[poeticseraphim]

Well it's a review..potentially good...


we are the 'good example' ....

However given that the Finns and Dutch are asking for Spannish collateral for funds we shall see..

It is interesting though...the EU deal has been presented as though it has to be retrospectively applied to Ireland...this makes it clear that this is not necessarily the case ..

A day or to ago we had this ..now its under review...

Perhaps the favourable reaction of the market to Ireland will help sway them..

Will the Dutch and Finns try to block any change?...

Some (krugman for example) have critcised Merkels approach in Ireland ...

Potentially good news..

However the Eu deal is not as straight forward for Ireland it seems....the devil is always in the detail

[golfwallah]

Originally Posted by Scofflaw

It's normally just called horse-trading. And it's basically why the EU tends to evolve when there's a crisis, because otherwise the variety of national interests trump the need for action.

cordially,
Scofflaw

Oops, posted this on the "what will the Left do" thread but now think I should have posted here:

Talk about horse trading at EU level, the first step, “sine qua non” in the “seismic shift” allowing the ESM to directly recapitalize the banks is implementation of “an effective single supervisory mechanism”.

Going back to antoobrien’s post #3 (http://www.boards.ie/vbulletin/showt...p?t=2056686110) - the trade off to the ESM taking over the bank recapitalization piece of our national sovereign debt is more effective centralised banking supervision.

Presumably, current national supervisory arrangements are still considered too subject to national interests and hence too risky in the long term.

This key condition, of closer banking supervision, seems like another step towards a much more integrated Europe (and reduced national sovereignty), which would probably have been unthinkable without the current crisis.

As for the immediate short-term cost / benefit impact – a maximum Irish investment of €11.1 billion in the ESM gets us a large chunk of our bank bailout debt of €40.5 billion off our balance sheet and onto the weighted ESM pool of debt. Whether this also involves transfer of ownership of the banks to the centre remains to be seen – please correct me if I’ve got any of these sums wrong!

Extract from 1st paragraph of the brief Euro Area Summit statement (emphasis is mine):
“When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding. The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme”.
For full text see: http://consilium.europa.eu/uedocs/cm.../ec/131359.pdf.

The statement goes on to say that “ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner“ and that “Eurogroup to implement these decisions by 9 July 2012”.

[briankirby]

Would be grateful if somebody could explain this to me.
It looks as if ESM will capitalise our banks directly rather than the government having to pump money into the banks and then borrow from the troika to do so.
But,wont the money from the ESM still have to be repaid by the banks,which are now state owned?

Also,would the ESM money replace(rather than add to) the money that was already pumped into the banks by the taxpayer?
Thanks

[antoobrien]

Originally Posted by briankirby

Would be grateful if somebody could explain this to me.
It looks as if ESM will capitalise our banks directly rather than the government having to pump money into the banks and then borrow from the troika to do so.

Yes, that is the case for future bank capital requirements, e.g. the €4bn that we reckon they'll need in a few years.

Originally Posted by briankirby

But,wont the money from the ESM still have to be repaid by the banks,which are now state owned?

The deal is short on detail, so it remains to be seen exactly how the money will be paid back. It should be the banks, as they will be borrowing it directly.

Originally Posted by briankirby

Also,would the ESM money replace(rather than add to) the money that was already pumped into the banks by the taxpayer?

In our case we'll be looking to replace at least some of the exchequer borrowings. Exactly how much, again, remains to be seen but it's up to about €40 bn.

[roro2]

Exactly how much, again, remains to be seen but it's up to about €40 bn.

I can't really see the ESM stumping up for the €35bn IBRC funding, seeing as Eurostat has already deemed this not recoverable. But about €5bn of the State input into AIB was also deemed non-recoverable by Eurostat recently, along with another €0.5bn for ILP. So, on a worst case scenario, only about €5bn might be considered by the ESM and reclassified off our debt. But the problem is there has only been speculation so far and zero detail (except one vague sentence in the EU statement), so it's all guesswork that will take a long time to sort out.

[poeticseraphim]

http://www.businessinsider.com/europ...ollapse-2012-7

And borrowing for Spain and Italy is rising further especially for 3 year bonds.

Investors are still losing faith in Europe.


Ireland had a T-bill auction...
http://in.reuters.com/article/2012/0...8I54Y220120705

We seem to be the only good news story.

We pay less for a three month bet than Spain. But is that us going well or simply spain doing badly ?

Anyway it seems Europe is not doing great , we are a doing better , but a lot ddepends on whether Europe gets it together and also gives us a better deal.

Ireland sold 500 million euros of treasury bills at an average yield of 1.8 percent.
Deficit still 13% of GDP economy expected to stagnate next year.

Still we are the only ones giving Europe good news.

SO GO ON EUROPE GIVE US A GOOD DEAL!

[poeticseraphim]

http://www.independent.ie/business/e...s-3159183.html

Hmmm...

It appears the Dutch object to the ECB buying Govt bonds ...they want to keep it's balance sheet in check.

The ECB says it will not resume it's existing programe of purchasing bonds fromcurrent investors.
They are talking about giving the ESM a banking license to buy bonds from the ECB to fund buying bonds ???


How would that keep the balance sheet in check ? And it is still just borrowing from the ECB??

Are they going to use it to force countries to borrow from the ESM to tighten the conditions of any buying of bonds?

[poeticseraphim]

http://www.ft.com/intl/cms/s/0/11176...#axzz1zsbBFsuh

Greece drops demands to ease terms on it's second bailout.

It came as a response to EU and IMF officials visiting and Christine Lagarde saying 'she was in no mood for negotiations or renegotiations'.

The drop of demands came after lenders said they would refuse further funding.

All Greek parties promised to try to negotiate the deal before elections.


So Greece gets no re-negotiation.....and Ireland? Who knows? I wish they would make it clearer.

[Sand]

Its good to see that some realism is emerging this week after the puzzling reaction to the European summit last week. Despite all the talk of "seismic shifts" no one was able to explain who had paid off Ireland's debt. The reason being because no one had agreed to do so. That would have been a "seismic shift".

Merkel, painted as being a defeated figure last week, has had the last laugh as the self declared victors begin to realize she didn't promise any concrete game-changer and didn't increase Germany's liability for their debts in the slightest - directly or indirectly via EU institutions. Instead the other states re-affirmed their adherence to Merkel's short term pet project of the fiscal pact and ECB banking control in exchange for a long term promise that when an institution that doesn't exist yet is set up, it might,once a eurozone banking regulatory system is agreed and implemented, and if Germany agrees, do something under a mechanism that no one has agreed yet. Maybe.

It might be said the best victories are when the other side think they've won.

The ESM has a limited budget, which hasn't been increased. Ireland's banks have already been recapitalized, at state expense so a commitment to in the future directly capitalize banks is a fine solution to a problem we had 4 years ago and have already solved. Even if the ESM does buy into Irish banks, it will be at market value - crystallising huge losses for the Irish government. The best that can be said is that it might in the long term reduce small sovereign funding risks - but that's in the long term.

The Finnish and Dutch have already announced their resistance to the ESM being used to buy bonds in secondary markets - they probably dont need to worry, the ESM simply doesn't have the firepower to meet all the jobs its being given. Meanwhile, the ECB have shut down their bond buying exercise which was at best grudgingly endured by factions within the ECB.

All in all, Merkels position hasn't shifted at all - she's always said that the other Eurozone states must comply with Germany's conditions first, and then they'll talk about aid. Maybe.

Its just ironic that the Irish political set, so long the masters of avoiding difficult decisions by agreeing to setup an inquiry to produce a report to file in the archives didn't recognize what Merkel has done to them.

[antoobrien]

Originally Posted by roro2

I can't really see the ESM stumping up for the €35bn IBRC funding, seeing as Eurostat has already deemed this not recoverable. But about €5bn of the State input into AIB was also deemed non-recoverable by Eurostat recently, along with another €0.5bn for ILP. So, on a worst case scenario, only about €5bn might be considered by the ESM and reclassified off our debt. But the problem is there has only been speculation so far and zero detail (except one vague sentence in the EU statement), so it's all guesswork that will take a long time to sort out.

The latest on this (to be taken with a pinch of salt) is that we are looking at getting a deal on €32bn out of the €64bn total, with the PNs to be restructured separately. The deal is hoped to be in place by October.

THE European Commission has confirmed that a deal to shift the burden of Ireland’s bank debt off the government’s books will be ready by October this year.

The deal, reached after a marathon nine-hour meeting, involves the eurozone’s future rescue fund, the European Stability Mechanism, taking over Irish taxpayers’ €32 billion euro stake in the banks.

EU economics chief Olli Rehn said early today that the Commission would publish proposals in September and aim to get the agreement of Ireland's 16 eurozone partners by October.

Restructuring talks are already underway on €31 billion in promissory notes issued by the government in 2010 to spread the cost of bailing out the former Anglo Irish Bank.

However, any deal involving the ESM will be conditional on the setting up of a euro-level bank supervisor, most likely within the European Central Bank.

A proposal from the Commission is due in September, but the ECB is unlikely to be able to take over supervisory duties before next year.

The Irish deal hinged on decisions taken for Spain

[roro2]

The deal, reached after a marathon nine-hour meeting, involves the eurozone’s future rescue fund, the European Stability Mechanism, taking over Irish taxpayers’ €32 billion euro stake in the banks.

This sentence strikes me as a bit optimistic/sensationalist. I wouldn't describe last night's events as a "deal" being reached, and this quote isn't really backed up by the rest of the article, and definitely not in the EU statement: http://www.consilium.europa.eu/uedoc...fin/131648.pdf

Positive that they did mention Ireland again though.

[antoobrien]

Originally Posted by roro2

This sentence strikes me as a bit optimistic/sensationalist.

Nine hours is one day's work. Hardly sensationalist.

[darkman2]

FT video on the cross over between Spanish and Irish bonds and why investors think Ireland post summit is probably the better bet (just grit your teeth at the begorah stuff)

http://video.ft.com/v/1727863980001/...es-are-smiling

[Scofflaw]

Originally Posted by darkman2

FT video on the cross over between Spanish and Irish bonds and why investors think Ireland post summit is probably the better bet (just grit your teeth at the begorah stuff)

http://video.ft.com/v/1727863980001/...es-are-smiling

Somewhat annoying video, both for the begorrah stuff (people really think we should rejoin the UK, eh?) and for the reiterating of some irritating myths, such as rather casually describing our employment and GDP collapse in 08/09 as "not a great advertisement for austerity", something they're not causally related to.

To be fair, though, both the begorrah stuff and the myths were the work of the presenter, while the other guy at least pointed out that there had been "some unsustainable growth" before the collapse - which is perhaps a slight understatement of the Celtic Tiger period.

Anyway, the gist was that the fall in Irish rates compared to Spanish rates related to "admiration for what Ireland has done" so far, the outcome of the recent summit, and the fact that Ireland has the 3rd largest positive trade balance in the EU (c. €37bn to Holland's €50bn and Germany's €125bn), which means that (if it keeps up) the money is there for Ireland to pay its way.

I suspect that while the Spanish were obviously the main focus of the potential bank debt deal, unlike Ireland the magnitude of the hole in their banking sector is still unknown, and their government is still largely at the stage of denial.

cordially,
Scofflaw