ECB buys Irish bonds in move to calm market debt fears

ei.sdraob

THE EUROPEAN Central Bank was reported yesterday to be buying Irish government debt in an effort to halt a marked slide in its price over the course of the week. According to Bloomberg News, market traders witnessed the transactions.

The sell-off of government bonds was halted yesterday and fresh short-term debt was issued by the National Treasury Management Agency.

The purchase of government bonds by the ECB was one of the emergency measures introduced in early May to stem the eurozone debt crisis, which culminated in the bailing out of Greece. Such measures are highly unorthodox and have caused open divisions among the 16-member bloc’s central bankers.

http://www.irishtimes.com/newspaper/frontpage/2010/0813/1224276716261.html

seems like there is little interest in buying our junk bonds?

murphaph

Little surprise really. Haven's gone anywhere near far enough in reducing public sector pay and social welfare benefits. Need to do the above and introduce property taxation asap tbh. Need to tax things that don't promote job creation (and I'm a landlord, so it'll hit me personally but Ireland needs it: sadly too many politicians got into "property" so they are the least likely to tax themselves.)

silverharp

murphaph wrote: »

Little surprise really. Haven's gone anywhere near far enough in reducing public sector pay and social welfare benefits. Need to do the above and introduce property taxation asap tbh. Need to tax things that don't promote job creation (and I'm a landlord, so it'll hit me personally but Ireland needs it: sadly too many politicians got into "property" so they are the least likely to tax themselves.)

tax is tax, you can call it what you want but draining money from the general public will reduce economic activity. The problem is there are a lot of "dead men walking" that are depended on the government spending double digit sums it doesnt have

doc_17

People might go for extra taxes if they weren't being pumped into Anglo for absolutely no return or no bebefit to the wider economy. but maybe that situation is like old age......depressing...until you consider the alternative.

If a property tax was implemented I can't think of anything other than chaos, especially for those who bought in 06/07. Anyway as Morgan Kelly says it's only a matter of time isn't it before nobody at all buys Irish Government debt.

rumour

Anglo is infuriating but its not the problem. We are in such dire straits, tax cannot rectify 55million a day. The markets know this.
Moreover they know our prospects of repaying are decreasing by the day.

Either we swallow the bitter pill now or we will have it forced upon us. Unfortunately I think our politicians will avoid responsibility and take the route of having it forced. But I guess that is what we want as a nation just look at the opinion polls anybody who ignores the problem and just critices the necessary cutbacks grows in popularity.

I would love someone to explain a logical way out of this. It all reeeks of inevitability. My view is the only quick way out is to cut public spending by approx 40% or endure death by a thousand cuts.

dan_d

I personally would be happy for Europe to interfere and tell our Government what to do.

I'll be quite happy to take advice from the French or Germans. Let's face it, our crowd of clowns are behaving like just that - clowns. They haven't a clue what they're at.

hinault

Financial Times heading last night was " Greek and Irish debt worries spook international investors"

http://www.ft.com/cms/s/96f4d10c-a63c-11df-8767-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F96f4d10c-a63c-11df-8767-00144feabdc0.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Feurope

Whether we like it or not, the markets (and I had that word:mad:) regard us as a basketcase.
That's why they're charging us nearly 300 interest basis points more than Germany on our bonds.

I still maintain that pouring billions in to Anglo with no prospect of that money ever being repaid is economic suicide.

Idbatterim

its a pity the ECB stepped in, we are a basket case, there need to be far more cuts, far too many working and paying no tax, welfare system far too generous, PS overpaid, overstaffed, inefficient. I really hope it gets to the point where we cant keep on dodging the inevitable.

ei.sdraob

well this seems very significant development now on our way to doing a Greece

so the question then is: how far will ESB allow us to drag rest of eurozone and for how long before they get nasty....

hinault

ei.sdraob wrote: »

well this seems very significant development now on our way to doing a Greece

so the question then is: how far will ESB allow us to drag rest of eurozone and for how long before they get nasty....

I don't know how far the ESB will allow us to drag Europe .

But the ECB is taking up the slack which international bond holders failed to act upon.

Ireland is now viewed by bond markets in the same way as Greece is being viewed.

It's even it the WSJ
http://blogs.wsj.com/marketbeat/2010/08/13/just-a-reminder-alls-not-peachy-in-euroland/

FT's headline 12th August 2010 was that Ireland and Greece has made investors nervous.

http://search.ft.com/search?queryText=irish&ftsearchType=type_news

hinault

duplicate post

Tea drinker

hinault wrote: »

I still maintain that pouring billions in to Anglo with no prospect of that money ever being repaid is economic suicide.

But where is the money going? Back into European banks, who loaned Anglo the credit in the first place? So there is no bailout as such, only thing that has happened is the Irish people are liable to pay Anglo's loans to EU and other banks.

hinault

Tea drinker wrote: »

But where is the money going? Back into European banks, who loaned Anglo the credit in the first place? So there is no bailout as such, only thing that has happened is the Irish people are liable to pay Anglo's loans to EU and other banks.

You're incorrect.

Anglo's loanbook is being bought by NAMA - at a discount.

The loanbook has a value in Anglo's books.
The discount which NAMA pays for the loanbook is lower.

The difference between the value in Anglo's books and the discounted price paid for those loans by NAMA means that the difference has to be funded (recapitalised).

The taxpayer has been put on the hook for the cost of that recapitalisation.

johnnyskeleton

ei.sdraob wrote: »

http://www.irishtimes.com/newspaper/frontpage/2010/0813/1224276716261.html

seems like there is little interest in buying our junk bonds?

What I want to know is how long the ECB have been unofficially buying Irish bonds, either directly or indirectly. It's possible that the last few bond auctions (which were heralded by some as great successes) were merely the result of the ECB using a private vehicle to prop up the Irish state.

Nemi

dan_d wrote: »

I personally would be happy for Europe to interfere and tell our Government what to do.

That could be an improvement. So long as we don't forget that the ECB is mostly interested in the stability of the euro. I think we should be too, obviously. I just think we have to remember that outside interference, whether from Europe or IMF, will not be gentle.

Of course, we could try appointing a NAMAed property developer as Minister of Finance. Imagine how surprised the ECB would be when they turn up to get their money back, and find that all the assets they thought the Irish Government owned have been transfered to the GAA.

ardmacha

That could be an improvement. So long as we don't forget that the ECB is mostly interested in the stability of the euro

What most people are calling for here is that Anglo is wound up, the small depositors covered by the usual deposit insurance and the bond holders taking a bath. These bond holders are pension funds etc in other Euro countries, the ECB does not want these to lose their money as their solvency would then be affected.

There is some evidence that the bond markets are not entirely well informed on this point. Their view is that a country that cuts its expenditure gets into a deflationary spiral which makes it impossible to recover. But Ireland is a small open economy, just as we couldn't inflate indefinitely independently of other countries, we cannot deflate independently indefinitely. If trade improves, and the German gdp growth shows that it is, then production in Ireland will increase. This trade related growth may not be job rich, but the deflation spiral will stop all the same. Consequently a huge gap in German and Irish bond rates is inappropriate, if things are decent in Germany then trade will increase and Ireland will get a substantial part of this. This may not be true of Greece, but it is of Ireland. So the ECB is acting reasonably.

murphaph

ardmacha wrote: »

What most people are calling for here is that Anglo is wound up, the small depositors covered by the usual deposit insurance and the bond holders taking a bath. These bond holders are pension funds etc in other Euro countries, the ECB does not want these to lose their money as their solvency would then be affected.

There is some evidence that the bond markets are not entirely well informed on this point. Their view is that a country that cuts its expenditure gets into a deflationary spiral which makes it impossible to recover. But Ireland is a small open economy, just as we couldn't inflate indefinitely independently of other countries, we cannot deflate independently indefinitely. If trade improves, and the German gdp growth shows that it is, then production in Ireland will increase. This trade related growth may not be job rich, but the deflation spiral will stop all the same. Consequently a huge gap in German and Irish bond rates is inappropriate, if things are decent in Germany then trade will increase and Ireland will get a substantial part of this. This may not be true of Greece, but it is of Ireland. So the ECB is acting reasonably.

Irish manufacturing is still losing a lot of jobs. Ireland as a whole is still shockingly uncompetitive against our EU neighbours. Ireland must get its pay levels appropriate for a small open economy, with little indigenous industry to speak of. We overpaid ourselves (at all grades and levels) during the fake boom. Time to get back to reality: those on big mortgages will have to suck it up.

ardmacha

Ireland as a whole is still shockingly uncompetitive against our EU neighbours.

Ireland has a large trade surplus, not quite the characteristic of a "shockingly" uncompetitve country. Yes, this surplus has a large element of multinational production but Spain and Greece have large trade deficits. My point remains, whatever about the limitations of the companies that provide it, Ireland can benefit from increased trade to a greater extent than other peripheral countries.

Germany is super-competitive and need to pay themselves an increase, otherwise they will wreck the Eurozone with their mercantilist policies.

GSF

ardmacha wrote: »

Germany is super-competitive and need to pay themselves an increase, otherwise they will wreck the Eurozone with their mercantilist policies.

Germany is competing with the rest of the world not Greece, Ireland & Spain.

danbohan

GSF wrote: »

Germany is competing with the rest of the world not Greece, Ireland & Spain.

ardmacha would like germany to be a basket case like ireland greece and spain , anything to avoid the reality of a bankrupt country borrowing to overpay its ps workers , its unemployed , its pensioners not to mention its zombie banks

murphaph

ardmacha wrote: »

Germany is super-competitive and need to pay themselves an increase, otherwise they will wreck the Eurozone with their mercantilist policies.

What nonsense. So you think Germany should intentionally make itself less competitive (Germany is the most productive nation on earth) just because the paddies and the useless southern states had a bonanza on cheap credit and to hell with the consequences?

ardmacha

This is the Irish Economy forum, some form of economic debate is expected, but as usual is lacking. Germany does compete with the world and not just the Euro zone. They are now doing well as the Euro has devalued owing to problems with Greece et al. In the old ERM the peripheral currencies would have devalued, France etc would have stayed the same and Germany would have revalued. A similar process is needed within the Euro.

hoyanto

rumour wrote: »

Anglo is infuriating but its not the problem. We are in such dire straits, tax cannot rectify 55million a day. The markets know this.
Moreover they know our prospects of repaying are decreasing by the day.

Either we swallow the bitter pill now or we will have it forced upon us. Unfortunately I think our politicians will avoid responsibility and take the route of having it forced. But I guess that is what we want as a nation just look at the opinion polls anybody who ignores the problem and just critices the necessary cutbacks grows in popularity.

I would love someone to explain a logical way out of this. It all reeeks of inevitability. My view is the only quick way out is to cut public spending by approx 40% or endure death by a thousand cuts.

Wow another one of the Russian econofacists devotees? Seriously what effect do you think a 40% cut in government expenditure would have on the economy? Deflationary? Just a little? Do you think bond holders are going to lend money to a country that cuts so deep that there is no way that it will avoid setting off a massive deflationary spiral?

And seriously Anglo is not the problem? You don't think the market is looking at the Government and seeing it pump billions after billions in to a black hole with no sign of a bottom, no the markets must see that as prudent fiscal policy for sure.

Scarab80

hinault wrote: »

But the ECB is taking up the slack which international bond holders failed to act upon.

What do you mean by that? That the ECB are buying our bonds because we can't sell them to anyone else?

The ECB program only operates in the secondary market, meaning that they will not buy bonds directly from governments (they are prohibited from doing so), they will buy these bonds as they are traded once purchased if they deem that the yield being demanded is too high.

The reason they do this is to try to subdue speculative runs on soverign debt and calm long term bond investors.

hinault wrote: »

Ireland is now viewed by bond markets in the same way as Greece is being viewed.

Greece is to Ireland as Ireland is to Germany. Greek bonds trade at 500bp over Irish bonds, Irish bonds trade at 300bp over German bonds.

Ireland is viewed in the same way as Portugal, there is a 10bp difference in bond yields. For the past few months we have been viewed as less risky than Portugal and movements in both bonds have generally mirrored each other, however last week beginning with the unemployment numbers and followed by AIB and BOI results and the EU Anglo announcement we switched positions with Portugal being viewed as slightly less risky.

There has been talk about Ireland this week because of this movement but the main reason for the slide in bond and equity markets has been the growing fears of a double dip recession on both sides of the pond.

Scarab80

hinault wrote: »

You're incorrect.

Anglo's loanbook is being bought by NAMA - at a discount.

The loanbook has a value in Anglo's books.
The discount which NAMA pays for the loanbook is lower.

The difference between the value in Anglo's books and the discounted price paid for those loans by NAMA means that the difference has to be funded (recapitalised).

The taxpayer has been put on the hook for the cost of that recapitalisation.

Ok, there is no way that you can be an accountant as you previously claimed, at the most a CPA.

Why do you think the difference has to be funded? Could it possibly be that the amounts Anglo owes to it's creditors (depositers, banks, ECB, Central Bank, bond holders) is greater than the amount it holds in assets (loans)?

The recapitalisation goes to Anglo's creditors, exactly as Tea drinker said. I'm starting to think that people believe that there is actually a black hole at Anglo central where wheelbarrows of cash are thrown into the event horizon.

ei.sdraob

ardmacha wrote: »

This is the Irish Economy forum, some form of economic debate is expected, but as usual is lacking. Germany does compete with the world and not just the Euro zone. They are now doing well as the Euro has devalued owing to problems with Greece et al. In the old ERM the peripheral currencies would have devalued, France etc would have stayed the same and Germany would have revalued. A similar process is needed within the Euro.

ah yes we could have the

irish euro
greek euro
spanish euro

oh wait :P

murphaph

ardmacha wrote: »

This is the Irish Economy forum, some form of economic debate is expected, but as usual is lacking. Germany does compete with the world and not just the Euro zone. They are now doing well as the Euro has devalued owing to problems with Greece et al. In the old ERM the peripheral currencies would have devalued, France etc would have stayed the same and Germany would have revalued. A similar process is needed within the Euro.

You think debate is lacking because I disagree with you?

Germany are doing well because they have a fundamentally sound economy based on MAKING things to a HIGH STANDARD that are DESIRED around the world. Their economy has been based on exports since the end of the second world war. They themselves (German people) are typically quite conservative financially, prefering to save rather than borrow, to shop in discount retailers (there's a reason why Aldi and Lidl BOTH call germany home) and not to buy expensive German cars (ironic as that may seem).

Of course Germany can export goods cheaper to NON EUROZONE countries with a weak Euro (but remember Germany's goods are NO CHEAPER within the Eurozone because of a weak Euro, and the Eurozone is the largest single currency market in the world). HOWEVER, for the decades in Germany known as the "Wirtschaftswunder" the Deutschmark was actually the world's strongest currency, due to policies of extreme fiscal discipline which were passed on from the Bundesbank to the ECB (the HQ of both are within spitting distance of each other for VERY GOOD reasons). Germany, despite having a strong currency was able to export goods at phenomenal rates, because the German worker is a productive one, even to this day.

You may wish to pretend that there are othe reasons for Germany's economic success and Ireland's woes, but the truth of the matter is that it comes down to the people: Germans won't hang themselves out to dry with massive mortgages, don't really care if they live their whole life in a flat, are on reasonable but not extremely good salaries, which are taxed heavily (but fairly) and spent on services at reasonable cost. Germany spends a LOT of it's taxes on infrastructure and a lot less on wages in the public sector etc. (especially when the military is removed from the equation).

We should have followed the German example, we didn't and now you want Germans to make themselves uncompetitive to protect your salary, rather than lower your expectations to that of a German worker.

maninasia

hoyanto wrote: »

Wow another one of the Russian econofacists devotees? Seriously what effect do you think a 40% cut in government expenditure would have on the economy? Deflationary? Just a little? Do you think bond holders are going to lend money to a country that cuts so deep that there is no way that it will avoid setting off a massive deflationary spiral?

And seriously Anglo is not the problem? You don't think the market is looking at the Government and seeing it pump billions after billions in to a black hole with no sign of a bottom, no the markets must see that as prudent fiscal policy for sure.

Anglo is a big problem but not THE problem. THE problem is the annual borrowing of 20 billion Euro to fund day to day spending (not including bank debts). That's 20 billion Euro added to the debt every year..as we know well debt can snowball and interest rates can go up (as they have recently). Every year's additional borrowing puts up the interest payment..meaning we end up running to stand still.
So how to deal with this problem, either raise taxes or cut spending, because economic growth on it's own is not going to be enough to deal with it. Economic growth is needed too...but it is going to be too slow to stop a real Irish credit crisis.

hinault

Scarab80 wrote: »

Ireland is viewed in the same way as Portugal, there is a 10bp difference in bond yields. For the past few months we have been viewed as less risky than Portugal and movements in both bonds have generally mirrored each other, however last week beginning with the unemployment numbers and followed by AIB and BOI results and the EU Anglo announcement we switched positions with Portugal being viewed as slightly less risky.

There has been talk about Ireland this week because of this movement but the main reason for the slide in bond and equity markets has been the growing fears of a double dip recession on both sides of the pond.

No, Ireland is linked to Greece.

Did you read the FT article that I linked a couple of days ago.?

Don't think ya did.


Read it again.
http://search.ft.com/search?queryTex...Type=type_news

hinault

Scarab80 wrote: »

Ok, there is no way that you can be an accountant as you previously claimed, at the most a CPA.

Why do you think the difference has to be funded? Could it possibly be that the amounts Anglo owes to it's creditors (depositers, banks, ECB, Central Bank, bond holders) is greater than the amount it holds in assets (loans)?

The recapitalisation goes to Anglo's creditors, exactly as Tea drinker said. I'm starting to think that people believe that there is actually a black hole at Anglo central where wheelbarrows of cash are thrown into the event horizon.

WTF?

There is a blackhole at the centre of Anglo and €24b (and counting) that will be handed by the State to Anglo has little or no chance of ever being recouped.

Repaying the creditors?
When will Anglo repay the State for the transfer of funds to it?

Nemi

ardmacha wrote: »

What most people are calling for here is that Anglo is wound up, the small depositors covered by the usual deposit insurance and the bond holders taking a bath. These bond holders are pension funds etc in other Euro countries, the ECB does not want these to lose their money as their solvency would then be affected.

Could we add that the ECB would also be concerned that if Ireland let a bank default, it would signal very clearly the prospect of banks in other EU countries being let default. So Greeks don't repay Germans the money they owe them; and if Germany suddenly has no savings, then the euro suddenly has markedly less value.

ardmacha wrote: »

There is some evidence that the bond markets are not entirely well informed on this point.

But, as some are saying here, is it not likely that the bond markets are reacting to the sight of Ireland effectively borrowing the equivalent of an Anglo bail-out every year, just to keep current public services at their present level.

We collectively need to make a GUBU adjustment to our lives, but there's not a lot of signs that this is on the political agenda. At times, you'd nearly get the impression that people think all that money is being borrowed for the banks. I'm not surprised, then, that lenders would be slow to give us money.

Gardai and nurses are lovely people, and all that. But when exactly are we going to get around to repaying the third of their salaries that we are borrowing next year? And who exactly will be making those repayments? What's the extra economic activity that will be generating this money?

ardmacha

You think debate is lacking because I disagree with you?

I think debate is lacking because people are not addressing the specific economic points I made.

Germany are doing well because they have a fundamentally sound economy based on MAKING things to a HIGH STANDARD that are DESIRED around the world. Their economy has been based on exports since the end of the second world war.

Certainly.

Of course Germany can export goods cheaper to NON EUROZONE countries with a weak Euro (but remember Germany's goods are NO CHEAPER within the Eurozone because of a weak Euro, and the Eurozone is the largest single currency market in the world). HOWEVER, for the decades in Germany known as the "Wirtschaftswunder" the Deutschmark was actually the world's strongest currency, due to policies of extreme fiscal discipline which were passed on from the Bundesbank to the ECB (the HQ of both are within spitting distance of each other for VERY GOOD reasons). Germany, despite having a strong currency was able to export goods at phenomenal rates, because the German worker is a productive one, even to this day.

So in a currency union what is the equivalent of German having a strong currency relative to other union members?

You may wish to pretend that there are othe reasons for Germany's economic success and Ireland's woes, but the truth of the matter is that it comes down to the people: Germans won't hang themselves out to dry with massive mortgages, don't really care if they live their whole life in a flat, are on reasonable but not extremely good salaries, which are taxed heavily (but fairly) and spent on services at reasonable cost.

Good for them, I must have some German blood myself I have never said that Irish people are not eejits, but there are implications for everyone of being in a currency union.

Germany spends a LOT of it's taxes on infrastructure and a lot less on wages in the public sector etc. (especially when the military is removed from the equation).

Modern Ireland spends a lot of taxes on infrastructure too, albeit in part because of previous shortfalls in this area. I'd like to see some figures on the total pay bills in both countries, as I noted before German both pays its teachers slightly more and has more of them per student. It does pay its doctors significantly less though.

We should have followed the German example, we didn't and now you want Germans to make themselves uncompetitive to protect your salary, rather than lower your expectations to that of a German worker.

I do not want to make Germans uncompetitive, I want them to enjoy a level of consumption that reflects their productivity and which allows other nations provide them with goods and services. If Germans all had a weeks holiday in Greece then they might not need to lend Greece money.

Specifically in the Euro this means Germany running an inflation rate of 4% odd for a couple of years, while the Euro zone average generally is 2-2.5% and Ireland etc have 0-1% inflation.

Scarab80

hinault wrote: »

No, Ireland is linked to Greece.

Did you read the FT article that I linked a couple of days ago.?

Don't think ya did.


Read it again.
http://search.ft.com/search?queryTex...Type=type_news

Yes, because Ireland and Greece were mentioned in the same article we are the same. Like I said Ireland were being mentioned last week because of negative information coming out in that period.



Hmmmm......

hinault

Scarab80 wrote: »

Yes, because Ireland and Greece were mentioned in the same article we are the same. Like I said Ireland were being mentioned last week because of negative information coming out in that period.



Hmmmm......

FT headline is clear.

Scarab80

hinault wrote: »

WTF?

There is a blackhole at the centre of Anglo and €24b (and counting) that will be handed by the State to Anglo has little or no chance of ever being recouped.

Repaying the creditors?
When will Anglo repay the State for the transfer of funds to it?

Yes, Anglos loan book is ****e, therefore they do not have the funds to repay their creditors, these creditors are guaranteed by the state so the state has to put money into Anglo so that they can discharge their liabilities, just like Tea Drinker said.

For anyone interested in how the Anglo BS will look after the funds have gone in, i reckon they are providing for a 60% discount on the NAMA bound loans.

Scarab80

hinault wrote: »

FT headline is clear.

I guess the guys investing billions into the bond markets must have missed that headline then. :rolleyes:

hinault

Scarab80 wrote: »

I guess the guys investing billions into the bond markets must have missed that headline then. :rolleyes:

I don't really know what your problem is, 80.

But feel free to take the issue up with the FT.

hinault

Scarab80 wrote: »

Yes, Anglos loan book is ****e, therefore they do not have the funds to repay their creditors, these creditors are guaranteed by the state so the state has to put money into Anglo......

Which doesn't address how Anglo propose to repay the State for the money put in to it.

Scarab80

hinault wrote: »

I don't really know what your problem is, 80.

But feel free to take the issue up with the FT.

No problem, i'm simply saying that Ireland and Greece are not in the same boat. The FT article does not say that they are either.

hinault wrote: »

Which doesn't address how Anglo propose to repay the State for the money put in to it.

It won't repay the state.

Though there may be some small return on the equity which is there for capital requirements or on the margin Anglo can earn on their remaining loan book, however given NAMA bonds now make up a big part of Anglos assets which pay a fairly meagre interest rate I can't see them making any decent margins.

Then again there could be further losses if their non-development loan book continues to degrade in quality.

hinault

Scarab80 wrote: »

No problem, i'm simply saying that Ireland and Greece are not in the same boat. The FT article does not say that they are either.

What did the FT headline read as?

Feel free to take it up with FT.

Scarab80 wrote: »

It won't repay the state.

That's what I said.

murphaph

ardmacha wrote: »

So in a currency union what is the equivalent of German having a strong currency relative to other union members?

The crux of the issue is that NOBODY forced us or Greece or anybody else to join monetary union. We knew going into it that it would be dominated by the economies of France and in particular Germany. The ECB was built next to the Bundesbank for heaven's sake...a clearer indication of monetary policy of the Euro couldn't have been given.

Germany played the game by the rules, maintaining its fiscal discipline even though credit was available at record low rates. Ireland etc. did not and behaved like drunken sailors. Who should now feel the pain? The Germans who played the game properly?

hinault

murphaph wrote: »

The crux of the issue is that NOBODY forced us or Greece or anybody else to join monetary union. We knew going into it that it would be dominated by the economies of France and in particular Germany. The ECB was built next to the Bundesbank for heaven's sake...a clearer indication of monetary policy of the Euro couldn't have been given.

Germany played the game by the rules, maintaining its fiscal discipline even though credit was available at record low rates. Ireland etc. did not and behaved like drunken sailors. Who should now feel the pain? The Germans who played the game properly?

The problem in Ireland is that the cost of cleaning up this financial crisis is being put to the already hardpressed taxpayer of this country.

The banks who made these reckless lending decisions should be made pay for the financial crisis.
Not the taxpayer.
And that applies to the taxpayer in Germany and the taxpayer in Ireland.

What should be a financial banking crisis has been allowed to become a sovereign debt crisis because this govt in this jurisdiction has decided that this State should bail out the banks and the banks management for their ineptitude.

oppenheimer1

ei.sdraob wrote: »

http://www.irishtimes.com/newspaper/frontpage/2010/0813/1224276716261.html

seems like there is little interest in buying our junk bonds?

Our bonds aren't junk... not yet at least.

ei.sdraob

were paying 5-6% and borrowing 2 dozen billion a year
nothing to worry about
move along

murphaph

hinault wrote: »

The problem in Ireland is that the cost of cleaning up this financial crisis is being put to the already hardpressed taxpayer of this country.

The banks who made these reckless lending decisions should be made pay for the financial crisis.
Not the taxpayer.
And that applies to the taxpayer in Germany and the taxpayer in Ireland.

What should be a financial banking crisis has been allowed to become a sovereign debt crisis because this govt in this jurisdiction has decided that this State should bail out the banks and the banks management for their ineptitude.

Of course Joe Public is on the hook for it...Joe Public has been electing populist FF governments for many years now. The electorate need to learn the lesson that electing populist governments (of any shade) who throw money about in the form of social partnership and at the same time fan the flames of property bubbles (with S23 incentives and mortgage interest relief etc.) will ultimately end in tears.

FF gave people (wrongly, but still) what they broadly wanted. They were a weak populist government who were cheered on by an absent minded electorate who will now pay the price for not thinking a bit more about their vote and what they wanted for Ireland.

hinault

murphaph wrote: »

Of course Joe Public is on the hook for it...Joe Public has been electing populist FF governments for many years now. The electorate need to learn the lesson that electing populist governments (of any shade) who throw money about in the form of social partnership and at the same time fan the flames of property bubbles (with S23 incentives and mortgage interest relief etc.) will ultimately end in tears.

FF gave people (wrongly, but still) what they broadly wanted. They were a weak populist government who were cheered on by an absent minded electorate who will now pay the price for not thinking a bit more about their vote and what they wanted for Ireland.

My point is that the taxpayer should not be on the hook for Anglo specifically.

I'm not too enamoured at the thought of bailing out AIB and BOI but they're both banks of systemic importance to the Irish economy.

Anglo never was systemically important to the irish economy.
It was systemically important to certain builders/developers.

murphaph

hinault wrote: »

My point is that the taxpayer should not be on the hook for Anglo specifically.

I'm not too enamoured at the thought of bailing out AIB and BOI but they're both banks of systemic importance to the Irish economy.

Anglo never was systemically important to the irish economy.
It was systemically important to certain builders/developers.

Agreed.

dan_d

I think the problem is that at the time, letting Anglo go would have signified to the entire international community that we had no control over what was happening economically around here and that would have been the end of us (though I'm not sure what that means either).

At this stage though....it's an absolute black hole, and a line needs to be drawn somewhere. Enough is enough.

hinault

dan_d wrote: »

I think the problem is that at the time, letting Anglo go would have signified to the entire international community that we had no control over what was happening economically around here and that would have been the end of us (though I'm not sure what that means either).

At this stage though....it's an absolute black hole, and a line needs to be drawn somewhere. Enough is enough.

I hear you.

It doesn't reflect well on a nation when a bank goes bust, I agree.
But banks have gone bust before and it had no long term effect on the reputation of the country of origin (think Barings, for example).

Anglo is more like BCCI.

Good riddance to it I say.

Liam Byrne

murphaph wrote: »

Of course Joe Public is on the hook for it...Joe Public has been electing populist FF governments for many years now. The electorate need to learn the lesson that electing populist governments (of any shade) who throw money about in the form of social partnership and at the same time fan the flames of property bubbles (with S23 incentives and mortgage interest relief etc.) will ultimately end in tears.

Many of us didn't even need to learn that lesson, but are still on the hook for it, by virtue of daring to live in this overpriced cesspit, sharing with the above idiots.

Sickening.

Scarab80

http://www.ntma.ie/Publications/2010/ResultsIrishGovtBondAuction17August2010.pdf

An amount of €500 million of the 4.0% Treasury Bond 2014 was issued where the total bids received were 5.4 times the amount allocated, while €1 billion of the 5.0% Treasury Bond 2020 was also issued where the total bids received were 2.4 times the amount allocated.

The 2014 bond was sold at an average yield of 3.627% while the 2020 bond was sold at an average yield of 5.386%. This compares with a yield of 5.537% for the benchmark 10-year 2020 bond at the previous auction in July.

.....

Today’s auction brings the total funds raised from the bond market in 2010 to €18.3 billion. Allowing for cash balances, retail debt and the long-term funding carried over from last year, the Exchequer is fully funded into the second quarter of 2011.