Ireland Going Bankrupt and the Bailout consequences

[Austin Allegro]

I think there should be some kind of European 'It's A Knockout' where all the PIIGS have to compete for the prize of a fiscal bail-out.

Alternatively there could be some sort of referendum held, with the question 'Do you want Ireland to be bailed out by the EU on the condition that it surrenders all political sovereignty to Brussels in perpetuity' with two boxes below, one marked 'yes' and the other marked....'yes' as well.

Nah, the EU would never do anything as dodgy as that would it?

[rogerthelodger]

Alternatively there could be some sort of referendum held, with the question 'Do you want Ireland to be bailed out by the EU on the condition that it surrenders all political sovereignty to Brussels in perpetuity' with two boxes below, one marked 'yes' and the other marked....'yes' as well.

Nah, the EU would never do anything as dodgy as that would it?

lol,saves multiple referendums until you get a "YES" !

[eric pebble]

I live next door to the Irish Republic. I've read the propertyPin (Irish HPC) for 4 years. They saw it coming in full detail but were powerless because the politicians kept the gravy train running to keep the banks afloat and help the developers out.

Yup ----

They kept the whole Ponzi/Pyramid Scam going....

The fuel in Ireland, Spain, The USA & UK has been

PREDATORY LIAR LOANS;

THE POISON THAT HAS BROUGHT THE WORLD TO THE EDGE OF AN ABYSS.

Edited November 22, 2010 by eric pebble

[leicestersq]

Yup ----

They kept the whole Ponzi/Pyramid Scam going....

The fuel in Ireland, Spain, The USA & UK has been

PREDATORY LIAR LOANS;

THE POISON THAT HAS BROUGHT THE WORLD TO THE EDGE OF AN ABYSS.

Liar Loans backed up by false accounting. The only way that they work is if you falsely account for them on your books.

If they were marked at the correct price, it would appear that you were losing money. If that happened, you wouldnt get the money markets lending you money, and depositors would run to other banks.

So you need to falsely account. That way you can lend out at lower rates than you competitors, taking their business. You can borrow at higher rates, depositors and investors are only too happy to chase the yield. And they keep on lending you money until you run out of cash, as you will at some point.

Meanwhile, your actions force other banks, to do the same! Faced with someone who lends at lower rates and borrows at higher rates, honest banks (honest in terms of the fact that they are trying to lend profitably, unlike the bank run by a crook), have no choice but to follow suit. It only takes on bad bank with a crook at the top (there has to be a crook at the top for this to happen), and unless the regulator gets that bank stopped, you are going to have a financial collapse.

It doesnt need to be mortgages. Any dishonest loan, where the borrower is unlikely to repay will do. False accounting for those loans is the trick you need to pull off a control fraud of this sort. It is this fraud that regulators failed to stop, encouraging others to do the same and leading to the disaster now unfolding.

[Si1]

Jim isn't a Keynian then I take it, even moderately

[interestrateripoff]

The bailout assumes the Irish can somehow service debt, they are hoping for economic growth....

Irelands only option is to default, same with the Greeks and start again.

There is no pain free exit from this mess.

[200p]

I have always got time for Jim Rogers. He speaks truth!

[Peter Hun]

And it went so well for Iceland and Argentina

[Timm]

This will cripple the Irish economy for years to come. In the future Ireland will be crippled because everything they earn will go to pay off old debt.

Sounds almost like reparations...

[Timak]

Jim isn't a Keynian then I take it, even moderately

I don't think Keynes was even a Keynesian if you mean that Keynes would have approved of government taking on debts run up by property speculators and financial market spivs.

Unless you meant to type Kenyan in which case I agree, I think he is American

[IP Newcomer]

Isn't it what Argentina did in 2001? I thought they redenominated USD debts into pesos.

Domestically they did so. They certainly didn't do it for all their foreign creditors, not sure if they did it for any. Don't lend to your own government.

[Peter Hun]

Didn't Russia default in the 90s?

Russia has massive natural resources and oil, it paid back its debts with a wall of money the high oil price gifted them.

Argetina and Iceland are countries who's only natural resources are an abundance of very stupid people.

[Timak]

Russia has massive natural resources and oil, it paid back its debts with a wall of money the high oil price gifted them.

Argetina and Iceland are countries who's only natural resources are an abundance of very stupid people.

Presumably a different Argentina to the one that is mineral rich, oil and gas producing and a huge agricultural exporter?

[gimble]

And it went so well for Iceland and Argentina

If you're being sarcastic you're wrong - at least about Argentina. Immediately after their default in 2000 things were indeed really very bad, but the country recovered quickly. By 2004 the economy was growing at 8% and it's done pretty well since then. Similar story with Russia after 1997. I guess a big difference is that those two have their own currencies, unlike Ireland.

[Agentimmo]

Good JR video

He's looking a little plumper these days. Maybe all those Chinese meals !!

Also, the RBS glass office at the start of the report - it's just across from Liverpool St station in London. They do a very nice subsidised lunch in there.

If the Irish banks go bust, then RBS (ie. the UK govt) will lose a packet. Doesn't RBS own Ulster Bank and a few other Irish entities? And the RBS share price of 40p would seem like a distant dream. Listen, Mr Hester and a number of other RBS fat cats and City slickers are betting on the RBS share price going north of 50p in the not too distant future so they can earn their big bonuses. Did anyone really think they'd allow Ireland to fail thus depriving them of their retirement funds?

[IP Newcomer]

If the Irish banks go bust, then RBS (ie. the UK govt) will lose a packet. Doesn't RBS own Ulster Bank and a few other Irish entities? And the RBS share price of 40p would seem like a distant dream. Listen, Mr Hester and a number of other RBS fat cats and City slickers are betting on the RBS share price going north of 50p in the not too distant future so they can earn their big bonuses. Did anyone really think they'd allow Ireland to fail thus depriving them of their retirement funds?

I think that this is the reason why the UK is in this particular racket, as Europe could start cramming down RBS debts and force them on to HMG's balance sheet.

[pl1]

They'll riot before they cut... Some bad stories comming out of The Emerald Isle tonight..

http://www.irishcentral.com/news/Civil-unrest-and-riots-feared-as-Irelands-bank-crisis-worsens-109836899.html

Civil unrest and riots feared as Ireland’s bank crisis worsens

November 22, 2010

Plans to cut the minimum wage and slash public service workforce has enraged Irish union leaders who warn of massive street protests and unrest.

Jack O’Connor, general president of Siptu, the largest union said demands to cut the minimum wage was the the agenda of the elite in Irish society, who were “cheerleaders for the property bubble”.

He attacked business leaders who he said want to “restructure the social architecture of Ireland” and make the most vulnerable bear the brunt of the proposed cutbacks.

He said everyone who adheres to the “principles of decency and fair play” should participate in a major protest on Saturday.

The march, is organised by the Irish Congress of Trade Unions.

The Minister for Finance Brian Lenihan stated on Sunday that the minimum wage of $11 would have to be looked at because it has “increased far beyond the rate of inflation” over recent years.

One of Ireland’s biggest trade unions, the Technical Engineering and Electrical Union, said that the nation was on the brink of civil unrest if the government imposes further ‘draconian’ cuts to the public sector. The union is threatening a civil disobedience campaign unless Prime Minister Brian Cowen calls for an immediate election.

"When the measures being proposed are heaped on top of the €14.5bn cuts already implemented in the last three brutal budgets, life in Ireland will be unbearable," union leader, Eamon Devoy, told the Guardian.

David Begg, the general secretary of the Irish Congress of Trade Unions, said the union movement was calling for mass protests on November 27 to "allow ordinary working people to voice their opposition to a policy that could destroy 90,000 more jobs.”

Edited November 22, 2010 by pl1

[Bloo Loo]

BBC finance reporter says Ireland are in trouble, not because of overspending, but large private debt and banks failing to get paid.

NOT THE HOUSING BUBBLE.

[copydude]

The bailout assumes the Irish can somehow service debt, they are hoping for economic growth....

Yes, this is 'conventional thinking'. But does anyone really think/know that it will work?

It his hard to find precedents, because we have never had debt on such an unprecedented scale. (Not just Ireland.)

The exposure of foreign banks to Ireland is already greater than Ireland's GDP. Hmmmm.

The IMF always proposes anti-growth solutions. Cut wages, pensions, gov spending, raise taxes . . . austerity of the kind which only reduces consumer spending and national Government tax takes. (People either leave the country or opt out en masse into the black economy. See Russia.)

For countries that rely on little else than consumer spending for an economy, how does austerity actually, umm, not just make the problem worse ???

Very interesting that the Icelanders have gone back to processing whale blubber and knitting those nice woolly jumpers. Financial services are history. When is everyone else going to wake up.

Edited November 22, 2010 by copydude

[Peter Hun]

If you're being sarcastic you're wrong - at least about Argentina. Immediately after their default in 2000 things were indeed really very bad, but the country recovered quickly. By 2004 the economy was growing at 8% and it's done pretty well since then. Similar story with Russia after 1997. I guess a big difference is that those two have their own currencies, unlike Ireland.

'Done pretty well'. Ha Ha Ha.

Do you live in Argentina? This guy does, and he describes its as a total cluster**** even now. He's trying to emigrate. Argentina is still a disaster.

http://ferfal.blogspot.com/

[moonriver]

I just heard on the itv news that one of the austeritiy measures Ireland may have to introduce, is a tax on property for all home owners.

[Bloo Loo]

And it went so well for Iceland and Argentina

Iceland is recoverying....already.

I beleive Argentina went the hyperinflation route...course they failed twice trying the same thing..twice...

[Bloo Loo]

Yes, this is 'conventional thinking'. But does anyone really think/know that it will work?

It his hard to find precedents, because we have never had debt on such an unprecedented scale. (Not just Ireland.)

The exposure of foreign banks to Ireland is already greater than Ireland's GDP. Hmmmm.

The IMF always proposes anti-growth solutions. Cut wages, pensions, gov spending, raise taxes . . . austerity of the kind which only reduces consumer spending and national Government tax takes. (People either leave the country or opt out en masse into the black economy. See Russia.)

For countries that rely on little else than consumer spending for an economy, how does austerity actually, umm, not just make the problem worse ???

Very interesting that the Icelanders have gone back to processing whale blubber and knitting those nice woolly jumpers. Financial services are history. When is everyone else going to wake up.

Im sorry, but ANTI GROWTH is cut wages, pensions, government spending?..these are all the things that SUPPRESS growth.

everyone has the ability to contribute, so everyone can rely on a consumer society....there is, after all, no-one else to buy stuff...no Martians, no Venusians, just us.

[SavingBear]

Ireland should go bankrupt!

could not agree more.

Just added that little youtube clip to my current facebook page.

[Peter Hun]

Iceland is recoverying....already.

I beleive Argentina went the hyperinflation route...course they failed twice trying the same thing..twice...

Argentina has/is still fighting/paying bank the bond holders and is still getting 25% inflation. The Government fabricates the inflation figures, of course.

Iceland has a legal battles with its bond holders coming up, and its still negotiating Icesave. Its 'recovery' includes a currency that is not accepted outside of Iceland, all exchange has to go through the Icelandic bank and an artificial exchange rate is applied.

First article summarises Argentina's 'boom'

http://ferfal.blogspot.com/search/label/Argentina%20Economy

Edited November 22, 2010 by Peter Hun