Do you think it’s possible that the 2 Brians have figured out that the Europeans are more worried about what happens than they are, and are using this knowledge to hold out for a few baubles for themselves before the accept a bailout
Oh yes. They have learned well from the bank chiefs. Ireland is systemic until the bailout. After that it is irrelevant. See Greece for example…
Should we leave the euro .?
Would we be much worse off?
As English speaking members of Europe [like U.K.] American companies are no worse off.
We control our tax rates!
We control our own destiny, not begging paupers of Europe.
We link our currency to gold and investors will flock, as they do the Swiss franc.
Actually I think the game is a lot simpler than that. The current game of chicken with the EU/ECB is mostly about FF positioning among its core demographic for the next election. FF’s near death experience during Spring 2009 (only saved by the Greens) has only redoubled their efforts. They have know brutal cuts that would seriously impact their core supporters have been coming since before the 2007 elections. Soft landing or no soft landing.
The last two years has been spent avoiding any hard decisions at all cost and trying to maneuver the opposition into a weak position for a snap election. Think a sumo dance. So far the opposition have not been wrong footed but FF have still been able to position themselves among the core 26% / 28% demographic so that when the axe does come down and their supporters get clobbered financially the local FF’ers can canvas during the next election with the line “those foreign financiers forced us to be bailed out by the IMF/ECB” and “its those foreigners that took away your medical card / cut your welfare / cut your PS salary by 30%” etc. etc.
In the same way the bank bail out was all about saving the skin of a small group of insiders the current crisis caused by the refusal of the government to cut back boom levels of public expenditure is all about the simple electoral calculus of ensuring it keeps most of its core voting demographic at the next election and the survival of FF afterward as the largest party. Looks like they are going to succeed. The spin off of a whole bunch of FF marginal TD’s as “independents” is just part of the process of how the monster will survive the next election. I expect that FF will still pick up the usual 10 or 15 “bonus” seats after the next election , except this time it will be in the guise of ex-FF “independents” who will then vote with their tribe in the next Dail.
If you think I am been far too cynical then you have not been paying attention. This has been the FF way since '26 when it split from Sein Fein to be become the Me Fein party. Its all about survival and spoils. Good governance never enters the picture.
What would be the logistics of Ireland printing its own currency over the weekend rather than calling in the IMF? Maybe this is what the stand-off is about? Could it explain the IMF story being hidden by RTE now?
Almost everything that has happened at a political level in the various parties over the last few years will only start making sense if you start with the banal truth of the election time hustings as it work in Ireland and work back from there. FF’s positioning has been completely predicable. As have the very public attempts at dumping Cowen. Saw the same thing happen to Lynch in the late 70’s when the '77 give away election promises rapidly fell apart and completely sank the economy. But I see no shark like Haughy waiting to step in. To be perfectly brutal the party is pinning the future of the country on a man who is very sick and dying of cancer. That is what I saw on Newsnight on BBC2 a few days ago.
FG’s leadership tussles have been between two wings of the party, the patriots and the realists. The patriots want to step in a save their country from financial destruction. The realists have a better grasp of how the mind of the Irish electorate works and realizes that if a FG goes into coalition and force through the cuts needed to save the country the party has a good chance of not surviving intact the resulting political fallout. So I’m with the realists on this one. The dismemberment of FG would only benefit FF so better to keep FF in power come what may and have them deal with the political consequences of the fiscal collapse.
And Labour? Just being their usual woolly clueless self. Still the most ineffectual and least successful social democratic party in the western world. Utterly hopeless.
So it just a matter of hold tight and ride out the storm. Because the Irish political parties will not deliver any real long term solutions to the current situation until enough of the Irish electorate has had the living shit scared out of them. And based on what I’ve seen so far I dont think the current crisis and its likely aftermath will do it. So just watch them trying to scramble to get their own seat on the life boat while stomping on the fingers of everyone else in the water desperately trying to hang on to the side for dear life. It’s not going to be pretty.
Oh, I quite agree, sorry I didn’t read the baubles bit in IDONTKNOW’s post - the win for FF will be to have a solution imposed. I think the only delay is the a recognition in the EU that they are dealing with people who would send not only their own country but everyone else’s up the swannee to ensure their own dynastic survival.
In addition, there is the backers to think of. One suspects that the putative opposition have rebuffed their advances…
NCB have a report out on whether Ireland is solvent:
ncbresearch.com/fixed_income … turing.pdf
There’s a discussion about it and opinion pieces by John McHale (yes) and Constantin Gurdgiev (no) on IrishEconomy:
irisheconomy.ie/index.php/20 … number-up/
My initial reading of the NCB report:
The NCB report that Mr. McHale alludes to sees GNP growth from 2011 as:
As they see GDP growth being greater than this, they see an increase in the gap between GDP and GNP increasing (currently the gap in 19%).
Including NAMA, they see a peak debt:GDP of 134.2% (in 2012) with a figure at end of 2014 of 130.6%
(All from Appendix 1)
p.7 “If the real interest rate on debt is higher than real output growth, then the debt/GDP ratio increases, even if a government manages to match its primary expenditure with revenue. In this case, new debt needs to be issued simply to cover the interest payments on the outstanding stock of debt. As new debt is added, interest payments will increase even
further, thus leading to the issuance of ever greater amounts of debt. roughly speaking, when a government “indefinitely” issues new debt to pay interest on the stock of debt (and any additional non‐funded
expenditure), it is said to be running a Ponzi scheme, and its debt is set to grow without limit.”
“Table 1 below is our baseline scenario for the debt outlook in 2014. This scenario assumes that the fiscal consolidation is seen through in full, that there are no further capital transfers to the banks from the exchequer and that spreads over Germany normalise towards 200bps over the coming years (whether that is done domestically or with EFSF help).”
“Under the NCB scenario, Ireland would need more growth than our assumed rate or to initiate further fiscal consolidation measures to stabilise debt in 2015.”
I don’t see much to be cheery about in this report. NCB are saying:
- growth will be insufficient to avoid a poverty trap.
- there will be a jobless recovery (evidenced by the low rate of GNP growth)
In addition, they make no mention, that I can see of future eurozone interest rates. These have to be the elephant in the room. If the main part of the european economy recovers this will continue to help our exports, at least from the MNC sector. The corollary of this is that inflation expectations will increase if unemployment continues to fall in the larger economies. If the pressure to expand domestic consumption in Germany bears fruit, while it may increase our exports more, it will also lead to further inflationary pressures.
The summary of the NCB report is:
“Is Ireland solvent? Under our baseline scenario – fiscal consolidation seen through in full, normalisation of the spread over Germany, no further bank transfers from exchequer – Ireland is solvent.”
I believe all three factors are untenable; that all three are required is made clear elsewhere in the document. I can come to no other conclusion that Mr. Kelly’s - we are reliant on the kindness of strangers to:
- enforce fiscal consolidation
- normalise the spread through the use of EFSF
- resolve our banks without further cost to us
At this stage wouldn’t a bailout of some description, either IMF or EU be the best option? Rather than the political jigs and reels happening now at least we will have some real diction and clarity and a short-term roadmap.
The Sunday Business Post reports that the Irish government are under huge pressure from the ECB and other European governments to accept a bailout. The pressure has been intensified on the government today.
Lenny and Biffo (and NCB) can talk about getting the deficit under control all they like, but the problem is the loan to deposit ratio of our domestic credit institutions. We need foreign deposits or foreign support to balance the assets against liabilities
Borrowings from the ECB by Irish Domestic Credit institutions increased €23 bn in Sept up to €83bn.
(a lot of term deposits matured as the original term of Bank Guarantee expired).
The majority of this increase was caused by the decrease in deposits from non residents.
centralbank.ie/data/site/cmb … 202010.pdf
October won’t be pretty either.
Without a bailout ESF or IMF, this outflow won’t be stemmed.
Based on domestic deposits the Eur wedge on the edge posse are not that busy (up to September anyway).
As JMC said its all about the survival of FF at this stage . Keep the county in a high state of anxiety over the weekend and then accept a bailout early next week . Spin it that the bailout was forced onto us by the nasty Europeans and they are the ones who are removing the medical cards etc and not FF.
It was Lehman Brothers fault and now its the nasty Germans fault . We are a small open economy who just happened to be in the wrong place at the wrong time when the GFC hit . Then invoke the Irish victim mentality come the next election .
Totally agree and this is another reason why PTSB, BOI and AIB are in serious trouble. The Irish Times reported today about the huge deposit outflows in BOI in recent weeks leading to 160% loan to deposit ratio a BOI. I am reliably informed that AIB have had similar, if not worse, deterioration in their loan to deposit ratio. Meanwhile, PTSB have a shocking 260% loan to deposit ratio. This is simply unsustainable.
Your stats are so September 2010 !! The figure, as at last Friday, as I said in another thread, is 100 billion in support to Irish domestic banks as per The Sunday Business Post report. The Sunday Business Post says that the ECB are keeping our Irish banks alive and their support cannot be guaranteed to continue.
Good spot. The Irish Times today said that the outflows are mainly coming from corporate customers and high wealth individuals. Interesting that there are high non resident outflows as well.
So the cycle that started with Anglo in 2007 is now ending with the whole Irish banking system. Anglo starts losing external deposits so the other banks and CB step in to hide the hole. Now for the last 18 months all the other Irish banks are losing external deposits so the CB via the ECB fills the hole. By all metrics not only does Ireland not have a banking sector anymore but I dont see how the rubble is sold off with out someone, sometime, have to take a very big hit. We are talking a multi-tens billions hit.
What has just happened in Ireland will be taught for generations to come as a case study about how not to recover from a banking crisis. Finland as an example of how to do it right. Norway as how to do it right, eventually, when your political class are slow to catch on. And Ireland as how not to do it in ever possible way, when you political class is not slow to catch on but just crassly grasping and incompetent.
Why do I get the feeling that something is dying this weekend and next week the country may be living in a very different world? Little more than a ward of (EU) state with the ECB as guardian.
See the Ode to the Republic thread in the Piston…
Someone’s got it in for me
they’re planting stories in the press,
Whoever it is I wish they’d cut it out
but when they will I can only guess.
Idiot wind, blowing everytime you move your mouth
Blowing down the back roads headin’ south
Idiot wind, blowing everytime you move your teeth
(Sorry offtopic - but there’s a great video of that here, Podge)
This is pretty serious stuff.