Enda and the IMF interest decrease

the_syco

EU will discuss lower interest rates - Rehn

The European Union will discuss lowering the interest rate on bailout loans to Ireland as part of its comprehensive response to the sovereign debt crisis, Economic and Monetary Affairs Commissioner Olli Rehn has said.

Remembering the talks Enda had before the election, and how this appears "just after" the election, it seems to bolster Enda's mission a bit.

http://www2.newstalk.ie/2011/news/6former-eu-parliament-chief-says-proper-eu-bank-tests-needed17/

He is expected to tell Mrs. Merkel that his party will want to re-negotiate the terms of the EU-IMF deal for Ireland if they get into government.

I find the timing interesting at the very least.

Duiske

Here's an important part from you first link.

'I expect that this issue of pricing policy will be looked at from the overall European perspective of safeguarding financial stability in the euro area and ensuring debt sustainability of all its members.'

I take that to mean that while they will look at the interest rate and possibly revise it downwards, they will not reduce it to anywhere near a level that makes a bailout look like a good deal for other Eurozone countries that are struggling.

If they are to reduce the rate, i would be surprised if it was more than a 1.5% reduction.

Maj Malfunction

Maybe we might be lucky to see some softening from Europe?

http://www.rte.ie/news/2011/0228/imf-business.html

Now that we have all got rid of the FF clowns, maybe Europe will have more confidence in Ireland now that Biffo and Comical Lenny are gone?

Economically we can't expect for things to improve overnight, but politically at least we have some measure of competence restored.

steve9859

And no matter what Enda might say if the interest rate does come down, the reduction will have had nothing to do with FG or anyone else in Ireland. The reduction has been discussed in Europe for weeks as part of a change to the framework that all countries agreed - it has not been prompted by us!

Sure, Ireland have a seat at the table, but does anyone really think that Enda saying we cant afford it will have any influence at all? Merkel, Sarkozy and Rehn will have their own experts deciding whether or not we can afford it, and what new framework should be in place.

the_syco

steve9859 wrote: »

The reduction has been discussed in Europe for weeks as part of a change to the framework that all countries agreed - it has not been prompted by us!

Although I do agree with you, I am cynical about the timing. If this was announced before the election, it may have swung in FF's favour. As it happened the day after a new party was elected, I'm hoping it was done so as to not effect the election, or that they just didn't like FF.

chrislynch8

My understanding is that this seems to have been on the table a long time now, before Enda went on his mission etc. I find it hard to believe that FF didn't know that the Interest Rate can be revised down and tried denying this was even possible

Scofflaw

the_syco wrote: »

Although I do agree with you, I am cynical about the timing. If this was announced before the election, it may have swung in FF's favour. As it happened the day after a new party was elected, I'm hoping it was done so as to not effect the election, or that they just didn't like FF.

It will have been done so as not to affect the election. Any major announcements with a political effect get delayed once an election is called. There's a number of PS projects hanging fire similarly, because they have a similar obligation to political neutrality.

cordially,
Scofflaw

steve9859

the_syco wrote: »

Although I do agree with you, I am cynical about the timing. If this was announced before the election, it may have swung in FF's favour. As it happened the day after a new party was elected, I'm hoping it was done so as to not effect the election, or that they just didn't like FF.

It's far enough, holding off the announcement. FG were always going to be in power, so merkel kindly gave enda a jump start on his first day. Probably what they were discussing at their meeting a couple of Weeks ago. Doesn't disguise the fact that there is nothing new. Any respect I have for enda will be seriously dented if he tries to take credit for an interest rate reduction

Mr. Loverman

The 20 year old who has 200k in credit card debt isn't going to sort out her problem by getting a tiny reduction in the interest rate.

Mr. Loverman

Mr. Loverman wrote: »

The 20 year old who has 200k in credit card debt isn't going to sort out her problem by getting a tiny reduction in the interest rate.

...and she's continuing to spend money like there's no tomorrow.

z0oT

Straight from their "5 Point Plan".

However, we believe that Ireland may be left with no option, in the absence of a renegotiated deal, but to write-down the value of the bonds in the Irish banks, or face the prospect of a hugely damaging sovereign default

Whether whoever will be negotiating at the time will be keen to remind our EU partners of that now is another thing entirely.

Idbatterim

The amount of debt is a far bigger problem than the interest being charged on it! If I said to other fellow posters here, you owe me 1 million, but the interest rate is only 1%. God knows what will happen when we have to go back to bond markets! I totally disagree with the debt we are wracking up to maintain the status quo. Id prefer a quick short correction. If the corporation tax was raised by say 2.5%, would any companies actually leave here?

zig

Idbatterim wrote: »

If the corporation tax was raised by say 2.5%, would any companies actually leave here?

probably not, but it still wouldnt be enough of a correction, also you are instantly creating an environment of uncertainty for any companies that were considering a move, and for new companies contemplating coming here.

The only instant correction available to us is a write off of at least some of the debt. Bondholders are investors , and are often well aware that it is still possible to lose some money, they are in the world of business and finance, they know more than anyone the risks involved in investing.
With all that said, it is a far far more secure way of investing than buying shares in vodafone(for example), so on that note, I believe if they took a cut I still think they would come back for more investing, simply acknowledging that its part of the game and that they will make more money in the long run by continuing to invest rather than retreating completely.
bit of an off topic rant there:D

Idbatterim

I know that the 2.5% would not be much in the scheme of things, was just wondering whether it could be a win/win, i.e no companies leave and we take in more tax, the uncertainty issue is a valid points. But surely that already exists to an extent. The corporation tax might ultimately be the price Europe want in exchange for us burning the bondholders... Funny how Merkel says that from 2013, they will have to take a hit in future losses, but we will have to pay them back, bit of a double standard. Even if they do have to shoulder future losses, wont they just higher the interest anyway to cover for the increased risk?