Who is going to hold the ECB accountable for this mess?
At the Banking Inquiry Ajai Chopra agreed that our debt burden was unfair, but is there any kickback, asks Colm McCarthy
Ireland's two-year bank guarantee introduced at the end of September 2008 was meant to cost nothing at all. The banks were solvent, people were assured. They were just temporarily short of liquidity due to some incomprehensible snafu at banks in New York. This was not credible at the time and was not widely believed. Every single domestic bank duly went down in one of the biggest bank busts ever recorded anywhere. Through 2009 and into 2010, the Government scrambled to keep the system functioning, principally through injecting vast quantities of taxpayer's cash. Meanwhile, the Government's own deficit soared, adding to the State debt. Several other governments around the eurozone struggled to borrow on the bond market.
The first country to go under was Greece, the recipient of a 'bailout' in May 2010 as the troika of European Commission, European Central Bank and International Monetary Fund made its inauspicious debut. The IMF, a credit union for governments, had never before accepted a junior role with regional bodies in mounting financial rescues of members in trouble. It is unlikely ever to do so again given the bruising (third) re-run of the Greek crisis, and some of the reasons were in plain view at the Banking Inquiry last week.
On Monday, it was announced that the ECB had declined to attend the inquiry. Its retired former president, Jean-Claude Trichet, turned up for a curious performance, not at the inquiry proper but at a contrived meeting in Kilmainham on April 30 last. Trichet was questioned by inquiry members but was conceded the bizarre privilege of vetting the questions in advance, which did not inspire him to offer candid or informative answers.