German banks. The whole thing would have come down. Chaos.

    Reply
    • Dave finn 28/11/11 #
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      Europe is keeping its banks afloat. Not us. The budget deficeit was 20 bn. We have made 20bn of a correction. The deficeit is still 20bn. Why is that? BANKS!

    • Máirín 29/11/11 #
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      No! We are keeping Europe afloat by sticking by the euro rather than printing púnts … and not alone are we protecting the euro but we are being charged interest for the privilege of doing so….

  • Report this comment

    “If ye love wealth better than liberty, the tranquility of servitude than the animated contest of freedom, go from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that you were our countrymen!” – Samuel Adams

    Have a nice day.

    Reply
  • Maria Dunne 29/11/11 #
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    DOWN to EU NOW!!!..we have waited too long….we should have never gone in 1st time & Gerry Adams told ye so…..we are only an island & they are eating us up & spitting us out…what did ye expect from the Germans???..Ye have short memories!!!…what did they do to the Jewish people….we’d be better off under UK!!!!…our forefathers are turning in their graves….silly stupid to think we could play with the big boys!!!

    Reply
    • Thinkshpake 29/11/11 #
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      Are you really comparing this to the Holocaust? Knee jerk much?

    • Ryan Murphy 29/11/11 #
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      Jesus, I’d hate to be a German person, and come across that utter load of bile!

    • Dave finn 29/11/11 #
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      It seems you have a short memory too, saying we’d be better off “under UK”. It was not that long ago in historical terms that a few million starved to death in this country while its abundent stocks of food were being exported to feed the UK….

    • Matthew Mark 29/11/11 #
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      I actually think we’d be far better off as part of the UK. Same language, similar culture. What the helll have we in common with Greece, Spain? Nothing.

  • Trevor Bacon 29/11/11 #
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    http://www.positivemoney.org.uk/

    Maybe its a solution – After we’ve all Starved to death.

    Reply
  • Conor Heffernan 29/11/11 #
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    to be fair, Europe has been good to us, u need not drive 2 far on any main road in Ireland before you see a sign sayin part funded by European development fund, the same goes for sewerage schemes, water schemes etc, it was only a matter of time before the gravy train ran out. To think that the European countries who gave us all that money would let us burn their banks and bondholders, is a bit mad really!

    Reply
    • Tigerisinthezoo 29/11/11 #
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      We have given as much. The truth is that everyone gained but it seems the Germans gained much more.

    • Brian Walsh 29/11/11 #
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      Yes we did do well from the EU, but over the years we got hundreds of millions, the problem is that Germany was thinking in billions all that time. What we got was crumbs from the table and we thought we were doing great. Who’s doing great now?

    • Matthew Mark 29/11/11 #
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      Same nonsense argument about how much we’ve got from EU in funds. One answer : we GAVE UP OUR FISH STOCKS WORTH BILLIONS!!!!

  • Tigerisinthezoo 29/11/11 #
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    Our best bet is to balance our public debt if thats even possible. At least then we would have some cards to play. However we are seeing the first real downside of this global economy. It’s like a drowning man, everyone will get dragged down because we are all connected.

    Reply
  • Darren Tracey 29/11/11 #
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    http://www.independent.ie/business/personal-finance/surviving-the-recession/what-would-happen-to-your-money-if-ireland-defaulted-2647568.html I think I’d rather stay in the EU if I’m honest. How people come out with this absolute bull, that we’re better off without europe, is beyond me.

    Reply
    • Matthew Mark 29/11/11 #
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      It would be nice to have money to worry about.

    • Niall Mulligan 29/11/11 #
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      To be fair, the Indo has churned its fair share of pro-establishment bull in its time.

      Would like to see a thorough, scholarly appraisal before coming to any conclusions.

      My head is still spinning from this, cannot believe that our “leaders” couldn’t leverage support from one apex of the troika into a better deal.

      Abject.

  • Print the punt and let’s get on with it.
    God love us

    Reply
  • Derek Durkin 29/11/11 #
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    It’ll be interesting to see if any more revelations come about DSK. There is a lot of talk about a connection between the two.

    Reply
  • Mary Dwyer 29/11/11 #
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    A rehash of what we already knew. Except,, what “conditions” did the I.M.F. want. Now, that could be interesting.

    Reply
    • 29/11/11 #
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      540 billion euro worth of oil and gas perhaps

    • 29/11/11 #
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      And a strategic military and economic location for the biggest imperial empire the world has even seen.

      Take a read off John Perkins ‘Confessions of an Economic Hitman’ available for a tenner in easons. a book everyone should read!

  • Frank2521 29/11/11 #
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    When I see the roads around D4 getting resurfaced with the most expensive covering and stainless steel posts being put up for traffic lights etc I wonder how much more corruption can these guys get away with. To resurface Park Ave (1.5 miles) that did not need it – I drive it every day. It must be corruption. Stainless steel poles are like gold plated taps – will somebody arrest the Dublin City Manager ?

    Reply
  • no name 29/11/11 #
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    Same shit, over n over…. They all knew. They are all in each others pockets.

    Reply
  • 29/11/11 #
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    Well at least we can still burn them in traditional witch hunt style.

    Reply
  • William O'Shea 29/11/11 #
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    Forget about the Germans/troika etc…….. the fact of the matter is our Taoiseach at the time (Kaiser Biff) showed absolutely NO solidarity with the Irish people! And for this he gets an outrageous pension at the age of 51 or whatever he is. As he said in the Dail on one occasion as a result of being heckled by the opposition “…. I’m Taoiseach and I’ll run the country the way I see fit…..” I’m now beginning to see him as the Rev. Ian Paisley saw him………….. he’s as thick as he looks!

    Reply
  • neuromancer 29/11/11 #
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    I wish Germany would just run our country. They do a fine job in deutchland, bring that over here.

    At least their country works and they have excess monies. They don’t pish theirs away like we do.

    Reply
    • Kieran Dunne 29/11/11 #
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      The Germans have excess money? True, but its money that doesn’t exist. The Franco – German banks are completly tied up in this mess and are a huge part of the crisis. Wouldnt fancy the same speculators running our place tbh. Merkel’s lack of political leadership is also baffling

  • John 29/11/11 #
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    Me thinks the IMF are trying to look like the good guys here. Epic fail!

    Reply
  • Ciaro 29/11/11 #
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    The amount of lies told by cowen, lenihan et al at the time was shocking.

    Reply
  • Cal Mooney 29/11/11 #
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    Sorry for the repeated posts across multiple articles …. but i am going torepeat my views again and again until people realise they are being sold bu**sh*t by FF/FG/Labour….

    SF have repeated many many times, they would have no problem negotiating with Europe on having a savage haircut applied to Ireland debt. They have said many time, that the Banking debt is NOT sovereign debt.
    I have said in many articles that many eminent economists also supported SFs view. Now, apparently, it looks like the IMF suported that view also.
    FF/FG/Labour have done such a good job using their propoganda, that many people now believe FF/FG/Labour.
    But when i see articles like this one, i cant help thinking to myself, i told ya so.
    We were told coming to the election that SF’s policy of burning bond-holders would have left us with no money in the banks to pay soical welfare, gardai, nurses etc …. Now apparently, the IMF would have supported us, and that the cash machines not working was a total myth.
    FF/FG/Labour are at best a lieing shower of ba*stards, and at worst, Financial terrorists, who have saddled Ireland with Sovereign debt, tjhat should never have been applied to us in the first place. They have scared the public away from voting SF with their lies, These guys need to justify their lies. ENDA kenny must tell the Irish people why he lied so blatantly to us coming into the election….

    People, wake up, eyes wide open.

    Reply
  • Gary Keegan 29/11/11 #
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    Can we not all pick a month say January and all default on everything, mortgage, car tax, phone bills, gas, electric, TV, Household charge, vat the lot. Just not pay and let these fookers know we are willing to do it again and again until the tide turns in our favour and they start to listen?

    Reply
    • Paul Curran 29/11/11 #
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      Exactly, boycott them, take back some control from those thieves and traitors in Leinster House FF Fg L . It’s a complete smokescreen portrayed that there is any difference between any of these parties! On the boycott side what critical mass of people would there have to be to be effective 10,000. 50,000 more It would be more effective than any protesting!

  • Ed Appleby 29/11/11 #
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    The great fantasy of European ‘partners’ and American ‘special friends’ has finally been exposed for the bullshit it is and always was, people need to be real about this, the US will always look out for the US and the German/Franco alliance which is what the Eurozone is now morphing into is about self preservation, the fact is that these countries would be happy to ditch the PIIGS countries tomorrow if they could and retain their Euro currency undamaged at the same time. The IMF operates in a different sphere and has different objectives the Irish govt, are just a puppet govt, who are going through the motions. The Cowen govt, told the country lies upon lies and when they finally did take the bailout they couldn’t even get a decent rate of interest. The fact that it was Geithner who torpedoed the IMF deal is galling when you think of the way the Irish govt, media and people fawned over Obama when it was his treasury secretary that was sticking the knife into Irelands back. Only the UK’s Osborne stood up for Ireland and lets face it, he was doing that out of UK self interest, the amount of trade between the UK and Ireland is too important to the UK and Ireland to stand by and watch Ireland go down the tube. The sad fact is that there is no such thing as friendship or loyalty in business it all about profit and making a buck, Ireland needs to start planning for a new reality and that might mean outside the Euro.

    Reply
  • Charles Magus 29/11/11 #
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    Lies, lies and more lies! the IMF is owned by the bastard Rothschilds that don’t give a rat’s arse about humanity! The IMF through Hentry Kissinger and David Rockefeller told Brian Cowan that he was to go along with the scam to guarrantee that no matter how risky the loan was, if the bankers made very bad decisions, the government would bail them out. The bankers made sure that they took on extremely bad loan risks, Especially if the Rothschild family were major shareholders of their banks! This is so that they would need a massive bail out which would get the country into such a deep debt that the IMF would have to step in and begin taking resources from that country that had trouble paying back the loan, or they would put stipulations on the loan to Ireland so that they could be given government utilities so they could charge the people the earth to use them. This is how the IMF goes into a country and destroys it with debt that can never be paid off! They did this to Africa and stole their lands and resources! Take a look at a book call the “Confessions of an Economic hitman”, by John Perkins. It shows you how this banking scam works and what happens to the people that don’t get into debt! They get murdered, just like the Polish President and his entire party. (But one, the betrayer) They were killed because they refused an IMF loan and to take the contaminated Vaccines from Baxters that would kill the oldest and weakest in Poland’s society.

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  • Diarmuid O'Flynn 29/11/11 #
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    Fiachra, under threat from the ECB/EU/EC (or so we’re told, though there is no actual evidence of this anywhere, orally or in print) we have assumed a debt that wasn’t ours of €72bn in failed bank bonds, a debt that will become at least €100bn when interest is added, so we can borrow €100bn to keep our banks going – this makes sense to you? And that €100bn ‘liquidity’ funding, Fiachra, where is that going? You do realise that €55bn in bank bonds mature over the next four years from the six Irish banks – where do you think that money will come from, the bank profits? Jesus H Christ!

    Reply
  • Tony Skillington 29/11/11 #
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    If the IMF were in favour of us doing this…why did we not just borrow all the money from them..roast the bankers and tell Germany to go fuck itself?

    Reply

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