"Seismic shift" in EU policy following latest summit, & a better deal for Ireland

Heads the ball

Anyone else here upset that now, Irish taxpayers will have to bail out Spainish and Italian banks?

After all the pain we had with bailing out our own banks we are now to bail out other banks?

djpbarry

Kaiser2000 wrote: »

Well maybe I'm looking at it a bit more selfishly in terms of what has it done for Ireland. After all if Germany, France, Spain etc use the EU as means to further their own national agenda, why not us?

Are you seriously going to try and argue that the EU has not benefited Ireland? I’m old enough to remember what 1980’s Dublin was like and, even in the current “crisis”, the Dublin of 2012 is a virtual utopia by comparison.

Kaiser2000 wrote: »

My point is that as long as individual members continue to put national - or even constituency - interests ahead of what's good for the EU as a whole (not just the "chosen few") then we will continue to have a situation where counties such as ourselves and Greece etc will be at the "mercy" of whatever fallout comes out of those decisions.

From where I’m sitting, it was the likes of Greece and Ireland putting national/constituency interests ahead of what was good for the EU that has us where we are.

Kaiser2000 wrote: »

I also think that BECAUSE each member state is so different industrially, politically and socially that we may NEVER get to a situation where we see ourselves as EU citizens first, Irish/German/whatever next which in my opinion is exactly what's needed if we ever are to make this work.

I will never be convinced by the “everyone’s too different argument”, but anyway. Plenty of people in the UK consider themselves English/Scottish/Welsh/Northern Irish first and British second, but the UK still works.

Kaiser2000 wrote: »

Personally, I think we should have never joined the Euro as it's caused us more problems than it solved. We should have instead have remained as a trading partner but retained control of our own affairs as it's surely been proven that the "one size fits all" approach hasn't worked - neither in the "good times" nor the bad

So after witnessing the monumental mistakes that were made by successive Irish governments over the last 10-15 years, you want to go back in time and give them a currency they can fiddle with too? Seriously?

sarumite

Dave! wrote: »

What will this mean for tax payers? Will there be some respite from the "austerity"? Less need to tackle awkward areas in upcoming budgets? How will it affect the Croke Park Agreement?

I think the government needs to mindful of such attitudes. The argument prior to this change in direction was that by giving countries in austerity programs leeway they would revert to old habits that got them in trouble in the first place. According to the EC, Ireland still has a PS that is on the high end of pay by international standards and our welfare system is still very generous. The banking debt isn't the sole reason we have a deficit and thus the next budget should reflect the economic challenges still facing us. While I welcome this new development, I think we shouldn't rest on our laurels in getting the budget and economy as a whole back to health.

Dave!

Indeed, if the Taoiseach overplays this then it'll make it more difficult for him to pass difficult budgets and negotiate with the public sector unions.

everdead.ie

Heads the ball wrote: »

Anyone else here upset that now, Irish taxpayers will have to bail out Spainish and Italian banks?

After all the pain we had with bailing out our own banks we are now to bail out other banks?

We will not be paying anything towards the spanish or Italien(if they need it) banks. We don't have any money to do so.

We are still running a massive deficit caused by the collapse of the construction Industry which has made 100,000's unemployed (directly and indirectly employed by the sector) and massively reduced our tax in-take, this means we still have to make progress in increasing our competitiveness and finding new ways to increase taxation.

Heads the ball

everdead.ie wrote: »

We will not be paying anything towards the spanish or Italien(if they need it) banks. We don't have any money to do so.

We are still running a massive deficit caused by the collapse of the construction Industry which has made 100,000's unemployed (directly and indirectly employed by the sector) and massively reduced our tax in-take, this means we still have to make progress in increasing our competitiveness and finding new ways to increase taxation.

We will be paing money into the ESM and thats now going to go straight to banks who need it.

Flex

Dave! wrote: »

Indeed, if the Taoiseach overplays this then it'll make it more difficult for him to pass difficult budgets and negotiate with the public sector unions.

Thats my concern out of all this. It will make passing difficult budgets much harder (along with the fact the government probably wont have the will to pass difficult budgets since they wont be able to simply blame the Troika for everything) and I can see the Public Sector demanding more pay increases off the back of any savings this may provide. Cautiously optimistic for the moment though...

everdead.ie

Heads the ball wrote: »

We will be paing money into the ESM and thats now going to go straight to banks who need it.

My understanding is the banks will be paying money in, still we have zero right to complain imo.

Heads the ball

everdead.ie wrote: »

My understanding is the banks will be paying money in, still we have zero right to complain imo.

You are incorrect. It is the State which will be paying money in.

Gurgle

Soooo, if I now have this straight:
We've signed up to this ESM, a fund for bailing out countries who can't borrow on the international bond markets due to oppressive interest rates.

But 'they' have decided to use this money to keep crashed banks afloat.
Isn't this the same solution as before, just scaled up? Taxpayers money given to banks.

And what happens when another country needs a sovereign bail out?
"Sorry, the ESM fund is empty, we gave it to the banks already"

ixtlan

Heads the ball wrote: »

We will be paying money into the ESM and that's now going to go straight to banks who need it.

Indeed, but we can hardly complain about this when our contribution will be small compared to others.

As to how this plays out over the next few months it's hard to say. I expect that when the fine details are worked out there'll be plenty in there for people to grumble about and continue to say we should have left the Euro. As the saying goes there's no such thing as a free lunch.

Still, looking at things positively, for once the EU has exceeded the (admittedly low) market expectations, and it is clear that for the moment at least, rumours of the end of the Euro have been greatly exaggerated.

Ix.

ixtlan

Gurgle wrote: »

Soooo, if I now have this straight:
We've signed up to this ESM, a fund for bailing out countries who can't borrow on the international bond markets due to oppressive interest rates.

But 'they' have decided to use this money to keep crashed banks afloat.
Isn't this the same solution as before, just scaled up? Taxpayers money given to banks.

The difference being that the cost in effect is being spread out among all the states, so the contribution we must make is much smaller.

Gurgle wrote: »

And what happens when another country needs a sovereign bail out? "Sorry, the ESM fund is empty, we gave it to the banks already"

It's a concern. I expect the hope is that with the bank debt removed, it's less likely that states will need a sovereign bailout. We have been arguing that without the bank debt we would not have needed one.

In practice whether this will really work will depend on the details and some luck, and since the details won't be known for a few months, there's at least that much breathing space.

Ix.

Heads the ball

ixtlan wrote: »

Indeed, but we can hardly complain about this when our contribution will be small compared to others.


Ix.

Our contribution will be €1billion but that can be increased to as much as €11billion. That is NOT small.

I think we are well entitled to query where our money is going.

There is a HUGE difference between Ireland lending to another sovereign (which was the stated position at the time we ratified the recent Treaty) and Ireland lending directly to a bank which is on its knees.

Heads the ball

Gurgle wrote: »

Soooo, if I now have this straight:
We've signed up to this ESM, a fund for bailing out countries who can't borrow on the international bond markets due to oppressive interest rates.

But 'they' have decided to use this money to keep crashed banks afloat.
Isn't this the same solution as before, just scaled up? Taxpayers money given to banks.

And what happens when another country needs a sovereign bail out?
"Sorry, the ESM fund is empty, we gave it to the banks already"

This is an excellent post. Taxpayers money now going straight to banks. Its the one decision in the past decade that has almost unaminous opposition: we never should have placed the bank debt on the Irish people but people now have no issue with us giving money that we can ill afford (think how many more teachers could be paid, or how many social welfare cuts could be reversed) to FOREIGN banks.

The ESM is a ponzi scheme.

antoobrien

Heads the ball wrote: »

The ESM is a ponzi scheme.

No A ponzi scheme is one where investor a get paid "profit" from investor b's money. This is a consolidated loan fund - think giant credit union - where the members deposit money and the ESM loans it out.

I think everybody here is ignoring the fact that the bond markets now have "competition" in funding the banks. The banks don't have to take ESM funding, nor do they have to accept market funding. The markets now have a choice when dealing with the banks: fund at lower levels or lose the potential to make profit. The market players that try to speculate and drive prices up will be priced out of the market because the ESM funding will be available at a certain price - effectively putting a ceiling on the bank bond prices.

djpbarry

Heads the ball wrote: »

...think how many more teachers could be paid, or how many social welfare cuts could be reversed...

You’re aware that Ireland is still running a massive deficit, right?

Heads the ball

djpbarry wrote: »

You’re aware that Ireland is still running a massive deficit, right?

Yes. That is why I am calling for careful scrutiny of where we put our money. And giving a bailout to bankia is not what i would do with it.

djpbarry

Heads the ball wrote: »

Yes. That is why I am calling for careful scrutiny of where we put our money.

No you're not - you're calling for a reversal of welfare cuts?!?

Einhard

Would anybody be able to explain how this works in practise, and how in particular it affects Ireland. If it's applied retrospectively, does that mean that the ESM would take over the debt that Ireland acquired in order to bail out the banks? I presume they would pay a significantly lower rate of interest on that debt, thereby reducing Ireland's interest payments. Is there anything more to it? From what I've read and heard, it seems that the debt would be taken from Ireland's books entirely, thereby reducing government debt, but how exactly would this happen?

Perhaps somebody could clarify for me?

Heads the ball

djpbarry wrote: »

No you're not - you're calling for a reversal of welfare cuts?!?

You are wrong. Nowhere did I suggest that we should reverse welfare cuts. I was simply asserting that the €1bn is in no way small when you consider the pain we have gone through in recent budgets (which included reduction in teachers, welfare cuts etc etc*).

* and that list is pretty long

[Jackass]

NIMAN wrote: »

Although this is good news, one thing's for sure, we only got a deal because Spain and Italy are about to get one.

I actually don't agree with this at all.

In fact, I think this is vindication for the Government taking the Economy out of free fall since they came to office, steadying the ship and I think given the order they've brought to the country, haven't been as tough on cuts as could have been conceived when they first came to office.

I also think this is a real slap in the face for Martin and also the shinners, as they attempted to ruffel Enda Kenny on his "soft" stance in Europe and what was he doing to negotiate a deal, and Kenny's line was always that we need to get the house in order, be patient, pass the refarendum, basically be the good boy and be patient (which he was heavily criticized for) and not only has he proven to have adopted the exact right stratagy, but the words "well bahaved Economies" is used in the statement, as well as specificly mentioning Ireland along side Italy and Spain, but no one else. I think our handling of our crisis is the direct cause of us getting in on level pegging with Spain and Italy and not as an after thought, and I really think this is as big a victory for this Government as the bank guarentee was a failure of the last.

Not to be politically motivated here, but I have been massively impressed with this Government since coming in to power, and I really hope they get the recognition they deserve for this, remembering where we came from, they have done an extraordinary job and they may well have just landed us at the top table with the big boys to get out of this mess, and Greece and Portugal and Cyprus might not be as fortunate just yet and I think the special mention of Ireland is a direct compliment to the fact that we are being taken very seriously now and they're going to give us extra attention to get out of this.

I think what the neigh-sayers tried to use as Kenny's biggest weakness, he's just turned in to his greatest strength - clearing the confusion of weak in Europe into astute strategic planner in Europe

Heads the ball

[Jackass] wrote: »

In fact, I think this is vindication for the Government taking the Economy out of free fall since they came to office, steadying the ship

They have not steadied the ship.

Unemployment, deficits, still in a program etc etc

daltonmd

[Jackass] wrote: »

I actually don't agree with this at all.

In fact, I think this is vindication for the Government taking the Economy out of free fall since they came to office, steadying the ship and I think given the order they've brought to the country, haven't been as tough on cuts as could have been conceived when they first came to office.

Ireland played no hand or part in this, of that you can be sure. This is simply the powers that be admitting, finally, they got it wrong.
We have Spain & Italy to thank for this, make no mistake about that.

This does not change this budget, it may not have any real impact on future ones.
Any savings does not mean we have more money, it means we have to borrow less, which is of course good news, but my money is on a very tough next 18 months.

Voltex

I think this has to be one of the best bits of news the country has had in nearly5 years. When you look at private debt, it has fallen from about 120billion in 2008 to about 90 billion today...and thats financing assets worth approx 400billion (in real value terms).
Pent up demand in a housing market where perception and uncertainty along with lack of credit has artificially retarded normal demand levels may help the building/construction sector get back to a normal, sustainable level of activity.

Our nation has sucked it up and knuckled down... and thats reflected in the 9 year bond prices which are hanging around the 6% mark.

femur61

djpbarry wrote: »

Are you seriously going to try and argue that the EU has not benefited Ireland? I’m old enough to remember what 1980’s Dublin was like and, even in the current “crisis”, the Dublin of 2012 is a virtual utopia by comparison.
From where I’m sitting, it was the likes of Greece and Ireland putting national/constituency interests ahead of what was good for the EU that has us where we are.
I will never be convinced by the “everyone’s too different argument”, but anyway. Plenty of people in the UK consider themselves English/Scottish/Welsh/Northern Irish first and British second, but the UK still works.
So after witnessing the monumental mistakes that were made by successive Irish governments over the last 10-15 years, you want to go back in time and give them a currency they can fiddle with too? Seriously?

I was going to like this post but I remember the 80’s in Dublin, Ireland today are in so much a better off place. I think the Irish have an attitude that we are owed something for nothing from the EU. We lost our sovereignty when we allowed the children to be abused by the Catholic Church and then by corruption by FF governments.

A person on the BBC said we have a debt of 169bn and of that only 45bn is bank debt, so 124bn is soverign debt. (could be wrong, feel free to correct those figuers if I am)

[Jackass]

daltonmd wrote: »

Ireland played no hand or part in this, of that you can be sure. This is simply the powers that be admitting, finally, they got it wrong.
We have Spain & Italy to thank for this, make no mistake about that.

This does not change this budget, it may not have any real impact on future ones.

Well I'm not saying that Merkel was never going to move until Enda Kenny stood up and demanded it, and then she decided she couldn't cope with the potential wrath of Ireland (worth under 2% of EU GDP) and conceded. You have to remember, if it was a shareholder meeting, our votes would be more or less worthless, regardless of our Economics situation.

The point is that we DON'T have that negotiating power, but because of our conduct and handling of the crisis, we, Ireland specificly, have been pointed out as a country who will be given great attention to help recover our situation and shore up our financial sector, and we have been put on level pegging with the absolute powerhouses of Spain and Italy.

The only reason we got there is because of our handling of this crisis, and we are now on the coat tails of the power house Economies and are more or less promised what concessions are made to them, will be made to us. That is a massive change in circumstances, and are bargaining powers have just jumped through the roof.

This is not something that has been afforded to bigger Economies than ours, such as Portugal, who haven't negotiated as strong a position, and less so countries like Greece or Cyprus.

This is the reason that the cost of borrowing (in terms of bond market value) collapsed on the back of this announcement, with our bond yield falling below the critical 7% mark over night, and about a 20% drop in the cost of borrowing to our Government, and in theory, we could afford to go back to the markets within a matter of days, thus regaining our Economic soverignty. i.e. not living off handouts from Germany.

daltonmd wrote: »

Any savings does not mean we have more money, it means we have to borrow less, which is of course good news, but my money is on a very tough next 18 months.

Well it's 6 of one and half a dozen of the other. Whilst the income of the Government might remain stable, the expenditure will be reduced by the removal of the debt burden we have to serve, thereby freeing up resources which can be spent elsewhere, which will ease the need to cut further spending in order to maintain essential services.

Duiske

Dave! wrote: »

Why will the cost of fuel shoot up? It's only after coming down! And I just bought a 2 L petrol Lexus

mike65 wrote: »

Heard that, that's the way markets think - oh deal - more money - more demand - lets put up prices!

mike65 got it right. We had a good news story at the start of the week about petrol/diesel prices due to fall by about 7%. Seems that's fecked now on the back of this Euro deal. Oil prices soar 9 percent as Europe moves to tackle crisis.

Scofflaw

Duiske wrote: »

mike65 got it right. We had a good news story at the start of the week about petrol/diesel prices due to fall by about 7%. Seems that's fecked now on the back of this Euro deal. Oil prices soar 9 percent as Europe moves to tackle crisis.

Also, it rained.

cordially,
Scofflaw

Scofflaw

[QUOTE=[Jackass]]The only reason we got there is because of our handling of this crisis, and we are now on the coat tails of the power house Economies and are more or less promised what concessions are made to them, will be made to us. That is a massive change in circumstances, and are bargaining powers have just jumped through the roof.

This is not something that has been afforded to bigger Economies than ours, such as Portugal, who haven't negotiated as strong a position, and less so countries like Greece or Cyprus.[/QUOTE]

Our bargaining power as the 'model' programme country shouldn't be underestimated - although naturally it has to be dismissed both by the left (because 'austerity' can't be a good thing in any way) and by those opposed to the EU (because a large part of their arguments against the EU requires us to be portrayed as powerless within it).

cordially,
Scofflaw

MrReynholm

Duiske wrote: »

Oil prices soar 9 percent as Europe moves to tackle crisis.[/URL]

Have the pump owners put up the prices yet? We know how quickly they react to an increase in the cost of oil after all, and how slowly they react to a drop.

With regards to the new agreement struck, I think it's fantastic myself. Although, the majority of people are completely disconnected from reality in that they don't seem to realise that the overwhelming majority of our borrowing is to prop up a bloated and overpaid public service, and an overgenerous social welfare system.

What we will see is most likely a tough budget in December; further cuts, new taxes, etc. and outrage over the Government being "crooks" by "not passing on the savings of this deal" to the "average man". Expect Boyd-Barrett and Higgins to be out complaining about taxes on the "average man" while valiantly defending the social welfare benefits of the "average man".

What my question is, is what is the ramifications for the ownership of the now nationalised banks? If, for example, the move is implemented retrospectively and the money put into the banks is taken out and replaced with ESM/ESF money, do the government retain control of the banks in question?

If the banks are then legally made repay the ESF funds, will the government be allowed to continue to control them?

Because personally I would absolutely hate to see this as a victory for AIB and co in terms of becoming polluted private entities again.