IMF Bailout Details

nesf

So far:

• 5.8% average interest rate.
• Deadline for balancing budget extended to 2015, giving us an extra year. 10 billion to be immediately used to prop up the banking sector with an extra 25 billion contingency fund for the banks.
• 50 billion to cover budget deficits over the next 5 years.
• 85 billion bailout in total.
• 17 billion of this will come from Irish sources: i.e. the Pension Reserve Fund and the buffer of sovereign borrowing we had that covered us until the middle of next year. So total borrowing will be 67 billion at worst from the perspective of this bailout.

Leiva

nesf wrote: »

So far:

• 5.8% average interest rate.
• Deadline for balancing budget extended to 2015, giving us an extra year. 10 billion to be immediately used to prop up the banking sector with an extra 25 billion contingency fund for the banks.
• 50 billion to cover budget deficits over the next 5 years.
• 85 billion bailout in total.

5.8%

Still gonna default .

quad_red

nesf wrote: »

[*]7.5 billion of this will come from Irish sources: i.e. the Pension Reserve Fund and the buffer of sovereign borrowing we had that covered us until the middle of next year. S
[/LIST]

Is it not 17 billion from the Pensions Fund and domestic sources?

nesf

mixednuts wrote: »

5.8%

Still gonna default .

We could/will see a banking debt restructuring I think, which would ease things considerably.

nesf

quad_red wrote: »

Is it not 17 billion from the Pensions Fund and domestic sources?

Could be, I'll double check.

nesf

quad_red wrote: »

Is it not 17 billion from the Pensions Fund and domestic sources?

You're correct. It's 7.5 billion of our money going into the banks with 9.5 billion going towards our budget deficit. OP corrected.

Benito

nesf wrote: »

You're correct. It's 7.5 billion of our money going into the banks with 9.5 billion going towards our budget deficit. OP corrected.

As of now on the news, it's 12.5 billion of our pension reserve plus 5 billion from 'cash reserves'. Is the good news that we don't have to pay 5.83% on these funds? Funny or what?

nesf

Benito wrote: »

As of now on the news, it's 12.5 billion of our pension reserve plus 5 billion from 'cash reserves'. Is the good news that we don't have to pay 5.83% on these funds? Funny or what?

Well, you could hardly expect them to lend us 85 odd billion Euro and ignore the fact that we had 17.5 billion of cash lying around. Plus it's in our interests to minimise how much we borrow so really we had no choice but to throw the Pension Reserve Fund into the bailout pot.

Southsider1

nesf wrote: »

So far:

• 5.8% average interest rate.

This implies that we will pay up to 8% on some portion of the Debt.

Also The Taoiseach's wording is important to note:
"it is being borrowed at an estimated average rate of 5.8%"
These two words: Estimated average; means effectively that we're being fed a steaming pile of BS here. We should be dealing in hard figures here. Bear on mind too that the likelihood is that the Irish Banks will be borrowing the "bailout"/stitch up money at a rate of between 7% and 9% so onward lenidng rates will be a minimum of 10%. And Cowen expects this to help the economy recover?:eek:

It's got to be the biggest fraud in the history of the state by a long shot. Cowen and Lenihan make Charles Haughey look like Saint Anthony.

johngalway

Southsider1 wrote: »

[/LIST]
This implies that we will pay up to 8% on some portion of the Debt.

Also The Taoiseach's wording is important to note:
"it is being borrowed at an estimated average rate of 5.8%"
These two words: Estimated average; means effectively that we're being fed a steaming pile of BS here. We should be dealing in hard figures here. Bear on mind too that the likelihood is that the Irish Banks will be borrowing the "bailout"/stitch up money at a rate of between 7% and 9% so onward lenidng rates will be a minimum of 10%. And Cowen expects this to help the economy recover?:eek:

It's got to be the biggest fraud in the history of the state by a long shot. Cowen and Lenihan make Charles Haughey look like Saint Anthony.

The same weasel wording was used not so long ago, could be related to Anglo, it was something like the final total estimated to be €34bn. As I said on that thread, you cannot estimate that, you cannot tell people the final bill is €34bn, err, sorry estimate, but that the real final total will actually be Tuesday the 9th of Never. It either is something, or, it is something else. Weasel words.

Benito

nesf wrote: »

Well, you could hardly expect them to lend us 85 odd billion Euro and ignore the fact that we had 17.5 billion of cash lying around. Plus it's in our interests to minimise how much we borrow so really we had no choice but to throw the Pension Reserve Fund into the bailout pot.

I'd like us, not of course our wonderful Government, to know think of DEFAULT. How much worse does this get? Noonan is on now.

Benito

Benito wrote: »

I'd like us, not of course our wonderful Government, to know think of DEFAULT. How much worse does this get? Noonan is on now.[/QUOTE

I'll quote meself, Noonnan seems to think this will allow us back into the bond markets :eek:

This is all about getting the banks back in the 'good books' relative to the bond markets. F**k the country, it's all about the banks and of course, the EURO. Now I know I should be happy:(

PeterIanStaker

Default I say. To hell with it. FF and their cronies only looking out for each other as bloody usual. The rest of us can freeze to death in the snow for all they care.

nesf

Benito wrote: »

I'd like us, not of course our wonderful Government, to know think of DEFAULT. How much worse does this get? Noonan is on now.

Defaulting could bring down Spain, Portugal and possibly even Italy. This would bring down the Eurosystem. This is a hell of a lot worse scenario than paying 5.8% on debt over the next few years until we get back into the bond market.

Also, all you guys crying for default need to remember that we still need to borrow money next year and the year after etc. We would be paying insane rates of interest on that borrowing after defaulting on our loans. We're in a very nasty deficit position that will take years to sort out, you really don't want to be borrowing at a very high rate of interest during this period.

Defaulting doesn't magically sort things, it just gives us a whole new bunch of problems potentially much worse than the bailout we're accepting.

Southsider1

It should also be noted that
1.Ireland must use it's own pension reserves first before we can raw down any outside funding. This means in effect that we will have absolutely no funding left when we start to draw down the external funding.

2.We will not be signing up to a fixed interest rate. And we are not absolutely guaranteed this funding. We can only apply to draw down when required. If the bond markets come down in rates we will be "encouraged" to utilise them so we are back at square one.

So to put it bluntly we have now been well and truly shafted. Unfortunately there is no way out now. Game Over!

nesf

Southsider1 wrote: »

It should also be noted that
1.Ireland must use it's own pension reserves first before we can raw down any outside funding. This means in effect that we will have absolutely no funding left when we start to draw down the funding.

2.We will not be signing up to a fixed interest rate. And we are not absolutely guaranteed this funding. We can only apply to draw down when required. If the bond markets come down in rates we will be "encouraged" to utilise them so we are back at square one.

So to put it bluntly we have now been well and truly shafted. Unfortunately there is no way out now. Game Over!

1. This is not true since we're not putting all of our assets into the fund. Some of the PRF and cash buffer the NTMA has will be left over after we invest in ourselves.

2. This is a really poor analysis. We want to be back in the bond market. We want rates to drop under 5.8% (which could very easily happen within 3 years if market nervousness about the Eurozone calms down). Ideally we shore up the banks enough and can borrow for less than 5.8%. This kind of incentive to borrow from the bond markets is a good mechanism to have in a bailout package. We may be bailing out an EU country some day and we'll definitely want this kind of clause in there.

Southsider1

nesf wrote: »

1. This is not true since we're not putting all of our assets into the fund. Some of the PRF and cash buffer the NTMA has will be left over after we invest in ourselves.

Well Commissioner Rhen said on his Press Conference of France 24 a short time ago that "Ireland must use up it's own cash in hand including all reserves before they can access external funding". Joan Burton and Michael Noonan said similarly on RTE tonight also.

nesf wrote: »

2. This is a really poor analysis. We want to be back in the bond market. We want rates to drop under 5.8% (which could very easily happen within 3 years if market nervousness about the Eurozone calms down). Ideally we shore up the banks enough and can borrow for less than 5.8%. This kind of incentive to borrow from the bond markets is a good mechanism to have in a bailout package. We may be bailing out an EU country some day and we'll definitely want this kind of clause in there.

It doesn't do us any favours at all. All it does is totally tie us up. We are absolutely hostage to one or other of the Bond Market or the EU. Regarding your statement above: "We want to be back in the bond market". I disagree. We shouldn't want that. We should have had a more benevolent deal from our EU brethern. The Bond Market are the world exuivelant of Loan Sharks.

nesf

Southsider1 wrote: »

Well Commissioner Rhen said on his Press Conference of France 24 a short time ago that "Ireland must use up it's own cash in hand including all reserves before they can access external funding". Joan Burton and Michael Noonan said similarly on RTE tonight also.

The economists on the 6.1 didn't though. They stated there was more reserves than the 17.5 billion mentioned.

Southsider1 wrote: »

It doesn't do us any favours at all. All it does is totally tie us up. We are absolutely hostage to one or other of the Bond Market or the EU. Regarding your statement above: "We want to be back in the bond market". I disagree. We shouldn't want that. We should have had a more benevolent deal from our EU brethern. The Bond Market are the world exuivelant of Loan Sharks.

They can't give us a sweet deal. Otherwise there'd be no incentive for countries to mind their finances. If you could piss away money for a decade then come cap in hand to the EU for a nice sweet bailout there'd be chaos in the EU.


The bond market is a reality we must accept. If we want to run deficits some years we need to borrow the money from someone, so yeah we kind of need to get back into the bond market at some point. The EU can't give us a perpetual bailout.

My name is URL

nesf wrote: »

Defaulting doesn't magically sort things, it just gives us a whole new bunch of problems potentially much worse than the bailout we're accepting.

Wouldn't it also clear the way for us to start fixing things from the ground up rather than putting everything we have into sustaining a failed system for the short term?

steelcityblues

We are back where we belong in the eyes of Brussels - at the butthole of Europe.

This announcement proves it, and don't try to spin it otherwise!

nesf

My name is URL wrote: »

Wouldn't it also clear the way for us to start fixing things from the ground up rather than putting everything we have into sustaining a failed system for the short term?

Ignoring the whole EU contagion thing, it'd be more of an option if we had a more balanced budget. The main issue outside of EU/currency concerns is the size of our deficit. We'll have trouble affording 5.8% to cover our deficit, if we defaulted it'd almost be certain that we'd be paying more than 5.8% for the first 4 or 5 years which is exactly when we can't afford high interest rates.

sceptre

nesf wrote: »

The economists on the 6.1 didn't though. They stated there was more reserves than the 17.5 billion mentioned.

They might be referring to the NPRF being about 24.5 billion in total (that's the total value as stated in last year's end of year report). That 24.5 includes 7 billion invested in BOI and AIB at the direction of Brian Lenihan though - there's an entire section of the report dealing with that. If so, 24.5 minus 7 is 17.5. They might be talking about something else but if so, I'm damned if I can think of what.

My name is URL

nesf wrote: »

Ignoring the whole EU contagion thing, it'd be more of an option if we had a more balanced budget. The main issue outside of EU/currency concerns is the size of our deficit. We'll have trouble affording 5.8% to cover our deficit, if we defaulted it'd almost be certain that we'd be paying more than 5.8% for the first 4 or 5 years which is exactly when we can't afford high interest rates.

We'll have trouble affording this! How often do recessions occur? When the next one strikes will we need another bailout? I'm not trying to speculate or scare monger.. it just seems bizarre to me that we are putting so much into keeping failed banks in existence, and propping up a currency that looks dead on its feet. Unless major political changes happen then the cycle will repeat itself. If we walked away now it would spread, but is that really such a disastrous thing?

I think we need a complete restructuring of our political and banking models if European-wide plans like this are ever going to work. And bailing the current lot out each time isn't going to achieve that when the people coughing the money up have less and less to spend.

dan_d

Something that was raised to me today as a major problem (in the eyes of the person that mentioned it)...what happens if the EU bail Portugal out, then all eyes turn to Spain.....and the EU says "hang on a sec, Spain is too big for us to bail out...we'll just have to throw in the towel and burn the bondholders".

Are we going to look like complete fools at that stage? Will that not make people extremely angry.....far more so than they are now??

And more importantly - how likely is it that this might happen??.....

Yitzhak Rabin

Cowen said the reason why the senior bondholders wouldn't be taking hit, as it would be a threat to the stability of the eurozone.

If someone has a Fianna Waffle/English dictionary to hand, could they explain what he means?

Dannyboy83

Not as bad as I expected, but still far from good enough.

Nothing there for new mortgage lending.
Stanrdard & Poor predicting a 10% drop in poperty as minimum in 2011.
http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.independent.ie%2Fnational-news%2Firelands-drop-in-house-prices-is-worst-in-world-2438385.html&h=f95a7

Irish banks cannot afford to give out mortgages at 5.8%, they will have to be what now? 8% minimum? Can a heavily taxed taxpayer afford 8% now? Doubt it.
The Irish banks priority is no longer to hide defaults.

ECB fractional reserve for Irish banks is now 100:8, so no new mortgages for next 2 years.

We are simply on the cusp of the real property crash right now.

MagicMarker

I just posted this in another thread...

Here's a bit of a breakdown....

http://namawinelake.wordpress.com/2010/11/28/the-bailout-details-emerge/

This post will be updated as more details are released from Brussels

(1) €85bn bailout – €50bn for the day to day running of the country. €35bn for the banks. €10bn immediately and €25bn as a contingency for the banks. Headline external bailout – €67.5bn because €17.5bn coming from Irish resources (€12.5bn from NPRF and €5bn from cash reserves).

(2) Of the €35bn for the banks, €12.5bn is to come from the NPRF. The NPRF has a value of ~€24.5bn of which ~€7bn is already invested in BoI/AIB preference shares. Announcement today will leave c€5bn in NPRF if contingency is drawn down.

(3) €3.44bn is coming from the UK at xx% for xx years, €393m from Denmark and €598m from Sweden.

(4) €10bn to be “invested” “immediately” in the banks – this was really about the banks.

(5) Statement from Central Bank of Ireland expected shortly regarding recapitalisation of the banks – €10bn immediately. AIB expected to be 100% nationalised. Speculation that both BoI and ILP will be in majority State control.

(6) “Blended” interest rate of 5.83% combined – RTE citing “government sources”, Four year plan assumption was 6%

(7) We have been given an extra year to meet 3% deficit:GDP – RTE.

(8) Average length of loans 7.5 years

(9) €67.5bn external assistance – €22.5bn from IMF and €45bn from EU including UK, Denmark, Sweden

(10) What about ECB funding – €90/100bn in the six State-guaranteed banks at 29 Oct 2010?

(11) “Best available deal for Ireland” – An Taoiseach

(12) Senior bondholders unaffected

(13) “wider application” of subordinated bondholder haircutting – that implies BoI and AIB.

(14) 118% debt:GDP in 2013 if €25bn bank contingency needed

(15) We potentially return to 1992 level of tax being used to service debt in “worst” situation

(16) “We’re out of bond markets for 2011 at any rate”

(17) Default would be a huge problem to euro banking system. Lehmans default had consequences far afield. We are a responsible country that has benefitted greatly from the reserves of the ECB.

(18) John Corrigan at the NTMA and governor Patrick Honohan key to negotiating deal (no mention of Matthew Elderfield).

(19) Jiggery pokery with banks – Regulator to tells banks cap requirements – banks to decide how to fund.

(20) Professor Constantin Gurdgiev – Yet another announcement on banks’ recap (same old same old) – bank recap at least €67bn (€32bn already plus €35bn into the facility). Still believes banks will be undercapitalised because of future mortgage losses. Believes default or restructuring will be required.

(21) ECB order banks to “deleverage” to replace emergency liquidity. Banks must therefore raise deposit rates therefore higher mortgage and lending rates in Ireland.

(22) Michael Noonan: EU have won the pool, Ireland has played a poor game here.

(23) Helpful if proposals are owned by Irish society – European Commission

(24) Ajai Chopra – Irish authorities have been proactive in finding solutions to fiscal/banking problems

nesf

My name is URL wrote: »

We'll have trouble affording this! How often do recessions occur? When the next one strikes will we need another bailout? I'm not trying to speculate or scare monger.. it just seems bizarre to me that we are putting so much into keeping failed banks in existence, and propping up a currency that looks dead on its feet. Unless major political changes happen then the cycle will repeat itself. If we walked away now it would spread, but is that really such a disastrous thing?

I think we need a complete restructuring of our political and banking models if European-wide plans like this are ever going to work. And bailing the current lot out each time isn't going to achieve that when the people coughing the money up have less and less to spend.

Majorly restructuring the banking sector is part of our bailout deal. You are indeed correct though, reform is needed along with bailouts to prevent a repeat of this the next time there's a financial crisis. Some hope can be taken that most of Europe escaped serious difficulties during this recession.

nesf

yekahs wrote: »

Cowen said the reason why the senior bondholders wouldn't be taking hit, as it would be a threat to the stability of the eurozone.

If someone has a Fianna Waffle/English dictionary to hand, could they explain what he means?

A lot of the bondholders are European banks. Ireland defaulting on the bank debt could bring down German, English etc banks. Which could trigger a European wide banking crisis that could strain the Eurozone heavily, possibly fatally if similar occurrences happen in Portugal and Spain.

nesf

Dannyboy83 wrote: »

Not as bad as I expected, but still far from good enough.

Nothing there for new mortgage lending.
Stanrdard & Poor predicting a 10% drop in poperty as minimum in 2011.
http://www.facebook.com/l.php?u=http%3A%2F%2Fwww.independent.ie%2Fnational-news%2Firelands-drop-in-house-prices-is-worst-in-world-2438385.html&h=f95a7

Irish banks cannot afford to give out mortgages at 5.8%, they will have to be what now? 8% minimum? Can a heavily taxed taxpayer afford 8% now? Doubt it.
The Irish banks priority is no longer to hide defaults.

ECB fractional reserve for Irish banks is now 100:8, so no new mortgages for next 2 years.

We are simply on the cusp of the real property crash right now.

The banks won't be borrowing at 5.8% to lend out again. We'll be borrowing at 5.8% to put capital into the banks.

nesf

sceptre wrote: »

They might be referring to the NPRF being about 24.5 billion in total (that's the total value as stated in last year's end of year report). That 24.5 includes 7 billion invested in BOI and AIB at the direction of Brian Lenihan though - there's an entire section of the report dealing with that. If so, 24.5 minus 7 is 17.5. They might be talking about something else but if so, I'm damned if I can think of what.

I don't know, I'm just going on what the economists on the news were saying. There might be more clarity in the Nine o' Clock news tonight.

steelcityblues

nesf wrote: »

A lot of the bondholders are European banks. Ireland defaulting on the bank debt could bring down German, English etc banks. Which could trigger a European wide banking crisis that could strain the Eurozone heavily, possibly fatally if similar occurrences happen in Portugal and Spain.

Yet, do you think the bondholders are geting away with it or not?

nesf

steelcityblues wrote: »

Yet, do you think the bondholders are geting away with it or not?

I think there will a restructuring of bank debt on a European wide scale. When it'll happen I don't know but the Germans and French are keen to bring it into bailout deals.

As is, subordinate debt holders are getting 20c in the Euro for their bonds in Anglo and similar. A senior debt write down could very easily be on the cards but it won't be mentioned until Portugal is either stabilised or bailed out.

Yitzhak Rabin

nesf wrote: »

A lot of the bondholders are European banks. Ireland defaulting on the bank debt could bring down German, English etc banks. Which could trigger a European wide banking crisis that could strain the Eurozone heavily, possibly fatally if similar occurrences happen in Portugal and Spain.

I suspected the same.

Why though are they not told to carry some of the can. The Irish banks have failed. In 'normal' circumstances when a business fails, then its creditors take some of that pain. So why aren't we going back and negotiating a deal where we pay back, say, 60c in the euro of senior bondholder debt. Then if that means that German/Portuguese/Spanish/Italian/etc. banks are under pressure, then German/Portuguese/Spanish/Italian/etc. people borrow to recapitalise their banks.

Why are we paying for the poor decisions of not only our banks, but also other European banks. From what I can see we are being completely screwed.

nesf

yekahs wrote: »

I suspected the same.

Why though are they not told to carry some of the can. The Irish banks have failed. In 'normal' circumstances when a business fails, then its creditors take some of that pain. So why aren't we going back and negotiating a deal where we pay back, say, 60c in the euro of senior bondholder debt. Then if that means that German/Portuguese/Spanish/Italian/etc. banks are under pressure, then German/Portuguese/Spanish/Italian/etc. people borrow to recapitalise their banks.

Why are we paying for the poor decisions of not only our banks, but also other European banks. From what I can see we are being completely screwed.

Banking debt is weird. The biggest issue as far as I can see is not really who we owe the money to, it's that if we burn senior debt holders then other debt holders of other banks in the EU are going to get very nervous and this will drive up rates on bonds making it a lot harder for other European banks who are currently liquid to borrow money creating a liquidity problem on a EU wide scale.

It's complex, a write down of debt is likely to happen in my opinion but it'll be very carefully timed and choreographed.

Dannyboy83

yekahs wrote: »

Cowen said the reason why the senior bondholders wouldn't be taking hit, as it would be a threat to the stability of the eurozone.

If someone has a Fianna Waffle/English dictionary to hand, could they explain what he means?

He is correct in that regard,

http://www.economist.com/node/17583123

There are good grounds not to: first, if they face losses then depositors, who in theory have the same seniority, might start a run. Second, senior bank bonds from other euro-zone countries, especially Greece, Portugal and perhaps Spain, might suffer contagion. Third, other Irish banks are thought to be big holders of Anglo Irish Bank senior bonds, so they would suffer further losses. And fourth, the European Central Bank would take losses on its reserves of Irish bank bonds and those that it is holding as collateral.

This diagram gives a good idea of the poorly balanced stool, if 1 leg goes....

(Of course, that liability should never have been ours, but it's too late to get into that now)

Dotsie~tmp

This is what happens when politicians try to "fix" markets. They invariably make it worse. A lot of people are getting very confused here about soverign debt and private debt. The markets are closed to us BECAUSE we tried to shore up banks that were insolvent. They knew the problem was too big. Some are swallowing the line that assuming more debt for these dead banks will get us back into the bond market. Complete logic failure.

Getting the bank debt off our back will only make Ireland a more appealing prospect in the soverign debt bond market. Markets lend money to people/banks/countries who they think will pay them back. This plan makes that more difficult killing growth and upping overall debt levels. I'll say it again markets will see a less debt burdened Ireland addressing its fiscal deficit as more likely to pay back. What this deal has done is made us totally reliant on EU funding at exhorbitant rates. The longer we stay the worse our fiscal situation will become and the further the normal markets will retreat. Its a trap ffs!

Looking at this I see an inevitable default in the future as I can see no growth only contraction. Except then we will have emptied the last of the states resources into banks that will have to be allowed fail anyway. The downsides of defualt is now for us no worse than staying the course. At least after a restructure we can become lean mean and debt free in a reasonable time frame. We can no longer stay inside the Euro. Its just too strong and is going to kill us. Fiscally the Euro make zero sense for us now. All the benefits are gone and infact are now lead weights. Everything associated with this deal is political. Our own political system is so wedded to the idea of Europe that we will commit suicide to stay within it. This is a political deal to save the European Union itself and our sycophant leaders just pledged us as cannon fodder for the battle. The thing that sickens me the most is I believe this is just to buy time for the bigger countries to build up some political capital for a massive QE program in the future.

Free of all private banking debt and growing with a devalued currency Ireland will become an attractive prospect. Markets arent political and they dont have collective memories. They only care about the next payday.

Dannyboy83

nesf wrote: »

The banks won't be borrowing at 5.8% to lend out again. We'll be borrowing at 5.8% to put capital into the banks.

So what rate do you think the banks will charge then?
ECB rate?
Doesn't that mean the taxpayer is subsidising the homeowners mortgage?

As more and more taxes come online and increasing numbers of people default, the bank will need more and more recapitalisation, just to sustain current lending rates, not to mind issue new lending. No new lending = property collapse = vicious circle (I think 80% of applications were refused this year)

And if we need the full amount or more money for recapitalisation, then the interest payments will sink us anyway.

Dotsie~tmp

yekahs wrote: »

Cowen said the reason why the senior bondholders wouldn't be taking hit, as it would be a threat to the stability of the eurozone.

If someone has a Fianna Waffle/English dictionary to hand, could they explain what he means?

It means Europe thinks we have done very well out of them. So now they think its time to take one for the team. The price of taking one may be two decade of pain for the Irish people because a lot of well paid irresponsible people didnt do their job. Or did it too well maybe in the bankers case.

loldog

nesf wrote: »

They can't give us a sweet deal. Otherwise there'd be no incentive for countries to mind their finances. If you could piss away money for a decade then come cap in hand to the EU for a nice sweet bailout there'd be chaos in the EU.

I'm glad they didn't send you to negotiate. We gave up control of our interest rates to join the Eurozone. Low interest rates suited Germany, but were a nightmare for our economy. We ought to keep repeating the point that we're either in this together or not at all.

.

Iwasfrozen

PeterIanStaker wrote: »

Default I say. To hell with it. FF and their cronies only looking out for each other as bloody usual. The rest of us can freeze to death in the snow for all they care.

Defaulting doesn't make the debt go away. It just means no-one will lend us money untill we begin to pay off our original debt.

nesf

loldog wrote: »

I'm glad they didn't send you to negotiate.

Well, look at it this way, if we were bailing out Portugal and handing over a billion or two, would you want it to be at a very low interest rate? Really?

Wolfe Tone

If defaulting will bring down everyone else, cant we be right dicks about it and demand a lower rate?

nesf

Dannyboy83 wrote: »

So what rate do you think the banks will charge then?
ECB rate?
Doesn't that mean the taxpayer is subsidising the homeowners mortgage?

As more and more taxes come online and increasing numbers of people default, the bank will need more and more recapitalisation, just to sustain current lending rates, not to mind issue new lending. No new lending = property collapse = vicious circle (I think 80% of applications were refused this year)

And if we need the full amount or more money for recapitalisation, then the interest payments will sink us anyway.

Banks can't afford to raise their interest rates by much simply because of the threat of default. Rock, hard place etc.

nesf

MUSSOLINI wrote: »

If defaulting will bring down everyone else, cant we be right dicks about it and demand a lower rate?

Yes and no. Main issue is people have long memories and next time we go looking for something from the EU after screwing them on interest rates they'll tell us to **** off. Remember they all need to sell it at home since it's taxpayers' money that's being used to bail us out so the rate can't be too low.

Dannyboy83

nesf wrote: »

Banks can't afford to raise their interest rates by much simply because of the threat of default. Rock, hard place etc.

Looks like Morgan Kelly is being proved right again then.
We need to rob his crystal ball.

nesf

Dannyboy83 wrote: »

Looks like Morgan Kelly is being proved right again then.
We need to rob his crystal ball.

*shrugs*

All depends on what interest rates the banks can attract for short term funding and whether they can attract back deposits.

Dotsie~tmp

nesf wrote: »

*shrugs*

All depends on what interest rates the banks can attract for short term funding and whether they can attract back deposits.

The immorality of asking ordinary tax payers to be responsible for private companies disasterous behaviour just doesnt compute with people like you does it?

Dannyboy83

p.s.
Nearly fell off my chair when I saw that Eoghan Harris got something right;
i.e. the pay apartheid
http://www.independent.ie/opinion/columnists/eoghan-harris/eoghan-harris-leaner-times-ahead-but-fat-cats-are-still-getting-fatter-2439257.html

But of course, the guaranteed debt tsunami arising from Public sector pay reform, means rock, hard place again.

So private sector are A) Underpaid Paying high taxes to prevent State Sector expenditure reform (SW & PS Pay) && C) Are now gonna subsidise other people's mortgages.

If I was a gambling man, I'd say a combination of Brain Drain & mortgage default is going to sink us.

(And those 2.75% growth rates are not going to materialise either)

Our rescue is built on so many assumptions but if the IMF/ECB had spent just a week watching the RTE News and seeing what a pack of cowboys run this country, they'd know that they've just signed the Euro's death warrant.

Dannyboy83

Dotsie~tmp wrote: »

The immorality of asking ordinary tax payers to be responsible for private companies disasterous behaviour just doesnt compute with people like you does it?

To be fair to NESF, he obv. doesn't approve of the situation either but we're lucky that he's a rational, calm headed lad and hangs around to answer our questions.

I appreciate it anyway, Cheers NESF.

(Paypal me in the min;))

Mr.Micro

The most repugnant thing of this whole bailout scheme and the upcoming budget is that the next Government ( presumably FG/Labour, but ya never know as this is Ireland) will be hamstrung because of these 2 things, effectively a caretaker Government. Is it not outrageous that a failed grossly negligent Government the worst in the States history can even now dictate the terms of the next 4 years? Surely the EU would have been happier to have allowed a bit of leeway and Ireland to have an election before putting a condition of passing this budget or no money? ( maybe that was a lie too, I suspect it is?)