If Ireland defaults,what happens?

Amhran Nua

Cavehill Red wrote: »

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.

Let them make whatever deal they like. The Irish people will not be held accountable for the gambling debts of the Anglo gang and the red braces brigade.

CJhaughey

Richard Douthwaites Blog is easy to read and makes very simple points.
Its pretty simple and makes good points about the IMF bailout conditions.

a148pro

the govt were (prob) right to guarantee the deposits because there would have been a run on the banks and a wholesale financial crisis

but it was not one bit in our national interest to guarantee the bonds

and I can only presume that Europe told them to guarantee the bonds because if they didn't the entire European Sh*thouse was liable to go up in flames?

I remember thinking at the time of that guarantee that the govt were going beyond their powers and that it should be put to the people

theholyghost

This seems impossible now because the game seems to be more about Portugal and Spain rather than Ireland. But the logical thing would be to sit down with Germany and say, we're screwed and your banks did a lot to screw us. We simply cannot pay back the money. You need to lend us X Billion @ a genrous rate of interest and we will pay your banks back 50c in the Euro. Over time the banks may be able to cope with this and if not YOU (Germany and France) will have to decide whether your banks are too big to fail or not.

There really is no practical difference in AIB making a reckless loan to an individual and a German bank making a reckless loadn to AIB.

I think this simpy wouldn't be allowed now as the resulting pressure on Portugal and Spain would absolutely wreck the Euro.

If we had actually done this in 2008 when the whole Eurozone appeared stronger we'd probably be out the other side of it now. The interesting thing about 2008 is that the Government must have taken absolutely no measures to realistically establish how much debt they were taking on with the banks.

Dan_Solo

theholyghost wrote: »

The interesting thing about 2008 is that the Government must have taken absolutely no measures to realistically establish how much debt they were taking on with the banks.

As the Oireachtas is glacially slowly uncovering now, probably up to half of those debt and assets were fraudulently misrepresented by banks and developers. I see absolutely no reason why the state cannot simply return these to their respective owners.

hinault

theholyghost wrote: »

But the logical thing would be to sit down with Germany and say, we're screwed and your banks did a lot to screw us. .

Yes and No.

Yes, the country is screwed because irish banks of their own volition decided to borrow far to much money.
It is the irish banks fault, not the German banks.

Compounding this is the decision taken by Lenny to indemnify all the liabilities of the irish banks.

theholyghost wrote: »

If we had actually done this in 2008 when the whole Eurozone appeared stronger we'd probably be out the other side of it now. The interesting thing about 2008 is that the Government must have taken absolutely no measures to realistically establish how much debt they were taking on with the banks.

agreed

a148pro

yeah but the point is the German banks were trying to make money by loaning to us, they were taking a risk in doing so and now, logically if nothing else, they deserve to get burned

and I don't think the Germans were one bit less reckless in loaning to AIB than AIB were in loaning to developers. anyone involved in finance in Europe knew our boom was based on property and they all knew there would naturally be concerns as per the extent of the growth and whether it was sustainable. but they still loaned, because our star was in the ascendant, everyone else was doing it and it was probably regarded as easy money.

so we as individuals have been burnt by getting mortgages on property that is now in negative equity. i can accept that. the govt has been burned by pumping up wages for everyone and now being unable to pay those wages because of the bust. i can accept that. but I cannot accept that this generation and the next generation and the next generation of taxpayers should be burned to insulate the bond holders. it was emphatically their mistake that they loaned to the Irish banks, not ours.

now burn them.

and if that bothers the EU, then give us the money we need to avoid burning them at a rate that doesn't make it impossible for us to trade our way out of this situation.

Freiheit

Spot on, what has happened is absolute insanity.....making generations pay for the mistakes of banks....A nation led by fools and economic illiterates.....parish hall politcans in charge of a country...remind me of the 90's hit game 'Lemmings'.

Can the people do anything to stop this?.

later12

Cavehill Red wrote: »

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.

Excuse me... Spain defaulted "Umpteen times?" While I don't deny their problems in the twentieth century, I would like you to define "umpteen", because I presume youare including the sixteenth and nineteenth centuries there cavehill. Hardly relevant anyway. Membership of the European Union and more particularly of the single European currency is a game changer.

Please do not give Argentina as an example of something to aspire to. Have you ever been to Argentina?

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.

Look, we are in serious trouble with our sovereign and our banking debt. Nobody denies this. It is impossible that we will repay the debt as it currently stands - it won't happen. However rather than considering something as disastrous as sovereign debt default, we should be examining the possibility of restructuring both our sovereign and our banking debt. With European banks shoring up their balance sheets, the possibility (I did not say likelihood) of investor move away from safe havens like the US treasuries into higher yielding European sovereign debts, we could muddle - cumbersomely but eventually - out of this crisis.

Investors are not idiots and when we hit rock bottom, if we hit rock bottom, you will know about it; but the game isn't up yet.

It is still to premature to seriously consider defaulting.

Dotsie~tmp

We can start walking and calling. Ive never been to a protest and only once contacted a TD (Pat Carey, I wont repeat the story but he is all thats wrong with vote buying giveaway politics). My father and myself are going out on Saturday if something is on. We can only try.

a148pro

Freiheit wrote: »

Spot on, what has happened is absolute insanity.....making generations pay for the mistakes of banks....A nation led by fools and economic illiterates.....parish hall politcans in charge of a country...remind me of the 90's hit game 'Lemmings'.

Can the people do anything to stop this?.

well the most concerning thing was that none of the major opposition parties were saying they'll burn them, so it seemed there was no alternative in terms of votes. I did hear Richard Bruton on the radio today saying some senior bond holders would have to take a hit, which is a good start.

but I've yet to hear anyone address the argument that we will be unable to take this loan because the combined interest alone on our debts will be 1/3 of our tax intake. which to me means there is no response to this argument. and all the parties are just blindly going along with this. no-one is discussing the nuclear option and they should be.

as per what we should do, I genuinely believe that the dail should be marched on. i mean we have just sat here for the last two years and taken this, it is a fcuking damning indictment of a supposed republic priding itself on its revolutionary history. the only demonstration planned is in relation to the cuts. fcuk the cuts, I agree with the cuts, they have to happen. but imposing an insurmountable burden on us instead of on German banks / pension funds / venture capitalists - we have to march on that.

incidentally, does anyone have any view on the extent to which the guarantee given in 2008 is legally binding, either at all or on future governments? it may be irrelevant if we simply can't pay it but it would be interesting to know.

Dan_Solo

later10 wrote: »

Look, we are in serious trouble with our sovereign and our banking debt.

We are in trouble with our sovereign debt solely because FF decided to transfer banking debt and developer debt into the sovereign debt.
I still say the fraudulently assessed debts in both NAMA and the bailout need to be returned to their previous owners at a bare minimum.

later12

Dan_Solo wrote: »

We are in trouble with our sovereign debt solely because...

Look, we are all aware (or should be aware by now) of the genesis of this problem. Who here is really debating that? The question now is about our ability (or inability) to repay, what got us into this mess is another issue and largely a political one.

a148pro wrote:

but I've yet to hear anyone address the argument that we will be unable to take this loan because the combined interest alone on our debts will be 1/3 of our tax intake. which to me means there is no response to this argument.

The debt we are currently exposed to needs to be restructured. You are quite correct: as it stands, we cannot repay.

Bob_Latchford

Dotsie~tmp wrote: »

We can start walking and calling. Ive never been to a protest and only once contacted a TD (Pat Carey, I wont repeat the story but he is all thats wrong with vote buying giveaway politics). My father and myself are going out on Saturday if something is on. We can only try.

Yes me to. But I dont want it over took by some interest group or party Should be the Irish people making a point that they understand the situation and want a fair deal and change

Dan_Solo

later10 wrote: »

Look, we are all aware (or should be aware by now) of the genesis of this problem. Who here is really debating that? The question now is about our ability (or inability) to repay, what got us into this mess is another issue and largely a political one.

Yes, we are where we are, but as much of the bank guarantee as possible should be returned to the banks as invalid as they were fraudulently assessed.
Also NAMA should be utterly scrapped and all assets returned to their previous owners. How many billions of debt would that get back to the private sector where it belongs? Surely these arent' governed by the same rules as sovereign debt? An act of parliament made NAMA so an act of parliament should be able to kill it.

later12

Look it's not as easy as that but in any event, the discussion is totally academic. The Government parties don't support bank failure, nor do the incoming Government. Wrongly so in my opinion, but I'm not the Government so what gives.

It will not happen so people might as well get used to it and work with what options are available.

Dan_Solo

later10 wrote: »

Look it's not as easy as that but in any event, the discussion is totally academic. The Government parties don't support bank failure, nor do the incoming Government. Wrongly so in my opinion, but I'm not the Government so what gives.

It will not happen so people might as well get used to it and work with what options are available.

Well TBH there is one party on every ballot paper in the country which would give you that option. Many would not consider that an option at all, but less and less do every day.

later12

Dan_Solo wrote: »

Well TBH there is one party on every ballot paper in the country which would give you that option. Many would not consider that an option at all, but less and less do every day.

You talking about Sinn Fein?

Reading their economic policies from the past would encourage me to vote Fianna Fail to be honest.

shannonpowerlab

I am expecting that odds are that this coutry can default in about the time the 4years are up based on their record from the past 2 years...there maybe a lot of deja vu moments in the years to come...

Such as,
Oh we have a short fall of XXbn, week later "oh by the way we have reviewed it and it was double that"...blah blah blah.

Then deny that there is another negotiations to extend the loan and then there will be another public booboo and general election and keeps going like the groundhog day in reality.

They will never change...

That would be my take on this whole thing.

I am preparing to leave the country.

irishh_bob

Freiheit wrote: »

Spot on, what has happened is absolute insanity.....making generations pay for the mistakes of banks....A nation led by fools and economic illiterates.....parish hall politcans in charge of a country...remind me of the 90's hit game 'Lemmings'.

Can the people do anything to stop this?.

whoever your local FG , labour or sinn fein TD is , ring them up and tell them you are not prepared to see your children impoverished just so german pension funds and british banks can be saved , im not capable of doing it but someone needs to organise a march and i will gladly join , if it means downing tools for the day and getting a quater of a million people to leinster house , so be it , this bailout if it passes will be like dropping a nuclear bomb on our economy , the after effects will be felt for years , we will be a wasteland

kaiser sauze

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?

The current guarantee expires in Spring 2011, cannot remember exactly when offhand.

It can simply not be renewed, or it could be reissued with limitations.

Laois_Man

Interesting article on how Argentina is doing now after it's 2002 soverign debt default. (Article is 4 months old)

http://www.soundsandcolours.com/articles/argentina/argentina-lessons-learnt-from-the-aftermath-of-default/

AlmightyCushion

Laois_Man wrote: »

Interesting article on how Argentina is doing now after it's 2002 soverign debt default. (Article is 4 months old)

http://www.soundsandcolours.com/articles/argentina/argentina-lessons-learnt-from-the-aftermath-of-default/

So they went through years of hell, which would have been much worse if they didn't devalue their currency (an option we don't have) and if there wasn't a boom in the prices for oils and metals in the global markets (something else we don't have) and they end up paying it back any ways and even then things are pretty cagey from an economic and political stability point of view? Doesn't really sound like a good option for Ireland.

Nonoperational

It sounds bloody awful. Jesus christ every time I listened to the radio today there were bloody idiots screaming for default default default. It's not as simple as pouting in the corner and saying I'm not paying and all the problems magically go away.

AlmightyCushion

gpf101 wrote: »

It sounds bloody awful. Jesus christ every time I listened to the radio today there were bloody idiots screaming for default default default. It's not as simple as pouting in the corner and saying I'm not paying and all the problems magically go away.

Yeah but Jim Corr said it would be sound and it's not like he's a complete nut job who hasn't got a clue. Did you see his youtube video? He said we need to have our own currency that we can print as much as we like debt free. Excellent idea, Jim, hyper-inflation will help fix our economy.

h2pogo

AlmightyCushion wrote: »

Yeah but Jim Corr said it would be sound and it's not like he's a complete nut job who hasn't got a clue. Did you see his youtube video? He said we need to have our own currency that we can print as much as we like debt free. Excellent idea, Jim, hyper-inflation will help fix our economy.

He didn't say print as much as we like.

Dont you think hyperinflation is possible the way things are?

EastTexas

My gut feeling, since the EU bosses are pushing Ireland to take the money, it’s more likely to be in their interests and not Ireland's, it's future and welfare of the people.
Particularly curious is how fast and with how little scrutiny they trying to get this over and done with.
They are kind of pretending that Ireland has no choice but to go along with the demands, but I think Ireland does.
If anything it should be given enough time to mull it over.
What’s the hurry?

Iorras55

mike65 wrote: »

Well no sense to force a default by charging too much for the loan, so I don't see it happening. However as you ask, Ireland would be shut out of the markets, so no borrowing. The country would have to live on its income which well short of expenditure, the National Pension Fund could be used up that would give Ireland about a year of grace before penury of several years.

Then at some point a deal would be struck to allow Ireland to re-enter the markets.

If that happened I hardly think anybody would be holding their breath until the deal would be struck to start the whole fiasco all over again. If we were out, we would make damn sure we stayed out permanently! Claim Ireland back from the MNC's.

digme

EastTexas wrote: »

My gut feeling, since the EU bosses are pushing Ireland to take the money, it’s more likely to be in their interests and not Ireland's, it's future and welfare of the people.
Particularly curious is how fast and with how little scrutiny they trying to get this over and done with.
They are kind of pretending that Ireland has no choice but to go along with the demands, but I think Ireland does.
If anything it should be given enough time to mull it over.
What’s the hurry?

The markets open monday, that is the sad truth of it.

Laois_Man

gpf101 wrote: »

It sounds bloody awful. Jesus christ every time I listened to the radio today there were bloody idiots screaming for default default default. It's not as simple as pouting in the corner and saying I'm not paying and all the problems magically go away.

Argentina were the only country in it's region that went bust though. We also have things that Argentina didn't have....the power to bring Spain, Portugal, Italy and hopefully the entire Euro down with us!!!

I'm no expert, and I may be nieve....but I say...DO IT!!!