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The GE, the bailout and defaulting

  • 05-12-2010 1:45pm
    #1
    smallBiscuit
    Closed Accounts Posts: 1,074 ✭✭✭


    I've been reading lots of different opinions of late on the economy, the the state of the gov, the imf, the eu, the bailout, who will actually get the money, and interest rates - isn't it amazing how when something like this happens everyone suddenly realizes we have a gov and they are screwing us over.

    So I have a question, January comes, we have a ge, and the country is now (for eg) being staggered (forget running, we are well beyond being able to run anywhere :-)) by a Labour/SF coalition.
    So would it be possible for them to now turn around to the eu and say, stick your bailout money, unless you want to renegotiate the terms? ie drop that interest rate.
    I'm thinking maybe 1-2 % on the money for us and 0% on the money we are going to be giving straight back to them? Since it seems a bit cheeky to me to charge us interest on their money.


Comments

  • #2
    zig
    Registered Users, Registered Users 2 Posts: 1,206 ✭✭✭zig


    Yes theres no reason why not, the bailout is just a loan agreement, but it is very hugely in Europes interest for us to take this. As a matter of fact its pretty much necessary for us to take this for the survival of the Euro.

    So this whole 'We don't have to agree to the deal , but they don't have to keep lending' argument, while true, isnt quite a correct one in this situation.


  • #3
    SkepticOne
    Closed Accounts Posts: 6,718 ✭✭✭SkepticOne


    We're getting 67 billion. As a condition for this we're committing 35 billion for putting into the banks, which is 53 percent of the loan amount. It is clear that this is more about the banks than Ireland.

    Various economists have said that anything like the 5.7 percent interest we're being charged will mean that the debt is unsustainable and we'll either default or need to have the debt restructured.

    I think the most likely scenario is that an incoming government will not default but will try to carry on for a few years. In broad terms the economy is being run by the EU/IMF, so any deterioration of the economy will be blamed on them. Then at some point we will ask, or possibly they will offer, more money at a better interest rate and that will keep us going a bit longer.

    If there was to be an outright default, then we'd be closed off from both IMF funding and the bond markets and the government would have to fund expenditure entirely from revenue.


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