German Finance Minister "It's Ireland's Fault"

Villa05

Wolfgang Schauble, Germany's powerful federal minister for finance, has said it is all Ireland's fault its banks collapsed, plunging the economy into a deep recession, and absolves reckless European bondholders of all blame.
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"The cause in Ireland is something Ireland itself created – not Luxembourg, not France, not Germany, but Ireland – and it benefited from it for some time," Schauble claims.
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"Everyone should solve their own problems. If everyone swept in front of their own door, the whole neighbourhood would be clean," the German politician added.

http://www.independent.ie/business/world/the-germans-say-its-all-irelands-fault-29105380.html

I hear what he is saying, in that we collectively voted for dodgy at best Governments over 15 years, but sweeping your own front door analogy should equally apply to those that invested in these banks and they should take responsibility for their own failed investments.

The Irish public are responsible for the deficit in public finances as result of voting for Fianna Fail failed policies.

The bondholders/investors are responsible for losses as result of ill thought out investments

Common sense I would have thought.

johnnyskeleton

Villa05 wrote: »

http://www.independent.ie/business/world/the-germans-say-its-all-irelands-fault-29105380.html

I hear what he is saying, in that we collectively voted for dodgy at best Governments over 15 years, but sweeping your own front door analogy should equally apply to those that invested in these banks and they should take responsibility for their own failed investments.

The Irish public are responsible for the deficit in public finances as result of voting for Fianna Fail failed policies.

The bondholders/investors are responsible for losses as result of ill thought out investments

Common sense I would have thought.

That view, if shared by the majority of people and politicians in September 2008 would have been of enormous benefit to the country.

But since we did have FF in power who indemnified those losses, they are very much our responsibility now.

Over the last year or so the Irish media and commentariat seem to have accepted as true that the bailout was foisted on us by Europe and that they are the bad guys. Nothing could be further from the truth.

And even now, 26% of the country would still vote FF, which shows that there is a massive demographic of financially illiterate corrupt fools out there. Until Irish voters get some reality then we are very much to blame for our woes.

Doom

The Germans probably blamed others for WW1 and WW2 too, they know it was their fault then as well as now.

UDP

I believe the argument is that we allowed the reckless bank behaviour due to no proper oversight. While I believe this is true I still think those that made investments in banks should lose their investment as part of a bankruptcy.

However I'm not sure if I remember correctly so hopefully someone can correct me but didn't Merkel tell Ireland that guaranteeing the banks was a bad idea? If we hadn't guaranteed the bank debt we would not be in the bad shape we are in right now.

UDP

Doom wrote: »

The Germans probably blamed others for WW1 and WW2 too, they know it was their fault then as well as now.

The German's fully paid back their debt from the ww2 even though it took 50 odd years. Plus Germany wasn't responsible for ww1 - there were a load of countries involved.

Tigerandahalf

I think a lot of the people voting for FF are the same people who voted for FG in the last election. Those voters are just sending out a message to FG that they are not the only game in town.

johnnyskeleton

UDP wrote: »

I believe the argument is that we allowed the reckless bank behaviour due to no proper oversight. While I believe this is true I still think those that made investments in banks should lose their investment as part of a bankruptcy.

However I'm not sure if I remember correctly so hopefully someone can correct me but didn't Merkel tell Ireland that guaranteeing the banks was a bad idea? If we hadn't guaranteed the bank debt we would not be in the bad shape we are in right now.

It seems she didn't say anything - Ireland did it without any real consultation with other European countries. Lenihan apparently rang Christine Laguarde who he says seemed to agree with him, but she was among the first to distance herself from the bailout.

What really gets me is the sheer arrogance of that fat drunken fool who knew nothing about running a country but believed himself to have found the secret to "the cheapest bailout ever" and refused to listen to anyone who said otherwise.

Manchegan

UDP wrote: »

The German's fully paid back their debt from the ww2 even though it took 50 odd years.

Irish Independent, 27 February 2013
"Not many people know that generous debt relief was availed of by Germany at the beginning of its 'economic miracle'. Among modern sovereign debt restructurings, the 'London Debt Accord' for Germany (we celebrate its 60th anniversary on February 27) is an early and little-known example – which is all the more surprising because it was so successful in restoring (West) Germany's debt sustainability. By the end of the negotiations, half of all debts had been cancelled and the remainder had been rescheduled in such an intelligent way that Germany never faced a debt problem again."

UDP

Manchegan wrote: »

Irish Independent, 27 February 2013
"Not many people know that generous debt relief was availed of by Germany at the beginning of its 'economic miracle'. Among modern sovereign debt restructurings, the 'London Debt Accord' for Germany (we celebrate its 60th anniversary on February 27) is an early and little-known example – which is all the more surprising because it was so successful in restoring (West) Germany's debt sustainability. By the end of the negotiations, half of all debts had been cancelled and the remainder had been rescheduled in such an intelligent way that Germany never faced a debt problem again."

Germany owed 16 billion marks from ww1 in the 20s which defaulted in the 30s. Germany decided to pay it back anyway to keep everyone happy. Another 16 billion was owed from loans after ww2. The london debts agreement cut the total amount owed by ~50% to ~15 billion. So they effectively paid back very close to the full amount that they actually owed from ww2. This not to mention how the country was raped by the US and the UK after ww2.

murphaph

UDP wrote: »

However I'm not sure if I remember correctly so hopefully someone can correct me but didn't Merkel tell Ireland that guaranteeing the banks was a bad idea? If we hadn't guaranteed the bank debt we would not be in the bad shape we are in right now.

Not only did other EU finance ministers tell us it was a "bad idea", they literally hit the roof in some instances. I believe the French finance minister got quite angry with Lenihan over it.

This guarantee was under no circumstances a product of EU coercion etc. We thought we could pull a fast one so to speak and it has backfired on us. We voted in sufficient numbers for FF so we must take the medicine as a nation now, sickening as that may be to those of us that didn't support the petrol on the fire economic policies of that thoroughly discredited party.

People in Ireland may not like the direct manner of the Germans. That's tough. A bit of directness and a bit less flowery talk and bullsh!t would be very good for Ireland.

murphaph

UDP wrote: »

Germany owed 16 billion marks from ww1 in the 20s which defaulted in the 30s. Germany decided to pay it back anyway to keep everyone happy. Another 16 billion was owed from loans after ww2. The london debts agreement cut the total amount owed by ~50% to ~15 billion. So they effectively paid back very close to the full amount that they actually owed from ww2. This not to mention how the country was raped by the US and the UK after ww2.

The Russians "raped" (or from their perspective paid back the debt due) to the eastern part of Germany after the war but the western allies didn't, apart from France a bit and they were put in their box by the Americans.

The western allies (the US mostly) realised that destroying Germany's economic capacity would mean they would never be able to get the average German to work 60 hours a week for the following 20 years in VW factories making funny little cars and in doing so would mean that Germany would never be able to repay its due debts. The Russians weren't as clever and removed entire factories and whatnot back to mother Russia, almost completely destroying the East German economy in the process.

The thing is...Germany deserved it. They had as a people gone on a terrible war and they deserved the austerity they lived through after the war for 20 years. They took their medicine though and to an extent are still taking their medicine (they will be the ones working and paying taxes and using those taxes to write off Greek debt for example) because they still feel a debt is owed by them to Europe.

If every country was prepared to stand up to its responsibilities and not try to blame everyone else, Europe would be a much stronger place. Ireland fcuked up with the lack of banking regulation and then fcuked up again by guaranteeing those banks' debt. Time for Ireland to stop moaning and take some responsibility.

Villa05

UDP wrote: »

I believe the argument is that we allowed the reckless bank behaviour due to no proper oversight. While I believe this is true I still think those that made investments in banks should lose their investment as part of a bankruptcy.

However I'm not sure if I remember correctly so hopefully someone can correct me but didn't Merkel tell Ireland that guaranteeing the banks was a bad idea? If we hadn't guaranteed the bank debt we would not be in the bad shape we are in right now.

The then French Finance minister when contacted by Brian Lenihan to inform her of the Bank Guarantee replied "Oh Fu*k". She was not pleased

Just to add: This was what Lenihan said in an interview broadcast on RTE, He was laughing as he said it as if it was some kind of joke. I will never forget it. The contempt that Government had for it's people and peers

UDP

murphaph wrote: »

The Russians "raped" (or from their perspective paid back the debt due) to the eastern part of Germany after the war but the western allies didn't, apart from France a bit and they were put in their box by the Americans.

The western allies (the US mostly) realised that destroying Germany's economic capacity would mean they would never be able to get the average German to work 60 hours a week for the following 20 years in VW factories making funny little cars and in doing so would mean that Germany would never be able to repay its due debts. The Russians weren't as clever and removed entire factories and whatnot back to mother Russia, almost completely destroying the East German economy in the process.

The thing is...Germany deserved it. They had as a people gone on a terrible war and they deserved the austerity they lived through after the war for 20 years. They took their medicine though and to an extent are still taking their medicine (they will be the ones working and paying taxes and using those taxes to write off Greek debt for example) because they still feel a debt is owed by them to Europe.

If every country was prepared to stand up to its responsibilities and not try to blame everyone else, Europe would be a much stronger place. Ireland fcuked up with the lack of banking regulation and then fcuked up again by guaranteeing those banks' debt. Time for Ireland to stop moaning and take some responsibility.

The americans took a load of intellectual property from Germany and rebranded it as their own under the Truman executive order 9604. The germans weren't even allowed to use their own inventions for years. The patent office was also closed for years after the war ended strongly stifling the german economy and helped the USA steal many german scientists. While the russians took the factories and raw materials the americans did more damage by stealing their IP and brain drained them. The people of Germany well paid for Nazi's behaviour way above and beyond what it cost the allies to defeat them in the war. Unfortunately the vast majority of what they paid didn't go to the actual victims of the Nazis.

sheesh

In many ways he is right but
it also sounds like a politician's blanket statement with no view of the many of the minor but significant details. It was not exactly Irelands fault. the building boom was on the back of low interest rates set to give advantage Germany set by a very German influenced European Central Bank.

I am not blaming Germany. It is mostly our own fault. The inference being that if we had been a bit more like Germany it would not have happen is rubbish. we cannot control the interest rate in the Euro zone and they can.

UDP

sheesh wrote: »

In many ways he is right but
it also sounds like a politician's blanket statement with no view of the many of the minor but significant details. It was not exactly Irelands fault. the building boom was on the back of low interest rates set to give advantage Germany set by a very German influenced European Central Bank.

I am not blaming Germany. It is mostly our own fault. The inference being that if we had been a bit more like Germany it would not have happen is rubbish. we cannot control the interest rate in the Euro zone and they can.

Yes, I agree there is a certain amount of blame on Europe too. The only thing is we totally under regulated the industry allowing people to get the likes of 110% mortgages. Allowing people to get loans without checking that they could afford them or what exactly they were being used for. If we had put more checks in with regards that type of stuff it would not have mattered what the ECB interest rates were we could have taken advantage of them in a controlled way to our benefit.

carpejugulum

depends on how you define 'Ireland'

GCU Flexible Demeanour

murphaph wrote: »

<...>Ireland fcuked up with the lack of banking regulation and then fcuked up again by guaranteeing those banks' debt. <...>

I'm not especially arguing with that, but it's worth delaying a little to explore why. There's one article out there that gives an interesting perspective.

http://ipa.ie/pdf/Administration/GeorgeTaylor.pdf

While there is much in Honohan’s report to commend, to attribute the origins of the financial crisis simply to the failure of the Financial Regulator to scrutinise the banks sufficiently (largely because of regulatory capture) is to miss the crucial point entirely: reform was designed to remove the role of the regulator, or persistent and prudential intervention.

The Financial Regulator was a recent reform and, apparently, one that passed scrutiny by internal and external examiners.

http://www.audgen.gov.ie/documents/vfmreports/57_FinRegulator.pdf

May 2007

<…>Since its establishment, the Financial Regulator has devoted considerable effort to developing a formal risk rating model, and significant progress in achieving risk-based supervision has been made. The Financial Regulator ranks financial services providers based on their risk rating, taking account of both inherent risk and the impact that failure of the financial services providers would have. The risk ratings are then used to allocate the available resources.<…>

The IMF's picture of the reform was reasonably uncontroversial, too.

http://www.oecd.org/dataoecd/5/57/38151620.pdf
<...>The Irish FinancialRegulatory Authority largely benefits from the independence of the central bank, and has an accountability structure of its own.
<...>The countries with the highest scores on accountability include Australia, Ireland, and the U.K. On the part of Australia and the U.K.<...>

We've an awful talent for something. I'm just not sure what, precisely.

murphaph

sheesh wrote: »

I am not blaming Germany. It is mostly our own fault. The inference being that if we had been a bit more like Germany it would not have happen is rubbish. we cannot control the interest rate in the Euro zone and they can.

We didn't need to control the interest rate. We just needed to control the banks.

We just needed to impose strict lending criteria to prevent banks from lending ridiculous multiples of income to fools to "invest". The low interest rates were available all over Europe but not all European banks were so reckless.

Technoprisoner

i wonder if he would be saying the same thing if we decided to burn the bond holders?

dzer2

UDP wrote: »

Yes, I agree there is a certain amount of blame on Europe too. The only thing is we totally under regulated the industry allowing people to get the likes of 110% mortgages. Allowing people to get loans without checking that they could afford them or what exactly they were being used for. If we had put more checks in with regards that type of stuff it would not have mattered what the ECB interest rates were we could have taken advantage of them in a controlled way to our benefit.

This is not the problem with the banks, as they are repossessing and taking joe soap to court over their debts, its the developers and the the likes that have got off scott free over the billions that they wasted and plundered. Back in 2008 the were no problems with mortgages and personnel debt. The government basically took private debt and made it a state IOU it wasnt until Feb this year that it officially became a state debt. This was all a way to save the rich business people from going bankrupt there were 2 other sound banks in the state at the time that needed no state funding and these should have being allowed to prosper and the bad ones close.

murphaph

dzer2 wrote: »

This is not the problem with the banks, as they are repossessing and taking joe soap to court over their debts

...but they aren't. The family home is still being protected, regardless of how unrealistic the purchase was.

OMD

dzer2 wrote: »

This is not the problem with the banks, as they are repossessing and taking joe soap to court over their debts, its the developers and the the likes that have got off scott free over the billions that they wasted and plundered. Back in 2008 the were no problems with mortgages and personnel debt. The government basically took private debt and made it a state IOU it wasnt until Feb this year that it officially became a state debt. This was all a way to save the rich business people from going bankrupt there were 2 other sound banks in the state at the time that needed no state funding and these should have being allowed to prosper and the bad ones close.

Personal homes are protected. Developers have gone bankrupt. It is a nice rant but completely wrong on its 2 main points.

G Power

Villa05 wrote: »

http://www.independent.ie/business/world/the-germans-say-its-all-irelands-fault-29105380.html

I hear what he is saying, in that we collectively voted for dodgy at best Governments over 15 years, but sweeping your own front door analogy should equally apply to those that invested in these banks and they should take responsibility for their own failed investments.

The Irish public are responsible for the deficit in public finances as result of voting for Fianna Fail failed policies.

The bondholders/investors are responsible for losses as result of ill thought out investments

Common sense I would have thought.

no matter who was in power during the 15 years you speak of they would have toed the new world order/euro/banking families line of cheap and easy monies to be offered to everyone (remember pre-approved credit cards being sent out to anyone earning a wage and 100%+ mortgages!!) and for their efforts they'd be rewarded with lavish lifestyles for doing it!!

all we have to do is watch fine gael and labour and how quickly they settled right in enjoying the spotlight while doing nothing but cementing the debts of banks onto the taxpayers and the defenceless!! it's not like they were ever truly opposition in those 15 year either cos even opposition are at the trough and enjoying lavish lifestyles.

Villa05

G Power wrote: »

no matter who was in power during the 15 years you speak of they would have toed the new world order/euro/banking families line of cheap and easy monies to be offered to everyone (remember pre-approved credit cards being sent out to anyone earning a wage and 100%+ mortgages!!) and for their efforts they'd be rewarded with lavish lifestyles for doing it!!

all we have to do is watch fine gael and labour and how quickly they settled right in enjoying the spotlight while doing nothing but cementing the debts of banks onto the taxpayers and the defenceless!! it's not like they were ever truly opposition in those 15 year either cos even opposition are at the trough and enjoying lavish lifestyles.

utter Bull
Fact: FF were handed a near perfect country with the foundations for sustainable export driven growth, they handed back a bankrupt toxic wasteland.

The debts were piled on the the Irish people the night of the guarantee

I think that it is some achievement to be able stabilise the economy given what we were handed. Maye more down to the Irish people and IMF influence.

woodoo

Manchegan wrote: »

Irish Independent, 27 February 2013
"Not many people know that generous debt relief was availed of by Germany at the beginning of its 'economic miracle'. Among modern sovereign debt restructurings, the 'London Debt Accord' for Germany (we celebrate its 60th anniversary on February 27) is an early and little-known example – which is all the more surprising because it was so successful in restoring (West) Germany's debt sustainability. By the end of the negotiations, half of all debts had been cancelled and the remainder had been rescheduled in such an intelligent way that Germany never faced a debt problem again."

Yeah they cause 2 world wars and then get a debt write down but is us that deserves to be scolded

Cavehill Red

People need to listen and hear this manure, and then stop paying off banking debts this nation did not accrue.
If we're going to be blamed for collapsing the European banking system, then let's fcuking do it.

P_1

It's simple human nature though isn't it? People see something that is to their advantage and they run with it.

I'll probably get a lot of FLAK for this but if a new party calling themselves Mé Féinn started up tomorrow they would probably top the polls

cast_iron

johnnyskeleton wrote: »

Over the last year or so the Irish media and commentariat seem to have accepted as true that the bailout was foisted on us by Europe and that they are the bad guys. Nothing could be further from the truth.

I don't think that is true. WE chose to implement the bailout ourselves - I don't think that is being denied. But, it does appear the EU forced us to extend the bailout due to the high risk of contagion to other banks and the highly precarious state of other EU state's finances.

This is a subtle difference that puts the decisions in a more clear context than some people seem to portray. And I'm not commenting on whether the bailout was right or wrong - just the context in which these decisions had to be taken at the time.

murphaph

woodoo wrote: »

Yeah they cause 2 world wars and then get a debt write down but is us that deserves to be scolded

Oh FFS. Germany didn't cause WWI any more than the rest of the empires of the day all vying to be top dog in Europe.

As for us being scolded....read any history book that isn't called "Mein Kampf" and I'll think you'll find Germany was roundly "scolded" for WWII and to this day doesn't let its children forget (concentration camp visits are compulsory still). Germany (with the possible exception of Austria) has the strictest anti Nazi laws in the world. Nazi demos are usually attended by a counter demo that is 10 times bigger. Germans know that they screwed up big time back then.

Compare and contrast to the Irish who (if polls are anything to go by) have already forgotten what FF did to the country and see them as a viable alternative government. :rolleyes:

Come visit Berlin and you'll find Germany is quite open and up front about its past. No hiding things in the shadows. I'm sick of the digs at Germany by people who are largely ignorant of the facts. If Ireland could face up to its past with the same vigour (how many priests have we sent to prison altogether?) it would be refreshing!

maninasia

murphaph wrote: »

Not only did other EU finance ministers tell us it was a "bad idea", they literally hit the roof in some instances. I believe the French finance minister got quite angry with Lenihan over it.

This guarantee was under no circumstances a product of EU coercion etc. We thought we could pull a fast one so to speak and it has backfired on us. We voted in sufficient numbers for FF so we must take the medicine as a nation now, sickening as that may be to those of us that didn't support the petrol on the fire economic policies of that thoroughly discredited party.

People in Ireland may not like the direct manner of the Germans. That's tough. A bit of directness and a bit less flowery talk and bullsh!t would be very good for Ireland.

Not only that, but the guarantee was extended at least yearly over the intervening years, prior to most bondholders getting paid (2009/2010) not much resistance was put forth. The Irish public were not sufficiently informed in terms of international finance norms and also too trusting of the government's spin (a bit like government ministers listening to bankers and civil servants with vested interests). Most people wanted the guarantee and therefore forced the bailout to be requested. Most people simply didn't understand what was going on.

They are well educated now though.

maninasia

cast_iron wrote: »

I don't think that is true. WE chose to implement the bailout ourselves - I don't think that is being denied. But, it does appear the EU forced us to extend the bailout due to the high risk of contagion to other banks and the highly precarious state of other EU state's finances.

This is a subtle difference that puts the decisions in a more clear context than some people seem to portray. And I'm not commenting on whether the bailout was right or wrong - just the context in which these decisions had to be taken at the time.

They couldn't force anything. It's like Timothy Geitner was supposed to have been involved aswell from the US side. Nobody forced us to guarantee Anglo Irish bank. They could have said no. They might had to deal with some frosty relations for a while but so what. They were supposed to be leaders of OUR nation, having OUR best interests at heart.

The other part of it though, is that Ireland is running a huge current account deficit. And wasn't prepared to deal with the consequences of that immediately Iceland style.