STOCK MARKET WATCH -- Monday, 9 April 2012

[Demeter]

59. Irish Deal Simply Recycles Zombie Debts

http://www.huffingtonpost.co.uk/nick-dearden/irish-deal-simply-recycle_b_1391450.html

Ireland's complex proposal for renegotiating its debts today recalls the many years of debt restructuring experienced by Third World countries over the last three decades. Far from giving those countries a fresh start, these negotiations kicked the problem down the road.

So will the debt negotiations in Ireland. Ireland has been brought to its knees by a debt, which originated not with excessive public spending, but a footloose financial sector that gambled with the future of the country. Standing astride Ireland's notorious property bubble is the Anglo Irish bank - which lent money to rich speculators to inflate a property bubble.

When the bubble burst, the Irish government foolishly agreed to guarantee the bank. Economics professor Morgan Kelly said at the time that both Anglo and Irish Nationwide, which was also underwritten, "were purely conduits for property speculation. They fulfil no role in the Irish economy." Anglo is believed to have 15 customers who owe the bank more than €500m each.

Today Anglo Irish, now rebranded as the Irish Bank Resolution Corporation, is a zombie bank - it only exists to repay debts. It will not become a viable bank again and its existence does not benefit the Irish economy. Nonetheless, over €8bn has been paid by the Irish government to Anglo's secret investors, even though many of these bondholders fuelled Ireland's speculative economy.

The bondholders were paid thanks to new 'bail-out' loans. Now Ireland has to 'repay' a series of 'promissory notes' - IOUs which are pumped back into the zombie banks, and effectively removed from circulation. Much needed money is effectively destroyed...MORE

CALLS FOR DEBT JUBILEE