FT comes out in support of Anglo debt restructuring

darkman2

An extraordinary editorial today (Monday) in the Financial Times openly supporting Ireland's case in relation to Anglo Irish bank. Whilst they don't reach the dizzy heights of calling for a debt writedown they firmly support, according to this article, a restructuring of the terms of repayment

There is a separate question, however, regarding the date when the money ought to be paid back. The current repayment schedule imposes a significant burden on the Irish economy at a time when it is still struggling to recover. A much better strategy would be to defer the repayment of the notes until the economy has resumed growing at a sustained rate. Alternatively, Dublin should be allowed to swap the existing notes for others with a longer maturity and a lower interest rate.

....continues

A restructuring would also make sense politically. Dublin has made significant progress in reducing its deficit and it would be foolish for Brussels not to reward this progress. And while Irish politicians share some of the blame for the blanket guarantee offered by Dublin to its stricken banks, it was the EU that strong-armed them in that position. Regardless of the referendum battle, it is only fair that the Union seeks to mitigate the impact of a wrong-headed decision.

http://www.ft.com/cms/s/0/2570633e-6477-11e1-b50e-00144feabdc0.html#axzz1oCkdRl6T

I think it is very significant that a publication like the FT has such an editorial for us.

Liam Byrne

darkman2 wrote: »

An extraordinary editorial today (Monday) in the Financial Times openly supporting Ireland's case in relation to Anglo Irish bank. Whilst they don't reach the dizzy heights of calling for a debt writedown they firmly support, according to this article, a restructuring of the terms of repayment

There is a separate question, however, regarding the date when the money ought to be paid back. The current repayment schedule imposes a significant burden on the Irish economy at a time when it is still struggling to recover. A much better strategy would be to defer the repayment of the notes until the economy has resumed growing at a sustained rate. Alternatively, Dublin should be allowed to swap the existing notes for others with a longer maturity and a lower interest rate.

....continues

A restructuring would also make sense politically. Dublin has made significant progress in reducing its deficit and it would be foolish for Brussels not to reward this progress. And while Irish politicians share some of the blame for the blanket guarantee offered by Dublin to its stricken banks, it was the EU that strong-armed them in that position. Regardless of the referendum battle, it is only fair that the Union seeks to mitigate the impact of a wrong-headed decision.

http://www.ft.com/cms/s/0/2570633e-6477-11e1-b50e-00144feabdc0.html#axzz1oCkdRl6T

I think it is very significant that a publication like the FT has such an editorial for us.

Good to see someone fighting our corner (albeit depressing that it's not our own TDs & MEPs) but the question would be how far down the road we want to kick this particular can?

Bottom line is that it's not our debt and - IMHO - it was unconstitutional of FF to choose to put a burden of this size on our heads.

Liam Byrne

Liam Byrne wrote: »

Good to see someone fighting our corner (albeit depressing that it's not our own TDs & MEPs) but the question would be how far down the road we want to kick this particular can?

Bottom line is that it's not our debt and - IMHO - it was unconstitutional of FF to choose to put a burden of this size on our heads.

With all that has happened with the Euro in crisis, do you honestly believe that the Irish representatives want to be walking into every meeting waffling on about debt write-downs? I feel like some people certainly take extensive liberties when they imagine the Irish as some sort of European power-player. We're less than one percent of the EU's population. Our government will work on having the debt written down - why? BECAUSE IF THEY WANT TO GET BACK INTO POWER THEY WILL HAVE TO TRY.

So chill, people. We only had the bailout and people were asking about a write-down. How do you think these European summits work? The Irish delegation go storming in, "BURN THE BONDHOLDERS". Do you think the Europeans will tackle the issue, or merely sidestep it and sideline us from future EU discussions.


Think people. Think.

later12

Rojomcdojo wrote: »

With all that has happened with the Euro in crisis, do you honestly believe that the Irish representatives want to be walking into every meeting waffling on about debt write-downs? I feel like some people certainly take extensive liberties when they imagine the Irish as some sort of European power-player. We're less than one percent of the EU's population.

We are 100% of the EA's crisis programme states with a real shot of regaining any meaningful market access without a sovereign default.

I don't think we can afford to strut into the Berlaymont and start telling Olli Rehn what's what. However, your argument is slightly disingenuous in light of the influence we do and can hold as a (possibly) recovering Eurozone state economy, and the influence our recovery might have on attitudes to the crisis mechanisms in place for Europe.

Tipp Man

Hasn't it been said several times (by politicians) that they are negotiating for a restructure of the banking debt

Assuming that they are not lying (which I must admit is an assumption) then I think it is fair to say that these negotiations will take time but i would be reasonably confident that there will be a restructure of some sort on at least some of the banking debts

later12

Tipp Man wrote: »

Hasn't it been said several times (by politicians) that they are negotiating for a restructure of the banking debt

We've been hearing about these particular negotiations since about Summer 2011, though. There now seem to be murmurings that no deal will be reached after a whole year.

These are not even political discussions... in theory. They are supposed to be technical in nature. What could possibly be causing such difficulty?

later12

later12 wrote: »

We've been hearing about these particular negotiations since about Summer 2011, though. There now seem to be murmurings that no deal will be reached after a whole year.

These are not even political discussions... in theory. They are supposed to be technical in nature. What could possibly be causing such difficulty?

Because nothing at all has happened since the summer of 2011 and Irish bank debt restructuring has been at the top of the agenda since?

Ehm.

GSF

Restructuring does not equal default so they seem to be advocating paying it off over a generation or two.

So presumably rather than depressing GDP by say 3% per year for the next 10 years, the solution advovated with reduce GDP by 1% per year for 30 years?

Same pain just spread out over a longer term.

Tora Bora

Promisary note restructure: FT are in favour, IMF in favour, Joan Burton in favour, Joe Citizen in favour. But hey, Enda and Eamon G, and M Noonan, don't want to upset their masters in ECB:rolleyes:

later12

GSF wrote: »

Restructuring does not equal default so they seem to be advocating paying it off over a generation or two.

So presumably rather than depressing GDP by say 3% per year for the next 10 years, the solution advovated with reduce GDP by 1% per year for 30 years?

No; because even if these notes were to be paid off over such a period (i) GDP does not remain a constant, ideally it grows and (ii) inflation erodes the cost of the notes to the state.

Anyway, I think the most common argument is to defer principal and interest due on the obligations using some predetermined economic indicators as the starting date of the repayment schedule, or for 10 years down the line, etc.

Literally, putting these things aside.