EU Commission again calls for Irish debt deal

KyussBishop

They were not simply a committee for passing along information, they also had a role to play in guiding regulatory policy:

...
(e) contribute to ensuring the efficient and consistent functioning of colleges of supervisors in particular through setting guidelines for the operational functioning of colleges, monitoring the coherence of the practices of the different colleges and sharing best practices;
(f) contribute to developing high-quality and common supervisory reporting standards;
...
2. The Committee shall review the Member States’ supervisory practices and assess their convergence on an ongoing basis. The Committee shall report annually on progress achieved and identify the remaining obstacles.
...
1. The Committee shall monitor and assess developments in the banking sector and, where necessary, inform the Committee of European Securities Regulators, the Committee of European Insurance and Occupational Pensions Supervisors and the Commission. The Committee shall ensure that the finance ministries and national central banks of the Member States are informed about potential or imminent problems.
2. The Committee shall, at least twice a year, provide assessments to the Commission of micro-prudential trends, potential risks and vulnerabilities in the banking sector. The Committee shall include in these assessments a classification of the main risks and vulnerabilities and indicate to what extent such risks and vulnerabilities pose a threat to financial stability and, where necessary, propose preventative or remedial actions. The Council shall be informed of these assessments.
3. The Committee shall have in place procedures enabling the supervisory authorities to react promptly. Where appropriate, the Committee shall facilitate a joint assessment amongst supervisors within the Community on risks and vulnerabilities which may negatively affect the stability of the financial system of the Community.
4. The Committee shall ensure an adequate coverage of cross-sectoral developments, risks and vulnerabilities by closely cooperating with the Committee of European Securities Regulators, the Committee of European Insurance and Occupational Pensions Supervisors and the Banking Supervision Committee of the European System of Central Banks.
...
1. The Committee shall contribute to the development of common supervisory practices in the field of banking as well as on a cross-sectoral basis in close cooperation with the Committee of European Securities Regulators and the Committee of European Insurance and Occupational Pensions Supervisors.
2. To this effect, it shall in particular establish sectoral and cross-sectoral training programmes, facilitate personnel exchanges and encourage competent authorities to intensify the use of secondment schemes, joint inspection teams and supervisory visits and other tools.
3. The Committee shall, as appropriate, develop new instruments to promote the common supervisory practices.

https://en.wikipedia.org/wiki/Committee_of_European_Banking_Supervisors

They don't need to directly investigate themselves, when they are in charge of properly co-ordinating regulation across the EU, and of regulatory policy; this still puts them in a direct position of responsibility (and partial culpability for improper regulation), which is thus collectively shared by all EU members.

Scofflaw

KyussBishop wrote: »

They were not simply a committee for passing along information, they also had a role to play in guiding regulatory policy:

https://en.wikipedia.org/wiki/Committee_of_European_Banking_Supervisors

They don't need to directly investigate themselves, when they are in charge of properly co-ordinating regulation across the EU, and of regulatory policy; this still puts them in a direct position of responsibility (and partial culpability for improper regulation), which is thus collectively shared by all EU members.

Overall, that's true, but nothing in that remit need have the slightest impact on a national regulator who feels they are already doing perfectly well, thanks - the EU supervisors have no way of contradicting them, having no independent insight into the state of the national banks, and no powers to require any national regulator to undertake any identified best practice. Not to put too fine a point on it, those are the 'powers' of a talking shop for regulators, not a regulatory body.

cordially,
Scofflaw

KyussBishop

Scofflaw wrote: »

Overall, that's true, but nothing in that remit need have the slightest impact on a national regulator who feels they are already doing perfectly well, thanks - the EU supervisors have no way of contradicting them, having no independent insight into the state of the national banks, and no powers to require any national regulator to undertake any identified best practice. Not to put too fine a point on it, those are the 'powers' of a talking shop for regulators, not a regulatory body.

cordially,
Scofflaw

Well, the 'level 4' part of the Lamfalussy process gives the EU power to take legal action against member states, for not properly implementing regulatory policy agreed at an EU-level; here's a nice brief summary that I found:

Levels of the Lamfalussy Process
Level 1 – Framework Directive
Framework legislation is proposed by the European Commission (the “Commission”) and adopted by the Council of the European Union (the “Council”) and the European Parliament (the “Parliament”) under the co-decision procedure.

Level 2 – Implementing Measures
In order to achieve the principles of the Framework Directive, more detailed implementing measures are prepared by the Commission to supplement the Level 1 framework legislation.
The Commission will mandate the Committee of European Securities Regulators (“CESR”), which includes all of the Member State regulators, to
advise it on the content of these measures. The CESR will enter into public consultations and will then publish its advice to the Commission. The
Commission is not obliged to accept the CESR advice. The Commission will then enter into public consultation before adopting the Level 2 measures
which will be endorsed by a qualified majority of Member States.

In order to achieve a qualified majority, a majority of member states (50% +1) and a minimum of 255 votes (out of 345) must be cast in favour of
the measures. Each member state is allocated a number of votes that roughly reflects the size of its population.

Once the measures are adopted by the Council, each Member State will then implement the Level 1 text and Level 2 regulations into its domestic legal system.

Level 3 – Facilitation of convergence of regulatory practice by supervisory committees
The CESR will draft and issue guidance on the meaning of the Level 1 and Level 2 measures and a common enforcement policy.

Level 4 – Enforcement of Directive
The Commission checks Member States’ implementation of the Directive and takes enforcement action for any failure to implement or inconsistent implementation.

http://hb.betterregulation.com/external/A11767480_LamfalussyProcess.pdf

I agree though, that it leans more towards a 'talking shop' type setup at the same time though, it does still undertake a role for regulatory enforcement, that does cause the regulatory burden (and culpability for failures in regulation) to be shared by member states.

Scofflaw

KyussBishop wrote: »

Well, the 'level 4' part of the Lamfalussy process gives the EU power to take legal action against member states, for not properly implementing regulatory policy agreed at an EU-level; here's a nice brief summary that I found:

http://hb.betterregulation.com/external/A11767480_LamfalussyProcess.pdf

I agree though, that it leans more towards a 'talking shop' type setup at the same time though, it does still undertake a role for regulatory enforcement, that does cause the regulatory burden (and culpability for failures in regulation) to be shared by member states.

Again, the 'powers' outlined there for the supervisory bodies are advisory ones only - they make recommendations to the Commission, which may or may not take them on board. The Commission has the power, as always. to take legal action where Directives aren't properly implemented, but the supervisory body does not - and the supervisory body is composed of the national regulators in the first place.

cordially,
Scofflaw

Scofflaw

Anyway, back to the on-again-off-again saga of a deal on Irish bank debt. It's reported that the ECB has refused the government's preferred option of trading the promissory notes for a long-term bond:

THE European Central Bank has rejected the Government's preferred solution to the cost of paying back money borrowed to rescue Anglo after the property market crash, EU sources have said.

The Government wants to avoid paying €3.1 billion a year until 2023 to service a promissory note it issued to underwrite Anglo Irish Bank during the financial crisis of 2008.

Finance Minister Michael Noonan had proposed converting the note into long-term government bonds that would be taken up by the Irish Central Bank with the intention of keeping the bonds in its portfolio for a long period.

The sources said the ECB's Governing Council discussed the plan for the first time at a meeting on Wednesday and Thursday and agreed that it amounted to "monetary financing" of the Irish government, banned under article 123 of the EU treaty.

"The ball is now back in the Irish court," one source involved in the deliberations said.

"This is an issue of principle. There is a real concern in the Governing Council because you can create precedents when you do things for one country. Then others may say 'why not for us?'," the source said.

"We must be sure the solution doesn't open a window in terms of monetary financing."

http://www.independent.ie/national-news/ecb-rejects-governments-preferred-deal-on-promissory-notes-3367619.html

But the ECB rejects the claim:

The European Central Bank has dismissed reports that Ireland's preferred option on the promissory note deal had been rejected, saying negotiations were still under way and conclusions on their outcome were premature.

It follows an earlier report from Reuters news agency which said that the ECB had rejected a proposal to convert the note into long-term Government bonds that would be taken up by the Irish Central Bank.

http://www.rte.ie/news/2013/0126/364656-ecb-promissory-note/

We may be where we are, but we haven't a clue where that is...

cordially,
Scofflaw

Sand

There's some real spin going on in Irish media. A few days ago, round about when the OP was made, if you googled for "Irish debt deal" the only news media carrying any reports were RTE, the Irish Times and the Irish Independent. No European or other international media saw any "deal" emerging. And you'd presume they would be interested as they would be paying for any deal. There's more of it here.

Reuters (an objective, non partisan source) reported the rejection by the ECB of the preferred Irish deal, whilst reporting that there were still other options under discussion which presumably would not trigger the monetary financing red line. This is not entirely reassuring because to secure a worthwhile deal monetary financing is *exactly* what we are asking for.

RTE (a state controlled broadcaster) is denying the rejection on the headline, whilst actually admitting the Reuters story in the details: Sean Whelan, their economics correspondent reports that the "ECB didnt accept what was on the table from the Irish" and went on to summarise the ECB position as being "Back to the drawing board, and try again".

That's just damage control - Gilmore (already caught out as a liar by the wikileaks release of US diplomatic reports) and RTE aren't able to challenge Reuters reporting. They admit that the ECB rejected the Irish scheme as monetary financing. They're just desperately trying to spin the headline into something less harmful than "ECB rejects Irish promissory note proposal" so they rush out a counter story that better suits them. The government is being extremely foolish - they're investing far too much political capital into this "deal on the promissory notes" and they're going to be badly badly burnt when the only deal they can reasonably secure is going to be very underwhelming.

Scofflaw

Sand wrote: »

There's some real spin going on in Irish media. A few days ago, round about when the OP was made, if you googled for "Irish debt deal" the only news media carrying any reports were RTE, the Irish Times and the Irish Independent. No European or other international media saw any "deal" emerging. And you'd presume they would be interested as they would be paying for any deal. There's more of it here.

That's about the only point I'd disagree with there - I don't think non-Irish press finds the on-again-off-again shenanigans associated with a debt deal for us particularly enthralling. I suspect Reuters carried that single piece because it was an exclusive.

cordially,
Scofflaw

sock puppet

Sand wrote: »

There's some real spin going on in Irish media. A few days ago, round about when the OP was made, if you googled for "Irish debt deal" the only news media carrying any reports were RTE, the Irish Times and the Irish Independent. No European or other international media saw any "deal" emerging. And you'd presume they would be interested as they would be paying for any deal. There's more of it here.

By debt deal do you mean just the specific deal rejected or a debt deal in general? As the Financial Times argued a couple of weeks ago I think that investors had probably already factored in an Irish debt deal.

Slydice

Interesting narrative:
ECB 'rejects promissory note proposal' - Saturday, January 26, 2013 - 12:00 AM
http://www.irishexaminer.com/breakingnews/ireland/ecb-rejects-promissory-note-proposal--report-582633.html

COMMENT: what now for the promissory note 19:42, 26 January 2013 by Cliff Taylor
http://www.businesspost.ie/#!story/Home/News/COMMENT%3A+what+now+for+the+promissory+note/id/89127228-1885-1042-f4aa-467663860187

Gilmore denies ECB said no to Noonan promissory plan - Sunday January 27 2013
http://www.independent.ie/national-news/gilmore-denies-ecb-said-no-to-noonan-promissory-plan-3367818.html

Ireland has changes to make in bank debt proposal: minister DUBLIN | Sun Jan 27, 2013 8:03am EST
http://www.reuters.com/article/2013/01/27/us-ireland-ecb-changes-idUSBRE90Q07S20130127

Ireland plans to redo bank debt proposal - DUBLIN | Sun Jan 27, 2013 11:43am EST
http://www.reuters.com/article/2013/01/27/us-ireland-ecb-idUSBRE90Q05820130127

Promissory note talks facing difficulties - Minister Varadkar
Updated: 22:33, Sunday, 27 January 2013
http://www.rte.ie/news/2013/0127/364719-bank-debt-ecb/

The Irish Times - Monday, January 28, 2013
Ministers concede difficulties with ECB over deal on promissory notes
http://www.irishtimes.com/newspaper/frontpage/2013/0128/1224329371668.html

_Kaiser_

Slydice wrote: »

Interesting narrative:
ECB 'rejects promissory note proposal' - Saturday, January 26, 2013 - 12:00 AM
http://www.irishexaminer.com/breakingnews/ireland/ecb-rejects-promissory-note-proposal--report-582633.html

COMMENT: what now for the promissory note 19:42, 26 January 2013 by Cliff Taylor
http://www.businesspost.ie/#!story/Home/News/COMMENT%3A+what+now+for+the+promissory+note/id/89127228-1885-1042-f4aa-467663860187

Gilmore denies ECB said no to Noonan promissory plan - Sunday January 27 2013
http://www.independent.ie/national-news/gilmore-denies-ecb-said-no-to-noonan-promissory-plan-3367818.html

Ireland has changes to make in bank debt proposal: minister DUBLIN | Sun Jan 27, 2013 8:03am EST
http://www.reuters.com/article/2013/01/27/us-ireland-ecb-changes-idUSBRE90Q07S20130127

Ireland plans to redo bank debt proposal - DUBLIN | Sun Jan 27, 2013 11:43am EST
http://www.reuters.com/article/2013/01/27/us-ireland-ecb-idUSBRE90Q05820130127

Promissory note talks facing difficulties - Minister Varadkar
Updated: 22:33, Sunday, 27 January 2013
http://www.rte.ie/news/2013/0127/364719-bank-debt-ecb/

The Irish Times - Monday, January 28, 2013
Ministers concede difficulties with ECB over deal on promissory notes
http://www.irishtimes.com/newspaper/frontpage/2013/0128/1224329371668.html

Lesson learned: You can't trust anything that's reported anymore except the certainty that it won't be good for Ireland. Nor am I surprised that the government/Gilmore denied it at first - sure they were at the same thing when the IMF came to town!

I fully expect that, as has been the case all along:

- Those who gambled and lost will still get paid

- The Irish taxpayer will be the one to foot the bill - not those responsible, nor those agreeing to this in our name (a bunch of teachers, publicans and lawyers playing statesmen on an international stage. Any wonder we're being treated as the EU's whipping boy)

- The cardboard cutout that we have as "leader" of this country will continue spouting meaningless drivel about inheriting the problem and how the Irish people will put their shoulder to the wheel and repay "our" debts, so he can get another pat on the head/award/attaboy from Europe

- Meanwhile the domestic economy will continue to be flushed down the toilet, the best of our youth (who as an aging population we kinda need!), and anyone else who's able will continue to emigrate, and anyone that's left will be paying for this for decades to come

Yep, we really should have been let at the controls of a country alright! :rolleyes: Didn't even take us 100 years to totally mess it up and sell off the "independence" we so craved! (not that we ever really had it though - from "de Brits" to the Church to the EU)

maninasia

These cowboys don't understand the first thing about negotiation. I found myself agreeing with Gerry Adams today when he said...just don't pay it.

If you are faced with somebody who is not going to pay something, you are going to do a deal.

_Kaiser_

maninasia wrote: »

These cowboys don't understand the first thing about negotiation. I found myself agreeing with Gerry Adams today when he said...just don't pay it.

If you are faced with somebody who is not going to pay something, you are going to do a deal.

Agreed, especially when not doing a deal means the entire house of cards could come down. If anything they should be asking us to do a deal, not the other way round!

But as I said above, we have a bunch of teachers, lawyers and publicans representing us at these negotiations (not to mention well-insulated civil servants) who either way will not be affected by the decisions they take on behalf of the rest of us... any wonder then that we keep losing out.

I still think that the best thing Ireland could do would be to beg the UK to take us back as a fully-fledged member of the commonwealth (not as a subjugated nation as previously). We have a lot more in common with the UK and similar interests than we do with the faceless bureaucracy of Brussels.

We (as a nation) just aren't ready for the responsibility of running a country yet. We went from being controlled from London, to Rome and now from Brussels/Berlin. Most of our laws ape our former "masters" - albeit implemented arseways most of the time! - and culturally, despite the 800 years nonsense, we are quite happy to replicate the UK high street, follow the English Premier League and watch the UK soaps.

We have proven time and again that we aren't capable of governing ourselves. From electing woefully underqualified TD's to represent us based on what they did around the town, to the corrupt "stroke" mentality that most of the population engage in (or would if they thought they wouldn't get caught!), to the general disinterest in anything political or economic by "the people" - unless it affects the price of a pint or packet of fags of course! :rolleyes:

Scofflaw

maninasia wrote: »

These cowboys don't understand the first thing about negotiation. I found myself agreeing with Gerry Adams today when he said...just don't pay it.

If you are faced with somebody who is not going to pay something, you are going to do a deal.

Faced with someone who's not going to pay, you look at the consequences for you and for them of the various options. What are the consequences for the ECB of Ireland not paying? Does the ECB lose money? No. Does it lose credibility? No. What are the consequences for the ECB of agreeing to what Ireland wants? Every other country will want to do the same, and the ECB will have to agree to it for them too.

What are the consequences for Ireland of not paying? Does it lose credibility? Yes. Does it lose money? Overall, possibly, possibly not, hard to say. It certainly has to wind IBRC up at once, with concomitant losses, which must be absorbed either by the bank's market creditors, or by the CBI.

I'm not sure why people persist with the idea that we somehow have the ECB over a barrel, when all the evidence so far says we don't. Historically, Ireland has had very good negotiators - the simplest explanation for their apparent failure to play what many people believe is some kind of unbeatable hand is that people are reading the cards wrong.

cordially,
Scofflaw

ART6

The speech to the Oxford Union by Danil Hannan MEP is worth watching. I accept that he is a UK politician, but his argument is very relevant to Ireland.

http://www.youtube.com/watch?feature=player_embedded&v=7ZpJeHN0_gw#

View

The effect of not paying the promissory note is that the end party at the other end of the transaction is out of pocket and facing potential bankruptcy.

Who is that party?

Why, the Central Bank of Ireland which would of course need an immediate bail-out from the tax-payer to avert the threat of bankruptcy.

The chain of payments with these notes is:

The State -> (State owned) IBRC -> (State owned) CBI

Scofflaw

ART6 wrote: »

The speech to the Oxford Union by Danil Hannan MEP is worth watching. I accept that he is a UK politician, but his argument is very relevant to Ireland.

http://www.youtube.com/watch?feature=player_embedded&v=7ZpJeHN0_gw#

Like many speeches by politicians, it contains some good points, many tendentious ones, and some very rapid skating over logical holes. It's not, however, particularly relevant to the thread, nor did you even explain why it might be. A talk about whether the Occupy movement was right is not really attached to the question of whether Ireland does or does not get a deal on the promissory notes it issued to prop up its banks.

cordially,
Scofflaw

ART6

Scofflaw wrote: »

Like many speeches by politicians, it contains some good points, many tendentious ones, and some very rapid skating over logical holes. It's not, however, particularly relevant to the thread, nor did you even explain why it might be. A talk about whether the Occupy movement was right is not really attached to the question of whether Ireland does or does not get a deal on the promissory notes it issued to prop up its banks.

cordially,
Scofflaw

Apologies. Submitted in too much hurry while distracted by other matters. I thought it was relevant to the thread because it considers the whole issue of the various mechanisms that have been adopted in respect of the bank failures. Perhaps my post should be moved to a more relevant thread -- or simply deleted if you feel that appropriate.

Cavehill Red

Scofflaw wrote: »

I don't dismiss them, I'm just taking them as one point of view, since that's what they are. I don't know what her agenda is, or the extent to which she has one, and I doubt you do either. Is it necessary for you to have everything be rosy in Iceland, and if so, why?

cordially,
Scofflaw

On the contrary, Scofflaw, I'd ask you why you insist, while admitting you don't know her work, that Davidsdottir has an agenda? That insistence would seem to expose your own.
I think you're a google jockey on this particular issue, actually. Your argument required a particular analysis on Iceland, so you went to google and grabbed the first one you saw. Unfortunately for you, it turned out to be amateur hour. Having now spotted this, I'll be watching for it in future. It may well be that you are nothing like as informed as you like to present yourself to be.
Again, I'd suggest, if you have an ACTUAL interest in Icelandic economics, that you consult Davidsdottir's writings on the matter, which certainly do not depict everything as being rosy, but are especially illuminating on the contrast with Ireland, in which she has taken a sustained interest.

Chips Lovell

Funnily enough, I've seen Sigrún Davíðsdóttir make some very similar points to Tendra, i.e. that the broad brush interpretation of what happened in Iceland is incorrect and that Iceland didn't really just dust itself off and walk away from the mess.

Cavehill Red

Vladimir Kurtains wrote: »

Funnily enough, I've seen Sigrún Davíðsdóttir make some very similar points to Tendra, i.e. that the broad brush interpretation of what happened in Iceland is incorrect and that Iceland didn't really just dust itself off and walk away from the mess.

Exactly. She hardly paints an entirely rosy picture. She's been consistently arguing, for example, that Iceland did bail out their banks, for example. But she also makes some very different points to the graphic designer, especially in relation to the contrast with Ireland.

Scofflaw

Cavehill Red wrote: »

On the contrary, Scofflaw, I'd ask you why you insist, while admitting you don't know her work, that Davidsdottir has an agenda? That insistence would seem to expose your own.
I think you're a google jockey on this particular issue, actually. Your argument required a particular analysis on Iceland, so you went to google and grabbed the first one you saw. Unfortunately for you, it turned out to be amateur hour. Having now spotted this, I'll be watching for it in future. It may well be that you are nothing like as informed as you like to present yourself to be.
Again, I'd suggest, if you have an ACTUAL interest in Icelandic economics, that you consult Davidsdottir's writings on the matter, which certainly do not depict everything as being rosy, but are especially illuminating on the contrast with Ireland, in which she has taken a sustained interest.

I don't particularly require Iceland to be one thing or the other. I just don't think they're Ireland, and I think the constant drawing of parallels is almost invariably at the shallowest possible level of analysis.

On the other hand, like everyone else who has been interested in the crisis, I have of course been following their progress on and off for a couple of years now. I wouldn't claim to be an expert on them, but then I wouldn't really accept anyone else's claim to be the expert either.

As to agendas, the main one that concerns me is not so much the agenda of any Icelander, but the agendas of those who constantly draw the shallow parallels already referred to, since those 'parallels' are really nothing more than 2-D stage props for the "default/kill the banks and everything will be rosy" roadshow. That Iceland offers multiple contrasting voices on their progress demonstrates the lack of depth of such claims - and that one regards one of those voices as more significant than another is likely to reflect personal preference rather than objective judgement.

cordially,
Scofflaw

Sand

@Scofflaw

That's about the only point I'd disagree with there - I don't think non-Irish press finds the on-again-off-again shenanigans associated with a debt deal for us particularly enthralling. I suspect Reuters carried that single piece because it was an exclusive.

We don't really disagree then - my point is that the wider European and international media will actually report a deal if and when it occurs. Whereas the Irish media are reporting a deal every three weeks on average. RTE and most of the Irish media seem to be completely gullible when it comes to unfounded and unproven claims of diplomatic triumph by government ministers. RTE is state owned, but I don't understand why the papers are so stupid as to accept and print the version of events given to them by the Governments PR team as the literal, unchallenged truth.

@Sock Puppet

By debt deal do you mean just the specific deal rejected or a debt deal in general? As the Financial Times argued a couple of weeks ago I think that investors had probably already factored in an Irish debt deal.

I meant the deal being announced from the Ecofin meeting on the first page (not the OP). I googled "Irish debt deal" and "Irish eurozone deal" at the time and the only news stories bringing back hits were RTE, Irish Times and Irish Independent. No non-Irish source reported any "deal". Therefore it was clear nothing significant had actually emerged, it was just spin.

My litmus test for an actual deal of any significant value is going to be seeing a report where Angela Merkel is telling the German people that they're going to pay off at least some of the Irish debt. That's the unfortunate problem we have: to get meaningful debt relief either the ECB must greenlight monetary financing (which it almost certainly wont unless there is an existential threat to the Euro) or Germany, Finland, the Netherlands and the other Eurozone creditor states must greenlight their taxpayers funds being used to reduce the debt of the Irish taxpayer (which is more likely than monetary financing, but still highly unlikely given the grim progress on Irish reform of the public sector and social welfare making it politically impossible to sell to the voters in those countries).

So for Ireland to get a deal, someone has to break the bad news to the ECB or the taxpayers in the other Eurozone countries. You'll know there's a deal when you see it in the non-Irish media.

I should state for the record - I entirely expect to see a "deal" announced by the Irish government by March. They have hyped up expectations and burned so much political capital that they have to announce something. But like the "deal" announced last year I expect it to be very underwhelming. I think the government will survive the fallout - they're just too strong in votes - but their credibility will be shot.

@maninasia

These cowboys don't understand the first thing about negotiation. I found myself agreeing with Gerry Adams today when he said...just don't pay it.

If you are faced with somebody who is not going to pay something, you are going to do a deal.

Gerry Adams is being as dishonest as Gilmore when he says that. Adams and his mates in Provisional SF have torn strips out of successive governments for very minor adjustments to spending and have constantly called for spending to be protected and increased.

Ireland could actually just not pay it. But Adams needs to then honestly admit that his policy then means drastic spending cuts being implemented very quickly. The government policy of delaying spending cuts (which I disagree with completely) is only possible because the ECB and the Troika are lending us the money (at interest) to fund our unsustainable spending. There is no solution which involves not paying the ECB and yet them still enabling our very stupid spending.

Also, the time for being big and brave in negotiations with the Troika was back in 2009 and 2010. Far too late now. The Green Jersey strategy has driven the country onto its knees, and as Morgan Kelly predicted we are entirely dependent on the kindness of strangers.

Cavehill Red

Scofflaw wrote: »

I don't particularly require Iceland to be one thing or the other. I just don't think they're Ireland, and I think the constant drawing of parallels is almost invariably at the shallowest possible level of analysis.

On the other hand, like everyone else who has been interested in the crisis, I have of course been following their progress on and off for a couple of years now. I wouldn't claim to be an expert on them, but then I wouldn't really accept anyone else's claim to be the expert either.

As to agendas, the main one that concerns me is not so much the agenda of any Icelander, but the agendas of those who constantly draw the shallow parallels already referred to, since those 'parallels' are really nothing more than 2-D stage props for the "default/kill the banks and everything will be rosy" roadshow. That Iceland offers multiple contrasting voices on their progress demonstrates the lack of depth of such claims - and that one regards one of those voices as more significant than another is likely to reflect personal preference rather than objective judgement.

cordially,
Scofflaw

I think an inability to discern a qualitative difference between the one-off musings of a graphic designer and years of in-depth analysis from a nation's foremost economics reporter who has written books on this precise issue would for me be an example of shallow analysis at its finest.
I don't believe you have such an inability - I believe you are arguing a preposterous equity of analytical value here precisely because Davidsdottir has provided much highly useful and well-researched comparative analysis of the Irish and Icelandic situations which undermine your position that the two have no bearing on each other.

Icepick

Kaiser2000 wrote: »

- The Irish taxpayer will be the one to foot the bill

not really
This economy will not generate enough to pay it all back.

Scofflaw

Cavehill Red wrote: »

I think an inability to discern a qualitative difference between the one-off musings of a graphic designer and years of in-depth analysis from a nation's foremost economics reporter who has written books on this precise issue would for me be an example of shallow analysis at its finest.
I don't believe you have such an inability - I believe you are arguing a preposterous equity of analytical value here precisely because Davidsdottir has provided much highly useful and well-researched comparative analysis of the Irish and Icelandic situations which undermine your position that the two have no bearing on each other.

Again, no, and again I think you're reading an agenda into my position which is a mirror image of your own because I disagree with you, rather than being mine. Let me ask you something - what makes Davidsdottir an expert on Ireland?

cordially,
Scofflaw

Cavehill Red

Scofflaw wrote: »

Again, no, and again I think you're reading an agenda into my position which is a mirror image of your own because I disagree with you, rather than being mine. Let me ask you something - what makes Davidsdottir an expert on Ireland?

cordially,
Scofflaw

I didn't say that she was an expert on Ireland. She is an expert on reporting economics issues, however, and she has been a sustained and renowned voice both in commentating and analysing the aftermath of the Icelandic banking crisis as it has developed, and she has consistently examined the contrasts with Ireland because they have, as you pointed out earlier, prepossessed many people in both countries.
In other words, she is perfectly positioned and informed to provide a cold-eyed objective but interested examination of the Irish situation as it compares and contrasts to the Icelandic situation, and has done so on a number of occasions.

Scofflaw

Cavehill Red wrote: »

I didn't say that she was an expert on Ireland. She is an expert on reporting economics issues, however, and she has been a sustained and renowned voice both in commentating and analysing the aftermath of the Icelandic banking crisis as it has developed, and she has consistently examined the contrasts with Ireland because they have, as you pointed out earlier, prepossessed many people in both countries.
In other words, she is perfectly positioned and informed to provide a cold-eyed objective but interested examination of the Irish situation as it compares and contrasts to the Icelandic situation, and has done so on a number of occasions.

Well, no, because to be able to draw "cold-eyed objective" and relatively expert comparisons between Iceland and Ireland, you need to be relatively expert on both. Otherwise you may be applying an in-depth understanding of an Icelandic issue to a poorly-understood Irish situation, where the assumption that the two are comparable is based on the poor understanding of the Irish situation. A comparative analysis of two situations is only as good as one's understanding of the less well understood situation, not as good as one's understanding of the situation one is more familiar with.

For example, what's the likelihood that Davidsdottir is prone to common myths about the Irish situation, such as the much-repeated and never demonstrated "wall of German money"?

And that's before we get into the question of what makes Davidsdottir right about Iceland, as opposed to simply having one expert point of view.

cordially,
Scofflaw

maninasia

When negotiating one doesn't admit their weakest positions. One must also prepare for the worst as much as possible so one can reliably claim you are ready to blow the whole thing if absolutely neccessary. You don't want to do it, but you can and will do it if forced.

That's negotiation. Time and time again our lot aren't up to the job.

Scofflaw and others are good analysts but would make poor negotiators. Don't worry, it's a common Irish affliction.

View

maninasia wrote: »

When negotiating one doesn't admit their weakest positions. One must also prepare for the worst as much as possible so one can reliably claim you are ready to blow the whole thing if absolutely neccessary. You don't want to do it, but you can and will do it if forced.

And, when exactly have we ever shown any willingness to "prepare for the worst" and embrace the much greater cut-backs and/or tax-cuts that would be needed were we to forego borrowing the monies made available to us in the bailout loan facilities?

Remember, no one is standing there forcing Enda Kenny to borrow the money to keep, let's say, Castlebar General Hospital alive and kicking - instead, we choose to borrow those monies because as in this example we don't want to face the consequences of not doing so.

Icepick

View wrote: »

And, when exactly have we ever shown any willingness to "prepare for the worst" and embrace the much greater cut-backs and/or tax-cuts that would be needed were we to forego borrowing the monies made available to us in the bailout loan facilities?

Remember, no one is standing there forcing Enda Kenny to borrow the money to keep, let's say, Castlebar General Hospital alive and kicking - instead, we choose to borrow those monies because as in this example we don't want to face the consequences of not doing so.

Ironically the ones advising to come with all guns blazing are the ones least prepared to face the consequences when the bluff is called.

Chips Lovell

The logic often appears to be that if we just tell everyone we owe money to to get stuffed, we'd have more money for hospitals etc. and won't have to introduce extra taxes like the Property Tax.

Scofflaw

Vladimir Kurtains wrote: »

The logic often appears to be that if we just tell everyone we owe money to to get stuffed, we'd have more money for hospitals etc. and won't have to introduce extra taxes like the Property Tax.

Except that we're still a long way from balancing the budget, so that can't be the case. We'd have about €5bn more annually if we repudiated all debt, sovereign and bank alike, but I haven't seen anyone calling for that.

If we repudiated just the bank debt, we'd save...well, it's a little more complicated than it looks. We had an estimated notional (accounting) debt of €169.2bn at the end of 2011, on which we were paying €5.28bn on actual borrowings of €138.6bn (we haven't yet borrowed to pay most of the promissory notes). End 2012, that's expected to be €192bn, so the interest costs will be €6.25bn.

How much of that is bank-debt interest? About €1.31bn, assuming we count the NPRF/Exchequer cash injections as borrowing by assuming they produced borrowing elsewhere.

cordially,
Scofflaw

Slydice

Scofflaw wrote: »

Except that we're still a long way from balancing the budget

Scofflaw wrote: »

How much of that is bank-debt interest?

Interesting take on that issue on the NamaWineLake blog recently:

We’ve largely stopped borrowing to pay for services and welfare, now we’re borrowing to repay interest on debt
January 28, 2013 by namawinelake
http://namawinelake.wordpress.com/2013/01/28/weve-largely-stopped-borrowing-to-pay-for-services-and-welfare-now-were-borrowing-to-repay-interest-on-debt/

Our deficit consists of a primary balance – what we collect in taxes versus what we pay out for services, capital projects and welfare. As you can see, the results of five years of austerity are that the primary deficit will be just €3,250m in 2013 and should actually be a surplus of €930m in 2014. So, we are practically there in terms of paying nurses and Gardai, not to mention pensions and social welfare payments.

What is now pummeling us is the still-rising €190bn of national debt, and the interest thereon.

Where the Left is weak is in blaming the €190bn of national debt entirely on the banks. The reality is our national debt of €190bn at the end of 2012 has mostly come about because of the slow pace of the adjustment after the banking and property crash in 2008.

(1) €41bn of the €190bn debt is directly attributable to the bank bailout. Whilst we will have been paying interest on some of this, it should still be the case that less than 25% of our debt was used for the bank bailout. Of course we also raided the pension reserve for an additional €20bn-plus.

(2) €1.8bn of the deficit in 2013, is interest on the infernal promissory notes given to Anglo, INBS and EBS.

3) The interest rate on our national debt is understood to be 3-4%. It is almost certain the interest rate would be lower, perhaps far lower, if we hadn’t loaded the burden of the bank bailout on our shoulders.

(4) The banks have been recapitalized to pay existing bondholders and if there were to be default on these payments, it is arguable that the capital “saved” could be returned to the State and passed on to our sovereign lenders to pay down national debt and reduce the interest charged.

K-9

Slydice wrote: »

Interesting take on that issue on the NamaWineLake blog recently:

We’ve largely stopped borrowing to pay for services and welfare, now we’re borrowing to repay interest on debt
January 28, 2013 by namawinelake
http://namawinelake.wordpress.com/2013/01/28/weve-largely-stopped-borrowing-to-pay-for-services-and-welfare-now-were-borrowing-to-repay-interest-on-debt/

But surely that means that 75% of the interest was to help us pay wages and welfare while we took a few years to get the deficit under control?

noodler

15.4bn deficit in 2013

Take away 3.1bn for the promissory note payment and we have 12.3bn

Take away the interest on our national debt of 7.225bn and we get and we have just over 5bn.

I think he has counted the interest portion of the promissory note payment in 2013 (1.9bn) twice - once in the 3.1bn and once in the interest.

Scofflaw

noodler wrote: »

15.4bn deficit in 2013

Take away 3.1bn for the promissory note payment and we have 12.3bn

Take away the interest on our national debt of 7.225bn and we get and we have just over 5bn.

I think he has counted the interest portion of the promissory note payment in 2013 (1.9bn) twice - once in the 3.1bn and once in the interest.

Not sure he should be counting the interest on the promissory notes at all - we've had repeated explanations of the irrelevance of that interest, since it's interest payable to IBRC, and thus comes back to the government.

cordially,
Scofflaw

NAP123

Scofflaw wrote: »

Not sure he should be counting the interest on the promissory notes at all - we've had repeated explanations of the irrelevance of that interest, since it's interest payable to IBRC, and thus comes back to the government.

cordially,
Scofflaw

Are you sure about that?

maninasia

It should be noted that the above figures for primary balance are government projections, while they could be better, they could also be worse! These all show the primary balance rising smoothly year by year. Is that likely?

It's amazing that with a projected 4.7 billion positive primary balance in 2015 we will still be paying 8 billion in interest alone, thereby still adding 3.3 billion to the deficit and increasing the interest costs annually.

What amount of primary balance do we need to stabilise the deficit let alone reduce it? What's the chances of getting the interest rates down when bailout number 2 is on it's way?

Scofflaw

NAP123 wrote: »

Are you sure about that?

Sure:

Karl Whelan wrote:

The problem with the promissory note arrangement is not that it causes the state to incur high interest costs. In fact, the opposite is the case. The 8.2 percent interest rate quoted here relates to interest payments that the state is making to IBRC, a state-owned institution. This is one arm of the state paying another so the interest rate has no impact on the state’s underlying debt situation.

In the same way, the IBRC uses its promissory note payments to repay its ELA debts to the Central Bank of Ireland (another arm of the state) and the (lower) interest rate it pays on ELA also has no relevance. The Central Bank returns the profits it makes on these ELA loans to the state (see its 2011 annual report).

What is the interest cost to the state of the current arrangement? As I described in detail in this paper, the Central Bank takes in the principal payments on ELA and then retires the money that it created when granting the ELA in the first place. This reduces the balance sheet item “Intra-Eurosystem Liabilities” which the Bank currently pays 0.75% percent on.

http://karlwhelan.com/blog/?tag=promissory-notes

The interest is interest paid by the state to IBRC, which is wholly state-owned.

cordially,
Scofflaw

NAP123

Scofflaw wrote: »

Sure:



http://karlwhelan.com/blog/?tag=promissory-notes

The interest is interest paid by the state to IBRC, which is wholly state-owned.

cordially,
Scofflaw

So is the ESB but it does,nt hand over all of its money to the Govt.

dvpower

NAP123 wrote: »

So is the ESB [...]

The ESB isn't wholly state owned.

NAP123

[PHP][/PHP]

dvpower wrote: »

The ESB isn't wholly state owned.

The Unions don,t count.

antoobrien

NAP123 wrote: »

[PHP][/PHP]

The Unions don,t count.

They do if they own shares - same way as ESOT was one of the big shareholders of Eircom.

NAP123

antoobrien wrote: »

They do if they own shares - same way as ESOT was one of the big shareholders of Eircom.

The workers are still part of the State.

dvpower

NAP123 wrote: »

The workers are still part of the State.

When did workers in the semi-states lose their property rights? :eek:

antoobrien

NAP123 wrote: »

The workers are still part of the State.

As the ESOT was when the plans to float telecom (before the rebranding) were made. When the IPO happened the ESOT got the money, not the state. If the unions have a stake in the ESB, the same situation will arise - the state will not benefit (taxes asuide) from the sale of the union's stake.

Scofflaw

Actually, even for a 100% state-owned company, the argument NAP123 is making is still nonsense. The company may keep the money it makes, but keeping the money it makes simply means the government is not putting money in.

In the case of Anglo, if it keeps the money paid by the State in interest, it will still be using it for purposes for which the State would otherwise be supplying the cash.

cordially,
Scofflaw