If Ireland defaults,what happens?

Atilathehun

We do not need to default IF, we have the BALLS, not to BLINK, in the current negotiations with ECB / IMF.
Any interest rate attached to monies advanced to help solve the combination of bank and sovereign debt, MUST, at a level which does NOT make the total debt unservicible.
If they do not offer the money, at that interest rate say 2%, we simply say thanks but no thanks, we now hereby default. The consequent contagion will probably take down the euro. That would surely bring Napoleon Sarkozy and Kaiser Merkel, come down off their high horses.

Ok, we lived it up on loose credit. BUT, the ground source of that credit was in Frankfurt, Paris and London.

Our problem is certainly their problem. We must take some nasty medicine for our part in the fiasco. BUT, no need to take a suppository, when an oral tablet is adequate.:cool:

Cavehill Red

later10 wrote: »

Massive inflation, a bleeding of foreign investment (more like bloodletting), we would be a financial leper - far far worse than is the case now or in the projected future. We would bring the euro down, if we weren't kicked out of it by then

It's not an option.

What a load of rubbish.

I've said this repeatedly but it seems some people still haven't heard - Spain has defaulted umpteen times and always been back to the markets shortly afterwards.
Uruguay and Turkey defaulted repeatedly during the last century, and yet were able to go back to the markets within a short time. When Argentina last defaulted, they were back in the markets within months.

The 'financial leper' argument is BS scaremongering of the highest order, sprung on the Irish people to scare you into thinking you have no options by the very people seeking to be bailed out by this unpayable loan.

We WILL default if we seek to pay the bank debts. Our sovereign debts are entirely sustainable and well within market norms. Though we must bring the deficit down.

That means we need to default on the bank guarantee so as to protect our sovereign debt reputation.

Bob_Latchford

1% above what the Germans can borrow at should be the maximum, something like 3.5% tops.

"Our friends" in europe should not be profiting from Irelands troubles when it ultimately is in their best interest to

Dan_Solo

Is it too late or simply impossible to renege on the bank guarantee? That wouldn't be defaulting on our foreign debt as they're domestic banks? All the debts that who's performance was lied about should also be returned, as with fraudulently overpriced NAMA acquisitions.
Then let the banks and developers go bankrupt. The sovereign debt should not be involved in any way.

Bob_Latchford

Seems there is a "sovereign obligation" after a a gaurentee has been given by the state. .

Seems Dubai is yet another country that has been down this road

http://www.reuters.com/article/idUSTRE5B105320091202

Entities related to the government but not supported by it — especially Dubai World, which is weighed down by borrowings against questionable real estate projects — are less fortunate. Dubai's finance minister is right to say investors should have drawn a clear line between the two.

Cavehill Red

The likes of Dubai World were at best the equivalent of our semi-states. There's no equivalence between that and the Irish banks, which were and are clearly separate entities to the state.

The Irish state only took equity in the banks when it provided emergency funding. Prior to that, they were entirely separate autonomous and private entities. Even now, they are run by their own management entirely separate to government.

There is no bleeding of the border between state and non-state entities here. AIB, Anglo Irish and the rest are NOT arms of the Irish state and are NOT aspects of our sovereign debt, except insofar that Comical Lenny made them so by guaranteeing them.

Well, the time has come to stop guaranteeing them.

Dan_Solo

Bob_Latchford wrote: »

Seems there is a "sovereign obligation" after a a gaurentee has been given by the state. .

Seems Dubai is yet another country that has been down this road

http://www.reuters.com/article/idUSTRE5B105320091202

OK, but surely the state can't be liable for fraudulently assessed assets that it has guaranteed? Even if not all the bank guarantee can be returned, surely NAMA can be reversed as there is no outside interest? Plenty of outright lies on the valuations of assets there too.

Bob_Latchford

Just saying even with semi state there is wiggle room with sovereign obligations.

No expert so believed everything I had heard up until now was that we are saddled with bank debt when many countries have been here before and cut the private enties / semi state lose

Absurdum

Cavehill Red wrote: »

Well, the time has come to stop guaranteeing them.

Can anyone explain how this can happen? Is it simply a matter of declaring the guarantee null and void or is there a legal framwork involved? Or are FF simply too stupid and/or stubborn to take this route?

Dan_Solo

Absurdum wrote: »

Can anyone explain how this can happen? Is it simply a matter of declaring the guarantee null and void or is there a legal framwork involved? Or are FF simply too stupid and/or stubborn to take this route?

Stupid? Stubborn? Didn't you forget to put in a "corrupt" option?;)

Sir Oxman

mike65 wrote: »

Denmark is also thinking about a bilateral loan.

NIB--->Danske Bank

Bob_Latchford

There was a Icelandic guy on here the other day saying how they did it there and america did it to washington mutual

http://en.wikipedia.org/wiki/Washington_Mutual

They strip out what they want from the failing banks and move that to a new bank. The old bank is left with the debts and an IOU and allowed to fail

I am sure it gets messy in courts, but worth it

Absurdum

Dan_Solo wrote: »

Stupid? Stubborn? Didn't you forget to put in a "corrupt" option?;)

I wanted to keep it short and sweet, otherwise I'd be typing insults all night

Dan_Solo

As for returning debts to the banks and then having them collapse, I'd much rather lose all my savings now than lose ten times the amount in taxes and pay cuts over the next 50 years.

Cavehill Red

Absurdum wrote: »

Can anyone explain how this can happen? Is it simply a matter of declaring the guarantee null and void or is there a legal framwork involved? Or are FF simply too stupid and/or stubborn to take this route?

Simple issue of passing legislation in the Dail. Obviously Fianna Fail won't do it (without a gun at their heads) so that's why we need an election BEFORE any deal with the IMF/EU.

Absurdum

I only caught the end of Prime Time but Michael Noonan seemed somewhat open to the idea of some sort of default...some hope perhaps?

Dan_Solo

Absurdum wrote: »

I only caught the end of Prime Time but Michael Noonan seemed somewhat open to the idea of some sort of default...some hope perhaps?

I don't think we really want a default though. We want the public finances to be rid of the Fianna Fail transferred private debt. Then there's no need to default.

th3 s1aught3r

Watching VB. It sounds like we are going down the default road. Disorderly default doesnt sound like a nice option

marglin

If only he were in government. If only literally anybody else was at that negotiating table. A monkey with a rudimentary ability to communicate(making a noise meaning no or something) could do better. The discussions(in my head)

IMF/EU: Here lads ye're in trouble, sure look we'll save ya cos we're such good pals, ye have to pay interest of about 5% though, is that ok?

FF: Ah jaysus lads, that's awful sound, we really could do with the few bob. Its kinda for our mates at the banks but no one will lend them anything isnt that awful? 5% is very reasonable, joining the euro and then letting ye decide whats best for us is the best thing we ever did. that cheap money ye gave us a while back was great, we had some session, didnt we boys?

Rest of FF: ah we did thats for sure and everyone loved us for throwing such a good session, especially our mates the developers, jeez they loved it.

IMF/EU: the only thing is will everyone here like it? someone said to us on the way over ye're moving out in a few weeks, will this deal still be good?

FF: Ah sure f**k them, arent we only doing whats best for everyone, I mean do they not realise what would happen if the banks cant pay back their loans, I mean they owe some dodgy lads like. No dont worry lads it'll stick alright and everyone will stick with it forever.

IMF/EU: Ah you're dead right to be fair, fair play to ye lads. Just make sure ye do actually pay it back though. I heard someone whispering about defaulting, now ye'd want to stop that kind of talk.

FF: Don't worry we'll pay ye back alright, every penny, well sure dont we have loads of kids, they'll have jobs someday(Rest of FF looks nervously at each other), they'll give it back...or their kids at the very latest.

IMF/EU aside to each other: Thank God we got that through, if they default on the banks debt, we are all absolutely f**ked, our stupid mates in our banks were the ones who gave them the money. The last thing we want is our houses turning into a kip like this. Let's get out of here, here IMF you stay, you're big and scary keep an eye on them, if they step out of line break someone's leg or just take their valuables, you're good at that. Here that was way easier than we thought it would be, they're awful eejits arent they?
Eh i think the ugly one with glasses is drunk, lets go, Im german like, I dont 'do' parties.

IMF/EU exit to stage left, rafters fall on stage. curtain closes, then goes on fire. The fire extinguishers are empty. FF notice none of this as Cowen is singing a great aul ballad about Offaly.

Bob_Latchford

I dont understand why IMF/ECB dont see that their route could lead to default. They have the figures & experience of these situations

Sir Oxman

Bob_Latchford wrote: »

I dont understand why IMF/ECB dont see that their route could lead to default. They have the figures & experience of these situations

I think they do know but don't want that to happen now.
Probably 2013 as hinted at by Merkel, experts appear to agree that if we do the EU's bidding now and kick the famous can down the road then we will inevitably have a disorderly default which would be totally ruinous for Ireland.
If we default/restructure the rotten private bank debt now it will be an orderly default but this would probably blow up Portugal then Spain and of course hit the German and French banks.

IMO, we have a small timeframe to do what is best for Ireland.

hinault

Dan_Solo wrote: »

I don't think we really want a default though. We want the public finances to be rid of the Fianna Fail transferred private debt. Then there's no need to default.

The mantra from FF and Lenihan is that the ECB agreed with his party issuing the bank guarantee in Sept 2008.
That is their defence.

(not saying that their defence is right or justifiable).

Cavehill Red

hinault wrote: »

The mantra from FF and Lenihan is that the ECB agreed with his party issuing the bank guarantee in Sept 2008.
That is their defence.

(not saying that their defence is right or justifiable).

Did the Irish people?

Do the Irish people agree with it now?

Because it's the Irish people being asked to pay for this, not Comical Lenny, the ECB or anyone else.

Sir Oxman

hinault wrote: »

The mantra from FF and Lenihan is that the ECB agreed with his party issuing the bank guarantee in Sept 2008.
That is their defence.

(not saying that their defence is right or justifiable).

And that just confirms that the EU/ECB are on the private bank debt being borne by the Irish people - they cannot countenace that the German and French banks will take such a huge hit and casue them so much damage - we are the patsies and the govt are the criminals facilitating it.

hinault

gambiaman wrote: »

And that just confirms that the EU/ECB are on the private bank debt being borne by the Irish people - they cannot countenace that the German and French banks will take such a huge hit and casue them so much damage - we are the patsies and the govt are the criminals facilitating it.

No one forced the Irish banks to borrow all that money.

The management of those banks, along with the criminal decision of lenihan to socialise those liabilities, are culpable.

No one forced those irish banks to borrow any of that money.

hinault

Cavehill Red wrote: »

Did the Irish people?

Do the Irish people agree with it now?

Because it's the Irish people being asked to pay for this, not Comical Lenny, the ECB or anyone else.

of course the irish people didn't agree to this.

the argument used is that if there was a run on the irish banks in sept 2008, we'd have had a financial crisis.

Lenihan and FF claim that they obtained agreement from the ECB to guarantee the banks, to stop the run on the banks.

That is their defence.

We don't know if the ECB agreed with the FF guarantee....................

Lenihans decision to guarantee the banks has brought us to this impass.

if he hadn't guaranteed the irish banks, would there have been a run in sept 2008???

Dotsie~tmp

hinault wrote: »

No one forced the Irish banks to borrow all that money.

The management of those banks, along with the criminal decision of lenihan to socialise those liabilities, are culpable.

No one forced those irish banks to borrow any of that money.

Your right they didnt. Just like nobody can force the Irish people to pay the gambling debts of private institutions. Just because you gave a party a mandate it doesnt mean they can turn around and say they now have carte blanche to give away the crown jewels. I dont remeber FF running on a take on €200bln of private companies debt platform.

Sir Oxman

hinault wrote: »

No one forced the Irish banks to borrow all that money.

The management of those banks, along with the criminal decision of lenihan to socialise those liabilities, are culpable.

No one forced those irish banks to borrow any of that money.

We know the Irish banks are as rotten - that doesn't mean Irish citizens must be held liable and pay private debt.

hinault

gambiaman wrote: »

We know the Irish banks are as rotten - that doesn't mean Irish citizens must be held liable and pay private debt.

That is the argument that I am trying to make all along.

The management in those banks took the decision to borrow that money and to then loan that money irresponsibly.
They're culpable but so too is Brian Lenihan when he took the decision to transfer the repayment of these borrowings on to the taxpayer.

Irish banks + Brian Lenihan.

Sir Oxman

hinault wrote: »

That is the argument that I am trying to make all along.

The management in those banks took the decision to borrow that money and to then loan that money irresponsibly.
They're culpable but so too is Brian Lenihan when he took the decision to transfer the repayment of these borrowings on to the taxpayer.

Irish banks + Brian Lenihan.

I was thinking we were talking at cross-purposes there!