EU Summit 21/07

Scofflaw

So, summit today, and various bits and pieces being released:

Taoiseach’s doorstep in Brussels

https://www.youtube.com/watch?v=ddZZzqCHEO8

Short - very short - doorstep interview with the Taoiseach.

The press conference will be live at 10pm tonight - on the Council website (which also has other doorstep interviews): http://tvnewsroom.consilium.europa.eu/

cordially,
Scofflaw

later12

Juncker was the first leader to mention the inevitable D-word today. No flies on that lad.
http://www.bloomberg.com/news/2011-07-21/euro-leaders-start-talks-as-juncker-says-greek-default-possible.html

The markets respond
http://www.youtube.com/watch?v=oXvV2ALV0bg&feature=share

Irish Slaves for Europe

Look at the body language and demeanor of Enda in that video, he looks completely flat. He must know this is going to be another pointless meeting in terms of Ireland's situation.

mikom

Scofflaw wrote: »

Short - very short - doorstep interview with the Taoiseach.

Loving his enthusiasm.

later12

http://www.rte.ie/news/2011/0721/eu.html

So Ireland gets an interest rate reduction - on the EFSF portion of its borrowings only, of course - and €135bn shall be made available over the next 30 years through a variety of measures including a debt buy-back programme on the secondary market, so that helps.

Also...

'We welcome Ireland and Portugal's resolve to strictly implement their programmes and reiterate our strong commitment to the success of these programmes.
'The EFSF lending rates and maturities we agreed upon for Greece will be applied also for Portugal and Ireland.
In this context, we note Ireland's willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB)....'

more information please!

Sand

Theres encouraging news in the way Trichet was handled.

A neccessary precondition to dealing with the crisis was silencing his increasingly shrill "no default, no selective default, no credit event!" tirades. It looks like he was reeled in last night and put in his place as its quite clear "no default, no selective default, no credit event!" is a stupid and failed policy.

The dam on the greek default is finally going to be breached so dont make any plans for next week. According to the hysterical predictions the world is shortly due to end.

hmmm

Sand wrote: »

The dam on the greek default is finally going to be breached so dont make any plans for next week. According to the hysterical predictions the world is shortly due to end.

The Euro doom-mongers have been proved wrong, yet again. The EU is lining up a Greek default, it's hardly super secret inside information.

Today was a good day for Ireland, we can do a lot with an extra 800 million a year. The government can't take much credit (although I'm sure they will), this reduction in the interest rate would probably have happened irrespective of who was in power.

The "kicking the can down the road" strategy of successive Irish governments is working, and we are seeing strategies to address the debt problems in Europe being developed in conjunction with the stronger nations in Europe.

Tora Bora

€600m saving in interest, means, another quango or three will be kept alive. That's all.

Sand

@hmmmm

The Euro doom-mongers have been proved wrong, yet again. The EU is lining up a Greek default, it's hardly super secret inside information.

Hardly secret to anyone except the EU - they appear to have been the last to know.

Today was a good day for Ireland, we can do a lot with an extra 800 million a year.

No, we cant do anything because its not an extra 800 million. Its a cut in spending money we dont have. We have little say over our fiscal policy.

The "kicking the can down the road" strategy of successive Irish governments is working, and we are seeing strategies to address the debt problems in Europe being developed in conjunction with the stronger nations in Europe.

Shades of Brian Lenihan there..."The strategy is working!"

I wouldnt hold the ticker tape parade quite yet though.

Firstly, there are some encouraging moves here:

1 - Trichet and the ECB have been kicked back into their boxes and apparently told firmly to keep their traps shut. This is a welcome development.

2 - The EU is acknowledging that default is inevitable. 3 years too late, and still focused only on Greece but a clear breakthrough.

But:

1 - We've been here before. There was similar chest thumping in the wake of the announcement of the 700 billion euro war chest to defend the Eurozone last year from the evil speculators/markets...didnt really work out that way.

2 - These are very, very broad declarations - the devil will be in the detail.

3 - Theres still evidence of high ranking stupidity at the heart of the EU response with the bank levy retaining credibilty as an option as recently as yesterday.

4 - Debt buybacks are not reccomended when it comes to reducing debt burden: It may not work as efficiently as the EU presumes it will.

5 - From an Irish point of view we've got a welcome cut in the Irish interest rate, but its not clear what we have traded for it - the government may have been forced into stupidly surrendering control of a key aspect of Irish industrial policy in exchange for a bauble or two which would be an extremely bad trade.

hmmm

Sand wrote: »

5 - From an Irish point of view we've got a welcome cut in the Irish interest rate, but its not clear what we have traded for it - the government may have been forced into stupidly surrendering control of a key aspect of Irish industrial policy in exchange for a bauble or two which would be an extremely bad trade.

I honestly doubt the Irish government traded anything for this, we were told what our new rate was going to be and that's that. The game changed last week when Italy & Spain came under pressure, all our previous negotiations where we ran into trouble with the French became irrelevant in the new circumstances.

Good loser

hmmm wrote: »

I honestly doubt the Irish government traded anything for this, we were told what our new rate was going to be and that's that. The game changed last week when Italy & Spain came under pressure, all our previous negotiations where we ran into trouble with the French became irrelevant in the new circumstances.

Don't think you're correct about this. See post 5 above.

The tax issue was emphasised from Brussels on Prime Time tonight with Rchd Crowley.

Mayo Exile

Constantin Gurdgiev et al rubbished the deal on the Vincent Browne show on TV3 tonight. Basically said the Irish banking debt had not been confronted and Ireland will be back in sometime in 2013 looking for the type of deal Greece got today.

hmmm

Good loser wrote: »

The tax issue was emphasised from Brussels on Prime Time tonight with Rchd Crowley.

I see no tax issue.

beeftotheheels

Mayo Exile wrote: »

Constantin Gurdgiev et al rubbished the deal on the Vincent Browne show on TV3 tonight. Basically said the Irish banking debt had not been confronted and Ireland will be back in sometime in 2013 looking for the type of deal Greece got today.

I'm so glad I decided not to watch VB this evening based on the assumption that some muppet like Gurdgiev would be on spouting fiction and not fact (the latter being a concept which he seems to have great difficulty in grasping).

Mayo Exile

beeftotheheels wrote: »

I'm so glad I decided not to watch VB this evening based on the assumption that some muppet like Gurdgiev would be on spouting fiction and not fact (the latter being a concept which he seems to have great difficulty in grasping).

Question still remains though - how does this deal relate to the banking debt going forward?

lmimmfn

Mayo Exile wrote: »

Constantin Gurdgiev et al rubbished the deal on the Vincent Browne show on TV3 tonight. Basically said the Irish banking debt had not been confronted and Ireland will be back in sometime in 2013 looking for the type of deal Greece got today.

you mean Constantin "compare the market .com"? lol
I cant take hime seriously anymore.

beeftotheheels

Mayo Exile wrote: »

Question still remains though - how does this deal relate to the banking debt going forward?

In much the same way as not chopping off one's leg and using less evasive measures relates to the presence of a verruca.

We've been given a cream that probably, but not certainly, will kill the verruca. Yet certain commentators are still insisting that we need to cut off our leg to be certain that the verruca is gone.

View

beeftotheheels wrote: »

In much the same way as not chopping off one's leg and using less evasive measures relates to the presence of a verruca.

We've been given a cream that probably, but not certainly, will kill the verruca. Yet certain commentators are still insisting that we need to cut off our leg to be certain that the verruca is gone.

How could you doubt the sanity of such an idea for even a moment?

Scofflaw

Mayo Exile wrote: »

Constantin Gurdgiev et al rubbished the deal on the Vincent Browne show on TV3 tonight. Basically said the Irish banking debt had not been confronted and Ireland will be back in sometime in 2013 looking for the type of deal Greece got today.

There wouldn't be an issue there with the fact that if things settle down, his business venture with Ganley (helping people move their money to Switzerland) becomes rather less attractive? A conflict of interest, even?

cordially,
Scofflaw

Mayo Exile

beeftotheheels wrote: »

In much the same way as not chopping off one's leg and using less evasive measures relates to the presence of a verruca.

We've been given a cream that probably, but not certainly, will kill the verruca. Yet certain commentators are still insisting that we need to cut off our leg to be certain that the verruca is gone.

Kind of like detonating a nuclear warhead to pasteurise a litre of milk then?!

later12

In case anyone missed the official statement by the EU heads of state, which can sometimes be a little muddied by media reporting, the document is available here

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/123978.pdf

The main points

We have decided to lengthen the maturity of future EFSF loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years and up to 30 years with a grace period of 10 years.

We will provide EFSF loans at lending rates equivalent to those of the Balance of Payments facility (currently approx. 3.5%), close to, without going below, the EFSF funding cost. We also decided to extend substantially the maturities of the existing Greek facility.

The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options further strengthening overall sustainability. The net contribution of the private sector is estimated at 37 billion euro

All other euro countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature

To improve the effectiveness of the EFSF and of the ESM and address contagion, we agree to increase their flexibility linked to appropriate conditionality, allowing them to:
- act on the basis of a precautionary programme;
- finance recapitalisation of financial institutions through loans to governments including in non programme countries ;
- intervene in the secondary markets

Where appropriate, a collateral arrangement will be put in place so as to cover the risk arising to euro area Member States from their guarantees to the EFSF.

The EFSF lending rates and maturities we agreed upon for Greece will be applied also for Portugal and Ireland. In this context, we note Ireland's willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ Pact framework.

later12

The private sector, i.e. the world's major investment banks, via their representative body, the IIF, have issued their statement.

http://www.iif.com/download.php?id=rPiz9R7SVQ4=

The exchange will occur into the following instruments

1) A Par Bond Exchange into a 30 year instrument
2) A Par Bond offer involving rolling-over maturing Greek government bonds into 30 year instruments
3) A Discount Bond Exchange into a 30 year instrument
4) A Discount Bond Exchange into a 15 year instrument
For instruments, 1, 2 and 3 the principal is fully collateralized by 30 year zero coupon AAA Bonds. For instrument 4, the principal is partially collateralized through funds held in an escrow account.

Scofflaw

Goodness me - this is increasingly looking like a comprehensive solution. Well, let's call it an 'approach' as opposed to a solution, because we don't yet know whether it will actually work, but it's certainly evidence of a much greater level of joined-up and forward-thinking action than anything to date!

http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eurozone-greece

slightly surprised,
Scofflaw

Fr Tod Umptious

later10 wrote: »

In case anyone missed the official statement by the EU heads of state, which can sometimes be a little muddied by media reporting, the document is available here

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/123978.pdf

The main points

What part of all this is the effective 'once off' Greek default ?.

Shane Ross made a point in a quick sound bite on the RTE news implying that if they are allowing Greece to default on some of it's sovereign debt, then in the further Ireland will be allowed to also.

A Robucon has been crossed he said.

So in 6 mount time when it may not be working out for Ireland can we possibly go back and say 'ok we will have what Greece got please'

Is mise le key

hmmm wrote: »

The Euro doom-mongers have been proved wrong, yet again. The EU is lining up a Greek default, it's hardly super secret inside information.

It really is incredible, a default on the unsustainable debt has been what the ULA have been saying all along, yet it was lunacy 'euro doom-mongering' when it was said by us.

Now it is OK as the EU has decided it is OK, really you have to stop the delusion & immediate rejection of some serious facts just because its coming from people you dont agree with on a political level.

hmmm wrote: »

The "kicking the can down the road" strategy of successive Irish governments is working, and we are seeing strategies to address the debt problems in Europe being developed in conjunction with the stronger nations in Europe.

If you really beleive it was a 'strategy', to 'kick the can down the road', then again you are deluding yourself. The reason it is being resisted, or as you put it, 'kicking the can down the road', is that once the inevitable move was made to acknowledge a default it really is signalling the beginning of the end for the Euro, how long will it be until they concede that we cannot afford it either, interest rate reduction or not.

Now before you say i am being negative in the midst of the reduced interest rate, we said all through the campaign for the elction that part of the FG/LAB proposal to get into government was to get a reduced interest rate, meaning, we will only pay less on the loans that have propped up the failed private banks.

The issue of propping up the failed private banks AT ALL has not been addressed.

Scofflaw wrote: »

Goodness me - this is increasingly looking like a comprehensive solution. Well, let's call it an 'approach' as opposed to a solution, because we don't yet know whether it will actually work, but it's certainly evidence of a much greater level of joined-up and forward-thinking action than anything to date!

http://www.guardian.co.uk/business/2011/jul/22/bailed-out-eurozone-greece

slightly surprised,
Scofflaw

Joined up & forward thinking action!!!

More like the option that was always there they have resisted for as long as possible as they know it will have a cascade effect through the entire system, this was inevitable & was known from the start it will have to go here but dragging the heels was the preffered option to try & slow the process down.

The writing is on the wall, and unfortunatley it is spelling unavoidable hardship for us all.

Fr Tod Umptious wrote: »

What part of all this is the effective 'once off' Greek default ?.

Shane Ross made a point in a quick sound bite on the RTE news implying that if they are allowing Greece to default on some of it's sovereign debt, then in the further Ireland will be allowed to also.

A Robucon has been crossed he said.

So in 6 mount time when it may not be working out for Ireland can we possibly go back and say 'ok we will have what Greece got please'

The game is up & now we will see slowly unfold the real damage that this rotten system will inflict on all of our living standards.

later12

Fr Tod Umptious wrote: »

What part of all this is the effective 'once off' Greek default ?.

The "voluntary" private sector involvement.

Fitch were wasting no time earlier today

In line with the rating approach outlined by the agency on 6 June 2011 (see ‘Fitch Outlines Rating Approach to a Sovereign Debt Exchange’ at www.fitchratings.com), Fitch will place the Greek sovereign (issuer) rating into ‘Restricted Default’ and assign ‘Default’ ratings to the affected Greek government bonds on the date that the offer period for the proposed debt exchange closes. Fitch will assign new post-default ratings to Greece and to the new debt instruments once the default event is cured with the issue of new securities to participating bondholders. Along with other relevant factors, the extended maturity structure and reduction in the net present value of the Greek public debt stock will be reflected in the new post-default sovereign rating that will be assigned to Greece and its debt instruments on completion of the exchange. The new ratings will likely be low speculative-grade.

Who cares, Fitch? It was mostly already priced in. Greek 10yr:

Shane Ross made a point in a quick sound bite on the RTE news implying that if they are allowing Greece to default on some of it's sovereign debt, then in the further Ireland will be allowed to also.

It's very hard to avoid that conclusion. Italian 10yr is currently trading at a still significant 5.28% yield - that's still problematic. This template is likely to be expanded upon if something more radical is not forthcoming.

K-9

Is mise le key wrote: »

It really is incredible, a default on the unsustainable debt has been what the ULA have been saying all along, yet it was lunacy 'euro doom-mongering' when it was said by us.

Now it is OK as the EU has decided it is OK, really you have to stop the delusion & immediate rejection of some serious facts just because its coming from people you dont agree with on a political level.

The position of the last and this Government was it needed a solution at a European level, that's exactly what happened. I don't think this is the type of default the ULA or SF envisaged!

later12

Eh, the ULA were not calling for a restructuring or a relatively small PSI contrasted with major sovereign involvement. That's simply untrue.

Anyway. Lucinda Creighton has justified her presence(????) at the negotiations by going on radio to tell you scoundrels to stop talking about an Irish default.

http://www.rte.ie/news/2011/0722/eu.html

Minister of State for European Affairs Luicinda Creighton has said it is irresponsible for people to say that Ireland is going to default on its debts.
Minister Creighton, who attended last night's meeting of eurozone leaders, said negotiations were extremely difficult and the deal agreed was very complex.

Or so she read in the paper.

Is mise le key

K-9 wrote: »

The position of the last and this Government was it needed a solution at a European level, that's exactly what happened. I don't think this is the type of default the ULA or SF envisaged!

No your right, its not a default as we would have envisaged, but it is inching closer & closer to that position until eventually, just like in Orwells animal farm, it will reach a point where the official line will be the opposite of what it was a few years prior, & amnesia (or self delusion) that it was advocated & called for by the opposition a few years earlier will set in, conveniently.

Scofflaw

K-9 wrote: »

The position of the last and this Government was it needed a solution at a European level, that's exactly what happened. I don't think this is the type of default the ULA or SF envisaged!

No, they explicitly envisaged unilateral or disorderly defaults, and were against waiting for a European solution. Still, you can't stop politicians from claiming that what's happening is exactly what they predicted as long as the same word occurs in both prediction and outcome.

cordially,
Scofflaw

Is mise le key

Scofflaw wrote: »

No, they explicitly envisaged unilateral or disorderly defaults, and were against waiting for a European solution. Still, you can't stop politicians from claiming that what's happening is exactly what they predicted as long as the same word occurs in both prediction and outcome.

cordially,
Scofflaw

Hmmm, Joe Higgins was saying back in 2010 that the defaults would be dragged out over the next 3 years until the recognition ireland will have to default is accepted, he said all along why make it that the people of Europe have to suffer so much hardship in between & drive the economies into the ground before it happens.

The question is rhetorical, the reason they will roll it out slowly is so state companies can be privatised to as large an extent as possible.

The prize of this recession is control in private hands of Europes countries Elec, Gas, Transport, Health, Telecoms, Water, & land.

K-9

Is mise le key wrote: »

No your right, its not a default as we would have envisaged, but it is inching closer & closer to that position until eventually, just like in Orwells animal farm, it will reach a point where the official line will be the opposite of what it was a few years prior, & amnesia (or self delusion) that it was advocated & called for by the opposition a few years earlier will set in, conveniently.

This was always the way it was always going to be, they're politicians after all. Still, it's better to have the weight of the EU behind it rather than throwing the toys out of the pram.

Sand

Sand wrote: »

No, we cant do anything because its not an extra 800 million. Its a cut in spending money we dont have.

Precisely. Well said. The authorities at home will make great efforts to bandy around a figure of 800 million over the next week or two, but it must be remembered that nothing of that value will ever reach the country's infrastructure or services. Rather, 800 million less will be spent per year on servicing an unmanageable debt of €85billion.

We have not gotten any healthier here, in real terms. We're just losing a drop less blood from a hemorrhaging wound. We are slightly less up to our necks in debt than we were last week, but the fact remains that we're still up to our necks in what is fundamentally an unjustified, unsustainable debt.

Mayo Exile wrote: »

Constantin Gurdgiev et al rubbished the deal on the Vincent Browne show on TV3 tonight. Basically said the Irish banking debt had not been confronted and Ireland will be back in sometime in 2013 looking for the type of deal Greece got today.

Exactly. The only way Ireland can return itself to a situation where it is sustainably controlling it's debts, based on realistic growth prospects, is to refuse to honour the portion of those debts run up by foreign banking investors. This latest restructuring has done nothing to address that core issue.

We're still paying an unjustifiable unfair debt, we're just paying it over a longer time, and at a lower rate. Tinkering around the edges will not change the fundamental issue. As well as paying our own bill, we're paying somebody else's and we can't afford both. "Burning the bondholders" is the only way we can hope to regain our financial sovereignty in the foreseeable future.

Big decisions need to be taken right now, by an Irish government which (yet again) seems to only want to kick the problem down the road a bit and wait to see what happens in the meantime.

Tipp Man

Deleted User wrote: »

We're still paying an unjustifiable unfair debt, we're just paying it over a longer time, and at a lower rate. Tinkering around the edges will not change the fundamental issue. As well as paying our own bill, we're paying somebody else's and we can't afford both. "Burning the bondholders" is the only way we can hope to regain our financial sovereignty in the foreseeable future.

Big decisions need to be taken right now, by an Irish government which (yet again) seems to only want to kick the problem down the road a bit and wait to see what happens in the meantime.

the biggest decision facing the Irish government is how fast can it get the budget to something resembling balanced

The budget deficit is an Anglo Irish bank every bloody year

fliball123

Deleted User wrote: »

Precisely. Well said. The authorities at home will make great efforts to bandy around a figure of 800 million over the next week or two, but it must be remembered that nothing of that value will ever reach the country's infrastructure or services. Rather, 800 million less will be spent per year on servicing an unmanageable debt of €85billion.

We have not gotten any healthier here, in real terms. We're just losing a drop less blood from a hemorrhaging wound. We are slightly less up to our necks in debt than we were last week, but the fact remains that we're still up to our necks in what is fundamentally an unjustified, unsustainable debt.



Exactly. The only way Ireland can return itself to a situation where it is sustainably controlling it's debts, based on realistic growth prospects, is to refuse to honour the portion of those debts run up by foreign banking investors. This latest restructuring has done nothing to address that core issue.

We're still paying an unjustifiable unfair debt, we're just paying it over a longer time, and at a lower rate. Tinkering around the edges will not change the fundamental issue. As well as paying our own bill, we're paying somebody else's and we can't afford both. "Burning the bondholders" is the only way we can hope to regain our financial sovereignty in the foreseeable future.

Big decisions need to be taken right now, by an Irish government which (yet again) seems to only want to kick the problem down the road a bit and wait to see what happens in the meantime.

I think you may be a bit disingenuous...The increase in time to pay back is also a factor..You have to remember the current gov are backed into a corner the majority of the debt both banking and soverign were totted up under FFs watch..You cannot say that they are not trying to tackle both they are burning some bond holders to the tune of 5 billion and have got a 2% cut when FF were saying this could not be done..Now I know there are other mitigating circumstances ..but part of me feel that if FF were still in power we would of got neither..Also your point about it being a pointless exercise..it is until we get our spend under control..And the next few budgets will have to bridge this 18billion deficit

Sand

I think you may be a bit disingenuous...The increase in time to pay back is also a factor

True, we now have a 40 year mortgage as opposed to a 20 year mortgage. Cheaper up front interest charges, but for twice as long.

Godge

Is mise le key wrote: »

No your right, its not a default as we would have envisaged, but it is inching closer & closer to that position until eventually, just like in Orwells animal farm, it will reach a point where the official line will be the opposite of what it was a few years prior, & amnesia (or self delusion) that it was advocated & called for by the opposition a few years earlier will set in, conveniently.

Ha, ha, ha, a member of the ULA talking about "Animal Farm", a satire on what happens when the socialists/communists take over. Brilliant. If the ULA can adopt Animal Farm, what next? The rehabilitation of Ronald Reagan?

On the bigger issue, fair play to Enda Kenny, he promised a reduction in the interest rate, he delivered a reduction in the interest rate, he has saved us €600m-€800m per year. We all know (except the ULA) that we have to balance the budget and this result makes it easier to do so but there will still be some significant cuts/taxes to get us to a balanced budget.

View

Deleted User wrote: »

Rather, 800 million less will be spent per year on servicing an unmanageable debt of €85billion.

How exactly is it unmanageable?

NTMA put the current cost of the national debt as 11% of tax revenue. In 1990, our then national debt cost us 26.7% of tax revenue (which in itself was a reduction on the % paid in the 80's).

If our national debt today is "unmanageable", it must have been an awful lot more "unmanageable" back in 1990 (never mind the '80s) - yet we were then able to manage the "unmanageable", whereas today we apparently can't?

Godge

View wrote: »

How exactly is it unmanageable?

NTMA put the current cost of the national debt as 11% of tax revenue. In 1990, our then national debt cost us 26.7% of tax revenue (which in itself was a reduction on the % paid in the 80's).

If our national debt today is "unmanageable", it must have been an awful lot more "unmanageable" back in 1990 (never mind the '80s) - yet we were then able to manage the "unmanageable", whereas today we apparently can't?

Exactly, our national debt is not unmanageable but our budget deficit is unsustainable.

beeftotheheels

View wrote: »

How exactly is it unmanageable?

NTMA put the current cost of the national debt as 11% of tax revenue. In 1990, our then national debt cost us 26.7% of tax revenue (which in itself was a reduction on the % paid in the 80's).

If our national debt today is "unmanageable", it must have been an awful lot more "unmanageable" back in 1990 (never mind the '80s) - yet we were then able to manage the "unmanageable", whereas today we apparently can't?

Tut tut. Manageable means would like to manage as opposed to can manage!

K-9

Godge wrote: »

On the bigger issue, fair play to Enda Kenny, he promised a reduction in the interest rate, he delivered a reduction in the interest rate, he has saved us €600m-€800m per year. We all know (except the ULA) that we have to balance the budget and this result makes it easier to do so but there will still be some significant cuts/taxes to get us to a balanced budget.

Fair play to Enda Kenny for what exactly?

The Greek debt crisis?

Godge

K-9 wrote: »

Fair play to Enda Kenny for what exactly?

The Greek debt crisis?

Fair play to Enda Kenny for delivering on the election promise of reducing the IMF/EU interest rate. He will miss other promises but credit where credit is due.

A good week for him.

View

K-9 wrote: »

Fair play to Enda Kenny for what exactly?

The Greek debt crisis?

Aww, be fair to Inda - I am fairly sure that he is neither Greek nor responsible for their debt crisis. Then again, maybe he was doing a nixer and managing the Greek economy, while leader of the Opposition.

washman3

fliball123 wrote: »

I think you may be a bit disingenuous...The increase in time to pay back is also a factor..You have to remember the current gov are backed into a corner the majority of the debt both banking and soverign were totted up under FFs watch..You cannot say that they are not trying to tackle both they are burning some bond holders to the tune of 5 billion and have got a 2% cut when FF were saying this could not be done..Now I know there are other mitigating circumstances ..but part of me feel that if FF were still in power we would of got neither..Also your point about it being a pointless exercise..it is until we get our spend under control..And the next few budgets will have to bridge this 18billion deficit

you poor deluded soul..:)
if you want to credit anybody with achieveing this "deal" credit those people that rioted on the streets of Athens while 99% of us Irish sat on our arses and sucked our thumbs and pretended to be sophisticated.
do we credit Kenny,Noonan or Creighton or even the FF clowns that went before them? dont make me laugh.
and before you accuse me,NO i am not a member of any party, so no hidden agenda.(unlike you,i would bet)

K-9

Godge wrote: »

Fair play to Enda Kenny for delivering on the election promise of reducing the IMF/EU interest rate. He will miss other promises but credit where credit is due.

A good week for him.

And what role did he exactly play in this?

washman3

K-9 wrote: »

And what role did he exactly play in this?

The role of Village Idiot or Court Jester i would imagine.:D

Taxi Drivers

A reasonably positive take on Thursday's deal which highlights that this was a deal we piggy-backed onto but suggests that it is a step towards achieving a sustainable debt level.

Yesterday was a good day because of changes to the EU loans being provided to Ireland as we remain shut out of bond markets. Along with the IMF, the €67.5 billion loan we are provided with is the only funding the State will have until the end of 2013.

The problems with the EU money were that the interest rates were too high and the repayment dates were too soon. Although both of these were improved upon we must remember it was primarily because better conditions were provided to Greece. These improvements had to be applied to Ireland and Portugal because we are in the same rescue programme.

Irish Independent: A good day for Ireland Inc. but not a great one

Scofflaw

Sand wrote: »

True, we now have a 40 year mortgage as opposed to a 20 year mortgage. Cheaper up front interest charges, but for twice as long.

No - really not. People seem to be under the impression that we pay back the capital of the debt, which is extremely unlikely. We haven't therefore doubled the term for which we have the debt, because we would not in any case have paid it off after the original 7.5 years.

This is a very important point, because as far as I can see, people are also using this incorrect assumption to determine whether Ireland will default or not. You're all assuming that the idea is to pay back the debt, which it isn't - the way state debt is handled is to finance the debt cheaply, and to erode the value of it through inflation and economic growth.

For example, back in 1990, when interest payments on our national debt were 26.7% of tax revenue, we had a total debt of €32bn. Within a decade, interest costs were absorbing only 7.6% of tax revenue. Did we pay off any debt in the interim? Not a bit.

We're not likely to be planning on paying back any of this debt either.

cordially,
Scofflaw

Taxi Drivers

Sand wrote: »

True, we now have a 40 year mortgage as opposed to a 20 year mortgage. Cheaper up front interest charges, but for twice as long.

From the piece linked to above which agrees with Scofflaw's take above

There have been some claims that the extension of the repayment schedule increases the overall cost of the EU loans. This is true in the sense that we will be paying interest to the EU for longer. However, it is not an increased cost to the State as we would have repaid the EU loans with money borrowed from someone else. We would have been paying interest on this debt regardless.

Countries rarely pay back public debt. The difficulty Ireland faced was finding someone to lend us the money to repay the EU loans. We remain shutout from bond markets. The extension of the EU loans reduces the pressure on Ireland to return to bond markets. We can of course pay back the EU loans at any time we wish if private funding becomes available at cheaper rates. The extension of the repayment schedule is unambiguously good for Ireland.

Sand

@Scofflaw

No - really not. People seem to be under the impression that we pay back the capital of the debt, which is extremely unlikely.

Well, Id agree. So do the markets - thats why we cant borrow from the markets.

You're all assuming that the idea is to pay back the debt, which it isn't - the way state debt is handled is to finance the debt cheaply, and to erode the value of it through inflation and economic growth.

I'm assuming that the dogma that "sovereigns never repay debt, they just roll it over" only applies when the sovereign can roll over the debt.

Now whilst you might say we can roll over debt by just borrowing from the EFSF that comes with a host of political, economic and fiscal interference and is thus on shaky ground
- Ireland will be continously reminded of its lack of sovereignty, generating political resistance from the left.
- The core dont want to lend to us and they dont want to be on the hook for our borrowing. A transfer union, one which the Germans in particular would never, ever, ever happen is politically very unpopular. So there is scope for political resistance there too.

Especially if Ireland slacks off on the fiscal policies imposed as conditions of lending...who blinks there? Is the lending cut off so that Ireland is forced to default? Or does the core keep lending even if the achieved savings tend to be more aspirational than practical.

Now for growth and inflation saving us...

Firstly, the ECB sets the inflation rate and they set it in Germanys interests. They have a target of 2% a year and as shown by their raising rates at exactly the wrong time 2 weeks ago they are serious about meeting it. Given the interest and the deficit, Id think it quite likely that our debt will rise at a far faster rate than the inflation rate.

Secondly for growth - there isnt immense prospects for growth in the short or medium future. Everyone has been following the "Sovereigns dont repay debt" dogma, figuring theyll pay for it tommorrow. Well tommorrow is here, and people are having to deleverage.

Even in Ireland particular case - I really dislike the "Things were bad in the 1980s and we got out of it" theories. Simple comparisons such as "Debt Serving in 1990 = X, so hence debt servicing now is not a problem" miss that this is 2011, not 1990 and conditions are different.

In 1990 we werent locked into the Euro, we retained control of our fiscal policies, including our corporate tax rate. People were poor, but they were debt free. We were on the cusp of an era of huge FDI by US companies, fuelling immense export driven growth in Ireland into a booming world economy.

But thats done and dusted now. Now both the state and the people are heavily, heavily, heavily in debt. The gains from an era of huge globalisation have been achieved. Ireland has caught up with the average, so wont have the boost that smaller, poorer economies have in growth. We've had a decade of immense economic growth, but its over and the next question is where is the growth going to come from when banks are thrashed and the government cutting spending drastically? The necessary conditions for the sort of explosive Celtic Tiger growth that we need to erode our debt simply isnt there.

As has been said, any level of debt is manageable if you simply predict a high enough level of growth to sustain it - but where is the growth going to come from in the current conditions?

@Taxi Driver

We can of course pay back the EU loans at any time we wish if private funding becomes available at cheaper rates.

Never say never, but if we cant enter the markets now at our expected level of growth, debt and creditworthiness its practically impossible that we will be able to do so at rates cheaper than what are being offered by the EFSF.

Scofflaw

Sand wrote: »

Well, Id agree. So do the markets - thats why we cant borrow from the markets.

Er, no. The problem is that they think we're likely to default on repayments. We never have paid back capital, so it's not really going to be a factor.

Sand wrote: »

I'm assuming that the dogma that "sovereigns never repay debt, they just roll it over" only applies when the sovereign can roll over the debt.

That's pretty much tautological - and if they're not in a position to roll it over, they're equally not in a position to pay it back.

Sand wrote: »

Now whilst you might say we can roll over debt by just borrowing from the EFSF that comes with a host of political, economic and fiscal interference and is thus on shaky ground
- Ireland will be continously reminded of its lack of sovereignty, generating political resistance from the left.
- The core dont want to lend to us and they dont want to be on the hook for our borrowing. A transfer union, one which the Germans in particular would never, ever, ever happen is politically very unpopular. So there is scope for political resistance there too.

Especially if Ireland slacks off on the fiscal policies imposed as conditions of lending...who blinks there? Is the lending cut off so that Ireland is forced to default? Or does the core keep lending even if the achieved savings tend to be more aspirational than practical.

In other words, Ireland needs to actually reduce its deficit so that it doesn't need to borrow further - no change there, then. As for political resistance to deficit reduction, that's also a given, and likely to be less effective rather than more if the deficit reduction is a required condition of borrowing.

Sand wrote: »

Now for growth and inflation saving us...

Firstly, the ECB sets the inflation rate and they set it in Germanys interests. They have a target of 2% a year and as shown by their raising rates at exactly the wrong time 2 weeks ago they are serious about meeting it. Given the interest and the deficit, Id think it quite likely that our debt will rise at a far faster rate than the inflation rate.

Really? I can't fathom the arithmetic you use to reach that conclusion, unless you assume we don't make interest payments - which is a default.

Sand wrote: »

Secondly for growth - there isnt immense prospects for growth in the short or medium future. Everyone has been following the "Sovereigns dont repay debt" dogma, figuring theyll pay for it tommorrow. Well tommorrow is here, and people are having to deleverage.

Tomorrow isn't here, though. Maturity on the loans is now 15 years, so in that sense, tomorrow is 15 years away.

Sand wrote: »

Even in Ireland particular case - I really dislike the "Things were bad in the 1980s and we got out of it" theories. Simple comparisons such as "Debt Serving in 1990 = X, so hence debt servicing now is not a problem" miss that this is 2011, not 1990 and conditions are different.

In 1990 we werent locked into the Euro, we retained control of our fiscal policies, including our corporate tax rate. People were poor, but they were debt free. We were on the cusp of an era of huge FDI by US companies, fuelling immense export driven growth in Ireland into a booming world economy.

Er, we still have control over our CT rate. The most we've done is agree to "constructively engage" with CCCTB, so I think you have the white flag up a little too soon there.

Sand wrote: »

But thats done and dusted now. Now both the state and the people are heavily, heavily, heavily in debt. The gains from an era of huge globalisation have been achieved. Ireland has caught up with the average, so wont have the boost that smaller, poorer economies have in growth. We've had a decade of immense economic growth, but its over and the next question is where is the growth going to come from when banks are thrashed and the government cutting spending drastically? The necessary conditions for the sort of explosive Celtic Tiger growth that we need to erode our debt simply isnt there.

As has been said, any level of debt is manageable if you simply predict a high enough level of growth to sustain it - but where is the growth going to come from in the current conditions?

Where does growth come from in any economy? Or are you saying that no economy ever grows?

Inflation at c.2%, say growth in the upper 'mature economy' region of 2% rather than the heady 6% of yore - that reduces our relative level of debt quite well.

And, really, calling Ireland a mature economy is kind of hilarious, if you compare it to places like the UK, France, Germany, or even Italy. Ireland's economic infrastructure is still very poor - it looks amazing compared to 1990, but it's still not in any sense mature.

cordially,
Scofflaw