What do Govt mean by "Out of the bailout"?

dixiefly

I was listening to Eamonn Gilmore going on about how we will be out of the bailout on Dec 15th next. What does this actually mean.? Will we have paid some loans off? Will we be out of the umbrella of troika etc?

The reality is that we will still be borrowing massively.

What does it actually mean?

Scortho

That We will no longer be receiving support from the troika.
Whether we will or not Is a different story.
A lot balances on external forces at this stage.

Geuze

dixiefly wrote: »

I was listening to Eamonn Gilmore going on about how we will be out of the bailout on Dec 15th next. What does this actually mean.? Will we have paid some loans off? Will we be out of the umbrella of troika etc?

The reality is that we will still be borrowing massively.

What does it actually mean?

Paid off IMF/EU loans = NO

Paid off any public debt = NO

Out of scrutiny of troika = YES

But subject to other scrutiny

Sand

Basically we will be back to where we were on November 28th 2010, except with less options and vastly more debt on our shoulders. When I mean *our* shoulders, I of course mean *our* children's shoulders. All talk about moral hazard and needing to shoulder the bill for electing reckless FF governments went out of fashion once it was realised what moral hazard would actually mean for the people who elected reckless FF governments. Easier to put the bill onto the kids.

We will lose about the only positive from the whole experience - Troika oversight which was about the only thing encouraging the government to cut spending or improve governance at all.

COYW

Sand wrote: »

We will lose about the only positive from the whole experience - Troika oversight which was about the only thing encouraging the government to cut spending or improve governance at all.

Dead right. We will be venturing into very dangerous waters as the 'bright sparks' who rule us will have nobody watching over them. God only knows what madness is ahead of us! They are less likely to make the necessary cuts in public spending, as they cannot blame the big bad Troika.

Slydice

We are hooked on borrowed money.

Being off the bailout kinda means we're off the methadone treatment EU/IMF loans which kept us on the straight and narrow and made us behave with the amount of money we borrowed. The EU/IMF treatment also made it really hard for politicans to give stuff to their mates.

Off the bailout means we can tap the good stuff (loan sharks) from around the world for the money we borrow. The EU/IMF gets less of a say in what our Politicans do and so the politicans get sort out their mates easier and of course... get yer wan down the road the medical card (which has just become harder to get in the lastest budget and so will make for more people who the politicans can "sort out" and then get a vote from)

Fr Tod Umptious

It means that we borrow the money to service our national debt from the international money markets rather than from the troika.

MrBizzles

There putting this spin on things and making the public think ah sure aint we a great bunch of lads getting us out the Troika programme when in truth there is no major difference except they wont be looking over our shoulders but we still owe a shed load of money

dlouth15

Tbe borrowing from the Troika stops. The paying back starts.

Fr Tod Umptious

dlouth15 wrote: »

Tbe borrowing from the Troika stops. The paying back starts.

The borrowing (from someone) and the paying back (to someone) goes on all the time.

Back in Nov 2010 the interest rate (the bond yield) that Ireland would have to pay for money borrowed from the international markets became unsubstantial, thus the arrival of the troika, which gave Ireland the money, for three years in instalments, at a lot more sustainable interest rate, on the condition that they oversaw the use of that money for period of three years.

dlouth15

Fr Tod Umptious wrote: »

The borrowing (from someone) and the paying back (to someone) goes on all the time.

Yes of course, but specifically, the borrowing from the Troika stops and the paying back to the Troika starts (I think the first payment is due in 2015).

Back in Nov 2010 the interest rate (the bond yield) that Ireland would have to pay for money borrowed from the international markets became unsubstantial, thus the arrival of the troika, which gave Ireland the money, for three years in instalments, at a lot more sustainable interest rate, on the condition that they oversaw the use of that money for period of three years.

Yes, none of that is in dispute.

What I think will be interesting will be Ireland's ability to borrow from the markets after the bailout ends. With a 120% debt to GDP ratio and, arguably more importantly, a 160% debt to GNP ratio, will the markets be willing to lend at a relatively low rate?

In other words, has Ireland been put on a sustainable footing with this bailout or have matters been made worse?

maninasia

The government is hoping the long ball game is going to work, IMO international economic growth, especially in the US and EU as they rebound will help save Ireland's bacon. But it's still going to be tight and higher interest rates are going to make the debt burden a serious drag for a long time.

Going Forward

Out of the bailout and into the fire.

The country constantly teeters on a knife edge - go back through the decades, we somehow could not and cannot sustain ourselves and rely heavily on external factors: the expected international rising tide, and using emigration as a relief valve to counter unemployment.

There's little reason for any optimism and even less for the political credit being claimed by the Righteous Brothers (Kenny and Gilmore) for stringently sticking to a plan which they abhorred whilst in opposition.

bbam

Bailout or not.

The big factor for our future is the global economy.
If the global economy grows then we can benifet from more export of both goods and people. These are needed to get ourselves out of our current situation.

If the global economy faulters then were in for a long struggle. Our domestic market just isn't big enough to generate the business required to sustain our population and services.

In many ways were passengers with little control of our economic fate. What the government are doing is tweaking ad buying for time in te hopes that the global economy rises and brings us along.

Rightwing

It means, we will be borrowing from the capital markets instead of the troika, possibly at more favourable int rates depending on state of economy.

However, it does not mean we will be free from scrutiny from the troika. They will be examining us for many years ahead until their money is paid back.

COYW

COYW wrote: »

Dead right. We will be venturing into very dangerous waters as the 'bright sparks' who rule us will have nobody watching over them. God only knows what madness is ahead of us! They are less likely to make the necessary cuts in public spending, as they cannot blame the big bad Troika.

Agree with you but problem for the govt is that the fiscal policies that they've introduced under supervision of the troika proved very unpopular with voters. A lose lose for FG.

Jumboman

Looks like there is a 2nd bail out coming which will be called a "safety net".

ART6

The Irish government was pressurized into converting its private bank debts into sovereign debt in order to prevent the potential collapse of the euro. This saddled a generation or more of Irish citizens with a bill that could only be paid by accepting loans from the ECB, the EU, and the IMF. All that did was transfer the debt from one money lender to another, and it has become apparent that although Ireland has been a good boy, there will be no relief from that. Now Draghi of the ECB has said that some European banks might be allowed to fail, presumably since the perceived threat to the euro has diminished. There will, however, be no retrospective support for the good boys.

So now what? It is suggested that the Irish banks (the AIB in particular) might need another bail out, but it sounds like there will be no EU support for that and our government doesn't have the cash to do so. Right so: the AIB was too big to fail a couple of years ago so, presumably, it is now, but now it is state owned. So now the state will not be contravening EU rules by supporting a private company because AIB is now a semi-state company, and the money to do so can be borrowed from the ECB against the guarantees of generations yet to be born.

I try, sometimes without success, to avoid rants in serious forums, but lately I do begin to wonder if our government and the administration of the EU have any concept of democracy, sovereignty, or even fundamental human ethics.

Rightwing

ART6 wrote: »

The Irish government was pressurized into converting its private bank debts into sovereign debt in order to prevent the potential collapse of the euro. This saddled a generation or more of Irish citizens with a bill that could only be paid by accepting loans from the ECB, the EU, and the IMF. All that did was transfer the debt from one money lender to another, and it has become apparent that although Ireland has been a good boy, there will be no relief from that. Now Draghi of the ECB has said that some European banks might be allowed to fail, presumably since the perceived threat to the euro has diminished. There will, however, be no retrospective support for the good boys.

So now what? It is suggested that the Irish banks (the AIB in particular) might need another bail out, but it sounds like there will be no EU support for that and our government doesn't have the cash to do so. Right so: the AIB was too big to fail a couple of years ago so, presumably, it is now, but now it is state owned. So now the state will not be contravening EU rules by supporting a private company because AIB is now a semi-state company, and the money to do so can be borrowed from the ECB against the guarantees of generations yet to be born.

I try, sometimes without success, to avoid rants in serious forums, but lately I do begin to wonder if our government and the administration of the EU have any concept of democracy, sovereignty, or even fundamental human ethics.

The Ir govt converted it's debt when biffo & co. went on a solo run to try and ruin the country to preerve the party. The EU was completely against it at the time, but the Irish buffoons played completely into their hands.

clairefontaine

The hangover is just beginning.

Because there are no consequnces for not repaying your mortgages, the banks are not getting repaid, and they are also not lending. You will see either, more and more bailouts, or more banks crashing and the economy collapsing.

If more people were actually paying their mortgages, you would also be seeing far more poverty and anger than you do, probably conditions more like Greece.

Good if chilling article here:

http://www.theatlantic.com/business/archive/2013/04/welcome-to-ireland-where-mortgage-payments-are-optional-and-the-banks-are-a-mess/274566/

flintash

freshly cooked new dooms day'er
This article was long ago before even "boom" started in Dublin.... who cares...
Do you really think byers or sellers really interested in macroeconomics or other crap like this
Its mind bogging, I know, so wat?

Sand

Well, I think the ongoing risk was the government tried to prevent anyone losing. Banks wouldn't fail. Bondholders wouldn't burn. Social welfare would be protected. Civil servants and the public sector had inviolable contracts and pension rights. Mortgages would be paid. No one would be thrown out of their homes. The deficit would be cut. Government would be reformed. No special interests would be affected. The trade unions would be kept happy. Ireland would never default. The taxpayer was always ready with the chequebook to ensure nobody lost.

The inherent TINA analysis was that we don the sackcloth and ashes, tear at the heartstrings of the Germans with our puppy-dog eyes (well known for their merciful streak), they would relent and give us lots of money in a grand Eurozone deal, and with one mighty leap we would escape from the jaws of reality. "Haha yee fools - shure I never was sorry at all!"

You can see the last echoes of this in the increasingly pathetic belief that the ECB and the EU *need* Ireland to be a success story. As well as the hilarious demands by Irish political class that the EU honour its promises about retroactive bank bailouts from Summer 2012 - a political class which happily, shamelessly, openly lies in its manifestos to the Irish voters appalled at getting lied to. Brilliant. I'd pay good money to see the photos of Kenny and Gilmore's face as they realised they'd been treated with as much contempt as they treated Irish voters.

The reality is that this isn't coming. The Germans have been communicating very loudly and very clearly to anyone who would listen from 2007 onwards that they will never ever ever ever ever ever ever ever pay off the debts taken on by other states. Ever. Merkel's re-election hasn't changed the message.

Now, you will have read a lot about the Celtic Tiger economy and society being "unsustainable". A lot of wise-heads will have said that is was a time when everyone went mad. If you are under the age of 30 or you have children you had better hope that actually the Celtic Tiger was very sustainable - because you and your children are going to have to sustain the bills incurred during it. Older generations have taken the loot. Ireland is on what the Green Jersey brigade planned as the knife edge of sustainability in a global economy where shocks are common.

Best of luck.

clairefontaine

The reality is as far as I can see is Germany better get off it its eat its cake and have it attitude if it doesn't want its European fantasy to collapse entirely, because that's where it's headed.

flutered

the troika will be forming our budgets for a very long time, they will be with us until they recieve 75% of their dosh back, it is not so long ago that our grandchildren were saddled with debt during a late night alcahol fueled dail session.

Sand

If it makes you feel any better, there hasn't been a single reform since that prevents a few of the inner circle on a drug and drink fuelled bender signing up your children to more open ended debts to save their mates without any serious review or debate. And AIB and Bank of Ireland haven't gone away you know.

clairefontaine

Sand wrote: »

If it makes you feel any better, there hasn't been a single reform since that prevents a few of the inner circle on a drug and drink fuelled bender signing up your children to more open ended debts to save their mates without any serious review or debate. And AIB and Bank of Ireland haven't gone away you know.

So.... do the banks own the government or does the government own the banks?

And if the people own the banks, off borrowed money from the ECB, that they have to pay back, can't it only be paid back by home reposessions, if the non payment of mortages continues?

What is the end game of all this with reposessions? And what is the endgame if there are no reposessions?

ART6

clairefontaine wrote: »

What is the end game of all this with reposessions? And what is the endgame if there are no reposessions?

Either way the banks lose. No mortgage repayments and they say goodbye to the money they lent. Repossessions and with current house prices they stand to lose up to two thirds of each mortgage even if they manage to sell the homes. Then in the latter case, with the banks themselves being wary of providing new mortgages, who is going to buy those repossessed properties? Only those people with sufficient cash in their pockets, but are there enough of them to clear the repossessed housing stock, never mind the large commercial bad loans? More bailouts on the way, sure as God made little apples.

clairefontaine

ART6 wrote: »

Either way the banks lose. No mortgage repayments and they say goodbye to the money they lent. Repossessions and with current house prices they stand to lose up to two thirds of each mortgage even if they manage to sell the homes. Then in the latter case, with the banks themselves being wary of providing new mortgages, who is going to buy those repossessed properties? Only those people with sufficient cash in their pockets, but are there enough of them to clear the repossessed housing stock, never mind the large commercial bad loans? More bailouts on the way, sure as God made little apples.

Who will buy them?

Well, someone will buy the land, the land is where the money is, so my guess is foreign investors and banks.

ART6

clairefontaine wrote: »

Who will buy them?

Well, someone will buy the land, the land is where the money is, so my guess is foreign investors and banks.

Well, the foreign investors and the foreign banks already own the government so they might as well own the land as well!