Ireland Going Bankrupt and the Bailout consequences

[OnlyMe]

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.

False accounting, false broking and mortgage origination, false legislation, false oversight. false risk ratings, biggest ponzi scheme ever.

[Bloo Loo]

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.blogsp...ntina%20Economy

as I say, hyperinflation works really well....NOT.

I dont know all the facts on the Argies, but I read an article in Moneyweek a few months ago where they said 1 cent ( whatever the currency is now) is worth, following TWO hyperinflations, MORE than the entire issue of currency before the first hyperinflation.

default clears the deck...bondholders...should be more careful

[RufflesTheGuineaPig]

Counties can't go bankrupt. They can just renegotiate the debt over longer repayment terms.

Ireland could pay it's debt, it just means the population would have higher taxes and less services.

Ireland just doesn't want to pay, as it's people have got so used to watching plasma TVs, driving 4x4s and eating fancy food.

Counties can't go bankrupt.

They can devalue their currency to toilet-paper to wipe out debts valued in their own currency. This is what national default is. As Ireland doesn't issue it's own crrency, it can't do this.

If Ireland simply doesn't pay it's debts they wont just go away. In 20 years time, those debts will still be there. There are plenty of african countries who will vouch for this, still paying debts run up by dictators 30 years ago.

Therer is no magic bullet. As my footer says, someone has to pay the debts, one way or another.

Ireland is hoping the EU as a whole shares out the pain by devaluing the euro.

[Peter Hun]

as I say, hyperinflation works really well....NOT.

I dont know all the facts on the Argies, but I read an article in Moneyweek a few months ago where they said 1 cent ( whatever the currency is now) is worth, following TWO hyperinflations, MORE than the entire issue of currency before the first hyperinflation.

default clears the deck...bondholders...should be more careful

The Argies decided that their currency had parity with the dollar (haha, sure) and their debt was in dollars. Devalued by 75% and the debt stayed the same

[blobloblob]

Brian Cowen live on BBC News now.

[davedavies]

Brian Cowen live on BBC News now.

Was he speaking English?

Election in Jan 2011 if he can last that long?

[blobloblob]

Was he speaking English?

Election in Jan 2011 if he can last that long?

"Bailout first, budget second, election third". I can't see him getting away with that.

[Lagarde's Drift]

Brian Cowen live on BBC News now.

I don't think he'll last till January at this rate.

[Errol]

How many pieces of silver did he say were involved?

[blobloblob]

Was he speaking English?

I think he said he's a tea shop.

[Bloo Loo]

The Argies decided that their currency had parity with the dollar (haha, sure) and their debt was in dollars. Devalued by 75% and the debt stayed the same

was it you posted the links to how the Argies survived during the hyperinflation a couple of years ago?

If it was, and you have the links, Im sure a few here would be interested to read them,

[Bloo Loo]

Counties can't go bankrupt. They can just renegotiate the debt over longer repayment terms.

Ireland could pay it's debt, it just means the population would have higher taxes and less services.

Ireland just doesn't want to pay, as it's people have got so used to watching plasma TVs, driving 4x4s and eating fancy food.

Counties can't go bankrupt.

They can devalue their currency to toilet-paper to wipe out debts valued in their own currency. This is what national default is. As Ireland doesn't issue it's own crrency, it can't do this.

If Ireland simply doesn't pay it's debts they wont just go away. In 20 years time, those debts will still be there. There are plenty of african countries who will vouch for this, still paying debts run up by dictators 30 years ago.

Therer is no magic bullet. As my footer says, someone has to pay the debts, one way or another.

Ireland is hoping the EU as a whole shares out the pain by devaluing the euro.

no. they could just say "no. we arent paying them". No-one could force them

[RufflesTheGuineaPig]

no. they could just say "no. we arent paying them". No-one could force them

And in 10 years time the debt would still be there. Plus interest and fines as per the terms of the contract.

Consider: Ireland refuses to pay. A year later the US offers Ireland finacial aid. US bank sues in US court. Financial aid money goes to US bank instead.

Happens to african countires all the time.

[Bloo Loo]

And in 10 years time the debt would still be there. Plus interest and fines as per the terms of the contract.

Consider: Ireland refuses to pay. A year later the US offers Ireland finacial aid. US bank sues in US court. Financial aid money goes to US bank instead.

Happens to african countires all the time.

no. no court can overulel a government.

governments tend to choose NOT to default.

[sikejsudjek]

As usual the fundamental problem is that there is no real money. When we have a debt problem we try to solve it with more debt and hope for more growth from a population soon to be out of a job, pensionless and taxed into the ground.

When do the financial elite realise that a nuclear bunker isn't an attractive place to live ? These debts were never real money to start with, and should be written off before the inevitable semi- permanent damage to growth takes down the rest of the economy. Madness.

[RufflesTheGuineaPig]

no. no court can overulel a government.

governments tend to choose NOT to default.

Ireland could just refuse to pay.

They would just never be able to trade with any other country on planet earth again.

Ever.

Any transactions Ireland did with another country would be subject to that countries laws and anyone in that country owed money by ireland would have claim on any assets ireland had in that country.

Ultimately, what matters, is that IRELAND COULD PAY IT JUST DOESN'T WANT TO.

[copydude]

Similar story with Russia after 1997. I guess a big difference is that those two have their own currencies, unlike Ireland.

As I noted on another current thread, Russia switched into another currency entirely during the late nineties. Nobody wanted roubles . . only dollars. It was the unofficial currency of choice for several years.

Through legislation and banking reform, Russia was able to rehabilitate the rouble. The banks caused more problems than the currency . . . and still today, you have to reform the former before the latter. That's where the problem lies.

[indirectapproach]

Ireland is bankrupt.

Stuffed whichever way.

Interest rates in Argentina in 2002 were what? 67%

What are they now? 17%

Last year? 20%

If Ireland goes the Argentina route .... it's stuffed.

If it goes the ECB, IMF austerity route, it's stuffed.

That's a pity.

[Bloo Loo]

Ireland could just refuse to pay.

They would just never be able to trade with any other country on planet earth again.

Ever.

Any transactions Ireland did with another country would be subject to that countries laws and anyone in that country owed money by ireland would have claim on any assets ireland had in that country.

Ultimately, what matters, is that IRELAND COULD PAY IT JUST DOESN'T WANT TO.

course they would.

I could name 10 busted computer firms, that were all favoured suppliers of MS, Intel, Nvidia et al, gone bust, owed hundreds of thousands, and those self same directors were dealing with MS, Intel, Nvidia et al the following week, with full credit facilities.

If Ireland voided a ton of debt today, and they fixed their cash flow problems, bankers would be queueing up to lend.

If this was not so, then why are they STILL invested when it was clear Ireland was a basket case since 2007?

Money has no loyalty except the potential for profit.

[indirectapproach]

Sure, that's why Argentine interest rates are 17% not 70%.

[wonderpup]

Ireland could just refuse to pay.

They would just never be able to trade with any other country on planet earth again.

Ever.

You are talking about a financial system with all the long term memory capability of a goldfish-' ever' in this case will not be very long at all.

If Ireland were debt free and rarin' to go- why would they not get investment? They would be better placed than their debt laden neighbours.

[RufflesTheGuineaPig]

I could name 10 busted computer firms, that were all favoured suppliers of MS, Intel, Nvidia et al, gone bust, owed hundreds of thousands, and those self same directors were dealing with MS, Intel, Nvidia et al the following week, with full credit facilities.

If Ireland voided a ton of debt today, and they fixed their cash flow problems, bankers would be queueing up to lend.

If this was not so, then why are they STILL invested when it was clear Ireland was a basket case since 2007?

Private companies are completely different to countries.

Ireland COULD pay it would just mean the Irish have a pretty crappy decade.

If Ireland voids debts, it only does so in Ireland. outside of Ireland those debts could still be enforced.

There is no mechanism for a country to actually "go bankrupt". Countries always have ways of paying in the long term, it just means no more state pensions and healthcare. Historically countries devalue away debt in their own currency and renegotiate debts denominated in other currencies. The can renegotiate because the debts are generally SMALL THAT THE PROFITS TO BE MADE BY TRADING WITH THAT COUNTRY AGAIN. With Ireland, that is NOT the case.

[winkie]

As usual the fundamental problem is that there is no real money. When we have a debt problem we try to solve it with more debt and hope for more growth from a population soon to be out of a job, pensionless and taxed into the ground.

When do the financial elite realise that a nuclear bunker isn't an attractive place to live ? These debts were never real money to start with, and should be written off before the inevitable semi- permanent damage to growth takes down the rest of the economy. Madness.

Bankruptcy clears the air, just because you are a bankrupt doesn't mean you die....there is more to this than meets the eye.

[copydude]

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

Sorry BL, but are we talking at cross purposes? I thought I said exactly the same thing . . . I agree with you entirely . . . IMF policies are Anti Growth (suppress growth) and achieve nothing . . . well, not exactly nothing, they are pretty good at putting whole nations on the breadline. (Latvia.)

I think you misread my post.

When everyone is on the breadline in Ireland or Latvia or Bulgaria, and the Government of the day is in even more debt than it ever dreamed possible, I would love to see the IMF defend its policies.

[Bloo Loo]

Sorry BL, but are we talking at cross purposes? I thought I said exactly the same thing . . . I agree with you entirely . . . IMF policies are Anti Growth (suppress growth) and achieve nothing . . . well, not exactly nothing, they are pretty good at putting whole nations on the breadline. (Latvia.)

I think you misread my post.

When everyone is on the breadline in Ireland or Latvia or Bulgaria, and the Government of the day is in even more debt than it ever dreamed possible, I would love to see the IMF defend its policies.

oops