Make your voice heard: Response needed from ECB on Anglo Irish Debt Burden

Debtocracy

Godge wrote: »

You are right. How do people keep missing this? The FF government made its "cheapest bailout in the world" decision on 30 September 2008 on behalf of all of us against the advice of everyone else but now we want everyone else to pay. It is a bit like the drunk driver saying it wasn't my fault because they gave me free drink but I insisted on driving even though my sober friend told me not to but because he didn't drink and then drive, he should share my punishment because I gave him a lift home.

Guys goes to bar, gets excessively drunk due to own stupidity and encouragement from barman while inebriated. Guy runs up large tab but also runs up a tab for friends who took advantage of his drunken kindness. Next day barman comes to guy’s house demanding payment of the full tab. Guy agrees to pay his own tab but suggests to the barman that his friends should be responsible for paying half of the value of their own drinks. Barman disagrees and suggests that the reputation of his business would be irrevocably lost if he demanded payments from those people. Guy goes to sink to vomit.

Good loser

View wrote: »

With the most obvious explanation being that the question was flawed but VB wasn't going to let a small issue like that stop himself...

Agreed. As are many of his questions. Biased and simplistic. Egging on the mob.

Remember our banks were under the supervision of OUR regulator - a public servant. If he had done his job properly Anglo Irish would never have got to the state it did.

puffdragon

Done!

makeorbrake

Good loser wrote: »

Remember our banks were under the supervision of OUR regulator - a public servant. If he had done his job properly Anglo Irish would never have got to the state it did.

Agreed.
And by the same token, who was carrying out the 'checks and balances' of the ECB's lending exactly?.....or did they know exactly what they were doing..

Godge wrote:

You are right. How do people keep missing this? The FF government made its "cheapest bailout in the world" decision on 30 September 2008 on behalf of all of us against the advice of everyone else but now we want everyone else to pay.

No - your missing the point. The basis of the question revolves around the ECB pressurising the current Irish Government into NOT burning bondholders.

yellowlabrador

done

meglome

makeorbrake wrote: »

Agreed.
No - your missing the point. The basis of the question revolves around the ECB pressurising the current Irish Government into NOT burning bondholders.

I don't think he is. Our government agreed to certain things and signed up to that on our behalf. Many of us disagree with some of these things but we as a nation voted for that government three times in a row. The were corrupt and inept all along but we didn't seem to care until they dropped us in the shít.

Dannyboy83

http://www.financedublin.com/pdfs/GG_debt_NTMA_note_May_2011.pdf
According to this, by 2015 we are on track to owe €203.6 billion, best case scenario.

I think it's been shown on this forum several times that the adjustments specified cannot actually be met, as they rely on creating 100,000 phantom jobs and stuff.

The talk of Bailout 2 has started.

We have political paralysis at EU level (Eurobonds) and domestically (OverSpending)

I guess we are on the road to ECB-directed bankruptcy?

Scofflaw

makeorbrake wrote: »

Absolutely - it is relevant. However, I think it should be considered within the context of that segment of the press conference. So people, please check this out HERE - and see if you feel that the question was answered to your satisfaction (as a taxpayer).

It would be better to really see the thing in context of the whole press conference: http://www.imf.org/external/mmedia/view.aspx?vid=1402374718001

makeorbrake wrote:

No - your missing the point. The basis of the question revolves around the ECB pressurising the current Irish Government into NOT burning bondholders.

Sure - that's why Masuch's answer is important, because he basically says that it's an Irish government decision. The ECB have in effect said that several times now - and Varadkar repeated it yesterday. Not sure why it doesn't take hold - perhaps the government aren't a scary enough boogeyman?

amused,
Scofflaw

Scofflaw

On that subject, there's an interesting snippet in the 4th troika review:

The political determination required to implement the medium-term fiscal consolidation plan could be tested. Ireland’s net public debt was low before the crisis, at 11 percent of GDP in 2007, but only four years later is projected to reach 97 percent of GDP. Supporting the privately-owned banks accounts for 40 percentage points of this increase.

Much of this support was necessary to preserve a functioning banking system, and the fiscal cost was mitigated by burden sharing with subordinated debt holders. However, even for banks with losses greatly exceeding their capital and subordinated debt, senior debt is being repaid in full. In particular, debt securities on issue by banks now in wind-down (Anglo and INBS) stood at some €21.1 billion in late 2008 (13½ percent of GDP in 2011), excluding covered bonds and subordinated liabilities.

Domestically, the lack of burden sharing with unguaranteed senior debt holders is perceived as being required to protect the European banking system, and is recognized as contributing to Ireland’s debt sustainability challenge and fiscal adjustment needs.

Why "perceived"?

cordially,
Scofflaw

tayto lover

Godge wrote: »

You are right. How do people keep missing this? The FF government made its "cheapest bailout in the world" decision on 30 September 2008 on behalf of all of us against the advice of everyone else but now we want everyone else to pay. It is a bit like the drunk driver saying it wasn't my fault because they gave me free drink but I insisted on driving even though my sober friend told me not to but because he didn't drink and then drive, he should share my punishment because I gave him a lift home.




That answer makes perfect sense to me but won't satisfy the crazy mob.

I would say its a bit like the guy who walked home getting the blame for drunk driving. Its not his fault and not our debts.

GowlBag

I'd like to do this but the link just gives me "This page cannot be found". Did I miss a deadline?

Scofflaw

tayto lover wrote: »

I would say its a bit like the guy who walked home getting the blame for drunk driving. Its not his fault and not our debts.

Unfortunately, they are our debts, in exactly the same way the deficit is our debt. The government of the day - who the Irish people elected - took on those debts as a policy decision, or as a policy screw-up, rather, since they didn't intend really taking them on, but took the risk. Exactly the same process produces the deficit - our elected government makes policy decisions that commit our tax money.

That's Godge's point - the bank debt was taken on by our government as the result of a policy decision to prop up the Irish banking sector, just as the PS wage bill is what it is as a result of policy decisions to expand the PS and benchmark it to avoid discontent, and the SW bill is the result of policy decisions to provide large transfers to the vulnerable in Irish terms, and the Irish aid bill is the result of policy decisions to help the really vulnerable in world terms...and so on.

There are people who object to each of those, and/or who don't benefit from them, but they're all taken on in exactly the same way - policy decisions by our elected government.

cordially,
Scofflaw

View

Scofflaw wrote: »

Unfortunately, they are our debts, in exactly the same way the deficit is our debt. The government of the day - who the Irish people elected - took on those debts as a policy decision, or as a policy screw-up, rather, since they didn't intend really taking them on, but took the risk. Exactly the same process produces the deficit - our elected government makes policy decisions that commit our tax money.

That's Godge's point - the bank debt was taken on by our government as the result of a policy decision to prop up the Irish banking sector, just as the PS wage bill is what it is as a result of policy decisions to expand the PS and benchmark it to avoid discontent, and the SW bill is the result of policy decisions to provide large transfers to the vulnerable in Irish terms, and the Irish aid bill is the result of policy decisions to help the really vulnerable in world terms...and so on.

There are people who object to each of those, and/or who don't benefit from them, but they're all taken on in exactly the same way - policy decisions by our elected government.

cordially,
Scofflaw

And, it should be remembered that during the "success years" of the Celtic Tiger, when the government was handing out largese not many people were saying "I didn't contribute to our success so give the tax-breaks to others". There was no sign of anyone trying to opt out of those policy decisions...

bbsrs

GowlBag wrote: »

I'd like to do this but the link just gives me "This page cannot be found". Did I miss a deadline?

+1 , was the link removed?

IHateMondays

Hi there,
I wasn't near a radio yesterday so missed the link on Today FM. They've now taken it down - I've searched online but can't find it. Would anyone have a copy of it? We shouldn't loose momentum on this and I'm sure a lot of other people would like a chance to send this email as well.

Thanks.

makeorbrake

Scofflaw wrote: »

Sure - that's why Masuch's answer is important, because he basically says that it's an Irish government decision.

Yes, they say it's an irish government decision BUT they say that IF they go down that road, it will have consequences. And those 'consequences' will be the actions of who exactly???

makeorbrake

IHateMondays wrote: »

Hi there,
I wasn't near a radio yesterday so missed the link on Today FM. They've now taken it down - I've searched online but can't find it. Would anyone have a copy of it? We shouldn't loose momentum on this and I'm sure a lot of other people would like a chance to send this email as well.

Thanks.

Was listening to Today FM earlier. They said that between 9-5pm yesterday, they had registered in excess of 9,000 mails sent. They followed up with a query to the ECB Press Office for comment - they have said they would come back - but still waiting. Link has been taken down now.

Scofflaw

makeorbrake wrote: »

Yes, they say it's an irish government decision BUT they say that IF they go down that road, it will have consequences. And those 'consequences' will be the actions of who exactly???

Of the markets - that's what the bits about "confidence about Ireland" and "spillovers into the Irish financial sector in general" are about in Masuch's reply.

There isn't anything the ECB can threaten to do to Ireland that doesn't hurt the ECB and the rest of the eurozone much much worse than it hurts Ireland.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

Of the markets - that's what the bits about "confidence about Ireland" and "spillovers into the Irish financial sector in general" are about in Masuch's reply.

Ok ...so when McWilliams says that new investors will come in - is he just playing to the gallery?

What of Iceland as a case study?

Lastly, why can we not be privy to the knowledge of precisely who these bondholders are?

IHateMondays

Yep, heard that earlier on Today FM. I couldn't log on yesterday and was just wondering if anyone out there has a copy of the email that Today FM put together to send to the Troika?
Thanks

Scofflaw

makeorbrake wrote: »

Ok ...so when McWilliams says that new investors will come in - is he just playing to the gallery?

It's how he makes his living, so it's generally a safe assumption.

makeorbrake wrote: »

What of Iceland as a case study?

Good points and bad. But do you mean a real case study/analysis, or some kind of glib and partial comparison?

makeorbrake wrote: »

Lastly, why can we not be privy to the knowledge of precisely who these bondholders are?

That's a tough one - I would very much like to know who they were, and my glee if I found a reliable rundown of them would be very great (and rapidly shared).

I suspect, though, that what would get cited is "commercial confidentiality", because if the markets knew a good chunk of someone's assets were tied up in IBRC bonds, that someone would probably suffer commercial consequences.

I know that Declan Ganley published a list of bondholders fairly recently - and what looked like an unredacted list - but withdrew it almost immediately. So the information is out there, but it seems likely that it comes with some kind of potential penalty. And, of course, it was a list of the institutions that held bonds - but a lot of those institutions would presumably be holding them as part of funds they're managing for other people, so it doesn't necessarily tell you that much about who would lose if there were haircuts. I would presume that if a bond suffered a haircut, the fund manager passes that loss onto the investors in their fund.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

It's how he makes his living, so it's generally a safe assumption.

So does Nobel prize winning economist, Joseph Stiglitz also have a vested interest in saying the repayment of bondholders is simply "unconscionable" ??


LINK


What's his vested interest in such an analysis?

Scofflaw wrote: »

Good points and bad. But do you mean a real case study/analysis, or some kind of glib and partial comparison?

The inference seems to be that most of us who have commented on this thread would go for the 'glib and partial comparison'. However, let's not assume that (it's certainly not what I'm looking for). By all means, share your wisdom on the Iceland situation. Is it not true that they faced the most extreme of situations and whilst there were NO easy answers, they took the right option (when looking at their scenario in a global sense)?

I'm no economist - but where were all the economists warning that entering into the euro would mean that we would become totally uncompetitive? Whether we like it or not, we are all getting a lesson in economics these days. However, some things simply remain to be explained away satisfactorily when challenged.

makeorbrake

johnnyskeleton wrote: »

The question makes no sense. Either it was for the benefit of the French and german banks and he therefore answered his own question or else it wasn't and the premise of the question is flawed.

Did he answer "It's for the benefit of the French & German banks"? The question is'nt flawed - it's simply a question. Surely an educated mandarin of the ECB has the intellect to answer said question?

johnnyskeleton wrote: »

As to why the Irish people should pay, it's because our government committed us to pay and then blamed Europe and the lazy electorate agreed with this.

Hang on a second...back up the bus. If your government (past or present) sold you into slavery, you would bemoan it but accept it? A nonsensical example (although some might describe the current scenario as economic servitude) - but it makes the point. How untenable does a position have to be before we can accept that we must roll back? Clearly the last administration took an untenable position. The current administration was elected with a clear mandate to renegotiate - or in effect, roll back from the untenable position that was taken. We're still waiting....

Scofflaw

makeorbrake wrote: »

So does Nobel prize winning economist, Joseph Stiglitz also have a vested interest in saying the repayment of bondholders is simply "unconscionable" ??


LINK


What's his vested interest in such an analysis?

No, I certainly wouldn't consider Stiglitz the same way I would consider McWilliams. I'm not simply trying to discredit the source in McWilliam's case because I don't like his message - McWilliams is a discreditable source whether I like his message or not.

And there's nothing really I would retort against Stiglitz - it is unconscionable, but it was also agreed, and has been turned into a measure of Ireland's reliability. Stupid, unconscionable, agreed - but neither intellectual nor moral outrage changes the picture.

makeorbrake wrote: »

The inference seems to be that most of us who have commented on this thread would go for the 'glib and partial comparison'. However, let's not assume that (it's certainly not what I'm looking for). By all means, share your wisdom on the Iceland situation. Is it not true that they faced the most extreme of situations and whilst there were NO easy answers, they took the right option (when looking at their scenario in a global sense)?

I don't know - I think "took the right option" can only truly be judged on the basis of whether Iceland is in a better position than had it taken one of the other options, and it's not really possible to make that judgement, because they didn't. Further, there's a good argument that they took the only possible option - their banks were more than ten times the size of their economy, ours were about three and a half times the size of ours. So they didn't ever have a lot of options - their banking sector could have sucked the state down behind it, and there wasn't ever the possibility they could have saved them.

We hear a lot about how Iceland is doing from commentators arguing one or other course for Ireland - to read them, one might think that Iceland was enjoying a boom, whereas Icelandic commentators appear rather more downbeat. And certainly some of the comparisons that are offered are ludicrous in their simplicity. It's facile to compare Iceland's unemployment rate and say "look, 8%, half of ours", because our structural unemployment rate is higher - we had unemployment of 4% during the boom, they had unemployment of less than 1% - so one could equally well say that their unemployment rate is 8+ times their structural rate, while ours is only 4 times ours.

And, of course, the fat lady hasn't sung. The only way one can be really sure whether Iceland took the right decision is to look at their course over the next 20 years or so - or, of course, there's blind faith.

makeorbrake wrote: »

I'm no economist - but where were all the economists warning that entering into the euro would mean that we would become totally uncompetitive? Whether we like it or not, we are all getting a lesson in economics these days. However, some things simply remain to be explained away satisfactorily when challenged.

I think there may be a correlation/causation issue there. We had an economic boom on a very limited infrastructural and human resource base - it's rather hard to avoid a loss in competitiveness under those circumstances, and we didn't really even try very hard, what with benchmarking and decentralisation. If the euro was responsible for our loss of competitiveness, it's hard to see how we could possibly be regaining it at the moment.

The best explanation seems to me that had we treated euro membership in the same rather steady and disciplined manner as we prepared for it during the Nineties, we would now be sitting at the eurozone table comfortably tut-tutting at the Greeks' profligacy and bemoaning the cash call for the latest round of their bailout.

But, as a cousin of my wife's put it, when looking back on the fact that he, as the owner of a small building company, was bidding over a million euro at auction for a field in Carlow, we lost the run of ourselves. We weren't greedy, so much as just carried away.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

I don't know - I think "took the right option" can only truly be judged on the basis of whether Iceland is in a better position than had it taken one of the other options, and it's not really possible to make that judgement, because they didn't. Further, there's a good argument that they took the only possible option - their banks were more than ten times the size of their economy, ours were about three and a half times the size of ours. So they didn't ever have a lot of options - their banking sector could have sucked the state down behind it, and there wasn't ever the possibility they could have saved them.

We hear a lot about how Iceland is doing from commentators arguing one or other course for Ireland - to read them, one might think that Iceland was enjoying a boom, whereas Icelandic commentators appear rather more downbeat. And certainly some of the comparisons that are offered are ludicrous in their simplicity. It's facile to compare Iceland's unemployment rate and say "look, 8%, half of ours", because our structural unemployment rate is higher - we had unemployment of 4% during the boom, they had unemployment of less than 1% - so one could equally well say that their unemployment rate is 8+ times their structural rate, while ours is only 4 times ours.

And, of course, the fat lady hasn't sung. The only way one can be really sure whether Iceland took the right decision is to look at their course over the next 20 years or so - or, of course, there's blind faith.

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

Godge

makeorbrake wrote: »

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

and still two notches below Ireland, tell me did anyone ever get a response to the mass email?

Scofflaw

makeorbrake wrote: »

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

I guess I'd probably follow the advice handed out by their Finance Minister:

Iceland is warning Greece and Ireland not to copy its recovery model even though the Atlantic island managed a return to international debt markets less than three years after letting its banks default on $85 billion.

“People should be careful when it comes to drawing comparisons between Iceland on the one hand, and Greece, Portugal, Spain and Ireland on the other,” Finance Minister Steingrimur J. Sigfusson said in an interview in Reykjavik. “Iceland didn’t have the ability to save the banks. Trying to rewrite the events that led to that eventuality as some sort of an export product is irresponsible.”

And would add to that that they were out of the markets from 2006 until late last year. We have, thus far, been out of them less than 18 months.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

I guess I'd probably follow the advice handed out by their Finance Minister.......and would add to that that they were out of the markets from 2006 until late last year. We have, thus far, been out of them less than 18 months.

According to chief emerging markets economist with Danske..: “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

Source


"Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium."

Farmer Pudsey

I tried to use link but it is down anybody have e-mail address and copy of mail

Also this is all acdaemic about if we need to pay it as we will will not meet out targets this year. Extra tax on fuel is not meeting targets as people doing less car trips higher vat rate will not meed target pubs and shops empty for second month. Resistance to septic tank charge and household tax charge is mounting and a lot of people will not register. Mortgage default problem continues Banks not lending unless the trioka wake up we will follow Greese in default in the next 6-12 months. Remember old saying you cannot get blood out of a turnip and we are now the turnip.

Even if we cut Civil Service wage bill by another 10-15% reduce dole by 30% and delete extra to pensioners we cannot recover we need growth and it will not happen for the next 3-5 years if we continue as we are doing. We now have an effective top rate of tax at 53% Vat is at 23% for a country with no public transport we have expensive fuel ( I know France ,Germany GB etc are more exensive) but we depend on out cars more and as much tax as we can put on drink and cigs

Even if the household charge gets off the blocks and at present I cannot see it suceeding or if it get going it will be at a low rate for a long time the reality is that if you take 100 euro out of a worker's pocket at present he will cut back other expenditure by that amount

Scofflaw

makeorbrake wrote: »

According to chief emerging markets economist with Danske..: “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

Source


"Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium."

Hmm...if I have to choose between an analyst who says a country followed a textbook example, and the Finance Minister of said country, who says people should not use their decisions as a textbook, I think I'm forced to go with the latter.

Because, after all, the analyst is only analysing the decisions of the Minister. And from a perspective where he doesn't have to make those decisions, or live with the consequences.

cordially,
Scofflaw