I have long advocated that the Irish Government should walk from the wretched promissory notes which were given to cover the losses at Anglo/INBS , and on which we are now as a state paying €3.1b per annum (or about 5 weeks tax take).
I have written about the mechanics of these odious scraps here.
What nobody can answer, in specific action terms, is what would happen if we did. All I ever get, even from market participants, is a statement along the lines of “ooh,that would be bad, sure the ECB now, you dont want to mess with them, theyd react so they would”.
Well, they would. But how? The implication is that the ECB reaction would be devestating, and worse for the economy than burning 5 weeks tax take in a bonfire of idiocy each march. What would that be? Invasion? Cutting off irish banks, good and bad, from liquidity? What actions, and how would they be done?
If, as I suspect, there are few if any actual actions the ECB can or would take, then it begs the question why not do this? One imagines the other members of the Troika would heave a sigh of relief at the issue being settled, and the remaining real national debt being secured from default (probably).
So, what can/would the ECB do if we walked from the notes? No vages threats, no tut-tuting, no pursing of lips and shaking of heads. Actual actions that they can take… please. I mean, there must be some…mustnt there?
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