Tell us, Jean-Claude.. About that letter?

The Public Accounts Committee of the Irish parliament is unique in its committees in that it has the power to compel witnesses to attend. They can sit there and say nothing but at least they must attend. As has been widely presumed, the committee is, it appears, to hold hearings into That Night, when the government decided to guarantee the banks (and in doing so killed the economy). I suspect that the findings of the PAC will reflect much more cockup and much less consipracy than many have suspected (feared? secretly hoped for?).

The headlines are that we will get the “full” story of the night. I doubt that we will, absent the appearance of Jean Claude Trichet, then Chairman of the ECB .   The ex (and late) Finance Minister, Brian Lenihan had always contended that he was, in effect, instructed by JCT to “save your banks” . There is in existence a letter from the ECB dated 19 November which, it appears, overrides and enhances the (foolish but) democratic wishes of the Irish Parliament which passed the guarantee scheme on 5 October and which was given effect by ministerial order on 20 October. This letter appears to be one that gives effect to the “save your banks” message of Trichet. Despite a number of requests ( see here, and here as examples ) over the years this letter has never been made public.  Apparently the contents are so explosive that they would “would undermine the protection of the public interest as regards the monetary policy of the union and as regards the stability of the financial system in a member state” .

Really? Unless the letter is signed in blood by Count Dracula and  Cthulu  on behalf of the Illuminati-Reptilian coalition, I doubt that 4 years on it would cause much more than a rueful shaking of heads. The letter probably makes dire noises about contagion and the stability of the European Financial System, and some soothing words along the lines of “just do this and we will all be grand, this is temporary”. It is much more likely to be embarrasing to the ECB (calling the consequences of the guarantee and severity of the problem wrong and hectoring a small nation), the Dept of Finance (this calling coming in part from their briefing of the same ECB) and the then government (naievly trusting in our friends in europe instead of a Palmerstonian interest based policy) than it is to rock the foundations of Euro area monetary policy (if we still have one other than reflexive hooverian austerity enhancing tightening). Sunlight is the best disinfectant so let it in.


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