Bailout Amounts to €85 Billion

Byron85

Just hit the news within the last half an hour or so.

http://www.rte.ie/news/2010/1123/economy.html

I suppose the estimates we all had been hearing over the last few days weren't too far off the mark. So, now that we have the figure the conditions will be made known relatively soon I presume.

Mods, feel free to merge with an existing thread if appropriate.

oppenheimer1

Byron85 wrote: »

Just hit the news within the last half an hour or so.

http://www.rte.ie/news/2010/1123/economy.html

I suppose the estimates we all had been hearing over the last few days weren't too far off the mark. So, now that we have the figure the conditions will be made known relatively soon I presume.

Mods, feel free to merge with an existing thread if appropriate.

The estimates we had been hearing have been way off the mark. Lucy (TCD) said he expected it to be a quarter of a trillion euro. This plan involves downsizing which his didn't.

Ren2k7

Didn't Lenny say a few days ago that the bailout would be in the low 10s of billions. how many lies has that been now?

Triangla

http://namawinelake.wordpress.com/2010/11/22/how-much-of-a-bailout-will-we-need-%e2%80%93-%e2%80%9cyou-can-work-it-out-yourselves%e2%80%9d-says-minister-for-finance-brian-lenihan-here-are-my-workings/

Seems to be around the quarter of a trillion mark alright.

We're funded for the next few months, could be bad move jumping into getting bailout without considering all options.

http://www.bloomberg.com/news/2010-11-23/bust-is-better-than-a-bailout-for-irish-patient-matthew-lynn.html

Dr_Teeth

1 million tax payers is never going to pay off 85 Billion euros at 5%. Surely we're just going to end up defaulting after a decade or two of unnecessary struggle?

Is there any hope at all that our leaders will realise this and tell the German, British etc bondholders to politely go F themselves and get bailed out by their own governments if needs be?

Byron85

oppenheimer1 wrote: »

The estimates we had been hearing have been way off the mark. Lucy (TCD) said he expected it to be a quarter of a trillion euro. This plan involves downsizing which his didn't.

I heard a few estimate of €120 billion and around €90 billion from a few different sources.

Ren2k7 wrote: »

Didn't Lenny say a few days ago that the bailout would be in the low 10s of billions. how many lies has that been now?

What's a few billion between friends. :rolleyes:;)

lmaopml

I think he said 'yes' when asked would it be in the 'tens of billions' - and when asked would it be over 100billion he said, 'no'.

George Orwell 1982

The real question is what will the interest rate by. If its over 5% it could push is to default. Karl Whelan has a post about it over on Irish economy http://www.irisheconomy.ie/index.php/2010/11/23/efsf-charging-7/#comments

Scofflaw

Dr_Teeth wrote: »

1 million tax payers is never going to pay off 85 Billion euros at 5%. Surely we're just going to end up defaulting after a decade or two of unnecessary struggle?

Is there any hope at all that our leaders will realise this and tell the German, British etc bondholders to politely go F themselves and get bailed out by their own governments if needs be?

Unlikely, since it serves no particular purpose other than emotional satisfaction. It's like a shop telling its customers and creditors politely to go F themselves because the shop is in financial difficulties - you only do it if you don't plan to continue trading.

cordially,
Scofflaw

dreenman

Given that the last statement from the lying <insert your own expletive> re the amount of the bailout is that it wouldnt be 100 billion does this mean that we are not going to accept the Brits loan?

We are still so far from knowing what the liability of the banks are. The cost our public service is insignificant compared to the amnount of money we are pumping into the banks - this really is insanity!

Scofflaw

George Orwell 1982 wrote: »

The real question is what will the interest rate by. If its over 5% it could push is to default. Karl Whelan has a post about it over on Irish economy http://www.irisheconomy.ie/index.php/2010/11/23/efsf-charging-7/#comments

When we finally have full details, we should go over all the predictions made by pundits and others...

cordially,
Scofflaw

Triangla

dreenman wrote: »

Given that the last statement from the lying <insert your own expletive> re the amount of the bailout is that it wouldnt be 100 billion does this mean that we are not going to accept the Brits loan?

We are still so far from knowing what the liability of the banks are. The cost our public service is insignificant compared to the amnount of money we are pumping into the banks - this really is insanity!

Good article on the banks and bailout here, pretty good blog for info it must be said.

http://namawinelake.wordpress.com/2010/11/23/the-restructure-of-the-irish-banking-sector/

Cavehill Red

Scofflaw wrote: »

Unlikely, since it serves no particular purpose other than emotional satisfaction. It's like a shop telling its customers and creditors politely to go F themselves because the shop is in financial difficulties - you only do it if you don't plan to continue trading.

cordially,
Scofflaw

Wouldn't worry me if AIB and Anglo cease trading one bit.
This money is for their debts. As you keep telling us, the nation is well-funded into next year, is it not?
Fine. We don't need the money. Let's renege on the guarantee that should never have been implemented in the first place, and let the bondholders go hang.
I'm fed up of reading posts by people who want to saddle me and my family with decades worth of other people's debt. I'm not paying it. It's not my debt, nor yours neither.
(Unless you owe money to Anglo or AIB, that is.)

anoble66

I just hope these talks collapse and that we go down the default route....because I think we are really screwed if we take this 85b loan.

dreenman

Triangla wrote: »

Good article on the banks and bailout here, pretty good blog for info it must be said.

http://namawinelake.wordpress.com/2010/11/23/the-restructure-of-the-irish-banking-sector/

I agree its a good blog and an excellent summary of the current ownership of the banks and backs up what we all now realise that the bailout is not to keep public services goiing but to pour more money into the banks. But it still doesnt answer the question how much are we as country/citizens having to finally put into the banks.

Increasingly the best option (one that we have now missed?) was to default!

Bob_Latchford

Vincent B just on saying total debt 200bn, 5k euros per taxpayer per year just to service the debt.

It looks an impossible debt tp pay

Scofflaw

dreenman wrote: »

I agree its a good blog and an excellent summary of the current ownership of the banks and backs up what we all now realise that the bailout is not to keep public services goiing but to pour more money into the banks. But it still doesnt answer the question how much are we as country/citizens having to finally put into the banks.

Increasingly the best option (one that we have now missed?) was to default!

The opportunity to default is always there. The question is, if it's so pain-free compared to other options, why don't states do it all the time? The answer is that foreign investment immediately dries up and you're shut out of the bond markets for several years. You can just about do it if you're a reasonably large country with natural resources, because other countries will still trade with you - unfortunately the majority of our exports are driven by FDI firms, and we're a very small market. It would be better to raise the CT rates than default, with respect to the FDI companies here.

Nor is it pain-free in debt terms - most countries that default wind up paying back the great majority of the debt anyway, just over longer periods, and the effects of a default on the country's credit rating persists for a long time. The minute the country gets into trouble again, the spectre of the previous default will be raised, and debt prices will immediately jump.

So a default is a short-term solution with long-term effects - as is a bailout. The difference is that we can trade our way out of a bailout because we'll be able to keep the FDI companies on board, whereas we almost certainly couldn't in the case of a default - which is, in turn, why the conditions attached to the bailout can't be too onerous. Nor is there any point in defaulting after the bailout, since what's being provided is a facility to draw against - defaulting would result, I imagine, in immediate closure of that facility. Again, truckloads of cash are not being flown into the country.

cordially,
Scofflaw

Ren2k7

The way i see it, the Irish banks borrowed from other foreign banks and now they can't pay them back. So the EU wants us to pick up the bill. Wouldn't that be like me owing some money to some other user here and then expecting the state to pay it off for me.

Here's a better idea, let the banks go it alone. If they fail, tough t**ies. The creditors get control of what's left of the rotten carcass of the Irish banking industry and we don't have to sell our children a lifetime of debt.

That's capitalism baby.

Cavehill Red

But those aren't the only two options.

We can renege on the bank guarantee also.

That's not a sovereign default, and we wouldn't require a 'bailout' (which is no bailout really, except for foreign banks and the likes of Roman Abramovich who bet on Anglo and lost.)

Ren2k7

And also tear up the blanket guarantee so the state isn't liable for the debt

Cavehill Red

Just heard the rate of interest on this 'bailout' - 7%

That's way higher than Greece! This is a blatant attempt to place the Irish nation in perpetual servitude.

We HAVE to refuse this.

gurramok

Triangla wrote: »

http://namawinelake.wordpress.com/2010/11/22/how-much-of-a-bailout-will-we-need-%e2%80%93-%e2%80%9cyou-can-work-it-out-yourselves%e2%80%9d-says-minister-for-finance-brian-lenihan-here-are-my-workings/

Seems to be around the quarter of a trillion mark alright.

We're funded for the next few months, could be bad move jumping into getting bailout without considering all options.

http://www.bloomberg.com/news/2010-11-23/bust-is-better-than-a-bailout-for-irish-patient-matthew-lynn.html

This figure is being heavily agreed by a range of panelists on the Vincent Browne show. This is gobsmacking, we can't afford it. Also they are saying an interest rate of 6.7% been mentioned on the bailout.

waxon-waxoff

Default is the only option so, see this bloomberg article

www.bloomberg.com/news/2010-11-23/bust-is-better-than-a-bailout-for-irish-patient-matthew-lynn.html

Scofflaw

Cavehill Red wrote: »

But those aren't the only two options.

We can renege on the bank guarantee also.

That's not a sovereign default, and we wouldn't require a 'bailout' (which is no bailout really, except for foreign banks and the likes of Roman Abramovich who bet on Anglo and lost.)

We can renege on the guarantee - but the guarantee isn't what's crippling us. It's the recapitalisation of the banks, which are now effectively state-owned.

The best option there would be the Icelandic option - move the good assets and domestic business over, let the remains collapse.

cordially,
Scofflaw

Ren2k7

Perhaps folk should wait until its officially announced with all the relevant detail before getting hysterical over conjecture. Didn't TV3 report last night that Cowan was heading to the park to get the dail dissolved.

Scofflaw

Ren2k7 wrote: »

Perhaps folk should wait until its officially announced with all the relevant detail before getting hysterical over conjecture. Didn't TV3 report last night that Cowan was heading to the park to get the dail dissolved.

They should, but they won't. Personally, I can't see the point of getting worked up over what Vincent Brown's panellists agree on. I'd rather hear it from the IMF.

cordially,
Scofflaw

Bob_Latchford

To be fair tv3 have been more on the money than Cowen & Co.

Its hyped and over the top but the situation is fraught and tense, maybe its needed. They seem to know more than most

Cavehill Red

Scofflaw wrote: »

We can renege on the guarantee - but the guarantee isn't what's crippling us. It's the recapitalisation of the banks, which are now effectively state-owned.

The best option there would be the Icelandic option - move the good assets and domestic business over, let the remains collapse.

cordially,
Scofflaw

Glad you're seeing the light, SL. I've been proposing the Iceland option for a long time.

Ray Burkes Pension

85 billion, you're having a laugh. We need 150 billion now at 2% before the Portuguese get and Spanish get it first.

Scofflaw

Bob_Latchford wrote: »

To be fair tv3 have been more on the money than Cowen & Co.

Its hyped and over the top but the situation is fraught and tense, maybe its needed. They seem to know more than most

Unless they know everything that's involved, that's not that much use - and is "hyped and over the top" commentary really what's needed in a "fraught and tense" situation?

Even the back of the envelope figures about €200bn divided by 2m taxpayers are utterly meaningless.

Catastrophe TV is good TV - it's not even slightly likely to be accurate, though. The rate isn't known yet, and people are doing calculations with figures pulled out of their trousers and waving them around shouting "doomed!". Meh.

slightly despairing,
Scofflaw

Ren2k7

It's probably to late at this point to suggest but how credible would it be to work out an alternative plan where the banks could default, the state remains solvent and not require more money heaped onto the debt mountain?

Dotsie~tmp

Its never too late. These agreements can be thrown in the bin at any time when a people mandate it. They just have to understand there are consequences that we must deal with. Right now the cure seems worse than the disease.

hotmail.com

Ren2k7 wrote: »

Perhaps folk should wait until its officially announced with all the relevant detail before getting hysterical over conjecture. Didn't TV3 report last night that Cowan was heading to the park to get the dail dissolved.

Nope, they didn't. They speculated that heading to the Park was one of the potential outcomes of the FF ministerial meeting. And that was true, there are reports that some ministers favoured calling an election.

Dotsie~tmp

Scofflaw wrote: »

We can renege on the guarantee - but the guarantee isn't what's crippling us. It's the recapitalisation of the banks, which are now effectively state-owned.

The best option there would be the Icelandic option - move the good assets and domestic business over, let the remains collapse.

cordially,
Scofflaw

That might precipitate a falling out with the UK? Neither of us need that.

Cavehill Red

hotmail.com wrote: »

Nope, they didn't. They speculated that heading to the Park was one of the potential outcomes of the FF ministerial meeting. And that was true, there are reports that some ministers favoured calling an election.

You'll not know for definite until one of these hounds breaks cover and writes their memoirs in a few years time. But that certainly seems to have been the case in my understanding. There was more than one looking to go last night.

munzab

Scofflaw wrote: »

Unless they know everything that's involved, that's not that much use - and is "hyped and over the top" commentary really what's needed in a "fraught and tense" situation?

Even the back of the envelope figures about €200bn divided by 2m taxpayers are utterly meaningless.

Catastrophe TV is good TV - it's not even slightly likely to be accurate, though. The rate isn't known yet, and people are doing calculations with figures pulled out of their trousers and waving them around shouting "doomed!". Meh.

slightly despairing,
Scofflaw

i think a bit of scaring is needed at this point.

2 years ago we heard it was going to be "the smallest bank bailout ever". now there is a chance of even possibly bringing down europe with us. reassurance in the past by that government that they knew what they were doing and all was cool, get back to work and roll in it with ur buddies has led us to where we are.

might as well be pessimistic and get good news than being an optimist and get shot in the backside while reversing into it.

Scofflaw

munzab wrote: »

i think a bit of scaring is needed at this point.

2 years ago we heard it was going to be "the smallest bank bailout ever". now there is a chance of even possibly bringing down europe with us. reassurance in the past by that government that they knew what they were doing and all was cool, get back to work and roll in it with ur buddies has led us to where we are.

might as well be pessimistic and get good news than being an optimist and get shot in the backside while reversing into it.

The problem is that the scary stuff isn't useful - we're not talking about war here. In a year's time, when the bailout and the rest have fed into the Budgets, you can take stock - because for most of us, that's when things will actually have an impact. In the meantime, unless one is actually heavily invested in Irish sovereign debt or bank shares, this is all effectively meaningless - fun to speculate on, but absolutely not worth panicking over - the IMF aren't going to come to your house to demand an immediate payment.

Seriously, what is it supposed to achieve?

cordially,
Scofflaw

Bob_Latchford

Scofflaw wrote: »

Unless they know everything that's involved, that's not that much use - and is "hyped and over the top" commentary really what's needed in a "fraught and tense" situation?

Even the back of the envelope figures about €200bn divided by 2m taxpayers are utterly meaningless.

Catastrophe TV is good TV - it's not even slightly likely to be accurate, though. The rate isn't known yet, and people are doing calculations with figures pulled out of their trousers and waving them around shouting "doomed!". Meh.

slightly despairing,
Scofflaw

Problem is no one knows whats going on. Government representatives are on the news saying no bailout talks, then its only technical talks. within days it a bailout by everyone IMF/EU/Sweden/UK

I would love to see couple of hours debate with economists going over the options individually but we arent getting anywhere near it. Will take VinB in absence of anything better

hinault

Scofflaw wrote: »

The problem is that the scary stuff isn't useful - we're not talking about war here. In a year's time, when the bailout and the rest have fed into the Budgets, you can take stock - because for most of us, that's when things will actually have an impact. In the meantime, unless one is actually heavily invested in Irish sovereign debt or bank shares, this is all effectively meaningless - fun to speculate on, but absolutely not worth panicking over - the IMF aren't going to come to your house to demand an immediate payment.

Seriously, what is it supposed to achieve?

cordially,
Scofflaw

To a point, true.

IMF/ECB are not going to be knocking at individual houses demanding repayment.

The Irish State will do it for them, in the form of substantial increases in taxes/cutting of public services which will effect the life of every individual in this State and in all probability their childrens adult life as well.

€200 billion plus debt is huge.

Bob_Latchford

Scofflaw wrote: »

The problem is that the scary stuff isn't useful - we're not talking about war here. In a year's time, when the bailout and the rest have fed into the Budgets, you can take stock - because for most of us, that's when things will actually have an impact. In the meantime, unless one is actually heavily invested in Irish sovereign debt or bank shares, this is all effectively meaningless - fun to speculate on, but absolutely not worth panicking over - the IMF aren't going to come to your house to demand an immediate payment.

Seriously, what is it supposed to achieve?

cordially,
Scofflaw

dont you think it will impact on jobs, welfare, houses etc and the wider economy?

What if we default or the banks go the way of Iceland. I was thinking this would impact everyone?

Scofflaw

Bob_Latchford wrote: »

dont you think it will impact on jobs, welfare, houses etc and the wider economy?

What if we default or the banks go the way of Iceland. I was thinking this would impact everyone?

Any of the options now available to us will impact jobs, welfare, house prices, taxes, services, everything - and none of the options are great. We know that, and we knew that this time last year. We knew that a budget was coming up that aimed to cut €6bn off the state deficit, and we knew that the banks were swallowing money.

What we don't know is how any of this works out in terms of impact on us particularly. We won't know that until the bailout, the banks, a default, or whatever is factored into the taxes we pay, the services we receive, the value of our house, and the chances of getting a job - and that will take a couple of years. Panic might be appropriate if there was an army landing around our coast with the intention of exterminating the Irish. It's completely and utterly useless here, because we're not talking about fleeing down the road with your Grandad in a hand cart - we're talking about looking at the long-term impact, and deciding on how best to match your skills, business, residence, personal finances etc to the new circumstances. The picture being painted is as if the minute the deal is signed you'll get a demand through your door for the whole €5k - it's silly.

Absolutely nothing useful can be done on the scale of time that panic implies - so what's the point of the media drumming up scary scenarios? Apart from the fact that it increases viewer numbers, of course, and VB's personal profile (and thus fees), I can't see any.

cordially,
Scofflaw

Bob_Latchford

Scofflaw wrote: »

Absolutely nothing useful can be done on the scale of time that panic implies - so what's the point of the media drumming up scary scenarios? Apart from the fact that it increases viewer numbers, of course, and VB's personal profile (and thus fees), I can't see any.

cordially,
Scofflaw

Fair enough but why is Rehn saying everyday is vital and government is pushing for budget passed maybe even next week?

I would be much less panicky happier if IMF/EU said they would wait till after general election and take up negotiations then, including funding anything needed in mean time. It must be a fraction (3months of total 3 year funding?)

The urgency is coming from Rehn and Cowen who is addressing the nation every other day. It reminds me of the banking crisis in 2008 when they said the banks would end if there wasnt a guarentee. Feel Ireland is being bounced about this agreement and the budget and its making me jumpy.

Dotsie~tmp

Scofflaw wrote: »

The problem is that the scary stuff isn't useful - we're not talking about war here. In a year's time, when the bailout and the rest have fed into the Budgets, you can take stock - because for most of us, that's when things will actually have an impact. In the meantime, unless one is actually heavily invested in Irish sovereign debt or bank shares, this is all effectively meaningless - fun to speculate on, but absolutely not worth panicking over - the IMF aren't going to come to your house to demand an immediate payment.

Seriously, what is it supposed to achieve?

cordially,
Scofflaw

Your asking people to change their nature. The same irrational exuberance that feeds bubbles has a flip side. Its just the way people are.

hotmail.com

Scofflaw wrote: »

Any of the options now available to us will impact jobs, welfare, house prices, taxes, services, everything - and none of the options are great. We know that, and we knew that this time last year. We knew that a budget was coming up that aimed to cut €6bn off the state deficit, and we knew that the banks were swallowing money.

What we don't know is how any of this works out in terms of impact on us particularly. We won't know that until the bailout, the banks, a default, or whatever is factored into the taxes we pay, the services we receive, the value of our house, and the chances of getting a job - and that will take a couple of years. Panic might be appropriate if there was an army landing around our coast with the intention of exterminating the Irish. It's completely and utterly useless here, because we're not talking about fleeing down the road with your Grandad in a hand cart - we're talking about looking at the long-term impact, and deciding on how best to match your skills, business, residence, personal finances etc to the new circumstances. The picture being painted is as if the minute the deal is signed you'll get a demand through your door for the whole €5k - it's silly.

Absolutely nothing useful can be done on the scale of time that panic implies - so what's the point of the media drumming up scary scenarios? Apart from the fact that it increases viewer numbers, of course, and VB's personal profile (and thus fees), I can't see any.

cordially,
Scofflaw

Scaring people is your interpretation, tbh I just see it as the truth.

Put simply, we owe a fortune and because our economy is so small, we may not be able to afford to pay off the debts, particularly if the interest rate is too high.

I think it was fair for the panelists to point that out tonight.

jank

Scofflaw wrote: »

Unless they know everything that's involved, that's not that much use - and is "hyped and over the top" commentary really what's needed in a "fraught and tense" situation?

Even the back of the envelope figures about €200bn divided by 2m taxpayers are utterly meaningless.

Catastrophe TV is good TV - it's not even slightly likely to be accurate, though. The rate isn't known yet, and people are doing calculations with figures pulled out of their trousers and waving them around shouting "doomed!". Meh.

slightly despairing,
Scofflaw

I agree but I think the penny has finally dropped that we are bust! No matter what the IMF come out with or the ECB we will not be able to pay the debt. Unless they give us Billions at 2%. The 85 billion mentioned before is going to be between 5% and 6.5% we just cant afford that.

Didnt see the VB show so where is the extra 200 billion coming from all of a sudden?

Scofflaw

jank wrote: »

I agree but I think the penny has finally dropped that we are bust! No matter what the IMF come out with or the ECB we will not be able to pay the debt. Unless they give us Billions at 2%. The 85 billion mentioned before is going to be between 5% and 6.5% we just cant afford that.

Didnt see the VB show so where is the extra 200 billion coming from all of a sudden?

Seems to be existing state debt of c. €90bn, plus the bailout of €85bn, plus some figure that happens to take it a round and scary number.

There does seem to be an element of surprise here - mind you, I've been pointing out that people were in denial for a while.

cordially,
Scofflaw

Bob_Latchford

You cant blame people for being in denial. Government had said only days ago that no bailout was needed. Would imagine that most took those words at face value.

Think we knew things were going to be rough but done in orderly manner.

Now the bailout is underway, the Greens have caused the government to be a lame duck and there is talk of defaulting and pulling out of the euro. Thats just since Sunday

Digitaljunkie

Not so sure of the credibility of the VB show at the end comments of 250 billion so it went up 50 in a few minutes. I do hope their wrong..........

Scofflaw

Bob_Latchford wrote: »

You cant blame people for being in denial. Government had said only days ago that no bailout was needed. Would imagine that most took those words at face value.

Think we knew things were going to be rough but done in orderly manner.

Now the bailout is underway, the Greens have caused the government to be a lame duck and there is talk of defaulting and pulling out of the euro. Thats just since Sunday

The Greens will apparently be on board for the budget (unlike Messrs Healy-Rae and Lowry), and there has been talk of defaulting and pulling out of the euro for a while - but personally I'd say that's more denial, in a way, because a lot of those pushing for it seem to believe it's somehow pain-free. Default may be a better option than a loan at punitive rates, but we won't know until we know the rates. It'll be painful either way.

cordially,
Scofflaw

Bob_Latchford

Do you know whats in the budget that it needs to be passed before a general election? why does Rehn want it passed urgently?

jank

Scofflaw wrote: »

Seems to be existing state debt of c. €90bn, plus the bailout of €85bn, plus some figure that happens to take it a round and scary number.

There does seem to be an element of surprise here - mind you, I've been pointing out that people were in denial for a while.

cordially,
Scofflaw

What is your personal opinion on what will happen so and what should happen...

You love talking down to people saying dont panic as its pretty much meaningless in peoples day to day lives. So what do you foresee in the future. Nail your colours to the mast.