German Debt Auction fails

nesf

http://www.guardian.co.uk/business/blog/2011/nov/23/eurozone-crisis-eurobonds-recession-fears#block-12


Pretty serious news. Might light a fire under Germany to get **** done but it gives an idea of how brutal things would be for Ireland in the market right now if we were outside of the IMF program if even Germany is having trouble selling bonds!

Crazy Horse 6

One morning we will wake up and the ATM's won't work and the money in your bank account will be worth zip. It will happen that quickly.

sellerbarry

Won't make any difference to those of us who don't have any money.

KindOfIrish

It is a logical consequence of resent developments in eurozone. Printing more euro is the only solution for the debt crisis. And Germany will be forced to accept that.

zero_hope

nesf wrote: »

http://www.guardian.co.uk/business/blog/2011/nov/23/eurozone-crisis-eurobonds-recession-fears#block-12


Pretty serious news. Might light a fire under Germany to get **** done but it gives an idea of how brutal things would be for Ireland in the market right now if we were outside of the IMF program if even Germany is having trouble selling bonds!

The only rational thing for Germany would be to leave the EU and stop bailing out crappy countries who are unwilling or unable to tax their citizens properly.

newman10

Crazy Horse 6 wrote: »

One morning we will wake up and the ATM's won't work and the money in your bank account will be worth zip. It will happen that quickly.

So do you get the cash out of the bank

I am pie

zero_hope wrote: »

The only rational thing for Germany would be to leave the EU and stop bailing out crappy countries who are unwilling or unable to tax their citizens properly.

It's catch-22 for the Germans, leave and loose the benefits of having a single currency free trade market to export all their manufacturing output into, stay and pay for the pleasure.

Not a black & white decision.

Blowfish

I am pie wrote: »

It's catch-22 for the Germans, leave and loose the benefits of having a single currency free trade market to export all their manufacturing output into, stay and pay for the pleasure.

Indeed. If Germany were to leave, the Euro would weaken and you'd have a massive amount of people jumping ship into the 'new Deutschmark' making it ridiculously strong and killing German exports completely.

Permabear

This post has been deleted.

kennyb3

Don't think it changes much and is being overstated. Their cost is still around 2%. Will just scare other EU member states more who will eventually let Germany do what they want. Germany will get its fiscal union. The next few months will be a series of yields rising until this is achieved. All the while German exports get more competitive abroad as the euro weakens.

Scofflaw

kennyb3 wrote: »

Don't think it changes much and is being overstated. Their cost is still around 2%. Will just scare other EU member states more who will eventually let Germany do what they want. Germany will get its fiscal union. The next few months will be a series of yields rising until this is achieved. All the while German exports get more competitive abroad as the euro weakens.

Germany doesn't want a fiscal union - that's the problem. Indeed, it was the one thing they were afraid of when they joined the euro, and were that it wasn't something that would happen. Germans want what they thought they had for the last decade - a currency weaker than the DMark because it contains weaker economies, but without Germany having to subsidise those weaker economies.

cordially,
Scofflaw

kennyb3

Scofflaw wrote: »

Germany doesn't want a fiscal union - that's the problem. Indeed, it was the one thing they were afraid of when they joined the euro, and were that it wasn't something that would happen. Germans want what they thought they had for the last decade - a currency weaker than the DMark because it contains weaker economies, but without Germany having to subsidise those weaker economies.

cordially,
Scofflaw

Depends what you mean by fiscal union i guess - the peripherals see it as eurobonds but I meant it from a German perspective - which is the ability to oversee others spending, which they very much do want.

HellFireClub

Crazy Horse 6 wrote: »

One morning we will wake up and the ATM's won't work and the money in your bank account will be worth zip. It will happen that quickly.

And it'll have to, because with online banking, you can shift your money out of this jurisdiction and into another currency (for example GBP), at the first whisper of trouble. Forget about people queuing up at the branch screaming for a withdrawal form, someone would have to go into the bank and tell them to basically take down the internet banking part of their website for personal and business banking. Then the branches would have to be closed down temporarily while a new currency was being printed and distributed.

Scofflaw

kennyb3 wrote: »

Depends what you mean by fiscal union i guess - the peripherals see it as eurobonds but I meant it from a German perspective - which is the ability to oversee others spending, which they very much do want.

No, that's just a quid pro quo for bailing the weaker euro economies out. If they could avoid both they'd happily do so, just as they did for the last decade.

The whole "it's Germany conquering Europe!!!" Daily Mail schtick adds nothing to the debate. They're really not interested in supervising us unless we have their credit card in our hot sticky little fist.

cordially,
Scofflaw

kennyb3

Scofflaw wrote: »

No, that's just a quid pro quo for bailing the weaker euro economies out. If they could avoid both they'd happily do so, just as they did for the last decade.

The whole "it's Germany conquering Europe!!!" Daily Mail schtick adds nothing to the debate. They're really not interested in supervising us unless we have their credit card in our hot sticky little fist.

cordially,
Scofflaw

Yes they wish the last 10 years could be repeated for the next 10 but the fact is it won't. They realise the flaws of the euro and although they dont want to 'conqueor'/control europe as you put it - they realise they have to.

Although i'd be very interested on your own theories as to why they are stalling in relation to action? Every German paper I read leads to me to the conclusion they are only looking out for themselves.

nesf

kennyb3 wrote: »

Every German paper I read leads to me to the conclusion they are only looking out for themselves.

Same as every other country tbh.

Boskowski

Bond auction failed cos the German papers aren't risky enough. Why would you buy a German paper with 2% interest if you could buy a Spanish one with 5%?

On another note I can only support what Scofflaw says with regards to Germany.
Believe it or not we have no desire to conquer Europe through the backdoor and we have no desire to control other countries. (Well technically that's an assumption as I'm not invited to the secret AGMs anymore but it's an educated assumption)
It just that it seems to serve a certain clientele when certain rags paint the fourth Reich on the wall.

kennyb3

http://ftalphaville.ft.com/blog/2011/11/23/759801/the-bund-that-broke-the-bundesbank/

Blowfish

Boskowski wrote: »

Bond auction failed cos the German papers aren't risky enough. Why would you buy a German paper with 2% interest if you could buy a Spanish one with 5%?

There were USD35Bn of 5 year US treasuries yesterday that went for 0.937%. It's not the low yield that's putting people off, frankly it's the Euro.

Scofflaw

kennyb3 wrote: »

Yes they wish the last 10 years could be repeated for the next 10 but the fact is it won't. They realise the flaws of the euro and although they dont want to 'conqueor'/control europe as you put it - they realise they have to.

Have to and don't want to is more or less the opposite of the whole "Fourth Reich" thing, though...

kennyb3 wrote: »

Although i'd be very interested on your own theories as to why they are stalling in relation to action? Every German paper I read leads to me to the conclusion they are only looking out for themselves.

Because they're hoping - against hope, at this stage - that the euro crisis can be solved without them having to take over responsibility for the rest of the eurozone. Hence all these half-measures, each of which the German government hopes can stabilise the situation without them taking that final step.

A large part of the problem, of course, is that the market's attitude to the euro was always based on the implicit assumption that Germany was backing the whole deal. They didn't lend to the Greeks at low rates because they thought the Greeks were trustworthy, but because they reckoned Germany would, when the chips were down, stand over Greek debts. The markets are now doing their best to ensure that what they believed to be implicitly the case becomes formally the case - the reluctance is on the part of Germany, who really really don't want it to be the case, and who will exact as high a price as possible if it has to be the case.

Also, of course, the German government, even if convinced of the need to take such responsibility, has to sell that to the German electorate and parliament - something which is much tougher in Germany than here, because they lack the whip system that turns the Dáil into a rubber-stamp for the government. And Merkel isn't really of a calibre to galvanise the German nation into accepting such responsibility.

Meanwhile the rest of us are standing around muttering about how the rich bastards won't put their hands in their pockets for the good of everyone else - something which provokes the variety of anti-German narratives which have been such a feature of the crisis. After all, it's easier on our consciences if it's obvious that the Germans deserve to pay for everyone, isn't it?

cordially,
Scofflaw

kennyb3

I think somewhere along the way you've got the wrong idea of what i think - this 4th reich stuff seems to keep coming as i mentioned fiscal union. Personally i'd be in favour of the EU (read Germany) overseeing budgetary policy.

Also I have made no anit German comments in fact I fully support their policy of being against QE as throwing good money after bad will only esculate the situation rather than solve it.

Just to be clear.

Scofflaw

kennyb3 wrote: »

I think somewhere along the way you've got the wrong idea of what i think - this 4th reich stuff seems to keep coming as i mentioned fiscal union. Personally i'd be in favour of the EU (read Germany) overseeing budgetary policy.

Also I have made no anit German comments in fact I fully support their policy of being against QE as throwing good money after bad will only esculate the situation rather than solve it.

Just to be clear.

Apologies - I took that from this:

kennyb3 wrote:

Depends what you mean by fiscal union i guess - the peripherals see it as eurobonds but I meant it from a German perspective - which is the ability to oversee others spending, which they very much do want.

There's so much of the "Fourth Reich" stuff about currently I took it up the wrong way.

apologies,
Scofflaw

ednwireland

Crazy Horse 6 wrote: »

One morning we will wake up and the ATM's won't work and the money in your bank account will be worth zip. It will happen that quickly.

bet my debts wont be worth zip though

Voltex

I think the Germans would rather national fiscal policy fix the debt crisis than a monetary policy.

Its a game of brinkmanship really...the Germans already know the only way to put a stop on this is for the ECB to just threaten to start printing money. Theres no fund or investment bank in the World going to go head to head with the ECB....but what the German are holding out for is that the big debtor Nations in Europe adopt fiscal rectitude and austerity and push through the reforms..BEFORE they concede to the ECB printing money ( or just make the threat).

Finnbar01

Blowfish wrote: »

Indeed. If Germany were to leave, the Euro would weaken and you'd have a massive amount of people jumping ship into the 'new Deutschmark' making it ridiculously strong and killing German exports completely.

A stronger currency is much better than a weaker one IMO.

Blowfish

Finnbar01 wrote: »

A stronger currency is much better than a weaker one IMO.

In some cases that may be true, but when exports and local manufacturing make up a large percentage of your GDP as strong currency can cause major issues.

Permabear

This post has been deleted.

Scofflaw

Finnbar01 wrote: »

A stronger currency is much better than a weaker one IMO.

Tell that to the Spanish Empire! To be honest, I think the description of currency as 'strong' and 'weak' is highly misleading - rephrasing what you've said as "I think a high-exchange-rate currency is much better than a low-exchange-rate one" makes it rather clearer that the benefits of a "strong" currency are hardly self-evident.

cordially,
Scofflaw

kennyb3

Permabear wrote: »

This post had been deleted.

Agree, listen to any of the investment houses and they don't just talk about risk - they talk about risk against yield. And the yield just isnt high enough for the risk.

recedite

As talk of eurobonds increases, you would expect to see signs of convergence in bond yields across the eurozone.

Dai John

kennyb3 wrote: »

I think somewhere along the way you've got the wrong idea of what i think - this 4th reich stuff seems to keep coming as i mentioned fiscal union. Personally i'd be in favour of the EU (read Germany) overseeing budgetary policy.

Also I have made no anit German comments in fact I fully support their policy of being against QE as throwing good money after bad will only esculate the situation rather than solve it.

Just to be clear.

I would not trust the Germans to run the financial system, they are not very good at it historically. In recent times they made a mess of the reunification. They were all in favour of it at the time but a year later most Germans wanted the wall put back up. The exchange rate had been 6 east marks to 1 west and they gave them 1 for 1. They caused havoc in the property market because housing for East Germans in the west was subsidised. Income tax rose and taxation generally. Germany is a police state, ask any truck driver. You cannot drive anywhere without being pulled in by some kind of enforcement goon.
Before the euro we had a currency on paper called the"Ecu". This was a currency often used for transactions on paper. Local currencies were allowed to deviate only a little either side of the "Snake" without collective permission. Each country kept it's own currency and they should have allowed the ecu to be traded in currency alongside to ease international travel and transactions.
How could anyone expect the Greeks and Italians to share a currency with Germany ? When they had the Drachma and the Lira they were always devaluing and the Deutchmark kept going up. Nothing wrong with the euro if it had been confined to Germany,Benulux and France and possibly Austria. The Guilder was tied to the Dm for years with a 10% difference, it worked as their economies were similar.
Northern Europeans tend to obey the rules on the whole, and pay their debts ( in my experience as an International truck driver),but if a Greek or Italian told me it was Thursday I would have to check the calender, you could never trust the Greeks or Italians to pay .I would have confidence in the Spanish and found them good to deal with.You will find that the way they do business reflects politically also. Historically Greece has a bad record on default. The Italians have large gold reserves,( possibly the 4th largest in the world) but why won't they use them ? The euro is doomed in it's present format, certain countries need to be excluded otherwise it will be dragged down.

Boskowski

There is quite a few inaccuracies in what you're saying.

First of all reunification. You're saying it was done badly. The thing is though there isn't really a best pratices handbook for reunifications is there? We took in a country of just under 20 mill in population roughly as developed as Romania. Since then huge transfers were made to the tune of over 100 bill year after year. Large numbers of pensioners and other welfare receivers had to be paid. Unemployment is still massive there. An extra tax was put on 'westerners' to find this money. The former east has been nothing but a huge burden since economically. I'm not usually what one would call a patriot but on this one I have to say it's quite an achievement.

The Eastmark was only converted 1:1 as far as small private money was concerned. Ordinary peoples saving. Corporate and speculative money was converted at 2:1 and 3:1. Quite fair on the small people me thinks.

Of course not everyone was going to be happy about it. Imagine a similar situation with the 6 counties. I promise you there ll be quite a few people saying feck them we can't afford them hand them back to the UK.

I'm not sure who could have done it better tbh.

As for the police state claim. Well yes and no. From an Irish perspective it may seem police state when you actually get stopped for your taillights being broken or to make sure you're not lorrying around for 14 hrs without a break. Others may find that actuality being a good thing.

Only saying.

thisNthat

OK so I'm a little out of my depth on this conversion but find all the different posts/points of views very interesting,
I have a few questions -

What does all this mean for Ireland?
Will we have to leave (Or be kicked out of) the Euro currency? or Union?
If so what are the positives and negatives of this?
Where do you see Ireland in 5 years time?

Please don't baffle me with marketing terminology,

Thanks in advance..

Blowfish

thisNthat wrote: »

OK so I'm a little out of my depth on this conversion but find all the different posts/points of views very interesting,
I have a few questions -

What does all this mean for Ireland?

As a single event on its own, it wont have any direct impact on Ireland or even Germany for that matter.

What it does do is raise some interesting questions.

Scofflaw

Blowfish wrote: »

As a single event on its own, it wont have any direct impact on Ireland or even Germany for that matter.

What it does do is raise some interesting questions.

Admittedly, those questions become slightly less interesting in the light of the fact that the interest rate on the bonds is lower than the ECB's target inflation rate, which essentially makes them a guaranteed way of losing money. Certainly that seems to be the attitude expressed by traders, and since it involves no political analysis on their part, but just simple maths, I'm inclined to take their point of view on it for once.

In a sense, Germany seems to be suffering from their safe haven status here in exactly the same way they would if they had the DMark back.

cordially,
Scofflaw

Boskowski

thisNthat wrote: »

OK so I'm a little out of my depth on this conversion but find all the different posts/points of views very interesting,
I have a few questions -

What does all this mean for Ireland?
Will we have to leave (Or be kicked out of) the Euro currency? or Union?
If so what are the positives and negatives of this?
Where do you see Ireland in 5 years time?

Please don't baffle me with marketing terminology,

Thanks in advance..

I'm not very educated on economy matters myself but my take is basically the Euro is too big to fail. We're all pot committed.

Germany is being stroppy cos they don't like being effectively the guarantor for weaker economies so they resist anything that makes them formally guarantor.

The Euro also has 'enemies' it would seem. Especially the German dominance of it which I can understand to an extent but it's not something Germany is actively seeking out IMO and most of it is blabla anyway, mostly financial agendas behind it.

After toing and froing and exhausting all other options finally the right thing will be done and life will continue.

We live in a capitalist system which is fuelled by the desire to make money. A breakdown doesn't make money or only for a limited time. Therefore it's really in everyones interest to keep the machine oiled and consumption and circulation alive.

We will have to follow through on bringing the budget in line though. No saviour will come to rescue us from that. But that's really fair enough me thinks. We're not really been given such a bad deal. We're really only downsizing from mad levels to what our own economical power can actually sustain. If we could make our own society a little more equal - bring the protected pockets in line with reality - we could even find some sort of national solidarity amongst ourselves.

the culture of deference

Boskowski wrote: »

We live in a capitalist system which is fuelled by the desire to make money. A breakdown doesn't make money or only for a limited time. Therefore it's really in everyones interest to keep the machine oiled and consumption and circulation alive.

Unfortunately the machine is dying.

We speak about this as if the whole world is involved.

80% of the planets population is struggling to survive, we are responsible for that.

Dai John

Boskowski wrote: »

There is quite a few inaccuracies in what you're saying.

First of all reunification. You're saying it was done badly. The thing is though there isn't really a best pratices handbook for reunifications is there? We took in a country of just under 20 mill in population roughly as developed as Romania. Since then huge transfers were made to the tune of over 100 bill year after year. Large numbers of pensioners and other welfare receivers had to be paid. Unemployment is still massive there. An extra tax was put on 'westerners' to find this money. The former east has been nothing but a huge burden since economically. I'm not usually what one would call a patriot but on this one I have to say it's quite an achievement.

The Eastmark was only converted 1:1 as far as small private money was concerned. Ordinary peoples saving. Corporate and speculative money was converted at 2:1 and 3:1. Quite fair on the small people me thinks.

Of course not everyone was going to be happy about it. Imagine a similar situation with the 6 counties. I promise you there ll be quite a few people saying feck them we can't afford them hand them back to the UK.

I'm not sure who could have done it better tbh.

As for the police state claim. Well yes and no. From an Irish perspective it may seem police state when you actually get stopped for your taillights being broken or to make sure you're not lorrying around for 14 hrs without a break. Others may find that actuality being a good thing.

Only saying.

First you say I am inaccurate then you agree with me. I am not talking about broken tailights or driving 14 hours, please don't justify their over zealous officious attitude when they don a flat cap and uniform. Give a German a flat cap and some authority and you give yourself a major problem.

anymore

Crazy Horse 6 wrote: »

One morning we will wake up and the ATM's won't work and the money in your bank account will be worth zip. It will happen that quickly.

That is what I am afriad of. Mind you when I posted a thread asking that the Government make some statement on the seciurity of savings in euro deposits, it received very little attention, so what do you say ?
If someone farted in Gaza, it would receive more attention :eek:

Boskowski

Dai John wrote: »

First you say I am inaccurate then you agree with me. I am not talking about broken tailights or driving 14 hours, please don't justify their over zealous officious attitude when they don a flat cap and uniform. Give a German a flat cap and some authority and you give yourself a major problem.

Well, I do actually agree with you (again) up to the point where you're bringing in generalizations.

Yes, there is a reason we had some kind of proverb in school which went along the lines of 'no brains, no skills, please give me a uniform'.

But there is a difference between a police state and some overzealous officers. Police state is when you have over-controlling. Some of the Skandinavian countries seem a bit like that.

I haven't had too much contact with the police wherever I roamed up to this point, but I epxerienced thickish mini-generals and gentlemanlike policefolk everywhere. Actually I found the American cops much more 'no sh1t with me' than the Germans.

And tbh my first experience with the AGS 10 years ago wasn't the most pleasent either. And since we're talking about little traffic corps Nazis I shall tell you about it.
Little fecker set himself up at half 1 in the morning on the I believe N7 it is coming out of Paulstown, just between the 50km/h, the 80km/h and the 100 km/h limit sign, literally at the end of the little village. Now there was about 70 meters in total between all 3 signs. When I passed the 50 km/h I floored it and got stopped and his explanation was that I had more than 80 km/h before I had reached the 100 km/h sign . When I really politely said wasn't that a little harsh at half 1 in the morning boy did I get some lecture and a fine and everything and for the rest of the conversation I was like 'of course officer', 'yes officer'.

Did I think then Irish guards are all little mini SS guys? No I didn't.

Liam Byrne

Scofflaw wrote:

After all, it's easier on our consciences if it's obvious that the Germans deserve to pay for everyone, isn't it?

So what's the story ? FF & The Greens make us responsible for other people's debts because of some contrived collective responsibility and that's somehow OK with you (and the Germans), but when that is taken in the other direction there's somehow a problem ?

Despite the fact that - as lenders who didn't do due diligence - they are more responsible than me for Anglo, but yet it's the likes of me that foots the bill ?

The whole notion of responsibility has been bastardised and warped beyond recognition at this stage.

There's absolutely no incentive to do the right thing anymore, because you'll get screwed anyway by someone with a bigger agenda.

Amberman

Liam Byrne wrote: »

So what's the story ? FF & The Greens make us responsible for other people's debts because of some contrived collective responsibility and that's somehow OK with you (and the Germans), but when that is taken in the other direction there's somehow a problem ?

Despite the fact that - as lenders who didn't do due diligence - they are more responsible than me for Anglo, but yet it's the likes of me that foots the bill ?

The whole notion of responsibility has been bastardised and warped beyond recognition at this stage.

There's absolutely no incentive to do the right thing anymore, because you'll get screwed anyway by someone with a bigger agenda.

I completely agree. The entire idea of privatised gains and socialised losses is completely absurd in a capitalist system. The 10 year olds answer to TBTF is to break them up to protect the integrity of the system and the rule of law...and I'm not just talking about Ireland here, but the global financial system.

What we have can't really be called capitalism...and thats really the crux of the issue here...the departure from capitalism. Capitalism without failure is like Christianity without Hell.

There is absolutely nothing inherently wrong in individuals, banks and other institutions, including countries, doing stupid things...they always have and always will.

What is clearly a problem is protecting them from their just punishment for their foolish actions and asking others to pay for their mistakes.

This creates massive disincentives on both sides of the equation to the extent that levered gambling (when you have an implicit backstop with someone elses money), corruption, fraud and outright theft become optimal strategies in capital accumulation. If theres no punishment, theres no disincentive for many people.

Scofflaw

Liam Byrne wrote: »

So what's the story ? FF & The Greens make us responsible for other people's debts because of some contrived collective responsibility and that's somehow OK with you (and the Germans), but when that is taken in the other direction there's somehow a problem ?

Despite the fact that - as lenders who didn't do due diligence - they are more responsible than me for Anglo, but yet it's the likes of me that foots the bill ?

The whole notion of responsibility has been bastardised and warped beyond recognition at this stage.

There's absolutely no incentive to do the right thing anymore, because you'll get screwed anyway by someone with a bigger agenda.

The inner Cabinet of the last government stuck us with the bank guarantee because as far as I can see they honestly believed that such a guarantee would sort out the problem with the Irish banks, which they appear to have believed - as most commentators did at that point - that the problem was simply one of liquidity, ie, that the banks were merely having trouble borrowing because of uncertainty. Hence the guarantee, which was supposed to provide certainty.

As it happens, they were spectacularly wrong, and they were spectacularly wrong because for the previous decade they had been letting the banks essentially regulate themselves, so they had no real idea of the position of banks like Anglo, who had built themselves an unsustainable model based on short-term borrowing and long-term lending into the property bubble. That's why it looked like a liquidity issue - if the short term debts could be rolled over, then surely the carousel would keep spinning.

But the carousel was based on lending into the bubble, and the collapse of the bubble meant the banks were insolvent as well as illiquid, something the guarantee not only didn't/couldn't address, but which the guarantee suddenly attached firmly to the sovereign position.

Not only did the government - or, again, the inner cabinet of two people, one now dead, who appear to have taken the decision - fail to grasp that, they seem to have also failed to grasp the fact that about the only thing that would allow their gamble to not fail spectacularly was an iron-clad sovereign position - and it turned out that they, like Anglo, had built their castle on the sand of the property bubble.

So what they thought they were doing - using the strength of a fundamentally sound state to stand over the temporary borrowing issues of fundamentally sound banks - was almost 100% wrong. And it was wrong because the previous decade had been spent making it wrong.

And that's the Irish government that the Irish people voted for - not just once, but in 1997, 2002, and 2007. I can't see where any Irish person can simply wash their hands of the whole thing and claim to have any notion of what democracy means.

cordially,
Scofflaw

kennyb3

Scofflaw wrote: »

.

And that's the Irish government that the Irish people voted for - not just once, but in 1997, 2002, and 2007. I can't see where any Irish person can simply wash their hands of the whole thing and claim to have any notion of what democracy means.

cordially,
Scofflaw

Wouldn't use 'any' as what about the people that didn't vote for them? I think you make a great point though - the vast majority of people did vote for them yet nobody seems to take responsibility for effectively encouraging them. The fact they were re-elected in 2007 even as the end was nigh tells you everything you need to know. Every poster who voted for them needs to accept some responsibility.

Scofflaw

kennyb3 wrote: »

Wouldn't use 'any' as what about the people that didn't vote for them? I think you make a great point though - the vast majority of people did vote for them yet nobody seems to take responsibility for effectively encouraging them. The fact they were re-elected in 2007 even as the end was nigh tells you everything you need to know. Every poster who voted for them needs to accept some responsibility.

Obviously, the responsibility of any individual voter for the election of a particular government is small. However, I don't think it's avoided simply by not having voted for the government, although I don't have a very good argument for that position - it just seems to me that when you're part of a group, you're responsible for the group's choices as long as you choose to remain part of the group.

I chose to remain part of the Irish electorate and public during the Fianna Fáil/PD years of deregulation and tax unbalancing, and I wouldn't, if someone were to say "but you Irish voted for them", angrily repudiate any responsibility unless I felt like repudiating any notion of being Irish, even though I've never voted Fianna Fáil or PD.

cordially,
Scofflaw

Dai John

nesf wrote: »

http://www.guardian.co.uk/business/blog/2011/nov/23/eurozone-crisis-eurobonds-recession-fears#block-12


Pretty serious news. Might light a fire under Germany to get **** done but it gives an idea of how brutal things would be for Ireland in the market right now if we were outside of the IMF program if even Germany is having trouble selling bonds!

The Germans offered a rate of only 2%, why ? Was it because they wanted it to fail so that they would have to step in themselves, and therefore have less money to support the failing economies ? The other point is if dodgy countries pay over 7%, would this not indicate that buying bonds is a gamble, so why feel sorry for bondholders and be afraid to burn them ? You pays your money and takes your chance. If you go to the bookies and bet on an outsider, should you expect to win ?

BombayMix

Scofflaw wrote: »

Obviously, the responsibility of any individual voter for the election of a particular government is small. However, I don't think it's avoided simply by not having voted for the government, although I don't have a very good argument for that position - it just seems to me that when you're part of a group, you're responsible for the group's choices as long as you choose to remain part of the group.

I chose to remain part of the Irish electorate and public during the Fianna Fáil/PD years of deregulation and tax unbalancing, and I wouldn't, if someone were to say "but you Irish voted for them", angrily repudiate any responsibility unless I felt like repudiating any notion of being Irish, even though I've never voted Fianna Fáil or PD.

cordially,
Scofflaw

I think the word responsibility has two meanings and gets confused. The Irish public is now responsible for the debt, but any argument that the Irish public is responsible for causing this situation is fragile and opening up room for an ironic Godwin.

nesf

Dai John wrote: »

The Germans offered a rate of only 2%, why ? Was it because they wanted it to fail so that they would have to step in themselves, and therefore have less money to support the failing economies ? The other point is if dodgy countries pay over 7%, would this not indicate that buying bonds is a gamble, so why feel sorry for bondholders and be afraid to burn them ? You pays your money and takes your chance. If you go to the bookies and bet on an outsider, should you expect to win ?

You're kind of looking at it the wrong way. Think of it this way, if a bookkeeper reneges en masse on a bunch of bets, gamblers will take their business elsewhere. In order to regain business the bookkeeper will have to offer extremely good odds in order to rebuild his reputation until such a time as he is trusted again. Until that time comes the bookkeeper is in trouble and is offering bets that don't make sense given the fundamentals of a match/race/whatever.

It's not that bondholders expect you to always pay back the money, it's they expect you to always pay back the money when you can do it. Burn them and they'll take their business elsewhere quite easily and when you go back into the market anyone who'll deal with you will be screwing you over on interest rates until you show you're a good boy and paying back debts that you can again.

nesf

BombayMix wrote: »

I think the word responsibility has two meanings and gets confused. The Irish public is now responsible for the debt, but any argument that the Irish public is responsible for causing this situation is fragile and opening up room for an ironic Godwin.

Directly causing it sure (it's silly), collectively responsible in a nebulous kind of way holds more water here.

Scofflaw

BombayMix wrote: »

I think the word responsibility has two meanings and gets confused. The Irish public is now responsible for the debt, but any argument that the Irish public is responsible for causing this situation is fragile and opening up room for an ironic Godwin.

Again, not sure - they're certainly not directly responsible, as if they'd gone down to the banks and made them lend against their better judgement. So I'd have no difficulty agreeing that they're not culpable.

That they're on the hook for the debts is unarguable, obviously.

So that leaves responsible in the sense of either directly or indirectly helping the situation come into being, and there I wouldn't really hesitate to say they do have some responsibility, through:

(a) repeatedly voting for governments that promised low regulation of the financial sector - aka "light touch regulation" or "sweeping away red tape"

(b) repeatedly voting for governments who both cheerled the boom and pumped it up with pro-cyclical policies and tax breaks

(c) repeatedly voting for governments who moved the tax base from income and other direct taxes to taxes reliant on the property and credit bubble

(d) repeatedly voting for governments whose only apparent solution to any issue was to throw money at it

(e) buying into the boom themselves and competing with each other to recklessly take on ever more debt to fund lifestyles and inflated property prices

(f) supporting a culture of planning corruption, and supporting the government in its efforts to muzzle the few independent planning voices such as An Taisce

At the end of the day, the Irish people are sovereign in Ireland. That means the buck stops with them. They cannot afford to be greedy, complaisant, and tolerant of corruption and unaccountability, but they have been, because they will thereby be landed with a bill, and lose some of their sovereignty, both of which they have done. And the bill is very large, and has arrived at everyone's table, whether they were personally greedy, complaisant, and tolerant of corruption and unaccountability or not, because that's the nature of collective responsibility and collective sovereignty, and it's part of what being a citizen means - if your fellow citizens choose to commit to a course of stupidity, you're part of it too as long as you choose to associate with them.

cordially,
Scofflaw

Sand

Dai John wrote: »

The Germans offered a rate of only 2%, why ? Was it because they wanted it to fail so that they would have to step in themselves, and therefore have less money to support the failing economies ?

They may have thought to capitalise on the flight from risky assets - Germany has long been considered risk free, so perhaps they thought they could still sell a good chunk of the bonds - not on the basis of them offering a great rate of return, but on the basis of them being a safe haven which investors might be willing to pay for when everything else is in chaos. From the German perspective, if investors are fleeing euro peripheral debt, then they have to find a home for their euros, so Germany could strike a harder bargain than they might have.

Unfortunately, it appears they miscalculated, and if investors are looking for a safe haven, its increasingly in assets that are not denominated in euro.