EU / IMF bailout is our Treaty of Versailles

professore

Has anyone thought this already ?

Our next election will be the equivalent of the German 1933 election. The parallels are frightening. We just need to look at a party that won 18.3% of the vote as the Nazis did in 1930. We already have our Treaty of Versailles making us pay back what pretty much everyone now agrees were unreasonable amounts of money with the EU / IMF bailout. At least the Germans started a war to deserve it !!!!!

In January 1921, the total sum due was decided by an Inter-Allied Reparations Commission and was set at 269 billion gold marks (the equivalent of around 100,000 tonnes of pure gold), about £13 billion or US$64 billion[Note 1] ($785 billion in 2011),[Note 2] a sum that many economists at the time deemed to be excessive.[1] The yearly amount paid was reduced in 1924 and in 1929 the total sum to be paid was reduced by over 50%.

During this delay the situation in Germany as well as renewed fears of hyperinflation had resulted in a countrywide bank run, draining some $300,000,000. As a result, all German banks had to close temporarily.

This would have happened here too had the ECB not stepped in. Also it gives us a precedent for getting the repayments halved

In the German public, there was little acceptance that the German army had been defeated in war. The German High Command, which could claim that the army had not been defeated in the field, evaded responsibility for the defeat, and blame was attributed by many to civilian elements, particularly Socialists, Communists, and Jews. This became known as the Dolchstoßlegende (stab-in-the-back myth).[6] There was also little acceptance of German responsibility for the war and little sense that Germany had done anything wrong. Accordingly, there was growing resentment at the reparations, which were perceived as harsh, partly because of deliberate misrepresentation by German leaders.

The Irish have a similar idea, only it's FF and the bankers who are taking the blame at the moment. However the Irish case has much more merit. Now all we need is some young charismatic popular speaker with a well organised militia from a popular party ... did someone say Pearse Doherty ?

Source : http://en.wikipedia.org/wiki/World_War_I_reparations

RichardAnd

professore wrote: »

Has anyone thought this already ?

Our next election will be the equivalent of the German 1933 election. The parallels are frightening. We just need to look at a party that won 18.3% of the vote as the Nazis did in 1930. We already have our Treaty of Versailles making us pay back what pretty much everyone now agrees were unreasonable amounts of money with the EU / IMF bailout. At least the Germans started a war to deserve it !!!!!

The bolded statement is absolute nonsense. The causes of WW1 were extremely complex and had roots going back almost 50 years to the Franco-Prussian war. Germany were no more guilty of starting the war than and of its other belligerents. That treaty was so punitive as it was typical european politics on behalf of the victors, punish those deemed to be responcible whether its really true or not.

History, like the recession, is not a simple case of "the bankers dun it!".

http://en.wikipedia.org/wiki/Causes_of_World_War_I

professore

RichardAnd wrote: »

The bolded statement is absolute nonsense. The causes of WW1 were extremely complex and had roots going back almost 50 years to the Franco-Prussian war. Germany were no more guilty of starting the war than and of its other belligerents. That treaty was so punitive as it was typical european politics on behalf of the victors, punish those deemed to be responcible whether its really true or not.

History, like the recession, is not a simple case of "the bankers dun it!".

http://en.wikipedia.org/wiki/Causes_of_World_War_I

Fair point. Maybe "at least the Germans fought a war" would have been more appropriate. However my main point is that the "bailout" is equally punitive to Ireland as the Treaty of Versailles was to Germany.

RichardAnd

professore wrote: »

Fair point. Maybe "at least the Germans fought a war" would have been more appropriate. However my main point is that the "bailout" is equally punitive to Ireland as the Treaty of Versailles was to Germany.

Perhaps, it's certainly possible to see similarities. The treaty against the germans was born from spite and general european disunity and there's certainly an element of that in our EU deal. However, things will not get as bad here was they did in the weimar republic, not by a long shot.

View

professore wrote: »

Has anyone thought this already ?

Our next election will be the equivalent of the German 1933 election. The parallels are frightening. We just need to look at a party that won 18.3% of the vote as the Nazis did in 1930. We already have our Treaty of Versailles making us pay back what pretty much everyone now agrees were unreasonable amounts of money with the EU / IMF bailout.

Do they?

You think the majority of the electorate would prefer us to borrow money at 9%+ from "the markets" rather than the <6% from the IMF/EU? Or that they'd prefer to immediately cut 19billion from our day-to-day spending (i.e. non-bank related) were we to decide to cease borrowing?

hatrickpatrick

View wrote: »

Do they?

You think the majority of the electorate would prefer us to borrow money at 9%+ from "the markets" rather than the <6% from the IMF/EU? Or that they'd prefer to immediately cut 19billion from our day-to-day spending (i.e. non-bank related) were we to decide to cease borrowing?

You're forgetting another obvious option which is to f*ck bank investors and let them all fail and rot.
There is absolutely no justification whatsoever for taxpayers bailing out bondholders. They took the risk, they pay the price. End of story.

How much money would this country save if our government wasn't even remotely involved in anything to do with bailing out banks, I wonder?

Cool Mo D

hatrickpatrick wrote: »

You're forgetting another obvious option which is to f*ck bank investors and let them all fail and rot.

He covered that. If we do that, we will have to cut 19 billion from our spending, as we won't be able to borrow money.

View

hatrickpatrick wrote: »

You're forgetting another obvious option which is to f*ck bank investors and let them all fail and rot.
There is absolutely no justification whatsoever for taxpayers bailing out bondholders.

The decision on that was made by our government. If you remember the rest of the EU were furious when we went off on a solo run on this...

KerranJast

hatrickpatrick wrote: »

You're forgetting another obvious option which is to f*ck bank investors and let them all fail and rot.
There is absolutely no justification whatsoever for taxpayers bailing out bondholders. They took the risk, they pay the price. End of story.

For the umpteen time, senior bonds are very low risk effectively the same as ordinary deposits. They invested in those bonds and got shag all interest in return for security.

Nody

Cool Mo D wrote: »

He covered that. If we do that, we will have to cut 19 billion from our spending, as we won't be able to borrow money.

It could be SF solution that by showing such strong leadership in burning all bondholders they are so impressed that they turn around and offer an unprecedented low rate to borrow to Ireland.

KerranJast wrote: »

For the umpteen time, senior bonds are very low risk effectively the same as ordinary deposits. They invested in those bonds and got shag all interest in return for security.

Actually they are above ordinary deposits by law in order to get cash back (and would get interest accordingly).

professore

View wrote: »

Do they?

You think the majority of the electorate would prefer us to borrow money at 9%+ from "the markets" rather than the <6% from the IMF/EU? Or that they'd prefer to immediately cut 19billion from our day-to-day spending (i.e. non-bank related) were we to decide to cease borrowing?

You're missing my point. It's not about what the electorate would prefer, it's about the size and terms of the "bailout" being similar to pre WW2 Germany's reparations.

If we had the bank debt off our shoulders I think our interest rate would not be 9%+. Look at all the billions already shoveled into the banks. That, with the pension reserve fund and the increased taxes would have been more than enough to stabilise our finances and give us plenty of breathing space to close the budget deficit. This presupposes a well run economy of course. That horse has already bolted unfortunately.

hatrickpatrick

KerranJast wrote: »

For the umpteen time, senior bonds are very low risk effectively the same as ordinary deposits. They invested in those bonds and got shag all interest in return for security.

I as a taxpayer did not force anyone to buy a bank bond. I wouldn't have touched one with a barge pole. Why should I pay for the foolishness of others in making bad investment choices?

Will the government bail out my investments which didn't work out the way I had hoped?

Would you be happy ti give me €2,000 to make up for an investment I made which turned out to be worthless?
No?
Didn't think so. Why are you treating bank investors differently then?

Scofflaw

professore wrote: »

You're missing my point. It's not about what the electorate would prefer, it's about the size and terms of the "bailout" being similar to pre WW2 Germany's reparations.

If we had the bank debt off our shoulders I think our interest rate would not be 9%+. Look at all the billions already shoveled into the banks. That, with the pension reserve fund and the increased taxes would have been more than enough to stabilise our finances and give us plenty of breathing space to close the budget deficit. This presupposes a well run economy of course. That horse has already bolted unfortunately.

So you're saying that if I took on by personal guarantee the debts of my limited company - against all advice and entirely on my own initiative - then a friend who loans me the money to pay off those debts and keep eating is doing exactly the same thing as beating me up and extorting money from me through threat of further violence?

What will you argue next? That the MABS service are responsible for you being in debt, because if they hadn't helped you arrange credit you'd have been able to default and go to prison?

amused,
Scofflaw

professore

Scofflaw wrote: »

So you're saying that if I took on by personal guarantee the debts of my limited company - against all advice and entirely on my own initiative - then a friend who loans me the money to pay off those debts and keep eating is doing exactly the same thing as beating me up and extorting money from me through threat of further violence?

What will you argue next? That the MABS service are responsible for you being in debt, because if they hadn't helped you arrange credit you'd have been able to default and go to prison?

amused,
Scofflaw

Wow that is some interpretation. I said Similar not exactly. Whilst we are on this analogy ....

Firstly I think we are both agreed that "you" in this analogy are a bit of a gormless eejit ....

So you're saying that if I took on by personal guarantee the debts of my limited company - against all advice and entirely on my own initiative

Not exactly, you were entrusted with my money and you gave my personal guarantee to the debtors of your company.

- then a friend who loans me the money to pay off those debts and keep eating is doing exactly the same thing as beating me up and extorting money from me through threat of further violence?

The "friend" came over to your house when you weren't home, said you needed the money when you kept insisting you didn't, and still had money in the bank, told all my neighbours about my situation, who by the way had invested lots of money in your limited company, and whose own businesses would suffer heavily or even collapse if yours failed. The "friend" knew you were spending money like a drunken sailor, and since you were embarrassed by the whole situation, gave my personal guarantee (not yours) to take on the loan to get this annoying friend off your back.

All politics is local. The ECB have a structural problem they need to solve - but this bailout structure is not going to do it. I am not arguing for default but just making the point that as things stand we will default sooner or later.

What will you argue next? That the MABS service are responsible for you being in debt, because if they hadn't helped you arrange credit you'd have been able to default and go to prison?

Now you are being ridiculous

professore

RichardAnd wrote: »

Perhaps, it's certainly possible to see similarities. The treaty against the germans was born from spite and general european disunity and there's certainly an element of that in our EU deal. However, things will not get as bad here was they did in the weimar republic, not by a long shot.

Let's hope not - but I do think they have the potential to get pretty bad.

Scofflaw

professore wrote: »

Wow that is some interpretation. I said Similar not exactly.

Similar, exactly - when the comparison is so far off the mark, the difference is trivial.

professore wrote: »

Whilst we are on this analogy ....

Not exactly, you were entrusted with my money and you gave my personal guarantee to the debtors of your company.

Eh, no - the Irish banks are part of the Irish economy.

professore wrote: »

The "friend" came over to your house when you weren't home, said you needed the money when you kept insisting you didn't,

But did actually need.

professore wrote: »

and still had money in the bank,

Not enough for the debts I'd taken on.

professore wrote: »

told all my neighbours about my situation,

No, that was already widely reported on, despite my policy of "constructive ambiguity". If anything, the rest of Europe has been a good deal more discreet about our position than we have.

professore wrote: »

who by the way had invested lots of money in your limited company, and whose own businesses would suffer heavily or even collapse if yours failed.

No, and no - eurozone banks are owed about €10bn of all our banks' debt securities, and have never been owed more than €17bn out of a total of about €130bn. That €10bn is spread around a lot of banks, and won't knock a hole in anything at all. You're welcome to check the facts with the Central Bank records, and you probably should do so.

professore wrote: »

The "friend" knew you were spending money like a drunken sailor,

Which is why I needed the money.

professore wrote: »

and since you were embarrassed by the whole situation, gave my personal guarantee (not yours) to take on the loan to get this annoying friend off your back.

...actually, that doesn't make sense at all, even in your rewrite. You should make up your mind whether I needed the money - having pledged yours, which you gave me the attorney power to do - or not, as well as who exactly is supposed to be who in this rewrite.

professore wrote: »

All politics is local. The ECB have a structural problem they need to solve - but this bailout structure is not going to do it. I am not arguing for default but just making the point that as things stand we will default sooner or later.

And Ireland has several structural problems, including 'spending money like a drunken sailor'.

professore wrote: »

Now you are being ridiculous

Heh - I'm not the one arguing that being lent money to cover our government's stupid decisions is the equivalent of the Treaty of Versailles.

Let's go from the top, without analogy:

1. our banks were over-stretched and under-regulated
2. when the credit crunch came, they persuaded the Irish government that they only had a liquidity problem, not a solvency one
3. the Irish government, not knowing any better, because they hadn't been regulating properly, gave a blanket guarantee to all the Irish banks
4. the guarantee stabilised the liquidity problem, but didn't address the solvency problem...
5. ...which rapidly came out after the guarantee
6. the government instituted NAMA to try to remove the toxic assets, but...
7. the NAMA process was slow, and lacked credibility - partly as a result
8. during the guarantee, the issues with the banks were not resolved
9. as a result, when the guarantee expired last September, there was a rapid flight of overseas deposits, and a rapid worsening of the banks' debt position
10. in turn, Irish sovereign bond rates rose rapidly, and
11. bailout

Let me put that in a picture for you - this is Irish domestic bank debts, and the Irish 10-year bond rate on top:



Do we look like we need a bailout there?

cordially,
Scofflaw

professore

Scofflaw wrote: »

Similar, exactly - when the comparison is so far off the mark, the difference is trivial.



Eh, no - the Irish banks are part of the Irish economy.



But did actually need.



Not enough for the debts I'd taken on.



No, that was already widely reported on, despite my policy of "constructive ambiguity". If anything, the rest of Europe has been a good deal more discreet about our position than we have.

No, and no - eurozone banks are owed about €10bn of all our banks' debt securities, and have never been owed more than €17bn out of a total of about €130bn. That €10bn is spread around a lot of banks, and won't knock a hole in anything at all. You're welcome to check the facts with the Central Bank records, and you probably should do so.

You are being somewhat disingenuous here. It is more than just banks.

The chief buyers of Irish bonds are large European asset managers, particularly Germany, followed by France. Union Investment, one of the four largest asset management firms in Germany, is a significant buyer of Irish debt. Pioneer Asset Management, which has a large operation here, is also a substantial investor. It is a subsidiary of Italian bank UniCredit.

Capital Research, part of the Capital Group Companies, is also an investor. This company has also taken stakes in a large number of Irish listed companies. Italian fund Fondaco is also an investor, as is Clerical Medical Investment Group, a division of Lloyds, which also bought up debt in recent years in Anglo Irish Bank. The rest of the buyers of Irish debt tend to be major European banks, such as Fortis and Deutsche Bank, which often purchases bonds through its DWS Investments arm.

http://www.tribune.ie/article/2009/sep/06/revealed-who-owns-our-government-and-bank-debt/



Which is why I needed the money.

I never said we didn't need the money.


...actually, that doesn't make sense at all, even in your rewrite. You should make up your mind whether I needed the money - having pledged yours, which you gave me the attorney power to do - or not, as well as who exactly is supposed to be who in this rewrite.



And Ireland has several structural problems, including 'spending money like a drunken sailor'.



Heh - I'm not the one arguing that being lent money to cover our government's stupid decisions is the equivalent of the Treaty of Versailles.

Let's go from the top, without analogy:

1. our banks were over-stretched and under-regulated
2. when the credit crunch came, they persuaded the Irish government that they only had a liquidity problem, not a solvency one
3. the Irish government, not knowing any better, because they hadn't been regulating properly, gave a blanket guarantee to all the Irish banks
4. the guarantee stabilised the liquidity problem, but didn't address the solvency problem...
5. ...which rapidly came out after the guarantee
6. the government instituted NAMA to try to remove the toxic assets, but...
7. the NAMA process was slow, and lacked credibility - partly as a result
8. during the guarantee, the issues with the banks were not resolved
9. as a result, when the guarantee expired last September, there was a rapid flight of overseas deposits, and a rapid worsening of the banks' debt position
10. in turn, Irish sovereign bond rates rose rapidly, and
11. bailout

Let me put that in a picture for you - this is Irish domestic bank debts, and the Irish 10-year bond rate on top:



Do we look like we need a bailout there?

cordially,
Scofflaw

I have no issues with 1-11 ... and we needed the bailout after the catastrophic management of the economy and it's result. My point is the size of the bailout and the terms of the repayments are saddling us with a similar problem to the Weimar republic. THATS the similarity. I have been trying to find out the GDP of the Weimar republic as a percentage of the reparations without success.

Scofflaw

professore wrote: »

I have no issues with 1-11 ... and we needed the bailout after the catastrophic management of the economy and it's result. My point is the size of the bailout and the terms of the repayments are saddling us with a similar problem to the Weimar republic. THATS the similarity. I have been trying to find out the GDP of the Weimar republic as a percentage of the reparations without success.

You may find this interesting, then: http://www.buyandhold.com/bh/en/education/history/2003/germany.html

And this:

The U2 front man has rapped debt relief with Angela Merkel before, and he needs to make her aware that Ireland’s “real estate repartitions” are similar in scope to German World War I “war reparations.” After the treaty of Versailles, the Weimar Republic was forced to accept debt of more than 150% of the country’s Net Social Product, a precursor measure to GDP. Later in the 1920s after two near defaults, this burden was reduced by the Allies to 75% of GDP. It still led to disaster. Last month S&P was projecting Ireland’s debt will stand at 110% of GDP for 2011.

The German story gets sadder. When Germany accepted the terms of the reparations in 1920, their economy was actually experiencing spirited growth. Today, Ireland’s GDP is shrinking and the government is slashing spending. Every domestic cut is being fully offset by an increase in interest payments – payments that will last three generations. It took until just last quarter, 92 years after the WW I armistice, for Germany to make its final reparation payment. At this rate, the great grandchildren of Ireland will be paying off the mortgage on London’s Claridge’s Hotel in the year 2102. Yes, 2102.

The problem is still that you're misidentifying the point at which we took on that debt - the thread title should really read "the Bank Guarantee was our Treaty of Versailles - and it was self-inflicted". The IMF/etc is actually in the position of the US in the Dawes Plan.

cordially,
Scofflaw

professore

Two fascinating snippets there Scofflaw.

Scofflaw wrote: »

The problem is still that you're misidentifying the point at which we took on that debt - the thread title should really read "the Bank Guarantee was our Treaty of Versailles - and it was self-inflicted".

I would agree with that. But what self respecting tabloid would put an accurate headline on their front page ....

Scofflaw wrote: »

The IMF/etc is actually in the position of the US in the Dawes Plan.

cordially,
Scofflaw

What we need then is a Marshall Plan. The Dawes Plan didn't work. Another thought - if things keep going the way they are we will be entitled to more structural funds again !

hatrickpatrick

The bank debt is still private debt held in the private sector to private individuals who chose to take a risk. I am not one of those individuals. I own no bank bonds. And even if I was, I wouldn't have the gall to ask someone else to pay for my stupidity.

That's my issue with this anyway. You make a bad investment, YOU lose out. The majority of Irish taxpayers have nothing to do with bank bonds, why the f*ck should they pay for the mistakes of others? If a business in the private sector messes up, it dies. End of story. Anglo, at the very least, should simply have been left to sort out its own sh!te, and if it hadn't succeeded, it would have died, damaging inevstors for sure but leaving the rest of the innocent bystanders intact.

My analogy:
I bet on a horse. The horse loses. I therefore ask everyone in the jockey's town to give money to the jockey to give to me so I don't lose my money. The others living in the town had nothing to do with my individual choice to make the bet, yet for some reason I feel I have the right to demand they pay for my mistakes.

This, ladies and gentlemen, is a bank bondholder.
They made the choices. Their investment, their loss.

Scofflaw

hatrickpatrick wrote: »

The bank debt is still private debt held in the private sector to private individuals who chose to take a risk. I am not one of those individuals. I own no bank bonds. And even if I was, I wouldn't have the gall to ask someone else to pay for my stupidity.

That's my issue with this anyway. You make a bad investment, YOU lose out. The majority of Irish taxpayers have nothing to do with bank bonds, why the f*ck should they pay for the mistakes of others? If a business in the private sector messes up, it dies. End of story. Anglo, at the very least, should simply have been left to sort out its own sh!te, and if it hadn't succeeded, it would have died, damaging inevstors for sure but leaving the rest of the innocent bystanders intact.

My analogy:
I bet on a horse. The horse loses. I therefore ask everyone in the jockey's town to give money to the jockey to give to me so I don't lose my money. The others living in the town had nothing to do with my individual choice to make the bet, yet for some reason I feel I have the right to demand they pay for my mistakes.

This, ladies and gentlemen, is a bank bondholder.
They made the choices. Their investment, their loss.

I don't think anyone - or at least hardly anyone - disagrees with the sentiments there. The disagreement is whether putting the sentiments into action is positive at this stage given the practical consequences of doing so.

The time to have "burned the bondholders" was back when most of the Irish bank debt was to non-Irish bondholders. The problem now is that that is not now the situation.

cordially,
Scofflaw

View

professore wrote: »

You're missing my point. It's not about what the electorate would prefer, it's about the size and terms of the "bailout" being similar to pre WW2 Germany's reparations.

The majority of the bailout loan from the other member states is there to cover our day-to-day spending. No one is forcing us to spend 19 billion a year more than we get from taxes. It is our choice to do so because we don't want to face the extremely harsh realities doing so would entail.

The other member states are borrowing money to loan to us - it is costing their tax-payers money to do so. Do you honestly think the other member states would be upset if we had decided to make those cuts instead of borrowing off of them? Remember even now we are still free to make those cuts which would mean we need to borrow less from them...

professore wrote: »

If we had the bank debt off our shoulders I think our interest rate would not be 9%+. Look at all the billions already shoveled into the banks. That, with the pension reserve fund and the increased taxes would have been more than enough to stabilise our finances and give us plenty of breathing space to close the budget deficit. This presupposes a well run economy of course. That horse has already bolted unfortunately.

That's a very big "If" - our government made a set of sovereign decisions, presumably in the belief they were doing "the right thing". As such, we ended up where we are.

You can certainly argue that their decisions were wrong but unless you are saying that the IMF/EU should have refused to provide assistance to Ireland, as some sort of additional punishment for our plight, this is largely pointless.

SkepticOne

View wrote: »

The majority of the bailout loan from the other member states is there to cover our day-to-day spending. No one is forcing us to spend 19 billion a year more than we get from taxes. It is our choice to do so because we don't want to face the extremely harsh realities doing so would entail.

A condition of the 67.5 billion loan is that 35 billion goes into the banks.

View

SkepticOne wrote: »

A condition of the 67.5 billion loan is that 35 billion goes into the banks.

So? That doesn't alter that the majority of the loan from the other member states is there to cover our day-to-day spending.

SkepticOne

View wrote: »

So? That doesn't alter that the majority of the loan from the other member states is there to cover our day-to-day spending.

You have to subtract off the conditions for obtaining that loan from the loan amount. If I lent you 100 euros but stipulated that you had to spend 50 euros on something you didn't want, I think you would agree that you are not getting the full benefit of the 100 euros.

Scofflaw

SkepticOne wrote: »

You have to subtract off the conditions for obtaining that loan from the loan amount. If I lent you 100 euros but stipulated that you had to spend 50 euros on something you didn't want, I think you would agree that you are not getting the full benefit of the 100 euros.

Except that the Irish government had already committed to bailing out the banks, so I've no idea why you keep pretending someone else made them do it?

Even the IMF deal only refers (as was pointed out to me) to the protection of senior bondholders by stating that it will be in accordance with a prior Irish government statement. The EU & IMF aren't making the Irish government spend the money on the banks - the Irish government asked for money to spend on the banks. We may not regard that as a good use of borrowed money, but it wasn't one forced on the government by the lender, but decided by the government and requested of the lender.

puzzled,
Scofflaw

dan_d

I'm pretty sure I'm missing the point here:o, but here goes...
There's currently approx. 4 million Irish people. There was approx 65 million German people after WW1.
This deal may be our Treaty of Versailles, but I highly doubt the outcome will be the same.

professore

Scofflaw wrote: »

Except that the Irish government had already committed to bailing out the banks, so I've no idea why you keep pretending someone else made them do it?

What if the current government disagree with this - which from their official statements it appears they do ? One of the reasons they got votes was because many of the electorate disagreed with baling out the banks. Of course we don't know how many but you can be pretty sure it was a majority. I know you're going to say they were the democratically elected government and entered into an agreement at the time on our behalf yada yada yada but France and Germany are not adverse to bending the rules when it suits them :

http://news.bbc.co.uk/2/hi/business/1815483.stm

This is a European problem that has the potential to destroy the economies of the EU and possibly the Euro, and needs to be resolved at European level in a realistic way - not by serially bankrupting the PIIGS. Ireland especially is very frustrating as there are parts of the economy doing very well and with huge growth potential - but the mess we are in now will destroy that.

I have no problem with the current account deficit - but remember € 35 bln of the € 62.5 - 56% - is for the banks. And it is a racing certainty that this will not be enough by a long shot - and in fact I would say Alan Dukes €50 bln is underestimating the problem judging by the track record of estimates so far.

Alan Dukes, who is also a former Irish finance minister, reiterated that he did not think the 35 billion euros earmarked for Irish banks under the country's IMF/EU bailout was enough, saying a clean banking core would require around 50 billion euros in new capital.

Source: http://uk.reuters.com/article/2011/02/08/ireland-ecb-idUKLDE7172ER20110208

We cannot continue pretending this "bailout" under it's current terms is going to work, whatever the rights and wrongs of it are politically. I foresee a messy default in 2013 or even before where we give up any competitive advantages and have already sold off all strategic assets - the ESB and exploration rights to oil and gas being the ones I am most concerned about. Ruhr and Saar coalfields ???? Remember those ?

professore

dan_d wrote: »

I'm pretty sure I'm missing the point here:o, but here goes...
There's currently approx. 4 million Irish people. There was approx 65 million German people after WW1.
This deal may be our Treaty of Versailles, but I highly doubt the outcome will be the same.

Well we are unlikely to declare war on the EU if that's what you mean .... and as long as we stay in the Euro we won't have hyperinflation - just far far less euro to go round.

However the complete collapse of our economy, the social unrest, and the radicalisation of politics are all on the cards.

professore

Seems David McWilliams was reading this thread ...

http://www.thepost.ie/commentandanalysis/claim-the-moral-high-ground-54917.html

In passing, we might remind Germany of the Marshall Plan’s debt forgiveness approach, versus the Versailles Treaty’s punitive approach - and the social and political results of each.

Tayla

You know this whole thing would be much easier to stomach if the money system wasn't such a joke, we owe money to spain, spain owes money to us, Uk owes us, we owe Uk, money created out of thin air which they earn interest on, they'll 'print' enough (in their estimation) to solve the crisis without damaging their precious euro.......most of europe is fcuked and if we should forget about how much our currency is worth against other countries, Europe is big enough to trade within itself for now if needs be.

It's only (fake ) money after all

Scofflaw

professore wrote: »

I have no problem with the current account deficit - but remember € 35 bln of the € 62.5 - 56% - is for the banks. And it is a racing certainty that this will not be enough by a long shot - and in fact I would say Alan Dukes €50 bln is underestimating the problem judging by the track record of estimates so far.

Why is it so difficult for people to get this figure right? The figure for the banks is €35bn max - €10bn committed, €25bn contingency - of the full €85bn programme.

The €10bn committed of the €35bn comes from Ireland's NPRF contribution, because it was earmarked already under the 4-year programme. The other €25bn comes from remaining €75bn of the full programme, which is funded partly by Ireland (€7.5bn) and mostly by external loans of €67.5bn (not €62.5bn).

Either factor in all the money that may go to the banks against the full value of the programme, or factor in the proportion of the external assistance that goes to the banks against the value of the external assistance.

1. €35bn of €85bn = 41.1%
2. €25bn of €67.5bn = 37%

Even that assumes that the full value is used, which may or may not be the case - either way, the bank part of the programme can only be made to look like a majority of the programme by comparing it against only the external assistance part of the programme, which is either dishonest or just plain incorrect.

cordially,
Scofflaw

ninty9er

professore wrote: »

Fair point. Maybe "at least the Germans fought a war" would have been more appropriate. However my main point is that the "bailout" is equally punitive to Ireland as the Treaty of Versailles was to Germany.

At least Germany took the pill. Looking elsewhere to have your responsibility waived wasn't on their radar. The last treaty payment was made at the end of LAST YEAR!

reinald

ninty9er wrote: »

At least Germany took the pill. Looking elsewhere to have your responsibility waived wasn't on their radar. The last treaty payment was made at the end of LAST YEAR!

Actually Germany took some considerable persuasion to accept that particular pill and most certainly did initially look elsewhere to waive their responsiblity.

The World War I Guilt clauses contained in the Treaty of Versailles, objectively considered to have been very punitive in retrospect, were a significant factor which contributed to the rise of extreme nationalism, fostered by a sense of unfairness, in Germany in the 1930's. This in turn ultimately led to the elevation of the Nazi's to power and a contravention of the terms of the Versailles Treaty, prompting World War II. It took defeat in World War II to convince Germany to honour its obligations under the Treaty.

So it wasn't so much that Germany was satisfied to pay under Versailles, they had to be convinced through a war that this was the only game in town.

It is therefore conceivable that the perceived unfairness of the IMF/ECB deal could contribute to a similar rise in extreme, possibly violent, nationalist sentiment in Ireland over the coming years. From our own history, we know what an unhappy road that can be and would do well to avoid it, which in turn should mean that the government is prepared to consider all options at this stage

professore

Scofflaw wrote: »

Why is it so difficult for people to get this figure right? The figure for the banks is €35bn max - €10bn committed, €25bn contingency - of the full €85bn programme.

The €10bn committed of the €35bn comes from Ireland's NPRF contribution, because it was earmarked already under the 4-year programme. The other €25bn comes from remaining €75bn of the full programme, which is funded partly by Ireland (€7.5bn) and mostly by external loans of €67.5bn (not €62.5bn).

Either factor in all the money that may go to the banks against the full value of the programme, or factor in the proportion of the external assistance that goes to the banks against the value of the external assistance.

1. €35bn of €85bn = 41.1%
2. €25bn of €67.5bn = 37%

Even that assumes that the full value is used, which may or may not be the case - either way, the bank part of the programme can only be made to look like a majority of the programme by comparing it against only the external assistance part of the programme, which is either dishonest or just plain incorrect.

cordially,
Scofflaw

Point taken. Somehow I had gotten 62.5 billion in my head.

Either factor in all the money that may go to the banks against the full value of the programme, or factor in the proportion of the external assistance that goes to the banks against the value of the external assistance.

Let's be realistic here. The banks will need more than € 35 bln so there's no "may" about it. More like an additional € 15 - € 20 billion on current best estimates I have heard.

Solair

I think it's a bit ridiculous to compare SF with the NAZI party to be quite honest.

Other than being nationalist in outlook, I don't really see any similarities at all.

They're left-leaning, socialists with a united-Ireland policy. Yes, they've dodgy connections in the past, but they don't seem *that* bad!

I haven't seen any evidence that they're xenophobic, ultra-right wing or fascist. In fact, I've seen the polar opposite to that.

I would be more concerned about the consequence of an economic crisis in somewhere like Belgium where you could easily see a rise of a nasty right-wing neonazi movement.

aftermn

Surely the real difference is that we were not involved in a war. Whatever side you believe was responsible for that war, it was a hugely destructive exercise, with enormous costs all round.
As is usual in the history of war, to the victor the spoils.

Perhaps the real lesson from that period is that insisting on your pound of flesh can be counter productive. It produced the second war.

Even if one sees our recent difficulties as a sort of economic war, we haven't yet defaulted (caused damage) to anyone. Aren't they a little early looking for their pound of flesh?

professore

reinald wrote: »

Actually Germany took some considerable persuasion to accept that particular pill and most certainly did initially look elsewhere to waive their responsiblity.

The World War I Guilt clauses contained in the Treaty of Versailles, objectively considered to have been very punitive in retrospect, were a significant factor which contributed to the rise of extreme nationalism, fostered by a sense of unfairness, in Germany in the 1930's. This in turn ultimately led to the elevation of the Nazi's to power and a contravention of the terms of the Versailles Treaty, prompting World War II. It took defeat in World War II to convince Germany to honour its obligations under the Treaty.

So it wasn't so much that Germany was satisfied to pay under Versailles, they had to be convinced through a war that this was the only game in town.

It is therefore conceivable that the perceived unfairness of the IMF/ECB deal could contribute to a similar rise in extreme, possibly violent, nationalist sentiment in Ireland over the coming years. From our own history, we know what an unhappy road that can be and would do well to avoid it, which in turn should mean that the government is prepared to consider all options at this stage

In January 1921, the total sum due was decided by an Inter-Allied Reparations Commission and was set at 269 billion gold marks (the equivalent of around 100,000 tonnes of pure gold), about £13 billion or US$64 billion[Note 1] ($785 billion in 2011),[Note 2] a sum that many economists at the time deemed to be excessive.[1] The yearly amount paid was reduced in 1924 and in 1929 the total sum to be paid was reduced by over 50%. Payments ceased when Adolf Hitler's National Socialist German Workers' Party took power in 1933, with about one-eighth of the initial reparations paid.[1] The final payments were made on 4 October 2010,[2] the twentieth anniversary of German reunification.[1]

So they only had to pay back 50% of the originally agreed sum - say 134.5 billion gold marks. But it gets worse ...

The American historian Sally Marks commented the figure of 132 billion marks of reparations imposed by the London Conference of May 1921 was a highly misleading one[11] Reparations were divided into A, B, and C bonds[11] The bulk of the reparations were assigned to the C bonds, which were as Marks called "chimerical" as the Allies did not intend to collect the C bonds, which only existed to give the impression to French public opinion that substantial sums were going to be collected[11] The Allies intended to collect only the A and B bonds, which totaled 50 billion marks, which was an amount that was slightly smaller than the 51 billion marks that the Germans had offered to pay

So we are now down to 50 / 269 * 100 = 18.6 % of the original sum. Any chance we can get a similar deal ?????

After Germany’s defeat in World War II, payment of the reparations was not resumed. There was, however, outstanding German debt that the Weimar Republic had used to pay the reparations. An international conference decided (Agreement on German External Debts, 1953) that Germany would pay some parts of the remaining debt only after the country was reunified, at that time an event thought very unlikely to happen. West Germany paid off the remainder by 1980. According to the agreement, the debt would be serviced for 20 years, leading to the last payments being due on 3 October 2010, the 20th anniversary of German reunification. About 10% of this debt, about 20 million euro, has not been claimed yet.

So technically it was debt they used to pay the reparations that was paid off, not the reparations themselves.

http://en.wikipedia.org/wiki/World_War_I_reparations

By the way it's also interesting to note that it was the French who pushed to have the reparations paid in full and who also occupied the Ruhr to get their money .... Jean Claude Trichet anyone ?

professore

Solair wrote: »

I think it's a bit ridiculous to compare SF with the NAZI party to be quite honest.

Other than being nationalist in outlook, I don't really see any similarities at all.

They're left-leaning, socialists with a united-Ireland policy. Yes, they've dodgy connections in the past, but they don't seem *that* bad!

I haven't seen any evidence that they're xenophobic, ultra-right wing or fascist. In fact, I've seen the polar opposite to that.

I would be more concerned about the consequence of an economic crisis in somewhere like Belgium where you could easily see a rise of a nasty right-wing neonazi movement.

Most of the most brutal regimes in the 20th century were left wing. Stalin, Pol Pot, Mao, Ceaucescu, take your pick, there are many examples. Sinn Féin are not in power yet. Do not underestimate what they would do if they had an overall majority. The nazis were a small "mostly harmless" party too once.

professore

aftermn wrote: »

Surely the real difference is that we were not involved in a war. Whatever side you believe was responsible for that war, it was a hugely destructive exercise, with enormous costs all round.
As is usual in the history of war, to the victor the spoils.

Well I would argue we were to some extent ... one waged by a small group of bankers aided and abetted by our government against the Irish people.

aftermn wrote: »

Perhaps the real lesson from that period is that insisting on your pound of flesh can be counter productive. It produced the second war.

Yes ... that's my point !!!!! I also think (or hope) that sense prevails and some sort of fudge will happen where Ireland will not end up paying all the debt or maybe over such a long period it will amount to the same thing.

aftermn wrote: »

Even if one sees our recent difficulties as a sort of economic war, we haven't yet defaulted (caused damage) to anyone. Aren't they a little early looking for their pound of flesh?

Hmmm we (and others) have damaged the faith in the euro to some extent ...

It's a fascinating discussion in any event.

reinald

Solair wrote: »

I think it's a bit ridiculous to compare SF with the NAZI party to be quite honest.

Other than being nationalist in outlook, I don't really see any similarities at all.

They're left-leaning, socialists with a united-Ireland policy. Yes, they've dodgy connections in the past, but they don't seem *that* bad!

I haven't seen any evidence that they're xenophobic, ultra-right wing or fascist. In fact, I've seen the polar opposite to that.

I would be more concerned about the consequence of an economic crisis in somewhere like Belgium where you could easily see a rise of a nasty right-wing neonazi movement.

Stating that extreme nationalist sentiment could be encouraged in Ireland over the coming years if the present IMF/ECB deal endures, does not necessarily imply that such nationalist sentiment would be encouraged by or embodied in Sinn Fein as such. It could manifest itself in the form of a totally different political party or, more likely, new popular and/or subversive movements. Such a movement may or may not involve Sinn Fein.

In fact, given the full participation of Sinn Fein in existing political processes on both sides of the border, albeit adopting extreme positions on the left in the South, would suggest that Sinn Fein might not constitute part of a new look nationalist movement at all.

professore

reinald wrote: »

Stating that extreme nationalist sentiment could be encouraged in Ireland over the coming years if the present IMF/ECB deal endures, does not necessarily imply that such nationalist sentiment would be encouraged by or embodied in Sinn Fein as such. It could manifest itself in the form of a totally different political party or, more likely, new popular and/or subversive movements. Such a movement may or may not involve Sinn Fein.

In fact, given the full participation of Sinn Fein in existing political processes on both sides of the border, albeit adopting extreme positions on the left in the South, would suggest that Sinn Fein might not constitute part of a new look nationalist movement at all.

Yes of course you are correct. It is just a theory after all. I am not trying to bash Sinn Fein or single them out, just using an example. Something like Libertas could be equally dangerous. In any event a charismatic leader is needed.

RichardAnd

professore wrote: »

Yes of course you are correct. It is just a theory after all. I am not trying to bash Sinn Fein or single them out, just using an example. Something like Libertas could be equally dangerous. In any event a charismatic leader is needed.

Well the true lesson in nazism, for me, was less about the evils of a select few and more about how a massive amount of people can be a part of genocide. Hitler and his cohorts may have been at the tip of the nazi organisation but they didn't bring about the final solution alone, it took thousands of people to help them. Sure, a few of these were hung after the war and rightly so but I wonder how many concentration camp guards who pass the time by being as cruel as possible to their charges escaped the noose?

My point is that when people become opressed they become less humane. If the Irish people were forced into something extremely punitive by the EU, I have little doubt that the veneer of civilisation that seperates humans from monkies would not last too long without a few cracks appearing.

I recall that, some months ago, I raised a point that no matter how bad FF might be, there could always be some one worse. I was treated to a barage of flippant nonsense from angry boardies but perhaps those people might grasp my point if there's a Paddy Hitler or Micky Pot sitting in the pheonix park.

professore

RichardAnd wrote: »

Well the true lesson in nazism, for me, was less about the evils of a select few and more about how a massive amount of people can be a part of genocide. Hitler and his cohorts may have been at the tip of the nazi organisation but they didn't bring about the final solution alone, it took thousands of people to help them. Sure, a few of these were hung after the war and rightly so but I wonder how many concentration camp guards who pass the time by being as cruel as possible to their charges escaped the noose?

My point is that when people become opressed they become less humane. If the Irish people were forced into something extremely punitive by the EU, I have little doubt that the veneer of civilisation that seperates humans from monkies would not last too long without a few cracks appearing.

I recall that, some months ago, I raised a point that no matter how bad FF might be, there could always be some one worse. I was treated to a barage of flippant nonsense from angry boardies but perhaps those people might grasp my point if there's a Paddy Hitler or Micky Pot sitting in the pheonix park.

You are right there. However that's why it was right what the Irish electorate did to FF - another thing you need is a compliant citizenry who vote for some extremist. If we had voted back in FF it would send a signal that we will put up with anything - as apparently some people will.

My point though was not that there would be a genocide here - I am not that pessimistic.

RichardAnd

professore wrote: »

You are right there. However that's why it was right what the Irish electorate did to FF - another thing you need is a compliant citizenry who vote for some extremist. If we had voted back in FF it would send a signal that we will put up with anything - as apparently some people will.

My point though was not that there would be a genocide here - I am not that pessimistic.

A genocide isn't likely here, I just don't see it happening. Rather, I'd say Ireland's extremist government, if there is one, will be a far left collection of lunatics. Think something along the lines of people before profit with the Irish communist party thrown in for spice. I can imagine policies like 50% corp tax, a 100% tax on earnings above 100k, a wealth tax and probably 500 euro a week for the unemployed :rolleyes:

Something like that .

reinald

RichardAnd wrote: »

A genocide isn't likely here, I just don't see it happening. Rather, I'd say Ireland's extremist government, if there is one, will be a far left collection of lunatics. Think something along the lines of people before profit with the Irish communist party thrown in for spice. I can imagine policies like 50% corp tax, a 100% tax on earnings above 100k, a wealth tax and probably 500 euro a week for the unemployed :rolleyes:

Something like that .

There is absolutely no question of a movement emerging here akin to that which operated in Nazi Germany, not only for a variety of political reasons but also due to cultural factors.

The Irish race has never entertained the notion of racial superiority, primarily due to their status as an oppressed people themselves throughout modern history.

Also I would suggest that the conditions leading to a theoretical Irish movement might resemble, but not be in any way, identical, to the conditions stoking the rise of the Nazi's. Yes the War Guilt Clauses were a factor which were exploited by the Nazi's but there was arguably also a (possibly much more crucial and preexisting) racist undercurrent peculiar to Germany and Austria, in particular, in the 1930's, primarily relating to the Jews.

So in fairness I think, notwithstanding the subject matter of this thread, it is a bit too extreme for us to be even discussing the possibility of genocide in an Irish context.

Having said that, it is plausible, though not necessarily very likely perhaps, that some sort of extreme nationalist movement could emerge in Ireland in response to perceived IMF/ECB exploitation.

But if we are seriously discussing this idea, then in my view such a movement would probably not be comprised of any of the parties/groupings (including the Socialists, People Before Profit and so on) which currently participate in the established political system and therefore 'buy in' to that system and form of government so to speak, no matter what they might say at election time.

I would be of the view that we would more likely see both the resurrection of certain subversive groups from the past and the establishment of new ones on both the left and right which totally reject established political structures and forms of government. I would be thinking that violent anarchists and extreme nationalists outside of the system would primarily comprise such a subversive element.

professore

reinald wrote: »

There is absolutely no question of a movement emerging here akin to that which operated in Nazi Germany, not only for a variety of political reasons but also due to cultural factors.

The Irish race has never entertained the notion of racial superiority, primarily due to their status as an oppressed people themselves throughout modern history.

Beliefs of racial superiority is not a requirement. Having said that, listening to some Celtic Tiger cubs you could be mistaken for thinking the above statement is false.

reinald wrote: »

Also I would suggest that the conditions leading to a theoretical Irish movement might resemble, but not be in any way, identical, to the conditions stoking the rise of the Nazi's. Yes the War Guilt Clauses were a factor which were exploited by the Nazi's but there was arguably also a (possibly much more crucial and preexisting) racist undercurrent peculiar to Germany and Austria, in particular, in the 1930's, primarily relating to the Jews.

So in fairness I think, notwithstanding the subject matter of this thread, it is a bit too extreme for us to be even discussing the possibility of genocide in an Irish context.

Yes I agree.

reinald wrote: »

Having said that, it is plausible, though not necessarily very likely perhaps, that some sort of extreme nationalist movement could emerge in Ireland in response to perceived IMF/ECB exploitation.

A lot depends on the economy and debt burden in the next couple of years.

reinald wrote: »

But if we are seriously discussing this idea, then in my view such a movement would probably not be comprised of any of the parties/groupings (including the Socialists, People Before Profit and so on) which currently participate in the established political system and therefore 'buy in' to that system and form of government so to speak, no matter what they might say at election time.

I would be of the view that we would more likely see both the resurrection of certain subversive groups from the past and the establishment of new ones on both the left and right which totally reject established political structures and forms of government. I would be thinking that violent anarchists and extreme nationalists outside of the system would primarily comprise such a subversive element.

I'm not so sure. The nazis participated in the established political system for as long as it suited them. Any of the above groups could potentially be hijacked by some extremist nutter and become very popular if enough people really suffer financially. Our recent history has shown that many people can be convinced of just about anything no matter how little relationship it has to the facts - e.g. a 1 bed flat in Dublin is worth € 300 K and they can afford the mortgage on a € 30K salary.