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

[Bogball XV]

Surely the 6bn in cuts and the 15bn total slash plan shows that there is going to be action on the deficit.

Firstly, how can anything that the Irish govt say be believed, it's extremely embarrassing really.  Time after time we hear Lenno out revising his earlier forecasts and apart form projected growth figures the revision is always upwards.  How can he/we be trusted?  They really seem to have bought into their wee theory about being able to talk up and down the economy, they have to realise that trite rubbish about turning corners (yes, he said that in september didn't he) and the worst being over are seen as precisely that by investors, and that the more lies you tell, the lower your credibility.

Secondly and more importantly, tackling the deficit whilst it has to be done is going to have a huge impact on future growth and future bank losses, overseas analysts can see that you can't just take that amount of money out of an economy the size of ours and expect things to coast along and work themselves out in 4 years time.  We're talking about reducing our expenditure by 40% over the next 4 years and then keeping that new expenditure level for the forseeable future.  The implications for growth can only be negative, that means that as the article points out, we've most likely underestimated again.

[seafoid]

At this stage there is no choice. The cuts have to happen.
But the country does need action to stop the debt deflation spiral. I think that is where the EU should come in.
Greece is already in the treatment room and austerity isn't working there either.

FF have to go and then be treated with garlic and a crucifix.   

[Bogball XV]

I know the cuts have to happen seafoid and for the time being at least they have to stick to the 4 year plan.  But that doesn't make irish bonds any more palatable for investors, and as for corporate bonds - honestly, who in their right mind would invest in AIB at present? 

Have you seen this article?

http://www.telegraph.co.uk/finance/personalfinance/savings/8133937/How-safe-is-your-money-in-an-Irish-bank.html

I wouldn't expect much else from The Telegraph.

[ludermor]

http://www.independent.ie/opinion/analysis/thomas-molloy-what-we-face-if-the-imf-takes-over-the-country-2420140.html



By Thomas Molloy

Monday November 15 2010

WHAT will it actually mean for us if the country is forced to call in the International Monetary Fund (IMF)?

Central Bank governor Patrick Honohan took the markets by surprise last week by musing openly about this once taboo question. His conclusion was that it would make little difference and would not act as a "panacea" for our problems.

Speaking at the International Financial Services Summit 2010 in Dublin, the governor added that any IMF policies would be "very much" like the Government's present policies.

And the fund was unlikely to make any changes to the 12.5pc corporation tax rate.

It was a surprising intervention, and the Department of Finance was forced to deny the next day that the Central Bank was preparing for a default.

Since then, we have seen persistent reports that the Government is imminently about to call in the IMF in some shape or form.

What would such a decision mean and was Mr Honohan right to say that it would make little difference?

We don't have to look far within Europe to get a good idea of what it could mean for Ireland if the IMF arrives in Dublin. Greece, Iceland, Latvia and Hungary have all had to call in the IMF over the past two years -- with varying degrees of success and with varying levels of suffering among the population.

No two countries are the same. No matter how bad the Greek economy is, it simply cannot be compared with Iceland -- where the tiny economy was completely overwhelmed by a banking crisis unprecedented in modern times.

Some like to argue that Iceland is recovering quickly from the crisis but the truth is the tiny population of the volcanic island is still struggling with huge social problems and political unrest, which make it hard to swallow the IMF's bitter prescriptions.

At the other end of the scale, and somewhat closer to the Irish economy, Latvia and Hungary have taken their medicine and appear not to be doing too badly since the IMF took control. In fact, both appear to have weathered the worst of the crisis and to be poised to return to growth after two gruelling years of cuts. "I can't say the IMF made a huge difference from former times," says Liva Melbirde, a financial reporter with Latvian business daily 'Dienas Bizness' -- echoing Mr Honohan's comments.

"I think, on balance, it's been good for Latvia. At the time, we didn't have an option; we were spending too much money and we were not in control."

Few in Latvia blame the IMF for the inevitable suffering that has followed the cuts and most hold the government to account, she adds.

Turnaround

Part of Melbride's sanguine attitude stems from the fact that Latvia's gross domestic product is expected to grow 3pc next year. If this happens, it would mark a remarkable turnaround for the country, which saw an 18pc slump last year. Unemployment is now around 15pc from a peak of 17.3pc in March.

But that turnaround has come at great cost. The centre of Riga is full of beggars and empty shops -- much like Dublin these days. "No one is unaware of the fact that there are still too many people suffering," World Bank President Robert Zoellick admitted during a visit to the Baltic country in August.

Some idea of the level of pain can be seen by the fact that Zoellick was speaking after a meeting with Latvians working on a special jobs programme that pays 100 lati (€130) a month for clearing hogweed from fields.

"Those gentlemen are doing pretty tough work for 100 lati a month and I thought it was an excellent sign about the will of people in Latvia to work to try to earn a living for their families," he said.

Latvia's situation is instructive for Ireland because the currency is linked to the euro and the government, which wants to join the single currency in two years' time, took the decision not to devalue. Instead, Latvians have had to cut salaries and costs to bring spending under control -- just as we here in Ireland will in the years ahead.

While the IMF's intervention in Latvia could be described as immensely painful but perhaps successful because it helped the government and the population there to do what it wanted to do anyway, the same cannot be said of Iceland and Greece where a large part of the population is opposed to reforms.

In Greece, there seems to be little shame for the bombs that are landing in the post box of European Union leaders such as German Chancellor Angela Merkel, who helped put together a package of loans in May to bail out the country.

"Our lives in Greece virtually changed overnight, so it should be no surprise that we see such actions taking place," 34-year-old teacher Christina Angreou told Bloomberg this month. "Not that I'm for such actions, but it's a protest."

A poll released last month shows that two-thirds of Greeks think the country could have avoided asking for funds, up from 42pc in April.

The country's public sector union plans to strike later this month to protest against austerity policies and job cuts, which have pushed unemployment to 12pc -- high by Greek levels but still lower than Ireland's rate.

While the Greeks are protesting more than the Latvians, they are suffering less; the IMF has so far resisted imposing the sort of fiscal discipline on Greece as it has on Latvia.

But Greece, which has been a relatively wealthy country for decades and which has a strong tradition of protest, does not closely resemble Ireland despite a common currency.

It seems much more likely that life under the IMF in this country would feel closer to the Latvian or Hungarian experiences -- Latvia was not known as the Baltic Tiger for nothing. "If it wasn't for the IMF and the EU, Latvia would now be completely bankrupt," Jens Fischer, a Riga-based political and economic analyst, said earlier this year. "But it's not like Greece -- the people have seen worse times during the Soviet era and don't complain.

"There is also a big grey economy which remains unseen but keeps many people ticking over just as the grey economy here is keeping hunger at bay in many families."

The reluctance to complain -- also seen here in Ireland -- could be the key to understanding what the IMF will do.

The IMF has acted differently in each European country where it has a major say on government policy but its actions have largely mirrored each government's instincts. As Mr Honohan said last week, the IMF seems to work best when it helps governments to do what they already want to do rather than impose a new set of policies and beliefs.

Judging by the Irish Government and the mainstream opposition's eagerness to "do the right thing" in recent months it seems likely that any IMF intervention would be of the short-sharp-shock variety rather than the bailouts seen in Greece and Iceland.

That could translate as a few years of pain in return for a relatively quick return to economic growth. The problem is that the jury is out on whether such a remedy will work. While Latvia and Hungary are poised for growth, their fortunes, like ours, are intimately tied to the fortunes of the world economy.

[seafoid]

I know the cuts have to happen seafoid and for the time being at least they have to stick to the 4 year plan.  But that doesn't make irish bonds any more palatable for investors, and as for corporate bonds - honestly, who in their right mind would invest in AIB at present? 

Have you seen this article?

http://www.telegraph.co.uk/finance/personalfinance/savings/8133937/How-safe-is-your-money-in-an-Irish-bank.html

I wouldn't expect much else from The Telegraph.

Bogball

The Torygraph is a rag. They sacked all their cricket correspondents and now put PA copy down under a made up name.  Interesting to see the rightwing Brit press putting the boot in. RBS and HBOS are heavily exposed to Ireland so the government has to help out regardless of what the commuters on the 19.27 to Tunbridge Wells say. 

You are right about AIB. Dependent on cheap money from the ECB - when it is ever going to be able to stand on its own 2 feet again?  It is such a pity for what used to be a fine company. 
   

[mannix]

When I think back to some of the things that builders and estate agents said to me 4 or 5 years ago I get weak at the knees, its no wonder Ireland will be run by Germany soon and to be honest lad and lasses it would be no harm since we do not have the brains to run ourselves, honestly, MICHAEL O LEARY, WILL YOU FOR THE LOVE OF GOD PLEASE TAKE OVER LENIHANS JOB OR AT LEAST ADVISE HIM AND HIS PARTY.
Legions of spongers living in free housing,getting free medical cover, free schooling and free cash every week is another massive problem, its one thing for somebody needing it but we have too many just happy to leach of the taxpayer, it must be stopped, make the men on the dole do something for that dole, sweep the street or clean the plastic bags and rubbish of the hedges.And the girls with kids and no sign of a father should get reduced money until they name him, lack of personal responsibility is our undoing.
Talked to a fella whose brother has 8 kids with the wife and has never had a job, how can this be right?Another bastard in a munster city has 4 kids and had 3000 euro a month, he was renting a mansion and going to watch celtic, left a 1200 euro gas bill behind and a wrecked the house only for a councillor to move them into another estate house in the middle of the night.
Ireland needs to cop itself on in a big way.

[Zapatista]

When I think back to some of the things that builders and estate agents said to me 4 or 5 years ago I get weak at the knees, its no wonder Ireland will be run by Germany soon and to be honest lad and lasses it would be no harm since we do not have the brains to run ourselves, honestly, MICHAEL O LEARY, WILL YOU FOR THE LOVE OF GOD PLEASE TAKE OVER LENIHANS JOB OR AT LEAST ADVISE HIM AND HIS PARTY.

Be carefull what you wish for. Michael O'Leary is only interested in Michael O'Leary. These cries for a second coming are frightening especially when people want to see that second coming in the form of Michael O'Leary. For the love of God have a think about it for a second. I'd rather see Bob Geldoff as Minister for Finance.

[muppet]

When I think back to some of the things that builders and estate agents said to me 4 or 5 years ago I get weak at the knees, its no wonder Ireland will be run by Germany soon and to be honest lad and lasses it would be no harm since we do not have the brains to run ourselves, honestly, MICHAEL O LEARY, WILL YOU FOR THE LOVE OF GOD PLEASE TAKE OVER LENIHANS JOB OR AT LEAST ADVISE HIM AND HIS PARTY.

Be carefull what you wish for. Michael O'Leary is only interested in Michael O'Leary. These cries for a second coming are frightening especially when people want to see that second coming in the form of Michael O'Leary. For the love of God have a think about it for a second. I'd rather see Bob Geldoff as Minister for Finance.

Mannix, extreme capitalism killed this country and you want to ask the most extreme capitalist for advice?

Begging for a strong thug of a leader might seem attractive when you are in a hole, but history tells us the hole can get an awful lot bigger if you go down that road.

[Rossfan]

Remember Germany got a strong leader in 1933 

[trileacman]

I know the cuts have to happen seafoid and for the time being at least they have to stick to the 4 year plan.  But that doesn't make irish bonds any more palatable for investors, and as for corporate bonds - honestly, who in their right mind would invest in AIB at present? 

Have you seen this article?

http://www.telegraph.co.uk/finance/personalfinance/savings/8133937/How-safe-is-your-money-in-an-Irish-bank.html

I wouldn't expect much else from The Telegraph.

Bogball

The Torygraph is a rag. They sacked all their cricket correspondents and now put PA copy down under a made up name.  Interesting to see the rightwing Brit press putting the boot in. RBS and HBOS are heavily exposed to Ireland so the government has to help out regardless of what the commuters on the 19.27 to Tunbridge Wells say. 

You are right about AIB. Dependent on cheap money from the ECB - when it is ever going to be able to stand on its own 2 feet again? It is such a pity for what used to be a fine company.

Whatever about your other points, this is a load of shite. A crowd of hoors in my experience, who would have done their mothers for a cheap buck. And not just in recent times, my beef with them goes back to the 80's. Glad to see the back of them.

[muppet]

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/11/will_the_ecb_pull_the_plug_on.html

[Lecale2]

I still find it surprising how many people in the south just don't realise how bad things are.

[seafoid]

I think people are going to figure it out, Lecale. FF have destroyed the economy.   

[gerrykeegan]

I think if I was a public servant I would be asking my union to at least ballot members on taking pain now and not when the IMF/EU conditions are imposed.

[Zapatista]

I think if I was a public servant I would be asking my union to at least ballot members on taking pain now and not when the IMF/EU conditions are imposed.

When the IMF come in that will be there starting point. Anything that came before won't matter.