David McWilliams: If we're a 'special case' let's strike a really good deal -- we deserve it
TWO issues have been dominating the Irish economic landscape this week. The first is: what does our being described as a "special case" by Angela Merkel and Francois Hollande actually mean? If it means we will be treated specially, what will other countries, like Spain, think? The second, and equally important, issue is this: does being "a special case" mean we will get a legacy bank deal, which would be a big step forward? If so, what would such a deal do for the biggest problem facing our society -- the coming tidal wave of mortgage defaults initially in the "buy-to-let" market, and then in the residential mortgage market?
The last five days have not been easy for the faint-hearted. On Friday, Ms Merkel poured freezing Baltic water on Ireland's chances of getting a legacy deal. Then, following a flurry of diplomacy, a joint communiqué issued by Berlin and Dublin suggested we were in fact a special case. Our specialness has not yet been defined, but on Monday, the Taoiseach took a swing at it, saying Ireland was special because we had "taken one for the team", in not applying the rules of capital to the bankruptcy of the banks; leaving the creditors to take a major hit.
As soon as it became apparent that the Irish State, bullied by the ECB, was following a "no bondholder left behind" policy with respect to the banks even as their losses mounted, this column always argued that the bondholders should be burned. The basic logic of not paying up front -- instead of paying and then looking for your money back -- is obvious.