The EU signals that it will bailout member States if necessary

nesf

From the FT: http://www.ft.com/cms/s/0/866e1246-0c43-11df-8b81-00144feabdc0.html

The EU will act as a lender of last resort if necessary. They have no specified on what terms that would be and I would guess that if it did happen (Greece is by far the most likely candidate) then the conditions attached would be fairly punitive.

Greek bond rates have risen to 7.25% which is truly insane for a Eurozone country. Looks like this has scared quite a few people into finally deciding the matter once and for all publicly.*

For some perspective: Irish bonds are trading at 4.8% or thereabouts at the moment and even at the worst points of the crisis never broke 6%.

jmayo

nesf wrote: »

From the FT: http://www.ft.com/cms/s/0/866e1246-0c43-11df-8b81-00144feabdc0.html

The EU will act as a lender of last resort if necessary. They have no specified on what terms that would be and I would guess that if it did happen (Greece is by far the most likely candidate) then the conditions attached would be fairly punitive.

Greek bond rates have risen to 7.25% which is truly insane for a Eurozone country. Looks like this has scared quite a few people into finally deciding the matter once and for all publicly.*

For some perspective: Irish bonds are trading at 4.8% or thereabouts at the moment and even at the worst points of the crisis never broke 6%.

This is what a fair few posters have been saying here for the last year when people start raising the spectre of the menacing dark shadow of the IMF.
The EU (or rather ECB and they are as good as controlled by France and Germany) will not allow Eurozone country have IMF coming in, but will step in before that.
But for the citizens of the country it probably won't make much difference, since either way the government will have to initiate huge cutbacks in public spending to bring the deficits back in line within stated EU limits.

I also think the EU will want to lay down a marker and make the Greeks initiate tough measures rather then continuing to bury their heads in the sand.
The only danger for Ireland is that the EU gets so bogged down rescuing Greece that if we needed intervention they would implement even tougher restrictions on us.

ei.sdraob

wooohoooo, lets go and borrow some more billions as per trade unions plans

if link is not working for anyone try this http://www.ft.com/cms/s/0/866e1246-0c43-11df-8b81-00144feabdc0.html?nclick_check=1 or clear the cache/cookies in your browser (damn you FT!)

this is interesting

Eurozone countries and EU authorities are reluctant to spell out how they would assist Greece, for fear that it would relax pressure on Athens to attack its problems and unsettle rattled financial markets.

The immediate priority is for Athens to demonstrate that it is serious about cutting public expenditure, improving tax collection, publishing reliable financial statistics and tackling corruption, the officials said.

seems an ECB bailout comes with string attached and looks remarkably as what IMF would do in similar position

johnnyskeleton

jmayo wrote: »

This is what a fair few posters have been saying here for the last year when people start raising the spectre of the menacing dark shadow of the IMF.
The EU (or rather ECB and they are as good as controlled by France and Germany) will not allow Eurozone country have IMF coming in, but will step in before that.
But for the citizens of the country it probably won't make much difference, since either way the government will have to initiate huge cutbacks in public spending to bring the deficits back in line within stated EU limits.

I also think the EU will want to lay down a marker and make the Greeks initiate tough measures rather then continuing to bury their heads in the sand.
The only danger for Ireland is that the EU gets so bogged down rescuing Greece that if we needed intervention they would implement even tougher restrictions on us.

That's the real issue isn't it? Are they going to do the IMF's job for them, or is there going to be free money from the ECB, or somewhere in between?

It also calls into question JCT's remarks about withdrawing emergency funding to all banks in the eurozone starting 2010.

nesf

jmayo wrote: »

The only danger for Ireland is that the EU gets so bogged down rescuing Greece that if we needed intervention they would implement even tougher restrictions on us.

I don't think that's going to happen. Right now the EU is almost holding up Ireland and saying to Greece "Do what they are doing!". If anything we're becoming a poster boy for how a Eurozone country is supposed to behave when there's a collapse in tax revenues and a ballooning deficit looms.

Flamed Diving

nesf wrote: »

I don't think that's going to happen. Right now the EU is almost holding up Ireland and saying to Greece "Do what they are doing!". If anything we're becoming a poster boy for how a Eurozone country is supposed to behave when there's a collapse in tax revenues and a ballooning deficit looms.

Yup, we took the tough decisions that were going to be imposed on us by the IMF or EU anyway. I don't see how this can be seen as some victory by the anti-FF/begrudgers/fiscal-expansion-will-fix-it rabble.

If anything, Greece is an embarrassing example of what would have happened to Ireland had we not made cutbacks.

jmayo

nesf wrote: »

I don't think that's going to happen. Right now the EU is almost holding up Ireland and saying to Greece "Do what they are doing!". If anything we're becoming a poster boy for how a Eurozone country is supposed to behave when there's a collapse in tax revenues and a ballooning deficit looms.

True, but I think that is because our budget was run by them before it was actually initiated.
IMHO ever since lenihan went off and took decision on bank guarantee, our finance minister has to run big decisions by the folks in Frankfurt or Brussels.
Remember we need ECB for NAMA to supposedly function.

Flamed Diving wrote: »

Yup, we took the tough decisions that were going to be imposed on us by the IMF or EU anyway. I don't see how this can be seen as some victory by the anti-FF/begrudgers/fiscal-expansion-will-fix-it rabble.

If anything, Greece is an embarrassing example of what would have happened to Ireland had we not made cutbacks.

You sound like ffer yourself what with all the talk of taking tough decisions. :rolleyes:

Our government took no tough decisions in 2008 at start of unravelling, they took some minor ones in early 2009.
Actually they rolled back on some of their tough decisions and some others
actually screwed up things further like VAT revenues.
Then they belately took some action (the least they could get away with) in December 2009, after almost national outcry about their public sector wage cutting methodologies.
They even rolled back on some of these allowing high earning public servants slip through.

We need to shave a further 12-16 odd billion off our deficit so they have taken no real tough decisions yet.

But I guess if you want to compare us to Greece, well then we have a fine accomplished government taking hard decisions. :rolleyes:
Sadly though I have higher standards as I don't always want to be favourably compared to the relegation zone dwellers, but to those at the top of the pile.

nesf

jmayo wrote: »

True, but I think that is because our budget was run by them before it was actually initiated.
IMHO ever since lenihan went off and took decision on bank guarantee, our finance minister has to run big decisions by the folks in Frankfurt or Brussels.
Remember we need ECB for NAMA to supposedly function.

Not really no. All that came out of Europe was some very general targets for the medium term, i.e. get back to 3% deficit within 3-4 years or so. The actual minutiae of the Budget are solely the work of the Government parties.

Also the EU was quite unhappy with the bank guarantee. It almost definitely wasn't their suggestion given the accusations of unfair competitive advantage after it was enacted.

Flamed Diving

jmayo wrote: »

True, but I think that is because our budget was run by them before it was actually initiated.
IMHO ever since lenihan went off and took decision on bank guarantee, our finance minister has to run big decisions by the folks in Frankfurt or Brussels.
Remember we need ECB for NAMA to supposedly function.



You sound like ffer yourself what with all the talk of taking tough decisions. :rolleyes:

Our government took no tough decisions in 2008 at start of unravelling, they took some minor ones in early 2009.
Actually they rolled back on some of their tough decisions and some others
actually screwed up things further like VAT revenues.
Then they belately took some action (the least they could get away with) in December 2009, after almost national outcry about their public sector wage cutting methodologies.
They even rolled back on some of these allowing high earning public servants slip through.

We need to shave a further 12-16 odd billion off our deficit so they have taken no real tough decisions yet.

But I guess if you want to compare us to Greece, well then we have a fine accomplished government taking hard decisions. :rolleyes:
Sadly though I have higher standards as I don't always want to be favourably compared to the relegation zone dwellers, but to those at the top of the pile.

If anything, Greece is an embarrassing example of what would have happened to Ireland had we not made cutbacks.

Sponge Bob

Greece is only a canary in the goldmine. The EU is afraid of a cascading repeat of the ERM collapse in 1992 ( albeit this time in sovereign bonds) so they would say this wouldn't they.

In the end they actually get the IMF to sort it out while making caring noises themselves, eg what happened in Latvia last year.

Liam Byrne

The immediate priority is for Athens to demonstrate that it is serious about cutting public expenditure, improving tax collection, publishing reliable financial statistics and tackling corruption

Hopefully they'll be brought in, so, because our own Government have no intention of doing this.

Maybe we'd have to bite a bullet or two, but imagine if we could start from scratch, with no corruption.....

Unfortunately, instead of John Lennon, the song from Willie Wonka's Chocolate Factory came to mind as I wrote that last sentence...."Come with me, and we'll be, in a world of pure imagination...."

jmayo

nesf wrote: »

Not really no. All that came out of Europe was some very general targets for the medium term, i.e. get back to 3% deficit within 3-4 years or so. The actual minutiae of the Budget are solely the work of the Government parties.

Also the EU was quite unhappy with the bank guarantee. It almost definitely wasn't their suggestion given the accusations of unfair competitive advantage after it was enacted.

No I think you are missing my point.
I know they were greatly peed off with the banking guarantee because it was seen as uncompetitive and not just by UK.
It is ever since that little solo run, that I would guess that the EU and ECB are demanding that major financial decisions are run by them for approval so to speak.
Yes they don't care how the deficit is brought back in line but they do care that it is steadily done so over 4/5 years. They did give us extra year or so to do it, but that is it.
They do demand that we are appearing to be diong something about it unlike the Greeks.

Flamed Diving wrote: »

If anything, Greece is an embarrassing example of what would have happened to Ireland had we not made cutbacks.

Yes we all know that the Greeks are doing shag all about their situation whereas we are doing something.

Where I disagreed with your previous post was your opinion that our government were taking tough decisions in tackling our problems.
I believe they have left it too late and they should have really started doing something worthwhile a year and half before Dec 09.
Instaed they did a Greece on it for well over a year.

How much did our public spending go up in 2008/2009 ?

Gurgle

cutting public expenditure, improving tax collection, publishing reliable financial statistics and tackling corruption

Cutting public expenditure: Half-done here, cuts for employees / pay-offs for buddy-buddy contractors.
Improving tax collection: As above
Publishing reliable financial statistics: Please oh Please
Tackling corruption: Why has CAB not done the rounds of politicians' bank accounts? That would cover NAMA in a single shot.

ballinatray

jmayo wrote: »

True, but I think that is because our budget was run by them before it was actually initiated.
IMHO ever since lenihan went off and took decision on bank guarantee, our finance minister has to run big decisions by the folks in Frankfurt or Brussels.
Remember we need ECB for NAMA to supposedly function.


.

You sound like ffer yourself what with all the talk of taking tough decisions. :rolleyes:

Our government took no tough decisions in 2008 at start of unravelling, they took some minor ones in early 2009.
Actually they rolled back on some of their tough decisions and some others
actually screwed up things further like VAT revenues.
Then they belately took some action (the least they could get away with) in December 2009, after almost national outcry about their public sector wage cutting methodologies.
They even rolled back on some of these allowing high earning public servants slip through.

We need to shave a further 12-16 odd billion off our deficit so they have taken no real tough decisions yet.

But I guess if you want to compare us to Greece, well then we have a fine accomplished government taking hard decisions. :rolleyes:
Sadly though I have higher standards as I don't always want to be favourably compared to the relegation zone dwellers, but to those at the top of the pile.

One wonders indeed where the Irish stand in all this vis-a-vis bank debt as a percentage of gnp....(compared with Greece ) I dont know but in 2007 ( January ) Irish morgage debt as apercentage of GNP stood at 190%... USA which was beginning to melt stood at 48%, while Germany was at 16%....Dear God 10 times more morgage debt that Germany and we think we are out of the woods!!!!!!!!!

AlekSmart

I dont know but in 2007 ( January ) Irish morgage debt as apercentage of GNP stood at 190%... USA which was beginning to melt stood at 48%, while Germany was at 16%....Dear God 10 times more morgage debt that Germany and we think we are out of the woods!!!!!!!!!

Them Goldarn`d Germans agin.....sheesh...They Just don`t know the meaning of the term Property Ladder...do they even have a term for it in German ?

That oul Renting is Dead Money...I tells ya.....just look at Germany...FULL of Dead Folks it is....

hmmm

Greece has today effectively come under EU central economic control. Unions are going for a general strike in response and god knows what happens next. A national humiliation and we were a few months away from the same in 2009, before we put through a brave budget that has changed the Ireland mood music in the debt markets.

Liam Byrne

AlekSmart wrote: »

They Just don`t know the meaning of the term Property Ladder...do they even have a term for it in German ?

Probably not. It's the most ridiculous and disgusting manufactured term of the last decade.

I walked out of a bank one day when enquiring about a loan for a house because the salesperson used that phrase to a couple in front of me.

The banks had no concept of buying a house to live in, do up, make into a home, and lots of people fell for the bull****.

View

hmmm wrote: »

Greece has today effectively come under EU central economic control. Unions are going for a general strike in response and god knows what happens next. A national humiliation and we were a few months away from the same in 2009, before we put through a brave budget that has changed the Ireland mood music in the debt markets.

The EU is going to monitor Greece's finances and all data related to them. Given that a large part of the current mistrust of Greece arises after they admitted that their official budget figures were b*llsh%t, that is hardly surprising. Indeed, having someone officially monitor their figures might even help them as it might reassure international investors about the quality of their economic data.

The EU has enough to do without taking on something as thankless as "cental economic control" of Greece.

hmmm

View wrote: »

The EU has enough to do without taking on something as thankless as "cental economic control" of Greece.

From the WSJ

The commission's report recommended that Greece has until March 16 to outline how it will achieve this year's deficit target—8.7% of GDP. In previous cases in which countries have broken the EU's budget ceiling, the commission has never asked for so much detail so quickly, but Mr. Almunia said a rapid, credible plan is critical.

I've no doubt that the Greek government's plan is mostly a work of Frankfurt and Paris, not Athens. Greece has to fund about 25bn more in debt for 2010 and roll over another 25bn - they haven't a hope on their own.

View

hmmm wrote: »

From the WSJ

I've no doubt that the Greek government's plan is mostly a work of Frankfurt and Paris, not Athens. Greece has to fund about 25bn more in debt for 2010 and roll over another 25bn - they haven't a hope on their own.

It is up to the Greeks to get their finances in order. There is no legal basis for "Frankfurt and Paris" to run their finances even if they wanted to do so.

Were it a case that they were running Greece's finances, there wouldn't be such a steep premium on Greek bonds. As it is, the financial markets have a lot of doubts about the Greeks ability to manage their own finances (and repay the bonds), hence the premium.

Flamed Diving

http://www.economist.com/world/europe/displaystory.cfm?story_id=15452594

View

Flamed Diving wrote: »

http://www.economist.com/world/europe/displaystory.cfm?story_id=15452594

Same old story from the Economist - they have been doing a "chicken licken" routine on the Euro since the Maastricht Treaty was passed.

Of course, what you will not see them doing is examining the arguments used in Britain to justify not joining the Euro. Stuff like, "having our own currency will mean we'll have greater flexibility and will perform better in a downturn", whereas the reality is they are the worst performing of the big 4 EU states, are the last of them out of recession and their current account deficit is approaching Ireland's.

nesf

View wrote: »

Same old story from the Economist - they have been doing a "chicken licken" routine on the Euro since the Maastricht Treaty was passed.

I thought the article was quite balanced.

View

nesf wrote: »

I thought the article was quite balanced.

To explain, after the Maastricht Treaty and prior to the Euro launch, the Economist's line was "The Euro cannot work and it will never get off the ground".

When it did get off the ground, and - in line with normal market trading - fell against the dollar (the US was still in the dot com boom then), every drop in the Euro-Dollar rate was "proof" for the Economist that the markets/people had no confidence in the Euro and that it would no doubt fall apart soon.

All very well, but when the Euro started to rise again against the dollar, did the Economist do articles on the "proof" the markets/people did indeed have confidence in the Euro? Or articles that markets/people had no confidence in the Dollar? No, of course not...

Likewise, as I mentioned in the previous post, do you see them asking questions about the economic performance during the recesssion of the UK V's that of its Eurozone peers? Again, no. Or about the assumptions in British thinking about the Euro's possible performance that made them decide to opt out of the Euro? Again, no. An unfortunate oversight no doubt...

The Economist may seem relatively decent in comparasion to much of the UK's rabid Eurosceptic press but ultimately it just doesn't do balanced coverage in relation to the EU.

ei.sdraob

View wrote: »

To explain, after the Maastricht Treaty and prior to the Euro launch, the Economist's line was "The Euro cannot work and it will never get off the ground".

When it did get off the ground, and - in line with normal market trading - fell against the dollar (the US was still in the dot com boom then), every drop in the Euro-Dollar rate was "proof" for the Economist that the markets/people had no confidence in the Euro and that it would no doubt fall apart soon.

All very well, but when the Euro started to rise again against the dollar, did the Economist do articles on the "proof" the markets/people did indeed have confidence in the Euro? Or articles that markets/people had no confidence in the Dollar? No, of course not...

Likewise, as I mentioned in the previous post, do you see them asking questions about the economic performance during the recesssion of the UK V's that of its Eurozone peers? Again, no. Or about the assumptions in British thinking about the Euro's possible performance that made them decide to opt out of the Euro? Again, no. An unfortunate oversight no doubt...

The Economist may seem relatively decent in comparasion to much of the UK's rabid Eurosceptic press but ultimately it just doesn't do balanced coverage in relation to the EU.

The Telegraph have weekly articles for the last decade on how the euro would collapse, i kid you not, just read anything by Ambrose on the Telegraph, like clockwork every few days you get a doom and gloom articles


anyways shouldnt the likes of David McWilliams be happy now that we are "devaluing"

Flamed Diving

I was actually more interested in the 2009 estimate for debt to GDP.

Riskymove

Flamed Diving wrote: »

I was actually more interested in the 2009 estimate for debt to GDP.

It is an imprtant figure but as usual %s dont show the whole picture

for example Italy would seem to be far better based on the balance as a % of GDP yet its debt to GDP seems to be double ours!

every Country's structure is also different meaning different actions are required to tackle problems

Flamed Diving

Riskymove wrote: »

It is an imprtant figure but as usual %s dont show the whole picture

for example Italy would seem to be far better based on the balance as a % of GDP yet its debt to GDP seems to be double ours!

every Country's structure is also different meaning different actions are required to tackle problems

Their debt to gdp is a percentage, as is the deficit balance. The latter is a y-o-y issue (or week on week!), which we are currently taking steps to pull back, although for each week we spend in the red, we throw more on the debt-to-GDP pile, but thankfully we still have some room to move on the debt-to-GDP front. That is why the EU has given us until 2014 to get things below 3%, I guess.

http://ec.europa.eu/economy_finance/sgp/deficit/countries/index_en.htm

Actually if one looks at the 'current deadline for correction' and contrasts it with the debt-to-GDP ratio, there would seem to be a negative correlation. Perhaps I guess correctly.