The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Hardy]

So we owe 104bn to the UK as much as we owe to Germany and France put together.
But the UK owe us 113bn................

Y'see this is the stuff I just don't get. How come the other side of the balance sheet is never netted off our national debt?

Presumably this 113Bn the UK owes "us" is owed to Irish banks - which, since we now own them, really is us. So our balance with the UK is 9Bn positive. Or else the 113Bn we owe them is after we net off the 104Bn they owe us.

Could somebody who understands this tell me how it works?

Here is one article which helps although I recall a better one. I'll keep looking.

http://www.guardian.co.uk/business/dan-roberts-on-business-blog/interactive/2009/jan/29/financial-pyramid

Belated thanks, Muppet.

What I was getting at was this idea of debt cross cancellation of national sovereign debts, as proposed in this exercise. Professor Jeremy Baker was on George Hook's show yesterday talking about it, but he didn't address satisfactorily the problem with this proposal, which is this, as far as I can see:

While the debtor entities (in the case of sovereign debt) are sovereign states, the creditor entities are private banks (leaving aside the consideration of nationalised banks, for simplicity). In other words, when we say "Ireland owes the UK 40 Billion" we mean  Ireland owes 40 Billion to some UK banks, not to the UK state. Likewise when we say "the UK owes Ireland 50 Billion", the money is owed to Irish (let's assume private) banks.

Therefore it's not possible to cross-cancel these national debts by arranging for the UK state to cancel Ireland's 40 Billion debt and the Irish state to cancel 40 Billion of the UK's 50  Billion debt, leaving the UK owing Ireland 10 Billion. Where do the actual creditors, the UK and Irish  banks, get their money in this scenario?

[armaghniac]

According to the  IMF, Anglo Irish Bank broke the Euro!!
http://www.imf.org/external/pubs/ft/wp/2011/wp11269.pdf

[sammymaguire]

Are you going to actually do anything other than post stuff on here?

I'm not sure what you mean by that Sammy. If you mean will I offer suggestions of a possible way out of it well lots of better qualified people than me are struggling to but my fundamental belief is that govts are there to serve the people who elected them and not private financial institutions. In this regard I believe that the open ended bank guarantee given back in 2008 was the death knell for Ireland as we know it. Given that we have a track record of what could be loosely termed as a right wing monetarist economic policy I can't see anything happening outside of what ever European wide solution will eventually surface.
In the meantime the majority of the population will continue to suffer, struggle to heat their house, educate their kids, and even die due to the state of our health system but bar a sea change  in our national psyche we seem ready to accept this as our lot. ( I could theorise as to why I think that is but that would be another whole days work!!)

I honestly don't know where it's going to end but I can't see it ending well. Rumours abound that we are printing punts in preparation for the end game which will mean a drastic change in all our circumstances but which may well be the best course of action in the long term for future generations.

In the meantime I'll continue to post the "informative" pieces so people can make up their own mind

I am kind of getting to the point where I am sick of reading and am starting to think taking to the streets is the way to go.

An uprising could be needed, what do you reckon? 

[Rossfan]

I am kind of getting to the point where I am sick of reading and am starting to think taking to the streets is the way to go.

An uprising could be needed, what do you reckon?

Away you go and start it , then the rest of us will see whether we'll join you 

[sammymaguire]

I am kind of getting to the point where I am sick of reading and am starting to think taking to the streets is the way to go.

An uprising could be needed, what do you reckon?

Away you go and start it , then the rest of us will see whether we'll join you 

thats the problem with this country... someone needs to take a stand at some point. The people in power are ripping the piss big style and everyone is just sitting back and taking it up the you know what!

[Declan]

thats the problem with this country... someone needs to take a stand at some point. The people in power are ripping the piss big style and everyone is just sitting back and taking it up the you know what

Talking about ripping the piss here's our former great TD and Minister Dick Roche pontificating in the Wall Street Journal no less about the crisis!! Funnily his omissions are more notable than the actual article but it just shows the contempt the selected few have for people.

http://online.wsj.com/article/SB10001424052970203611404577045850805579064.html?mod=WSJEUROPE_hpp_sections_opinion

viva la revolution which won't happen here until they start rationing booze

[thejuice]

I am kind of getting to the point where I am sick of reading and am starting to think taking to the streets is the way to go.

An uprising could be needed, what do you reckon?

Away you go and start it , then the rest of us will see whether we'll join you 

Who do suggest we go after? The banks? the government? Bank premises? the IFSC? the Central Bank?

and How? Do we withdraw all our funds and put them in the Credit Union. How do you hurt these institutions?

[Denn Forever]

Talking about ripping the piss here's our former great TD and Minister Dick Roche pontificating in the Wall Street Journal no less about the crisis!! Funnily his omissions are more notable than the actual article but it just shows the contempt the selected few have for people.

I was going to make the observation of "why are people asking the architects of out crisis any thing" then I remembered Kevin Cardiff debacle. 

[muppet]

I am kind of getting to the point where I am sick of reading and am starting to think taking to the streets is the way to go.

An uprising could be needed, what do you reckon?

Away you go and start it , then the rest of us will see whether we'll join you 

Who do suggest we go after? The banks? the government? Bank premises? the IFSC? the Central Bank?

and How? Do we withdraw all our funds and put them in the Credit Union. How do you hurt these institutions?

I was thinking about this a lot. Protests in Roscommon about hospital services and Laois about a nursing home (to name just two) are doomed to fail. These are single issue local agendas that the rest of the country don't give a toss about. However at least those people went out and marched. The real question is how do you get them all to march together?

You would need a unifying cause (or causes) that didn't carry any baggage or hidden agendas.

My instinct would be to attack the powers that be in the EU on a democratic platform. For example, Barroso was demanding yesterday that what he called democratic powers be transferred from countries to the EU or in other words transfer more power to himself. However he himself was not elected by the people of the EU. He was appointed by the then heads of State.

Another possible crusade would be a campaign to force the Government to either hold a vote on the bank bailout or to split the bank debt from the sovereign debt. Again that could be on a democratic platform as that burden seems to have been forced upon us by the unelected mandarins in the EU & ECB.

[Rossfan]

I propose that the Government should give every man woman and child in the 26 counties an equal share of the same amount they had to borrow to bail out the failed reckless irresponsible banks.
I know it would mean more borrowings in the short term but sure the ECB love us anyway so...

So say divide € 90,000,000,000 by 4,400,000 gives us € 20,454 each.

Only stipulation is that it be in vouchers which can only be exchanged for goods in the 26Cos or to pay off loans to banks ,HP, Credit Unions etc.

All that economic activity would have the Country back on its feet in no time and the taxes on all that activity plus savings on Soc Welfare etc would enable the Govt to have a load of the debt paid off before we'd run out of steam.

[sammymaguire]

Another possible crusade would be a campaign to force the Government to either hold a vote on the bank bailout or to split the bank debt from the sovereign debt. Again that could be on a democratic platform as that burden seems to have been forced upon us by the unelected mandarins in the EU & ECB.

You could be on to something here... Ireland must be the laughing stock of Europe.

[Declan]

Interesting comments here from Noonan in the Telegraph which I haven't heard being publicised widely. He hints at the reckless lenders but confirms that the general public are going to be continually screwed.

Ireland demands debt relief, warns on EU treaties
Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain.

By Ambrose Evans-Pritchard, in Dublin
The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.

"We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan.
"We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks.

Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters.

"We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said.
The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum.
The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case.
Ireland took on the bulk of the debt from its oversized banking system in 2008, resisting a chorus of calls for the country to follow Iceland's example and walk away from private bank liabilities. Had Ireland done so, it might have set off a catastrophic chain reaction across Britain and Europe.
The fateful move has saddled the taxpayers with colossal losses from Anglo Irish and other banks, and will push public debt to near 118pc of GDP by 2014. There is a widespread resentment in Ireland that taxpayers were sacrificed for the greater cause of Europe without receiving any acknowledgement from the EU's creditor states.
Ireland was ordered to pay a penal surcharge of 300 basis points on the orginal EU loan package, which Mr Noonan described as a "piece of foolishness" that has since been abandoned. "Bank shareholders were wiped out already so they had their sharp lesson in moral hazard."
Ireland has imposed haircuts on the junior debt tranches of rescued banks. Mr Noonan said this may now be extended to Bank of Ireland debt to help cover €350m of fresh capital it needs by next month. The state holds 15pc of the bank's equity.
Mr Noonan said Ireland is sheltered from the storm blowing through the eurozone since it does not need market funding until 2013, but the crisis cannot be allowed to drag on. "Some way will have to be found to create a firewall. The role of the ECB is a matter of debate. There may be legal difficulties in it operating in the same way as the Federal Reserve.Whether the ECB has a role in working with the IMF or EFSF (bail-out fund) is under discussion," he said.
Ireland has no "detailed contingency plans" for a eurozone break-up. "Obviously, we have thought about it, but it's a very remote possibility," he said.
Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland's "internal devaluation" policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget.
"We have to face reality. There is no painless way, no soft option: we're going to cut spending drastically, but with social cohesion. We don't want situation we see in Greece with people on streets and the foundations of state under threat. We're not going that route."

[muppet]

Interesting comments here from Noonan in the Telegraph which I haven't heard being publicised widely. He hints at the reckless lenders but confirms that the general public are going to be continually screwed.

Ireland demands debt relief, warns on EU treaties
Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain.

By Ambrose Evans-Pritchard, in Dublin
The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.

"We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan.
"We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks.

Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters.

"We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said.
The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum.
The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case.
Ireland took on the bulk of the debt from its oversized banking system in 2008, resisting a chorus of calls for the country to follow Iceland's example and walk away from private bank liabilities. Had Ireland done so, it might have set off a catastrophic chain reaction across Britain and Europe.
The fateful move has saddled the taxpayers with colossal losses from Anglo Irish and other banks, and will push public debt to near 118pc of GDP by 2014. There is a widespread resentment in Ireland that taxpayers were sacrificed for the greater cause of Europe without receiving any acknowledgement from the EU's creditor states.
Ireland was ordered to pay a penal surcharge of 300 basis points on the orginal EU loan package, which Mr Noonan described as a "piece of foolishness" that has since been abandoned. "Bank shareholders were wiped out already so they had their sharp lesson in moral hazard."
Ireland has imposed haircuts on the junior debt tranches of rescued banks. Mr Noonan said this may now be extended to Bank of Ireland debt to help cover €350m of fresh capital it needs by next month. The state holds 15pc of the bank's equity.
Mr Noonan said Ireland is sheltered from the storm blowing through the eurozone since it does not need market funding until 2013, but the crisis cannot be allowed to drag on. "Some way will have to be found to create a firewall. The role of the ECB is a matter of debate. There may be legal difficulties in it operating in the same way as the Federal Reserve.Whether the ECB has a role in working with the IMF or EFSF (bail-out fund) is under discussion," he said.
Ireland has no "detailed contingency plans" for a eurozone break-up. "Obviously, we have thought about it, but it's a very remote possibility," he said.
Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland's "internal devaluation" policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget.
"We have to face reality. There is no painless way, no soft option: we're going to cut spending drastically, but with social cohesion. We don't want situation we see in Greece with people on streets and the foundations of state under threat. We're not going that route."

http://www.irishtimes.com/newspaper/breaking/2011/1125/breaking35.html?utm_source=twitterfeed&utm_medium=twitter

This might explain Noonan's comments. They are now talking about leaving private banks out of any bailouts, which is a bit f**king late for us!

In other news: http://www.irishtimes.com/newspaper/breaking/2011/1125/breaking34.html?utm_source=twitterfeed&utm_medium=twitter

Spain is 'considering' outside aid. This means they are past the bit where  Noel Dempsey (and Dermot Ahern) goes on the news and say they have seen no IMF people anywhere, 'have you Dermot?'.

[muppet]

Wow!

http://www.broadsheet.ie/2011/11/25/kevins-gate-the-back-to-back-loans/

Any fool knew that Irish Life didn't give a €7bn loan to Anglo without a nod from the State. (This was deliberately misleading the markets at best). But Cowen and Lenihan denied they knew anything and up to now we never heard a hint of a name.

[seafoid]

Interesting comments here from Noonan in the Telegraph which I haven't heard being publicised widely. He hints at the reckless lenders but confirms that the general public are going to be continually screwed.

Ireland demands debt relief, warns on EU treaties
Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain.

By Ambrose Evans-Pritchard, in Dublin
The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.

"We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan.
"We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks.

Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters.

"We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said.
The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum.
The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case.
Ireland took on the bulk of the debt from its oversized banking system in 2008, resisting a chorus of calls for the country to follow Iceland's example and walk away from private bank liabilities. Had Ireland done so, it might have set off a catastrophic chain reaction across Britain and Europe.
The fateful move has saddled the taxpayers with colossal losses from Anglo Irish and other banks, and will push public debt to near 118pc of GDP by 2014. There is a widespread resentment in Ireland that taxpayers were sacrificed for the greater cause of Europe without receiving any acknowledgement from the EU's creditor states.
Ireland was ordered to pay a penal surcharge of 300 basis points on the orginal EU loan package, which Mr Noonan described as a "piece of foolishness" that has since been abandoned. "Bank shareholders were wiped out already so they had their sharp lesson in moral hazard."
Ireland has imposed haircuts on the junior debt tranches of rescued banks. Mr Noonan said this may now be extended to Bank of Ireland debt to help cover €350m of fresh capital it needs by next month. The state holds 15pc of the bank's equity.
Mr Noonan said Ireland is sheltered from the storm blowing through the eurozone since it does not need market funding until 2013, but the crisis cannot be allowed to drag on. "Some way will have to be found to create a firewall. The role of the ECB is a matter of debate. There may be legal difficulties in it operating in the same way as the Federal Reserve.Whether the ECB has a role in working with the IMF or EFSF (bail-out fund) is under discussion," he said.
Ireland has no "detailed contingency plans" for a eurozone break-up. "Obviously, we have thought about it, but it's a very remote possibility," he said.
Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland's "internal devaluation" policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget.
"We have to face reality. There is no painless way, no soft option: we're going to cut spending drastically, but with social cohesion. We don't want situation we see in Greece with people on streets and the foundations of state under threat. We're not going that route."

http://www.irishtimes.com/newspaper/breaking/2011/1125/breaking35.html?utm_source=twitterfeed&utm_medium=twitter

This might explain Noonan's comments. They are now talking about leaving private banks out of any bailouts, which is a bit f**king late for us!In other news: http://www.irishtimes.com/newspaper/breaking/2011/1125/breaking34.html?utm_source=twitterfeed&utm_medium=twitter

Spain is 'considering' outside aid. This means they are past the bit where  Noel Dempsey (and Dermot Ahern) goes on the news and say they have seen no IMF people anywhere, 'have you Dermot?'.

I think that means they won't ask private banks to take hits on their bonds.  But am not sure how that would have helped us. -