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gruffydd

Ireland Going Bankrupt and the Bailout consequences

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http://www.bloomberg.com/news/2010-11-08/grant-says-ireland-going-bankrupt-eu-rescue-a-sham-video.html

Mark Grant, managing director at Southwest Securities Inc., and John Brynjolfsson, chief investment officer at Armored Wolf LLC, talk about Ireland's sovereign debt crisis.

European Union Economic and Monetary Affairs Commissioner Olli Rehn said today he endorses the Irish government’s plan to cut spending and raise taxes by as much as 6 billion euros ($8.4 billion) in 2011. (Source: Bloomberg)

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Ireland may as well call in a Witch Doctor to chant some voodoo instead of trying to fix this with austerity.

The sucker is unfixable, the sucker is going down, the only question left is, how long?

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Ireland may as well call in a Witch Doctor to chant some voodoo instead of trying to fix this with austerity.

The sucker is unfixable, the sucker is going down, the only question left is, how long?

Starting to remind of 2007 and the Northern Rock saga - You know its going to happen - just a question of when.........

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True, austerity isn't going to fix the massive scale of the banks debt problem which is now the concern of the Irish state. The only way to dodge the bullet was to allow the banks to default and renegotiate their debt. Too late now though, Ireland is through. It's up to the ECB to dictate terms for the bailout loan.

Still, maybe the new EU masters will be magnanimous in return for the splendid job the treasonous Irish government did to protect foreign bondholders at the expense of the Irish state.

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What tuly staggers me about Eire is what they actualyl spent the debt/credit on? As far as I can make out it all went on houses/flats?

Did they build loads of roads, factories, offices - I though they built those from the EU money in the 90s.

No, as far as I can make out Eire is bankrupt basically because of a housing bubble.

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And when Ireland goes bankrupt UK banks will take the hit

http://www.independent.ie/business/irish/uk-banks-exposed-for-230bn-on-loans-in-ireland-2227308.html

:angry:

For example, banks in the United States only have half the exposure to Ireland that Britain has. France also has a relatively minor exposure when compared to the Irish debt levels held by British bank-balance sheets.

The scale of the British exposure is such it is twice the size of that of the rest of the eurozone, excluding Germany and France.

The amount of debt major European banks hold in so-called peripheral countries is a major concern to policy makers in Brussels and also at the European Central Bank (ECB). For example, if one of these countries was unable or unwilling to repay their debts this could cause major damage to the balance sheets of these banks.

Wow!

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A bubble pumped up chiefly by British and German banks, who will now take the mother of all hits.

Thankfully owned by you the taxpayer so it doesn't matter ;)

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http://www.bloomberg.com/news/2010-11-08/grant-says-ireland-going-bankrupt-eu-rescue-a-sham-video.html

Mark Grant, managing director at Southwest Securities Inc., and John Brynjolfsson, chief investment officer at Armored Wolf LLC, talk about Ireland's sovereign debt crisis.

European Union Economic and Monetary Affairs Commissioner Olli Rehn said today he endorses the Irish government’s plan to cut spending and raise taxes by as much as 6 billion euros ($8.4 billion) in 2011. (Source: Bloomberg)

Default is the only option for Ireland and a good many others; the debts are too large and I agree that all these plans are basically a sham to hide this fundamental truth. Everything that has been done so far has only shifted the debt around; very little has actually been repaid and deleveraging in general has been absent. Extension of maturities and lower coupons are going to be the order of the day. I think we're living in a fools paradise and the pain hasn't even begun.

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As an anecdotal, I was involved with large flat build construction schemes in the NW from 2004-2008. The developer I worked for was entirely 100% funded via Irish banks. Allied, Anglo and BOI mainly. In 2008 3 schemes went bust after completion and one had the plug pulled whilst in the ground (still millions spent).

All these schemes are still on the banks balance sheet but the losses are not crystalised as they are still an 'asset'. They will be lucky if they are worth half their peak 'value'. This is a tiny example in a tiny area of what the Irish banks were doing. The full scale of their losses is still unknown in my opinion.

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Stupid policies have destroyed Eire

http://www.cityam.com/news-and-analysis/stupid-policies-have-destroyed-eire

IT is starting to look truly grim for Ireland, which is moving ever closer to the abyss. An article yesterday by Morgan Kelly, a professor of economics at University College, Dublin, added fuel to the fire. By next year Ireland will have run out of cash, Kelly claimed, and the terms of a formal bailout will have to be agreed. This view – that Ireland is already insolvent – is fast gaining converts; no wonder Germany is so keen to introduce European treaty changes to safeguard its taxpayers.
Ireland’s first error was to join the euro; its second was to guarantee all bank creditors. These two errors have destroyed the country. Joining the euro led to an immediate halving in interest rates and a surge in growth and inflation – had Ireland retained an independent monetary policy, its currency would have soared and it would have jacked up interest rates. Plenty of countries have suffered a property bust – only some have been bankrupted as a result. Not all were euro members, of course, but those peripheral economies that did join are all now in terminal crisis.

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And when Ireland goes bankrupt UK banks will take the hit

http://www.independent.ie/business/irish/uk-banks-exposed-for-230bn-on-loans-in-ireland-2227308.html

:angry:

If Ireland were allowed to go bankrupt and default all the other peripheral European economies, Spain, Portugal etc will follow like dominos. The eurozone and most of Europe’s bank's would collapse as well.

They have no way of paying off the debt / reducing the deficit. They will not grow with the austerity measures introduced and a strong €. The same is true for Greece, Spain, and Portugal as well. Ireland are merely further down the line. Long term growth is key, not the debt levels. Ireland are in a debt trap already. There is no way out, whatever they do will make the deficit and debt worse. They are going to run out of cash eventually and need a bailout.

The only solution has to be a restructuring of the Eurozone. The ECB will start QE to keep peripheral economies going. There will have to be some debt restructuring as well in Greece. The € will crash back down to all time lows vs the $ (0.7-0.8) enabling the weaker economies to export and grow. Germany will have the choice of taking back the DM or accepting QE / devaluation to save the rest of the eurozone. The alternative will be European financial meltdown.

The PIGS should never have been allowed in to the € in the first place, such an outcome was always inevitable.

The only question is how long it takes for the markets to force this endgame. It could be a few months or take years.

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The only question is how long it takes for the markets to force this endgame. It could be a few months or take years.

If Eire is going to run out of cash in the next 60 days then surely something will have to happen by then?

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If Eire is going to run out of cash in the next 60 days then surely something will have to happen by then?

I wish that there was some sort of law that would punsih government ministers for trading while insolvent .....

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What tuly staggers me about Eire is what they actualyl spent the debt/credit on? As far as I can make out it all went on houses/flats?

Did they build loads of roads, factories, offices - I though they built those from the EU money in the 90s.

No, as far as I can make out Eire is bankrupt basically because of a housing bubble.

It mostly went on property development - both commercial and residential.

There was some investment in infrastructure but mostly concentrated on building motorways between the main population hubs. Not much done with rail at all, some light rail in Dublin. Also some new hospitals and schools but not that many.

Basically the entire country went property crazy. To the extent where ordinary people were buying 'investment property' in places as far flung as Romania and Cape Verde. People were told by the government, the media, their peers and their families to get on the ladder as soon as possible or they would miss the boat and they did in huge numbers and with huge amounts of debt.

The money has been utterly, utterly malinvested. Ireland's only real option was for the banks to default but now the government has taken on their liabilities. Way too much debt for a state which isn't in control of its own currency to support.

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If Ireland were allowed to go bankrupt and default all the other peripheral European economies, Spain, Portugal etc will follow like dominos. The eurozone and most of Europe’s bank's would collapse as well.

They have no way of paying off the debt / reducing the deficit. They will not grow with the austerity measures introduced and a strong €. The same is true for Greece, Spain, and Portugal as well. Ireland are merely further down the line. Long term growth is key, not the debt levels. Ireland are in a debt trap already. There is no way out, whatever they do will make the deficit and debt worse. They are going to run out of cash eventually and need a bailout.

The only solution has to be a restructuring of the Eurozone. The ECB will start QE to keep peripheral economies going. There will have to be some debt restructuring as well in Greece. The € will crash back down to all time lows vs the $ (0.7-0.8) enabling the weaker economies to export and grow. Germany will have the choice of taking back the DM or accepting QE / devaluation to save the rest of the eurozone. The alternative will be European financial meltdown.

The PIGS should never have been allowed in to the € in the first place, such an outcome was always inevitable.

The only question is how long it takes for the markets to force this endgame. It could be a few months or take years.

The first stage will be that the PIG countries will have to hand over control of their economies to the ECB/EU in exchange for bailout funds. EU/ECB will set tax rates and spending budgets for them. Then when Spain needs the cash they will be subject to this process as well, Italy will escape because Berlusconi will tell them to F.O. The sud med countries and Ireland become vassel states to the EU super state.

Lets hope for some riots to oppose this, but I would imagine that it will all pass without a whimper.

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If Eire is going to run out of cash in the next 60 days then surely something will have to happen by then?

They can tap the existing stability fund? That would only be the start though, the economy will remain in recession they will need more cash. How long before the bailout fund is exhausted. Will they try more bailout cash after that?

How much can Germany take before they realise no amount of bail outs will let these economies grow and recover?

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They can tap the existing stability fund? That would only be the start though, the economy will remain in recession they will need more cash. How long before the bailout fund is exhausted. Will they try more bailout cash after that?

How much can Germany take before they realise no amount of bail outs will let these economies grow and recover?

But doesn't one of those guys in the above linked video point out that the much talked about EU stability fund actually has had no money put into it?

Anyhow, I am more interested in the knock-on affects for the UK and wider EU/global economies if Eire defaults. Surely it will bring about the second panic that many on here have been talking about?

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They can tap the existing stability fund? That would only be the start though, the economy will remain in recession they will need more cash. How long before the bailout fund is exhausted. Will they try more bailout cash after that?

How much can Germany take before they realise no amount of bail outs will let these economies grow and recover?

This begs the question of can they ever recover.

Take Ireland, it is just too far from the major centres of consumption in Europe, Germany, France and CH. It is far easier to build a factory in Poland, Czech and drive the lorry across the border. In Irelands case you need a ferry, then drive and that means overnight stays, all adding costs to a labour force that is already priced out of the market. Same with Portugal and Greece too far away. We even have this issue with Scotland too far away from the channel tunnel and the major port of Tilbury.

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The first stage will be that the PIG countries will have to hand over control of their economies to the ECB/EU in exchange for bailout funds. EU/ECB will set tax rates and spending budgets for them. Then when Spain needs the cash they will be subject to this process as well, Italy will escape because Berlusconi will tell them to F.O. The sud med countries and Ireland become vassel states to the EU super state.

Lets hope for some riots to oppose this, but I would imagine that it will all pass without a whimper.

What good would that do? There are no policy levers that can be pulled for Ireland etc to recover. The € is the problem, the debt will get worse no matter what Ireland do with fiscal policy. They may as well be moving around deck chairs on the titanic.

The resentment among the local populace would be massive as well. They still have sovereign parliaments and you can bet the EU/ECB would not be popular if they were instituting massive cuts. There probably would be riots / government overthrow if they tried this.

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  • 144 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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