Subordinated Debt

It's the phrase on the lips of every eejit who's trying to look clever. Personally I think the term was invented in a board room somewhere south of Hades, to be used as a tool to bludgeon the general population into a pulp. I have to admit it's pretty effective, since only fifteen hundred people turned up to protest in Dublin last week at the extent of the country's economic hangover.

Being a simpleton with a less than competent grasp on the state on my own overdraft never mind the national debt, I resorted to my old friend Google. So here goes a bluffer's guide to Subordinated Debt :

• In finance, subordinated debt (also known as subordinated loan, subordinated bond, subordinated debenture or junior debt) is debt which ranks after other debts should a company fall into receivership or be closed.
  en.wikipedia.org/wiki/Subordinated_debt

• Term covering hybrid core capital and subordinated loan capital. Only losses exceeding the shareholders' equity are covered.
  www.nationalirishbank.ie/en-ie/About-National-Irish-Bank/Bank-in-brief/the-crisis/Pages/Dictionary.aspx

• Debt that carries a lower-priority claim on issuer's income or assets than that of other (senior) debt.
  www.freddiemac.com/smm/s_z.htm

There were many more - Google it for yourself, it makes for interesting reading. It occurred to me that children's health services will become the subordinated debt of our solution to the mess in which we find ourselves.

So if I understand this correctly, (which lets face it, in my case is a big 'if') the economic unit on which our future depends is currently being subordinated in favour of the senior units who screwed the whole thing up in the first place.

Permit me an analogy here: a child like our Boy Wonder requires expensive medical treatment to keep him alive, this treatment is attractive to senior medical units because it shows the tangible result of extending the life of that child thus reducing the national child mortality rate, which reflects well internationally on the country as a whole. The effort vs reward equation stacks up well in the short term and saving his life is rightly seen as a senior debt.

Once the danger has passed, the child then slides down to become the subordinated debt of the local primary care authority. In the eyes of the primary care bosses, the child will neither exert enough pressure nor bring sufficient reward to warrant being considered as a senior debt. As a subordinated debt, there is no incentive to provide specialist intervention to allow the child to reach their developmental targets.

When the child ends up in a classroom requiring a special needs assistant or specialist equipment, they can migrate to being a senior debt liability again but the debt has now passed to the education department. The education mandarins will in turn strive to reduce their level of debt on this child by redefining the terms of their liability. Simply put, they will change the terms of the child's entitlement. This change in the terms of entitlement will result in creative reporting from the 'ologists in primary care to meet these new terms and ensure they can off-load the child from their debt portfolio. And so the debt shifts back and forth changing status with each department.

What we all know about debt is that we tend to prioritize our repayments in favour of those yielding the biggest baseball bats should we refuse to pay. Currently the ones holding those lumps of lumber, are unidentified bond holders; nameless, faceless entities beating our children out of the way while they charge to the top of the queue.

This is what comes of living in an economy instead of a society.

Cheers,

Ann