The IMF are coming?

[Rossfan]

insist that expenditure limits are adhered to, presumably they'll not allow us to pay our public servants multiples of what the same public servant would get in France, Italy or Germany, thus they'll insist that their salaries are cut (and 5-10% aint going to do it).

And will they cut their mortgage repayments and cut the prices of food and drink and just about everything else that's twice as dear in Ireland as in most other EU countries.
THese latter things are what caused pay rates to rise so much hereduring the Builderbertie era.

[Lecale2]

We are in a whole new ball game game where things like that don't matter.

[Bogball XV]

insist that expenditure limits are adhered to, presumably they'll not allow us to pay our public servants multiples of what the same public servant would get in France, Italy or Germany, thus they'll insist that their salaries are cut (and 5-10% aint going to do it).

And will they cut their mortgage repayments and cut the prices of food and drink and just about everything else that's twice as dear in Ireland as in most other EU countries.
THese latter things are what caused pay rates to rise so much hereduring the Builderbertie era.

hopefully, it's been my belief for a long time that a residential mortgage bail out of some form will be necessary, how it'll be implemented etc, i don't know.   I was having a chat about all this malarkey with someone else in the pub last night and we both agreed that this country is unbelievably fcuked at the future, we're not exactly financial and economic genuises, but we couldn't see any solution at all.  The other guy was at a meeting of financial controllers of mid to large companies in Dublin last week, each of them said that their numbers are down multiples of last years and that they only see it getting worse next year.  From what I remember these guys were employed in a variety of consumer goods industries (no construction lads there - they've already left the country). 
The dept of finance could be in for another shock next month too with the self assessed tax returns coming in, i'd be shocked if they've factored in the scale of refunds they'll be paying out, instead of preliminary tax in. 

[Caid]

Bit of an extreme opinion on the IMF:

http://www.huffingtonpost.com/nathan-lewis/the-imf-destroys-iceland_b_276193.html

The International Monetary Fund operates primarily as a banker bailout machine. They cajole and tempt and confuse and threaten the leaders of governments worldwide to pay off the failed bets of the big bankers using the taxpayer funds of their countries. This has been going on a long time, at least since the early 1980s.

Thus, I am not in the teeniest bit surprised that the same thing is happening today in Iceland and Latvia.

This article by Michael Hudson has some of the details:

For the past decade Iceland has been a kind of controlled experiment, an extreme test case of neoliberal free-market ideology. ... Is there a limit, a point at which government will draw a line against taking on public responsibility for private debts beyond any reasonable capacity to pay without drastically slashing public spending on education, health care and other basic services? ...

The European Union and International Monetary Fund have told them to replace private debts with public obligations, and to pay by raising taxes, slashing public spending and obliging citizens to deplete their savings. Resentment is growing not only toward those who ran up these debts -- Iceland's bankrupt Kaupthing and Landsbanki with its Icesave accounts, and heavily debt-leveraged property owners and privatizers in the Baltics and Central Europe -- but also toward the neoliberal foreign advisors and creditors who pressured these governments to sell off the banks and public infrastructure to insiders.

This is the trick: replacing private debts with public obligations. Lots of people loaned money to banks and corporations in Iceland. They are now facing huge losses.

What is supposed to happen here is: they take their losses. There was no government guarantee. Why should someone with no relation to this business deal have to pay off their losses just because they happen to live in Iceland?

The government of Iceland may not actually have the money to pay this off. They would have to borrow it. When the IMF makes a "rescue loan" to a government, the money spends no time in Iceland or Latvia. It goes directly to the foreign creditors, in places like New York and London.

However, the debts remain, to be paid off by the taxpayers of Iceland. Taxes rise, which just makes a bad economic situation worse. Valuable and important services are cut -- precisely when they are most needed. Then, the IMF "advisors" come in and start to make a lot of demands.

For example, they may demand that the government sell off "public infrastructure" and the assets of failed banks (which still have considerable value) to pay off the loans which were used to bail out the bankers in New York and London. Who buys this "public infrastructure"?

Typically, it's the bankers in New York and London! Normally, at very good prices -- very, very good prices. Extraordinarily good prices.

Prices for assets in a crisis are normally very low. But, a government that can be coerced into bailing out the bankers can also usually be coerced into selling off state assets at values that no private owner would accept.

Hudson calls this "neoliberal free-market ideology." Of course, it has nothing to do with the principles of capitalism. You could call it a form of fascist imperialism. I think John Perkins, author of Confessions of an Economic Hit Man and The History of the American Empire, would agree with this terminology.

It is hard to tempt and cajole and confuse world leaders when you use unpleasant terms like "fascist imperialism." That's why these proposals are camouflaged with labels like "neoliberal free-market principles," when they have nothing to do with free-market principles.

It's not about "conservative" and "liberal." It's about us against the banker imperialists.

The IMF should be abolished.

[Caid]

http://www.irishtimes.com/newspaper/innovation/2009/0302/1224241917182.html

WHO'S AFRAID OF [ ECONOMICS ] BOGEYMAN? THE IMF  March 2009

No one is suggesting Ireland needs the IMF - yet - but it might be instructive to see what this experienced body could do for us, writes MICHAEL CASEY

IN THE midst of our economic travails, three frightening letters have appeared in dispatches - I, M and F. It is a pity that the International Monetary Fund is seen as such a bogeyman, because it does excellent work around the globe by lending to countries and "encouraging" them to adopt corrective economic policies in the context of fully articulated, joined-up plans.

It is not being suggested that Ireland will have to approach the IMF, but as a contingency measure it is useful to consider what the IMF could do for a country like Ireland - which is experiencing severe economic and financial difficulties. It could do a lot.

It is the plan for economic adjustment that is the defining characteristic of the IMF. No other lending agency does this with anything like the same degree of rigour - and it employs hundreds of highly qualified macroeconomists for this work.

Incidentally, the IMF also has considerable experience in financial bailouts and in the vagaries of international capital markets. The IMF has far more experience and expertise at its fingertips than the Irish Government and public sector put together.

Of course, it is the policy plan that irritates governments on the receiving end. This may be because the plan involves tough choices the government in question really doesn't want to make. It may suggest that the government lacks the competence to formulate a plan on its own. Questions of democratic accountability sometimes arise.

These reasons usually explain why many countries do not consider going to the IMF until they have exhausted all other possibilities and are in a very bad state - a recent example being Iceland.

Unfortunately, that usually means that the economic adjustment has to be more severe than it might otherwise have been, and there is a greater chance of the recovery programme going off the rails before all of the agreed economic targets have been achieved. If the conditionality is not met, lending from the IMF will cease, or the whole programme may be renegotiated.

Countries that come late to the IMF usually find it difficult to adhere to the plan. The conditionality tends to be breached after about two years when "adjustment fatigue" sets in.

Governments tend to wilt under pressure at that key juncture where the medicine is still bitter, but the cure hasn't yet taken hold.

Some countries have worked out ways of lessening the political drawbacks of going to the IMF. They may, for example, use the IMF as a scapegoat, and blame the institution for the bitter medicine that has to be ingested.

Some countries have this blame game down to a fine art. Local newspapers and broadcasters discuss upcoming "test dates" - those end-quarters when the agreed economic conditions fall to be reviewed. Citizens of the countries in question bet on whether the tests will be met or not.

Some governments pretend that the economic plan has been worked out by themselves. The IMF does not object at all to this little subterfuge; if it helps to save face for the government in question, that is all good.

For years now the IMF has tended to focus on less developed countries, and a certain kind of snobbery has arisen because of that. UK policy-makers still feel a frisson of embarrassment when they think of their approach to the IMF in the mid-1970s. The fact that a developed country like Iceland is now a client of the IMF may break that pattern.

If Ireland were to go to the IMF, what kind of economic plan might emerge? Normally, the IMF would look for a currency devaluation to restore competitiveness, but this is not an option for us. Neither are changes in monetary policy, because interest rates are determined in Frankfurt. The IMF has, however, dealt with countries which belong to monetary unions in the Caribbean and Africa. The emphasis would have to be on fiscal policy.

Since the IMF "model" tends to be a free-market one, there probably would not be a significant increase in taxation, over and above what has already occurred in terms of VAT, the income levy and pension levy. Some form of property tax might, however, be proposed, since this would not distort market signals. Many charges for services provided by the public sector would probably be introduced.

Expenditure cuts would more than likely be deeper than envisaged at present - in the region of €16 billion over a three-year period or €20 billion over a five-year period. Increases in real social welfare spending would be contained to about 1 per cent per annum or less. The emphasis would be on eliminating the structural budget deficit.

It is likely that some State assets would be privatised. Public private partnerships would be encouraged. There would be substantial public sector reform, voluntary redundancies, and a complete rationalisation of our 800 public bodies. The latter would probably be reduced to 400 over a three-year period. The system of political appointees would be abolished in favour of open competition. Meritocracy would replace cronyism. All cosy cartels would be swept away.

Incomes would probably be cut in the public sector in the first year and frozen for the subsequent two years. There would be a strong recommendation that wages in the private sector should move pari passu so that competitiveness could be restored. There would be no attempt to alter materially the existing distribution of income. This is a politically sensitive area into which the IMF does not venture.

Considerable help and advice would be available on how to deal with the banking difficulties. While nationalisation might not be the first preference of the IMF, it is likely that one of their specialised teams could make a best estimate of the bad debts and recommend an appropriate solution that would "satisfy" the international markets, which hold the IMF in very high esteem. Advice would be offered in relation to an effective system of financial regulation for the future.

In short, the IMF could be seen as a one-stop shop which would tackle all of our problems in one fell swoop and would not be swayed or distracted in any way by vested interests and lobby groups.
All of this would be done in the context of an economic plan - which we still do not have. Borrowing from the IMF would be cheaper than from global markets. And an IMF programme would have a positive effect on Ireland's credit rating. Successful completion of the programme would earn us the international seal of good housekeeping which we have, unfortunately, lost in the last few months.
It is a pity that recourse to the IMF is regarded as such an extreme, and almost embarrassing, step. Because of this, most countries delay their applications, but this means the adjustment will be more severe.

At the present time, there is another good reason countries should apply to the IMF sooner rather than later: it is likely that the IMF's own liquidity position is going to come under pressure as other countries borrow from it. This may happen despite the IMF's plan to increase dramatically its own funding.

There is, however, probably an intermediate step available to Ireland by virtue of its membership of the European Monetary Union (EMU). Even though the European Central Bank and the Maastricht Treaty are opposed to bailing out member states in difficulty, there is a provision for "exceptional cases". Countries like Germany and France - and indeed, the EMU itself - could suffer reputational damage if one or more member states found themselves in severe distress. If Germany and/or France were to help Ireland there would probably be some form of conditionality which might even include "tax harmonisation". The Irish Government would need to tread carefully.

Here again, the old question of moral hazard rears its ugly head. An EMU member country, just like a poorly performing bank, can take the easy way out by relying on a bailout instead of putting its own house in order. While our Government is trying to do its own housekeeping, it is not exactly making giant strides. In the unlikely event that Ireland were to opt for the IMF, it should, if only as a matter of courtesy, clear its lines with the EU.

In the early 1980s when Ireland had huge fiscal and balance-of-payments deficits and an unemployment rate of 15 per cent, it was still able to borrow on global markets. And, while we didn't go near the IMF, there was one rather interesting development while I was there.

The managing director of the IMF held a lunch every quarter to discuss seven or eight of the worst economies in the world - usually poor third-world countries. To everyone's consternation, Ireland appeared on the "basket-country" agenda for one quarter during that period. The minister for finance and the Department of Finance were horrified. Ireland remained on the "hit list" for two quarters.

That was as close as we ever came to IMF discipline. But it served to concentrate the mind, and our own belated programme of fiscal rectitude began shortly afterwards. And that, many commentators believe, set the scene for the Celtic Tiger.

Michael Casey is the former chief economist of the Central bank and IMF board member

[Bogball XV]

Hah, a year on the b**tards still aren't here!! All idle chit chat....

[ziggysego]

Hitler's going to save us

http://www.youtube.com/watch?v=hm-q8F4t74g

[Lecale2]

Hah, a year on the b**tards still aren't here!! All idle chit chat....

Tomorrow. You conjured them up!

[An Gaeilgoir]

Watching Prime time last night and the performance of Joan Burton and Dick Roche, we have people in power and waiting in the wings who do not have the mental capacity,skill or knowledge  to deal with the crisis we are in or to formulate a plan to sort it out.  Fianna Fail have betrayed this country and all its peoples and history will judge them in years to come. Where are the Greens, IMPACT, SIPTU etc. over the last few days, shame on them as well as they are equally guilty in bringing us to this endgame.

The IMF and ECB arriving in is in my opinion is no harm, it will bring in a purpose, a direction and a way out of this mess. Paycuts for the public sector of up to 15%, halfing the number of Quangos, reducing the number of public service workers and yes i know there will be cuts to frontline services, but this is now the price of pur mis-managment whether we like it or not.This will bring our country in to line with our private and other public sector terms and conditions across the EU and end the cosy relationship between our government, vested interests and the unions. Not before time.

[boojangles]

What exactly is a Quango??

[An Gaeilgoir]

What exactly is a Quango??

Ireland in 2006 had more than 800 quangos, 482 at national and 350 at local level, with a total of 5,784 individual appointees and a combined annual budget of €13 billion

[seafoid]

What exactly is a Quango??

A quango is a semi governmental organisation set up to provide a service that used to be provided by the government. like the NCT crowd. There is loads of waste and duplication of managers and that sort of carry on.   

[ziggysego]

What exactly is a Quango??

Quagmire's Irish cousin. Giggity.

[seafoid]

BTW the IMF has nothing to do with putting the fear of God into the FF backbenchers to get the budget passed. 
This is far more serious. The Euro is in big trouble and Ireland is more or less bust.   

[Bogball XV]

Hah, a year on the b**tards still aren't here!! All idle chit chat....

Tomorrow. You conjured them up!

I'm going to have to learn to keep my mouth shut in future.