So : we know now that Ireland was indeed threatened. But a bigger issue seems to lurk , but this may be just my ignorance
In late march 2011 the newly elected Minister for Finance went into the Dail to outline what the government would do regarding banks and bonds. There was no mention of enforcing losses on senior unsecured bondholders. And so about 8b more debt than was needed was loaded onto the Irish taxpayer. Thats about 400m a year in interest.
This is despite a government, meaning cabinet decision having been made, presumably on the regular meeting 2 days before, or an earlier one, that such would be done. Testimony from the minister suggests that literally as he was about to deliver the speech he got a phone call from the ECB which was in effect a direct interference in the cabinet decision. JC Trichet told him, bluntly, not to announce the cabinet decision.
The nature and likelihood of the realism of the threats can be discussed in another post. But some questions arise.
- Who told Trichet the cabinet decision? When? Are cabinet decisions not confidential until announced?
- Noonan said he conferred with the Taoiseach and they, not the cabinet, agreed to drop the burden sharing decision. On what authority was that, as they are not the cabinet?
- How did Trichet know just when to ring? He gave Noonan no time, and presented him with an almost impossible dilemma. Noonan blinked. And 8b was lost
- Was the decision by Trichet his alone or made by the ECB? If so where and when? Why was the Governor of the Central Bank not called to quiz that decision making?
- How realistic was the threat that “an economic bomb would go off” ? Thats for another day but the decision made cost 8b. Would the incremental damage of this putative bomb have been 8b? Noonan thought so. On what basis was that decision made?