Greek default - conseuences for Ireland?

femur61

If Greece defaults do they realise they have no money and is Barroso correct it will have serious consequnces for Ireland or will it be to our benefit?

(Sorry,title spelt wrong, can't edit title)

GUIGuy

If Greece defaults the immediate effect will be contagion of the debt crisis to core European nations. They will wake up to bonds and financial sector share values that have fallen through the floor. Pensions funds and share values will fall by an unknown amount.

So in a way if Greece defaults the core European countries will have to share the pain in real terms and banks will finally have to face up to their reckless lending. Some European banks will come under severe pressure because previous stress tests were based on the ECB line that no country would default. Some banks might need to be nationalised and a new round of 'stress testing' of European banks that reflects reality rather than the ECB party line.

While this pain sharing might please some people... 'justice at last' mentality; it just means there'll be less money to lend to Ireland and the pressure will increase.

The interesting point is that German, French & British citizens haven't really felt the effects of the crisis so far. So long as they don't really feel the pain they can live on thinking that this 'crisis' is a small bump in the road and that the PIGS were delinquent so they have to bare the burden. The average Greek, Irish or German is not responsible for the crisis (reckless gambling is), but the average German/British/French has been shielded from its real effects because and European banks kept feeding the PIGs addiction.

It could be a very rude awakening as Greece might force the core European nations to drop the staunch wishful thinking. An enlightened solution would be a structured scheme of debt forgiveness combined with a weaning off credit rather than a unilateral default. A Greek default ultimately could cost far more than the cost of a sensible level of forgiveness, but as of yet citizens in core counties haven't really felt the pain and so they don't yet fear the future.

As for Greece itself it will probably be a bit like Iceland and Argentina or any other country... soup kitchen, violence and a gradual recovery.

For Ireland I imagine the immediate effect will be quiet panic from the government.
They'll realise the plan to reapply to the markets in 2012 is a dream and probably there won't be any money left for a second Irish bailout. So look forward to massive cutbacks in spending and tax increases.

Great fun! ;-)

later12

The most interesting thing for Ireland will be how the restructuring/ reprofiling of debt plays out. There is no doubt but that it will be a voluntary programme, and in that case, Ireland will have to watch closely how co-ordinated bondholders are during the process and whether or not they form BACs/ efficient creditor committees.

The role of the ECB in bondholder mediation will be interesting to watch as well, and whether some sort of ECB guaranteed debt instruments arise in the form of European Brady bonds.

It has become clear since the start of 2011 that there is no prospect whatever of Ireland returning to the capital markets in 2012. JMB is simply engaged in a PR exercise of dubious importance. He is correct in that that a Greek restructuring almost guarantees an Irish restructuring, but in some ways these have already been written in the teacups and the capital markets are just bearing out their own prophecies.

xflyer

When Greece defaults, that's when Greece defaults not if, we will follow. We cannot repay the money. FG and Labour cannot face up to that. They dance around the issue. But we will have to default, it won't be called that of course. Quite frankly we will be bailed out by the EU. They have no choice, we have no choice. When I say bailed out, I mean they will write off most of the debt.

I had no real confidence in the new coalition, mostly I just wanted to get rid of the crooked FF and Green cabal. But the new bunch are not that different. Particularly Labour who don't live in the real world. Now they are talking about increasing taxes, well, shock horror, what a surprise! They have no new ideas at all.

Eventually we will have new government run by realists, Enda Kenny and his boys and girls are no different to the old gang. His government will fall in disorder to be replaced by a whole new generation.

We are in for a rough ride.

PatsytheNazi

GUIGuy wrote: »

If Greece defaults the immediate effect will be contagion of the debt crisis to core European nations. They will wake up to bonds and financial sector share values that have fallen through the floor. Pensions funds and share values will fall by an unknown amount.

So in a way if Greece defaults the core European countries will have to share the pain in real terms and banks will finally have to face up to their reckless lending. Some European banks will come under severe pressure because previous stress tests were based on the ECB line that no country would default. Some banks might need to be nationalised and a new round of 'stress testing' of European banks that reflects reality rather than the ECB party line.

While this pain sharing might please some people... 'justice at last' mentality; it just means there'll be less money to lend to Ireland and the pressure will increase.

The interesting point is that German, French & British citizens haven't really felt the effects of the crisis so far. So long as they don't really feel the pain they can live on thinking that this 'crisis' is a small bump in the road and that the PIGS were delinquent so they have to bare the burden. The average Greek, Irish or German is not responsible for the crisis (reckless gambling is), but the average German/British/French has been shielded from its real effects because and European banks kept feeding the PIGs addiction.

It could be a very rude awakening as Greece might force the core European nations to drop the staunch wishful thinking. An enlightened solution would be a structured scheme of debt forgiveness combined with a weaning off credit rather than a unilateral default. A Greek default ultimately could cost far more than the cost of a sensible level of forgiveness, but as of yet citizens in core counties haven't really felt the pain and so they don't yet fear the future.

As for Greece itself it will probably be a bit like Iceland and Argentina or any other country... soup kitchen, violence and a gradual recovery.

For Ireland I imagine the immediate effect will be quiet panic from the government.
They'll realise the plan to reapply to the markets in 2012 is a dream and probably there won't be any money left for a second Irish bailout. So look forward to massive cutbacks in spending and tax increases.

Great fun! ;-)

Interesting. From what I have heard on the Vincent Brown show, the penny will drop sooner or later with the ECB and they don't want to see the whole of Europe going down the toilet. So looks like the Greeks will save us a hell of a lot of hardship and embarassment.

PatsytheNazi

xflyer wrote: »

When Greece defaults, that's when Greece defaults not if, we will follow. We cannot repay the money. FG and Labour cannot face up to that. They dance around the issue. But we will have to default, it won't be called that of course. Quite frankly we will be bailed out by the EU. They have no choice, we have no choice. When I say bailed out, I mean they will write off most of the debt.

I had no real confidence in the new coalition, mostly I just wanted to get rid of the crooked FF and Green cabal. But the new bunch are not that different. Particularly Labour who don't live in the real world. Now they are talking about increasing taxes, well, shock horror, what a surprise! They have no new ideas at all.

Eventually we will have new government run by realists, Enda Kenny and his boys and girls are no different to the old gang. His government will fall in disorder to be replaced by a whole new generation.

We are in for a rough ride.

Well I can understand your feelings on getting rid of FF/Greens joke. And let's admit it, no one is surprised at FG/Lab. So who besides FG/Labour can you see leading us out of the wilderness. SWP, SP, SF.......Micheal Healy Rae ?

POINTBREAK

I think it's a bit more complicated than it looks. Most of the Bondholders will have Credit Default Swaps as insurance against a Greek default. Most of these are underwritten by English and American Banks, so the consequences would be global.