Cyprus, the ECB and Anglo

All throughout the mess that was the unhappily drawn out death of Anglo Irish Banks, and indeed before, I and many others had been suggesting that rather than pay 3.1b per annum for many many annums we not….That we walk from the obligtation and not pay it to the Central Bank of Ireland.

The response was always “oh no sure the ECB, now them lads, oho, thems the buckos, oh begob theyll put manners on us, ah you dont want to be annoying them” and on and on in a manner that would do discredit to The Bird O’Donnell. Stripped of the teeth sucking and lip pursing the threat was that the ECB would pull the plug and deprive us of money. Eventually Ireland converted this non sovereign arguably illegal obligation into 25b of cold hard sovereign debt. And this was hailed as a marvel of political strokery and financial engineering…

Today the Cypriot parliament in effect gave two fingers to the ECB, among others. And the ECB, that fearsome boojum, responded….by sayin “oh….ah…right well just carry on so there…” . They agreed to keep ELA going under the normal rules, ruling out the possibility that the ATMs would run dry and the island sink into a modern day lord of the flies.  It might and they mught anyhow as anyone with a speck of sense withdraws money when and if the banks reopen. But it exposes as hollow the ECB threat. The key here is to keep the banks alive and solvent, so a  thousand year zero coupon Promissory Note or some other legal-accounting trick might be needed. Surely we could in a gesture of smal country solidarity give them the cliff notes?

That may be bad news in the longterm as it weakens the credibility of the ECB but in the short term it makes us look weak, imho…

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One thought on “Cyprus, the ECB and Anglo

  1. Pingback: Cyprus — Bucking the ECB » Bock The Robber

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