Bailout Referendum, what way would you vote?

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Noreen1 wrote: »

Difficult, yes. However, I refuse to believe that a Legal Agreement that was based on falsehoods cannot be overturned.

Bonds are traded on international markets and are regularly bought and sold. A company that owned a huge chunk of bonds from Irish banks may own none today. There is no mechanism for retrospectively "burning" a company that once owned bonds in Irish banks.

In addition, a huge chunk of the bonds are owned today by Irish companies - probably pension funds at a guess. Destroying the value of pension funds here would probably open another completely different Pandora's box of problems and add to the bank mess.

Noreen1 wrote: »

Does anyone here seriously believe that the Irish people would have accepted this guarantee had they been told the truth about the level of debt?
Even I can't believe that Brian Lenihan would have knowingly guaranteed the current level of debt - and God knows, I'm no fan of his!

Oireachtas decisions are decisions made on behalf of the people - they are binding on us.

Noreen1 wrote: »

We just had a General election where people overwhelmingly voted for re-negotiation of the Bailout deal. A surprising number of the remainder voted to reject the Bailout deal. Either way, the Irish people are not happy with the terms of the Bailout.

There is a world of difference between being in favour of getting a lower interest rate and "burning the bondholders". There are few people who would object to lower interest rates on any loan if they can get them.

As for people being unhappy - we are not obliged to draw down the loan and/or we are perfectly free to minimise the amount we do draw down. That does mean facing up the consequences of that decision - such as (much more) severe cuts in public services. Offhand, I don't remember many members of the public advocating for that in the election though...

Noreen1 wrote: »

Our European partners are well aware of this. Hence, their insistence on ignoring the wishes of the Irish electorate, by using our need for a loan as a means of insisting that their solution is the only game in town - is undemocratic.

A referendum would work in the incoming Governments favour, by emphasising the democratic will of the Irish people.

The other member states are under no obligation (legal or otherwise) to provide us with any loan whatsoever. The mandate of their politicians comes from their electorate - no result in any referendum in Ireland changes that.

Given that our "wealth per person" (as measured by GDP) is ahead of almost all of them - including Germany - their electorates would probably vote against giving us bailout loans under any terms. Politically speaking, in their domestic contexts, it would probably be easier for many of their politicians to just leave us to our fate. Possibly they should even do so, although I suspect that the complaints that would then ensue about the other member states not giving us a loan would be much, much louder than the current set of complaints.

Seaneh

whatstherush wrote: »

Can you elaborate a little more on this point. When all the banks are dead where does the perfectly solvent exporting company that I work for pay my wages to?

One of the perfectly solvent banks that also operate in the state.

AIB isn't one bank, is dozzens of banks.

same for BoI.



It is entirely possible for one area of those two banks to remain in business while the rest dies.


As for Anglo, a company with no public depositors, your argument is far more flawed.

This idea that 'the atms would dry up and the country would grind to a halt' is extremely naive and simplistic.


There are hundreds of banks in the world who would be in a position to fill whatever void was left by whichever banks died.

Scofflaw

Tayla wrote: »

From everything we've heard about Anglo wasn't it known worldwide as a basketcase.....if the people getting loans knew it then these bondholders knew it as well,

But Anglo most certainly wasn't "known worldwide as a basketcase". On the contrary, it had a good investment grade rating:

Fitch Upgrades Anglo Irish Bank to ‘A+’ Rating

Anglo Irish Bank has today (1st September 2006) announced that Fitch Ratings has upgraded the Bank’s long term rating to ‘A+’ from ‘A’. The other ratings are affirmed at Short-term ‘F1’, Individual ‘B’ and Support ‘3’. The Outlook remains Stable.

Announcing the upgrade, the rating agency commented:

“The upgrade reflects consistent growth in the bank’s operating profit and prospects for continued growth for at least the next two to three years, a larger capital base and greater diversification of assets and funding. The Individual rating also reflects very good asset quality, an extremely low cost/income ratio and above-average margins. The bank continues to benefit from the buoyant Irish and stable UK economies, while diversifying into the US through offices in Boston and New York and into Europe. Profitability should continue to improve in 2006 and beyond as the bank expands its core lending business across all its markets. Strong profitability growth should put the bank in a better position to manage successfully any credit-related shocks, although Fitch is not expecting any significant asset quality deterioration in the medium term”

David Drumm, Group Chief Executive of Anglo Irish Bank added, “This is another significant development for the Bank. The upgrade highlights the key strengths of our business model which focuses on producing long term sustainable profitability on the basis of robust asset quality, supported by a diversified funding mix and a strong and growing capital base.”

1 September 2006

Tayla wrote: »

Bondholders should be protected in banks where they are used for consumer lending and hindsight is a great thing but consumer and business banking should be completely seperate.....

Agree with that - the sad thing is that that's a bit of hindsight that emerges regularly from bank collapses.

Tayla wrote: »

we should never be on the line for bank debt for businesses.....especially not when people invested in a loony bank knowing what a state it was in, they knew they would more than likely be protected, I don't really care if the Germans or whoever have to pay some of it back because of such and such a pension fund to be honest with you because those who invested in the bank did so knowing how out of control Anglo was, we the Irish tax payer didn't and yet we're supposed to feel bad and pay up....

As pointed out above, if that's your justification, you'll need to change your view!

Tayla wrote: »

I'd vote no all the way!

This whole bailout to me looks like a way to buy the EU time, they don't seem to have a clue what is going on

The problem is largely that the German taxpayer feels about Ireland's debts as we feel about the banks' debts. The Germans were promised when they gave up the Deutschemark for the euro that they wouldn't end up bailing out fiscally reckless countries ...since that's exactly what we're asking them to do, it's taking time to persuade them along that road.

cordially,
Scofflaw

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DWCommuter wrote: »

That would probably be an example of the same ignorance that allowed the last 3 Governments to ride the country to blazes.

Whether the electorate makes a decision from ignorance or not, doesn't alter that it is democratic.

Scofflaw

Seaneh wrote: »

One of the perfectly solvent banks that also operate in the state.

AIB isn't one bank, is dozzens of banks.

same for BoI.



It is entirely possible for one area of those two banks to remain in business while the rest dies.


As for Anglo, a company with no public depositors, your argument is far more flawed.

This idea that 'the atms would dry up and the country would grind to a halt' is extremely naive and simplistic.


There are hundreds of banks in the world who would be in a position to fill whatever void was left by whichever banks died.

AIB handles 35% of the daily transactions in the country, and BOI the same. Together they account for 70% of the day to day transfers of money that keep the economy going.

cordially,
Scofflaw

ei.sdraob

Scofflaw wrote: »

AIB handles 35% of the daily transactions in the country, and BOI the same. Together they account for 70% of the day to day transfers of money that keep the economy going.

cordially,
Scofflaw

A job that can be done by any other bank(s)

In US failed banks get taken over and accounts transferred to healthier ones overnight, life goes on then

you swear the problems Ireland facing with banking have never occurred elsewhere and have no resolution policies in place

Seaneh

Scofflaw wrote: »

AIB handles 35% of the daily transactions in the country, and BOI the same. Together they account for 70% of the day to day transfers of money that keep the economy going.

cordially,
Scofflaw

those transactions could easily be handled by other institutions.

Also, its is entirely possible to continue to guarantee deposits alone. And to nationalise those specific departments of those two banks, apparently solvent and well running departments, without accepting the rest of the companies.



In a liquidation of an insolvent company, it is possible to buy specific parts of said company.

If a group of pubs is bankrupt, you can bet not all of them were running at a loss. During liquidation of that companies assets it's entirely possible for an individual to acquire one or more of the profitable premises and continue their operations while allowing the others to cease trading.

kenrr

If we're talking democracy ..... I'm very sure that if there was a referendum in Germany on whether or not to help Ireland with a bailout the answer would be "NO".

K-9

ei.sdraob wrote: »

A job that can be done by any other bank(s)

In US failed banks get taken over and accounts transferred to healthier ones overnight, life goes on then

you swear the problems Ireland facing with banking have never occurred elsewhere and have no resolution policies in place

Has any that big failed in the US though? By big I don't mean market value but market size.

I think Iceland might have managed it but not sure how exactly it was done.

Tayla

Deleted User wrote: »

new banks, new banks that arent crippled with impaired loans, new banks that then have the ability to give loans.

This has to be done, people seem to think we are saying let the banks go to the wall and that's it no more banks.....

Seaneh

Scofflaw wrote: »

AIB handles 35% of the daily transactions in the country, and BOI the same. Together they account for 70% of the day to day transfers of money that keep the economy going.

cordially,
Scofflaw

Also, you (nobody) has answered my question.

If debt exceeds GDP and the interest on that debt exceeds the rate of economic growth, how do yo propose to service the interest, let alone reduce the debt?


The IMF are not trying to help us, the IMF are venture capitalists, they bully their way into states and systematically strip them of their profitable services, assets and resources while pretending they are trying to help and then leave the state in a worse position than when they arrived.

Seaneh

K-9 wrote: »

Has any that big failed in the US though? By big I don't mean market value but market size.

I think Iceland might have managed it but not sure how exactly it was done.

In iceland bigger banks (proportionally) died and life went on.



Oh, and iceland is only about 2-3 years away from returning to normality.

kenrr

ei.sdraob wrote: »

A job that can be done by any other bank(s)

In US failed banks get taken over and accounts transferred to healthier ones overnight, life goes on then

you swear the problems Ireland facing with banking have never occurred elsewhere and have no resolution policies in place

But that only generally applies to small banks in the US; large banks get bailed out by Govt the same as anywhere else i.e. large banks' bondholders have a Govt "guarantee" because the banks are TBTF.

Seaneh

kenrr wrote: »

But that only generally applies to small banks in the US; large banks get bailed out by Govt the same as anywhere else i.e. large banks' bondholders have a Govt "guarantee" because the banks are TBTF.

In this case, the debt is too much to bare.

See a few posts up...


Every respected economic expert in the world is telling us that we cannot afford this loan and we shouldn't accept this debt, so why are we ignoring them?

kenrr

Seaneh wrote: »

In iceland bigger banks (proportionally) died and life went on.



Oh, and iceland is only about 2-3 years away from returning to normality.

Life went on ... but after a precipitous fall to 2003 levels of standard of living where it remains. The average Icelandic citizen is a long, long way from returning to normality. The average Irish citizen would suffer very severely in an Icelandic scenario and any sensible party knows it would be political suicide for any party in power to voluntarily go down that route.

Seaneh

kenrr wrote: »

Life went on ... but after a precipitous fall to 2003 levels of standard of living where it remains. The average Icelandic citizen is a long, long way from returning to normality. The average Irish citizen would suffer very severely in an Icelandic scenario.

The average irish citizen will suffer a lot worse and for a lot longer within the next 10 years if we carry on down the road we are on.


That is an unavoidable fact.




It will be far worse that 2003 standards of living.

ei.sdraob

kenrr wrote: »

Life went on ... but after a precipitous fall to 2003 levels of standard of living where it remains. The average Icelandic citizen is a long, long way from returning to normality. The average Irish citizen would suffer very severely in an Icelandic scenario and any sensible party knows it would be political suicide for any party in power to voluntarily go down that route.

As opposed to Irish living standards dropping to where exactly?

Tayla

Scofflaw wrote: »

But Anglo most certainly wasn't "known worldwide as a basketcase". On the contrary, it had a good investment grade rating:

That's interesting but I definitely found info on this before, let me dig it out again and i'll stick it up here. The celtic tiger was booming, they all knew it would end.

Scofflaw wrote: »

Agree with that - the sad thing is that that's a bit of hindsight that emerges regularly from bank collapses.

It's horrific,to think that the people who should have protected us allowed it to happen, it really genuinely sickens me.

Scofflaw wrote: »

As pointed out above, if that's your justification, you'll need to change your view!

It's not my only justification but I did give that impression.

Scofflaw wrote: »

The problem is largely that the German taxpayer feels about Ireland's debts as we feel about the banks' debts. The Germans were promised when they gave up the Deutschemark for the euro that they wouldn't end up bailing out fiscally reckless countries ...since that's exactly what we're asking them to do, it's taking time to persuade them along that road.

cordially,
Scofflaw

We were promised a lot too and we were let down, germans should know more than the rest what years of austerity can do to you, as course I want the buck passed, we can't afford it.....next couple of years we're going to see an increased number of suicides and family murders.

I'd like to think we will some day (soon) have a government who will do what is best for us, how can your own government condemn you like that?

kenrr

ei.sdraob wrote: »

As opposed to Irish living standards dropping to where exactly?

Based on Govt expenditure levels, I assume probably back to about 2003 ... but perhaps a more controlled descent may reduce the risk of excessive damage or overshooting. My main point is that no political party in power will voluntarily "do an Iceland" because they would get the blame for all the adverse consequences.

Seaneh

kenrr wrote: »

Based on Govt expenditure levels, I assume probably back to about 2003 ... but perhaps a more controlled descent may reduce the risk of excessive damage or overshooting. My main point is that no political party in power will voluntarily "do an Iceland" because they would get the blame for all the adverse consequences.

Debt > GDP.

Interest on debt > economic growth

how do you even pay the interest? You can't.


We are setting yourselves up for a MASSIVE, unavoidable fall.
'Doing an iceland' would be nothing compared to what will, without any doubt, happen in the next few years, if we don't 'do an iceland'.

DWCommuter

I like this.

K-9

Seaneh wrote: »

Debt > GDP.

Interest on debt > economic growth

how do you even pay the interest? You can't.


We are setting yourselves up for a MASSIVE, unavoidable fall.
'Doing an iceland' would be nothing compared to what will, without any doubt, happen in the next few years, if we don't 'do an iceland'.

We had similar debt levels in the late 80's and we did recover, though I'd wonder where the growth figures of the 90's will come from.

On the interest, it needs to be reduced, I don't think anybody is arguing that it shouldn't.

Seaneh

K-9 wrote: »

We had similar debt levels in the late 80's and we did recover, though I'd wonder where the growth figures of the 90's will come from.

On the interest, it needs to be reduced, I don't think anybody is arguing that it shouldn't.

Even if it is reduced to 3%. We are nowhere near that level of growth.



And this is vastly more debt than the 80's.



The budget shortcoming are comparable but to say we had similar debt is either a lie or ignorance.

eoinbn

K-9 wrote: »

We had similar debt levels in the late 80's and we did recover, though I'd wonder where the growth figures of the 90's will come from.

On the interest, it needs to be reduced, I don't think anybody is arguing that it shouldn't.

The 80's are irrelevant. We had a very small economy with very little private debt. Now we have massive private and public debt, even if we exclude the bondholder debt. Our wages in the 80's were very low by international standard which meant that there was huge potential to 'create wealth' by just been paid better- that is no longer the case.

Right now I would vote for the bailout in the hope that it will change substantially in the coming weeks. However if the vote was in 2 months and nothing was changed then I would vote to give the EU the two fingers and to try and do a deal with the IMF who are charging us ~3% interest.

K-9

Seaneh wrote: »

The budget shortcoming are comparable but to say we had similar debt is either a lie or ignorance.

No need for that.

The figures are freely available if you want to check. The debt level was similar GDP wise and higher as a % of tax revenue, though obviously that will catch up. That was the measurement you were using.

The difference this time is the levels of personal debt.

ei.sdraob

K-9 you are being deliberately disingenuous?

our national debt figures dont include
* NAMA which is a liability with many ?? over it
* any further losses in the now nationalised banks, and any further requirements from these banks for more money
* pensions liabilities now that pensions pot has been spent
* the central bank injections to banks

dont forget that we will need plenty of money to keep the state runing even if the 2014 target is reached (now its 2015 target :rolleyes:)
and finally interest on it all
am I forgetting anything else?

oh yes any liabilities in case of a bank run of which there is more chances now than ever.

all of this will be have to be paid for somehow by a deeply indebted population

K-9

No, not being disingenuous. We had massive debt levels in 1986 and were on the verge of IMF intervention then.

We had big problems ahead of us then too such as the baby boom generation maturing and finding work for them, corrupt Governments, coalitions etc.

I am in no way under estimating the problems faced. Sorry if I'm slightly out of synch with the "we are all doomed" meme on Boards.

Scofflaw

DWCommuter wrote: »

I like this.

I have to say that I don't - it just looks like someone slinging exciting figures around and shouting.

Seaneh wrote:

Debt > GDP.

Interest on debt > economic growth

how do you even pay the interest? You can't.

This is one of those things that looks on the surface to be the case, but is actually nothing like it.

You're assuming that (a) tax take as a proportion of GDP remains constant, and (b) that debt repayments as a proportion of tax take remain constant. Neither of those is the case.

A country repays a debt by assigning a certain proportion of state income to paying the debt - if the interest rate is higher than the country's rate of growth, then the proportion of the state's income dedicated to repaying that debt will have to rise, unless the state's income also rises through either economic growth or increased taxation. In our case, there is really quite a lot of room to manoeuvre, because we're starting from a reasonably low tax take.

This has all been allowed for - debt is expected to rise to a peak, then fall again. The peak is high, certainly, and the interest repayments are expected to take up a quarter of tax revenue (on a pessimistic estimate of future tax revenues), but that, as has been pointed out, isn't somewhere we haven't ever been - although it's incredible and appalling that we're back there again.

cordially,
Scofflaw

kenrr

Seaneh wrote: »

Debt > GDP.

Interest on debt > economic growth

how do you even pay the interest? You can't.


We are setting yourselves up for a MASSIVE, unavoidable fall.
'Doing an iceland' would be nothing compared to what will, without any doubt, happen in the next few years, if we don't 'do an iceland'.

So you'd recommend immediately cutting welfare by 40%; cutting minimum wage by 40% and cutting salaries/wages by 40%?

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K-9 wrote: »

Sorry if I'm slightly out of synch with the "we are all doomed" meme on Boards.

It is best done by watching a few episodes of "Dad's Army" and copying Frazer's "We are doomed, doomed I tell you" routine.