Tackling Anglo IOUs is key to easing crisis but the big question is -- how?
DECEPTION, covert agendas and stakes high enough to threaten Ireland's very survival -- it was all going on in Committee Room 4 yesterday as TDs and senators met to talk about the now infamous promissory notes used to rescue Anglo.
For those who haven't taken their crash course in financial engineering yet, the 'pro-note' is a €30bn glorified IOU that the Government used to bail out Anglo because it didn't have the readies to bail the bank out the old-fashioned way.
And for those who've managed to not yet hear the government spiel on 'pro note restructuring', our leaders want to change the IOU so we no longer have to pay it off €3.1bn a year for the next 15 years or so.
The trouble with the pro-note restructuring is that it's complex and happening behind closed doors, as officials from the EC, ECB and IMF hammer out proposals for how to change the IOU's terms.
The statements coming from various government ministers (Pat 'It'll be done in a couple of weeks' Rabbitte and Michael 'It's a long away away' Noonan) are so confusing the public hasn't a clue where things are at.
Against this backdrop, the finance committee yesterday invited some of the leading lights of Irish economics to shed some clarity on the situation, and so Trinity's Prof Brian Lucey, University of Limerick's Dr Stephen Kinsella and UCD's Prof Karl Whelan rocked up.
The trio did a comprehensive job of explaining how the pro-notes are used by the newly-renamed Irish Bank Resolution Corporation to borrow emergency cash from the Central Bank of Ireland.
Things got more murky when it came to how the IOUs could be restructured. Prof Lucey believes it's imperative the existing IOUs be redrawn before a €3.1bn repayment is made on March 31.
He also believes the entire amount could simply be written off, since this would increase the eurozone's monetary supply by less than half a percent and would hardly cause massive inflation (a view shared by Fine Gael's finance enthusiast Peter Mathews).
Prof Whelan, on the other hand, doesn't think writing off the debt is a runner, but believes Ireland has a good argument for drawing out the repayments over a longer period of time.
Then there's Dr Kinsella, who cautioned against the Government getting the Anglo debt moved to Europe's EFSF bailout fund where it can be paid off over a longer time frame.
"EFSF does not constitute success -- it turns it (the pro-note) into a sovereign debt," he declared, to solemn nods.
Chairman Alex White quickly concluded that the trio had made an "unanswerable case" that tackling the pro-note was "the difference between us being able to progress out of this post-crisis situation and not being able to do so".
But after almost three hours, the path forward looked as murky as ever -- though that was arguably always going to be the case since the committee hadn't the benefit of the IMF, EC, ECB, Department of Finance or anyone actually party to the talks.
That didn't stop the committee from breaking into a round of applause when things finally wrapped up.