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

[Declan]

If any of our banks default on the senior bondholders then where in gods name will any future good bank in this country get there hands on cash?

That's not answering the question- But bondholders aren't stupid- Any new future bank as you put it would be a separate entity to the failures we currently have and could negotiate on their own terms

[highorlow]

That's not answering the question- But bondholders aren't stupid- Any new future bank as you put it would be a separate entity to the failures we currently have and could negotiate on their own terms

When we joined the EURO all debt became sovereign to a certain degree when discussed in public. Your point on the bondholders is exactly my point, bondholders aren't stupid; when our banks become a viable entity in the marketplace again which may not be as far away as people in the meeja are suggesting, they are certainly a more viable and attractive proposition today then they were last Friday, (everytime i switched on the tv or radio in the last fortnight the debt of the banks grew by another 10billion which has since proven to be misleading by so called economists) then some vultures will come in and take them over and let them do a deal with the bondholders in private. In the meantime what has been done is really the only choice we had. The sovereign state couldn't come out and say last night 'by the way lads we are letting AIB go down the tubes tomorrow, see ye later,' what would you think would be going on today in the country? The sovereign state will also still have the NAMA assets which also appear to have been forgotton about by every so called analyst.

p.s. Iceland is not in the EURO. They devalued their Krona. If you want to go back to the punt then your on you own? As much as peoples homes have devalued we don't want houses valued at 150k Eur and punts of an exchange rate of 10 punts to 1 Eur so you will be paying off 150k Eur mortgage for a house worth 15,000 Eur!!

p.p.s If Morgan Kelly can predict some positive outlook then one could take him seriously.

[Bogball XV]

Do you see no difference between bank and sovereign bondholders high or low ?

If any of our banks default on the senior bondholders then where in gods name will any future good bank in this country get there hands on cash?

Bondholders will initially demand a higher rate of interest than they normally do for new start-up banks, say about 8% probably.  That's what they're supposed to do, they measure the risk and demand an interest rate adequately reflecting that risk.  Obviously, something that they didn't do too well in the past.
In saying that, it would be no bad thing for new banks to stay well away from raising capital externally to loan internally anyway for a while, we don't want a repeat of this in another decade

[Bogball XV]

That's not answering the question- But bondholders aren't stupid- Any new future bank as you put it would be a separate entity to the failures we currently have and could negotiate on their own terms

When we joined the EURO all debt became sovereign

I don't understand how that could be the case.

[highorlow]

I modified it there.

[bcarrier]

p.s. Iceland is not in the EURO. They devalued their Krona. If you want to go back to the punt then your on you own? As much as peoples homes have devalued we don't want houses valued at 150k Eur and punts of an exchange rate of 10 punts to 1 Eur so you will be paying off 150k Eur mortgage for a house worth 15,000 Eur!!

I think you are the alarmist now HoL . If we left the Euro domestic debt and savings would also be redesignated in the new currency. (It might actually solve the property overhang/ valuation issue through inflation.) There would be major issues but at some stage a devaluation may have to come into play.  A break up of the Euro is a live issue. Goldman Sachs have today said they expect the Euro to survive but to be messy.

Just because you dont like what Morgan Kelly and others have been saying doesnt make it less credible. We all need to keep open minds about what is going on ....I would love to see some positive in the current situation but there doesnt seem to be any policy except kick the can down the road. The situation with the banks is completely bizarre and I am at a loss as to why Ireland rather than Europe is picking up the bill if they are too big to fail. There might be something we dont know ( maybe structural funds coming our way ?) but I suspect Cowen and Lenihan have just been worn down.  It is tiresome stuff.

[Declan]

Another thing about the bail out that epitomizes the mindset here is the NPRF being raided so we have the bizarre situation that politicians' pensions - can't be touched, the (government) lawyers tell us,Bankers' golden parachutes - can't be touched, the (government) lawyers tell us, €17.5 bn pension fund for regular citizens - hey presto, given away by the government.

[Maiden1]

Ireland is getting a 85 Billion bailout from other European counties at 5.8%.  Basically the other countries are going to the markets and getting a loan at say 2.5% then loaning this money to Ireland at 5.8%.  'It's in Britains interest to bailout Ireland' should be interpreted as we'd be mad not to lend them money at that rate.  Portugal are next, once we start hearing stories that a country could be in trouble that is exactly what happens, the markets get scared and refuse to lend them money at a reasonable rate then eventually they have to get a loan with conditions from the EU or IMF.  If Ireland was not in the Euro they could have intentionally devalued the punt instead of cutting all benefits.  Foreign businesses see that the punt is weak and that they get a lot of value for there dollar/pound/euro and start investing jobs in Ireland.  People looking to go on holiday see the weak punt and think Ireland is a good place to go for a cheap holiday, Irish goods are cheap so the export market is strong.  All these thing would help the Irish Economy.  Because Ireland is tied to the Euro none of these options are available any longer.

[Zapatista]

Can someone explain where the cash reserve came from?

[Zapatista]

Another thing, the money moves here before we return it with interest and we think we are getting bailed out?

The EU problem is currently in Ireland and they want to keep it here. Fair enough I see the sense in that. However, there is no sense in Ireland footing the bill.

It's like having a swine flu outbreak in Mayo which resulted from poor common Irish agriculture laws. Quarentining Mayo for 4 years with a very expence operation and then billing the people of Mayo for it.

[Hardy]

Can someone explain where the cash reserve came from?

Borrowed money, I think. This is the money they were talking about when they said they had enough funding in place until mid-July. Though why it would have been borrowed and incurring interest before it was needed, I don't understand.

[Zapatista]

Can someone explain where the cash reserve came from?

Borrowed money, I think. This is the money they were talking about when they said they had enough funding in place until mid-July. Though why it would have been borrowed and incurring interest before it was needed, I don't understand.

Maybe they knew at that stage that we were fucked and bought themselves enough to get to an election?

[Declan]

Borrowed money, I think

You sure about that Hardy? I thought it came from our PRSI contributions??

[Hardy]

Borrowed off us then!

Seriously, not sure at all Declan. But the €19M annual deficit is borrowed from somewhere and I don't know of any other pot of money other than the NPRF (of fond memory).

[seafoid]

Borrowed off us then!

Seriously, not sure at all Declan. But the €19M annual deficit is borrowed from somewhere and I don't know of any other pot of money other than the NPRF (of fond memory).

Apparently there are €11bn worth of tax breaks annually. And then there's tax evasion.