Madam, – Lorenzo Bini Smaghi conflates capital that was lent to banks with capital that was lent to the state of Ireland (Opinion, December 20th). The capital lent to our bankrupt banks was risk capital – the institutions in question took a calculated risk, based on advice of ratings agencies and banking analysts and lent money to the Irish banks for a promised rate of return. If those agencies and advisers had been more diligent, had retained their independence and not engaged in a groupthink exercise it is doubtful that so much money would have been made available to the banks for them to recklessly re-lend.
If any Irish people call for a default of sovereign debt – that is money that the State borrowed on international markets, then they are a tiny minority. What Irish people are clearly and overwhelmingly calling for is a default of private bank debt – that only ended up as sovereign debt after the hastily decided and overbroad bank guarantee in 2008. That transformation remains quite mysterious to this day.
So, Lorenzo Bini Smaghi should do not tell us off for calling for something that we are not asking for. That is a cynical tactic. As an executive member of the ECB, a closer examination of the detail is warranted. Irish people are demanding fairness and equity and have shown that they are quite willing to take the pain. However, this does not include socialisation of massive private debt while the recklessness and lack of accountability of other actors remains unaddressed. – Yours, etc,
Madam, – In his excellent article, ECB executive board member Lorenzo Bini Smaghi, states: “To understand what is happening in Europe, economics textbooks are useful but the history ones even more so.” (Opinion, December 20th).
For someone who appreciates the lessons of history, perhaps he might agree that what is more appropriate for Ireland now is a Marshall Plan rather than a Treaty of Versailles. – Yours, etc,