Bailout Twas a mistake - Alan Ahearne

Now he only relises it a lot of us ordinary plonkers knew we were going down the drain before the bail out.

This is a bit rich if you look at it a few economists have being fairly right all the time they may have had odd slips but there forecasting has been farily accurate but the givernment have not wanted to listen. These economists are in general forcasting the break up of the euro and a massive default in government bonds by the PIIGS unless there is burden sharing by the EU. They question the stability of a system where we continue to load banking debt onto national debt of bankrupt countries where personal debt is very high.

The reality is that we are at the endgame now and Aherne knows it. The Germans have to understand that if
1 If we default they loose
2 If our banks go bust they loose
3 If we continue without growth they loose
4 If the Euro collapse they loose
5 If the euro saty's put they loose

What the germans have failed to understand from the start if we loose they loose as well.

johngalway wrote: »

But if we loose, we loose worse than anyone else, Ze Germans know this. Needs a lot of consideration and a lack of rash action.

We have lost so much already it is the countries that have taken little or no hit to their economies/national/bank debt that have more to loose than us. The old farming saying you cannot get blood from a turnip rings true here. If we and the rest of the piigs have to default it is the germans that have to pay they will also loose a lot of export markets.

When Alan Aherne is stating that the bailout was a mistake he is really saying that the ECB/EMF way of managing this crisis is not working and that the endgame is in sight. If we have to exit the euro will we have to devalue compared to the German euro or will germany have to revalue compared to the irish punt.

The government will have to balance its books so there will have to be like there should have been all along 20-30% social welfare cuts, minor wage cuts to lowerpaid CS staff and major cuts to higher paid CS staff and politicians as raising taxes will not be an option.

As the man said the game is up but the Gemans do not understand that yet it is too late to sort it out now. All along there should have been a bit of give and take but Merkosy did not understand it like Thatcher at the end of he career.

johngalway wrote: »

If we exit the Euro we'll get slaughtered. We'll owe our debts in Euro's and have to pay them in highly devlaued Punts.

I just do not know what part of "blood from a turnip" that people cannot understand.

You can only pay back what you can pay back not what you owe how people can equate us owe money in euro's if the f##king thing is gone the Greeks will not pay back euro's as they cannot affort to.

Most of the money we put into the banks had been put in before the troika bailout - the recapitalisation under the bailout was €16.5bn:

As reported at the Third Review, the €24 billion recapitalization of the domestic banks was completed at the end of July, with the exception of operations for €0.5 billion which are expected to be completed by end-2011. The total budgetary cost was limited to €16.5 billion through participation by private investors and liability management exercises on subordinated debt.

And of that €16.5bn, €10bn was from the NPRF, and the other €6.5bn from the exchequer, which leads to a slightly surprising conclusion - absolutely no bailout money has been used for the banks.

Here's a handy little table of the bank recapitalisation costs to the State:

€bn |AIB/EBS |BoI |IL&P |IBRC (Anglo/INBS) |Total
Government preference Shares (2009) — NPRF |3.5 |3.5* |— |— |7.0
Capital contributions (with Promissory Notes as consideration) /Special Investment Shares (2010) — Exchequer ** |0.9 |— |— |30.7 |31.6
Ordinary Share Capital (2009) — Exchequer |— |— |— |4.0 |4.0
Ordinary Share Capital (2010) — NPRF |3.7 |— |— |— |3.7
Total pre-PCAR 2011 (A) |8.1 |3.5 |0 |34.7 |46.3
|||||
PCAR 2011: |||||
Capital from Exchequer*** |3.9 |— |2.7 |— |6.5
NPRF Capital |8.8 |1.2 |— |— |10.0
Total PCAR (B) |12.7 |1.2 |2.7 |— |16.5
Total Cost of Recap for State (A) + (B) |20.7 |4.7 |2.7 |34.7 |62.8

Source: http://debates.oireachtas.ie/dail/2012/03/29/00077.asp

christmas2012 wrote: »

why is he only coming out with this now?

The Spanish bailout, presumably. As to why...Fianna Fáil have been increasingly bold recently in revising the history of the crisis in their favour, and Ahearne is rather visibly pointing the finger away from the government:

“It was a mistake. The Irish authorities in negotiations for the programme did want the new injections into the Irish banks to go directly, not to go to the Irish state,” said Mr Ahearne.

I don't recall any mention at the time of the government wanting that, but perhaps someone else can provide one.

cordially,
Scofflaw

johngalway wrote: »

I believe if we had been in a position to be able to cover our costs re the day to day running of the country then telling the banks to PFO would have been the right thing to do. After all, they were involved in what was basically gambling, responsible lending hadn't gone out the window, it had been shot out of a cannon from the rooftop. I would have agreed with letting them bear their own losses had the country been in a position to pay it's own way. However, we weren't so that's that.

Had we told the banks to go away they would have collapsed - taking about €400bn of deposits (including current accounts) with them. The government would have had to shell out for the deposit guarantee at the time of €20k per account.

Allowing for 2m personal current bank accounts the government would have been hit for up to €20 bn - before we get to deposit, small business and corporate accounts based here. It'd also have taken the credit unions with them because they have agreements with banks for a lot of their facilities.

We'd still have had to open up the NPRF in order to cover that gap, since we had a deficit of €1.6bn in 2007 (signs of the crash already starting).

I think that a lot of people do not understand I believe that Alan Aherne has come to understand that we cannot repay the money that is owed and that we should not have been expected to pick up the banking costs. If the banks (Angle and Irish nationwide in particular) had gone into examinership we could have arranged a managed solution where the bondholders picked up some of the cost.

There is a section of society out there in Ireland and in Europe that use phrases like Moral Hazzard, we did not borrow the money, people/countries have to pay there debts. You can only pay you debts if you can afford to.

We have two problems. The current budget deficit which the government fail understant that we cannot balance with tax increase and capital expenditure cuts alone. The national debt which has been increased by the funding of the banks.

It has now got to the stage that we all in Ireland/Europe will sink or swim togeather. If Germany, France and other euro countries are not willing to put there hands in there pockets and they are not we will have to default.

Austerity is not sustainable longterm especially when you have high levels of personel debt. The amount of buisness failure is starting to rise again. Also the self employed are starting to reach the end of there savings.

Just like after WWI the allies put a unsustainable debt burden on Germany that caused WWII the richer countries in Europe are trying to put an unstainable debt burden on the PIIGS and the outcome may not be pretty for either side.

Farmer Pudsey wrote: »

I think that a lot of people do not understand I believe that Alan Aherne has come to understand that we cannot repay the money that is owed and that we should not have been expected to pick up the banking costs. If the banks (Angle and Irish nationwide in particular) had gone into examinership we could have arranged a managed solution where the bondholders picked up some of the cost.

There is a section of society out there in Ireland and in Europe that use phrases like Moral Hazzard, we did not borrow the money, people/countries have to pay there debts. You can only pay you debts if you can afford to.

We have two problems. The current budget deficit which the government fail understant that we cannot balance with tax increase and capital expenditure cuts alone. The national debt which has been increased by the funding of the banks.

It has now got to the stage that we all in Ireland/Europe will sink or swim togeather. If Germany, France and other euro countries are not willing to put there hands in there pockets and they are not we will have to default.

Austerity is not sustainable longterm especially when you have high levels of personel debt. The amount of buisness failure is starting to rise again. Also the self employed are starting to reach the end of there savings.

Just like after WWI the allies put a unsustainable debt burden on Germany that caused WWII the richer countries in Europe are trying to put an unstainable debt burden on the PIIGS and the outcome may not be pretty for either side.

As I pointed out earlier, the bank bailout money supplied by the troika amounts to very little, so I somehow doubt Ahearne is actually saying any of that.

[EDIT]Sorry - none of the bailout money has been used for the banks.[/EDIT]

cordially,
Scofflaw

Scofflaw wrote: »

As I pointed out earlier, the bank bailout money supplied by the troika amounts to very little, so I somehow doubt Ahearne is actually saying any of that.

cordially,
Scofflaw

Them what was he saying or was he just breaking wind. When he utters a statement like that he must have a good reason to state it and he must be very unhappy with the situtation the country is in. He must also think that we are up the swanee.

Farmer Pudsey wrote: »

You can only pay you debts if you can afford to.

We have two problems.

You have a third too - a credibility problem. Living outside of Ireland, I hear reports of MPs evading tax with no consequences, bankrupts attending Euro 2012 and staying in €500 per night hotels and more importantly UNREFORMED public services where senior management are still paid huge salaries. For better or worse few people abroad are really convinced that Ireland is as hard up as you make it out to be.

Ahearne is now saying exactly what Morgan Kelly and McWilliams have been saying since day 1 of this crisis.!!!

We have been living beyond our means for 10 years or more ,what is now required is a 30% cut in expenditure or a devaluation of similar amount . It's obvious to a blind man that our huge leap in standard of living in the last decade is not now sustainable .
The fact that Ahearne and Bacon have crawled out of the woodwork following Elderfields capitulation on the banks last week would indicate that something very nasty is in the offing .
Honohan will probably wield the knife .
Again !

Farmer Pudsey wrote: »

coolshannagh28 wrote: »

We have been living beyond our means for 10 years or more ,what is now required is a 30% cut in expenditure or a devaluation of similar amount . It's obvious to a blind man that our huge leap in standard of living in the last decade is not now sustainable .
The fact that Ahearne and Bacon have crawled out of the woodwork following Elderfields capitulation on the banks last week would indicate that something very nasty is in the offing .
Honohan will probably wield the knife .
Again !

I would not count Aherne and Bacon in the same breath. Aherne had been on one side of the fence and has changed side to be McWilliams/Kelly/ and Constantine.
Bacon was a hired gun that has deserted ship and has been rehired his report has been bought and payed for by another party and he should crawl back into the hole he came from.

I do not think we need or will get a 30% devaluation it will be around 20% it will give the economy the injection that we need to start rolling along.

There might be time for one last holiday abroad in France before it gets too expensive, then again they may have to devalue as well. However we still will have Spain, Portagul, Italy and of course it will be very cheap to holiday in Greece though it might be a bit on the dodgy side unless the generals come to power. But I think that is the way the Germans want it.

It's an ill wind .....

antoobrien wrote: »

Then explain how we ran surpluses for most of the previous decade?
year|Budget +/-
2001 | +0.65bn
2002 | +.095bn
2003 | -0.98 bn
2004 | +0.33bn
2005 | -0.6bn
2006 | +2.2bn

We ran surpluses becasue we werecollecting income via stamp duties that were not sustainable, thierng lies the structural deficit problem. If we excluded stanp duties from the income side during those years we would have either been either balancing our books or running deficits also. That's why we are where we are.