Exactly..Who's opposed to the IMF bailout?

Nozebleed

which party is opposed to the bailout?...and if they get into power what will the consequences be if they refuse the help from the IMF?

LeixlipRed

SF and the ULA want to default on the debt. Other parties want to "renegotiate". Code for continue FF policy.

Nozebleed

what about consequences of refusing the bail out?

Chucky the tree

Sinn Fein and ULA are the two groups. The EU/IMF bailout is to be used to help the banks and to help pay are massive budget deficit we will have for the next 3-4 years. The major problem with SF and ULA "no to IMF/bailout" populist theory is that we won't have any money going forward to pay our deficit and to pay the wages our public sector and social welfare. It's possible not take the money from IMF but that would involve in us having to balance our budget in a year and leave needing to find cuts of €15bn pretty much straight away. This is where Sinn Fein's plan starts wanderings into fantasy land. They've said they'll refuse make cuts to social welfare and limited cuts to Public sector.

jeepers101

Isn't it a bit late for that?

Pete_Cavan

Nozebleed wrote: »

what about consequences of refusing the bail out?

I dont know about ULA but I have read Sinn Feins plan to default the bailout. They say they will use the National Pension Reserve Fund to cover our budget deficit this year. The deficit for 2011 is projected to be €17.7bn with the €6bn austerity package, Sinn Fein want to reverse many of the measures so under them the deficit would be higher. The NPRF is not enough to cover this years deficit with the cuts so under SFs plan we definitely would not be able to cover our deficit for this year (ie. not be able to pay nurses, social welfare, pensioners, etc.). Of course SF also want to use the NPRF to provide a stimulus package, they seem to have forgotten they need the money to cover the deficit.

Basically, under SFs plan the country will be in a worse economic state, and we would have no one to turn to to borrow from as they will have told the IMF to piss off, the bond markets wouldnt touch us 12 months after we refused to repay the last loan and we would have no funds of our own (NPRF) left.

Nozebleed

say we do default on the bailout..and SF/ULA or whoever were right with their policy. what happens if we meet our 17.7bn defecit..what happens then?

Chucky the tree

Nozebleed wrote: »

say we do default on the bailout..and SF/ULA or whoever were right with their policy. what happens if we meet our 17.7bn defecit..what happens then?

Job done pretty much, once Sinn Fein manages to do it without a revolt which is unlikely.

Pete_Cavan

Nozebleed wrote: »

say we do default on the bailout..and SF/ULA or whoever were right with their policy. what happens if we meet our 17.7bn defecit..what happens then?

Even if we do cover the deficit for this year, we will still have the same deficit next year. We would have one year to balance the books and would have to take €17.7bn out of our economy in one year which would do enormous damage. We took out €6bn in the last budget and look at how it is effecting people, now imagine three times that.

Nozebleed

but the bail out in total is 85bn? so if we meet the 17.7bn the first year..everything will be ok? what happens if we can only pay 12bn the first year? what happens then?

Pete_Cavan

Nozebleed wrote: »

but the bail out in total is 85bn? so if we meet the 17.7bn the first year..everything will be ok? what happens if we can only pay 12bn the first year? what happens then?

The bailout is to cover our deficit until 2014 so that we dont have to go to the bond markets who would charge us a lot more than the EU/IMF. Under the terms of the bailout we have to reduce the budget by around €15bn in that time, after which we should be in a position to go back to the bond markets. The EU/IMF have set the interest rate of the bailout quite high in the hope that the bond market interest rate will be lower and there is an incentive for us to repay the bailout, ie. the EU/IMF are making sure they get their money back. With a low deficit we are borrowing to pay off the bailout but at a much lower rate than the bailout.

Jim236

Chucky the tree wrote: »

Sinn Fein and ULA are the two groups. The EU/IMF bailout is to be used to help the banks and to help pay are massive budget deficit we will have for the next 3-4 years. The major problem with SF and ULA "no to IMF/bailout" populist theory is that we won't have any money going forward to pay our deficit and to pay the wages our public sector and social welfare. It's possible not take the money from IMF but that would involve in us having to balance our budget in a year and leave needing to find cuts of €15bn pretty much straight away. This is where Sinn Fein's plan starts wanderings into fantasy land. They've said they'll refuse make cuts to social welfare and limited cuts to Public sector.

You're very naive if you think we can pay back €200 billion.

The reality is Ireland is going to default, with or without the bailout.

Chucky the tree

Jim236 wrote: »

You're very naive if you think we can pay back €200 billion.

The reality is Ireland is going to default, with or without the bailout.

I never said we could/would pay it all pay. The OP asked a question, I answered it.

Nozebleed

Jim236 wrote: »

You're very naive if you think we can pay back €200 billion.

The reality is Ireland is going to default, with or without the bailout.

where's the €200bn coming from? is that the 85+interest? over how many years? up to 2014?

Jim236

Nozebleed wrote: »

where's the €200bn coming from? is that the 85+interest? over how many years? up to 2014?

Thats including all the money we borrowed from the 2 years or so up to the bailout. Nobody seems to have an exact figure, some economists are saying it could be as low as €120 billion, others say it could be well over €200 billion. €285 billion is the figure being floated now on Vincent Browne.

Chucky the tree wrote: »

I never said we could/would pay it all pay. The OP asked a question, I answered it.

You did more than answer his question. You ridiculed anyone who suggests that we should default, and implied the only way forward was to accept the bailout. You seem to think that because we burn the bondholers, that we wouldn't be able to borrow off the markets again. From what I understand of Sinn Féin's plans, they want to abandon the bailout, use money from the NPRF to fund the budget deficit for this year, and then return to the markets next year. Markets lend money based on the ability to pay, so assuming by then we've gotten rid of the instability of the banking crisis by separating sovereign debt from private debt and set out a plan to reduce our deficit over 6 or 7 years, why wouldn't they lend to us again?

The whole reason we were being charged such high interest rates by the markets was because of the banking crisis and the unknown figure to prop up the banks and keep them funded. That hasn't gone away, and yields on Irish bonds are still at record highs despite the bailout, and our credit rating is still being downgraded by several agencies. As I said in another thread, the markets aren't thick, they know we can't pay this money back. So even if we go down the road of accepting the bailout, we're not gonna be able to go back to the markets because the banking problem will still be there. At this stage we need to measure up the cost of defaulting versus the cost of the bailout, and there really isn't any difference. We should just cut our losses, let the banks fail and start again, because we're going to lose money either way, only if we accept this bailout then we're going to be saddled with debt for years and years to come.

And before you even say it, the ECB hung us out to dry last November, so I'm past caring what the effect will be on Germany's economy. At the end of the day, its now every man for himself. Whatever solidarity there was between us and Europe went out the window when they charged us the extortionate interest rate of 5.8% (6% in the case of the European Financial Stability Facility). We're the ones who'll have to suffer with this debt for generations to come if we just accept it, so why should we care about Germany or France? Let them bail out the bad debts of their banks.

Chucky the tree

Jim236 wrote: »

You did more than answer his question. You ridiculed anyone who suggests that we should default, and implied the only way forward was to accept the bailout. You seem to think that because we burn the bondholers, that we wouldn't be able to borrow off the markets again. From what I understand of Sinn Féin's plans, they want to abandon the bailout, use money from the NPRF to fund the budget deficit for this year, and then return to the markets next year. Markets lend money based on the ability to pay, so assuming by then we've gotten rid of the instability of the banking crisis by separating sovereign debt from private debt and set out a plan to reduce our deficit over 6 or 7 years, why wouldn't they lend to us again?

I ridiculed anyone who thinks we take Sinn Feins stance, where we default on the bailout, make little to no cuts, pay off our public sector deficit with the National pension reserve while we use the same national pension reserve to spend to boast stimulus and create more public sector jobs. If a guy in your local pub took a loan from someone and refused to pay it back, and then turned around and ask you for a loan would give it to him? I seriously doubt it. It's pretty much the same situation. As you say the markets will only lend if they are 100% they will get it back, SF track record of refusing to pay back a loan wipes out that 100% confidence. Not to mention they unworkable economic policies which increases they chances of the country going bust or after 3 years realise we can pay the loan from the markets back and SF again telling them to piss off which really will leave us out in the cold.

Jim236 wrote: »

The whole reason we were being charged such high interest rates by the markets was because of the banking crisis and the unknown figure to prop up the banks and keep them funded. That hasn't gone away, and yields on Irish bonds are still at record highs despite the bailout, and our credit rating is still being downgraded by several agencies. As I said in another thread, the markets aren't thick, they know we can't pay this money back. So even if we go down the road of accepting the bailout, we're not gonna be able to go back to the markets because the banking problem will still be there. At this stage we need to measure up the cost of defaulting versus the cost of the bailout, and there really isn't any difference. We should just cut our losses, let the banks fail and start again, because we're going to lose money either way, only if we accept this bailout then we're going to be saddled with debt for years and years to come.

It's not just our banking problem, it's our massive deficit and so far our inability to make a serious effort to tackle it. FF don#t have the balls to make serious cuts, which made things worse. You're skipping the crucial point that the interest rate can be renegotiated. Do you really think the IMF/EU will let us default so they lose there €90bn?

the_syco

Jim236 wrote: »

You're very naive if you think we can pay back €200 billion.

The reality is Ireland is going to default, with or without the bailout.

You're even more naive to think we can default on the bailout, and get a loan from someone else.

Nozebleed

So Who is responsible for this mess? is it FF & Greens? or those who were running the banks? are they going to be held accountable in the law courts?

Jim236

Chucky the tree wrote: »

I ridiculed anyone who thinks we take Sinn Feins stance, where we default on the bailout, make little to no cuts, pay off our public sector deficit with the National pension reserve while we use the same national pension reserve to spend to boast stimulus and create more public sector jobs. If a guy in your local pub took a loan from someone and refused to pay it back, and then turned around and ask you for a loan would give it to him? I seriously doubt it. It's pretty much the same situation. As you say the markets will only lend if they are 100% they will get it back, SF track record of refusing to pay back a loan wipes out that 100% confidence. Not to mention they unworkable economic policies which increases they chances of the country going bust or after 3 years realise we can pay the loan from the markets back and SF again telling them to piss off which really will leave us out in the cold.

What has just happened? We've run up a €19 billion budget defecit and introduced a blanket guarantee for all banking deposits. We couldn't afford to pay for it all, so Europe's solution for this was to lend more money to us to pay back the money we already borrowed and repay them over however many years, even though we couldn't pay back the money we originally owed to begin with. How does that make sense?!

Chucky the tree wrote: »

It's not just our banking problem, it's our massive deficit and so far our inability to make a serious effort to tackle it. FF don#t have the balls to make serious cuts, which made things worse. You're skipping the crucial point that the interest rate can be renegotiated. Do you really think the IMF/EU will let us default so they lose there €90bn?

The only alternative to them losing their €90 billion in an Irish default is to offer us even more money to put off a default for as long as possible, because the reality is we can't pay it back.

But at the end of the day, we're the ones being shouldered with that debt, so why should we accept it? We're bailing out German, French, and British bondholers who took a risk lending to Irish banks and lost. Thats their fault, let them take the hit. Or if Germany, France, and Britain don't want to damage their banks, let them bail them out.

We obviously have to tackle our sovereign debt and reduce the budget deficit, but if we accept this bailout and get shouldered with what could be in excess of €200 billion worth of debt since 2008, then there won't be any room for maneuvre to grow the economy again which is necessary to reduce the deficit. You can't rely solely on spending cuts like Fianna Fáil are suggesting.

the_syco wrote: »

You're even more naive to think we can default on the bailout, and get a loan from someone else.

We don't have to default on our sovereign debt, thats managable. But if we accept the bailout and continue to mix sovereign debt with private debt then we will have to default.

If we 'burn the bondholers' though, why would we be locked out of the markets? If we can show an ability to pay the money back, thats all they care about, not whether or not we took the hit for the bondholers in Europe. Going by that logic, the USA wouldn't have been able to borrow off the markets because they didn't bailout Lehman's Bros.

kippy

Jim236 wrote: »

What has just happened? We've run up a €19 billion budget defecit and introduced a blanket guarantee for all banking deposits. We couldn't afford to pay for it all, so Europe's solution for this was to lend more money to us to pay back the money we already borrowed and repay them over however many years, even though we couldn't pay back the money we originally owed to begin with. How does that make sense?!



The only alternative to them losing their €90 billion in an Irish default is to offer us even more money to put off a default for as long as possible, because the reality is we can't pay it back.

But at the end of the day, we're the ones being shouldered with that debt, so why should we accept it? We're bailing out German, French, and British bondholers who took a risk lending to Irish banks and lost. Thats their fault, let them take the hit. Or if Germany, France, and Britain don't want to damage their banks, let them bail them out.

We obviously have to tackle our sovereign debt and reduce the budget deficit, but if we accept this bailout and get shouldered with what could be in excess of €200 billion worth of debt since 2008, then there won't be any room for maneuvre to grow the economy again which is necessary to reduce the deficit. You can't rely solely on spending cuts like Fianna Fáil are suggesting.



We don't have to default on our sovereign debt, thats managable. But if we accept the bailout and continue to mix sovereign debt with private debt then we will have to default.

If we 'burn the bondholers' though, why would we be locked out of the markets? If we can show an ability to pay the money back, thats all they care about, not whether or not we took the hit for the bondholers in Europe. Going by that logic, the USA wouldn't have been able to borrow off the markets because they didn't bailout Lehman's Bros.

You're comparing the USA to Ireland and Lehmans to the Irish Banking sector........
WOW

Jim236

kippy wrote: »

You're comparing the USA to Ireland and Lehmans to the Irish Banking sector........
WOW

In the context that if you don't bailout the bondholers, you'll be shut off from the markets, which is nonsense.

kippy

Jim236 wrote: »

In the context that if you don't bailout the bondholers, you'll be shut off from the markets, which is nonsense.

Okay - I get point but the comparisons are as far apart as apples and Sean Fitz.
The problems are numerous here and I suspect we'll never know the full extent of who the "bondholders" are, however one has to come to the conclusion a lot of them are (at some point in the chain) state backed pension funds/private equity pension funds, the "burning" of whom will bring upon far more major issues than they will solve for us and indeed whatever countries these eminate from.

As you have said what has happened is the EU/IMF have decided that this needs to be stopped from happening and lend us more money to cover that eventuality - all well and good but as you rightly state the odds of us ever paying that back in its current format and with the country in the mess it will be in for a while is slim.
Thats why I suspect the EU is currently looking at a different "type" of bailout or a different "structure" to it - so there may be room for renegotiation there.

Ultimately what is happening now and for the past couple of years is unprecedented and I think people are playing it by ear. Its all well and dandy now, but Portugal and Spain bailouts are just around the corner and the EU will not be able to bail them out, from what I can tell, requiring major action involving the euro an possible two teir euro currency states.

Its a mess, whatever way you look at it.
I'd prefer the political parties focus on creating jobs, reducing red tape and costs for employers and cutting waste in the public sector rather than argue about some bullcrap TV interview, spew some nonsense about renegotiation when we and they dont even know how plausible that is.

ixtlan

Just to comment on Sinn Fein argument, which I think is nonsense but which unfortunately is not taken apart fully.

Their plan is.

Default on all outstanding bank bonds. They have not clarified if it involves defaulting on the bonds purchased by the ECB. I expect it does. This will immediately cause a massive financial crisis, both in Europe as trust will be lost in many banks, and directly in Ireland as clearly the ESB will cease funding Irish banks in any way. One can expect a huge outflow of deposits. But let's assume we survive that and that on balance the effect is positive for us...

Use up the rest of the pension reserve fund. That will only keep us going a few months so they also want to run down the buffer funds in the Central bank.

Now there are serious questions about that. From what I have heard, the Central bank buffer of a few billion is used to repay sovereign bonds which become due, so it's not really available in the sense that it's needed. I assume if you take that money you might need to default on sovereign bonds becoming due. It's a cash flow thing. If there is no cash coming in via a new loan then your deficit is higher because you need to directly pay off bonds coming due.

But anyhow let's put that aside. They might be able to keep the country ticking over until late 2011. Before that point they intend to return to the bond markets and expect to sell bonds at significantly less than EU/IMF offer. The question then is.... what if they cannot? What if the bond markets are not impressed by bank bondholder burning? What if the previous actions in burning the banks bonds has lead to such a massive drop in confidence that no one wants our bonds at less than 10% or 20% or 30%?

Ultimately their plan is like setting off with the kids on a desert trip through the Australian outback, with minimal provisions, and assuming that a petrol station will turn up before you run out... but you don't know for sure how far away the stations are.

The debt we have acquired is massive. We may indeed be unable to pay it. Fortunately (in a funny sort of way) several of our EU neighbours are in the same position, so this is likely to come to a head in the near future. Likely some form of "renegotiation" will be agreed. It won't be a default, but some form of restructuring, and it's not going to be a get of out jail free card, just something we Portugal, Spain and whoever else can live with.

The question for politicians is how to proceed. I think the answer is carefully. They do want to build a consensus of states and anyone stating that they will unilaterally do anything is talking nonsense. I think though that the major parties all know this. Even today Labour was saying that they did not mean unilateral action but rather that "they were laying a marker down that the deal needed to be looked at". That sounds just about right, though in the soundbites it sounds quite a bit more vitriolic.

Anyhow... my 2 cents...

Ix.

Chucky the tree

Jim236 wrote: »

What has just happened? We've run up a €19 billion budget defecit and introduced a blanket guarantee for all banking deposits. We couldn't afford to pay for it all, so Europe's solution for this was to lend more money to us to pay back the money we already borrowed and repay them over however many years, even though we couldn't pay back the money we originally owed to begin with. How does that make sense?!

It's makes perfect sense, just like how an overdraft from a bank makes perfect sense. I fail to see how it's so complicated.

Jim236 wrote: »

The only alternative to them losing their €90 billion in an Irish default is to offer us even more money to put off a default for as long as possible, because the reality is we can't pay it back.

But at the end of the day, we're the ones being shouldered with that debt, so why should we accept it? We're bailing out German, French, and British bondholers who took a risk lending to Irish banks and lost. Thats their fault, let them take the hit. Or if Germany, France, and Britain don't want to damage their banks, let them bail them out.

We obviously have to tackle our sovereign debt and reduce the budget deficit, but if we accept this bailout and get shouldered with what could be in excess of €200 billion worth of debt since 2008, then there won't be any room for maneuvre to grow the economy again which is necessary to reduce the deficit. You can't rely solely on spending cuts like Fianna Fáil are suggesting.

If we are about to default, why would they offer us more money? That makes no sense.

EU: I hear Ireland is about to default on our loan, the bastards
IMF: Lets just give them another €90bn, that will fix it wont it?
EU: Brilliant idea, they'll never default then!

It's not much good saying "we just need to tackle our sovereign debt" and then put forward zero ideas on how it can realistically be done. So far no political party has done this.

Jim236

Chucky the tree wrote: »

It's makes perfect sense, just like how an overdraft from a bank makes perfect sense. I fail to see how it's so complicated.

A bank would give an overdraft if you can show that you have the ability to pay it back. The bailout was not provided to us on those terms, it was simply to stop our banking crisis spilling over into other countries. If it was a case of only ourselves being effected by it, I doubt we would've gotten the bailout.

Chucky the tree wrote: »

If we are about to default, why would they offer us more money? That makes no sense.

EU: I hear Ireland is about to default on our loan, the bastards
IMF: Lets just give them another €90bn, that will fix it wont it?
EU: Brilliant idea, they'll never default then!

It's not much good saying "we just need to tackle our sovereign debt" and then put forward zero ideas on how it can realistically be done. So far no political party has done this.

Because if we default, that will cause a huge banking crisis in other countries, which will be like a domino effect across Europe. If giving us more money will prevent us from defaulting, thats what they'll do.

Chucky the tree

Jim236 wrote: »

A bank would give an overdraft if you can show that you have the ability to pay it back. The bailout was not provided to us on those terms, it was simply to stop our banking crisis spilling over into other countries. If it was a case of only ourselves being effected by it, I doubt we would've gotten the bailout.

Obviously EU feel we can pay it back, or else they'll re-negotiate it. They wouldn't just give us all this money if we don't pay it back. The problem with letting the bondholders burn and having the EU collapse is we are completely ****'d if that happens, and they know and we know it. Why wouldn't we have gotten the bailout if it just effected us? Iceland burnt the bondholders and got a bailout from the IMF.

Jim236 wrote: »

Because if we default, that will cause a huge banking crisis in other countries, which will be like a domino effect across Europe. If giving us more money will prevent us from defaulting, thats what they'll do.

So they'll just keep giving us free money until the end of time and the next Government will accept this deal?

dabestman1

Nozebleed wrote: »

So Who is responsible for this mess? is it FF & Greens? or those who were running the banks? are they going to be held accountable in the law courts?

as if anyone in thsi country will be held accountable in the courts, hell most won't be held accountable by the electorate: Comical Leni, Martin, etc