ECB shuts door on Greek bail-out

ei.sdraob

we should really take note of this event here in Ireland

as were in the same league

tho we in Ireland sort of started addressing problems in past budget, while Greece's leftie Socialist government did nothing to address issues and is floating along

This is potentially dangerous in a Left-leaning political culture where people have yet to accept the need for harsh medicine. Mere hints of austerity over the past two years have been enough to set off street riots, while Communist trade unions are already threatening to strike.

the trade unions in Ireland and a certain far left party want us to continue borrowing more and getting into debt like the Greeks are doing instead of addressing the problems


disclaimer: this is the first time i posted a link to an Ambrose Evans-Pritchard article, the guy almost weekly writes about the collapse of the euro in the Telegraph and is the UKs version of our beloved DMcW

nesf

Not really applicable to us as we've already committed ourselves to reducing our deficit relatively quickly and have taken the crucial first steps which our citizens seem to have accepted. Greece on the other hand hasn't managed this. It really is a very different situation.

Sand

I dont know, in a situation where we are strangely relieved the annual deficit is only 25 billion, not counting the 11 billion given to the banks last year, with at least the same due this year, and on top of that the NAMA blackhole, the rising credibility that a EU nation may not be able to meet its debt obligations...the Greek situation could be very applicable to us.

What makes Greece different is the unwillingness to at least talk a good game. Lenihans budget, for all the talk of its harshness and toughness, barely chipped away at deficit and that was before the backsliding began on the senior civil servant pay, and only after Cowen had to be restrained from slavering over the 12 days of christmas offer - if and when Lenihan is forced to step down due to his health, is there going to be a Minister of Finance strong enough, or even willing to do at least the very minimum required? If Cowen decides to insert back into the DoF does anyone have any confidence any serious efforts will be made to control spending?

Apart from public relations, our austerity campaign has barely taken off and has already clumped back down on the runway as vested interests petition their pawns.

That the ECB would go public on that is a very clear message, and not only to the Greeks but also to any other small, peripheral EU government who might think theres a safety net. His highlighting that the Greeks fiscal mess was home grown is very much applicable to Ireland, probably deliberately so.

ei.sdraob

nesf wrote: »

Not really applicable to us as we've already committed ourselves to reducing our deficit relatively quickly and have taken the crucial first steps which our citizens seem to have accepted. Greece on the other hand hasn't managed this. It really is a very different situation.

if we caved in (or will cave in/do a uturn) to Unions we might find ourselves in this situation, thats my point

hmmm

Greece is a very dangerous problem for Ireland. Our spreads, while high, still reflect an assumption by the debt markets that our Euro partners will not allow Ireland to default. We're arguably doing our part by taking our medicine, but we still need to finance 100 billion or so of borrowing over the next 2/3 years. If we are seen to do the right thing, I think an assumption that our Euro partners will bail us out if required is not unreasonable.

Greece is in a similar position but are refusing to do the necessary. The Euro paymasters (Germans in particular) are being forced into an uncomfortable position - should they bail out the Greeks, irrespective of their deficits, or should they allow a Greek default. If they choose the first option, Greece can continue to borrow silly amounts without any fear of having to repay it. If the Germans choose the latter (allow Greece to default), Ireland, Spain and Italy will see their funding costs rocket and potentially will default themselves.

johnnyskeleton

nesf wrote: »

Not really applicable to us as we've already committed ourselves to reducing our deficit relatively quickly and have taken the crucial first steps which our citizens seem to have accepted. Greece on the other hand hasn't managed this. It really is a very different situation.

I thought Greece had committed to an even quicker reduction, but just haven't actually done anything about it. At least BL did make relatively serious cuts to the budget.

As for our "plan" to reduce the deficit, so much of it relies on the economy going back, if not to 2006, then at least 2004/05, levels of employment, pay, tax etc and the banks suddenly bringing back life into the economy.

nesf

johnnyskeleton wrote: »

I thought Greece had committed to an even quicker reduction, but just haven't actually done anything about it. At least BL did make relatively serious cuts to the budget.

The second part is the important one. We started our cuts many months ago and while our main Opposition parties are grumbling about the specific details none of them are disagreeing with the size of the reduction involved which is also very important.

johnnyskeleton wrote: »

As for our "plan" to reduce the deficit, so much of it relies on the economy going back, if not to 2006, then at least 2004/05, levels of employment, pay, tax etc and the banks suddenly bringing back life into the economy.

Sure but the thing we have direct control of is our spending. So long as we're committed to reducing it then we're on the right track to rebalancing the books, the Government's time frame may be optimistic but since we can't actually control how big a rebound there will be in the economy it isn't something to get hung up about so long as we are bringing our spending back in control.