Saturday, November 27, 2010

Calls to reject the bailout getting louder

Bust Is Better Than a Bailout for Irish Patient: Matthew Lynn

It’s not too late. The request for aid may have been made. The negotiations may have started. But Irish Prime Minister Brian Cowen can still refuse a bailout from the European Union and the International Monetary Fund. It might sound like madness for a drowning man to refuse a lifebelt. But the decision the Irish make in the next few days will shape the future of their nation for a generation. Ireland would be better off going bust than taking a loan. The conditions attached to a rescue aren’t worth it: Once it takes EU money, it will never get off the hook. And the Irish banks aren’t worth saving anyway. Defaulting on your debts is a far less scary prospect than usually portrayed.

Posted by devo @ 11:39 AM (1452 views)
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9 thoughts on “Calls to reject the bailout getting louder

  • Totally agree with this article! It would be better for ‘The Irish’ if they went bust, came out of the Euro, devalued their currency and started again. They would probably have a nightmare 18 months and then exports would start pulling them out of recession, money would be invested in the country with a cheaper costs base etc and the country would recover.

    However, with the UK and German banks on the hook for 100 billion, if the Irish revolt, and pull out of the loan, then the effect on the UK could be massive. It might not happen straight away, but a new government in Ireland could pull the plug. It is also quite callous to lump all the Irish together as wanton spenders of money that they didn’t have. They should be consigned to the dustbin for a mere 10 years of history, when compared to their more extended history over the last few hundred years. If they do pull out and go bust this could be the silver bullet for the UK housing market.

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  • I guess if any nation are going to stand up for themselves, and not be hooked by the legal ‘loan shark’ that is the EU/IMF, and take what in the short term may be the harder route, it would have to be the gritty Irish. Good luck guys.

    I only wish our UK gov’t had a ‘pair’ big enough to take the finance industry on. Nationalize a few more, freeze bonus’s, restrict pensions, then actually calculate the true level of debt and make sure all those responsible pay the price.

    Huh..I just started to type:-
    ‘Those that lent irresponsibly should absorb some debt, those that borrowed irresponsibly should absorb some debt…….etc…’

    But, it’s not just the irresponsible. Natural market principles apply (Normally!). My brother had nequity throught he early 90’s, not through irresponsible borrowing, just because of market conditions. They go up, and they go down. He paid his debts off eventually.

    I like many chose not to be a part of the great HP bubble back in 05. And what have I got to show for it – devaluation of my savings, and a taller HP ladder to climb.

    Someone wrote the other day ‘ markets can behave irrationally longer than I can remain solvent’. Well the property market sure is irrational, hepled by QE and low IR. I sure won’t become insolvent (For a while yet at least), but my savings aren’t working very hard, and i’m starting to question my sanity – Having been questioned by so many for what seems a very very long time now.

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  • Only the Irish people can stop this now, this isn’t the people’s debt, but they are being forced to repay it. There is no government in the western world that will take the default option, one by one they will pay the ransom.

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  • @1…’is could be the silver bullet for the UK housing market’. It needs a catalyst of some description. I sure hope they do, and i sure hope you’re right.

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  • Everyone in Ireland knows the culpable and corrupt in their midst – they need to jail these people, tell the EU/IMF to get stuffed, appoint a government from outside all current political parties, give every citizen their own house, debt free (more than enough for people to pick and choose), introduce a citizen’s income and land value tax and aim to be self sufficient in energy and food production. Allow small, home grown businesses, creating value, to thrive. Send the message that the people are in charge and that the people will generate their own wealth and on their own terms, never again through speculating spivs and chancers or corporate cronyism.
    This is the opposite of what is being proposed, for anyone shouting ‘moral hazard’, the jump into the unknown will provide lesson enough, the lesson will be best learned is the people choose it themselves.

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  • 5. shipbuilder

    Too right!

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  • shipbuilder @5

    I would consider the lack of feedback to such a thought-provoking post to be a sign that you are on the right lines.

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  • [email protected] and shipbuilder @5, Everyone I speak to feels the same way. The winds of change are blowing and any politician who decides to stand in the way is in for a short career.

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  • @5 Agree with most of what you say, however, I question if self-sufficiency in energy and food production is possible e.g. in Adam Smith’s time it was necessary to import goods from other countries, because they could provide the products more cheaply, goods which could not be provided locally, and helped when local production was inadequate.

    The elephant in the room is mineral oil. All developed countries are dependant on mineral oil now, and if economic supply drops and the price rises too much, this could drastically change or collapse modern civilisation. There maybe a lot more of untapped oil in the world, however if it costs too oil to recover and process, or is too hard to get at, it is useless
    e.g. the Gulf oil mess was caused by BP and associates discovering the limits of current oil recovery technology, at extremely high pressures, in very cold water.

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