People discussing burning the bond holders and renaging our loan as the same thing?

runswithascript

I heard Constantin Gurdgiev mention this over the weekend how people are referring to burning the bond holders and reneging on our loan as the same thing.

Further, on David McWilliams' show they have played some interviews of the general public who do the exact same thing and it's not corrected.

Can somebody clarify this for me please?

Scofflaw

dusf wrote: »

I heard Constantin Gurdgiev mention this over the weekend how people are referring to burning the bond holders and reneging on our loan as the same thing.

Further, on David McWilliams' show they have played some interviews of the general public who do the exact same thing and it's not corrected.

Can somebody clarify this for me please?

I presume the confusion is between burning bondholders and rejecting the IMF/EU loan facility? That would arise because at this stage neither the EU nor the IMF would approve us burning the senior bondholders on account of the risk of sparking a market withdrawal from banks all over Europe.

So in order to burn the bondholders, we would at this stage have to move unilaterally to do something neither of our lenders agree with, which would have an impact on the loan facilities they've agreed with us.

Unfortunately we can't afford our government deficit unless someone lends us the money to do so - and outside Sinn Fein's belief bubble (in which burning lenders results in increased eagerness of lenders to lend to us) that means we can't afford to do it. Nor, I'm afraid, would we save all that much state money by doing it.

If we had done it back at the time of the guarantee, or shortly thereafter, there would have been a lot more debt to burn, and since we wouldn't have been reliant at that point on IMF/EU lending, we could have done it unilaterally. It would have made other European countries unhappy, but probably not any more so than our bank guarantee did anyway - after all, they could have just disavowed any intention to follow in our footsteps. The markets would have been sufficiently unhappy that we would almost certainly have needed an EU/IMF bailout shortly thereafter - but we would have required a lot less money.

cordially,
Scofflaw

Zubeneschamali

Scofflaw wrote: »

It would have made other European countries unhappy

Since Irish credit unions and pension funds are a big chunk of the bond-holders, burning them would have made a lot of people in this country unhappy, too.

bleg

The point about the credit unions is not actually true. Just another lie.

Zubeneschamali

bleg wrote: »

The point about the credit unions is not actually true. Just another lie.

Very convincing...

bleg

www.sbpost.ie/news/ireland/credit-union-body-angered-at-anglo-irish-link-48842.html

Whilst they do have some investment it is by no means enough to put peoples savings at risk. Like I say just another lie.

Zubeneschamali

More than half of Irish bank bonds held by investors in Republic

http://www.irishtimes.com/newspaper/finance/2011/0217/1224290024801.html

bleg

Nothing in there about the credit unions buddy. All I was saying is that saying the credit unions have a big chunk of the bonds.

MaceFace

50% held by Irish investors?

Who are these people and how much do they have?

It is the usual emotive nonsense we have heard from FF. If he had said something like "50% of the bonds are owned by the Irish themselves with the likes of Seannie and Fingers pension funds as well as Sean Quinns millions", do you think it would receive the same response?

Until there is a very clear description of who owns the bonds and how much they own, I say burn them.

Scofflaw

It's certainly true that credit unions have, for example, Anglo bonds - but, much as has been the case elsewhere, they've already been burned, or at least they've been burned on junior bonds.

Lenihan's latest claim that we can't burn the bondholders because they're Irish follows on from the publication of an article in the IT using the same Central Bank stats I source my figures from. In other words, Lenihan's announcement is a political reaction to what appears to be, to him, new information.

It follows the same pattern as the claim that we couldn't burn the bondholders because the ECB/EU/IMF don't want us to - that is, it's true now, but not the original reason, because it postdates the original decision to protect the bondholders.

European bondholders and Irish bondholders have both been burned, and neither were, at the time of the guarantee, the main holders of bonds in the covered banks. At the time of the guarantee, Irish bondholders held 23.5% of bonds, EU bondholders 16.4% of bonds - 60.1% were "rest of world".

cordially,
Scofflaw