I agree that this is probably made up and for the following reasons:
An EU/EFSF deal is likely to be the first step with the IMF in the background.
Even if there is a plan (which is likely), the timing is off. An actual fail in the bond markets would be required first.
There’s lots of made up stuff to talk books…
Why is this still important?
We are heading Greek style (higher yields permanently closing the open market), so it doesn’t surprise that some sort of bailout is being planned for. Still, the rumours are usually before the action has even started, so there’s an element of reflexivity - i.e. the rumours may be causal rather than just reflective.
No, I am saying that by Mr. Honohan saying that “the IMF would do nothing different than the current policy” he is saying that we are being as austerian as we can be, so calling for their intervention is not going to change much if anything in policy terms. If you see this as being an IMF plan for Ireland on standby, then you are misinterpreting the remarks.
1: The ECB are buying Irish bonds already so technically we are already in bailout mode
2: The ECB will never allow one of the member states access IMF loans when it can look after it itself - there is no saying it would do it any differently than the IMF, and there is no saying they wouldn’t send one of their lads over ( say Monday and Tuesday of this week ) to oversee the budget to insure it makes the cuts - so why so afraid on the IMF, they may as well be here and the ECB already are no ?
I am reversing my view that it is the EFSF that will be called on.
Corporation tax could be a condition for the EFSF.
The bondholder haircut mechanism is not yet in place for the EFSF, it functions as a liquidity conduit.
Reason 2 means there’s way more debt to come than has been admitted to so far. Perhaps some of the INBS cases have legs. Perhaps the trickle is now a flood from the other banks. Perhaps the promises are being called in early.
Anyway, if it is the IMF, then it is likely because of their bargaining power to impose losses on other european institutions. The knock-on effects elsewhere will be large. The likely medium term result of this is that we will be marginalised in Europe. Anti-terror legislation? They’ll be using anti-Christ legislation on us…
As to what it will mean - I think a domestic economy based on IOUs is likely.