Irish yields collapse following deal

darkman2

9 year (Irish bond)

http://www.bloomberg.com/quote/GIGB9YR:IND/chart

(2 year Irish bond)

http://www.bloomberg.com/quote/GIGB2YR:IND/chart

wow! That is a huge fall in a matter of hours. Impressive. Very good news. Let's hope it is not temporary.

christmas2012

were fvcked according to 'experts' we are not going to get out of this for another 20 + years

BKtje

Which experts? How can they already have calculated how last nights event will effect Ireland for the next twenty year when the agreements haven't even been finalised yet or do you mean before the agreement? If it's the later their findings would be fairly useless with such a large (possible) change on the horizon for the EU.

NIMAN

The same experts that said the Euro had 10 days left, about 3 months ago.

Doesn't matter if the in-and-outs are worked out yet, won't stop the doom and gloom merchants coming on the media peddling their end of the world stuff. Don't forget, as a nation, we love misery, so people will lap it up.

books4sale

NIMAN wrote: »

The same experts that said the Euro had 10 days left, about 3 months ago.
.

...they peddled that sh*te for about 2 years.

There was a time in Boards here where every week a poster would start a new thread about how inevitable the collapse of the Euro was.:pac:

darkman2

9 year Irish bond now at 6.4%. That is a low for this crisis. It has also meant it is now more expensive for Spain to borrow than Ireland. Not hard to see by market reaction what country has most to gain by implementing this deal. Our yields have fallen more than any other Eurozone country.

It's positive but we have a very long way to go. Given the position we are in as a country I am happy with what happened this morning. It only helps us get out of this situation.

AllGunsBlazing

I wouldn't trust the bond markets any further than I could throw them at the minute. The Spanish ten year yield alone has been up and down like a prostitute's knickers this past few weeks.

But if the 9 year Irish yield is still around 6% by the end of the summer then we can say that a corner has finally been turned. :fingers crossed:

Remember, all it takes is for Merkel to open her gob with one negative comment for yields to soar and markets to tumble all over again.

[Jackass]

We've heard "turned the corner" a few times, but I genuinely believe this to be it.

There's always an exaggerated reaction to significant news, positive or otherwise, and this negotiation with Europe will be dragged out over a number of months, so I wouldn't be surprised to see them rise slightly again, but the main point is that we have the "muscle" behind us now of 2 of the big 5 eurozone countries making demands that can't be ignored, and has put us on level pegging now, so it seems certain that we will get a reduction and much more favorable terms, and most importantly, the Governments spread sheet will be free of a much larger burden, paving the way for more flexibility in expenditure, definitely less austerity, and hopefully the implementation of some stimulus expenditure.

All in all, this is the news we've been waiting for. The deal hasn't been done yet, but we're now firmly sitting at the front of the table, and we've got the backing to get a fair deal and I think it puts us in a position where real incentives can be given for further integration and as I've said many times, it's all in time for Europe now. Half arsed measures haven't worked, and when it's at its weakest, the states need to become the tightest, and much closer integration of Europe will be a massively positive thing in the long run imo. Essentially becoming more at the heart of something much bigger than we could ever aspire to be on our own.

Heads the ball

[Jackass] wrote: »

We've heard "turned the corner" a few times, but I genuinely believe this to be it.

There's always an exaggerated reaction to significant news, positive or otherwise, and this negotiation with Europe will be dragged out over a number of months, so I wouldn't be surprised to see them rise slightly again, but the main point is that we have the "muscle" behind us now of 2 of the big 5 eurozone countries making demands that can't be ignored, and has put us on level pegging now, so it seems certain that we will get a reduction and much more favorable terms, and most importantly, the Governments spread sheet will be free of a much larger burden, paving the way for more flexibility in expenditure, definitely less austerity, and hopefully the implementation of some stimulus expenditure.

All in all, this is the news we've been waiting for. The deal hasn't been done yet, but we're now firmly sitting at the front of the table, and we've got the backing to get a fair deal and I think it puts us in a position where real incentives can be given for further integration and as I've said many times, it's all in time for Europe now. Half arsed measures haven't worked, and when it's at its weakest, the states need to become the tightest, and much closer integration of Europe will be a massively positive thing in the long run imo. Essentially becoming more at the heart of something much bigger than we could ever aspire to be on our own.

We are f*cked. We're gonna have to pay €1bn-€11bn under the ESM treaty to bail out European banks.

antoobrien

Heads the ball wrote: »

We are f*cked. We're gonna have to pay €1bn-€11bn under the ESM treaty to bail out European banks.

So we pay up to €11bn to get up to €40 bn off the books.....

Where do we sign up?

Slozer

Another piece of creative accounting to brush the problem under the carpet. (For the time being).

Heads the ball

antoobrien wrote: »

So we pay up to €11bn to get up to €40 bn off the books.....

Where do we sign up?

This represents a complete lack of understanding of what is going on.

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

antoobrien

Heads the ball wrote: »

This represents a complete lack of understanding of what is going on.

If we get €40 bn off GGD it reduces the debt ratio to 77% from its current level of 107%. Forget about the lower interest payments for the exchequer, it means lower levels of adjustments required to reduce the ratio toward the 60% limit (17% of an adjustment of debt/gdp rather than 47%).

Heads the ball wrote: »

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

Indeed, who owns the banks? Who gets the dividends if/when the banks get back to profitability? I swear some people are just looking for negatives.

flynnlives

here, lets not get ahead of ourselves.

still havent seen anything of the small print of this deal yet.

poeticseraphim

WOW!

That is impressive.....

However the devil is in the detail of any deal.

As said ....it is if this holds...great news

Goldman sachs have apparrantly been telling people to buy Spanish Irish and Italian bonds....

NIMAN

The amount they are letting us off with is probably going to end up being peanuts compared to what Spain and Italy is going to cost Europe.

We had a terrible banking crisis blown out of all proportions by property lending. Spain has a big property lending issue too, and the figures we are seeing now initially are probably the tip of the iceberg, just like they were in Ireland.

By the time Spain's costs are added up, we will be so small it will be the least of Europes problems.

Sand

Guys - when you hear Merkel telling the German people "We are going to pay off the debts of the Irish, Spanish, Italians and Greeks" then there will be a deal.

Right now, what we are hearing is the Irish, Spanish, Italians and Greeks telling the Irish, Spanish, Italians and Greeks that the Germans are going to pay off our debt. Minor, minor difference. Every EU political summit has to deliver a successful "deal" at its end. This EU summit has delivered a successful "deal" too.

And as I told people back in 2011 when there was similar hoopla about the crisis being solved - the devil is in the detail.

Who exactly has agreed to pay off all the Irish/Spanish/Italian debt?

Oh.... wasn't that in the deal?

darkman2

Who is saying Irish, Spanish, Italian debt is going to be paid off?


Nobody has said that.

Sand

That's my point.

darkman2

Sand wrote: »

That's my point.

Why should our debts be paid off? You think other countries owe us a living?


The issue here is the removal of bank debt from the sovereign. Our sovereign debt once that is done is 100% our problem that we alone have to deal with.

Duggys Housemate

I really get the impression that the negative guys on this thread have no idea what is going on.

Sand

darkman2 wrote: »

Why should our debts be paid off? You think other countries owe us a living?


The issue here is the removal of bank debt from the sovereign. Our sovereign debt once that is done is 100% our problem that we alone have to deal with.

Dial it back there a notch. Absolutely not to answer your question.

The bank debt is "our" debt. There is no such thing left as "bank" debt. This split between bank debt and sovereign debt that you imagine is mostly imagined - as Scofflaw pointed out not so long ago the practically all of the bank bailouts were funded from the NPRF and promissory notes. All of that is either spent out of sovereign reserves or sovereign debt.

The question remains - who exactly has agreed to compensate the Irish sovereign for all the sovereign wealth expended on the Irish banks?

The answer quite simply is nobody.

Debtocracy

This step is important in preventing a collapse of credit in the euro area and should allow us to maintain a stable state of stagflation for the next few years. What I’m wondering is who will eventually bail out the ESM when the zombie banks fail to pay back their investment?

sock puppet

Debtocracy wrote: »

This step is important in preventing a collapse of credit in the euro area and should allow us to maintain a stable state of stagflation for the next few years. What I’m wondering is who will eventually bail out the ESM when the zombie banks fail to pay back their investment?

What makes you think we're in a state of stagflation?

Duggys Housemate

Sand wrote: »

Dial it back there a notch. Absolutely not to answer your question.

The bank debt is "our" debt. There is no such thing left as "bank" debt. This split between bank debt and sovereign debt that you imagine is mostly imagined - as Scofflaw pointed out not so long ago the practically all of the bank bailouts were funded from the NPRF and promissory notes. All of that is either spent out of sovereign reserves or sovereign debt.

The question remains - who exactly has agreed to compensate the Irish sovereign for all the sovereign wealth expended on the Irish banks?

The answer quite simply is nobody.

Presumably if Spain gets a deal, we do. So we are reimbursed for that money by Europe. They take the promissory notes of our hand and pay their funny - printed - money.

darkman2

Financial Times puts it better than anyone in a couple of lines

Spot the eurozone country that doesn’t actually have to issue bonds in these closing 5-year bond yields on Friday:

Spain 5.4 per cent

Italy 5.16 per cent

Ireland 5.02 per cent

darkman2

Sand wrote: »

Dial it back there a notch. Absolutely not to answer your question.


The answer quite simply is nobody.

The market believes this will be applied retroactively. The statement from the commission clearly states that all are going to be treated equally. That's the reason Irish bonds are outperforming Spanish and Italian bonds - not only does the market believe this will happen - it sees Ireland in particular benefiting most from the deal as a programme country.

Look, don't take my word. Market reaction is there to see.

Scofflaw

Heads the ball wrote: »

This represents a complete lack of understanding of what is going on.

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

The answer seems likely to be that if the ESM pays for them, the ESM will own them. And that's actually a pretty good thing, given there are still risks to the banks - they're capitalised for what the mortgage default shock may be, but the estimates of the size of that could be too conservative.

I can't help but wonder, though, whether the idea of the ESM owning the "Irish" banks is something the government would be happy with, and what price we'd actually get for them. I somehow doubt it would be as much as we've put into them.

cordially,
Scofflaw

AllGunsBlazing

Duggys Housemate wrote: »

I really get the impression that the negative guys on this thread have no idea what is going on.

There is a difference between being negative and justifiably cautious. The euro crisis was supposed to have ended with the mass injection of money into the banks last December. It stabilised Spanish and Italian bonds for about 6 months before it all kicked off again.

I for one hope this deal goes through, as it will remove a massive millstone that hangs around our country's neck. But Merkel first has to sell it to the German people or it will die on the vine.

poeticseraphim

AllGunsBlazing wrote: »

There is a difference between being negative and justifiably cautious. The euro crisis was supposed to have ended with the mass injection of money into the banks last December. It stabilised Spanish and Italian bonds for about 6 months before it all kicked off again.

I for one hope this deal goes through, as it will remove a massive millstone that hangs around our country's neck. But Merkel first has to sell it to the German people or it will die on the vine.

The German parliment has approved it.....
http://www.reuters.com/article/2012/06/29/us-eurozone-germany-vote-idUSBRE85S1KR20120629
http://www.chicagotribune.com/news/sns-rt-us-eurozone-germany-votebre85s1kr-20120629,0,4220837.story

With a strong majority...

AllGunsBlazing

poeticseraphim wrote: »

The German parliment has approved it.....
http://www.reuters.com/article/2012/06/29/us-eurozone-germany-vote-idUSBRE85S1KR20120629
http://www.chicagotribune.com/news/sns-rt-us-eurozone-germany-votebre85s1kr-20120629,0,4220837.story

With a strong majority...

Those headlines come with a bit of a caveat though. And it doesn't necessarily mean resounding support form the German people.

[Jackass]

For the people being negative, the reason is that they don't understand the difference of a debt being soverign vs the debt being the liability of the banks, which we own, but our soverign is not responsible for that debt, we are just the main shareholders in a PLC, of which we can sell at a future point. We could sell it tomorrow if we wanted to distance ourselves from the debt, if that would make the neighsayers happy, we just wouldn't get a very good return on our investment. If you own shares in Ryan Air, you are equally as responsible for their debts personally as our Government will be liable for the debts of these banks.

murphaph

AllGunsBlazing wrote: »

Those headlines come with a bit of a caveat though. And it doesn't necessarily mean resounding support form the German people.

The German people will grudgingly go along with it (a collapse of the Euro is unlikely to be in Germany's interests either as it would cause global problems and hurt Germany's exports quite severely) I think but they will be expecting a lot more fiscal control in the rogue states than has been hereto forthcoming. Who could blame them. I'm a taxpayer here too and it annoys me but biting off one's nose to spite one's face is stupid: Germany should have been more careful at the outset of the single currency project. It wasn't and just trusted to luck that everyone would act responsibly and so Germany has to take some of the blame.

Duggys Housemate

murphaph wrote: »

The German people will grudgingly go along with it (a collapse of the Euro is unlikely to be in Germany's interests either as it would cause global problems and hurt Germany's exports quite severely) I think but they will be expecting a lot more fiscal control in the rogue states than has been hereto forthcoming. Who could blame them. I'm a taxpayer here too and it annoys me but biting off one's nose to spite one's face is stupid: Germany should have been more careful at the outset of the single currency project. It wasn't and just trusted to luck that everyone would act responsibly and so Germany has to take some of the blame.

The claim that the periphery didn't act responsibly, from the point of view of the Sovereigns is nonsense. Ireland had a surplus and a low debt to GDP ratio, so did Spain. The private sector went wild because of low ECB rates, rates lower than inflation.

murphaph

Duggys Housemate wrote: »

The claim that the periphery didn't act responsibly, from the point of view of the Sovereigns is nonsense. Ireland had a surplus and a low debt to GDP ratio, so did Spain. The private sector went wild because of low ECB rates, rates lower than inflation.

Ireland (for one) actually poured petrol on the flames of the property sector with wholly unneccessary Section 23 schemes. At any given time the Irish government could have reigned in the property market. They did the opposite.

The vast majority of Ireland's private debt is property related. This could and should have been prevented. It did not suit the government of the day to do so as they were taking in so many tax receipts from the sector and so they could keep buying elections (if the electorate is dumb enough you can) with income tax cuts and increases in public sector pay and welfare.

We could have drafted our own legislation to prevent banks from lendling more than a fixed multiple of real income and made it a serious offence to go beyond that level. We could have introduced rent controls to prevent people clambouring to "get on the property ladder" in the first place by making renting attractive.

We could have changed the vehicle licencing system to be like Germany, Netherlands, France etc. where the YEAR of registration is nowhere to be seen, so the "keeping up with the Jones'" BS that goes on in Ireland and the UK with new vehicle registrations is eliminated. The government however loved it when we sent money to Fritz for a new VW as it could take its VRT/VAT cut and use it to buy your vote at the next election-shortsightedness in the extreme (scrappage schemes weren't about improving road safety, they are about fanning the flames of the motor industry and taxpayer's money should never have been used in this way).

In short, we could and should have done many things on our little island to prevent the bad effects of cheap (at the time) money "forcing" us to borrow it. Germans and Dutch could borrow money just as cheaply as we could remember, but they didn't experience the super-bubble we did, largely because German banks (domestically at least) remained relatively conservative and required 20% - 30% deposits for mortgages. It's a different mindset towards debt: German bank issued credit cards MUST be cleared at the end of each month (so they are more like a charge card). The bank makes its money from the credit card fee, not from the interest as they do in Ireland. Different mindset.

This excuse of "the money was cheap, we had to borrow it" is such a cop out. We could and should have done lots of things to cool the "fake economy" (houses, foreign cars etc.) and keep an eye on competitiveness in the real export economy, the only thing that should matter to a tiny country like Ireland.

Scofflaw

murphaph wrote: »

Ireland (for one) actually poured petrol on the flames of the property sector with wholly unneccessary Section 23 schemes. At any given time the Irish government could have reigned in the property market. They did the opposite.

The vast majority of Ireland's private debt is property related. This could and should have been prevented. It did not suit the government of the day to do so as they were taking in so many tax receipts from the sector and so they could keep buying elections (if the electorate is dumb enough you can) with income tax cuts and increases in public sector pay and welfare.

We could have drafted our own legislation to prevent banks from lendling more than a fixed multiple of real income and made it a serious offence to go beyond that level. We could have introduced rent controls to prevent people clambouring to "get on the property ladder" in the first place by making renting attractive.

We could have changed the vehicle licencing system to be like Germany, Netherlands, France etc. where the YEAR of registration is nowhere to be seen, so the "keeping up with the Jones'" BS that goes on in Ireland and the UK with new vehicle registrations is eliminated. The government however loved it when we sent money to Fritz for a new VW as it could take its VRT/VAT cut and use it to buy your vote at the next election-shortsightedness in the extreme (scrappage schemes weren't about improving road safety, they are about fanning the flames of the motor industry and taxpayer's money should never have been used in this way).

In short, we could and should have done many things on our little island to prevent the bad effects of cheap (at the time) money "forcing" us to borrow it. Germans and Dutch could borrow money just as cheaply as we could remember, but they didn't experience the super-bubble we did, largely because German banks (domestically at least) remained relatively conservative and required 20% - 30% deposits for mortgages. It's a different mindset towards debt: German bank issued credit cards MUST be cleared at the end of each month (so they are more like a charge card). The bank makes its money from the credit card fee, not from the interest as they do in Ireland. Different mindset.

This excuse of "the money was cheap, we had to borrow it" is such a cop out. We could and should have done lots of things to cool the "fake economy" (houses, foreign cars etc.) and keep an eye on competitiveness in the real export economy, the only thing that should matter to a tiny country like Ireland.

We could, indeed, have borrowed money and poured it into business startups and expansions - at negative real interest rates there was a huge opportunity to boost Ireland's SME sector - but we didn't. So claims that our property bubble were somehow someone else's fault are bogus, because there was no requirement for us to borrow money and pour it into property.

Or, indeed, as you point out, for the government to pump up the property bubble with a range of tax breaks - these are the ones that applied in 2009:

Both Residential (S23) and Industrial Buildings Schemes|
Urban Renewal|1998
Town Renewal|2000
Rural Renewal|1998
Living over the shop|2001
Park and Ride|1999
Student Accommodation|1999
Industrial Buildings Schemes Only|
Seaside resorts|1995
Multi-storey car parks|1995
Living Over the shop|2001
Enterprise Areas|1994
Park and Ride|1999
Holiday Cottages|1968
Hotels|1994
Nursing Homes|1997
Housing for the Elderly/infirm|2002
Hostels|2005
Guest houses|2005
Convalescent Homes|1998
Private Hospitals|2002
Sports injury clinics
2002
Childcare Facilities|1998
Mental Health Centres|2007
Caravan Camps|2008
Mid-Shannon Corridor Tourism Infrastructure|2008

Source: http://taxpolicy.gov.ie/wp-content/uploads/2011/06/Property-Based-Reliefs-June-2011.pdf

That's a huge list of pro-property tax breaks, and those are just the special ones, not including things like mortgage interest relief. An interesting point in the source document is this:

We also note that the take up of tax relief schemes is highest amongst tax units with incomes of less than €100,000 with 45% of all claims coming from this grouping. This income group mainly participates in the area based schemes. Their counterparts in the ‘greater than €275,000’ income grouping had a higher intensity of investment in the hotels scheme with a lower participation in some of the area based schemes.

Which rather gives the lie to the common argument that tax breaks were only for the very wealthy.

cordially,
Scofflaw

poeticseraphim

Duggys Housemate wrote: »

I really get the impression that the negative guys on this thread have no idea what is going on.

Agreed! Sadly true.
I don't think some people understand Govt bonds and bond yields.
Lets say this..it is potentially great news...we still have to deal with the deficit but that is down greatly too and a tough budget.


But potentially this is good news.

Ireland has done best out of this it has to be said.....well it seems...touch wood.I think someone said that if after the summer it was still at 6ish % it would be the corner we are waiting for ....
But it is good news......

lets be cautious...really potentially good news
THE BASICS OF BONDS

http://www.youtube.com/watch?feature=endscreen&v=vYMPez0-Uso&NR=1

creedp

Scofflaw wrote: »

Which rather gives the lie to the common argument that tax breaks were only for the very wealthy.

Its not that surprising surely, i.e. that people earning up to €100k considered wealthy these days, shouldn't attempt to benefit from tax breaks. Its interesting though that the average tax allowance for those under €100k is €54,446 while that for those over €275k is €213,625. Also even though I would presume that the no. of taxpayers earning more than €275k is much smaller that those earning less than €100k the former had nearly 169k claims while the much larger latter had only 85k claims. I think Both of these stats pretty well support the commonly held view that the well off benefit most from tax breaks.

Scofflaw

creedp wrote: »

Its not that surprising surely, i.e. that people earning up to €100k considered wealthy these days, shouldn't attempt to benefit from tax breaks. Its interesting though that the average tax allowance for those under €100k is €54,446 while that for those over €275k is €213,625. Also even though I would presume that the no. of taxpayers earning more than €275k is much smaller that those earning less than €100k the former had nearly 169k claims while the much larger latter had only 85k claims. I think Both of these stats pretty well support the commonly held view that the well off benefit most from tax breaks.

I tend to agree with the latter point, although, to be honest, it's mathematically hard to avoid such an outcome!

cordially,
Scofflaw

Heads the ball

antoobrien wrote: »

Heads the ball wrote: »

This represents a complete lack of understanding of what is going on.

If we get €40 bn off GGD it reduces the debt ratio to 77% from its current level of 107%. Forget about the lower interest payments for the exchequer, it means lower levels of adjustments required to reduce the ratio toward the 60% limit (17% of an adjustment of debt/gdp rather than 47%).

Heads the ball wrote: »

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

Indeed, who owns the banks? Who gets the dividends if/when the banks get back to profitability? I swear some people are just looking for negatives.

The issue is the debt doesnt dissappear it simply goes back onto the banks which we own. So it is somewhat of an accounting trick.

Anyway my point is this debt ALWAYS belonged to the bank and looks like its getting put back there. Except the banks (except BOI) have now been nationalised so im not tremendously excited about that.

I am happy about the fact that as the national debt is ("apparently") "lower" it will mean less cuts required in the long term to meet our fiscal targets. That i welcome.

Also i think some people on here are heralding thn in yields hours after the deal. Certainly that is welcome but 1 the markets have been massively volatile and fickle over the past 4-5 years so one days results are not an indicator of the long term rate 2 no details of the deal have been worked out - just general principles

Heads the ball

[Quote=[Jackass];79484085]For the people being negative, the reason is that they don't understand the difference of a debt being soverign vs the debt being the liability of the banks, which we own, but our soverign is not responsible for that debt, we are just the main shareholders in a PLC, of which we can sell at a future point. We could sell it tomorrow if we wanted to distance ourselves from the debt, if that would make the neighsayers happy, we just wouldn't get a very good return on our investment. If you own shares in Ryan Air, you are equally as responsible for their debts personally as our Government will be liable for the debts of these banks.[/Quote]

WADR, thats like saying i have a house worth 10,000 with a debt of 100,000 over it but i can sell that at any time so its separate to my own balance sheet

Heads the ball

[Quote=[Jackass];79484085]For the people being negative, the reason is that they don't understand the difference of a debt being soverign vs the debt being the liability of the banks, which we own, but our soverign is not responsible for that debt, we are just the main shareholders in a PLC, of which we can sell at a future point. We could sell it tomorrow if we wanted to distance ourselves from the debt, if that would make the neighsayers happy, we just wouldn't get a very good return on our investment. If you own shares in Ryan Air, you are equally as responsible for their debts personally as our Government will be liable for the debts of these banks.[/Quote]

And please dont call it an investment. That implies it was something which we decided would be good to invest in, which we did under free will and which was done calmly.

This was a gun-to-head job by the ECB

sock puppet

Heads the ball wrote: »

WADR, thats like saying i have a house worth 10,000 with a debt of 100,000 over it but i can sell that at any time so its separate to my own balance sheet

Wow, a time traveller from 1854 is posting on boards!

[Jackass]

Heads the ball wrote: »

WADR, thats like saying i have a house worth 10,000 with a debt of 100,000 over it but i can sell that at any time so its separate to my own balance sheet

But you don't understand. That's the whole point. It's nothing like that.

It's like saying I have a 90% shareholding in a company with debts of 10 million.

I can sell my shareholding if I like, with the market access it has there may be a long term investor who wants to take on the burden, so it will be worth something, or I can decide to wind up the company and call in the receivers.

One thing is for sure though, I wont be putting any of my personal 100k a year I earn from my job into reducing the debt, and if the company fails, the receivers can take all the company assests, but mine will not be touched.

Personally, I am at no risk of bankruptcy and I have zero personal obligations to servicing the debts, that will only be serviced for the productivity of the company I am invested in.

What this deal will effect is that we will now shareholders in banks that have massive debts, but as a nation have zero obligation to those debts. It's essentially a removal of a bank guarentee and a removal of responsability of our soverign state and tax payers to ensure these debts our banks have accrued must be paid back. It is now a corporate issue and not a national one.

Scofflaw

Heads the ball wrote: »

And please dont call it an investment. That implies it was something which we decided would be good to invest in, which we did under free will and which was done calmly.

This was a gun-to-head job by the ECB

No, the ECB had nothing to do with the original decision to support the banks - that was a purely Irish decision. The ECB enforced the payment of the last 5-10% of senior bondholder debt once the troika bailout put them in a position to insist on such a thing, but backdating that to the original guarantee, as some people do, is unsupported nonsense.

And were we stupid enough to go into this insisting that the ESM take on the "debt the ECB forced on us", we'd be lucky to get much over €6bn out of the deal. It's not a useful argument.

cordially,
Scofflaw

Heads the ball

Scofflaw wrote: »

Heads the ball wrote: »

And please dont call it an investment. That implies it was something which we decided would be good to invest in, which we did under free will and which was done calmly.

This was a gun-to-head job by the ECB

No, the ECB had nothing to do with the original decision to support the banks - that was a purely Irish decision. The ECB enforced the payment of the last 5-10% of senior bondholder debt once the troika bailout put them in a position to insist on such a thing, but backdating that to the original guarantee, as some people do, is unsupported nonsense.

And were we stupid enough to go into this insisting that the ESM take on the "debt the ECB forced on us", we'd be lucky to get much over €6bn out of the deal. It's not a useful argument.

cordially,
Scofflaw

Well according to Dan Boyles book the ECB DID insist that we bail out the banks.

The government was told that no Europe.an bank could fail.

Scofflaw

Heads the ball wrote: »

Well according to Dan Boyles book the ECB DID insist that we bail out the banks.

The government was told that no Europe.an bank could fail.

Dan Boyle just repeats what has been inaccurately said in the media, though, and for his own benefit. His literary output adds nothing to the existing sum of knowledge.

If the ECB forced a government to implement something as large as the guarantee - and, frankly, there's no sign the ECB even liked the guarantee - there would be, I can't help but feel, actual evidence, which is, on the contrary, notable by its complete absence. The ECB's position on the senior debt come the bailout is well known - the ECB has never made any bones about their view - yet there is nothing equivalent for the guarantee.

The ECB only started being mentioned in respect of the guarantee after the troika bailout, when Fianna Fáil realised just how much a screw-up they had created, and decided to finger someone else. There's always people who'll buy such spin, for their own reasons, and for whom the lack of evidence is not an issue - some of the people all of the time, and all of the people some of the time, as they say.

cordially,
Scofflaw

Godge

Scofflaw wrote: »

Dan Boyle just repeats what has been inaccurately said in the media, though, and for his own benefit. His literary output adds nothing to the existing sum of knowledge.

If the ECB forced a government to implement something as large as the guarantee - and, frankly, there's no sign the ECB even liked the guarantee - there would be, I can't help but feel, actual evidence, which is, on the contrary, notable by its complete absence. The ECB's position on the senior debt come the bailout is well known - the ECB has never made any bones about their view - yet there is nothing equivalent for the guarantee.

The ECB only started being mentioned in respect of the guarantee after the troika bailout, when Fianna Fáil realised just how much a screw-up they had created, and decided to finger someone else. There's always people who'll buy such spin, for their own reasons, and for whom the lack of evidence is not an issue - some of the people all of the time, and all of the people some of the time, as they say.

cordially,
Scofflaw

A good analysis.

Nobody in europe liked the bank guarantee. It was a scheme dreamed up by David Mcwilliams and Brian Lenihan as an Irish solution to an Irish problem.

They made a promise to guarantee all the bank's debt but they were too stupid to realise that the promise might need to be fulfilled some day.

All the ECB and our European partners did was insist that we stick to the promise we made. Nothing wrong with that as their logic was if you make a promise you have to stick with it as the system would collapse if people broke promises. Where we went wrong was making the promise in the first place and that is all our own fault (or the fault of those we elected in 2007 if you are one of those who want to avoid responsibility).

Dr Galen

Just a small point here everyone.

We already have a thread around the "new" deal from last week, this thread was started to specifically talk about the yields dropping post the announcement. Can we try to keep it close to that topic please? I can see this meandering off in other directions, that are already covered by existing threads.

If new points/issues/debates come up, then make a new thread or drop me a line and I can separate out such posts into a new thread so as not to derail the OP in this one.

Cheers

DrG

Heads the ball

Scofflaw wrote: »

Dan Boyle just repeats what has been inaccurately said in the media, though, and for his own benefit. His literary output adds nothing to the existing sum of knowledge.

If the ECB forced a government to implement something as large as the guarantee - and, frankly, there's no sign the ECB even liked the guarantee - there would be, I can't help but feel, actual evidence, which is, on the contrary, notable by its complete absence.

Dan Boyle was a senior member of a cabinet party at the time of the bailout - how can you say he is inaccurate? Whats the evidence to back that up?

There appears to have been a decision that night not to document ANY evidence relating to the meetings/what was said/who said it (even who was there) etc... That lack of evidence cannot mean that the ECB didnt force that on us.

Anyway the evidence I am pointing to is Dan Boyles statement.

Scofflaw

Heads the ball wrote: »

Dan Boyle was a senior member of a cabinet party at the time of the bailout - how can you say he is inaccurate? Whats the evidence to back that up?

Well...there's Dan Boyle - and I'm speaking as a Green voter here.

Heads the ball wrote: »

There appears to have been a decision that night not to document ANY evidence relating to the meetings/what was said/who said it (even who was there) etc... That lack of evidence cannot mean that the ECB didnt force that on us.

Anyway the evidence I am pointing to is Dan Boyles statement.

You should go back an re-check what he actually says. There is well-attested "contact with the ECB" in the run-up to the guarantee - the legalities of the various options were checked in advance. But that's of no particular relevance to what you believe, which is that a government can be forced into a €440bn commitment without so much as the slightest hint of a paper trail.

cordially,
Scofflaw