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Ireland: Enda Kenny To Call For Bail-Out To Be Renegotiated

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http://www.telegraph.co.uk/news/worldnews/europe/ireland/8350486/Ireland-Enda-Kenny-to-call-for-bail-out-to-be-renegotiated.html

Enda Kenny, leader of Ireland's Fine Gael party, hailed a "democratic revolution" after angry voters this weekend hammered an Irish government blamed for a catastrophic economic collapse and loss of sovereignty to the European Union.

Mr Kenny is expected to form a coalition government later this week after Ireland's ruling Fianna Fail party was "wiped out" in early elections, losing over 50 seats in its worst election result in 85 years.

Ireland's new leader travels to Helsinki on Friday for a meeting of centre-Right EU leaders and confrontation with the German chancellor and French president over the EU and International Monetary Fund austerity programme.

He will plead with the EU for reduced interest rates on loans that Ireland was forced into last year when the collapse of Irish banks threatened to destroy the euro.

The new Irish government will also ask that investors, often other European financial institutions, take on some of an £85 billion debt burden of Irish banks, currently carried by taxpayers.

"I think Europe will be looking at this election here, they will see this is the first country to be the recipient of this particular kind of bail-out deal," he said.

"The reality of what we face in terms of this challenge is too much. I see room for manoeuvre in terms of interest rates and in terms of the cost of the banking structure."

"This particular IMF-EU deal is a bad deal for Ireland and a bad deal for Europe. This is a first. It should not be set in stone."

But Ireland's attempt to renegotiate the EU-IMF deal will put it on collision course with the European Central Bank and Commission, which are both opposed to Irish efforts to get investors to take a "substantial discount" on £17bn of bank debt.

As the Irish election count dragged on on Sunday, under the country's highly complex transferable vote system, as it became clear that Fianna Fail had been hit by a huge popular backlash against the EU-IMF bail-out.

The best politicians that money can buy.

eddy_1836231c.jpg

Gotta love that curtain.

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Actually Injin, that is the Telegraph saying he'll plead.

What he actually said was

I think Europe will be looking at this election here, they will see this is the first country to be the recipient of this particular kind of bail-out deal," he said.

"The reality of what we face in terms of this challenge is too much. I see room for manoeuvre in terms of interest rates and in terms of the cost of the banking structure."

"This particular IMF-EU deal is a bad deal for Ireland and a bad deal for Europe. This is a first. It should not be set in stone.

We'll see what he means by that this week

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What happens when eurozone rates start to rise?

The rate at which Ireland can borrow money is much lower than that available to me and I would argue I am much lower risk.

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The "renegotiation" will amount to no more than a little window dressing of the current terms of the bailout.

The elites have already decided how things are going to be and the Irish people will, if necessary, be "asked" the same question as many times as it takes until they give the "right" answer. I would have thought the Irish were accustomed to this by now given the democratic farce that was the Irish referendum/s on the Mastricht Treaty.

The only way the Irish people will get a different outcome is if they put down their ballot papers and storm the Parliament buildings.

Edited by tallguy

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Actually Injin, that is the Telegraph saying he'll plead.

What he actually said was

We'll see what he means by that this week

It will amount to bugger all is what it will amount to.

What remains to be seen, however, is how the Irish people will react when they realize the above is the case and they have been stitched up.

Edited by tallguy

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http://market-ticker.org/akcs-www?post=181067

If she's not drinking this weekend she's not very bright.

The unprecedented and historic defeat, Fianna Fail's worst result in 85 years, makes the Irish government the first eurozone administration to be punished by voters in the aftermath of the EU's debt crisis. Voter turn-out was exceptionally high at more than 70 per cent, indicating public anger at the government and the EU.

Late last year, Ireland was forced to accept a £72 billion EU-IMF bailout to cover huge public debts that were ran up to save failed Irish banks.

The bail-out was designed to prevent financial contagion that threatened the existence of the euro.....

The problem is, as noted, that the bailout wasn't for Ireland's benefit and they were effectively forced to take it.

Well, now they've got a new government. And it can say "Screw off."

But neither the two European leaders nor the European Central Bank or EU will permit any substantial changes, despite the huge popular Irish revolt against the bailout.

What are they going to do? Invade? I doubt it.

This isn't about "permission." It's about sovereignty.

Chancellor Merkel will tell Mr Kenny that if he wants to reduce the high, punitive 5.8 per cent interest rate charged on EU loans then Ireland will have to give up its low corporate tax rates - a measure regarded as vital to Ireland's recovery and one of the few economic policies it has not yet handed over to Brussels or Frankfurt.

No it doesn't. Merkel needs to be told to take a running chainsaw up the back door - sideways. Extortion is not an acceptable tool of negotiation.

The new Irish premier will also be warned that there is no question of forcing privately-owned financial institutions to assume Ireland's £85 billion bank debts because the resulting market panic would spread to Germany and France, tearing the euro single currency apart.

Good. Then they have leverage and lots of it. I suggest the Irish use it, and since the ECB, France and Germany have demonstrated that they're willing to extort and threaten, the rules of engagement have been set - there is no longer a need for pleasantries.

A European diplomat, from a large eurozone country, told The Sunday Telegraph that "the more the Irish make a big deal about renegotiation in public, the more attitudes will harden".

So what? The "European Diplomat" would be wise to stay the hell out of Ireland. I hear the Irish tend to have bad tempers, especially when screwed and drunk.

Have some more whiskey, my friends....

"It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told," said the diplomat.

Oh yeah? What if they decide that serving heads on a plate is an acceptable response if these banksters try to come into the country? What are they going to do about it?

They can't exactly force Ireland to comply now, can they?

I suggest the Irish set up a line of these at all international ports of arrival, and anyone who is a European Bankster, including those from the ECB, Germany or France gets their passport stamped while having their picture taken with head forward through the hole.

More at the link.

Dennigers view on it.

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http://market-ticker.org/akcs-www?post=181067

More at the link.

Dennigers view on it.

Something fishy with the Telegraph's reporting here. Those imflammatory comments by a diplomat were in the Telegraph article this morning and now I can't see them. Did somebody speak out of turn?!

I will quote them again in bold:

"As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout "must be applied" whatever the will of Ireland's people or regardless of any change of government.

"It's an agreement between the EU and the Republic of Ireland, it's not an agreement between an institution and a particular government," said a Brussels spokesman.

A European diplomat, from a large eurozone country, told The Sunday Telegraph that "the more the Irish make a big deal about renegotiation in public, the more attitudes will harden".

"It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told," said the diplomat.

Not very democratic! :blink::huh::unsure::unsure:

Edited, found old link http://www.telegraph.co.uk/news/worldnews/europe/ireland/8349497/Irelands-new-government-on-a-collision-course-with-EU.html

Edited by GloomMonger

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Good blog post on what Ireland should lay on the table - I do believe the Irish have this in mind, so I hope they hold their nerve, they certainly have negotiated cannily with the commission in the past:

What can Ireland do to escape her apparent fate?

In my opinion the "rescue" needs to change from being a rescue for Europe's banking system to a rescue for Ireland. At the moment Ireland's taxpayers are in effect taking the strain of not only bailing out her own banking system but propping up that of banks from around Europe. They could be helped by the following measures.

1. There has been a lot of debate over the fate of senior and subordinated bondholders in Ireland's banks. These were supposed to bear some of the risk of banking but so far have not done so. Some help can be found here as there are approximately 21 billion Euros of such assets. One way of helping Ireland would be to write these down to zero if necessary. After all if we do not write them down after the sort of collapse that has happened to Ireland's banking system when would we?

2. The interest-rate charged on the rescue package should be reduced from the current level of around 6%. When the "shock and awe" package was originally mooted and before it turned into the (incompetently designed) European Financial Stability Facility there was talk that it would make loans at an interest-rate of 4.5%. It would be better if it returned to such a philosophy. It would save Ireland some money and stop the obvious prospect which in the end is bound to happen of Irish minds focusing on someone making a profit from her misery as many Euro zone countries raise money much more cheaply than this.

3. Once the situation of Ireland's banks become fully clear then there will need to be a debt "haircut" in addition to the above measures. Ordinarily I would recommend starting with this but I am not sure that issues such as potential derivatives losses have been fully accounted for and in addition Ireland's housing market remains a problem. As "haircuts" are something which should happen only once then it is wise to wait although I would suspect I am not the only one wondering why information has been withheld. For example the latest accounts from the bad-bank NAMA have sat on Ireland's Finance Ministers desk for some time now.

Comment

The solution is not easy and it will cause pain around Europe's banks. Frankly I believe that this is the real reason why such measures have not been applied as we have seen another example of the can being kicked down the road. The essential problem of this strategy for Ireland is that the road is long and the can cannot be kicked far enough. The more cynical amongst you probably suspect that Europe's politicians only want to kick the can beyond their own elections!

One factor that cannot now be undone is the fact that via its Securities Markets Programme the ECB has bought some 77 billion Euros of peripheral government debt of which a reasonable amount will be Irish. Accordingly banks have been able to remove loss making positions from their balance sheets onto the balance sheet of the ECB. Shareholders have transferred losses to Europe's taxpayers. Since the programme started prices have fallen in some areas heavily so shareholders should be grateful and taxpayers should be made aware of what is being done in their name.

Those who wonder how banks are paying bonuses again might like to reread the last paragraph. It comes under the theme of privatisation of profits and socialisation of losses! Whilst there are various ways that governments are supporting banks in this way I regularly see politician's claiming that they are against "the banks" and want to punish them. Those particularly concerned about this topic might like to ask their member of the European Parliament what their voting record is in this area and what objections they have made…….

http://notayesmansec....wordpress.com/

Edited by okaycuckoo

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I wonder how the markets will take this news.

Next week is either going to be very interesting or a bit of a damp squid.

Kenny "Can we please renegotiate the bailout?"

Europe "No"

Kenny "Pretty please"

Europe "No"

Exactly. Quote from an EU bigwig, as also mentioned by DoomMonger:

It is not even take it or leave it. It's done. Ireland's only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told."

I note that Kenny said something in his victory speech about Ireland fulfilling its obligations etc. etc., as well as the predictable rhetoric about rebuilding and hope. In other words, he has no stomach for a fight with the EU.

Edited by The Ayatollah Buggeri

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The republic had a chance in a generation and they blew it. This is the equivalent of voting in the Tories after Labour - business as usual - one set of cronies out, another in. Fine Gael made no serious opposition to the bailout and this promise to renegotiate the terms is window dressing. Sad. The anger and fury in Ireland turned out to be little more than a whimper.

Edited by shipbuilder

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http://globaleconomicanalysis.blogspot.com/2011/02/massive-rout-in-irish-elections.html

...

...

Key Question

Changes in interest rates are meaningless, so would trivial, symbolic writedowns.

Wolf asked the key question I have been asking for months: Why should the taxpayers of the borrowing country pay all?

The answer is they shouldn't. Moreover I doubt they can. It would wreck the Irish economy to do so. If the EU breaks up over this, well that is the EU's problem more than it is Ireland's.

It is high time banks, not taxpayers bear the brunt of stupid lending decisions. There is no better time than the present to send that message, and the best way to do that is have the voters of Ireland decide.

Edited by billybong

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The "renegotiation" will amount to no more than a little window dressing of the current terms of the bailout.

The elites have already decided how things are going to be and the Irish people will, if necessary, be "asked" the same question as many times as it takes until they give the "right" answer. I would have thought the Irish were accustomed to this by now given the democratic farce that was the Irish referendum/s on the Mastricht Treaty.

The only way the Irish people will get a different outcome is if they put down their ballot papers and storm the Parliament buildings.

+1

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The republic had a chance in a generation and they blew it. This is the equivalent of voting in the Tories after Labour - business as usual - one set of cronies out, another in. Fine Gael made no serious opposition to the bailout and this promise to renegotiate the terms is window dressing. Sad. The anger and fury in Ireland turned out to be little more than a whimper.

Whilst the investors get back 100c on every Euro invested Joe Sixpack gets to enjoy a reduced standard of living whether he contributed to the mess or not.

I'd mock but we have the same racket going here in the UK.

It's going to take a complete meltdown for anything to change from the looks of it.

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They are re-negotiating the wrong bail out. They should be re-negotiating the terms of their bail out of the banks to 0, then the EU bail out of Ireland wouldn't be such a problem for them. Probably too late now though.

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Good blog post on what Ireland should lay on the table - I do believe the Irish have this in mind, so I hope they hold their nerve, they certainly have negotiated cannily with the commission in the past:

What can Ireland do to escape her apparent fate?

In my opinion the "rescue" needs to change from being a rescue for Europe's banking system to a rescue for Ireland. At the moment Ireland's taxpayers are in effect taking the strain of not only bailing out her own banking system but propping up that of banks from around Europe. They could be helped by the following measures.

1. There has been a lot of debate over the fate of senior and subordinated bondholders in Ireland's banks. These were supposed to bear some of the risk of banking but so far have not done so. Some help can be found here as there are approximately 21 billion Euros of such assets. One way of helping Ireland would be to write these down to zero if necessary. After all if we do not write them down after the sort of collapse that has happened to Ireland's banking system when would we?

2. The interest-rate charged on the rescue package should be reduced from the current level of around 6%. When the "shock and awe" package was originally mooted and before it turned into the (incompetently designed) European Financial Stability Facility there was talk that it would make loans at an interest-rate of 4.5%. It would be better if it returned to such a philosophy. It would save Ireland some money and stop the obvious prospect which in the end is bound to happen of Irish minds focusing on someone making a profit from her misery as many Euro zone countries raise money much more cheaply than this.

3. Once the situation of Ireland's banks become fully clear then there will need to be a debt "haircut" in addition to the above measures. Ordinarily I would recommend starting with this but I am not sure that issues such as potential derivatives losses have been fully accounted for and in addition Ireland's housing market remains a problem. As "haircuts" are something which should happen only once then it is wise to wait although I would suspect I am not the only one wondering why information has been withheld. For example the latest accounts from the bad-bank NAMA have sat on Ireland's Finance Ministers desk for some time now.

Comment

The solution is not easy and it will cause pain around Europe's banks. Frankly I believe that this is the real reason why such measures have not been applied as we have seen another example of the can being kicked down the road. The essential problem of this strategy for Ireland is that the road is long and the can cannot be kicked far enough. The more cynical amongst you probably suspect that Europe's politicians only want to kick the can beyond their own elections!

One factor that cannot now be undone is the fact that via its Securities Markets Programme the ECB has bought some 77 billion Euros of peripheral government debt of which a reasonable amount will be Irish. Accordingly banks have been able to remove loss making positions from their balance sheets onto the balance sheet of the ECB. Shareholders have transferred losses to Europe's taxpayers. Since the programme started prices have fallen in some areas heavily so shareholders should be grateful and taxpayers should be made aware of what is being done in their name.

Those who wonder how banks are paying bonuses again might like to reread the last paragraph. It comes under the theme of privatisation of profits and socialisation of losses! Whilst there are various ways that governments are supporting banks in this way I regularly see politician's claiming that they are against "the banks" and want to punish them. Those particularly concerned about this topic might like to ask their member of the European Parliament what their voting record is in this area and what objections they have made…….

http://notayesmansec....wordpress.com/

Thanks for this quote, I wonder if the Irish will have the courage to carry it out.

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I am sure I have read some where {a link from this site} that AIB or BI have auctioned of there deposit accounts ,which would pave the way for giving bond holders a haircut without affecting joe public

Also heard a Irish politician on the box on Saturday ,and every time the bailout /debt was mentioned he stated that it was as much of a problem for the EU as it was for Ireland and the point was made on several occasions

It look`s like a do a deal or take a hair cut scenario is going to happen

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I am sure I have read some where {a link from this site} that AIB or BI have auctioned of there deposit accounts ,which would pave the way for giving bond holders a haircut without affecting joe public

Also heard a Irish politician on the box on Saturday ,and every time the bailout /debt was mentioned he stated that it was as much of a problem for the EU as it was for Ireland and the point was made on several occasions

It look`s like a do a deal or take a hair cut scenario is going to happen

auctioned off their LIABILITIES?

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