There is the old story of the 18th century French lothario sitting at dinner beside a famously virtuous lady. “Will you sleep with me?” he asks. “Certainly not, how dare you suggest such a thing!” “Let us suppose, then, that I am the king of France and I offered half the kingdom for one night with you. Would you agree?” “Well, perhaps, but you are not the king of France.” “Very well, then, we have agreed the principle, so all that remains is to negotiate the terms.”

And so it was with Ireland’s promissory notes. Once any semblance of moral principle had been abandoned, all that was left was to negotiate the terms of surrender. And we’re still going to get screwed.

Again and again over the last five years, the phrase that has epitomised the Irish story has been that coined by the American writer Michael Lewis when he studied the bank bailout: “normalising a freak show”.

Lewis was writing in Vanity Fair about the late Brian Lenihan: “normalising a freak show is now a meaningful part of the job of being Ireland’s finance minister. At just the moment the crazy uncle leapt from the cellar, the drunken aunt lurched through the front door and, in front of the entire family . . . they carved each other to bits with hunting knives. Daddy must now reassure eyewitnesses that they didn’t see what they think they saw.”

Michael Noonan is now the daddy, of course, and he has carried off with great aplomb the ultimate act of normalising the freak show. The promissory notes were a monstrous freak, the star exhibit in the gallery of grotesques that is the Irish bank bailout. Its one virtue was in being so obviously freakish: the extortion of more than €30 billion from 1.8 million workers to pay entirely private debts is right up there with the Elephant Man and the Lobster Boy. Roll up! Roll up!

Grand larceny

This misshapen troll was an uncomfortable presence, a rebuke to morality, decency and even to the rules of capitalism. What had to be done was to make it “normal”, to dress it up in respectable clothes, teach it some table manners and polite conversation and bring it into the realm of the ordinary, the mundane, the unremarkable. And this is what last week’s deal was all about: grand larceny on an almost unimaginable scale has been transformed into a plain, boring old fact. The hideous ogre of the promissory note is now to be banal, ho-hum sovereign debt.

This is unarguably a kind of political triumph. The promissory notes have been bringing out the best in Irish political prestidigitation ever since they were born. Remember Leo Varadkar’s straight-up insistence before the general election that “Anglo Irish Bank is not getting another cent of our money . . . Not another cent”?

Remember Pat Rabbitte’s claim that the Government didn’t pay the promissory note last year, even though the Central Bank was in fact paid its €3 billion? But these are amateur efforts compared with what the Government pulled off last week: a complete capitulation on the principle of extorting private debts from citizens presented, and largely accepted, as a great day for Ireland.

Interest-only mortgage

What, really, is the price we get for abandoning any pretence of principle? It is, ironically, a giant version of the mechanism that characterised the worst mania of the fatal boom: an interest-only mortgage. Its benefits are real and significant but they have been insanely overhyped. The overall saving is not the €20 billion figure that was pumped into public consciousness last week. It is €8 billion. This is a meaningful sum, but calling it a “milestone” is ridiculous hyperbole.

The bottom line is that we’ll still be paying two-thirds of the cost of the promissory notes – without reducing the capital sum that we owe. In return for lying back and thinking of Frankfurt, we get to pay only 66 per cent of the money we didn’t owe in the first place. Lucky us.

The Government will come to regret its wild exaggeration of the significance of a deal that means that the national debt of €211 billion will be just €800 million lower in 2015 than it would otherwise have been. It has raised expectations of the end of so-called austerity that will be cruelly dashed.

It has sent out the signal to the troika and the rest of the world that Ireland is doing fine, a “good news story” that undercuts the chances of a write-off of the rest of the bank bailout costs. It has etched in stone the absurdity that a tiny economy like ours can bear a staggering 43 per cent of the entire cost of the European bank bailout. (Every Irish citizen has stumped up €8,956. The average European citizen, by contrast, has had to fork out just €191.)

Perhaps most importantly, the Government has incurred in this deal a huge hidden cost – the loss of the sense of justice, dignity and national selfrespect that is crucial to the building of a successful society. A nation taught to be grateful for such small mercies is not one that can imagine big things for its future.