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Ireland's Scary Scenario

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In what he calls a "scary scenario", outlined in the Sunday Independent today, Mr McCarthy says "the game is up" if the Government flunks the Budget on December 7.
The sense of impending doom is also evident in the latest Sunday Independent/Quantum Research poll, which found that a massive 64 per cent believe it to be "inevitable" that Ireland will need the help of the IMF in the new year.
Mr McCarthy has said that if the Budget does "too little" to convince the financial markets, the Government will be unable to finance itself — "which means an IMF/European bail-out and economic policy dictated from outside the country for the first time since the State was founded".
He warns that the country's cash reserves will run low by next spring, unless Ireland re-enters the bond market with a "pretty big issue" of up to €5bn.
"Realistically, the Government needs to do this in January or February at the latest," he says.
Could Ireland effectively be 'annexed' by Germany as soon as the New Year?
No control over currency, no control over debt issuance, sovereignty effectively handed over to Germany.
Edited by Frank Sidebottom

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Reminds me of the Act of Union 1707.

http://en.wikipedia.org/wiki/Darien_scheme

Idiots bankrupting themselves to the point that they ended up effectively annexed by whoever could bail them out.

Note that in 1707 it was the Scottish elite who were the ones bailed out effectively, the plebs had nothing to do with it.

It all sounds so very familiar...

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Could Ireland effectively be 'annexed' by Germany as soon as the New Year?

Hey why don't we take ireland then? Always fancied that craic they keep on about

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I can't see Ireland surviving without a bailout or default.

However the implications will send shockwaves across the EU, if Ireland falls I would expect the other PIIGS to follow suit. Chaos looming on the bond markets?

Perhaps Ireland will be owned by the Chinese?

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I can't see Ireland surviving without a bailout or default.

However the implications will send shockwaves across the EU, if Ireland falls I would expect the other PIIGS to follow suit. Chaos looming on the bond markets?

Perhaps Ireland will be owned by the Chinese?

Good to see those sweeteners for the yes vote in the Lisbon Treaty referendum are working out so well

The politicians (elected representatives to serve the country!) should have told the Irish voters, Fck off you are too thick to vote on something as important as this as they did in the UK, because having bought the bshit its clear that as a whole they were too dense to understand what they were voting for and it could have saved the politicians lying to them

Edited by Tamara De Lempicka

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I saw some Irish finance minsiter on Bloomberg the day they last sold a load of debt on the markets, say that they now had enoough cash to keep them funded for two years.

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I saw some Irish finance minsiter on Bloomberg the day they last sold a load of debt on the markets, say that they now had enoough cash to keep them funded for two years days.

Corrected.

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Ireland's deficit is 19 billion

Welfare spend is 21 billion

the solution is rather obvious (and yes i do live here):

* cut pensions (especially ex public servants)

* cut welfare, most countries dont have welfare schemes and none come close to whats handed out here

* tear up Croke Park agreement and take a machete to public servants who earn 40% more then private sector on average and had their wages increase all the way into 2009

The solution is obvious, its the lack of will and an iron neck to stand up to vested interests that is missing

oh and while at it scrap NAMA, and liquidate most of the banks

This problem could have been solved 2 years ago, instead the govt dragged its feet unwilling to stand up to lobbies hoping that the global economy recovers and somehow the whole thing blows over, needless say that was too optimistic

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Ireland's deficit is 19 billion

Welfare spend is 21 billion

the solution is rather obvious (and yes i do live here):

* cut pensions (especially ex public servants)

* cut welfare, most countries dont have welfare schemes and none come close to whats handed out here

* tear up Croke Park agreement and take a machete to public servants who earn 40% more then private sector on average and had their wages increase all the way into 2009

The solution is obvious, its the lack of will and an iron neck to stand up to vested interests that is missing

oh and while at it scrap NAMA, and liquidate most of the banks

This problem could have been solved 2 years ago, instead the govt dragged its feet unwilling to stand up to lobbies hoping that the global economy recovers and somehow the whole thing blows over, needless say that was too optimistic

Fortunately their isn't the political will to take the action needed. Forward to sovereign debt default and the end of fiat currency! :D

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Could Ireland effectively be 'annexed' by Germany as soon as the New Year?

No control over currency, no control over debt issuance, sovereignty effectively handed over to Germany.

Already happened; the day they joined the euro.

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Did the ECB not just set out conditions for a soft landing version of a member state default ?

Isnt the 440 billion euros pledged as some sort of solvency crisis loan fund still on the table ?

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I saw some Irish finance minsiter on Bloomberg the day they last sold a load of debt on the markets, say that they now had enoough cash to keep them funded for two years hours.

Updated correction.

Edited by SHERWICK

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Did the ECB not just set out conditions for a soft landing version of a member state default ?

Isnt the 440 billion euros pledged as some sort of solvency crisis loan fund still on the table ?

I think the plan is that in order for any state to access the €440 bn bailout fund in future, the holders of their debt will also need to take some sort of haircut

Whereas when Greece was bailed out to the tune of €110 bn, there was no haircut for bondholers

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I saw some Irish finance minsiter on Bloomberg the day they last sold a load of debt on the markets, say that they now had enoough cash to keep them funded for two years.

They have borrowed enough up front to keep themselves going, but only until about April next year.

The idea was that they borrowed whilst it was still relatively cheap and then they could sit out any spike in rates like the one that started last month and wait until rates fell again. But it's looking like rates might just keep on going up. I think he said that if rates were as high as last month this would make it impossible to repay, so if they are actually higher than this when they come to borrow again then presumably it's game over.

A great way to plan the national finances.

Edited by oldsport

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To be honest I think there exists genuine fear of what the consequences might be. Basically they don't really know so they try and carry on with what they do know.

I noted to my daughter when watching X Factor the other night with her (lol), that it always seems to be the contestant that is 'saved' that breaks down in tears whereas the contestant who loses and knows they are walking typically stands there quite serene. My take on this is that the one going has experienced what 'going' feels like and it isn't really all that bad after all. Whereas the one that is saved just considers the awfulness of the consequences if they had been the one to go.

Basically it fits the old addage about fear. All we have to fear is fear itself.

And to some extent I think a sovereign default and liquidation of banks and haircuts to bondholders is worse in the fear of it than the actual step itself when it happens. Life goes on.

Interesting.

Maybe the saved one is considering the awfulness of the consequences of salvation.

Your daughter has a wise daddy. Is that a good thing?

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They have borrowed enough up front to keep themselves going, but only until about April next year.

The idea was that they borrowed whilst it was still relatively cheap and then they could sit out any spike in rates like the one that started last month and wait until rates fell again. But it's looking like rates might just keep on going up. I think he said that if rates were as high as last month this would make it impossible to repay, so if they are actually higher than this when they come to borrow again then presumably it's game over.

A great way to plan the national finances.

Surely a great way to ensure it will be higher next April.

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For a brief period it looked like Ireland had pulled a rabbit out of a hat when it guaranteed all deposits in all of its banks in the wake of the Iceland collapse. Now it looks like that decision is going to come back to haunt them. Better to let the shareholders and bondholders go to the wall rather than have the country borrow its way into the arms of the IMF.

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I think the plan is that in order for any state to access the €440 bn bailout fund in future, the holders of their debt will also need to take some sort of haircut

Whereas when Greece was bailed out to the tune of €110 bn, there was no haircut for bondholers

Isn't the bailout fund itself funded by the issue of debt?

So because Ireland can't fund it's own debt the EU will do it for them. Genius.

Clearly everything is going to come up roses.

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I think the plan is that in order for any state to access the €440 bn bailout fund in future, the holders of their debt will also need to take some sort of haircut

Whereas when Greece was bailed out to the tune of €110 bn, there was no haircut for bondholers

The €440 bn bailout fund does not have money in it. The idea is that it will issue its own bonds backed by the triple A rating of Germany and some other AAA rated countries.

Read more about it here in an article published by Global Market Perspective.

In other signs of complacent thinking, successful bond auctions have allayed investors' concerns over Europe's near-term solvency.

Last month, the Irish National Treasury Management Agency sold all of its intended €1.5 billion of government bonds, while

Portugal raised €750 million in 4- and 10-year notes amid "strong investor interest." Spain, Greece and Hungary also successfully

sold shorter-term debt. Authorities breathed a sigh of relief and quickly informed the press: "Confidence is slowly and steadily

returning in Greek debt ...." said Petros Christodoulou of the Greek Public Debt Management Agency. "[T]here is no question of

any imminent danger to the Irish sovereign," said Ireland's finance minister Brian Lenihan. Don't listen to these cheerleaders.

Europe's sovereign debt crisis is much closer to a beginning than to an end.

Recall that the eurozone governments established the European Financial Stability Facility (EFSF) after the May 2010 flash crash

in order to stabilize the region's bond markets in the case of future "market disruptions." The structure of the EFSF alone

showcases the continent's ill-preparedness for the next crisis.

For one thing, the credit ratings agencies have bestowed AAA status on an emergency facility that, at present, has exactly zero

euros to combat an emergency. The plan, in fact, is to have the Facility itself borrow the money it needs, when it needs it. These

ratings for the facility's debt are tied to a cushion above and beyond each European country's share. It is this cushion that gives the

facility its AAA credit rating. This sounds rather similar to the failed Collateralized Debt Obligations ("CDOs") of 2007, where a

small tranche within the larger obligation was AAA, so therefore the whole obligation was rated AAA. We know where that led. A

brief look at the EFSF bonds reflects a similar structure. Here's how Standard and Poor's primary credit analyst Moritz Kraemer

justified the Facility's AAA rating in his September 20 report: "It is our opinion that the eurozone governments are strongly and

publicly committed to EFSF.... If a eurozone member receives approval for EFSF funding, EFSF would issue bonds in the capital

markets and on-lend the proceeds to the sovereign borrower after deducting an amount to serve as a fungible reserve." In other

words, much like the IOUs they will issue, the Facility at this point is merely a €440 billion pool of promises.

Yet the agencies seem content to make the same mistake all over again, this time with Europe's bailout facility. For instance,

during a conference call following its ratings' release, Standard and Poor's supported its AAA rating, saying that it looked at the

EFSF's ability to withstand the combined rescues of just three countries (Portugal, Ireland and Greece). The fact is, though, that

like subprime and prime home mortgages in 2007, the fates of European sovereigns are far too connected to be cherry-picked in

this way. The coming downleg will now do to sovereign debt what the 2007-09 decline did to mortgage bonds, and history will

repeat on a much larger scale.

On top of that, Ambrose Evans-Pritchard of the UK Telegraph points out this curious fact: Half of the Facility's guarantors are not

even rated AAA themselves. In fact, just three AAA-rated commitments -- those from Germany, France, and the Netherlands -- are

primarily supporting the Facility. According to S&P, the two scenarios that could endanger the Facility's rating are: (1) if any of the

three AAA-rated countries were to be downgraded and (2) if they wavered in their support for the fund.

Make no mistake, wavering support for the fund won't just waver, it will collapse during the next Primary degree decline. You can

literally bet on it. Five months ago, when the bailout package sailed through, the June 2010 European Financial Forecast described

the public attitude that will accompany the next significant bottom: "[C]ountries will laugh at the notion of neighborly assistance,

and bailouts will cease altogether." Germany's €120 billion promise makes up the Facility's largest commitment by far, yet the

German Constitutional Court has yet to even rule whether the EFSF is legal. For months, a group of politicians and university

professors have pressed the Court to rule on whether open-ended bailouts violate the Maastricht Treaty's "no-bailout" clause. (They

do.) The Court has refused to intervene up to now, but this will change as social mood falls, damages mount, and German

taxpayers are again called in to help.

German bonds have performed well for two years running, and they will continue to do so as long as the rest of Europe persists in

believing that it can shrink and lend its way out of economic woe. Of course, it is an oversimplification to state that austerity

measures are a failed response to debt-laden European economies -- such policies required some political courage as social

dissonance is the inevitable response to a re-making of the welfare contracts. However, the structure of the supposed mechanism

to provide support for the ailing European economies, the EFSF, is fatally flawed.

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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