Last Thursday was to be the day that Ireland would finally liberate itself from the worst financial crisis in its history.
We, the taxpayers, shovelled another €24bn into our busted banks (of which only two will be left standing); Ireland was shafted by the ECB, which failed to deliver on a promised medium-term funding facility; the Government U-turned on its election promise to burn bondholders; and events in Spain and Portugal heightened the stakes even further.
It was all so different just seven short days ago.
Last weekend, for a brief moment, a glimmer of hope emerged. As I sat in Brussels at the EU Council, word spread to me and other Irish journalists that a request from the new Government for a €70bn medium-term funding for Irish banks would be accepted. The aim was to end the huge uncertainty that currently hangs over our busted banks and the country.
So advanced was the plan, that newspapers last Saturday printed the details of how it would work on their front pages.
The thinking behind the plan was that because no one else will lend to them, Ireland's toxic and failed banks have been surviving on over €150bn's worth of emergency funding from the ECB for over a year now -- clearly an unsustainable situation. Medium-term funding would calm the markets, so the thinking ran, and restore confidence in Ireland over time.
The detail in the newspapers did not come from Dublin (the Department of Finance or the Central Bank) but from Jean-Claude Trichet's ECB sources in Frankfurt and Brussels. Indeed, Finance Minister Michael Noonan's first sight of the proposals was in the papers that morning.
But, surprise, surprise, it was not to be.
By Thursday, that glimmer of hope was gone. The plan was off the table, following a major row at ECB board level, where the Dutch, the Italians and the French -- in particular -- were against the idea.
In a direct attack on Ireland, the governor of the Dutch Central Bank and member of the ECB's Governing Council, Nout Wellink, said the ECB should stop its current policy of buying sovereign debt paper because the risks were becoming too big.
"We can simply continue to print more money. It is not good but it is possible. But we have to stop the current policy because the risks are becoming too big," Wellink was quoted in a Dutch newspaper.
"We are buying paper from banks, from the private sector and from governments. That is not what we are on earth for. If things turn bad, the value decline is for our account," he added.
Following intense discussions between Trichet and Kenny and later between Trichet and Noonan throughout Wednesday and early Thursday, expectation mounted that the ECB would announce the creation of such a medium-term facility.
As Patrick Honohan and Matthew Elderfield faced the media on Thursday afternoon to announce the detail of the €24bn top-up to the greatest swindle of the Irish taxpayer in history, the ECB left Michael Noonan and Ireland swinging in the wind.
There would be no formal announcement on a facility for Ireland. Instead, we got a lukewarm welcome to the results of the stress tests. Once again, in our hour of need, the European Central Bank screwed Ireland. It's becoming a recurring theme.
The new Government is also justifiably under fire this weekend for performing a significant U-turn on its election promises to burn the bondholders.
Transport Minister Leo Varadkar's emphatic election statement of "not another cent" for the banks unless losses are imposed now looks particularly embarrassing and the Government's authority has been severely weakened.
But as of this weekend, burden-sharing or burning the bondholders is now firmly off the table.
"The debate is over, Frankfurt would not agree," Noonan said on Friday.
The German and French gamblers are being protected once again, the Irish taxpayer is being screwed once again, and who is behind it all? The ECB.
Looking back at his comments during the election, Noonan, in fairness, always maintained that any burning of bondholders would have to be done in agreement with our European partners. His more excitable colleagues like Varadkar and others got him into trouble.
For his part, Noonan said the ECB had, by suspending ordinary lending rules for Ireland, given an implicit commitment to continue lending to our banks. He has his medium-term funding in all but name.
However, judging by Friday's reaction, the markets are not so sure. The cost of borrowing 10-year bonds remains at 10 per cent and commentary from throughout European financial houses showed clearly that many are not convinced.
"There has been no discussion of what the Irish banks are supposed to do about their falling deposits -- which declined by another €10bn in February and almost €100bn in the past six months -- and the borrowing from the ECB and the Irish Central Bank, they are forced to compensate," said a London-based analyst at Jefferies International. "Our initial impression is that the question of whether this is enough will continue to linger."
Thursday's €24bn figure for the banks was exactly in line with what I reported three weeks ago on the front page of this newspaper but it still reveals the shockingly horrific state of our banks. Out of that €24bn, over half, €13.3bn was needed just for AIB.
AIB's demise has been swift, shocking and entirely self-inflicted. Tired of seeing Anglo's profits soar during the Noughties, it belatedly got into the property-speculation business.
"Yeah, its figure is shocking. Because it got in late, it paid top price for a lot of s**** and hence its losses are bigger," a senior Government minister told me on Thursday night.
Bank of Ireland will receive €5.2bn, the soon-to-be-subsumed EBS €1.5bn and IL&P will get €4bn. These amounts include the actual capital need required by the banks and an extra capital buffer, just for extra safety.
The worst-case-scenario scope of the stress tests have angered many at the top of the banks and from the previous Government who have claimed that the banks will now be massively overcapitalised.
"They've gone way too far, the banks will be so stuffed with cash, they are clearly lining them up for sales," one senior Bank of Ireland source told me.
"The result of using overly harsh criteria is that the banks need more money up front, which means the taxpayer needs to borrow more to give it to them. There is no guarantee the taxpayer will get it back on the far side," a former Government adviser said.
Blackrock used far more pessimistic forecasts in terms of growth, unemployment, house prices and consumer confidence than were used by the EU/IMF last November, or by the Government in the Budget of last December.
One example of this is that 300,000 or so negative-equity mortgages were all put down as losses, even though many of them will continue to be paid.
"Take two public servants, who can't be fired -- they will continue to pay their mortgage, no matter what. Blackrock took no account of that, so the losses are massively overstated," the former government adviser added.
Even the straight-talking governor agreed that Blackrock had gone too far.
Mr Honohan said he did not predict a lot of home repossessions, but said the stress tests were predicting a worst-case scenario.
He said he did not predict anything like the number of home repossessions that were predicted and calculated in the stress tests.
This is the fifth bailout of our banks since 2008 but the first time that such a worst-case scenario approach has been taken.
While the banks don't like it, from the taxpayers' viewpoint, it should have been the approach since day one.
The IMF/EU deal set aside €35bn for the banks and that €24bn falls well within that. Given the buffers, even the markets seem to accept that the figure won't go higher.
For the consumer, the landscape of Irish banking is ready to change drastically, with only AIB and Bank of Ireland set to remain as the "universal pillars" -- which is not necessarily good news.
Honohan said the two-bank solution -- announced by Minister for Finance Michael Noonan in the Dail -- was "not an ideal situation". He conceded that he did have concerns, in particular on competition, cost and pricing.
But whatever way you look at it now, the taxpayer is now on the hook for €70bn in terms of our now largely nationalised and zombie banks. That figure rises to €100bn when you add the Nama bonds into the mix.
Thursday's events mark another dark day in our recent history. Given the huge further injection of taxpayers' money into the banks, once again the events of September 29, 2008 -- the night of the infamous bank guarantee -- return into sharp focus.
That was the night that modern Ireland was changed forever. The State decided to guarantee the loans and deposits of the Irish banks, amid fears that the entire sector was on the verge of collapse.
That panicked decision, made by two nervous and ill-informed ministers, Brian Lenihan and Taoiseach Brian Cowen, in an information vacuum, was in turn delivered as a fait accompli to the rest of the Cabinet late into the night.
It was an extraordinary event: the rich buccaneering captains of the free market coming cap in hand, begging the State for help.
It has been some 30 months since that guarantee was announced. The €85bn IMF/ECB bailout; the State's €100bn-plus involvement in the Irish banking system; massive transfers of capital; nationalisations; the Nama scheme to rescue the sector from the consequences of its own disastrous lending policies; and the events of last week -- all stem from the fateful decisions made that night.
It was the night that the mistakes, the debt and the greed of a small group of elite bankers led to the downfall of this country. At the heart of the chaos, the panic, was the toxic Anglo Irish Bank, whose dealings with developers have bankrupted this country.
Both Lenihan and Cowen have had to defend themselves strongly against accusations that any relationships they had with bankers led to the Government's decision to offer a near-blanket guarantee to the liabilities of the Irish banks. They repeatedly argued that this decision was taken in the national interest.
But was it considered in the national interest to offer such an extensive guarantee? Cowen and Lenihan have tended to answer that they took this decision based on the best advice available. But we now know that in fact that was not the case.
Remember the decision to offer the blanket guarantee was taken against the advice of highly paid experts Merrill Lynch, who were ensconced in the Department of Finance that weekend.
It was also opposed by senior officials within the Department of Finance, who had written months before that such a blanket guarantee "would expose the Exchequer to the risk of very significant costs," adding that it was "not regarded as part of the toolkit for successful crisis management and resolution".
Even two-and-a-half years later, details of what exactly happened that night are still emerging.
It has become known that Lenihan, in the days in the run-up to the guarantee, had been exploring options as to how to "quarantine" the toxic Anglo Irish Bank and Irish Nationwide, while protecting the rest of the Irish banking system.
According to a number of people who spoke with him at length, it was clear that he favoured isolating Anglo and that nationalisation was the preferred option.
"One of the bankers present suggested that we should examine the option of nationalising Anglo Irish and one other institution," Lenihan has said. That suggestion was quickly met with a fiery and typically bolshie response from Brian Cowen -- the man on whose watch as finance minister most of the worst crimes were committed.
"We're not f**king nationalising Anglo," he shouted as he slammed the table.
We don't know the full ins and outs of what was said that night. However, only one of two possible alternative conclusions can be reached.
Either the two biggest banks lied and scammed the Government into saving them -- deliberately withholding crucial information about Anglo and their own debt problems -- or they were simply incompetent and unaware of how bad their own situations were.
They were either liars or fools. Neither scenario is an attractive one. Whichever it was, the bankers left Government Buildings that night having spooked the Government into action. So the two Brians, who were misled and ignorant of what they were unleashing on the Irish public, presented a fait accompli to their sleepy cabinet colleagues, who put it through on the nod.
Speaking on RTE Radio yesterday, former president of the European Parliament Pat Cox described the bank guarantee as "one of the most reckless single decisions in the history of the State, whose legacy effect we will live with for a very long time".
The €70bn fallout of that decision emerged on Thursday. It is criminal that the biggest decision in the history of the State, which has bankrupted this country, was done in such a chaotic, shambolic fashion.
Next Friday, Noonan travels to Budapest for a meeting of European Finance Ministers and he is expected to secure the 1 per cent reduction in the interest rate charged to Ireland on the bailout deal.
While that will gain him €500m or so, by giving in on the bondholders, Noonan has closed the door on saving tens of billions of euro.
That decision, as Colm McCarthy stated with his usual brilliance on Friday, ultimately steers Ireland towards a sovereign default.
The truth is Ireland is being used as a political football not just by the ECB (which is gripped by a race to replace Trichet) but by Angela Merkel, who is under pressure at home, and by Nicholas Sarkozy, who also faces being booted out.
Played right, Ireland can get its better deal, but it's a tall order in a Europe fed up with our seemingly never-ending crises. The word from Europe yesterday is that Ireland may yet get its medium-term facility, but it may cost us our corporation tax rate. Given how few friends we have in Europe at the moment, Budapest will be a crucial meeting for Noonan and Ireland.
But we learned this week that we can't believe a word this Government tells us. How could we? They're not even in charge. Thursday's events show us clearly --we're all Frankfurters now.
