When will Ireland default?

Anthony16

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

Anyone

Anthony16 wrote: »

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

Its in Ireland's interest also to prevent a Euro collapse. If you think its bad now, it would be a hell of lot worse with a devalued worthless currency, and the inability to borrow. We'll be back picking spuds within a year.

dlouth15

Anthony16 wrote: »

If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.

The Irish government is no longer seeking that.

Anthony16

Why then is there a clause whereby it can be used in special cases to retrospectively recapitalise banks.I know Noonan has muttered he is no longer interested in this but Enda also said he never asked for a debt write down while his colleagues claimed differently.

What do u guys suggest is the future?Carry on in hope that there will be enough growth to enable us to pay back our massive debt load. That is delusional imo. Unless we get a big debt write down there is no hope for this country.Its a dump really.Greece managed to get a debt writedown which shows the Germans are wary of a eurozone break up and will do their utmost to prevent it

RED PASSION

Is money still save in the banks or will the government refuse to honour the bank guarantee if the country defaults

efb

The bank Guarentee is finished. The ECB covers all personal deposits up to €100K

Hootanany

We owe 600 billion we can never pay that back.

McDave

Anthony16 wrote: »

At the moment it seems we are dying a slow,inevitable death anyway so there is an argument for defaulting immediately and getting it out of the way.The irish government may be waiting until our sovereign income and expenditure match up and then defaulting on the bank debt.Maybe in the latter situation the markets would look more favorably upon us if we have our house in order.
The ECB continually throw us a bone to keep us content e.g. the promissory note deal.If they implemented what they said they would in June 2012 and allow the ESM to retrospectively recapitalise banks we may have a chance of staying in the EU.It is in the Germans interest to prevent a euro collapse and I think we should play hardball after the German elections

If it took Ahern and Co a decade or so to sell the country into hock, don't be surprised if it takes a similar duration to undo the damage. Don't forget that both public and private spending was frontloaded in massive amounts. It's a huge problem to turn around. And that's not even taking the public takeover of Anglo/INBS debt into account.

Expect a few more years of rebalancing, and hopefully then a sustainable recovery off a realistic economic base.

As to the timing of any potential deals, I think a lot of countries will be putting pressure on Germany after their elections. IMO, the time to commit to an investment and growth strategy will arrive once the German public has given Merkel a renewed mandate, and banking reforms are agreed at EU/EZ level.

Amirani

Hootanany wrote: »

We owe 600 billion we can never pay that back.

Not many countries intend to pay back all of their sovereign debt.

McDave

NiallSparky wrote: »

Not many countries intend to pay back all of their sovereign debt.

Or even a substantial amount! Most countries simply roll it over.

The sovereign debt crisis emerged primarily because many countries were getting into the budget deficit habit, allowing their total debt to balloon, and some lenders were starting to get the willies. That's one of the reasons for the Maastricht debt criteria. Sixty percent total debt and no more than 3% annual debt - although the latter probably assumes growth in and around that region, as opposed to the sclerotic rates of recent times.

Gone West

The default, or "whatever" will happen only after all the assets have been stripped from the people and sold off.
Ireland will be treated just like a company that is about to collapse, strip anything of value, sell it to pay off preferred investors, then go bankrupt.

Criminal incompetence should be a crime, and the uneducated ignoramuses who represent us, and "negotiate" at the big table with the big boys should have never left the family farm or their teaching job.

Anthony16

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

View

Fuzzy wrote: »

The default, or "whatever" will happen only after all the assets have been stripped from the people and sold off.

Well there must be no danger of default then since there seems to be no rush to sell off assets.

_Kaiser_

Anthony16 wrote: »

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

Ah but the Greeks were out protesting and threatening to default regardless - here we have the "European of the year" and a docile servile electorate.

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

I fully expect the EU to collapse under its own weight and the incompatible national interests, cultures and moralities of its member states and then maybe we can go back to the EEC model, but until then nothing much will change.. the rich will get richer, the gap between the social classes will increase (we may not have Lords and Ladies but we have definite and growing divisions), and the only people who'll pick up the tab or face any consequences will be the aforementioned docile, servile electorate.

You reap what you sow

McDave

Kaiser2000 wrote: »

Ah but the Greeks were out protesting and threatening to default regardless - here we have the "European of the year" and a docile servile electorate.

There's a very simple reason why we are not protesting in great numbers on 'bailouts', Troika, etc. And it is this.

Most Irish people actually endorsed Ahern and his crew and went along with the C****c T***r fiction. Irish voters may well be docile and servile as you suggest. But at least they have the cop on to realise that if they 'man the barricades', they're effectively protesting against themselves and their callow support of crony politics down the years.

McDave

Kaiser2000 wrote: »

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

Ireland will not default so long as it reckons it can maintain reasonable standards of living for enough of its people. We were never prepared to go the Icelandic route because we suspected the short sharp shock treatment would have dumped people out of the public service in massive numbers, and pay cuts would have been too painful for most.

Instead, our membership of the Eurozone has given us the opportunity to manage our way out of the crisis with most people still at work with reasonable enough wages. And with the prospect of setting our economy on a sustainable track, once the worst of the crisis is over.

As for sovereignty and independence, whether we're in or out of the EU, we live in an increasingly interdependent world. The EU has given member countries the opportunity to pool aspects of sovereignty where these can yield better results. The Euro for instance will yield increased sovereignty for its members insofar as the Eurozone will be able to maintain its longer term independence vis a vis the dollar, rouble, renminbi, etc. Many other aspects of sovereignty will remain ours. And we will always have the choice of pulling out of the EU if we feel it is no longer in our interests.

McDave

Anthony16 wrote: »

Most of that is bank debt forced upon the Irish taxpayer.I think we will have to get a major write down but only if we really look for it by threatening a full scale default. IMO Germany will stop at nothing to prevent this as seen with the writedown the greeks got

I think we'll get terms on our debts which will account for a substantial proportion of the promissory note 'debt'. But we will still have to pick up the tab for much of the Anglo/INBS charade because it was largely our charade which our State permitted to go unchecked, and about which it was spectacularly ill-informed. We'll also have to suck up the debts of the systemic banks as they were completely our State's responsibility to regulate.

And don't forget, we dodged a serious bullet on DEPFA whose massive debt was repatriated from IFSC cowboy land to Germany not long before Lenihan/Cowen's infamous guarantee.

If we had done as Iceland did, where would we be now? The foreign companies would have left in their droves, leaving unemployment at least twice what it is now and no way of paying social welfare, due to severly curtailed tax revenue. We would be borrowing even more just to keep the country running, if we could get it! The approach taken, tough and in ways unfair, is the only option open to us and anyone claiming otherwise is living in dreamland. Things ARE tough, but there is light at the end of the tunnel. Stick with it and we'll all emerge stronger.

3DataModem

What's the problem with handing over sovereignty? How much has it really benefitted us, and how much has it cost us?

McDave

Kaiser2000 wrote: »

Ireland won't default purely because it wouldn't suit EU interests for us to do so... we WILL however continue to hand over the last remnants of sovereignty and independence in the name of fiscal and political unity with a system that we have very little in common with at all and which certainly doesn't represent or protect our best interests.

Incidentally, how do you define 'sovereignty'? I often feel people bandy terms like sovereignty and neutrality around rather indiscriminately without getting to the crux of what they actually mean.

McDave

3DataModem wrote: »

What's the problem with handing over sovereignty? How much has it really benefitted us, and how much has it cost us?

These are questions which have to be asked. And honestly answered.

As far as the EU is concerned, we have temporarily handed over defined competences within strict legal terms. Some characterise this as pooling sovereignty. The pooled sovereignty will in time generate sovereignties at EU level that could not really exist at national level.

As far as Ireland is concerned, there are many areas of so-called sovereignty which we simply haven't exercised at all. And to our detriment. For instance, the State had the legal right to oversee and regulate our banking and financial sectors. But instead of working out what the abolition of the Glass-Steagall Act in the US and the general liberalisation of international capital movements meant in reality, our numbskull leaders and public servants merely saw it as a 'market' to exploit and another notch to add to our low tax off shoring business. It didn't occur to them for a second that their Charlie McCreevy laissez faire approach would lead to widespread abuses which would need to be closely monitored and controlled.

The Irish State did not exercise it's sovereignty in this regard. Not one whit. Worse still, when the whole charade went belly up, the government didn't have a clue and was turned over by a bunch of snake oil bank salesmen. Read this again: The entire 'sovereign' Irish State was played by a bunch of incompetents who couldn't run their own businesses.

So much for sovereignty!

golfwallah

Hootanany wrote: »

We owe 600 billion we can never pay that back.

But we can pay it back over the long term - it's just that the long term lengthens (and the pain associated with it for us all) as government (on our behalf) continues to borrow to prop up excessive current spending.

Remember, for example, that many of today's so called "strategic defaulters" will eventually inherit assets from their parents and the banks can wait around for a long time too to get their money back.

Personally, I'd prefer to see the unacceptably high debt overhang reduced quicker than have it hanging over us for years to come.

spank_inferno

Hootanany wrote: »

We owe 600 billion we can never pay that back.

Where are you getting the 600 from?

Isn't it closer to 180 billion?
(including debt already owed before the 2008 crash).

KyussBishop

I don't know if Ireland reliably has anything to gain from a default - we still need to use deficit spending to keep services going, and while still in the Euro, we'd get hammered in the bond markets without EU help.
If we want to default in any way that's beneficial, we'd probably have to leave the Euro, and if we leave the Euro then leaving the EU itself seems to come with that.

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.


The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

ezra_pound

KyussBishop wrote: »

I don't know if Ireland reliably has anything to gain from a default - we still need to use deficit spending to keep services going, and while still in the Euro, we'd get hammered in the bond markets without EU help.
If we want to default in any way that's beneficial, we'd probably have to leave the Euro, and if we leave the Euro then leaving the EU itself seems to come with that.

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.


The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

I agree with you whole entirely.

This is a complete u turn from your previous convictions. Have you abandoned mmt?

golfwallah

McDave wrote: »

There's a very simple reason why we are not protesting in great numbers on 'bailouts', Troika, etc. And it is this.

Most Irish people actually endorsed Ahern and his crew and went along with the C****c T***r fiction. Irish voters may well be docile and servile as you suggest. But at least they have the cop on to realise that if they 'man the barricades', they're effectively protesting against themselves and their callow support of crony politics down the years.

True and hence the old adage: "In a democracy you get the government you deserve and you deserve the government you get."

At election time, voters need to look beyond the politics of promise. For example, Pat Rabbitte conceding in a recent interview about breaking election promises on child benefit: “Isn’t that what you tend to do during an election”: http://www.thejournal.ie/pat-rabbitte-election-promises-labour-929522-Jun2013/

And we all know that the opposition were clamouring for even more reckless government spending during the Celtic Tiger era.

Ireland isn’t unique, either, as similar reckless political promises of goodies today are what got political parties into government in many democracies. There are a few notable exceptions where there seems to be some form of national consensus on how the pie should be shared between the various competing social partners (as in Germany or Switzerland, perhaps?). But in Germany they learned the hard way from promises made before two world wars.

Maybe it takes a catastrophe for people to learn lessons – I’d like to see a bit more debate on this issue and how to put more manners on political parties as regard their unaffordable political promises.

McDave

KyussBishop wrote: »

The last half decade has been an utter disaster in EU economic mismanagement, and the trainwreck looks like it could potentially continue on like this for another decade.
There is a fair chance that we are going to be in the same situation again, in the next economic crisis - so we should be seriously looking at getting back some control over our country, even if that means taking a lot of pain/damage in the short-term.

As I see it, there has been economic mismanagement in certain EU countries. At EU level, bases for sustainable macroeconomic policies are laid down in the Maastricht criteria. Most countries chose to ignore them. That's not the EU's fault.

The ECB has made money available at modest interest rates, and recently at low rates. It is not the fault of the ECB if certain countries abused borrowed money.

As for 'control', Ireland had practically complete control of its macroeconomic and financial policy during the C****c T***r years. And Ahern & Co. blew it completely.

McDave

KyussBishop wrote: »

The way Europe is headed, is towards a fully unified nation (the shared currency is actually a huge step in this direction and makes it nearly inevitable, unless it's aborted; this - a shared currency combined with economic crisis, is what originally brought the US states closer together).

Do we really want this anymore - for Europe to turn into a single unified nation? (especially given how badly mismanaged the crisis has been)
If we don't, we need to abort the single currency - monetary sovereignty (a country having control over its own currency), is actually an essential part of what makes up a countries overall sovereignty.

Even accounting for the concept of 'ever closer union', I don't see any basis whatsoever for a unified European nation. I don't know of a single country or region which would accept a new legal basis in the EU treaties to permit this. There are too many distinct cultures in Europe for there to be a basis for a single nation.

Regardless of the Euro, EZ countries are still mainly sovereign, and will remain largely so for the foreseeable future. Certain aspects of sovereignty will continue to be pooled on a formal legal basis. But member states will still remain nations, cultures or whatever makes them distinct.

McDave

golfwallah wrote: »

Maybe it takes a catastrophe for people to learn lessons – I’d like to see a bit more debate on this issue and how to put more manners on political parties as regard their unaffordable political promises.

Jean Monnet said Europe would be built on crises. And so it's transpiring. I guess the need for change is only widely understood when things go badly wrong and solutions are seen to have real meaning.

Certainly our own crisis has demonstrated the need for sustainable economics. Whether we learn from this is entirely another matter. When I listen to Labour railing against 'austerity' (which I personally see as simply balancing the books), I fear we're well capable of making similar mistakes all over again.

Phoebas

spank_inferno wrote: »

Where are you getting the 600 from?

Isn't it closer to 180 billion?
(including debt already owed before the 2008 crash).

I presume he's including household debt as well as sovereign debt. Dunno why he thinks we can never pay it back.

realitykeeper

Ireland should not default but it should let the banks go bust. Europe will never forgive Ireland its debts and rightfully so. They were good enough to lend us the money in good faith and the least we ought to do is repay it along with whatever interest is due. Angela Merkel had the right idea when she said "let every country clean up its own s**t."