The €100 Billion Question

Herodotus

The only question I've felt important enough to ask the political parties is this, 'Is your party comitted, be it in opposition or Goverment, to put the bank bailout to a referendum?'. This was the case in Iceland.

I emailed each of the four main parties yesterday and only one - the Green Party - has bothered to respond, and it didn't even answer the question, instead copying and pasting in their banking and deficit strategy.

The reality is that all other questions are beside the point as we will default. The only issue is when, and whether or not it will be unilateral or via some form of agreed restructuring.

Bearing this in mind, I came across canvassing leaflets today and I'm pleased to see that some concerned citizen(s) have taken it upon themselves to articulate it via the website http://www.nodebt.ie/.

Be sure to show your support in the online petition.

So, are you going to ask it?

Update: As mentioned in yesterday's David Mcwilliam's article...

'[Article 27 of the Constitution] governs the circumstances where a decision which is of “such national importance that the will of the people thereon ought to be ascertained”. Article 27 has never been used for this purpose but there is provision in the Constitution for a referendum on something which is simply so important that the people should be able to vote on it.'

Fremen

Who's to say that the popular vote is the right way to go though? Most people who would vote in that referendum don't understand how the banking system works, or what the implications of letting it fail would be. I'm not claiming to be an expert, but I'm pretty sure most other people don't understand it either.

Edit: in before that bloody awful Zeitgeist fractional reserve banking video...

mickydoomsux

8 whole lines of text of a "manifesto" on a website that was knocked together in 10 minutes in Frontpage and no viable alternative solution suggested.

Nice counter though. Also, notice that the Shinners or SWP aren't included in the crappy slur posters they have on their site

Agricola

It shouldnt be put to a referendum. Its not for every pleb to decide on complex economic affairs, its that every pleb has the power to decide who runs the country. If we could actually get the right people elected in the first place, then we wouldnt need to talk about referendums on bailouts.

Nevermind_

hmm a quick google of the address given as 43 east essex street leads to.... surprise surprise... the irish communist party HQ
http://www.communistpartyofireland.ie/

Wibbs

Nevermind_ wrote: »

hmm a quick google of the address given as 43 east essex street leads to.... surprise surprise... the irish communist party HQ
http://www.communistpartyofireland.ie/

Mhahahhahahahahahhah. Jesus though, you know we're buggered when those amadans start to look like they might be making sense.

Poor Craythur

Some people say referenda are a step too far for democracy and I'm inclined to agree.

Hail 2 Da Thief

Nevermind_ wrote: »

hmm a quick google of the address given as 43 east essex street leads to.... surprise surprise... the irish communist party HQ
http://www.communistpartyofireland.ie/

This link is on the Repudiate The Debt Facebook page also

Notorious97

sure if we had a vote on it and said No, we would only have a vote on it again until we give the correct answer......why yes sir, please load me up with mountains of debt, i dont mind my kids owing tax before they are born.

Nevermind_

I'd love to repudiate the debt as much as anyone (who wouldnt like a free lunch) but how the fcuk do we then get the money to run the country?

Gerry Adams said we'd "negotiate with the bond markets" as if they were a fcuking committee or a bunch of unionists.
i'd love to "negotiate" with the stock markets so that I only buy shares that rise in value but unfortunately I live in the real world.

i still am yet to hear a plausible answer on this from any of the "default" parties, all we seem to get back is fairytales.
its bullsh1t populist electioneering crap designed to get votes from people who dont understand the reprecussions (btw i'm not saying I understand them all either).
My personal opinon is we are fcuked either way


as for communism.... yeah that really worked out well so far didnt it

HooterSnout

Notorious97 wrote: »

sure if we had a vote on it and said No, we would only have a vote on it again until we give the correct answer......why yes sir, please load me up with mountains of debt, i dont mind my kids owing tax before they are born.

Gotta love Irish Democrazy

mickydoomsux

Notorious97 wrote: »

sure if we had a vote on it and said No, we would only have a vote on it again until we give the correct answer......why yes sir, please load me up with mountains of debt, i dont mind my kids owing tax before they are born.

Your kids would owe tax before they were born even if the IMF deal never happened.

Same goes for you and your mountains of debt, it's not like if the bailouts weren't happening we'd be tax-free.

AckwelFoley

Nevermind_ wrote: »

hmm a quick google of the address given as 43 east essex street leads to.... surprise surprise... the irish communist party HQ
http://www.communistpartyofireland.ie/

Would you believe the cheeky bastards have this slogan on their website

The will of the people and the struggle for democracy

Communism only ever has one democratic election. The first one. No more democratic elections after that.

I promise to vote for the communist party if and when they can show me one country where communism works

the keen edge

I'am not well up on global financial issues, but all I keep hearing in relation to the Irish banking crisis/Our banking crisis, is 'more money needed'.
Would this a fair analogy of Ireland's banking crisis, its very general but would it be, say 70% accurate? :


My car is due an its NCT in a fortnight.
I bring it to the locally situated branch of the foreign owned main dealer to give the car a pre NCT check.

It's an old car, plenty of miles on the clock, you could call it a wreck of sorts. In fact it is a 'write off', due to the fact that I crashed it head on into a wall, while off my head on a epic drunken binge.
The main dealer calls me that evening and tells me the car will need extensive work costing ~ €15,000.

I'am aware that similar cars to mine, in a NCT passable state, are never valued at more that ~€5000.

I do not have enough money in my bank account to pay for the repairs, but the garage will loan to me money to pay them for the repairs. I question should I go ahead with the repairs. However due to advice I receive, I tell the garage to proceed with the repair works.
This pleases the garage owners, and they tell me that my car will be fixed and ready for road on Friday evening.

Friday afternoon the garage calls me.
My car, after receiving €15,000 of repair work is still not in a NCT passable state.
I am told it will require more work to repair it fully.
Another €10,000 of work is required.
I authorise the additional works and agree to pay associated costs.


If the above is a fair analogy, I have one question:

WTF?

AckwelFoley

the keen edge wrote: »

If the above is a fair analogy, I have one question:

WTF?

Its amusing, but not accurate.

If you scrap your car you are at the loss of the value of the car.

Unfortunatly its up for heavy debate wheather you can scrap your banks and start again, most of what makes sence has me leaning toward not collapsing the banks and trying to start again

Nevermind_

https://www.youtube.com/watch?v=yieS7jWWdB8

maybe they planned this all along ??????
the devious bastards

the keen edge

snyper wrote: »

Its amusing, but not accurate.

If you scrap your car you are at the loss of the value of the car.

Unfortunatly its up for heavy debate wheather you can scrap your banks and start again, most of what makes sence has me leaning toward not collapsing the banks and trying to start again

This being AH's I probably should of made it clear that my post wasn't an attempt at being witty or smart arsed.

Are we not throwing vast quantities of rare money at these banks?
People, myself included, don't seem to bat an eyelid of the mention of a Billion Euros, or even several Billion's of Euros in relation to the banking bailout.

Most people the world over would have difficultly finding Ireland on the map. But yet we seem to be a global black hole in terms of loans related to the banking bail out.

Is it not time to just say enough is enough, hit the reset button and wipe the slate clean. Burn everything and everyone associated with Irish banking debt.
Obviously there would be major repercussions, but long term could it be any worst than what we are enslaving ourselves to with this bailout?

I'am not an anarchist , just a very confused and increasingly pissed off man.

Fremen

the keen edge wrote: »

Is it not time to just say enough is enough, hit the reset button and wipe the slate clean. Burn everything and everyone associated with Irish banking debt.
Obviously there would be major repercussions, but long term could it be any worst than what we are enslaving ourselves to with this bailout?

I'am not an anarchist , just a very confused and increasingly pissed off man.

That's what Argentina did, and they're a third world country now. The repercussions would be that everyone would want a larger rate of interest on money they lend, because they're lending to a known defaulter.

Whether we're servicing existing debt or borrowing money at higher rates, the result is the same - an austere budget and high taxes.

I agree that the current arrangement is a bit worrying. It'd be nice to see a bit more transparency in NAMA so that the average taxpayer knows exactly where the money is going. This would also provide an assurance that only the businesses that absolutely, crucially need a bail out get one.

Wibbs

Notorious97 wrote: »

sure if we had a vote on it and said No, we would only have a vote on it again until we give the correct answer

Oh you spotted that tactic of the government too? Yea funny one in a democracy alright. Oh wait for the apologists with "oh well first time around you didnt have all the facts". So what? Like the average voter is normally a mosaic of economist, strategist chock full of political savvy? That's nothing against the voters, I'd add myself in, but the "all the facts" line is bullshít. Our arms were twisted by the EU. End of.

Wibbs

Fremen wrote: »

That's what Argentina did, and they're a third world country now.

That's my concern with all these Drop the debt guys. They miss the fact we would be financially boned. Chances are very high we'd be asked to leave the euro and then what the hell would we peg our new currency to? Iceland trotted out as an example already had their own currency. Some actually give the example of Switzerland going it alone. :eek::rolleyes: How dense is that?

Red Hand

Wibbs wrote: »

Some actually give the example of Switzerland going it alone. :eek::rolleyes: How dense is that?

They and other Alpine peoples make great carvings like cuckoo clocks and stuff. I propose we do the same....although we don't have any suitable hardwoods for carving.

But we do have bogs. Turf sculpting will be our way out of this dark place.

You see, Wibbs, you just need to think outside the box-that's what the smart economy is all about.;)

Fremen

We could sell potato cakes.

Ireland makes deadly potato cakes.

mickydoomsux

Wibbs wrote: »

That's my concern with all these Drop the debt guys. They miss the fact we would be financially boned.

The majority have probably been lifelong welfare sponges. They don't miss the fact, they're just idiots who have no concept of how a First World economy works.

/in before "DERPPPPPPPPPP, like the banxsters and FF AMIRITE, HERPPPPPPPPP"

Herodotus

Fremen wrote: »

Who's to say that the popular vote is the right way to go though?

Iceland. As Joseph Stiglitz, the nobel price winning economist, put it recently, Ireland did everything 'right' [in a textbook way] and Iceland did everything 'wrong'. Yet whose crisis is over and whose is continuing apace?

Others such as David Mcwilliams, Fintan O' Toole, Shane Ross and many other commentators / economists both nationally and internationally have said the same.

Fremen wrote: »

Most people who would vote in that referendum don't understand how the banking system works, or what the implications of letting it fail would be.

As opposed to the people who are currently running the banking policy of the country? Do they know what they are doing?

Also, the Irish banking system has failed catastrophically and is continuing to do so via a slow but steady outflow of corporate and personal deposits. therefore, there are currently implications. The question is are they the best option available? For this, I again refer to the case of Iceland and Ireland.

Fremen wrote: »

I'm not claiming to be an expert, but I'm pretty sure most other people don't understand it either.

And I am not a communist, but it shows you how far off the radar the Irish political process is on the issue that the only parties that are actually speaking sense are the fringe parties. Although I accept that this is more out of the chance coincidence of their political dogma matching that of the current hard economic reality.

I would also add that after all that's happened, and continues to happen, many more people in Ireland, albeit from a low base, have indeed become accidentally 'experts'.

It's hard not to be if you follow events.

As such, many more people, I am pleased to see, are a lot more sophisticated in seeing through the smoke and mirrors of ongoing political events.

Fremen wrote: »

Edit: in before that bloody awful Zeitgeist fractional reserve banking video...

Finally, I would say that I respect your opinion and anyone else's on this issue as it affects you. Therefore, the underlying issue is not whether you are left, right, anarchist or communist, but merely that you get an opportunity to voice an opinion on the issue.

If you, or any others, would vote to agree with the bank bailout in a referendum then so be it.

The principle is that your view was heard and counted.

That is the crux of the referendum argument.

Herodotus

From today's Irish Times

ANSKE BANK and four other Danish lenders have had their credit ratings cut by Moody’s after a bank collapse revealed the country’s government was willing to impose losses on depositors and senior creditors in failed banks.

The rating agency said last week’s bankruptcy of Amagerbanken, a small Danish lender, showed that Copenhagen “is now far less willing to continue to support bank creditors at the expense of taxpayers” than just a few months ago.

Senior creditors and some depositors face losing about 41 per cent of assets after Amagerbanken was taken over by Finansiel Stabilitet, the government agency responsible for handling failed banks.

The case has been touted by some analysts as a precedent for Ireland and other European countries with crisis-hit banking sectors as governments agonise over whether to impose “haircuts” on senior creditors.

“Last week’s bankruptcy of Amagerbanken demonstrated the willingness and ability of the government to allow depositors and senior creditors of Danish banks to take losses in bankruptcy, where bank operations are continued as a going concern,” Oscar Heemskerk, Moody’s analyst, said.

Amagerbanken was the 11th Danish bank to fail since the country’s housing market crashed in the early stages of the global financial crisis. However, it was the first since the expiry last September of a Danish bank guarantee scheme that had previously protected depositors and senior creditors from losses.

While deposits up to €100,000 are still safeguarded under Denmark’s normal deposit insurance rules, any sums above that are no longer guaranteed.

According to the preliminary official valuation, Amagerbanken’s assets amounted to DKr15.2 billion when it failed, equivalent to about 59 per cent of senior liabilities.

Moody’s said it had downgraded the senior debt and deposit ratings of Danske, Denmark’s biggest bank, and four other lenders, by between one and two notches because of reduced systemic support from the government.

The agency downgraded its rating for Danske’s long-term, senior unsecured debt by one notch to “A1” and put it on review for a further possible downgrade.

There were downgrades for Spar Nord Bank, FIH Erhvervsbank, BankNordik and Ringkjøbing Landbobank.

The ratings of Sydbank, Jyske Bank and Nordea Bank Danmark were put on review for a possible downgrade. – (Copyright The Financial Times Ltd 2011)

Sam Vimes

Wibbs wrote: »

Oh you spotted that tactic of the government too? Yea funny one in a democracy alright. Oh wait for the apologists with "oh well first time around you didnt have all the facts". So what? Like the average voter is normally a mosaic of economist, strategist chock full of political savvy? That's nothing against the voters, I'd add myself in, but the "all the facts" line is bullshít. Our arms were twisted by the EU. End of.

Absolutely! How dare anyone suggest that we should have some kind of understanding of what we're voting on before we shoot something down that 27 nations including our own government have spent 5 years working on!!!!!!!11!!!11!

Ignorance is not something to be proud of mate. Or do you make up your mind on every issue in a state of wilful ignorance and angrily declare that anyone who tries to present you with the facts is trying to twist your arm?

Also, are you opposed to the idea of the court of appeals? Any new evidence that might come to light should be irrelevant surely? The jury has made their decision! They didn't have all the facts but so what right?

Ghost Estate

Sam Vimes wrote: »

Absolutely! How dare anyone suggest that we should have some kind of understanding of what we're voting on before we shoot something down that 27 nations including our own government have spent 5 years working on!!!!!!!11!!!11!

Ignorance is not something to be proud of mate. Or do you make up your mind on every issue in a state of wilful ignorance and angrily declare that anyone who tries to present you with the facts is trying to twist your arm?

I dunno about having one's arm twisted, with Lisbon II we were already in deep recessionary sh1t and people pretty much gave Lisbon the thumbs up to appease Europe in the hope that they'd look after us

Now look like what they gave us, a sh1tload of debt we might never be able to pay off.

We're all in Europe together when France and Germany are after our sovereignty, one big happy fecking family until one of us is in trouble then they say "look, we'll lend you some money at a suitably high interest rate because nobody else will lend it to you or else we'll just kick you out of the Eurozone and watch your economy tumble deeper into oblivion"

Sam Vimes

Ghost Estate wrote: »

I dunno about having one's arm twisted, with Lisbon II we were already in deep recessionary sh1t and people pretty much gave Lisbon the thumbs up to appease Europe in the hope that they'd look after us

Now look like what they gave us, a sh1tload of debt we might never be able to pay off.

We're all in Europe together when France and Germany are after our sovereignty, one big happy fecking family until one of us is in trouble then they say "look, we'll lend you some money at a suitably high interest rate because nobody else will lend it to you or else we'll just kick you out of the Eurozone and watch your economy tumble deeper into oblivion"

The interest rate was decided based on a formula that every country agreed to. Yes it could have been lower and hopefully it will be lowered but as you said yourself, the alternative is watching our economy tumble into deeper oblivion.

Herodotus

Update: As mentioned in yesterday's David Mcwilliam's article...

'[Article 27 of the Constitution] governs the circumstances where a decision which is of “such national importance that the will of the people thereon ought to be ascertained”. Article 27 has never been used for this purpose but there is provision in the Constitution for a referendum on something which is simply so important that the people should be able to vote on it.'

Ghost Estate

Sam Vimes wrote: »

The interest rate was decided based on a formula that every country agreed to. Yes it could have been lower and hopefully it will be lowered but as you said yourself, the alternative is watching our economy tumble into deeper oblivion.

You mean every country who wants to screw us because they have beef with the fact that we have a low corporate tax rate and a few other things.

Such a great, helpful tight-knit and altruistic little European community we're. Salt of the earth folks Sarkozy, Rehn and Merkel

Sam Vimes

Ghost Estate wrote: »

You mean every country who wants to screw us because they have beef with the fact that we have a low corporate tax rate and a few other things.

Such a great, helpful tight-knit and altruistic little European community we're. Salt of the earth folks Sarkozy, Rehn and Merkel

Or it could be that every country including ourselves agreed on the formula that's used to calculate the rates on the basis that bail out funds can't be made too cheap or it will encourage reckless lending. It could also be that they could have told us to shove our bailout up our arses and sent us to the market where we would currently be getting the bargain rate of ~9.5%. Or more likely we wouldn't be getting any money at all and the ATMs would stop working in the next few weeks.

Ghost Estate

Sam Vimes wrote: »

Or it could be that every country including ourselves agreed on the formula that's used to calculate the rates on the basis that bail out funds can't be made too cheap or it will encourage reckless lending. It could also be that they could have told us to shove our bailout up our arses and sent us to the market where we would currently be getting the bargain rate of ~9.5%. Or more likely we wouldn't be getting any money at all and the ATMs would stop working in the next few weeks.

Its not like bailouts are something you get if you don't need them. It seems like the EU are just giving us a fine/dig and talked us into believing we have to accept it because its 'for the better'.

If they told us to shove it up our arses its the best thing the EU would have ever done for us. ATM's? we can get new ones fairly cheap.

We're stuck with this expensive bail out so the rest of the countries can go about their business as usual.

Herodotus

Sam Vimes wrote: »

Or it could be that every country including ourselves agreed on the formula that's used to calculate the rates on the basis that bail out funds can't be made too cheap or it will encourage reckless lending.

Correct. As they wanted to avoid moral hazard. They are being responsible lenders while discouraging irresponsible borrowers.

So, why don't they obey that same rule to private banking debts?

Sam Vimes wrote: »

It could also be that they could have told us to shove our bailout up our arses and sent us to the market where we would currently be getting the bargain rate of ~9.5%.

And we are getting that market rate of 9.5 % precisely because the market recognises the economic absurdity of the ongoing Governement / IMF / ECB policy of nationlising and guaranting private sector banking losses.

Realistically, the exact rate of the IMF / ECB bailout is irrelevant. It is a destraction from the underlying reality. We will default.

While the IMF Bailout is, in large part, not a bailout of the Irish state, it's a bailout of Irish bank creditors.

I accept that there is a serious underlying structural deficit. However, without the burden of private sector banking debt, the structural deficit, by means of cuts, tax increases and borowing, would have been managable i.e. no need for a bailout.

Sam Vimes wrote: »

Or more likely we wouldn't be getting any money at all and the ATMs would stop working in the next few weeks.

The ironic point here is that the reality you have outlined is, in an accidental and unintended way, already the case.

The ATMs currently don't any money in them - of their own. No one will lend to them for similar reasons outlined above. As such, they are reliant on 'temporary' (2 years now I believe?) emergency, mainly ECB, central bank funding.

In any case, the ATMs will not run of cash. Firstly, the Irish Central Bank, i.e. the ECB, guarantees customer deposits. Secondly, the ECB, for the sake of the entire Eurozone, if not the world economy, would not stand by and see a run on the Euro (i.e. Euro collapse), as would be the case if this occured.

See this newly created website, with an article by TCD Prof. Brain Lucey, for more information.

Sam Vimes

Ghost Estate wrote: »

Its not like bailouts are something you get if you don't need them. It seems like the EU are just giving us a fine/dig and talked us into believing we have to accept it because its 'for the better'.

If they told us to shove it up our arses its the best thing the EU would have ever done for us. ATM's? we can get new ones fairly cheap.

We're stuck with this expensive bail out so the rest of the countries can go about their business as usual.

I don't think you understand what I mean by the ATMs would stop working. The solution to there being no money in the ATMs is not to buy new ATMs, it's to put money in them. The reason that you're able to go to an ATM today and have it give you money is that "expensive bail out that we're stuck with". Herodotus points out that our ATMs already don't have any money in them - of their own, instead they have that expensive bailout money in them, but I for one am glad that I'm sitting at a computer pondering the theoretical idea that our ATMs don't really have any money in them instead of queueing for food parcels from the red cross because our ATMs literally don't have any money in them

CrazyRabbit

snyper wrote: »

Would you believe the cheeky bastards have this slogan on their website



Communism only ever has one democratic election. The first one. No more democratic elections after that.

I promise to vote for the communist party if and when they can show me one country where communism works

To be fair, democracy isn't perfect either. And like most political ideology, it can be implemented in very different ways.

The type of government is irrelevant so long as you have the right people in it. Leaders who look after the people, & know what they are doing, would get my vote regardless of which party they belong to, or what their ideology is.

AckwelFoley

CrazyRabbit wrote: »

The type of government is irrelevant so long as you have the right people in it. Leaders who look after the people, & know what they are doing, would get my vote regardless of which party they belong to, or what their ideology is.

The type of government is paramount

Gerry Adams has a real popular mantra that people are the wealth of a country. . which is a load of cock. Nigeria is full of people - there is not a lot of personal wealth or infrastructure.

A country can only look after the running of the state and pay for all the social services if there is income from taxes, taxes can only be generated if people are able to pay it,and people can pay it if they are working, people that strive to creater bigger and better business employ more people and in theory pay more taxes.. communism takes that incentive away from people.

The type of governemt is important, as is electing the right people

Herodotus

Sam Vimes wrote: »

The reason that you're able to go to an ATM today and have it give you money is that "expensive bail out that we're stuck with". Herodotus points out that our ATMs already don't have any money in them - of their own, instead they have that expensive bailout money in them...

This is mistaken. As I mentioned, the money that you withdraw from an ATM in Ireland currently is, apart from obviously being your own, ECB emergency funding.

The [banking part of the] EU / IMF bailout money is for capital requirments, or the payment of maturing foreign bank debt i.e to repay French / German / British banks.

A part of the [banking] bailout money is also merely there on paper for confidence purposes. If needed, it can be drawn down. Although, it has been said that it is unlikely this will all be needed.

Regarding your queueing for food parcels comment. This is already happening.

You may be familair with the Cappuchin Day Centre in Bow Street, Dublin. Every Wednesday, over a 100 (?) people queue up for food parcels, while free meals are given out to families and individuals on a daily basis.

Apart from that, I again refer back to Iceland. The policy they followed, did not result in food shortages or national hunger.

Sam Vimes

Herodotus wrote: »

This is mistaken. As I mentioned, the money that you withdraw from an ATM in Ireland currently is, apart from obviously being your own, ECB emergency funding.

The [banking part of the] EU / IMF bailout money is for capital requirments, or the payment of maturing foreign bank debt i.e to repay French / German / British banks.

A part of the [banking] bailout money is also merely there on paper for confidence purposes. If needed, it can be drawn down. Although, it has been said that it is unlikely this will all be needed.

Kind of a technicality there mate.

Herodotus wrote: »

Regarding your queueing for food parcels comment. This is already happening.

You may be familair with the Cappuchin Day Centre in Bow Street, Dublin. Every Wednesday, over a 100 (?) people queue up for food parcels, while free meals are given out to families and individuals on a daily basis.

Kind of irrelevant there mate. I was referring to all of the ATMs in the country not having any money in them, not a hundred or so people who've fallen on hard times.

Herodotus wrote: »

Apart from that, I again refer back to Iceland. The policy they followed, did not result in food shortages or national hunger.

And we're not Iceland. If someone can explain to me how reneging on our debts will make the very same people we're reneging on eager to lend to us to fund our €19 billion a year deficit at a rate significantly less than the EU/IMF bailout I'm all ears but I really don't see it happening.

SEPT 23 1989

Herodotus

Sam Vimes wrote: »

Kind of a technicality there mate.

Belittle the facts if you may. However, they are two completely distinct issues.

Sam Vimes wrote: »

Kind of irrelevant there mate. I was referring to all of the ATMs in the country not having any money in them, not a hundred or so people who've fallen on hard times.

Irelevant, no. Consequences matter. And again, the alternative is not all (or part) of the nation's ATMs standing empty, as I, in my previous posts, and TCD's Prof. Brian Lucy in his article, which I linked to earlier, have already explained.

Sam Vimes wrote: »

And we're not Iceland. If someone can explain to me how reneging on our debts will make the very same people we're reneging on eager to lend to us to fund our €19 billion a year deficit at a rate significantly less than the EU/IMF bailout I'm all ears but I really don't see it happening.

The issue at hand is not about reneging on our [sovereign] debt. Private sector bank debt is, and should not be seen, as a part of this.

You implicitly argue in your point that not rengeing on 'our' [private banking] debt will mean that lenders will continue to lend Ireland money to fund our deficit, while reneging on 'our' [private banking] debt will result in lenders not lending Ireland funds.

Have you phrased this correctly? It is completely the opposite of what has happened.

As, to state this, signals a comlete disregard of the chosen policy and its consequences for Ireland over the past two years.

Sam Vimes

Herodotus wrote: »

Belittle the facts if you may. However, they are two completely distinct issues.

Irelevant, no. Consequences matter. And again, the alternative is not all (or part) of the nation's ATMs standing empty, as I, in my previous posts, and TCD's Prof. Brian Lucy in his article, which I linked to earlier, have already explained.

Look mate, I just don't see the relevance of either of these points to what I'm talking about. I'm talking about the money of every person in the country being wiped out and you responded by pointing out that there are currently a few hundred poor people in the country. Of course there are some poor people in the country. What's your point? I'm not talking about a few hundred people queueing for food parcels, I'm talking about you, me and everyone else in the country doing it

Herodotus wrote: »

The issue at hand is not about reneging on our [sovereign] debt. Private sector bank debt is, and should not be seen, as a part of this.

You implicitly argue in your point that not rengeing on 'our' [private banking] debt will mean that lenders will continue to lend Ireland money to fund our deficit, while reneging on 'our' [private banking] debt will result in lenders not lending Ireland funds.

Have you phrased this correctly? It is completely the opposite of what has happened.

As, to state this, signals a comlete disregard of the chosen policy and its consequences for Ireland over the past two years.

The debts have been ours since the Irish state guaranteed them in 2008. And even with that guarantee our banks are just bouncing along the bottom. What do you imagine will happen with our banks and our public finances if we cancel the guarantee and give the EU/IMF back their money?

zephyro

Sam Vimes wrote: »

The debts have been ours since the Irish state guaranteed them in 2008. And even with that guarantee our banks are just bouncing along the bottom. What do you imagine will happen with our banks and our public finances if we cancel the guarantee and give the EU/IMF back their money?

What I'd expect would happen is that the banks would be forced into receivership very quickly, which is what I for one would like to see. The Irish state excluding bank liabilities is fully funded until the middle of the year. If the bank guarantee were not in place the market yield for Irish debt would obviously be significantly lower than it is now.

Tigger

thread lacks poll

Sam Vimes

zephyro wrote: »

What I'd expect would happen is that the banks would be forced into receivership very quickly, which is what I for one would like to see. The Irish state excluding bank liabilities is fully funded until the middle of the year. If the bank guarantee were not in place the market yield for Irish debt would obviously be significantly lower than it is now.

Why would you like to see our banks in receivership? I assume you don't have any money in the banks?

Also, the bank bailout is a one off cost, whereas our budget deficit will overtake the amount of the EU/IMF bailout in 5 years and then continue growing. If the markets don't think we can pay off €85 billion now why would they believe we can pay off €190 billion ten years from now, especially without a functioning banking sector?

zephyro

Sam Vimes wrote: »

Why would you like to see our banks in receivership? I assume you don't have any money in the banks?

Very simply because I think failed companies should go out of business. I thought this was a basic principle in market economies but it seems not to be. I have money in one of the banks and have no concerns about it, there is a deposit guarantee in place, for which the total exposure of the state is a tiny fraction of the bank guarantee. What do you think should become of failed companies?

Sam Vimes wrote: »

Also, the bank bailout is a one off cost, whereas our budget deficit will overtake the amount of the EU/IMF bailout in 5 years and then continue growing. If the markets don't think we can pay off €85 billion now why would they believe we can pay off €190 billion ten years from now, especially without a functioning banking sector?

That would be true if the deficit wasn't reduced, which it obviously needs to be as quickly as possible. I'd actually prefer to do it more quickly than any of the current proposals. Also I've no idea why you think we wouldn't have a functioning banking sector. I'd expect we'd have an entirely foreign-owned one alright which I think when you consider the results of an Irish-owned sector just now would have to be regarded as a positive.

Sam Vimes

zephyro wrote: »

Very simply because I think failed companies should go out of business. I thought this was a basic principle in market economies but it seems not to be. I have money in one of the banks and have no concerns about it, there is a deposit guarantee in place, for which the total exposure of the state is a tiny fraction of the bank guarantee. What do you think should become of failed companies?

Yes I think that failed companies should go out of business too and I wish it was as simple as that but the problem is that deliberately allowing all of our banks to fail is the very definition of cutting your nose off to spite your face. It's all well and good to say that the banks failed and so should go out of business but how will they not take the whole country with them?

Also, it seems that you are in favour of the bank guarantee, just not one as far reaching as the one we have. We're agreed on that but unfortunately that decision was made in 2008. Hopefully we can come up with a reasonable multilateral plan to reduce the scope of the guarantee but telling our creditors to go and f*ck themselves is not the answer.

zephyro wrote: »

Also I've no idea why you think we wouldn't have a functioning banking sector. I'd expect we'd have an entirely foreign-owned one alright which I think when you consider the results of an Irish-owned sector just now would have to be regarded as a positive.

Which bank would that be? Is this bank already operating in the country or how long will we be waiting?

zephyro wrote: »

That would be true if the deficit wasn't reduced, which it obviously needs to be as quickly as possible. I'd actually prefer to do it more quickly than any of the current proposals.

All of the taxes raises and cuts so far have amounted to about 4 billion and to address the deficit it needs to be €19 billion, regardless of any bank guarantee. If we're going to have to take five times more pain than we already have whether we bail out the banks or not, why not take the bail out money from the EU/IMF to soften the blow and maybe keep some semblance of our bank sector in the process?

zephyro

Sam Vimes wrote: »

It's all well and good to say that the banks failed and so should go out of business but how will they not take the whole country with them?

I still don't understand why the liquidation of Irish banks would "take the whole country with them".

Sam Vimes wrote: »

Also, it seems that you are in favour of the bank guarantee, just not one as far reaching as the one we have. We're agreed on that but unfortunately that decision was made in 2008. Hopefully we can come up with a reasonable multilateral plan to reduce the scope of the guarantee but telling our creditors to go and f*ck themselves is not the answer.

I'm in favour of the deposit guarantee which is completely independent of the bank guarantee.

Sam Vimes wrote: »

Which bank would that be? Is this bank already operating in the country or how long will we be waiting?

It may (Ulster Bank, NIB) or may not be. What I'm referring to is the sale of the branch network of the Irish banks by a receiver. Are you suggesting there would be no interest in this from any foreign banks?

Sam Vimes wrote: »

All of the taxes raises and cuts so far have amounted to about 4 billion and to address the deficit it needs to be €19 billion, regardless of any bank guarantee. If we're going to have to take five times more pain than we already have whether we bail out the banks or not, why not take the bail out money from the EU/IMF to soften the blow and maybe keep some semblance of our bank sector in the process?

Because it's going to add a still unknown but undoubtedly enormous sum (possibly topping 100 billion) to our sovereign debt.

Sam Vimes

zephyro wrote: »

I'm in favour of the deposit guarantee which is completely independent of the bank guarantee.

Are you sure about that? I know that a lot of money that was put into our banks wasn't guaranteed and a lot of the people that puot that money in have already been burned. I was also under the impression that senior bond holders were effectively equivalent to depositors under Irish law.

zephyro wrote: »

I still don't understand why the liquidation of Irish banks would "take the whole country with them".


It may (Ulster Bank, NIB) or may not be. What I'm referring to is the sale of the branch network of the Irish banks by a receiver. Are you suggesting there would be no interest in this from any foreign banks?

Because it's going to add a still unknown but undoubtedly enormous sum (possibly topping 100 billion) to our sovereign debt.

If a foreign bank is to buy our banks, do they not inherit the debts of those banks, ie that unknown but undoubtedly enormous sum possibly topping 100 billion?

zephyro

Sam Vimes wrote: »

Are you sure about that? I know that a lot of money that was put into our banks wasn't guaranteed and a lot of the people that puot that money in have already been burned. I was also under the impression that senior bond holders were effectively equivalent to depositors under Irish law.

I'm sure, it's called the "Deposit Guarantee Scheme" and was in place before the bank guarantee.

Sam Vimes wrote: »

If a foreign bank is to buy our banks, do they not inherit the debts of those banks, ie that unknown but undoubtedly enormous sum possibly topping 100 billion?

They would if they bought the whole bank but obviously that isn't going to happen! If liquidators can't find a buyer for a company, which they clearly couldn't in the case of the Irish banks, they attempt to find buyers for parts of it. At the very least the branch networks and deposit bases of the banks have significant value and would find buyers.

squod

https://www.youtube.com/watch?v=Ne2EGhyT14M

VB discusses Patrick Holohan's (the central bank governor) idea of having the banks go into receivership with ''Green'' party member Eamon Ryan.

Amhran Nua

Herodotus wrote: »

And we are getting that market rate of 9.5 % precisely because the market recognises the economic absurdity of the ongoing Governement / IMF / ECB policy of nationlising and guaranting private sector banking losses.

Indeed, who'd have thought that taking on massive amounts of extra debt would damage your credit rating?

CrazyRabbit wrote: »

To be fair, democracy isn't perfect either. And like most political ideology, it can be implemented in very different ways.

Communism isn't a political ideology, its a religion.

It's worth pointing out here that even if we reduce the deficit drastically, it will spike up again with interest payments on the bailout, never mind capital repayments. Unless we see some drastic renegotiations, the cure could be worse than the disease.