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 Post subject: Restructuring was, now reprofiling is "newspeak" for default
PostPosted: Sun Apr 10, 2011 4:34 pm 
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We will reach rock bottom and the only way out is to default - Shane Ross -> http://www.independent.ie/national-news ... 15084.html

Quote:
The D words are taboo. Remember devaluation in the Nineties? It was unpatriotic to utter the word. Today, when we can no longer devalue, 'devaluation' is replaced by 'default'.
'Default' is as taboo today as 'devaluation' was in 1993. In both decades, we have wallowed in denial.
Sometimes we refuse to recognise racing certainties. In 1993, as the inevitable loomed, we dubbed it "realignment". Today, we are being trained to dub default as "restructuring".

there is more


Last edited by BoyRacer on Sun May 22, 2011 1:13 pm, edited 1 time in total.

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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Sun Apr 10, 2011 5:00 pm 
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Shane Ross:

Quote:
It is a red herring because, either way, we are on the road to default, but not before we are humiliated. Europe wants to keep us on the drip until they can create a bigger basket for themselves in 2013.

Ireland cannot wait.



Why not?

If there is such a thing as an orderly default, isn't 2 years a reasonable timeline for the EZ to get its ducks in a row? We've plenty to be getting on with in cutting the deficit in the meantime, so it's not as though it's wasted time, particularly if the debt is going to be restructured anyway.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Sun Apr 10, 2011 5:04 pm 
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Larry wrote:
Shane Ross:

Quote:
It is a red herring because, either way, we are on the road to default, but not before we are humiliated. Europe wants to keep us on the drip until they can create a bigger basket for themselves in 2013.

Ireland cannot wait.



Why not?

If there is such a thing as an orderly default, isn't 2 years a reasonable timeline for the EZ to get its ducks in a row? We've plenty to be getting on with in cutting the deficit in the meantime, so it's not as though it's wasted time, particularly if the debt is going to be restructured anyway.

Yep. I don't see the hurry. Some one else (the EU/IMF/ECB) have taken responsibility for the next few years. They have set the plan, so all we have to do is hit their targets. If it doesn't work out, whose fault is it then? Who do we owe most money to then? Oh yeah, those geniuses... egg on whose face?

Lie back and enjoy the next couple of years, it is as good as its going to get.

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So long and thanks for all the fish.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Sun Apr 10, 2011 6:01 pm 
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Okay then, assuming default is inevitable, what does default in a currency union look like?


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Sun Apr 10, 2011 10:42 pm 
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needle wrote:
Okay then, assuming default is inevitable, what does default in a currency union look like?

Unless they pull a gold-plated rabbit out of the hat, California could show the way... :x

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Book I, Chapter X, Part II,


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Sun Apr 10, 2011 11:09 pm 
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Madness of Crowds wrote:
needle wrote:
Okay then, assuming default is inevitable, what does default in a currency union look like?

Unless they pull a gold-plated rabbit out of the hat, California could show the way... :x


Not a good model. California's problems are completely due to a dysfunctional and utterly corrupted Democratic party who have been in power for the last 30 plus years. Remove the ruling party, break the public sector unions and the budget problem goes away in very short order. If the state shuts down in the morning very few people would actually notice the effect. Apart for those who are on the public payroll. Almost all of whose jobs can be done better (and cheaper) by the private sector. The state provides very few direct services to the majority of state taxpayers and those it does are rated among the worst in the country. Most real services are provided by the city and county (which tend to be better run) so ordinary taxpayers would be mostly unaffected by a state shutdown.

Now a default by Ireland and the resulting government cash squeeze is a very different matter...


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 12:49 am 
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jmc wrote:
Remove the ruling party, break the public sector unions and the budget problem goes away in very short order. If the state shuts down in the morning very few people would actually notice the effect. Apart for those who are on the public payroll. Almost all of whose jobs can be done better (and cheaper) by the private sector. The state provides very few direct services to the majority of state taxpayers and those it does are rated among the worst in the country. Most real services are provided by the city and county (which tend to be better run) so ordinary taxpayers would be mostly unaffected by a state shutdown.


Sounds like Ireland to me.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 6:23 am 
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In the region of.. wrote:
Sounds like Ireland to me.


In the broadest sense the Irish state exerts a lot of control on the "means of production" which includes the "means of distribution". Here the state controls Health, Education, Security, social welfare (state pension, dole payments, redundancy), corporate welfare (Landlords (NAMA & rent allowance), banks, Underwrites semi states commercial losses e.g. DAA, CIE, ESB, Agricultural subsidies, "Green energy" subsidies), the various quangos (Dublin docklands, Grangegorman, FAS). The collapse of the state will be noticed by the population, there are few if any areas of activity in this country where the state does not have a hand.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 7:37 am 
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In the region of.. wrote:
jmc wrote:
Remove the ruling party, break the public sector unions and the budget problem goes away in very short order. If the state shuts down in the morning very few people would actually notice the effect. Apart for those who are on the public payroll. Almost all of whose jobs can be done better (and cheaper) by the private sector. The state provides very few direct services to the majority of state taxpayers and those it does are rated among the worst in the country. Most real services are provided by the city and county (which tend to be better run) so ordinary taxpayers would be mostly unaffected by a state shutdown.


Sounds like Ireland to me.


Very different. For a start the Cal state budget is around 5% of state GNP whereas the Irish budget is at least 40% of Irish GNP (and if you factor out the essentially decoupled MNC sector more like 70% of the effective domestic economy). That's a very big difference.

The US system is divided between the Feds, the State, and the City / County. The Fed and the City / County figure quite a bit in peoples lives. The State not so much. But more importantly if the State shuts down all the stuff that is important devolves to the State/County. The State budget is 40% education, 20% prisons, 40% the rest. A far better education is provided by the private sector system for 1/3 the payroll cost of the public system. If the State shuts down then funding the full school budget devolves back to the Country / City (which is how it used to be) who could not afford the gross over manning or over payment of salaries of the status quo (when compared to private schools) so that costs would quickly revert to private sector levels. Same with the prison system. Private vendors can provide the same service for 50%/75% less so the cash strapped counties / cities would soon deal with that particular profligate cost center very quickly.

I think a short / medium term shut down would be a very good thing for the state. It would force some badly needed reforms through. An equivalent shutdown in Ireland would be an unmitigated disaster and a receipt for large scale social unrest. That's how utterly depended western European countries have become on the social welfare system to suppress and deflect social problems and how much people have developed a complete dependency culture.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 10:40 am 
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So Lets be clear about this.

Default is inevitable so it doesn't matter how much we borrow at this late stage. Theres a certain amount we can pay back and we have already borrowed more than that so extra borrowing now makes no difference. If fact if anything more borrowing is better because its essentially free money that will not have to be paid back.

yoganmahew wrote:
Larry wrote:
Shane Ross:

Quote:
It is a red herring because, either way, we are on the road to default, but not before we are humiliated. Europe wants to keep us on the drip until they can create a bigger basket for themselves in 2013.

Ireland cannot wait.



Why not?

If there is such a thing as an orderly default, isn't 2 years a reasonable timeline for the EZ to get its ducks in a row? We've plenty to be getting on with in cutting the deficit in the meantime, so it's not as though it's wasted time, particularly if the debt is going to be restructured anyway.

Yep. I don't see the hurry. Some one else (the EU/IMF/ECB) have taken responsibility for the next few years. They have set the plan, so all we have to do is hit their targets. If it doesn't work out, whose fault is it then? Who do we owe most money to then? Oh yeah, those geniuses... egg on whose face?

Lie back and enjoy the next couple of years, it is as good as its going to get.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 11:26 am 
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Rarely wrote:
So Lets be clear about this.

Default is inevitable so it doesn't matter how much we borrow at this late stage. Theres a certain amount we can pay back and we have already borrowed more than that so extra borrowing now makes no difference. If fact if anything more borrowing is better because its essentially free money that will not have to be paid back.

Not quite. Default is a likely outcome. If it does happen, I believe it will be in 2013 when there is a mechanism there to cope with it. It will be a structured default in that case so there will be no sudden stop to public funding. The more borrowing that is done now, though, the more difficult it will be in 2013 (the more protracted the recovery from the default). Institutional reforms now will pay off in 2013. Above all, though, the state needs to stay funded until 2013, so sticking with the plan is essential - however unrealistic the plan is.

As Morgan Kelly said, we are dependent on the kindness of strangers. Those strangers have shown us a particular sort of 'kindness' which many consider not all that kind (as it is unrealistic). However, those strangers now have a responsibility to us.

We are the stray cat they have started to feed. As long as we don't scratch the furniture or piss on the sofa, they'll feed us. They may even get our mange and fleas sorted out at their expense...

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"It is impossible to design a system so perfect that no one needs to be good."

So long and thanks for all the fish.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 11:45 am 
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yoganmahew wrote:
We are the stray cat they have started to feed. As long as we don't scratch the furniture or piss on the sofa, they'll feed us. They may even get our mange and fleas sorted out at their expense...


Nice analogy. Being feral, we'll probably piss on the sofa anyway AND they'll turn out to be allergic to us. :)


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 2:36 pm 
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pollydolly wrote:
yoganmahew wrote:
We are the stray cat they have started to feed. As long as we don't scratch the furniture or piss on the sofa, they'll feed us. They may even get our mange and fleas sorted out at their expense...


Nice analogy. Being feral, we'll probably piss on the sofa anyway AND they'll turn out to be allergic to us. :)


_________________
"It is impossible to design a system so perfect that no one needs to be good."

So long and thanks for all the fish.


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 Post subject: Re: Restructuring is the "new speak" for default
PostPosted: Mon Apr 11, 2011 4:23 pm 
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yoganmahew wrote:
Not quite. Default is a likely outcome. If it does happen, I believe it will be in 2013 when there is a mechanism there to cope with it. It will be a structured default in that case so there will be no sudden stop to public funding. The more borrowing that is done now, though, the more difficult it will be in 2013 (the more protracted the recovery from the default). Institutional reforms now will pay off in 2013. Above all, though, the state needs to stay funded until 2013, so sticking with the plan is essential - however unrealistic the plan is.

As Morgan Kelly said, we are dependent on the kindness of strangers. Those strangers have shown us a particular sort of 'kindness' which many consider not all that kind (as it is unrealistic). However, those strangers now have a responsibility to us.

We are the stray cat they have started to feed. As long as we don't scratch the furniture or piss on the sofa, they'll feed us. They may even get our mange and fleas sorted out at their expense...


2013 is not going to happen. The date was picked for purely political reasons. After the major elections in France and Germany and after (they hope) enough of the domestic banking losses in Germany and France have been traded through. The date has absolutely nothing to do with a responsible resolution of the ongoing Euro zone sovereign insolvency problem. But what the dynamics of the crisis over the last five years tells us is that events will not wait around or enfold purely at the convenience of Brussels, Frankfurt, Berlin and Paris. Quite the opposite. The euro establishment has always been behind the curve and has always been reactive rather than proactive and when ever active steps have been taken they have always deepened the crisis. The latest interests rate hike being a case in point.

They will be doing very well if the current regime survives till the end of the year. As it now looks like 2012 is limbering up to be as brutal a year as 2008 I really cannot see it limping into 2013 in any currently recognizable form. Next year is likely to turn into a bond vigilante kill-zone. Added to that the continued unpredictable results of the forced unwinding of several carry trades and the lose / lose situation of QE3/no-QE3 and you have all the makings of another year no one is going to forget in a hurry.

So it looks like, yet again, our masters in Brussels / Frankfurt plan to sail into the oncoming hurricane in what is little more than a makeshift pedalo.


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