Ireland Going Bankrupt and the Bailout consequences

[The Masked Tulip]

Unless it has changed since the peace process anyone born on the island of Ireland can ask for an Irish passport.

Oddly enough, we have for both historical and family reasons turned a blind eye to Irish living and working here in the UK since Eire left us and went off by themselves.

I have never had a problem with that - like the Irish generally... they are after all Welsh who can swim... but it is one of those bizare things that the Irish have with both us here in the UK and also in the US where it sometimes seems that every baby born in Ireland is given a US Green card at birth.

[Sour Mash]

Some Irish posters on the Property Pin are talking about the neuclear option of leaving the Euro and default

The problem for the Irish is that if they crap on the European banks they may find that they are locked out of the European markets.

Their 12.5 Corporation Tax rate is only worth something if they have the full benefits of EU membership. irelands domestic economy is simply not big enough alone to attract businesses there. They need those EU perks as well

Nothing in the trade treaties that depends on Euro membership, as far as I know. Most of the free trade and movement predates the Euro anyway. It'd be hard to get the Europeans to agree to Ireland's corporation tax break continuing but I get the impression that will be going anyway as part of the conditions of the inevitable bailout.

[bricor mortis]

I believe dual nationality arrangements have been around in Norn Iron for decades, probably since partition in the 1920's. I believe my brother has collected both pasports.

Edited November 15, 2010 by bricor mortis

[SHERWICK]

How big is the problem? 70B doesn't sounds a bit passe in these days of monster bail outs

Problem is, Eire population is approx 4.5m.

I make it 160K per man/woman/child

Luckily they're all MILLIONAIRES!

[stormymonday_2011]

Nothing in the trade treaties that depends on Euro membership, as far as I know. Most of the free trade and movement predates the Euro anyway. It'd be hard to get the Europeans to agree to Ireland's corporation tax break continuing but I get the impression that will be going anyway as part of the conditions of the inevitable bailout.

Agreed but I suspect that most of those treaty conditions are going to get overhauled before long

The tax arbitrage that Germany was prepared to put up with while the Euro was being launched are unlikely to be tolerated if and when states quit it

The logic of the Eurozone is that it inevitably requires a Euro state with centralised budgets and taxation. If countries do not want that restriction then they are placing themselves outside of that state and must risk one day having its market closed to them.

This is likely to apply to the UK as much a Ireland going forward.

The words the Continental System keep coming to mind

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

[jfk]

Interesting....

Indy Ireland

Furious protesters march on FitzPatrick's home

By Stephen Dunne

Monday November 15 2010

ANGRY protesters gathered at the home of disgraced former banker Sean FitzPatrick to demand he be thrown in jail.

However, gardai almost outnumbered protesters after a rumoured 400 marchers failed to show up.

Instead, around 30 protesters marched on the home of the former Anglo Irish Bank chief, close to Greystones Golf Club.

A source close to the FitzPatricks confirmed they were abroad, believed to be in a property owned by the family.

"He is rarely in the house now," the source said. "Sean still thinks he has done nothing wrong."

The protest, organised by the Right to Work campaign, began on the main street in Greystones, Co Wicklow. Outside the gates of FitzPatrick's home, James O'Toole, chairman of the campaign, said the protest was not just about the now-bankrupt banker, but about the upper classes who had escaped financial pain.

"Sean FitzPatrick is just indicative of the whole rich classes in the country who haven't been touched," he said.

Mr O'Toole called on authorities to jail the banker.

"I don't really have a message for Sean FitzPatrick, but I do have a message to the people in power -- we need to put Sean FitzPatrick in jail," he said.

FitzPatrick hit the headlines last week after it was revealed that a number of top former bankers at Anglo had not released passwords to investigators seeking access to encrypted files.

It is understood FitzPatrick has been contacted to see if he has knowledge of old passwords.

- Stephen Dunne

Irish Independent

[interestrateripoff]

http://www.guardian.co.uk/business/2010/nov/15/ireland-portugal-spain-european-debt-crisis

• Portugal's borrowing costs have soared during Irish crisis

• Bank of Spain hopes 'appropriate reaction' by Ireland will calm markets

Ireland's eurozone partners piled pressure on Dublin tonight to seek some form of financial support from the European Union or International Monetary Fund (IMF) as finance ministers prepared to discuss the growing crisis in Brussels tomorrow.

As the Irish government admitted that it had been in talks with EU officials over the level of its debts, fellow eurozone countries Portugal and Spain broke ranks to call for Ireland to accept a bailout and put a firewall between its financial contagion and its single currency partners.

Portugal has seen its borrowing costs rocket along with Ireland's as speculation has grown that it too may have to consider a bailout and the finance minister, Fernando Teixeira dos Santos, told the Wall Street Journal that there had been a contagion effect for his country because of fears about Ireland's ability to pay its debts.

"I would not want to lecture the Irish government on that," Teixeira dos Santos said. "I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision.

The Bank of Spain governor, Miguel Ángel Fernández Ordóñez, a member of the European Central Bank's governing council, told a banking conference in Madrid that he expected an "appropriate reaction" by Ireland to calm markets.

He later told reporters: "The situation in the markets has been negative due in some part to the lack of a decision by Ireland. It's not up to me to make a decision on Ireland, it's Ireland that should take the decision at the right moment."

Ewald Nowotny, another ECB governing council member, said in a radio interview the EU wanted a "quick, good solution to Ireland, so that there will be no spillover" to other heavily indebted countries such as Portugal and Spain.

The Irish finance minister, Brian Lenihan, will discuss the situation with other eurozone finance ministers in Brussels tomorrow and ministers from the other EU states will join them on Wednesday. His task was made slightly easier today as the markets eased pressure on Irish borrowing costs. After booming over 9% last week, the yield on benchmark 10-year Irish bonds fell to 8.1% as the Dublin government tried to hold firm on its policy of resisting calls for a bailout, which reached fever pitch over the weekend.

Yep clearly if Ireland accept a bailout the vultures won't then move on to other pray!!!

Got to the the idea that bailing out Ireland with more debt, which the other PIIGS will have to help fund will somehow solve this debt crisis.

Still as long as they can contain the problem happy days.

[interestrateripoff]

http://uk.reuters.com/article/idUKTRE6AC1K120101115

Mon Nov 15, 2010 7:27pm GMT

LONDON/MADRID (Reuters) - Ireland is not close to asking for an EU rescue, Eurogroup Chairman Jean Claude-Juncker was quoted as saying on Monday, but an Irish opposition leader said moves to support Dublin were already under way.

With pressure growing for quick action to prevent its crisis spilling over into other euro zone countries, the Irish government denied it would need a bailout.

But a senior member of the European Central Bank confirmed discussions were under way with Dublin and said that aid, if requested, would be available for Ireland's banks or for the state itself.

The governor of the Bank of Spain, one of a number of countries on the euro zone's periphery which has debt problems and has seen its borrowing costs spiral as a result of Ireland's troubles, prodded Dublin to act quickly by saying its indecision had increased jitters on financial markets.

There was some market speculation that euro zone finance ministers could announce some form of support after a meeting on Tuesday, but Juncker -- the group's chairman -- said Ireland had not requested aid and that a deal was not imminent.

"The Irish think that they can keep the problems they're facing under control," he told news agency Bloomberg." They are not near the point where they would ask for external help."

Economists say Prime Minister Brian Cowan's government may be able to wait until after a by-election later this month.

Irish opposition finance spokesman, Michael Noonan, told the BBC: "I'm extremely concerned. I think the reports (of an imminent bailout) over the weekend are true ... I think there is European intervention under way."

Portuguese Finance Minister Fernando Teixeira dos Santos also told Reuters there were no plans for it to request emergency foreign funding after the Financial Times quoted him as saying there was a high risk Lisbon would have to seek aid.

"Such a request is not imminent, there are no contacts, be it formal or informal," Teixeira dos Santos told Reuters. "The rest are rumours and speculation."

May the farce continue.

It is panto season after all.

[douggggy]

16,000 ?

only if the`ve got their greencard?

[The Masked Tulip]

Irish bailout: "But Dougal, that money was only resting in my account"

http://www.bbc.co.uk/blogs/newsnight/paulmason/2010/11/irish_bailout_but_dougal_that.html

Ireland's banks lent billions in soft loans during the property and credit boom last decade, much of which they will never get back. So they had to be part nationalised and bailed out to the tune of 70bn Euros by the Irish government earlier this year.

The Irish government was already facing a budget deficit crisis, because of collapsing growth, deflation, capital flight etc. It had already agreed a 7bn austerity drive over the next four years. But the bad loans it is underwriting total half the size of Ireland's GDP.

Because it bailed out the banks, it will now have to double its austerity programme to 15bn. Even if that is achievable it may tank the Irish economy so badly that they go into a death spiral of deflation, slump and eventually the government defaults on its debts.

Edited November 15, 2010 by The Masked Tulip

[papag]

I predict a Black Tuesday for Ireland when the begging bowl will be filled up to the brim, for now.

[ShedDweller]

I can see the bailout becomeing as important in Irish History as the Easter Rising ..

The way I see it .. and if anyone would like to contradict me please feel free .

A number of banks have made some very bad loans .. So bad as to be either grossly incomptent or downright fraud ..

These banks have gone bust. When other banks (think BCCI) have gone bust, you put them into administration sell the assets and give depositors back a percentage of what they put in .. You launch a fraud investigation into the circumstances.

However because it would "Destabilise" the European banking system the Irish government nationalises them thus making the irish people responsible for the bad loans ..

It looks like this is going to cost 50 billion That's 50 x 1000 x 1000000 Euros to sort out .. that's 12500 for every man woman and child in the country ..

The way I see it .. if the irish government throws Anglo to the wolves and lets it go bankrupt then it's a "Soft default" A couple of other banks may also fail but it's not IRELANDS problem ..

Now it seems that this will have to sealed in a treaty .. some poor Collins figure will be sent to Brussels or Frankfurt .. in the knowledge that there can be only one outcome .. and some DeValera figure will tell everyone at home that he could have got a better deal. Once the treaty is signed it wil bind every Irish Man, woman and child to repay the debts of the banks ..

This is a genuine "Daddy what did you do in the bailout?" .. "Daddy if you had done something I could have have stayed in Ireland after the age of 18 instead of having to go overseas to work .."

I genuinely believe that for Ireland to have a future they must stop the government going down this disasterous route .. If the EU wants to save Anglo .. then fine they can have the bank it's assets and liabilities .. if not it goes bust ..

This is a "Crunch" moment for Ireland. If the bailout is signed this generation of adults will never be forgiven by their children ... and those children will never understand why their parents did not put up a fight for them ..

[_w_]

This is turning into a bloody farce. Leave the Irish alone already!

And if somebody knows the real reason why we have this sudden completely manufactured urgency please let me know.

http://www.businessi...timatum-2010-11

Set the clocks!

According to The Guardian, Ireland has been given a 24 hour ultimatum:

An increasingly isolated Irish government was coming under mounting pressure tonight to seek a European or International Monetary Fund bailout within 24 hours amid fears that contagion from its crippled banking sector might spread through the weaker eurozone countries.

Portugal, Spain, the European Central Bank and opposition parties all urged Brian Cowen's coalition government to remove the threat of a second crisis in six months by putting a firewall between Ireland and its partners in the 16-nation single currency.

It's a little unclear where the 24 hour number comes from though. Later in the article it says this.

Ireland's opposition's finance spokesman, Michael Noonan, said he believed European intervention was "under way" and matters would come to a head within 24 hours. The government, he said, was "fighting a rearguard action for appearances purposes".'

Would an opposition finance spokesman actually have this info? Not clear.

What's clear is that the rest of Europe is eager to resolve thie mess fast. They're not happy about Irish banks suckling at the ECB's teet while the government gets to wait until sometime next year to hit the actual bond market again.

AND the rest of Europe is eager to make Ireland rid itself of its notoriously low corporate tax rate.

(via Politics.IE)

Edited November 15, 2010 by _w_

[tallguy]

I can see the bailout becomeing as important in Irish History as the Easter Rising ..

The way I see it .. and if anyone would like to contradict me please feel free .

A number of banks have made some very bad loans .. So bad as to be either grossly incomptent or downright fraud ..

These banks have gone bust. When other banks (think BCCI) have gone bust, you put them into administration sell the assets and give depositors back a percentage of what they put in .. You launch a fraud investigation into the circumstances.

However because it would "Destabilise" the European banking system the Irish government nationalises them thus making the irish people responsible for the bad loans ..

It looks like this is going to cost 50 billion That's 50 x 1000 x 1000000 Euros to sort out .. that's 12500 for every man woman and child in the country ..

The way I see it .. if the irish government throws Anglo to the wolves and lets it go bankrupt then it's a "Soft default" A couple of other banks may also fail but it's not IRELANDS problem ..

Now it seems that this will have to sealed in a treaty .. some poor Collins figure will be sent to Brussels or Frankfurt .. in the knowledge that there can be only one outcome .. and some DeValera figure will tell everyone at home that he could have got a better deal. Once the treaty is signed it wil bind every Irish Man, woman and child to repay the debts of the banks ..

This is a genuine "Daddy what did you do in the bailout?" .. "Daddy if you had done something I could have have stayed in Ireland after the age of 18 instead of having to go overseas to work .."

I genuinely believe that for Ireland to have a future they must stop the government going down this disasterous route .. If the EU wants to save Anglo .. then fine they can have the bank it's assets and liabilities .. if not it goes bust ..

This is a "Crunch" moment for Ireland. If the bailout is signed this generation of adults will never be forgiven by their children ... and those children will never understand why their parents did not put up a fight for them ..

I completely agree

But, this analysis doesn't just apply to Ireland. It really is time to decide which side we are on. Adopting a "pragmatic" position is not neutral.

Our children will remind us of this in the years to come.

Edited November 15, 2010 by tallguy

[tallguy]

This is turning into a bloody farce. Leave the Irish alone already!

And if somebody knows the real reason why we have this sudden completely manufactured urgency please let me know.

http://www.businessi...timatum-2010-11

Not all of the losses have been socialised yet. One way or another they are going to be unless we, the people, fight.

It really is going to come down to that.

Or not.

Edited November 15, 2010 by tallguy

[_w_]

Not all of the losses have been socialised yet. One way or another they are going to be unless we, the people, fight.

It really is going to come down to that.

I wish you were right believe me, but I really don't think it will happen.

[tallguy]

I wish you were right believe me, but I really don't think it will happen.

Depressingly, neither do I

[_w_]

Depressingly, neither do I

[SarahBell]

r4 about 6.45 this morning.

They had some irish bloke on.

400k mortgage. 3 bed terraced new build.

His business had a run of bad luck, didn't get any work, tools stolen, so he went back to uni and now they have a baby on the way.

His wife's income pays the mortgage (*Can't imagine how much she must earn) but he now works part time in a bar to put food on the table.

[interestrateripoff]

r4 about 6.45 this morning.

They had some irish bloke on.

400k mortgage. 3 bed terraced new build.

His business had a run of bad luck, didn't get any work, tools stolen, so he went back to uni and now they have a baby on the way.

His wife's income pays the mortgage (*Can't imagine how much she must earn) but he now works part time in a bar to put food on the table.

What's the minimum you could earn to support a mortgage that size?

[madpenguin]

This is turning into a bloody farce. Leave the Irish alone already!

And if somebody knows the real reason why we have this sudden completely manufactured urgency please let me know.

http://www.businessi...timatum-2010-11

Simple, a lot of traders will make a lot of money, and when Europe's crossed off the list they just look for the next target, (you can bet the US$ is waaay down the bottom.

I keep a daily watch on Euro/Sterling and you get cycles of panic/relax for both currencies, but never both at the same time, odd that seeing that these problems are happening throughout the world financial system, the US, UK and Europe all have more or less the same issues (granted different solutions, but I don't think you can say QE was an unbridled success just yet) and are all equally scary why aren't we seeing the same pressure on all three currencies at the same time, can't Wall street multitask?

Edited November 16, 2010 by madpenguin

[blue skies]

Savers told not to panic over state bailout speculation

Central Bank says guarantee is enshrined in EU law

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By Charlie Weston Personal Finance Editor

Tuesday November 16 2010

SAVERS were told not to panic last night. The Central Bank, economists and financial advisers all insisted that depositors' savings would be safe if the country was forced to sign up for an international bailout.

Central Bank officials stress-ed that the State's €100,000 guarantee for depositors has since become part of European law, which means the guarantee is now underpinned by the European Union.

"The €100,000 guarantee amount is now set out in European law, so that is a standard to which all European savers can get assurance of their cover," the Central Bank said.

Worried savers with money in banks, building societies, the post office and credit unions have been contacting this newspaper over the past few days, concerned about the safety of their funds and whether their money might be seized following a bailout.

Stability

Speculation has been mounting for days that Ireland would be forced to tap a fund put together by the European Union and the International Monetary Fund (IMF).

But experts stressed that the idea of a bailout would be to bring stability to the financial system, which would include ensuring savers did not lose out.

The Central Bank said: "Deposits in Irish banks, building societies and credit unions of up to €100,000 per person are covered by the Deposit Guarantee Scheme and, in addition, all deposits in participating Irish banks are covered under the Extended Liabilities Guarantee (the government guarantee) until June 2011."

The Department of Finance insisted there was no risk to deposits. "The Government's priority throughout the banking crisis has been to safeguard deposits and this is a priority which is shared by governments across Europe and the European Commission," it added.

Financial adviser John Lowe, also known as the Money Doctor, said any attempt to rob people of their savings as part of a bailout was highly unlikely as it would lead to anarchy and a total breakdown of society here.

"Whoever comes in, whether it is the IMF or the EU, will honour the guarantee for deposits put in place by the State. People should not panic," he said.

Economist Austin Hughes acknowledged that there was huge uncertainty for consumers at the moment, particularly those with savings.

But he stressed that as long as the economy and the financial services sector existed in this country, the rights of savers would have to be protected.

"It is highly improbable we will see any losses for savers," the KBC Bank economist said.

The head of RaboDirect, a Dutch bank with a AAA credit rating, said his bank had seen a surge in deposits.

Roel van Veggel said it was highly speculative and unlikely that savers would lose out through Ireland being forced to exit the euro currency union.

Savers with amounts greater than €100,000 in six Irish banks (AIB, Anglo Irish Bank, Bank of Ireland/ICS, EBS, Irish Life and Permanent and Irish Nationwide) are covered by the Eligible Liabilities Guarantee.

This scheme has been extended until next June and guarantees fixed-term deposits, ie money that the saver agreed to lock away for a fixed amount of time, for example, six months or three years.

However, the term deposit account must be with an institution that is participating in the ELG scheme.

The deposit must have been placed with the institution after it joined the scheme, but before September 29, 2010.

- Charlie Weston Personal Finance Editor

Irish Independent

[Bloo Loo]

'There's a run going on....'

http://www.creditwri...sit-flight.html

http://www.creditwritedowns.com/2010/11/on-the-alleged-irish-bank-deposit-flight.html#ixzz15R2RC7d2' rel="external nofollow">

nonsense, its just a bit unstable...ie...needs more cash, thats all...

[leicestersq]

'There's a run going on....'

http://www.creditwritedowns.com/2010/11/on-the-alleged-irish-bank-deposit-flight.html

http://www.creditwritedowns.com/2010/11/on-the-alleged-irish-bank-deposit-flight.html#ixzz15R2RC7d2' rel="external nofollow">

That could force the issue.

Anyone have any additional info on the 'run'?

What about other nations? A whiff of a run and contagion breaks out everywhere.

Here in the UK they can print the money to defeat a run, but that just puts pressure on the real value of the currency. They only way to resist that pressure, is to balance the budget. Fail to do that, and we are onto the gold standard.

Edited November 16, 2010 by leicestersq

[leicestersq]

duplicate - so deleted.

Edited November 16, 2010 by leicestersq