Ireland stuffed if proper help not given says IMF

caseyann

The IMF has launched an unusually strong attack on how Europe is handling Ireland's debt woes and the euro debt crisis more generally.

The comments from the Washington-based organisation come as worries grow that without a change of stance from Europe, the Irish plan could unravel.

There are now major differences between the IMF and the EU over the best way forward for the likes of Ireland, Portugal and Greece.

The IMF said Ireland needed more "support'' from its European partners to meet its current challenges otherwise the current €85bn plan may not be "sufficient'

It said that a combination of slower growth and higher unemployment rates, together with higher bond spreads and rating agency, have increased the risk that the plan could fail, if it remains structured in its current format.

Well wouldnt that be fine and dandy.
Serious question need answering if they are saying this.
http://www.independent.ie/business/european/imfs-chopra-says-europe-must-do-more-for-ireland-2653678.html

Technoprisoner

simple answer...forfeit

wiseguy

I wonder what the resident europhiles have to say about this statement of the obvious. Instead of attempting to resolve the crisis the French and the Germans have made things worse with their clumsy quasi nationalist political moves and interaction with the media.

Dyr

wiseguy wrote: »

I wonder what the resident europhiles have to say about this statement of the obvious. Instead of attempting to resolve the crisis the French and the Germans have made things worse with their clumsy quasi nationalist political moves and interaction with the media.

Vote Jawohl for jobs!

Tora Bora

Monsieur Sarkozy's chief advisor regarding the Euro crisis, and indeed the French paranoia I mean policy regarding the Irish corp tax issue is the very self same Madame Blagard

Her arrival at the top of IMF will not be good for Paddy, I fear.

meditraitor

Tora Bora wrote: »

Monsieur Sarkozy's chief advisor regarding the Euro crisis, and indeed the French paranoia I mean policy regarding the Irish corp tax issue is the very self same Madame Blagard

Her arrival at the top of IMF will not be good for Paddy, I fear.

Madame Blagard, that cant be her real name..... very funny.


It may not be her this time though, I read something over the weekend about the ozies and south africans complaining about the fact it "has to be a european candidate". I reckon thats only the first vollley, the asians will have their say soon enough and maybe we wont have to be lectured by a paranoid french politician.

the_syco

Tora Bora wrote: »

Madame Blagard

Her arrival at the top of IMF will not be good for Paddy, I fear.

It seems we truly have a blaggard in control of the IMF? :pac:

RichardAnd

I think another French IMF head wouldn't be proper in the current climate. Given the current euro crisis, any european IMF head would be too open to bias. I especially do not trust a frenchman (woman) to full-fill this role without injecting nationalist views into decisions.

I think it's time a non-european had a chance in the seat.

Scofflaw

wiseguy wrote: »

I wonder what the resident europhiles have to say about this statement of the obvious. Instead of attempting to resolve the crisis the French and the Germans have made things worse with their clumsy quasi nationalist political moves and interaction with the media.

I guess they'd probably say that you can't tell the difference between the EU, which has been supportive of better terms for the bailout, and a couple of the Member States, which haven't been, and which have blocked any moves to improve Ireland's bailout terms - which is possible because the EFSF fund is multilateral not EU, and the EFSM, while EU, is subject to unanimity.

Since both of those are what eurosceptics regularly express a strong preference for, I can only presume they're entirely supportive of it. This is, after all, a little taster of how things would work in a Europe of nation-states.

amused,
Scofflaw

Tora Bora

At this point in the development of the world economy, it is perhaps fitting that truly great finance ministers, of our era, be appointed to this crucial job.
I know you will all agree, that this man ticks all the boxes. With that in mind, I propose our very own

View

wiseguy wrote: »

I wonder what the resident europhiles have to say about this statement of the obvious. Instead of attempting to resolve the crisis the French and the Germans have made things worse with their clumsy quasi nationalist political moves and interaction with the media.

Well, as the article reports Chopra:

Europe needs more integration, not less, he added.

However, we can be sure that any such suggestion will be opposed outright by our Eurosceptics on principle.

RichardAnd

Voodoo_rasher wrote: »

yes, lets have someone from China take it over. then eventually its bye bye Euro currency..

I didn't say that. Please don't take my posts out of context.

charlemont

Tora Bora wrote: »

Monsieur Sarkozy's chief advisor regarding the Euro crisis, and indeed the French paranoia I mean policy regarding the Irish corp tax issue is the very self same Madame Blagard

Her arrival at the top of IMF will not be good for Paddy, I fear.

The same woman who rang Brian Lenihan in shock after the Bank Bailout Guarantee..

Voodoo_rasher

meditraitor wrote: »

Madame Blagard, that cant be her real name..... very funny.


It may not be her this time though, I read something over the weekend about the ozies and south africans complaining about the fact it "has to be a european candidate". I reckon thats only the first vollley, the asians will have their say soon enough and maybe we wont have to be lectured by a paranoid french politician.

An Asian. I see. Perhaps you are thinking of China. Then the euro will be in their sights.

professore

Scofflaw wrote: »

I guess they'd probably say that you can't tell the difference between the EU, which has been supportive of better terms for the bailout, and a couple of the Member States, which haven't been, and which have blocked any moves to improve Ireland's bailout terms - which is possible because the EFSF fund is multilateral not EU, and the EFSM, while EU, is subject to unanimity.

Since both of those are what eurosceptics regularly express a strong preference for, I can only presume they're entirely supportive of it. This is, after all, a little taster of how things would work in a Europe of nation-states.

amused,
Scofflaw

If the EU worked properly then they would have a proper fund or mechanism in place to deal with this and also not continually delegate responsibility to others as is happening here and also happened in the Bosnian conflict to name two. The EU can say what they like - after all talk is cheap - but the de facto economic power is with the ECB and Germany. If Angela tells Nicolas to "jump" he will say "how high?"

I would actually like to see a non European head of the IMF - maybe a no bullsh1t Aussie - one who is not going to be swayed one way or the other by political pressures from their home country - although I must say DSK seemed to be good in this sense even though he was French.

RichardAnd

professore wrote: »

I would actually like to see a non European head of the IMF - maybe a no bullsh1t Aussie - one who is not going to be swayed one way or the other by political pressures from their home country - although I must say DSK seemed to be good in this sense even though he was French.

If it's an Aussie, I'd nominate either of these two guys:

http://www.youtube.com/watch?v=5D0VhS8qXT0

They seem to have a pretty good grasp of the problems at hand.

Scofflaw

professore wrote: »

If the EU worked properly then they would have a proper fund or mechanism in place to deal with this and also not continually delegate responsibility to others as is happening here and also happened in the Bosnian conflict to name two. The EU can say what they like - after all talk is cheap - but the de facto economic power is with the ECB and Germany. If Angela tells Nicolas to "jump" he will say "how high?"

The problem is a natural outcome of the rather lopsided development of the euro - and more broadly, of economic coordination in Europe. Governments didn't want to give away any more sovereignty than was required at a minimum to create the monetary union, but the ECB was a necessary creation, and its political independence was also an obvious necessity. The result has been that the central banks are able to speak with a single authoritative voice through the ECB - and while I feel it's a little unfair to say that they represent the interests of Europe's financial economy, the map they operate on is an almost entirely financial one.

The EU, on the other hand, is hamstrung by the conflicting interests of the Member States. The governments of France and Germany both have to take account of views of their voters, who feel that after a decade of unprecedented prosperity achieved at least partly by us putting our hands in their pockets, they're being asked to put their hands in their own pockets to bail us out. The correct approach to that is a diplomatic offensive, building up support for Ireland's position and trying to reduce the support for the Franco-German position - and fortunately, that's the approach the government appears to be taking:

Minister of State for Finance Brian Hayes said Ireland was winning more European partners over to its side in resisting France and Germany’s insistence on a quid pro quo on Ireland’s corporate tax rate and a move on the debt burden.

‘‘But there is still a significant opposing parties around the French position and we have got to continue to work on that," Hayes said.

As I said, this is "Europe of the nations" stuff, and I find it entertaining that eurosceptics really don't like it at all...

professore wrote: »

I would actually like to see a non European head of the IMF - maybe a no bullsh1t Aussie - one who is not going to be swayed one way or the other by political pressures from their home country - although I must say DSK seemed to be good in this sense even though he was French.

I don't think that Lagarde being French is automatically a problem either. DSK, after all, was (is?) going to stand for the French Presidency, which should have meant that he would be grandstanding for the French home audience, if that's something that is an issue.

cordially,
Scofflaw

Tora Bora

RichardAnd wrote: »

If it's an Aussie, I'd nominate either of these two guys:

http://www.youtube.com/watch?v=5D0VhS8qXT0

They seem to have a pretty good grasp of the problems at hand.

So the guy answering the questions, deduces the US economy is stronger than the European economy, because it is owned by China.
He should take a look at the Aussie economy .............. biggest one trick pony in the globe. Digging up the ground, for stuff China buys.

If China takes a wobble, the engine, gearbox, front axel and rear axle will all implode under the Aussies:cool: There will be a lot of newly unemployed Paddies coming home to mother ireland, where the dole no doubt is better.

meditraitor

Voodoo_rasher wrote: »

An Asian. I see. Perhaps you are thinking of China. Then the euro will be in their sights.

Nope, any one of these.

COUNTRIES OF ASIA :-
AZERBAIJAN
JAPAN
QATAR
ARMENIA
JORDAN
SAUDI ARABIA
BAHRAIN
AZAKHSTAN
SINGAPORE
BANGLADESH
KUWAIT
SOUTH KOREA
BHUTAN
KYRGYZSTAN
SRI LANKA
BRUNEI
LAOS
SYRIA
BURMA
LEBANON
TAIWAN
CAMBODIA
MALAYSIA
TAJIKISTAN
CHINA
MALDIVES
THAILAND
EAST TIMOR
MONGOLIA
TURKEY
INDIA
NEPAL
TURKMENISTAN
INDONESIA
NORTH KOREA
UNITED ARAB EMIRATES
IRAN
OMAN
UZBEKISTAN
IRAQ
PAKISTAN
VIETNAM
ISRAEL
PHILIPPINES
YEMEN

I would guess the laws of averages would mean that there is more talent in these than europe.........

RichardAnd

Tora Bora wrote: »

So the guy answering the questions, deduces the US economy is stronger than the European economy, because it is owned by China.
He should take a look at the Aussie economy .............. biggest one trick pony in the globe. Digging up the ground, for stuff China buys.

If China takes a wobble, the engine, gearbox, front axel and rear axle will all implode under the Aussies:cool: There will be a lot of newly unemployed Paddies coming home to mother ireland, where the dole no doubt is better.

I've no idea how the economy of austrailia works but yeah, if they took a hit it would be a reverse emigration but home.

Prakari

Scofflaw wrote: »

but the ECB was a necessary creation, and its political independence was also an obvious necessity. The result has been that the central banks are able to speak with a single authoritative voice through the ECB - and while I feel it's a little unfair to say that they represent the interests of Europe's financial economy, the map they operate on is an almost entirely financial one.

The EU, on the other hand, is hamstrung by the conflicting interests of the Member States. The governments of France and Germany both have to take account of views of their voters, who feel that after a decade of unprecedented prosperity achieved at least partly by us putting our hands in their pockets, they're being asked to put their hands in their own pockets to bail us out.

So basically you need to give greater powers to the political and financial elites as the bottom 99.8% of Europeans are too cognitively unsophisticated and nationalistic to make the correct decisions.

The European Project would work fine if it revolved around reciprocal cooperation between European peoples rather than the centralising of power of a corrupt financial system.

Scofflaw

Prakari wrote: »

So basically you need to give greater powers to the political and financial elites as the bottom 99.8% of Europeans are too cognitively unsophisticated and nationalistic to make the correct decisions.

No idea how you got there from the political independence of the ECB, since even from your rather particular perspective it's only a case of moving some decisions from one part of the "political and financial elites" to another - from politically independent national central banks to a politically independent European central bank.

It certainly has nothing to do with everyone not part of those elites being "too cognitively unsophisticated and nationalistic to make the correct decisions" - I have no idea how one might suggest decisions on monetary policy could be made by international plebiscite in the first place.

Prakari wrote: »

The European Project would work fine if it revolved around reciprocal cooperation between European peoples rather than the centralising of power of a corrupt financial system.

There's the funny thing, though - that is what the European Project revolves around. It happens to incorporate mechanisms designed to manage said "corrupt financial system" because that's the corrupt financial system the economies of Europe run on. And that corrupt financial system, in turn, appears to be something the majority of European citizens are OK with the majority of the time.

cordially,
Scofflaw

SeanW

It's no secret that the IMF, perversely, were much more our friends throughout the bailout negotiations than our so-called EU partners. They lent us money at far cheaper rates, i.e. about half of the European fund costs, and IIRC the IMF wanted us to be able to impose losses on bank bondholders, Europe said "Non."

Our same "friends" now want us to take economically suicidal actions re: Corp. Tax, in exchange for 1% or so off the massively expensive funds that they foisted on us to pay off the bank bondholders, most of them French and Germany.

To me, it's painfully obvious what needs to happen next, and in short order.
1) Balance the budget for FY 2012.
2) Abandon the bank guarantee.
3) Make it clear that sovereign debt to the private markets will be honoured.
4) Maintain in good standing of loans from the IMF.
5) Tell everyone else, bank bondholders, the ECB and the ESRF to take a running jump.

Either we do that now, or we end up defaulting on *everything* 5 years down the road.

beeftotheheels

SeanW wrote: »

It's no secret that the IMF, perversely, were much more our friends throughout the bailout negotiations than our so-called EU partners. They lent us money at far cheaper rates, i.e. about half of the European fund costs, and IIRC the IMF wanted us to be able to impose losses on bank bondholders, Europe said "Non."

Our same "friends" now want us to take economically suicidal actions re: Corp. Tax, in exchange for 1% or so off the massively expensive funds that they foisted on us to pay off the bank bondholders, most of them French and Germany.

To me, it's painfully obvious what needs to happen next, and in short order.
1) Balance the budget for FY 2012.
2) Abandon the bank guarantee.
3) Make it clear that sovereign debt to the private markets will be honoured.
4) Maintain in good standing of loans from the IMF.
5) Tell everyone else, bank bondholders, the ECB and the ESRF to take a running jump.

Either we do that now, or we end up defaulting on *everything* 5 years down the road.

Some questions...

1) How do we balance the budget for 2012 without ensuring a recession?
2) How do we, legally, undo what we have done given that the government's legal advice has been that we cannot?
3) So our word is good on sovereign debt, but not good on debt we unilaterally promised to pay? And the markets will understand when our word is good and when our word is not good, everyone tells a few porkies when it suits them.
4) This I agree with
5) So we can tell the parties keeping us afloat to go and take a running jump? Of course you're right because it is not as though if they called our bluff we'd go belly up in the morning. Remind me again where we would get the money to pay our teachers, doctors, nurses, gardaí?

RichardAnd

beeftotheheels wrote: »

Some questions...

1) How do we balance the budget for 2012 without ensuring a recession?
2) How do we, legally, undo what we have done given that the government's legal advice has been that we cannot?
3) So our word is good on sovereign debt, but not good on debt we unilaterally promised to pay? And the markets will understand when our word is good and when our word is not good, everyone tells a few porkies when it suits them.
4) This I agree with
5) So we can tell the parties keeping us afloat to go and take a running jump? Of course you're right because it is not as though if they called our bluff we'd go belly up in the morning. Remind me again where we would get the money to pay our teachers, doctors, nurses, gardaí?

These are good questions but the answer might be that there really is no easy way out of our situiation. The europeans only bailed us out to save their failing currency and scare spain and italy straight so they're not our friends. On top of this, we might soon see a very hostile French woman at the helm of the IMF. Not a nice combination.

IF we closed the budget gap in one go, there would absolutley and totally be one hell of an economic spasm. The wages of civil servants would be down by up to 40% in one go and welfare would drop equally if not more so in a short space of time. The outcome of this could only be a prolonged recession but, isn't that exactly what we have already?

I don't want to see that happen but the other choice seems only to be years of paying off mountains of debt.

beeftotheheels

RichardAnd wrote: »

IF we closed the budget gap in one go, there would absolutley and totally be one hell of an economic spasm. The wages of civil servants would be down by up to 40% in one go and welfare would drop equally if not more so in a short space of time. The outcome of this could only be a prolonged recession but, isn't that exactly what we have already?

It is relative. Where we are now isn't great, but it is not that bad. You go to Tesco, you see people's trolleys and they look like they always did. We have law and order, we have the same dysfunctional health system we had previously, we have schools. I'm not saying that nothing has changed, but the changes we have had have been manageable for the most part.

If we try to close the gap too quickly then these things which we take for granted could cease to be there.

RichardAnd

beeftotheheels wrote: »

It is relative. Where we are now isn't great, but it is not that bad. You go to Tesco, you see people's trolleys and they look like they always did. We have law and order, we have the same dysfunctional health system we had previously, we have schools. I'm not saying that nothing has changed, but the changes we have had have been manageable for the most part.

If we try to close the gap too quickly then these things which we take for granted could cease to be there.

Possibly, but I was merely pointing out that it might come to that yet, we shall have to see.

SeanW

beeftotheheels wrote: »

Some questions...

1) How do we balance the budget for 2012 without ensuring a recession?
2) How do we, legally, undo what we have done given that the government's legal advice has been that we cannot?
3) So our word is good on sovereign debt, but not good on debt we unilaterally promised to pay? And the markets will understand when our word is good and when our word is not good, everyone tells a few porkies when it suits them.
4) This I agree with
5) So we can tell the parties keeping us afloat to go and take a running jump? Of course you're right because it is not as though if they called our bluff we'd go belly up in the morning. Remind me again where we would get the money to pay our teachers, doctors, nurses, gardaí?

1) No simple answer: either we take a quick hit now, or we depress our economy long term with interest payments.
2) I'm sure there is a way.
3) Yes - the markets have rendered their judgement on our deficit PLUS our bank guarantee, i.e. they don't believe it. That is why our government cannot borrow from the private sector. Ever since the Bank Guarantee, and we started pouring billions into the likes of Anglo, our sovereign borrowing rates have been rising. The markets reject our current plan completely.
I'm talking about restoring credibility over time by admitting that the bank guarantee was a spectacularly bad idea that was never going to work, and drawing distinction between bank debt and government debt.
5) For starters:

1. Raise some taxes
2. Cut welfare by 20%
3. Stop paying annual increments to public servants. Impose new working practices and mass layoffs on P.S. administrators and managers.

beeftotheheels

SeanW wrote: »

1) No simple answer: either we take a quick hit now, or we depress our economy long term with interest payments.

The quick hit which is being bandied around could result in a break down in law and order, food shortages, rioting etc based on the Argentina example. So I'm not in favor of going there voluntarily, I'm more than happy to take the risk of keeping up the interest payments to avoid armageddon.

SeanW wrote: »

2) I'm sure there is a way

Any ideas on what that way might be since those in the know have said that it is not possible?

SeanW wrote: »

3) Yes - the markets have rendered their judgement on our deficit PLUS our bank guarantee, i.e. they don't believe it. That is why our government cannot borrow from the private sector. Ever since the Bank Guarantee, and we started pouring billions into the likes of Anglo, our sovereign borrowing rates have been rising. The markets reject our current plan completely.

I'm talking about restoring credibility over time by admitting that the bank guarantee was a spectacularly bad idea that was never going to work, and drawing distinction between bank debt and government debt..

But if the lawyers are right that we cannot unguarantee the bank debt, and I suspect that they are, then we cannot draw any distinction. If we try, we could get sued, which will cause additional negative credibility issues.

SeanW wrote: »

5) For starters:

1. Raise some taxes
2. Cut welfare by 20%
3. Stop paying annual increments to public servants. Impose new working practices and mass layoffs on P.S. administrators and managers.

Your last list goes no where near far enough. In order to balance the budget through taxation in one year we would have to increase taxes monumentally. To April this year our deficit is €9.9bn while our tax take is €9.6bn. We would have to more than double the amount of tax we collect. Having a tax rate of 80% or so would increase tax avoidance/ emigration by high net worths hence no one has such a tax rate.

Cutting welfare by 20% and removing increments in the PS, sacking administrators would go nowhere near far enough, we would need to cut something like 40% off our public expenditure given that increasing taxation is not a great answer at the moment. 40% pay cuts would leave a raft of nurses and teachers unable to pay their mortgages, so we would have more defaults, and a bigger problem in our banks.

I'm not against tax increases or further cuts. Both are required to balance the books. But neither can balance the books in one year, the imbalance is just too large.

SeanW

beeftotheheels wrote: »

The quick hit which is being bandied around could result in a break down in law and order, food shortages, rioting etc based on the Argentina example. So I'm not in favor of going there voluntarily, I'm more than happy to take the risk of keeping up the interest payments to avoid armageddon.

I think you're being just a tad melodramatic here.

Any ideas on what that way might be since those in the know have said that it is not possible?

I'm sure there's a way, even if it took a constitutional amendment.

But if the lawyers are right that we cannot unguarantee the bank debt, and I suspect that they are, then we cannot draw any distinction. If we try, we could get sued, which will cause additional negative credibility issues.

But if the markets are right, and our current strategy is doomed to fail, doesn't it make sense to at least try to change course?

Your last list goes no where near far enough.

I did say it was "for starters"

40% pay cuts would leave a raft of nurses and teachers unable to pay their mortgages, so we would have more defaults, and a bigger problem in our banks.

But we can't afford to maintain current spending anyway. So some mortgages are headed towards default in any event.

later12

You would really have hoped that this notion of an immediate rebalance would have been taken off to bed by now.

Repudiation of debt is something that we associate with the overthrowing or the coming to power of revolutionary regimes... as happened in China, Russia and in Cuba. There is no question of a country repudiating its debt and then going to the top of the class as an investment potential. That would not only make no sense from a mathematical assessment of sovereign risk (taking into account, as it does, financial history), it would probably bring down the credit rating agency daft enough to form such an opinion in the first place. Indonesia once defaulted three times in one year. On each occasion its sovereign rating fell.

So the question then turns to funding the state ourselves. Now top-down spillovers of sovereign risk into the private sector are a well established phenomenon, particularly in Latin America which has been the laboratory for sovereign defaults, providing us with a fascinating insight into how economies behave when in default. How could we borrow in such an extreme situation?

So given that there is no apparent reason why Ireland is less likely to see this spillover of risk, what happens when falling private sector revenues and increased taxes put the economy into a negative feedback loop, whereby revenues are repeatedly undershooting spending? What do you who propose a repudiation of Irish debt suggest we do then?

later12

SeanW wrote: »

I'm sure there's a way, even if it took a constitutional amendment.

I'm sure there is a way.

Why? It isn't good enough for me to say "Oh I'm sure black is white" without being able to provide some logical or factual or experimental evidence to that effect.

beeftotheheels

SeanW wrote: »

I think you're being just a tad melodramatic here.

So give me an example of a nice default that all went well

SeanW wrote: »

I'm sure there's a way, even if it took a constitutional amendment.

Since at least some of the claims will fall under EC law our constitution cannot change that. The debts are contracts, justiciable for the most part in England and Wales, our constitution does not change English contract law. There really is no obvious way of getting out of this, it is not as simple as our government don't want to, or the ECB won't let them. Having guaranteed the debt any attempt on our part to escape that debt risks litigation.

SeanW wrote: »

But if the markets are right, and our current strategy is doomed to fail, doesn't it make sense to at least try to change course?

Only if the change of course looks to be better which it does not. Changing course for the sake of changing course is just daft.