If Ireland defaults,what happens?

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.

Nodoby's saying all the problems go away. But what it does do is put everyone else in the same 5hit as us! And, in that environment, you'll get out of the 5hit a damn sight quicker!

paul71

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.

I disagree, the idiots are the ones saying we as taxpayers should bail out private investors (bondholders) in private companies (banks) with money borrowed at exorberant interest rates from the same private investers we are saving (bond holders who lend to Germany in turn lending to us).

We should not default on the national expenditure debt, we should just allow the banks to fail.

Dan_Solo

Someone said earlier that the bank guaantee runs out in 2011? We should just do nothing until then (we have the cash reserves allegedly), then let the banks collapse. A lot of Irish and foreign depositors and savers will lose a LOT of money, but it's a small price to pay for Ireland sovereign debt remaining manageable and no need for IMF/ECB intervention.

HQvhs

I'm not an economist or anything like it! However, I've been following the economy for a long while now.

To me, it simply does not seem possible for Ireland to repay all the debt it owes - be it government debt, bank debt, or private debt. This is even more so as the government seems to be taking on all of this debt by itself. If we try to cut spending and raise taxes in order to pay it back or simply afford the interest we are just deflating our economy and further reducing our ability to pay. If we don't, then we're haemorrhaging money anyway.
Now I could be wrong - indeed, I hope I am!

But what I don't know is what would happen if we did default.

So, What do you think?

Is Ireland likely to default?
What would the consequences be?

joe12345

.

Hayte

Dan_Solo wrote: »

A lot of Irish and foreign depositors and savers will lose a LOT of money, but it's a small price to pay for Ireland sovereign debt remaining manageable and no need for IMF/ECB intervention.

Its a small price to pay to wake up one day and find all your savings wiped out and all the money in your current account gone huh? Guess its easy to say that when it hasn't happened to you yet.

femur61

If we default does that mean we go bust and subsequently no pay for the nurses, gaurds, anyone in the PS?

TheGodBen

Hayte wrote: »

Its a small price to pay to wake up one day and find all your savings wiped out and all the money in your current account gone huh? Guess its easy to say that when it hasn't happened to you yet.

As someone that has saved money my whole life and has a substantial sum in the bank, I would consider losing all that to be a small price to pay. After all, I'll end up paying far more in taxes just to pay off the interest on this loan, so I'd much rather pay a small sum now than pay a much, much larger sum over the course of my life.

Hayte

TheGodBen wrote: »

As someone that has saved money my whole life and has a substantial sum in the bank, I would consider losing all that to be a small price to pay. After all, I'll end up paying far more in taxes just to pay off the interest on this loan, so I'd much rather pay a small sum now than pay a much, much larger sum over the course of my life.

Think about what you are saying for a moment. I'm not aware of your personal circumstances that you can give up all your savings right now but not everyone can do that. Some people rely on their savings for when they get old or when they fall into arrears on monthly borrowings. For alot of people the money they keep in the current/savings accounts is vital to buffer them from unexpected expenditure, like getting into an accident and having to pay medical bills until such time that you can extract it out of their insurer (if you are even covered by such an event in your medical plan). Or if your car breaks down and you need to get it fixed because you need it to make the daily commute into work. Some people put away money for their kids' futures.

Festus

I like the way our "friends" in Europe and want to "help" us by charging us "interest".

I suppose you could call them our interesting friends.

If there is a bailout rescue fund there set up for situations like this would it not be more "friendly" to offer us a facility with minimal or no interest.

By all means but receivers or administrators in charge of the country and put the politicians and civil servants on minimum wage until we're free of the capital debt.

The whole concept of charging us interest is just asking for us to default.

TheGodBen

Hayte wrote: »

Think about what you are saying for a moment. I'm not aware of your personal circumstances that you can give up all your savings right now but not everyone can do that. Some people rely on their savings for when they get old or when they fall into arrears on monthly borrowings. For alot of people the money they keep in the current/savings accounts is vital to buffer them from unexpected expenditure, like getting into an accident and having to pay medical bills until such time that you can extract it out of their insurer (if you are even covered by such an event in your medical plan). Or if your car breaks down and you need to get it fixed because you need it to make the daily commute into work. Some people put away money for their kids' futures.

Which is why I think that ordinary people should be guaranteed up to €100,000. If worst comes to worst and the banks fail and wipe out all our deposits, it would be a catastrophe, but taking this bailout to pay for the banks is an even bigger catastrophe.

kaiser sauze

femur61 wrote: »

If we default does that mean we go bust and subsequently no pay for the nurses, gaurds, anyone in the PS?

No, it means we have the money to pay them.

What we are talking about doing is defaulting on the banks' portions of the debt.

Defaulting on the sovereign debt (excluding anything bank related) is not a real option.

femur61

kaiser sauze wrote: »

Defaulting on the sovereign debt (excluding anything bank related) is not a real option.

Sorry should have been clearer in my post. I mean will our sovereign debt be effected also in that we can't borrow, because we don't take in enough revenue to pay the PS wages, so we have to borrow. Therefore, will our ability to borrow to cover our sovereign debt be effected.

Dan_Solo

Hayte wrote: »

Its a small price to pay to wake up one day and find all your savings wiped out and all the money in your current account gone huh? Guess its easy to say that when it hasn't happened to you yet.

It's none of my business what private investors do with their money. You pick an investment (bank or otherwise) and hope for the best.
My house has lost €100,000 in value, I guess the government should pick up the tab as I made a bad investment?

Bob_Latchford

Dan_Solo wrote: »

It's none of my business what private investors do with their money. You pick an investment (bank or otherwise) and hope for the best.
My house has lost €100,000 in value, I guess the government should pick up the tab as I made a bad investment?

If you have trouble paying and you went to the bank and said I really really cant pay this it needs to be restructured. If the bank foreclosed on you it to would be holding a 100,000 loss. That money is gone.

If Ireland really cant pay this then restructuring of the debt is inevitable. The sooner the decision is made its best for everyone. bondmarkets and Irish people

Dan_Solo

Bob_Latchford wrote: »

If Ireland really cant pay this then restructuring of the debt is inevitable.

I doubt anything short of partial debt cancellation would be of any use. There just doesn't appear to be a plan anywhere that will try to pay our debts without adding to them.

ilovesleep

Can i ask what does defaulting mean?

i am so confused but i do know the country is deep in the **** and there is not a lot of options.

any chance the imf deal could be scraped and let the banks fail.

Bob_Latchford

ilovesleep wrote: »

Can i ask what does defaulting mean?

i am so confused but i do know the country is deep in the **** and there is not a lot of options.

any chance the imf deal could be scraped and let the banks fail.

A default is the failure to pay back a loan.

Its no difference to you or me getting a loan or mortgage and failing to pay it back. Just like you or me the Irish state is a good customer in the past and has always payed its debts in full. Just that now its possible we cant.

There are whole sliding scale of options still on the table. There are always choices ahead. The banks have already failed. We need to clean up the mess.

ilovesleep

Bob_Latchford wrote: »

A default is the failure to pay back a loan.

Its no difference to you or me getting a loan or mortgage and failing to pay it back. Just like you or me the Irish state is a good customer in the past and has always payed its debts in full. Just that now its possible we cant.

There are whole sliding scale of options still on the table. There are always choices ahead. The banks have already failed. We need to clean up the mess.

I know things will get bad but i hope there will be some hope. so sick with worry for all those i know and love.

Dan_Solo

Bob_Latchford wrote: »

Just that now its possible we cant.

Well put. It's possible we can't pay if we insist on covering our useless parasitic private sector bank debts!
I'd love to see the maths done for this. When Fathead says they examined all the options, he really meant all the options that kept his banking buddies happy.

ilovesleep

Bob_Latchford wrote: »

There are whole sliding scale of options still on the table. There are always choices ahead. The banks have already failed. We need to clean up the mess.

what are the options now.

would it not have been possible to refuse the imf loan, allow the banks to fail, take an eu loan to keep us ticking over while we introduce extreme cuts and tax hikes

Bob_Latchford

ilovesleep wrote: »

what are the options now.

would it not have been possible to refuse the imf loan, allow the banks to fail, take an eu loan to keep us ticking over while we introduce extreme cuts and tax hikes

as I understand it no. Ireland needs money for day to day functioning, mostly to support the banks now but also government spending over the nest 4 years. So even opposition parties would have to do a deal with IMF/EU, they are working together as sort of debt counsellors but also the lenders to get us over this

Main thing is that we to do next is understand and believe what the amount of debt we have in total is. The total debt is disputed. So getting a handle on this and believing what we are told even its unpalletable is key.

That will only happen after an election imo. Some sort of comprehensive independant/credible bank review

Best case from there is that we can afford the debt in full.

If we cant then hard choices will be made. We can sell stuff, wage cuts, welfare cuts etc etc on top of what has been annouced, but it still might not be enough, so thats where a renegotiation of the amount we owe comes in, aka default/restructuring. Its down the road at moment well after the election, so wouldnt get to worried.

Money is available for 4 years so its enough time to elect someone to take charge of the issue and implement changes.

Dan_Solo

Bob_Latchford wrote: »

Main thing is that we to do next is understand and believe what the amount of debt we have in total is.

This is why I think there must be grounds to cancel large tracts of the bank guarantee. There are obviously lots of debt which was fraudulently misrepresented and should be unsecured by the state. I can't see how the IMF can offer us advice on anything when we don't even know ourselves how much debt we have guaranteed.
That's assuming FF don't know of course... maybe they do...;)

leeroybrown

Bob_Latchford wrote: »

Money is available for 4 years so its enough time to elect someone to take charge of the issue and implement changes.

That's not quite true. Money is available for a three year period and is conditional on there not being a default on senior debt and on quarterly reviews of restructuring targets. I want this government out the door asap but I think it's extremely simplistic to suggest that their replacement will have any real breathing room.

Bob_Latchford

Ok didnt know that senior debt was tied to the money

At moment just hoping new government can make one prediction and hit it. Thats really the hieght of my expectations, that we are going in right direction with someone who isnt spinning us fairy tales