Should Ireland just let it sink?

caseyann

Ok two options Ireland says no lets it sink and generate our own deal to pay back what is owed,in the midst of this the economy slows down and breaks away from the euro and goes it alone.What is the worst that can happen?
Trade will still happen economy will pick up again and other EU countries will follow suit and leave the EU.No longer will EU have a say on how or when or what to do in our own country.

Good article
There is no need to be more explicit. The rogue banks you are now supposed to save would be replaced, as they have been before, with new banks set up by hard-headed businessmen with charters to go back to first principles and behave like people-serving banks, not casinos.

Then you could instruct your government to leave the eurozone, let the punt float (and depreciate) and settle the reduced debt in due course. That is what (without any publicity) Iceland is doing, outside the euro and outside the EU. And she is coming back from the abyss.

Is the above a terrifying course of action? Too right. Absolutely frightening. Taking on Berlin and its Frankfurt bank? It's David and Goliath. And there will be pain. But the Irish can take the pain as masters in their own land or as conquered serfs. And there is one ace in the hole

http://www.independent.ie/opinion/analysis/spirit-of-rebellion-still-dimly-flickers-2567592.html


My saying But who won there so what we are David throw a stone and it all comes tumbling down on them.:p

ilovesleep

Defaulting would be horrifically torturous. Especially if we're forced out from the euro and take on a new currency. Imports would be very expensive for a very long time. Not only that but MNCs based here wouldn't be able to operate here. Also we have a lot of UK chainstores here. They will all up and leave. It will mean huge unemployment.

The EU/IMF are allowing us to have a reasonable standard of living even though we'd have a mountain of debt to service.

Amhran Nua

ilovesleep wrote: »

Defaulting would be horrifically torturous. Especially if we're forced out from the euro and take on a new currency. Imports would be very expensive for a very long time. Not only that but MNCs based here wouldn't be able to operate here. Also we have a lot of UK chainstores here. They will all up and leave. It will mean huge unemployment.

We can't be forced to leave the euro.

ilovesleep wrote: »

The EU/IMF are allowing us to have a reasonable standard of living even though we'd have a mountain of debt to service.

The EU and the IMF are not at all in agreement over the debt we have to repay to be honest. The IMF wanted lower interest rates, our EU buddies wanted higher and barely tolerated IMF suggestions, never mind taking them on board.

Scofflaw

Amhran Nua wrote: »

We can't be forced to leave the euro.


The EU and the IMF are not at all in agreement over the debt we have to repay to be honest. The IMF wanted lower interest rates, our EU buddies wanted higher and barely tolerated IMF suggestions, never mind taking them on board.

Rubbish - the IMF calculated their rate according to their formulas, and the EU/EFSF according to theirs. The result is that each part of the bailout has slightly different characteristics - if you have some kind of source for your claim that the IMF argued for a lower interest rate and the EU rejected it, by all means let's see it.

regards,
Scofflaw

Amhran Nua

Scofflaw wrote: »

Rubbish - the IMF calculated their rate according to their formulas, and the EU/EFSF according to theirs. The result is that each part of the bailout has slightly different characteristics - if you have some kind of source for your claim that the IMF argued for a lower interest rate and the EU rejected it, by all means let's see it.

regards,
Scofflaw

Okay lets clarify, the IMF wanted much lower amounts repaid.

A bright red line could have been drawn between the third of the government debt that guarantees the obligations of the banks, on the one hand, and the rest of the government’s debt, on the other. The third representing the debts of the Irish banking system could have been restructured. Bondholders could have been offered 20 cents on the euro, assuming that the Irish banks still have some residual economic value. If those banks are insolvent, the bondholders could – and should – have been wiped out. Irish public debt would then have topped out at maybe 100% of GDP. And the Irish program would have had a hope of working. As it is, the program will have to be revisited, perhaps as soon as next year. Investors know this, which is why Irish spreads have barely budged.

In fact, this is exactly what the IMF, which at least knows how to add, has been pushing for over the last week. But the Fund was unable to overcome the objections of the Commission, the ECB and the German government.

One can interpret the intransigence of the German government and its EU allies in two ways. First, they understand neither economics nor politics. As Tallyrand said of the Bourbons, “They have learned nothing, and they have forgotten nothing.”

If you want to reduce that to nitpicking over rates, great, but don't think that makes a blind bit of difference to the actual problems facing the country.

The whitewash is over.

megafan

ilovesleep wrote: »

Defaulting would be horrifically torturous. Especially if we're forced out from the euro and take on a new currency. Imports would be very expensive for a very long time. Not only that but MNCs based here wouldn't be able to operate here. Also we have a lot of UK chainstores here. They will all up and leave. It will mean huge unemployment.

The EU/IMF are allowing us to have a reasonable standard of living even though we'd have a mountain of debt to service.

Would it be any worse than what we'll have to go through for the next decade or two? Standard of living are going to fall anyway... it might be vicious for a short while but the economy will improve quicker (ref Iceland) rather than a depressingly long lifetime of a downhill slide... :eek: people will have to live & I wouldn't worry about shops pulling out they'll set up wherever there's customers (& while they might give jobs their of little benefit to the economy)... People will have to realize that we've been asset stripped by the wealthy countries of europe... lost our seas, indigenous production companies & farming has been gelded by quota's and subsidies.. Our banking while ruined by it's own management & our government was also helped to collapse by the ECB with cheap unregulated money... In the decades to come history might say joining the EC was detrimental to this country any monies received came at a cost!

Scofflaw

Amhran Nua wrote: »

Okay lets clarify, the IMF wanted much lower amounts repaid.

If you want to reduce that to nitpicking over rates, great, but don't think that makes a blind bit of difference to the actual problems facing the country.

The whitewash is over.

Perhaps, then, you shouldn't have claimed the wrong thing.

Interestingly, it looks as if the German public is slowly being plámásed into accepting that the EU will be a transfer union. You should probably consider Germany's intransigence over the bailout in that light.

regards,
Scofflaw

Amhran Nua

Scofflaw wrote: »

Perhaps, then, you shouldn't have claimed the wrong thing.

Six of one, half dozen of the other.

Scofflaw wrote: »

Interestingly, it looks as if the German public is slowly being plámásed into accepting that the EU will be a transfer union. You should probably consider Germany's intransigence over the bailout in that light.

They should be getting used to it, since many of their local authorities are nearing bankruptcy. The details are sound enough even if the channel is dubious.

southsiderosie

caseyann wrote: »

Good article
There is no need to be more explicit. The rogue banks you are now supposed to save would be replaced, as they have been before, with new banks set up by hard-headed businessmen with charters to go back to first principles and behave like people-serving banks, not casinos.

Then you could instruct your government to leave the eurozone, let the punt float (and depreciate) and settle the reduced debt in due course. That is what (without any publicity) Iceland is doing, outside the euro and outside the EU. And she is coming back from the abyss.

Is the above a terrifying course of action? Too right. Absolutely frightening. Taking on Berlin and its Frankfurt bank? It's David and Goliath. And there will be pain. But the Irish can take the pain as masters in their own land or as conquered serfs. And there is one ace in the hole

http://www.independent.ie/opinion/analysis/spirit-of-rebellion-still-dimly-flickers-2567592.html


My saying But who won there so what we are David throw a stone and it all comes tumbling down on them.:p

Oh god, another one of these articles?

The author, given his political affiliations listed in his bio, is no fan of the EU. Based on his proposal, he also has little to no understanding of Irish politics. Not to mention that he is proposing economic suicide; it's all well and good for this guy to say "Ireland can take the pain" when he lives in Britain.

At the end of the day, the big economies of Europe don't really care that much about Ireland. Contrary to popular belief, neither do the Americans. While it seems increasingly obvious that the terms of the IMF agreement will need to be re-negotiated - significantly - the idea that Ireland should or could just leave the euro, bear down for a few months, and come out smelling like roses is insane.

Lockstep

A unilateral default would mean tortuous spending cuts and an insane amount of economic termoil; noone would lend to us, except at interest rates that make the EU/IMF deal look like a handout (They'd have to; we'd have already shown we can't be trusted to repay loans)

As for the claim that leaving the Euro would help, this was already dealt with in your previous thread .

later12

ilovesleep wrote: »

Defaulting would be horrifically torturous.

Lockstep wrote:

A unilateral default would mean tortuous spending cuts and an insane amount of economic termoil

Ok, lets not all wet ourselves over this.

Defaulting on the Irish debt is the last check the Irish can exert before total sovereignruin based on the current crisis mechanism. No financial plan can realistically be 'horrifically tortuous', that is plain and simple exaggeration. I am honestly beginning to think that there is a section of the Irish public who are loving the fury and the hyperbole of the doom, I believe the former of the above posters was the one who said s/he would be screaming "f*ck you Fianna Fail" on the deathbed. Hmmm.

Firstly, the Irish must push for a resolution which involves an integrated European response to the problems that are most magnified in the respective peripheral countries who have been, or are likely to be, 'bailed out'. The measure of the benefit to the core European economy and to the other peripherals, of saving Ireland as a Eurozone state must be reflected in the price that the Eurozone bloc must pay for that saving.
At present, the bailout hasn't cost them a cent, but it is saving them losses, not least sovereign losses. Look at sovereign spreads in the EU

Essentially this means a reform of the bailout procedure.

There may be a day when Ireland must restructure its loans, and this is widely described, unfortunately, as a default, though of course it is not quite so. However, even Argentina, who are the 'what not to do' poster boys of sovereign defaults did not go through a 'horrifically tortuous' episode. They are still in the sh1t of course but, even as someone who works in finance, I really think some people ought to remember that it is, at the end of the day, only money. There is nothing precious or sacred about money and if anything I think it is the Irish people's trepidation, fear or outright dislike of money that will bring the state long term Failure.

southsiderosie

later10 wrote: »

There may be a day when Ireland must restructure its loans, and this is widely described, unfortunately, as a default, though of course it is not quite so. However, even Argentina, who are the 'what not to do' poster boys of sovereign defaults did not go through a 'horrifically tortuous' episode. They are still in the sh1t of course but, even as someone who works in finance, I really think some people ought to remember that it is, at the end of the day, only money. There is nothing precious or sacred about money and if anything I think it is the Irish people's trepidation, fear or outright dislike of money that will bring the state long term Failure.

Argentina did go through a torturous process. The only reason they are not in worse shape today is because commodities prices are high, and Hugo Chavez purchased a lot of their bad debt. Ireland doesn't have millions of acres for soya and cattle, and it doesn't have an ideological sugar daddy-in-waiting to mop up a lot of the mess.

It is quite easy to say "it's only money" when you have a good job; what a flippant remark! In the meantime, poverty has increased significantly in Argentina, inequality has widened, and double-digit inflation is rampant - which hurts the poor far more than it hurts the rich, who have the ability to move their assets abroad, or buy dollar-backed securities. This is exactly what would happen if Ireland were to default and restore the punt - those in the export sector would do well, but everyone else, especially poorer people who spend a larger percentage of their income on (imported) food and clothes, would be screwed.

Permabear

This post has been deleted.

maninasia

ilovesleep wrote: »

Defaulting would be horrifically torturous. Especially if we're forced out from the euro and take on a new currency. Imports would be very expensive for a very long time. Not only that but MNCs based here wouldn't be able to operate here. Also we have a lot of UK chainstores here. They will all up and leave. It will mean huge unemployment.

The EU/IMF are allowing us to have a reasonable standard of living even though we'd have a mountain of debt to service.

Why would MNCs not be able to work here, that makes no sense. UK chainstores up and leave, don't think so, money is money and other shops would open to take the consumers money.
Temporarirly unemployment would increase, but our economy would become very competitive quickly with devaluation, exports would boom.

RichardAnd

Permabear wrote: »

This post had been deleted.

I agree. No matter how much we try to convince ourselves that we live in some sort of modern age of enlightenment and peace, our species has never evolved past the need for material wealth; for good or for ill.

At the end of it, everything we take for granted is dependant on money. With no money the country wouldn't simply be f**ked, it wouldn't exist anymore. Society would crumble away and law and order would break down leaving a mad max style world in it's wake.

In short, education, healthcare, welfare, justice and even the most basic iotas of the country all boil down to having a steady income. Money is, regardless of how we sugar coat it, the most important thing in the world.

loldog

RichardAnd wrote: »

I agree. No matter how much we try to convince ourselves that we live in some sort of modern age of enlightenment and peace, our species has never evolved past the need for material wealth; for good or for ill.

What is wealth but the application of labour to the natural environment? The amount of wealth on the planet is always static.

What does vary is the amount of labour expended on producing useful goods and services.

As a species I think we need to figure how to encourage useful work and stop worshipping money for its own sake.

The first step, of course, is to eradicate parasitic activities like banking.

.

Lockstep

Banking isn't parasitic. It's a necessary aspect of any modern economy. Trying to run a business without access to credit would be a disaster.

The problem isn't with bankers as a whole. It's with the greedy, reckless, incompetent ones.

Scofflaw

RichardAnd wrote: »

I agree. No matter how much we try to convince ourselves that we live in some sort of modern age of enlightenment and peace, our species has never evolved past the need for material wealth; for good or for ill.

At the end of it, everything we take for granted is dependant on money. With no money the country wouldn't simply be f**ked, it wouldn't exist anymore. Society would crumble away and law and order would break down leaving a mad max style world in it's wake.

In short, education, healthcare, welfare, justice and even the most basic iotas of the country all boil down to having a steady income. Money is, regardless of how we sugar coat it, the most important thing in the world.

It is, as Iain Banks would put it, a rationing and apportionment system for scarce resources. In its absence, other apportionment systems spring up, many of which revolve around the use of naked force.

cordially,
Scofflaw

dan_d

later10 wrote: »

I really think some people ought to remember that it is, at the end of the day, only money. There is nothing precious or sacred about money...

A fair point if you are looking at money as an item, wholly unconnected to anything else.
But it's not.It's connected to everything.Every single thing. Food, medicine, a home, health...everything. So you can't just say "money is just money", because the welfare of too many people relies on the stuff.
As for those who think we could creditably default/re-structure...I just don't see it.We're too small, we rely too much on foreign countries for trade and money, and we'd be wiped out. And that's just for starters. Surely that's just common sense?

View

Amhran Nua wrote: »

Okay lets clarify, the IMF wanted much lower amounts repaid.

Was Barry Eichengreen involved in the actual face-to-face discussions that led to the IMF/EU deal? If not, then his commentary would appear to be based on hearsay at best.

HivemindXX

caseyann wrote: »

There is no need to be more explicit. The rogue banks you are now supposed to save would be replaced, as they have been before, with new banks set up by hard-headed businessmen with charters to go back to first principles and behave like people-serving banks, not casinos.

The new banks would be set up to make as much money as quickly as possible. Their job would be to get in to the ruins, stuff their sacks with as much cash and valuables as possible and then get out before the roof collapses.

th3 s1aught3r

We take in around 30bn in tax revenue each year. We have guranateed debt of around 300bn. Whats the interest on the loans we have taken out every year?, we have to pay that before we even pay the public sector, wages and services
We will sink slowly in any event

Scofflaw

th3 s1aught3r wrote: »

We take in around 30bn in tax revenue each year. We have guranateed debt of around 300bn. Whats the interest on the loans we have taken out every year?, we have to pay that before we even pay the public sector, wages and services
We will sink slowly in any event

Where do you get a figure of €300bn from, and how much of that do you suppose we are paying interest on?

Interest payments on government debt is available from here: http://www.ntma.ie/NationalDebt/interestCost.php

Currently interest costs are €3.5bn per year on €94bn. Factoring in all the expected debt, including all NAMA expenditure, as happening in the next 4 years, those payments rise to €9.5bn per year on €215.5bn, assuming we have to roll over all maturing debt into the bailout fund.

Tax take, on the other hand, is actually about €35bn - but if you factor in things like the licence fee, PRSI and a couple of other ways the government makes money, it's more like €45bn.

cordially,
Scofflaw

loldog

Lockstep wrote: »

Banking isn't parasitic. It's a necessary aspect of any modern economy. Trying to run a business without access to credit would be a disaster.

Banking is parasitic. Bankers produce nothing of value and live off the labour of others.

We need an upgrade on your idea of a "modern economy". A whole new order, one without this dirty bloodstained debt-slave currency system.

.

Permabear

This post has been deleted.

Lockstep

loldog wrote: »

Banking is parasitic. Bankers produce nothing of value and live off the labour of others.

We need an upgrade on your idea of a "modern economy". A whole new order, one without this dirty bloodstained debt-slave currency system.

.

Giving others access to credit isn't parasitic. I much prefer my savings to be safely in the bank and gaining interest rather than sitting idly under my mattress.

People need credit. It's a fact of life. When a fatwa was placed on Christians acting as money-lenders, non-Christians (especially Jews) stepped up to fill the void as its such a vital and necessary industry.

Can you explain how you'd run an economy without credit and banking?

th3 s1aught3r

Scofflaw wrote: »

Where do you get a figure of €300bn from, and how much of that do you suppose we are paying interest on?

Add together the current gross debt of €160 billion, the Central Bank of Ireland’s exposure of about €50 billion, the bailout money of €67.5 billion, the Nama bill of €40 billion and the “new own use bonds” of €20 billion and you get a grand total of just over €337 billion. Make generous allowance for double-counting of deficit funding — especially relating to “bailout” cash and for Nama recoveries — and you still get to a ballpark figure of about €300 billion.

later12

southsiderosie wrote: »

This post had been deleted.

Have you ever been to Argentina? The country is poor, sure, their economy has suffered hugely from their economic jenga and some incredibly daft state sponsored mistakes (including a unilateral 'default' that turned into a restructuring and cost them more in the process, kicking out the IMF and then befriending them again) but to evenr describe the direct effect this had on the population, as people, as 'horrifically torturous', which is the term I am responding to, is plain exaggeration and scare mongering.

I have visited Argentina and seen the effects first hand, as many people on here likely have, and many people reading these boards will know Argentines working or studying in Ireland. I don't know - nor know of - any Argentines who describe the crisis as having been 'horrifically torturous' for them. Lets be honest, Rwanda went through horrific torture, Argentina did not, and Ireland, regardless of what happens, will not.

Personally I don't want Ireland to default, i'm fully in favour of paying out to bondholders of Irish sovereign debt, you could say it suits the beliefs of someone like me to argue that Argentina suffered irreperably and horrifically a miserable economic torture - but that's just dishonest. People need to stop losing the run of themselves.

Permabear wrote: »

Speaking as someone who also works in finance, that's an utterly bizarre statement. Money is never "only money."

That's a typically Irish response.

First of all, i'm talking about private individuals. Of course currency and debt and money markets are important, but there is more to worry about in one's daily life, that is my point. i just think, reflecting on some posts on here (such as the one where a poster promised to die screaming f*ck you FF on his deathbed) that things have gotten a little bit out of hand.

To explain why I describe your comment as a little Irish: we Irish people are probably the last nationality that I have encountered, on a very general basis, to be financially confident. Our entire economy over the past ten years was the travellers' weddings of economies - people who never had money self consciously wielding it at every opportunity. And yet debt is practically a dirty word, talking about money is considered uncouth, there is a shame in the promotion and enjoyment of currency, almost a reverence of it. Irish people are some of the most likely of the Europeans, in my experience, to answer as you just did. With Irish people, it is never, ever 'only money'.

amacachi

later10 wrote: »

Have you ever been to Argentina? The country is poor, sure, their economy has suffered hugely from their economic jenga and some incredibly daft state sponsored mistakes (including a unilateral 'default' that turned into a restructuring and cost them more in the process, kicking out the IMF and then befriending them again) but to evenr describe the direct effect this had on the population, as people, as 'horrifically tortuous', which is the term I am responding to, is plain exaggeration and scare mongering.

I have visited Argentina and seen the effects first hand, as many people on here likely have, and many people reading these boards will know Argentines working or studying in Ireland. I don't know - nor know of - any Argentines who describe the crisis as having been 'horrifically tortuous' for them. Lets be honest, Rwanda went through horrific torture, Argentina did not, and Ireland, regardless of what happens, will not.

Personally I don't want Ireland to default, i'm fully in favour of paying out to bondholders of Irish sovereign debt, you could say it suits the beliefs of someone like me to argue that Argentina suffered irreperably and horrifically a miserable economic torture - but that's just dishonest. People need to stop losing the run of themselves.

That's a typically Irish response.

First of all, i'm talking about private individuals. Of course currency and debt and money markets are important, but there is more to worry about in one's daily life, that is my point. i just think, reflecting on some posts on here (such as the one where a poster promised to die screaming f*ck you FF on his deathbed) that things have gotten a little bit out of hand.

To explain why I describe your comment as a little Irish: we Irish people are probably the last nationality that I have encountered, on a very general basis, to be financially confident. Our entire economy over the past ten years was the travellers' weddings of economies - people who never had money self consciously wielding it at every opportunity. And yet debt is practically a dirty word, talking about money is considered uncouth, there is a shame in the promotion and enjoyment of currency, almost a reverence of it. Irish people are some of the most likely of the Europeans, in my experience, to answer as you just did. With Irish people, it is never, ever 'only money'.

I think the term "horrifically tortuous" was being used, wrongly, in an OTT way but on the same scale as the "huge" 4% social welfare cuts we've had.

Scofflaw

th3 s1aught3r wrote: »

Add together the current gross debt of €160 billion, the Central Bank of Ireland’s exposure of about €50 billion, the bailout money of €67.5 billion, the Nama bill of €40 billion and the “new own use bonds” of €20 billion and you get a grand total of just over €337 billion. Make generous allowance for double-counting of deficit funding — especially relating to “bailout” cash and for Nama recoveries — and you still get to a ballpark figure of about €300 billion.

Leaving aside the fact that the current gross debt position is only €94bn, not €160bn, to what extent are your additions justifiable? How much of it are we currently paying interest on, what rate are we paying, and how long do we expect to be paying it? When you add the Central Bank debt, are you claiming that the taxpayer is currently paying interest on that? Are you claiming that 100% of NAMA must be written off?

cordially,
Scofflaw

Drumpot

Definition of Greed - excessive desire to acquire or possess more (especially more material wealth) than one needs or deserves

Capitalism - an economic system based on private ownership of capital



Capitalism encourages greed , plain and simple. Capitalism with Humans is like putting an alcohalic in charge of a pub, you are just asking for trouble. If history has shown us anything its that in some form it usually repeats itself when Humans are involved. . Corruption and the poor paying for the mistakes of the rich is not too differant from the feudal system when the peasants would be squeezed for every penny to subsidise their leaders.

Indeed many quote the greatness of Capitalism by comparing it with Communism as if saying one failed system is better then another . . Ironically I believe they are both failures in their own way because the people at the tops of the pyramids cannot be trusted to do the right things for the greater good.

In terms of money, the usual problem is the people, not the system. I would rather we have some sort of system that benefits the majority in terms of wealth spread, then our current system that doesnt just simply encourage greed, it thrives on it and ends up costing the poorer disproportionatly to the level of control they have in running these financial systems.

When you start to accept Sh*t, that is all you will ever get. The current system may not be completely useless, but it has failed because people (governments/regulators/directors) cannot be trusted to do the right thing when a system is built on rewarding wanton risks and rewards speculation that can drive the cost of fuel up and potentially bring down economies.

While I understand why the banks got the cash injections from taxpayers, its irrefutable that it shows that capitalism in its current form is a fail. Governments are too afraid to even comply with the basic principles of Capitalism (that you succeed or fail on your own head) because they allowed financial institutions to become too important to fail.

I could lead my life taking few risks and still end up screwed by the decisions of speculators or unregulated immoral bankers, how is this the best way for society to proceed?. Everything in capitalism pushes for people to in some way invest in this system. If you leave your money on deposit you are at the mercy of Inflation. If you invest in stocks/shares you are at the mercy of the markets. The sad thing is that we all know there will be another banking crisis of some sort in most of our lifetimes. Mainly down to bad practises driven by greed.

recedite

Scofflaw wrote: »

This post had been deleted.

If they adopt a permanent mechanism to buy our bonds, we would still owe them the money, plus interest. Not the same as a transfer then. Debt remains.

Permabear wrote: »

This post has been deleted.

You mean they lend out money.
Problem is, they keep lending out the same money again and again, claiming interest each time, while also leveraging the default risks.
If the State lent out the money directly to those who need credit, much less interest would be payable, and businesses would thrive. The State would not then face the risk of leveraged default.

Chuck Stone

But the wizards were frauds, whether they knew it or not, and their magic turned out to be no more than a collection of cheap stage tricks. Above all, the key promise of securitization — that it would make the financial system more robust by spreading risk more widely — turned out to be a lie. Banks used securitization to increase their risk, not reduce it, and in the process they made the economy more, not less, vulnerable to financial disruption.

Paul Krugman

Financial 'products' my ass.

caseyann

Drumpot wrote: »

Definition of Greed - excessive desire to acquire or possess more (especially more material wealth) than one needs or deserves

Capitalism - an economic system based on private ownership of capital



Capitalism encourages greed , plain and simple. Capitalism with Humans is like putting an alcohalic in charge of a pub, you are just asking for trouble. If history has shown us anything its that in some form it usually repeats itself when Humans are involved. . Corruption and the poor paying for the mistakes of the rich is not too differant from the feudal system when the peasants would be squeezed for every penny to subsidise their leaders.

Indeed many quote the greatness of Capitalism by comparing it with Communism as if saying one failed system is better then another . . Ironically I believe they are both failures in their own way because the people at the tops of the pyramids cannot be trusted to do the right things for the greater good.

In terms of money, the usual problem is the people, not the system. I would rather we have some sort of system that benefits the majority in terms of wealth spread, then our current system that doesnt just simply encourage greed, it thrives on it and ends up costing the poorer disproportionatly to the level of control they have in running these financial systems.

When you start to accept Sh*t, that is all you will ever get. The current system may not be completely useless, but it has failed because people (governments/regulators/directors) cannot be trusted to do the right thing when a system is built on rewarding wanton risks and rewards speculation that can drive the cost of fuel up and potentially bring down economies.

While I understand why the banks got the cash injections from taxpayers, its irrefutable that it shows that capitalism in its current form is a fail. Governments are too afraid to even comply with the basic principles of Capitalism (that you succeed or fail on your own head) because they allowed financial institutions to become too important to fail.

I could lead my life taking few risks and still end up screwed by the decisions of speculators or unregulated immoral bankers, how is this the best way for society to proceed?. Everything in capitalism pushes for people to in some way invest in this system. If you leave your money on deposit you are at the mercy of Inflation. If you invest in stocks/shares you are at the mercy of the markets. The sad thing is that we all know there will be another banking crisis of some sort in most of our lifetimes. Mainly down to bad practises driven by greed.

Great post Drumpot.
Squeeze the small people.

De Dannan

Scofflaw wrote: »

Leaving aside the fact that the current gross debt position is only €94bn, not €160bn,

Where do you get 94bn from ?
According to the NTMA, The General Government Debt was €150 billion at the end of 2010. We have €20 billion of cash, so the true debt at 31 Dec 2010 was €130 billion.

Scofflaw

De Dannan wrote: »

Where do you get 94bn from ?
According to the NTMA, The General Government Debt was €150 billion at the end of 2010. We have €20 billion of cash, so the true debt at 31 Dec 2010 was €130 billion.

Aye - typoed in the % of GDP instead there...been reading too many graphs.

oops,
Scofflaw

Scofflaw

recedite wrote: »

If they adopt a permanent mechanism to buy our bonds, we would still owe them the money, plus interest. Not the same as a transfer then. Debt remains.

I suppose that depends on whether Germany will be expected to simply roll over the sovereign bonds when they mature. Chances are they will, I think.

recedite wrote: »

You mean they lend out money.
Problem is, they keep lending out the same money again and again, claiming interest each time, while also leveraging the default risks.
If the State lent out the money directly to those who need credit, much less interest would be payable, and businesses would thrive. The State would not then face the risk of leveraged default.

The problem there - and it harks back to a point hatrickpatrick made - is that banks are economic utilities, but there's a tendency to treat them as if they were simply private companies.

Re-making the banks in the real form of a utility - which is what you're suggesting above - is certainly possible, although it goes right against the prevailing wisdom, which is to make utilities into private companies.

cordially,
Scofflaw

southsiderosie

later10 wrote: »

Have you ever been to Argentina? The country is poor, sure, their economy has suffered hugely from their economic jenga and some incredibly daft state sponsored mistakes (including a unilateral 'default' that turned into a restructuring and cost them more in the process, kicking out the IMF and then befriending them again) but to evenr describe the direct effect this had on the population, as people, as 'horrifically torturous', which is the term I am responding to, is plain exaggeration and scare mongering.

I have visited Argentina and seen the effects first hand, as many people on here likely have, and many people reading these boards will know Argentines working or studying in Ireland. I don't know - nor know of - any Argentines who describe the crisis as having been 'horrifically torturous' for them. Lets be honest, Rwanda went through horrific torture, Argentina did not, and Ireland, regardless of what happens, will not.

Personally I don't want Ireland to default, i'm fully in favour of paying out to bondholders of Irish sovereign debt, you could say it suits the beliefs of someone like me to argue that Argentina suffered irreperably and horrifically a miserable economic torture - but that's just dishonest. People need to stop losing the run of themselves.

Perhaps torturous is not the best adjective, given Argentina's relatively recent history with state torture. But to call this country's economic collapse anything other than shattering for large swathes of the population is simply wrong.

I haven't been to Argentina, but I have been to and lived in other countries in the region, worked and studied with Argentines (including a former finance minister - !!!), and did a masters thesis on the political economy of the region. The economic crisis there hit hard not solely because of the dramatic spike in unemployment and inflation, but also because Argentines always saw themselves above the other countries in the region in terms of their economic and social development. So the peso crisis not only hit hard economically, but also culturally - it represented a sort of status reversal that they have never quite recovered from. It is even more galling that today its neighbors Chile, and particularly Brazil, are the darlings of the so-called emerging market economies - Chile is even a member of the OECD now.

I would also add that the Argentines who have the means to live and study in Europe or the US are not those who were hit hardest by the crisis, although they have been hit and have had to make spending and lifestyle adjustments. Ultimately, the crisis was - and continues to be - a blow to both the psyche and pocketbooks of most Argentines, and - as usual - the poorest and working class were hit the hardest. If Ireland were to go through a similar debt default and currency devaluation, while the psychological hit might not be the same, there is little to suggest that the impact on middle and working class people would not be just as dire.

southsiderosie

Drumpot wrote: »

Definition of Greed - excessive desire to acquire or possess more (especially more material wealth) than one needs or deserves

Capitalism - an economic system based on private ownership of capital

Capitalism encourages greed , plain and simple. Capitalism with Humans is like putting an alcohalic in charge of a pub, you are just asking for trouble. If history has shown us anything its that in some form it usually repeats itself when Humans are involved. . Corruption and the poor paying for the mistakes of the rich is not too differant from the feudal system when the peasants would be squeezed for every penny to subsidise their leaders.

Indeed many quote the greatness of Capitalism by comparing it with Communism as if saying one failed system is better then another . . Ironically I believe they are both failures in their own way because the people at the tops of the pyramids cannot be trusted to do the right things for the greater good.

In terms of money, the usual problem is the people, not the system. I would rather we have some sort of system that benefits the majority in terms of wealth spread, then our current system that doesnt just simply encourage greed, it thrives on it and ends up costing the poorer disproportionatly to the level of control they have in running these financial systems.

When you start to accept Sh*t, that is all you will ever get. The current system may not be completely useless, but it has failed because people (governments/regulators/directors) cannot be trusted to do the right thing when a system is built on rewarding wanton risks and rewards speculation that can drive the cost of fuel up and potentially bring down economies.

While I understand why the banks got the cash injections from taxpayers, its irrefutable that it shows that capitalism in its current form is a fail. Governments are too afraid to even comply with the basic principles of Capitalism (that you succeed or fail on your own head) because they allowed financial institutions to become too important to fail.

I could lead my life taking few risks and still end up screwed by the decisions of speculators or unregulated immoral bankers, how is this the best way for society to proceed?. Everything in capitalism pushes for people to in some way invest in this system. If you leave your money on deposit you are at the mercy of Inflation. If you invest in stocks/shares you are at the mercy of the markets. The sad thing is that we all know there will be another banking crisis of some sort in most of our lifetimes. Mainly down to bad practises driven by greed.

How can you on the one hand condemn capitalism as the problem and then point to feudal exploitation? Greed, cronyism, and exploitation have always existed, long before Adam Smith.

Ireland's current situation is a direct result of the government failing in its responsibility to properly regulate and provide oversight of the economy, and a failure of Irish citizens to properly provide oversight of their government. The voting public by and large accepted **** politicians, so it is no wonder that they got ****ty politics.

If capitalism were the only problem here, then one would expect all capitalist countries to experience the exact same crisis in the exact same way. But the countries that are in big trouble are the ones who did not regulate their banks properly and/or engaged in out of control government spending. The US and Canada both have market economies, yet Canada is not in meltdown today...hm, why is that? There is huge variance in the economic performance of OECD countries - all of which accept the legitimacy of markets, but with varying levels of state regulation - and therein lies the problem: the national effects of the current crisis are directly related to the political economy of those countries, not 'capitalism' itself as a way of organizing economic behavior.

Permabear

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Drumpot

southsiderosie wrote: »

How can you on the one hand condemn capitalism as the problem and then point to feudal exploitation? Greed, cronyism, and exploitation have always existed, long before Adam Smith.

Ireland's current situation is a direct result of the government failing in its responsibility to properly regulate and provide oversight of the economy, and a failure of Irish citizens to properly provide oversight of their government. The voting public by and large accepted **** politicians, so it is no wonder that they got ****ty politics.

If capitalism were the only problem here, then one would expect all capitalist countries to experience the exact same crisis in the exact same way. But the countries that are in big trouble are the ones who did not regulate their banks properly and/or engaged in out of control government spending. The US and Canada both have market economies, yet Canada is not in meltdown today...hm, why is that? There is huge variance in the economic performance of OECD countries - all of which accept the legitimacy of markets, but with varying levels of state regulation - and therein lies the problem: the national effects of the current crisis are directly related to the political economy of those countries, not 'capitalism' itself as a way of organizing economic behavior.

Canada is the exception , not the rule.

In any civilisation we will always be able to point to exceptions to the norm to prove a point. I am not saying that Capitalism is incapable of succeeding, I am saying if it benefits the minority and the majority of those using this marketing system have shown an inability to properly regulate it, then there is something fundamentally flawed in that system.

The reason that Irish Government Bonds are at an all time high has nothing to do with debt of the Irish people. At the most simple definition its debt of banks and the people who loaned them money (including the EU that flooded the Irish Banks with cheap money). However, because the system can be exposed by people speculating on whether or not we will pump taxpayers money into these banks and also allow people to bet against us being able to afford to repay this loan means that either way the markets have decided to penalise the Irish People for the debts of private investors.

I know this doesnt sound morally upstanding, but if we didnt regulate the banks properly, it does not mean we should have to give a penny to anybody who invested in these private institutions. Rightly or wrongly our government felt that it might cost us more to let them close.

I agree there are examples of countries who have shown an ability to keep prudent policies in relation to their regulation and application of capitalism but its only a matter of time before they have their own crash of sorts as sure as night is after day, what goes up must come down. . And do you know what, chasing the dollar will more then likely have a big role to play in that downfall.

It is true that there is nobody suggesting a much superior alternative to Capitalism and it does serve a purpose. However, in its current format its got greed at its core and people are expendible cheap commodities that come a distant second to the will of the markets. In terms of how we value the lives of others, we havent really evolved as much as we like to think. We have just replaced archaic fascist ideals with jazzy modern day versions that are more user friendly and seem less imposing. We can either be a slave to the markets or we can be a country that never leaves our Island and cut ourselves off from the rest of the world (as we do not have enough natural resources for self sufficiency on our terms).

When capitalism has shown itself to be capable of practically financially crippling a country and increasing the likes of oil rates to ridiculous levels coupled with speculation, you have to ask yourself is it really just a market system or is it getting powers beyond its remit by default.

It is funny because i have found myself in the past get caught up on debating what needs to be done. Social Welfare reductions - check. Public service job losses - check , Tax increases - Check . .

But what sort of society has Capitalism made us when we can speak of practical measures that need to be made, to fund a bankrupt financial institution, that will cost hundreds of lives and effect thousands of families through suicides, stress (my wifes boss died of it) and psychological trauma ? Most people dont even think the social impact has any place when discussing the marketing system that will cost so many so much. It has somehow dehumanised the impact that this marketing system has on entire countries and completely ignores its immoral structure that is soley based on encouraging private ownership with no thought of potenyial social ramifications (and selective moral hazzard).

Yet people swear by Capitalism as if its some innocent marketing system that just plods along doing the will of the greater good by allowing us barter for goods. But its not that simple or innocent. Because there is no evil bond villian at the top of the pyramid (that we know of!), people just conform to what is convenient and comforting.

southsiderosie

To me, your post is making the same mistake that so many free-market fundamentalists do: you are taking a system out of its political and social context and making sweeping assumptions about its viability. Ireland, the US and the UK are in terrible shape; Germany, Hong Kong and Singapore are not. What conclusions then can we draw about capitalism?

All OECD states have market economies. Yet not all are in crisis. You keep critiquing capitalism as a "marketing" system, but are ignoring the fact that how capitalism works as an economic system is heavily impacted by the political and social system it is embedded in.

Capitalism has worked very well for Europe, North America, East Asia, and increasingly South Asia and South America. It worked well for Ireland in the 1990s, but that changed in the 2000s when the political context changed significantly.

Boom and bust cycles have always been a part of society, whether through crop bounty and failure or credit bubbles. And even before there were complex commodities markets or derivatives, there were asset bubbles - the Dutch Tulip mania that took place in the 1600s is the most obvious example. The difference today is, due to information technology and the sheer sums involved, the highs and lows of these cycles are more extreme than they have ever been. But these swings can be tempered by policy. Unfortunately for the Irish people, the government's policies not only failed to temper swings, but rather added fuel to the fire. And once the bottom fell out, they dug the hole even deeper by approving a sweeping bank guarantee. These were all actions taken by democratically elected officials, and when most of these decisions were made, there was little to no pushback from the general population. Capitalism cannot be blamed for Ireland's current situation - it is simply a story of terrible, terrible leadership.

Permabear

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recedite

Scofflaw wrote: »

I suppose that depends on whether Germany will be expected to simply roll over the sovereign bonds when they mature. Chances are they will, I think.

And after the bonds have been rolled over a few times, and accumulated their yields? Will the Germans then make the political decision to cancel all our debts instead of calling them in?

Re-making the banks in the real form of a utility - which is what you're suggesting above - is certainly possible, although it goes right against the prevailing wisdom, which is to make utilities into private companies.

Except private companies do not usually benefit from massive capital injections of taxpayer's (borrowed) money.

th3 s1aught3r

Scofflaw wrote: »

Leaving aside the fact that the current gross debt position is only €94bn, not €160bn, to what extent are your additions justifiable? How much of it are we currently paying interest on, what rate are we paying, and how long do we expect to be paying it? When you add the Central Bank debt, are you claiming that the taxpayer is currently paying interest on that? Are you claiming that 100% of NAMA must be written off?

cordially,
Scofflaw

I suppose what I am trying to say is that the total debt to income seems really excessive. I am not saying we have to pay interest om all this debt now, I am more concerned that if we take in x billion in tax and pay x billion in expenditure, we are left with llittle or nothing to service the debt, except more borrowing. I hope I am making sense ?

Scofflaw

recedite wrote: »

And after the bonds have been rolled over a few times, and accumulated their yields? Will the Germans then make the political decision to cancel all our debts instead of calling them in?

Under some circumstances, there would certainly be pressure for them to do so. If Germany were the primary holder of PIIGS sovereign bonds at the moment, I don't think there's any doubt there would be pressure on them to 'forgive' some of the debt.

But even just the purchase is a form of transfer, since it would involve Germany buying Irish bonds at less than market rates when the market's judgement is that Ireland cannot afford more debt. Of course, that's very close to what they're doing now through the EFSF, but loans more clearly require the repayment of the principal to the original lender.

recedite wrote: »

Except private companies do not usually benefit from massive capital injections of taxpayer's (borrowed) money.

Indeed, because most private companies aren't actually utilities. Private companies that are utilities, on the other hand, will always receive taxpayer digouts. If a purely privatised ESB were in danger of going out of business, it would be nationalised or otherwise bailed out - no doubt there would be the same calls for it to be allowed to fail, and the same claim that other electricity providers would step seamlessly into the breach, and no doubt the government of the day would ignore those calls and claims for the same reason as they do with the banks, which is that they're fairly true, but not quite true enough.

cordially,
Scofflaw

Scofflaw

th3 s1aught3r wrote: »

I suppose what I am trying to say is that the total debt to income seems really excessive. I am not saying we have to pay interest om all this debt now, I am more concerned that if we take in x billion in tax and pay x billion in expenditure, we are left with llittle or nothing to service the debt, except more borrowing. I hope I am making sense ?

Sure, that makes sense - indeed, it's basically the concern that the markets have with Ireland. The problem for us is that unless we cut the government deficit, we cannot realistically service the debts (including the banks) that we have taken on, because the State is already spending more than its income.

We've taken on large debts, and we're still borrowing to meet day to day needs. Contrary to the comforting views of Sinn Fein, attempts to repudiate some of the debt will not calm the market as long as we're still borrowing more - it just suggests that we're feckless or incompetent.

cordially,
Scofflaw

later12

Permabear wrote: »

This post had been deleted.

I have pointed out at least twice that I am not talking about the importance of money on a macroeconomic scale, I am talking about money in peoples' personal lives and how "bad" things are and how "bad" they could realistically get, which i'm not actually impressed is all so "horrifically torturous" and dire as is being suggested.

If you think I am talking about macroeconomics you either failed to read the post (twice) or otherwise just don't get it.

th3 s1aught3r

Scofflaw wrote: »

We've taken on large debts, and we're still borrowing to meet day to day needs. Contrary to the comforting views of Sinn Fein, attempts to repudiate some of the debt will not calm the market as long as we're still borrowing more - it just suggests that we're feckless or incompetent.

cordially,
Scofflaw

So in essence we are borrowing from the EU/IMF fund to service the debt (that we owe them), as we cannot borrow from the markets now ? Is this in any way sustainable ?

Scofflaw

th3 s1aught3r wrote: »

So in essence we are borrowing from the EU/IMF fund to service the debt (that we owe them), as we cannot borrow from the markets now ? Is this in any way sustainable ?

No, we're borrowing from the EU/IMF to pay for government spending and propping up the banks - we would otherwise be borrowing the same money from the markets (and will do so, if the market rates fall below the EU/IMF rates).

We don't owe the EU/IMF any money bar what we borrow from the bailout facility.

cordially,
Scofflaw

Permabear

This post has been deleted.