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

[Banana Man]

Declan we're missing the most important point of all.

10 year German bonds are currently at 2.5%. I've no doubt these feckers are borrowing to buy these, selling them to us at 7% and making a nice bloody margin. We're been taking for a ride and its not a ride that involves Pamela Anderson.

Just Default- will have no effect on deposits. We cant pay back that amount anyway. As said adopting Sterling wouldnt be a bad move. They are literally having kittens at present because their export market could collapse.

that's it, default and root them, they are like lonesharks at an international level. It's akin to the 3rd world debt where the interest servicing was beyond the individual countries and they couldn't cope and never made inroads into it.

I can forsee appeals in years to come asking the likes of the UK and Germany to write of their 3rd world debt to Ireland. It's pitiful and the boys in Leinster House are being bullied down this path they don't have to take. Root the lot of them, default. Default. Default.

[bcarrier]

Random Thoughts


1. Every credible economist/ commentator that I have seen or heard in last few days has said that we cant afford the proposed bailout. The numbers do not stack up at anything other than an interest rate of 1-2%. The effective rates being mentioned of 7% will not be sustainable and will only kick the default can down the road. In the meantime state assets will be offloaded in a firesale.


2. Reversing the bank guarantee and uncoupling the irish bank bondholder debt and sovereign bondholder debt is both pragmataic and morally justified. The bank bondholders have the option of converting their debt to equity but they have no right to expect future generations of Irish taxpayers to repay their loans. In reality both equity and bond holders in Irish banks  have been wiped out. A new good bank should be created.

3. The sovereign debt needs to be eroded through inflation/devaluation. This probably means Ireland exiting the euro (though Germany leaving would have same effect ) .     

4. If exiting the euro leads to an EU exit Ireland needs to reinvent itself fast ...an offshore tax haven ( oversized IOM/Malta) might be an option . The Wealth tax guggested by SF is exactly the wrong thing to do imo.

5. There a far too many TDS in Ireland - one TD per consitituency is enough.

[whiskeysteve]

the panic with AIB is more widespread than ever now, you know its bad when certain folk around you start talking about a 'bank run'.

Things are moving faster than even the more critical commentators have predicted. Collapse of the zombie banks would appear to be a matter of weeks, maybe days! I mean if they are still being funded even after that by ECB/IMF and joe public won't touch them at all, then you are surely talking about zombies that are fcking completely inanimate, i.e. good old traditional corpses.

And now more and more people bank with Northern (i.e. Danske), rabbo, etc, and are getting by. The lesson is really hammering home how we never really needed these banks that have been artificially propped up, just time and a bit of pain to restructure ourselves.

So its clearer than ever that the bank bailout money was nothing more than a massive heist.

[seafoid]

Martin Wolf in the FT
http://www.ft.com/cms/s/0/9dc7e408-f73e-11df-9b06-00144feab49a.html#axzz16CHpd3C

The crisis is a huge challenge for Ireland, which should surely convert unsecured bank debt into equity rather than force its citizens to bail out all the improvident lenders

[Hardy]

It all seems to be coming apart. The whole point of the bailout, from the EU's point of view was to end the sustained attack on the Euro and convince the market that there was no point in taking on Portugal and Spain. It simply hasn't worked and instead their bond yields continue to climb. Political instability here, fomented on the day of the bailout announcement hasn't helped. Imagine - a world depression brought on by the Greens and Jackie Healy-Rae!

I have no idea what a meltdown of the world financial system would mean. But I have a spade and a big back garden and it might make sense to buy vegetable seeds and canned food. And an axe for gathering firewood, which will have to be stolen, as I don't own a plantation. And maybe a shotgun.

[ballinaman]

So in summary....we're fcuked no matter what happens. Bailout won't be enough and will ruin us down the line. What will happen if we do default exactly? Apologies if has been explained already!

[INDIANA]

So in summary....we're fcuked no matter what happens. Bailout won't be enough and will ruin us down the line. What will happen if we do default exactly? Apologies if has been explained already!

the bondholders get burned the same f**kers Lenihan has been bailing out for 2 years. We dont pay back any of the loans- let AIB go to the wall or be sold to Santander and the likes. Exit the euro and join sterling. Convert the debt to equity for the bondholders regardless of whether they agree or not and start from scratch.
Will be a rough couple of years but we wont be paying for this the rest of our lives. Ourselves, our kids and their kids will be paying for this for the rest of their lives if this goes through.

[Banana Man]

So in summary....we're fcuked no matter what happens. Bailout won't be enough and will ruin us down the line. What will happen if we do default exactly? Apologies if has been explained already!

the bondholders get burned the same f**kers Lenihan has been bailing out for 2 years. We dont pay back any of the loans- let AIB go to the wall or be sold to Santander and the likes. Exit the euro and join sterling. Convert the debt to equity for the bondholders regardless of whether they agree or not and start from scratch.
Will be a rough couple of years but we wont be paying for this the rest of our lives. Ourselves, our kids and their kids will be paying for this for the rest of their lives if this goes through.

I seriously don't see the problem with this. I assume the bdget will still have to go through no matter what happens with the banks though only differene will be that all of the savings won't get swallowed up servicing 'new bank' debt....

[Fear ón Srath Bán]

... and we need bank resolution leglislation -- useless fecks couldn't even have put that together in the last 2 years!

[Donkeywalloper]

Heard a guy on primetime last night saying that even at 5% interest it would equate to 4 Billion a year on service of the interest alone. That is aprox 5 grand for every person working to service the debt alone  never mind normal tax collection for everyday running of the country.

Mass emigration on the cards once again

[ballinaman]

So in summary....we're fcuked no matter what happens. Bailout won't be enough and will ruin us down the line. What will happen if we do default exactly? Apologies if has been explained already!

the bondholders get burned the same f**kers Lenihan has been bailing out for 2 years. We dont pay back any of the loans- let AIB go to the wall or be sold to Santander and the likes. Exit the euro and join sterling. Convert the debt to equity for the bondholders regardless of whether they agree or not and start from scratch.
Will be a rough couple of years but we wont be paying for this the rest of our lives. Ourselves, our kids and their kids will be paying for this for the rest of their lives if this goes through.

Sounds like the only option so. Jesus lads...worrying times.

[give her dixie]

Don't bail out Ireland, free it.  Our billions will prolong the misery.
Better for the Irish to quit the euro and default on their debts

Douglas Carswell guardian.co.uk, Tuesday 23 November 2010 21.30 GMT

Britain has just promised £7bn towards a €90bn package aimed at rescuing Ireland's economy. But the bailout has not worked. Instead, we are sinking billions into a temporary rescue of the euro that will prolong Ireland's economic misery. So we should change course and prepare to offer a dramatically different solution – help Ireland decouple from the euro and allow the country to default on its debts.

A prosperous Ireland is in Britain's interest, as the chancellor, George Osborne, was quick to tell the House of Commons. It is not simply a case of economics. There is scarcely a street in Britain in which family ties do not bind the fate of our two islands. It is precisely because we want to see Ireland prosper that we should help it escape from the euro. It was euro membership, with ruinously low interest rates for more than a decade, that plunged Ireland into the economic abyss. Diehard euro advocates might ignore reality, but if Ireland had had interest rates set according to the needs of the Irish economy rather than a wider eurozone, it would not be in this credit-fuelled mess today.

For all the fanfare, the bailout has not reduced the amount Ireland owes by a single euro. Rather, it has seen Ireland accept more debt. Ireland has now gone beyond the point at which it can pay back what it owes. The country can either spend miserable years trapped in debt, with high taxes and higher emigration, or it can decouple from the euro – and default.

Decouple and default works. Remember how the political elite in Argentina, as in Ireland, pegged their own currency to another? Yet when the peso was decoupled from the dollar and Argentina defaulted in 2002, it was free to grow again. Argentina has been chugging along at an enviable 7% to 8% annual growth each year since.

Defaulting on its debts – impossible while Ireland remains in the euro – could follow if it were to decouple. While no one would ever then want to lend Ireland such mountains of money again, would that be such a bad thing?

What is certain is that as long as Ireland remains in the euro, its economic anguish will not end. Unable to devalue, Ireland will never become properly competitive – unless it suffers a dramatic fall in wealth. Yet a collapse in Irish wages is the inevitable outcome of the policy being pursued on both sides of the Irish Sea. How can that be in the interests of either us, or our closest neighbour?

Britain faces a time of unprecedented austerity. Yet many of the savings we have made in public services have now been soaked up by our massive contribution to bailing out the euro. Failure to bail out Ireland, some say, would place British banks in difficulty. But it is precisely because our banks are not out of the woods that we should keep any spare billions we have, for what still lurks on their balance sheets.

And the Irish bailout is also drawing us into potentially unlimited eurozone debt liabilities – in effect, it makes Britain a member of the euro as a debt union. Despite Osborne's best efforts to present it as an act of neighbourly goodwill, Britain had little choice but to cough up. Article 122 of the Lisbon treaty means we will have to hand over billions through the European Stabilisation Mechanism. Even if the chancellor were to say "no", the council of ministers would quickly overrule him. Thanks to the small print of our existing treaty obligations, should Portugal, Spain, or even Italy now seek a bailout, our potential liabilities would be unlimited.

Britain is discovering that it has been drawn into a long line of euro "debt dominoes", each one at risk from any of the others falling. Allowing the break-up of the euro could prove less ruinous than paying to keep everybody in line

[johnneycool]

It all seems to be coming apart. The whole point of the bailout, from the EU's point of view was to end the sustained attack on the Euro and convince the market that there was no point in taking on Portugal and Spain. It simply hasn't worked and instead their bond yields continue to climb. Political instability here, fomented on the day of the bailout announcement hasn't helped. Imagine - a world depression brought on by the Greens and Jackie Healy-Rae!

I have no idea what a meltdown of the world financial system would mean. But I have a spade and a big back garden and it might make sense to buy vegetable seeds and canned food. And an axe for gathering firewood, which will have to be stolen, as I don't own a plantation. And maybe a shotgun.

f**k 'em, run up big debts on credit cards, then f**k off. It's working for Dunne and the likes who seem to be riding off into the sunset whilst the rest pick up the tab.

[Zapatista]

Could we make Ireland a Limited Company and then Just close down?
We could then start a new Country called The Island Republic of East Limerick And North Dingle (Ireland for short). We can leave Cork as the Peoples Republic if they want. We would be brand new with a young educated work force ready to go. No debts hanging over our heads.

[seafoid]

Heard a guy on primetime last night saying that even at 5% interest it would equate to 4 Billion a year on service of the interest alone. That is aprox 5 grand for every person working to service the debt alone  never mind normal tax collection for everyday running of the country. Mass emigration on the cards once again

It is not going to go through. The markets aren't buying it.