{"id":27,"date":"2012-03-31T15:40:19","date_gmt":"2012-03-31T15:40:19","guid":{"rendered":"http:\/\/argentprovocateur.stanislasjourdan.fr\/?p=27"},"modified":"2019-12-15T16:49:18","modified_gmt":"2019-12-15T15:49:18","slug":"deal-ireland-echos-trapped","status":"publish","type":"post","link":"https:\/\/stanislasjourdan.fr\/en\/2012\/03\/31\/deal-ireland-echos-trapped\/","title":{"rendered":"French press’ mistaken view on the Irish promissory notes deal"},"content":{"rendered":"

On Thursday, the Irish government\u00a0announced<\/a>\u00a0that it reached a deal about the promissory notes issue, that forces Ireland to pay 3,06 bn euros on march 31st. But this deal actually does not defer any payment neither relieves Ireland from its heavy debt burden.<\/p>\n

In France, the only newspaper that reported about this information was\u00a0Les Echos<\/em>. But their\u00a0paper<\/a> is such a misleading piece that i’m afraid they had better not to say nothing. Indeed, Les Echos<\/em>\u00a0committed \u00a0a significant number of mistakes, false assumptions, and misunderstandings that I’ll try to discuss in the following post.<\/p>\n

The deal that wasn’t<\/h3>\n

In its very first sentence,\u00a0Massimo Prandi (the author) claims:<\/p>\n

Thanks to intense\u00a0negotiations with\u00a0its European partners and\u00a0with the ECB, Ireland\u00a0finally got\u00a0the green light to\u00a0a\u00a0first\u00a0rescheduling.<\/p><\/blockquote>\n

Even though the Irish government has been working a lot to get this kind of deal, the thing is, it did not get anything from the ECB and “European partners”. For a long time now, the ECB has been particularly reluctant to seal any kind of agreement that could constitute a bad precedent for market and financial stability.<\/p>\n

Apparently, this has not changed, despite a curious statements<\/a> from Michael Noonan:<\/p>\n

I, and the Irish government, would like to thank all parties to these discussions for their constructive approach and positive engagement.<\/p><\/blockquote>\n

On its side, the ECB seems to discover they were part of any deal, according to this laconic statement issued to\u00a0Reuters<\/a><\/em>:<\/p>\n

The ECB takes note of today’s announcement of the minister of finance of Ireland regarding the government’s intentions on the payment of the promissory notes due on Friday the 30th of March 2012<\/p><\/blockquote>\n

This, in my ears, sounds like a\u00a0fait accompli<\/a><\/em> rather than a deal… Or even no deal at all, since Bank of Ireland’ shareholders still have to approve the agreement (because the bank will act as an intermediary between the IBRC and the central bank, repoing an Irish sovereign bond sold to IBRC by the Irish treasury.<\/p>\n

ELA, NCB, ECB<\/h3>\n

While detailing\u00a0the substance of the so-called “deal”,\u00a0Les Echos<\/em>‘ reporter comes to saying that emergency liquidity assistance operations are risky for the eurosystem. However, while ELA operations are decided in accordance with the ECB, it remains on the sole responsibility of the National central bank providing the liquidity.<\/p>\n

By the way, it’s funny that the “deal” precisely increase the risk on the eurozone since 3 bn euros of ELA lendings will be replaced by standard ECB repo operations.<\/p>\n

Later, we can read that the deal received a lot of “perplexity” in the ECB’ staff, which is probably an euphemism. The ECB has been the strongest obstacle towards any kind of debt restructuring in Ireland.<\/p>\n

Angry Emerald<\/h3>\n

In the following sentence, we can read some lyrism like:<\/p>\n

L’entente scell\u00e9e est tr\u00e8s appr\u00e9ci\u00e9e dans la capitale de l’\u00eele d’Emeraude. (The sealed\u00a0agreement was very popular\u00a0in the capital\u00a0of\u00a0the Emerald Isle.)<\/p><\/blockquote>\n

Cute, but probably untrue. For some time now in Ireland,\u00a0activists,\u00a0economists, and normal people are standing up<\/a> against the payment of these promissory notes and other bonds repayments to private investors. Pressure has been rising on the shoulders of the Irish government lastly about these issues, and the fail to reach any solid consensus with the ECB will certainly not appease Irish people’s discontent.<\/p>\n

\"\"

Protests in front of the Central bank of Ireland<\/p><\/div>\n

Beyond the fa\u00e7ade<\/h3>\n

Les Echos<\/em>\u00a0quotes Central Bank of Ireland’s Patrick Honohan:<\/p>\n

There is a very definitive gain in debt sustainability.<\/p><\/blockquote>\n

As well as the Irish Finance minister statement:<\/p>\n

The net effect of this transaction is to reduce the economic cost for the State as a whole of refinancing this payment.<\/p><\/blockquote>\n

Again, this is not true. “There will be an increase in Government debt of roughly \u20ac410 million, plus the cost of transactions<\/em>“,\u00a0notices us<\/a>\u00a0the Dublin-based economist\u00a0Constantin Gurdgiev. Not to mention the deal will increase 2012′ public deficit by 90 millions.<\/p>\n

A \u2018deal’ for nothing<\/h3>\n

The end of the article is the most astonishing:<\/p>\n

The other advantage of the agreement is to show the Irish people that Europeans are of good will towards their country.\u00a0A key message\u00a0while voters\u00a0of the island\u00a0are preparing to\u00a0vote\u00a0in a referendum\u00a0on the Treaty\u00a0European\u00a0budget.\u00a0The call\u00a0to vote\u00a0was set for\u00a0May 31\u00a0Finally.\u00a0The\u00a0agreement strengthens\u00a0the hope\u00a0of\u00a0Dublin\u00a0to succeed\u00a0in\u00a0the ongoing discussions\u00a0with the Europeans to\u00a0renegotiate the terms\u00a0of all\u00a0promissory notes.<\/strong>\u00a0Michael Noonan\u00a0hopes to complete\u00a0by the end\u00a0of the year.<\/p><\/blockquote>\n

As I\u00a0said before, this so-called agreements shows absolutely no “good will” from the ECB towards relieving Ireland’s debt burden. After months of negotiations, the ECB, which is the key-player in this game, has not moved one millimeter from its hard-line. It simply pretends that\u00a0Ireland is doing good and that the plan is working out.<\/p>\n

And there is still very little hope this will change in the future. Especially if journalists are not able to produce any critical analysis against political\u00a0langue de bois<\/em>…<\/p>\n

Update<\/strong>: I just came across Le Figaro’<\/em>s piece<\/a> on the topic, which is more or less a copy-paste of the one commented here.<\/p>\n

\n

\"Paternit\u00e9\"\"Pas\"Partage<\/a>\u00a0lusciousblopster<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On Thursday, the Irish government\u00a0announced\u00a0that it reached a deal about the promissory notes issue, that forces Ireland to pay 3,06 bn euros on march 31st. But this deal actually does not defer any payment neither relieves Ireland from its heavy debt burden. In France, the only newspaper that reported about this information was\u00a0Les Echos. But their\u00a0paper is such a misleading<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[1],"tags":[352,340,350,18],"class_list":["post-27","post","type-post","status-publish","format-standard","hentry","category-blog","tag-ela","tag-ecb","tag-eurozone-crisis","tag-ireland"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2om4O-r","_links":{"self":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/27","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/comments?post=27"}],"version-history":[{"count":2,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/27\/revisions"}],"predecessor-version":[{"id":6769,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/posts\/27\/revisions\/6769"}],"wp:attachment":[{"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/media?parent=27"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/categories?post=27"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stanislasjourdan.fr\/en\/wp-json\/wp\/v2\/tags?post=27"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}