Robert Burns wrote ‘The Twa Dogs’ in 1785 and in line with much of Burns’ later works, is a social satire on inequality, class and the nature of happiness. The full text of Burns’ work can be found here. The tale became a firm favourite among radical poets, especially in Ulster where it inspired Samuel Thomson’s ‘To Allan, Damon, Sylvander and Edwin, an Eclogue’ (1799).
This page aims to grant the reader a knee high view of politics.
Luas: So Kaiser, you being the smartest of all the dogs, what’s this permissionary note the owners are getting so excited about?
Kaiser: The promissory note?
Luas: Right. ‘The Man’ calls it the permissionary note ‘cos he says he now has to ask some woman in Germany for permission to go for a piss.
Kaiser: He probably does. All the same, it’s called the promissory note and well they’re all excited because it’s finally been gotten rid of?
Luas: It’s gone? Great. I think. Well, what was it before it was gone?
Kaiser: It was basically a great big IOU.
Luas: To who?
Kaiser: I’ll start at the beginning. Forty years ago (or five years ago in man terms) there was this bank Anglo that ran out of money.
Luas: How does a bank run out of money?
Kaiser: It’s fair to say the men in charge didn’t know what they were doing and made a hames of things. The bank had less stuff they could sell than they had money they owed. Or they had less assets than liabilities as they say. That’s against the law. Banks aren’t allowed to be broke, or insolvent as they say, so they needed money.
Luas: Master was in the same spot. Always complaining about owing this and nobody paying him. He’s on the dole now, sure.
Kaiser: Ah but he’s not a bank though. He’s not important. I mean, he is to you but not to the state. You see, the state had a problem and that was the even bigger state. Outside of us and this here park is the country but there’s a hundred other countries as well and a while ago a few of them in Europe all said let’s get together, it’ll be great.
Luas: What’s that got to do with the bank?
Kaiser: Well the big heads in Europe were scared about contagion.
Luas: Contagion? Like when I got fleas off that mange ridden bitch…
Kaiser: Exactly… well sort of. The big heads in Europe were worried that if Anglo failed, the failure would jump on to the next bank and so on and so on until every bank in Europe was broke.
Luas: So what happened?
Kaiser: The Finance Minister at the time, wrote the bank an IOU for €30bn euro.
Luas: Is that a lot?
Kaiser: It would feed every dog in Ireland for the next thousand years for starters.
Luas: Why did he do that?
Kaiser: Because the big heads in Europe told him to.
Luas: I’d have told them to go fu…
Kaiser: Yes well. That’s why they don’t let dogs handle negotiations in Europe.
Luas: So he gave €30bn of government’s money to the bank?
Kaiser: No, he gave them an IOU. Then the bank took it to Ireland’s Central Bank and swapped it for cash.
Luas: That sounds a bit dodgy. Is that even legal?
Kaiser: No, not really. Or at least, it’s unconstitutional. Before he wrote the IOU he was supposed to ask for permission from the Dáil. He didn’t do that. He didn’t even ask his colleagues in his party. It was also dodgy for the Europeans.
Luas: Them again.
Kaiser: You see, the IOU wasn’t a normal way of doing business. It was dodgy as. There was no guarantee that the money would be paid back. He might as well have written it on a post it note. So the ECB, that’s the European Central Bank, had to give the minister permission to make up this note and then give permission to the Central Bank in Ireland to print the money. What the government had done was provide ELA to Anglo.
Luas: Wait now, what’s ELA? And why do you always talk in letters?
Kaiser: ELA stands for Exceptional Liquidity Assistance. The state couldn’t pay the money out of it’s own pocket because the bank needed too much so exceptional liquidity assistance is where money is created out of nothing, or printed by a central bank. And there are two reasons people should talk in letters. Firstly, it makes you sound smarter than you are and secondly, for politicians it’s better if the people on the street don’t have a clue what’s going on. It’s like a code to make sure they can carry on doing what they’re doing without too many people getting angry at them.
Luas: Well, why did Europe give them permission if it was so dodgy?
Kaiser: Because Anglo owed a lot of money to banks in the rest of Europe and they were afraid they would never see that money again.
Luas: Right. It sounds a bit daft but I’m starting to get the jist of it.
Kaiser: It gets worse.
Luas: Go on so.
Kaiser: Well, the terms of this madey-up deal were pretty awful. So, the bank was bust and because of that wasn’t allowed to access this exceptional liquidity assistance so the government gave them an IOU which the bank took to the Central Bank so they could make money up and give it to them. That money wasn’t free.
Luas: I bet it wasn’t. How much did it cost?
Kaiser: A lot. Firstly, the minister agreed to pay interest to Anglo at 6%.
Luas: Why? Why do we need to add interest to something we’re giving them?
Kaiser: For the promissory note/post it note to be recognised as an asset on their balance sheet, so it looks like something real in other words, interest had to be charged on it. So the government agreed that it would find €3.1bn every year until 2024, then slightly less for the final seven years.
Luas: Wait, who pays for it?
Kaiser: Your owner, mine and every other poor eejit in the country.
Luas: And when will this be over?
Kaiser: Well the government’s plan was to pay it all off by 2031. That’s 175 years in our time. The thing is, Anglo had to pay back a smaller rate of interest on the loan it got from the Central Bank so it was making money. Now that money should eventually come back to the government…
Kaiser: Should. It might not. And the central bank also charges interest on the money it printed and makes money on the difference from the ECB. That comes back to the government eventually too.
Luas: Sheesh. So the government takes money from the people, gives it to the bust bank, the bust bank goes to the central bank gives money to them and then the profits of the central bank comes back to the government? It’s just going round and round?
Kaiser: In a way.
Luas: Bit like my head at the moment. So what did that bank do with the €30bn?
Kaiser: They used it to pay off the gamblers who’d lost the money in the first place.
Luas: Get away with ye.
Kaiser: Wait, there’s more. What do you think happened to the €3.1bn the people had to pay every year in higher taxes or was funded through cutting their social welfare payments and sacking nurses?
Luas: I don’t think I want to know.
Kaiser: The Central Bank destroys it.
Luas: Destroys it? You’re having me on here.
Kaiser: I’m afraid not. It burns it. Shreds it. Does whatever. That was the only way the ECB would let it happen. That way, by the end of the whole thing, no new money has been created, the rules that govern exceptional liquidity assistance have been obeyed and the whole thing is legal… just.
Luas: Ah here, my head is melted. So what happened this week? You said it was gone now?
Kaiser: The promissory notes have gone. The debt hasn’t.
Luas: That doesn’t make a whole lot of sense.
Kaiser: It’s not supposed to.
Luas: Of course not. So what happened?
Kaiser: Well… a couple of days ago, the government introduced a new bill. Only it wasn’t new. It had been planned for months. It’s got a catchy title too. The Irish Bank Resolution Corporation Bill. The Irish Bank Resolution Corporation is what used to be called Anglo. On Wednesday night they called together the other finance ministers from the other parties and told them they were going to vote on passing the bill that night. That didn’t give them a lot of time. In fact, it didn’t give them any time. The bill that had been prepared was 59 pages long so when the smart lads were called into the Dáil to vote, they didn’t know what they were voting for.
Luas: So no one voted yes then.
Kaiser: No. It was passed.
Luas: But how can you vote yes to something you haven’t read?
Kaiser: Well, it’s a slight improvement on not being told at all.
Luas: Gee whizz.
Kaiser: Basically, the bill will liquidate the old Anglo.
Luas: Well about time in anyways. So what happened to the debt?
Kaiser: What the government has done is take all of the promissory notes and exchange them for government bonds, which are basically another type of IOU where the government promises to pay money at some future date.
Luas: What’s the difference between that and the IOU on the post it note?
Kaiser: Just that really. It wasn’t written on a post it note. It’s official and therein lies the hook.
Luas: Go on.
Kaiser: The government has exchanged the promissory note for this government bond and now the banking debt has been turned into sovereign debt. In other words, the people’s debt. You remember that kid in the playground walking around with the sign on his back that said ‘Kick Me’… that’s Ireland.
Luas: So why is everyone so happy about it?
Kaiser: Well, the deal means that even though the government will be charged interest on these new bonds they won’t have to make the first payment until 2038 and they won’t have to make the last payment until 2053. The hope is that because money depreciates over time that the bill will be less by the time it has to be payed.
Luas: So that’s grand so.
Kaiser: No, not really. From Ireland’s perspective it looks like they got a deal. But you see your one there in the pram. They’ve just told her to pay for it. And more importantly, she can’t say no.
Luas: Why not?
Kaiser: Because it’s a real debt now. The promissory note was a shoogly peg upon which to hang a jacket. The ECB knew this. They were afraid that it might not get paid. Now it has to be. The Europeans knew that the government might very well not get in again because the people are angry. They knew that if things continued as they are people like our masters would get more angry. Whoever got in next time round might not pay the madey-up IOU.
Luas: Ah here, hold on now. You’re telling me they didn’t have to pay it?
Kaiser: No, they didn’t. They could’ve told the lot of them to shag off.
Luas: So why didn’t they?
Kaiser: The truth is, they sent the wrong people to go and talk to the big heads in Europe. These European guys do these kind of negotiations for a living. Ireland sent over a couple of teachers.
Luas: Oh sure, they won’t send dogs to negotiate, but they’ll send a teacher.
Kaiser: Quite. The Europeans told them all these scary stories about the boogie man coming and taking all the money out of the cash machines. And that they’d be very naughty children if they didn’t pay up. The man in charge of Ireland didn’t like that because he’d just got his picture on the front of a famous magazine and wanted to make sure he stayed at the top of the class.
Luas: But how do you know the European’s were only jesting? How do you know they wouldn’t have pulled the plug?
Kaiser: There’s another country in the group that’s in an even worse state than Ireland, Greece. It’s defaulted as they say, or not paid up, four times already. The ECB have done nothing about it because they realise that they need Greece more than Greece needs them. The ECB needs Ireland too more than Ireland needs them. If one of their members gets shut down, the whole group collapses and their wonderful idea about all these European countries being stronger together fails. They’ll do anything to prevent that.
Luas: Crikey. Well, I’ll be best on my way, Kaiser. Afternoon in front of the fire methinks. A dog’s life and all that. Queer lot our masters. Queer lot indeed. I need a good lie down after that. What with ELA’s and IBRC’s and missionary notes…
Kaiser: Promissory notes…
Luas: I’ll stick with missionary notes just the same. Sure sounds like they’re all getting fucked to me.