The stages of Ireland's grief

I did an Economic Geography course at Queen's University in 1997 when the Celtic Tiger was at it's height. I called my course essay "Ireland Miracle or Mirage?" and it stated it was a mirage because it was dependent on multinationals who would inevitably move on, I certainly didn't expect it to end this way! Wish I'd kept a copy of the essay!

However this situation was by no means ineviatable. It all started to go wrong when Fianna Fail got back into power in 1997 they started implementing policies for the benefit of their developer paymasters such as tax breaks for the "NAMA Hotels" that developers built as vanity projects but were never viable. Had Ireland just stuck to the low tax model that gave birth to the Tiger and kept a grip on public finances then it wouldn't be in the mess it is today. The recession would still have happened but it wouldn't have been the total catastrophe we have seen.

Intriguing - Ireland's banks have borrowed too much and the solution is to force Ireland (the country) to borrow some more. Presumably so that they (the country) can meet their (the banks') debts by using borrowed (European) money.

It only makes sense to us because Ireland's banks owe us something around £140bn.

If someone wrote a book with this plot ten years ago it would have been hilarious.

You say that "But ultimately, the responsibility for this crisis lies with the Irish themselves" and yet you also say "The first is that they wouldn't be in this mess - or at least they wouldn't be in this mess right now - if the German chancellor hadn't insisted on leading the rest of Europe into a formal discussion of how sovereign debt in the eurozone might be restructured."

Which one do you believe?

"The stages of Ireland's grief" is the title of Stephanie Flanders piece.

Indeed, Stephanie, you are not wrong - but this is a truly bizarre, sudden and extraordinary move by George Osborne, to say the least, and vaguely suspect?

Is there something that The Chancellor of the Exchequer, The Bank of England et al, are not telling us?

Pray, tell Chancellor Osborne, why you are leaving the British public 'out of the loop' regarding your actions on the Euro currency Republic of Ireland? Will there be Questions in the House quite soon? Let's hope so.

It is their failure to supervise their banking system in the same way as the Icelandics did which created a paper monster that threatened their way of life so there is no of escaping culpability. The Irish government has been made to look foolish or incompetent or both. Their draconian response in terms of the public sector cuts is likely to have contributed to the worries of debt default. It not only increases the probability of private domestic debt default but by the same token ensures assets values decline.
Forcing down wages to be a more competitive economy has little to be said for it in the longer term - it is a race to the bottom.

"True, the rest of the system was complicit in allowing the liabilities of the Ireland's banking system get so far out of line with the size of its economy. But ultimately, the responsibility for this crisis lies with the Irish themselves."
Stephanie may I humbly suggest you revisit this comment. Granted, the Irish elected their government, who as putative regulators of the Irish banking system have been found to be asleep on the job as in the UK. Culpability for this mess truly lies within the banking system itself. The debts requiring bailout I venture will be found not to be purely property related bonds, but also complex instruments, bonds, CDO's, synthetic CDO's and the like originated in Wall Street which were bought either through greed or laziness or both by the bankers in Dublin (or London and the rest of Europe). Before attributing blame, perhaps we could have an empirical analysis of where these debts in the banks we are being asked to bailout originated from. Then we could start identifying the culprits, naming names and recovering assets. Every bailout has its price.

What I don't understand is why the German, UK, French and German Banks that lent all this money to Irish Banks should not suffer some pain.

Ireland decided to bail out the banks. Now that they are struggling their "friends" are wanting to give them more debt. Is this a "not in my backyard" bail out with vested interests saying your doing the right thing but not the way we would do it. Bitter pills all round, perhaps!

I'm sure my suggestion for a "And PIIGS might fly" blog is getting closer to reality. Inter alia, things are really going out of kilter. Well that's my observation.

Thank you for your usual well written article. It's all very disappointing for Europe but how guilty are those who created such a poorly managed system. Politicians and bureaucrats, with a little help from external US pressure, convinced sufficient voters to accept the Euro regime. Motives for joining were mixed and performance very mixed. The latter tolerated for political rather than monetary motives. The real fiscal management lacuna married to an overtly political monetary regime has allowed a range of 'smart-alecs' and worse to misuse the Euro Zone for their short term political or financial gain. Specifically, Ireland has played every game available - until the end. Grants, subsidies, loans, development plans, "the poor underdog", the "willing and enthusiastic European" and not to mention the 'competitor within the EU' through dubiously justified corporate tax incentives. The last ditch full immersion State Guarantee of bank debt was, for me, yet another clever move simply to make the inevitable failure seem less naughty; more a well intentioned 'damn, we tried' approach. Ireland will now do well to return to the older, and genuine, 'Celtic Scholarship' instead of the 'Tiger' approach. Above all, each small Euro Zone Member must learn their true place within the economic food chain. Natural resources, genuine competitive advantage and capacity for education and hard work must take pride of place over opportunism and 'keeping up with the Joneses'. If Europe cannot achieve this via a Constitution, democratic EU Executive born out of the European Parliament and a shared vision of European legality - the next generation might be in for a very bumpy ride. I suppose the Irish remember the EU Constitution!

Not only in Ireland but also in Euroland and the EU. We should just see where each member is at re the five stages;

1.Denial
2.Anger
3.Bargaining
4.Depression
5.Acceptance

Unfortunately I think the majority are still only at stage 1.

Very interesting listening to George Osborne on the news last night that the Uk is ready to help the republic of Ireland with a loan.
What has happened to the UK only just after the general Election the ConDems cancelled a loan to Sheffield Forgemasters as the country could no way afford it. Yet now we can help a foriegn coutry out while the rest of us as to take the cut backs what a government or is it because Sheffield does not elect a conservative MP. Shows you what this government think of people north of Watford.Shame on you CLEGG

I don't think anyone can say with any certainty who will take the hit on an Irish default, although RBS would probably be there as they seem to have been involved in every stupid transaction going.

What would be likely to occur however is a mass unwinding of derivative transactions in order to see who actually holds the can. Loss of confidence in financial institutions - does this sound familiar?

and where's the link to the relevant Simpsons episode?

here

The moral to this tale is perfectly clear. Banks should not be allowed to get too big to fail as they then take down the country.

If ever there was an illustration as to the foolishness of debt, the arrogance of bankers and the hubris of politicians then this is what is happening in Ireland today. The political fall out for such a small country will be huge and I expect there some people will go to prison as a consequence.

What has the future in store for Britain? I expect we will try to inflate our way out of trouble as usual always assuming our creditors are that daft, I don't think. There is more trouble ahead for us all.

This should be the future for all that surplus residential and commercial property in Ireland and elsewhere, its aready happening in the USA - 'Cities also are encouraging urban agriculture through the planting of community gardens on vacant lots. In some cases, homes acquired by a municipality are rehabilitated and occupied again. When buildings are demolished, the lots left behind may be cleaned for agriculture or the planting of gardens, or used for new construction. In the Cleveland area, multiple plots may be put together to allow for larger developments, which won’t go forward until demand for redevelopment emerges.' sustainable and much needed food could be produced ahead of the coming commodity wars.

Things are playing out exactly as I thought they would: a public debate will raise a fuss about Irish debt, then the bond markets will tentatively tip against Ireland, and anyone foolish enough to have shorted the debt will have lost as the EU then comes along with its EU stability fund.

There needed to be a touch of public debate and worry about EU sovereign debt to offset the US's little gag of issuing half a trillion in QE and then showing up at the G20 insisting on a unified approach against competitive currency devaluation.

To the author: It's PIIGS not PIGS. (Portugal, Italy, Ireland, Greece and Spain)

This new programme will involve outside forces monitoring our budgets on a four-yearly basis. That's no harm. Indeed, the EU should have proposed this back in 2005, when France and Germany were the first to exceed the 3% budget deficit defined in the SGP. But of course, as always, the big guys get away with it.

If Fianna Fail had never been in power, our country wouldn't be where it is now. Thanks Fianna Fail: you may have saved the banks (saving Anglo Irish has been one big joke), the lenders, the property developers but you have given away our hard-fought for sovereignty.

Funnily enough, the only person to speak out about the IMF loans (which are not a bailout) since they were announced has been the Central Bank Governer, Patrick Honohan (https://www.rte.ie/news/av/2010/1118/media-2856661.html - we are still waiting for an official statement from the Taoiseach Brian Cowen or Minister for Finance Brian Lenihan. Too busy drowning their sorrows in a pint, I imagine.

Time for Enda Kenny or Eamon Gilmore to start preparing for the next election. Or even Gerry Adams who is now contesting a seat in the Louth consistency. One thing is for sure, Fianna Fail will not be back in power for a long time after this! We need to make sure that next time we have a real economist as Minister for Finance; someone who understands the real issues at stake.

#7 Cassandra

Essentially I agree with you, then banks who were foolhardy enough to abandon prudence, and keep throwing money into places where they had any right to throw it, should in fact feel some pain.

They should have felt that pain 2-3 years ago, depending on how early in the crisis the pain was felt. The pain was loss, on the assets and the P/L account and, ultimately, on the capital. No question. The problem is that because nobody was watching properly, the numbers, when they came to light, were greater than the various banks' capital in many cases. This is when the mistake was made.

The authorities at all levels, instead of letting insolvency find the level, underwrote the assest and effectively bailed out the banks. Now at that time the pain would have been widespread, espcacially for the shareholders, who owned the capital. let's be clear, RBS shareholders can tell you all about that.

However, individual depositors, who are the lifeblood of any bank, needed comfort, which the government provided (arguably) by issuing a guarantee up to £100k for UK depositiors in UK banks. A nice soundbite (I think its only actually £50k, but who's arguing?).

Anyway, the real net losers would have been other banks themselves and the shareholders. However, some banks would have been string enough to survive, and some wouldn't. Its a tough life, always has been, always will be.

As a consequence of actions taken everywhere, lots of international banks are now owned effectively by the state, and they all still have the same problem, because nobody identified, addressed and took action to solve that problem, until now, when its almost too late.

The solution is less state spending and an increase in taxation to resolve each state's individual budgetary imbalance. The degree to which that inflicts pain on the citizens and taxpayers in that state varies. One of the factors that causes it to vary is the amount of existing government debt the banks are already financing, which itself has been increased because fo the state's assumtion of the risk on the debt that should have made them insolvent 2 years ago. See where this is going?

So, if Ireland is forced to default and that causes pain to French, German, UK banks, and some others, that pain will in fact be felt by the states and the people, simply because the pain is 2 years too late getting there, and ownership has changed hands. Think about it.

So Ireland bleeds, so will UK and FRance and Germany, et al. Then one of those will be the first to go through the same process (default), and then the aformentioned banks will bleed all over again. And so it goes on.

There is no clean and tidy way to solve this issue, and I'm totally ignoring the fact that the member states of the Euro have limited room to manouvre. US, UK, Japan, China, India etc can deploy different financial and fiscal tactics to impriove their respective situations, the EU can't, because one size has been designed to fit all, and I wouldn't want to be German right now.

Ireland has been doing the right thing economically, but is bound up by the problems for the entire eurozone. It is one of the highly poublicised second tier of zone member countries. The sad thing is, this is a tier that is going to grow, whilst the politicians refuse to accept the flaws in the system. Until they accept that some of the existing members MUST quit the Euro, and take wha5tever steps they need to take, then they're just going to get pushed round and round ad infinitum.

Greece's problems haven't been fixed. Spain is beyond hope in many ways. We know where Ireland is right now. Portugal's next in line, and Italy's just keeping its head down. As the total costs of keeping these afloat mount, and they will, Germany will find it ever more difficult to kep paying. I've already discounted the ability and desire of the French to pay, they're just not used to it.

There's plenty of pain available, just be clear, you're (we're) going to get our unfair share of it. And we all know who to blame!

I am sorry to see Ireland in this condition. But with the debt so high (around several 100% of GDP per last nights news)how much money was lent to Ireland by BANKERS in the past two years following lehman brothers?? They keep getting Billions in bonus can one therefore presume that they are being responsible and doing a proper job or are they continuing like before? Can there be assurance that the tax payer has not been given an additional burden created in the last two years?

I was in Dublin in April 2009 and reading in the Independant about the proposed formation of what came to be known as NAMA.

Some 18 months on and the support is coming to the fore. Why was no fuller analysis undertaken by Ireland or the European Union? We are only talking numbers here, all be it big numbers.

14. At 1:16pm on 18 Nov 2010, stanilic wrote:
' always assuming our creditors are that daft'

I am not sure it relies on them being too daft - they might see it as the better option too - Faced with what might be the alternative.

SF writes as the BBC's economics correspondent that 'The other thing that must seem so unfair to Ireland's ministers is that....'
Excuse me, but if Ireland's and too many other countries' ministers had had the ability to understand the meaning of their current account and acted correctly on the information that it provided, this painful mess should have been avoided.
Sex without consequences is another similar dream that can be tough to wake up from and be similarly challenging as to who foots the bill.

I agree that the Irish must shoulder some of the blame for the wreckless lending in the banking system, but membership of the Euro I think has just as big a role to play.

Throughout the Celtic Tiger era Ireland's booming economy was subjected to low interest rates designed to suit the German and French economies. As a result cheap borrowing in a booming economy lead to a nation to eager to borrow and invest (mainly in property). This also fueled inflation (an in particular, wage inflation) which has led to the Irish exports finding it hard to compete.

And getting out of the crisis has been made even tougher by membership of the Euro by having no ability to quantitatively ease.

The fact is Ireland has been an EU team player. It allowed central European economies to dominate the ECB, it was one of the first countries to allow eastern bloc nationalities to work in their country and it ratified Nice and Lisbon not for it's own good, but the good of the EU.

When the terms of this deal comes out, we should see just how much of a "team" the EU really is, I fear the worst!

Hmm the Irish problem, and who is responsible. An interesting query. I applaud the contributers who have highlighted the central involvement of developers in the progression of this situation to such a critical mass. That said the politicians must bear their share of the blame. It was not just the developers who engaged in white elephant, non-viable, vanity projects. One only needs to remember the furore surrounding the Abbotstown fiasco (or the Bertie bowl as it was called), so called after the then Taoiseach Bertire Ahern. Unfortunately, the Irish government and their circle of high-rolling friends saw a properous country as their ecomonic playground (a grown ups monopoly) where they bled each and every system of funding dry to their own ends, lining their own pockets with a juvenile disregard for the future or the wider population.

While the financial crisis is world wide and not confined to Ireland, the resultant state of the Irish economy is, I submit, an inevitable consequence of the "cute-huere" (in Irish a "fear glic") mentality that pervades the way business is done in the country. The general consensus being that "sure it's ok if yer man bends the rules he's one of ours". Corruption, self-interest and mismanagement are the watch words of the power structures in Ireland. I speak with authority having worked in the Irish economy for 10 years and having left sickened with the pervasive levels of nepotism and cronyism.

As such the only way that Ireland can properly extracate itself from this predicament, once the books have been balanced, is to develop a national mindset which abhors the avarice displayed by both politicians and developers alike. Sadly I think this is highly unlikely.

I feel sick to my stomach with what's happening in my Country today.
What has been facinating is where the support and offers of help are coming from. I hope we don't need it but thank you UK for the offer and hand of friendship. I am a public servent and have already taken severe 'austerity measures' already. We want to do this on our own but the external forces are too strong.

Krugman blog June 29 2010 "That’s why the Irish debacle is so important. All that savage austerity was supposed to bring rewards; the conventional wisdom that this would happen is so strong that one often reads news reports claiming that it has, in fact, happened, that Ireland’s resolve has impressed and reassured the financial markets. But the reality is that nothing of the sort has taken place: virtuous, suffering Ireland is gaining nothing.
Of course, I know what will happen next: we’ll hear that the Irish just aren’t doing enough, and must do more. If we’ve been bleeding the patient, and he has nonetheless gotten sicker, well, we clearly need to bleed him some more."
And Krugman today "So what the FT is reporting is that there’s a sort of slow-motion run on Irish banks in progress, with corporate depositors gradually reducing their accounts. Not crisis-level yet. But the ghost of a possible ejection from the euro is starting to become visible."

It seems the mistake the Irish made was to guarantee all bank transactions. Once they did that, allowing banks to fail was no longer an option. This meant the state had to absorb increasing losses.

A very relevant question is: how much of the Irish debt held by RBS is included in the Asset Protection Scheme underwritten by HMG? If there is still a large Irish default, will this end up in the lap of the UK taxpayer? Or could we safely wave goodbye to RBS?

The most recent blog from Paul Krugman in the New York Times today is "tingling":

"THIS IS THE WAY THE EURO ENDS

Not with a whimper but with a bank run.

OK, I’m overstating the case — we’re some ways from a euro exit for Greece, let alone Ireland. But we are drifting closer to the kind of scenario I wrote about back in April."

When Krugman's blog is considered with the editorial in today's FT today with recurring references to bank runs, you know there's much to come!

I know I am a bit dim but if you bear with me as I see it.The ECB loans to the Irish,make no sense economically.Simply put if Ireland,was an individual and walked into a high street Bank,to ask for a loan.First question how much,second question.How much?If they were by some miracle not laughed out of the building.third question.What collateral do you have? Laughter as they are shown the door.I know it is not that simple but this mess began because Banks were lending money they did not have to those who could not pay it back.So now the ECB has doled out trillions to,The Greeks,the Irish and old uncle Tom Cobley and all.Still with me?So my premisthe tipping point,has to be close.Germany alone can not BANKROLL the rest of Europe indefinitely and if Germany were hurtling toward an unmanageable debt because its lending money it dose not have.The possibility of ECB failure cannot be an impossibility,unlikely but not impossible.If it is as,a dim feller like me believes that a fundamental truth is.If I have one penny I cannot lend two penny's without first borrowing one myself and therefore.bankrupting myself in the process.I know I am an idiot economically but this has to be bordering on melt down for the Euro.That happens are the lights going to go out all over Europe.

One man's debt is another man's credit. The man with the debt has his debt guaranteed by the man to whom he owes money. Not only that, the man with the credit lends even more money to make things better for the man with the debt.

Why not just give the poor guy the cash and forget it?

What a shame, the Irish government, and let's not forget the people of Ireland have done all the heavy lifting to get this far only to be torpedoed by Angela Merkel's U-boat. Alright, the Irish banks were going to need a substantial 'backstop', but the 'haircut' announcement couldn't have come at a worst time. Thanks Angela.
Regards, etc.

There is no bailout unless the ECB prints money and gives it Ireland.
All that's happening at the moment is agreeing more loans.
But they'll be loans with conditions attached.
Most likley 'Austerity Conditions'

And the most interesting 'Austerity Explanation' I've found is:
https://www.youtube.com/watch?v=jUmQbf1AyA8&feature=related
And it suggests austerity is not much fun, not much fun at all.

7. At 12:32pm on 18 Nov 2010, Cassandra wrote:
What I don't understand is why the German, UK, French and German Banks that lent all this money to Irish Banks should not suffer some pain.
------
Exactly; who will rid us of these meddlesome priests. The Irish should just default and move on; these corrupt intuitions should have failed in October 2008 and no amount of propping up will stop this now, it’s just a matter of time and how big the inevitable crash is going to be. But as Cassandra foresaw the destruction of Troy, her tragedy was that no one would believe her.

This comment was removed because the moderators found it broke the house rules. Explain.

Stephanie points out that ultimately, the Irish Government had overall responsibility and let the whole system rock-and-roll for years, especially in property, which is why property prices there are now 50% off their peak.

The same sort of property boom was allowed to occur by Governments in the UK, Spain and the USA, all of which now well under water.

Incidentally, it did not 'start in America'. The USA had had a remarkably stable property market where youngsters could put down a reasonable deposit (10/15%) and take out a fixed term 25 year mortgage, not locked-in, and able to remortgage to a better deal without penalty. Great for the American property purchaser but not very profitable for the mortgage suppliers.

Unfortunately, Americans financial institutions looked overseas and saw how the mortage market operated in the UK and Austrialia, wth lots of 'churn' and consequently lots of profit and decided that they would have some of that.

As they say, the rest is {bad} history.

Greed is only good for a tiny minority.

Much of the lending by Irish banks has been carried out in the UK's assets - selling out the UK's assets to, 'all comers' including all manner of 'foreign interests'

'Treat thy neighbour as thyself'?

The UK is 'wide open' for business 'investment'? (i.e. Chamber of Commerce nonsense?.

The real story here has yet to emerge?

The UK has lost strategic control of its UK economy, not just to the banks ... but to foreign banks!

If this is 'British investment' ... I never wish to see a UK 'recovery'

The "broad outlines" have been made clear and need to be carefully considered, if proceeded with at all.

I'm always impressed by artificial deadlines. Someone wants a rush job.

Why, though?

The IMF loan, if contracted, will be repaid at a rate "in the region of 5%", according to the Governor of the Irish Central Bank.

Seems straight-forward. Greece with rain.

The bank subordinated debt due to be repaid with this loan is currently paid at up to a 13% interest level.

Whirr, whizz. Computer demands re-compute.

Why? Normally, bank subordinated debt is at some degree of risk, as per any Lower Tier 2 debt.

However, Ireland's banks' debts are guaranteed 100% without limit, with no first loss provision even imagined.

To repeat for clarity, the repayment of subordinated debt attached to 13% interest is being funded by this loan which will carry an interest rate of less than 5%.

This debt can now be purchased at less than half its going rate at issue 9 months ago. (Thank you, Angela. Are you sure you dislike investors?)

Bargain. Effectively, 26%. Guaranteed. With cash on hand from the IMF to secure repayment beyond doubt. (Angela insists on IMF cash. Wouldn't want investors relying on unsupported paper guarantees. Angela, tell me you love me. I can see it in the way you move.)

Paying the 21% in between in return for nothing. And paying 100% of the face value of a corporate bond issued by a private bank (which never had any branches or retail customers) that ceased trading three years ago (whose management are under investigation for fraud and have fled the country). Which bank has issued and repaid tens of billions in bonds since suspending trading.

That's like purchasing and redeeming an Enron bond. In 2004. From the taxpayers of Michigan.

Enabling a giant carry trade off IMF gold reserves, perhaps, but to no public purpose, I'm afraid.

Why would the Irish delay? Seems a maw worth diving into.

Naturally, the Irish Minister for Finance holds a first-class degree from Cambridge. One up for "world-class education" and "German prudence", Steph?

And don't forget LLoyds/HBOS/Halifax group were involved in the same old dirty practices as the other banks in Ireland before they pulled out conveniently earlier this year, affecting the loss of many, many, jobs.

From here, within the bowels of Deutschland and the EU, I cannot understand why no-one is questionning Merkel's assurances of Germany's economic "fitness". Only within the core of Merkel's administration does anyone seem to appreciate the scale of bank indebtedness. Here in the Lande (Rhineland-Pfalz) no-one has any grasp of the scale. The Lande provide the centre with finance and are currently racing to spend their current allocations, to withold whatever monies and tax payments they can justify from the Finance Ministry (and not paying taxes, at whatever level, is something of an art form). Merkel expects income and tells the World she has it (it is promised and planned) but, locally, nobody knows where the money will actually come from. Parties, not affiliated to the Coalition seem to be doing their utmost at Lande level to control their own finances and sooner or later Frau Dr. Merkel will have to face up the realities of the German fianancial system. She is still deeply in denial ... at least in the UK Cameron says there is a problem and is trying to get a grip on its scale .... "There is no problem in Germany" seems to be the Bundesrepublic Mantra!

'Corruption, self-interest and mismanagement are the watch words of the power structures in Ireland. I speak with authority having worked in the Irish economy for 10 years and having left sickened with the pervasive levels of nepotism and cronyism.'
I beg your pardon, I cannot believe this! these are suuuuurely attributes of the Greek character alone as everybody knows.

PS. One last thing, I would liketo thank the British people through Gorge Osbourne for sticking by my country...it was a very genorous offer, even with the fact we both rely so much on eachother as trading partners.


But I must say, I was shocked to read in the Irish Times leader column, i.e. The following quote; "IT MAY seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side".

I for one don't count £7billion a a few shillings, & I think the "Irish Times" should apologise. They don't represent me in that stupid remark.

@Dempster:

"There is no bailout unless the ECB prints money and gives it Ireland."

First of all, what is being proposed is not a 'bailout', but rather 'loans' which would help to inject capital into our banks (although not directly - the government would route the funds) and make it easier for the country to attract investment on the financial markets, thereby reducing our dependence on borrowing from the ECB at high interest rates. This could help to restore our triple AAA rating in the long-term. The markets have already responded positively today following the announcement of the loans package.

And second, the ECB can't print money or engage in the financial tactics of quantative easing, which the UK and the US have been doing (and thereby putting more pressure on the Eurozone, as Merkel stated last week). But it wouldn't be the first time that the ECB has changed its rules of play if they did start 'printing money'.

The UK press are having a field day with this story. One previous poster got it right, those bank guarantees should never have been given two years ago.

Another point I'd like to make is that the banks would never have engaged in so much reckless lending in the first place, if the people of Ireland hadn't accepted massive loans without any qualms. I hope these irresponsible people who took out loans when they couldn't afford it also recognise their role to play in the current state of affairs. We need to do more to educate people not to live beyond their means.

I'm no economist (no really, it's true) - but isn't lending Ireland yet more money, when it's already over-exposed beyond all reasonable limits, like continuing to inflate the balloon, instead of letting the air out? I agree with most of the other posts here - this whole mess is simply being delayed and drawn out, rather than resolved. The balloon will eventually go pop, and the longer we leave it, the bigger it gets, and the louder the bang...

It is never about one factor, too simplistic an analysis. There was too much easy money available vis a vis German, French, Austrian and other banks, there was a complete and total failure to regulate by the Irish authorities, there was a scandalous lack of intervention by the government who grew fat off the revenue from property and construction (both literally and metaphorically), there were absurdly low interest rates from the ECB, plus when you factor in the global market, competition for jobs, markets, all of these things combined to produce the most perfect economic storm and we are not alone, but that is cold comfort now with the IMF in government buildings. Failed Republic.

PS. One last thing, I would like to thank the British people through George Osbourne for sticking by my country...it was a very generous offer, even with the fact we both rely so much on eachother as trading partners.


But I must say, I was shocked to read in the Irish Times leader column, i.e. The following quote; "IT MAY seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side".

I for one don't count £7billion a a few shillings, & I think the "Irish Times" should apologise. They don't represent me in that stupid remark.

Stephanie wrote "... Ireland has probably done the most to get past the economic disadvantages of being in the euro and move forward".

I take it from this comment that Stephanie fully accepts the economic disadvantages that membership of the Euro brings to member states!

Stephanie went on to say that Ireland had done more than the other PIGS to reduce wages and costs to make Ireland more competitive. However, prior to the crunch, I believe I'm right in saying that inflation in Ireland outstripped other Euro countries, a direct factor of Euro membership and a one size fits all interest rate that was far too low for Ireland's needs. Membership of the Euro and low interest rates were the factors most responsible for the size of the asset price bubble and the subsequent crash.

The problem with cutting prices and wages in actual as well as real terms in a time of economic recession and high levels of debt is that it will make the problem of servicing that debt all the greater, and all the more so because the total level of debt is growing all the time. Ireland is experiencing the pain without experiencing any gain.

The question I would like Stephanie to answer is how can lending more money to Ireland, who cannot afford to pay back their current loans, can be saved by lending them more money that they cannot afford to repay? Isn't that economics of the madhouse? Any thoughts from other posters equally welcome?

I just love it when "the markets", who were angels when they were minded to lend, become devils when they start to doubt the creditworthiness of the borrower. What exactly is the lender supposed to do when creditworthiness is judged to have disappeared? Not having lent in the first place--about all that would have prevented Ireland's problems--would hardly have fitted the bill. I speak as a retired lending banker of many years' experience. Similar considerations apply to the wholly fanciful pressure put on domestic banks to lend to SME's when they, the banks, do not want to. It would be ridiculous and indeed the completely wrong way to run a sound lending operation for top mamagement to override lending decisions made in good faith lower down the organisation. If you give a lending officer a target he will meet it easily enough--by simply saying Yes to the necessary next few loan requests irrespective of loan quality. That way your own bank goes bust. This is pretty basic stuff.

If you were experiencing serious financial difficulties, would you seek advice or loans from a company which was unable to get it's own affairs in order.
How is it that the EU is able to tell the Irish what their next move should be and to organise funds to assist in the success of that move, when their own accounts are in such a total mess that they have been unacceptable to auditors for 16 years?

In reference to the very first comment left by 'JPSlotus 79' he describes 1997 as the year "the celtic tiger was at its height" ? One would ask very serious questions about the education they recieved if they believe the 'boom' was at its height in 1997.

"things started going wrong when fianna fail got back into power", again another totally unfounded statement, this was the same party that raised living standerds for the irish people to the highest level in the EU. Econmic growth was greater than any other country in the EU for several years .

The problem lies with the irish banking system,their reckless lending coupled with the fact that they were compeating againest the so called "big boys" in the banking game who were offering 100% mortages to anyone who had a wage, these banks have now returned to the british market.

Thank you Stephanie for a concise and fair assessment. Ireland's problem was caused by unfettered greed at all levels of Irish society compounded and abetted by an incompetent government, a bloated public service and Trades Union leaders anxious to become part of the "establishment". At present we are (on all sides)devoid of the leadership needed to lift the country which through exhortation, passion, insight and positivity and their actions would propel us past acceptance of such enormous and traitrorous behaviour and then give us the hope that's so badly needed.

Let us not forget that in 2006 Osbo was extolling Ireland's virtues:

https://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article733821.ece

https://www.newstatesman.com/blogs/the-staggers/2010/11/ireland-osborne-tax-irish

I hope he is asked about this in the Commons too!

I dont understand what the various conplaints about GO putting 6Bil on the table are about. Its better to loan 6Bil to Ireland than have to cover 40+Bil to RBS.

Anyway it just laffing all the way to the bank, providing you stop off at the pharmacists on the way.

This littl' PIIGie went to market.

45 Jaker

Thank you for the kind sentiment. There are many of us on this side of the water who know who we are and where we came from and would take a dim view of a UK government that did not puts its hand in our collective pocket for our friends and kinsfolk.

The men of 1916 fought for a dream that never became real for the simple reason that sadly life is a compromise. This does not invalidate their dream and their sacrifice even though the politics of those times makes me unable to share it with you.

There has always been someone in our family who has traded with Ireland and in my generation it is me. I fully understand that the UK government is acting as much in self-interest as otherwise but I know the pain the Irish people currently suffer and I fear it may well get worse for all of us before we get to put a bottom under this disaster.

The important thing for all is to understand that we are in the grip of history and whilst the past may have resonance for some as it should do, it is down to us all to write a new page or two in these days that will allow us to look forward rather than behind.

Ms Flanders - I have said what I need to say elsewhere but can I offer something from Mark Twain. He - allegedly asked me to offer it only a century after his unfortunate demise. I just wished I could have posted it here about - a hundred years sooner.
Thought of the Moment

Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it. -Mark Twain, author and humorist (1835-1910)

With reference to Ireland, we must aslo remeber that they did have a massive inflation problem before joining the Euro. The low Euro interest rate then fueled but hid a problem that already existed.

We really have to consider why our leaders are now running scared. It's surely not the hardship that the Irish people will face from even tighter austerity measures. Perhaps the real truth is that they are finally recognising that the exposure of all of their banks is now so high and precaruios that it threatens each and every country irrespective of their soverign debts.

The idea of one European currency was that we were all in this together. This allowed banks to grow bigger than their own governments. Now that the going gets tough they want to run and hide. Well if our Euro friends don't want to help then I say screw them all. The government should cover individual deposites up to 500k and stop there. If that means some or all of the banks to bust, then so be it. Let them shut down and we will invite some Chinese banks to come in and take over the viable business.

As the current (Irish) economic mess is entirely due to the inaction/and or, incompetence of the Irish government and their regulatory authorities, we Irish should bear in mind that nations get the Governments that they deserve.
What is even more striking, is the total absence of public protest - not quite Greek style, more as the French or Italians do it. It is mind-boggling that after more than two years of cack-handed government, we Irish are allowing this disastrous crew to continue to man the rigging and the helm.
(Why does 'walking the plank' spring to mind?).

56. At 5:48pm on 18 Nov 2010, Dubone wrote:

Sounds like a plan.

Unfortunately the 2008 bailouts (on both sides of the pond) destroyed symmetry, interfered with the economic food chain. Now the banks have lost their only predator, the market.

Heads they win - tails everyone else loses.

I stress, I don't have a problem with banks. They are just acting as banks. It is what they do.

I have problem with weak short-sighted governments. It is not an 'urban myth' that Brown / Darling were surrounded (2008) by bankers on all sides all giving 'helpful advice'.

This is not just Ireland's problem it is everyones.

It should be possible to put together a carefully orchestrated, coordinated suite of 'haircuts' / defaults without a systemic meltdown of the entire banking system.

This will rumble on until someone bites the bullet.

57. At 6:28pm on 18 Nov 2010, silversurfer wrote:

It is mind-boggling that after more than two years of cack-handed government, we Irish are allowing this disastrous crew to continue to man the rigging and the helm.

Interesting that Gerry Adams is standing in a safe Sein Fein seat in the republic at the next election.

49 liscarollconstruction:

'The problem lies with the irish banking system,their reckless lending coupled with the fact that they were compeating againest the so called "big boys" in the banking game who were offering 100% mortages to anyone who had a wage, these banks have now returned to the british market.'

Yes but nobody had to borrow did they. There is no mandate that you must buy an overpriced house. They did it because they wished to close their eyes and speculate. Any government watching this behaviour has enough people in a very big building telling them the outcome but they close their ears. Anybody suggesting going against the flow is told not to speak.

Now the bill is here and almost everybody has to pay, some more than others. But I dont see many in court do you.

Causation and actus reus are not words in systematic failure. Fetch a very big carpet and broom and speech writer to say how brave and noble actions are. Use the word friends a lot.

58 Richard Dingle:

''I stress, I don't have a problem with banks. They are just acting as banks. It is what they do.''

Yes and no. You do not let something parasitic get bigger than the host. Banks skim the economy, they manipulate, they fight consumer rights. Banks buy houses because consumers do not have the money. The consumer is manipulated and takes the liability. The government benefits from tax revenue from the game.

'I have problem with weak short-sighted governments.'

Yes and no. This is a failure of government to govern and regulate and failure of democracy due to powerful voter blocs coupled with a short term 4-5 year electoral cycle. Uplift in employment for example lags by 3 years from pick-up.

'This is not just Ireland's problem it is everyones.'

No it is not everyones. The media concentrates on trumpeting the vocal mainstream of self-righteous indignation. If it does otherwise that mainstream complains. For example - The latest scapegoat is the unemployed. So err lets not worry about the number of unemployed when things are going well, err we'll worry it when there are reduced job opportunites. Just one of a whole list of dull reactions, ever met a proactive politican. Wherever a politican is distracting by pointing out a 'problem' the real problem is almost diametrically opposite, aka Janus complex.

@35 said "Incidentally, it did not 'start in America'. "

That depends on where you think the start point was. Somewhere between the Nixon Shock and Angela Merkel calling time, perhaps.

Ireland may have put to sea in an overloaded boat - tied to other, larger, European boats; but the waves crashing over the decks now originated somewhere across the Atlantic.

There's no doubt it's an enormous mess - and someone, somewhere (and maybe more than one) is to blame; yet only Madoff is behind bars. That's truly amazing.

On the other hand, incompetence is not a crime. Some key figures have clearly shown they are not even competent to play Monopoly. So why on earth are they still here playing more serious games?

PS to 60 and 61

60 'almost everybody has to pay' refers to Ireland

61 'No it is not everyones' refers to the UK and the wider world.

: ) before somebody bothers to comment.

..........................

62. The-itinerant-ex-pat

'.... yet only Madoff is behind bars. That's truly amazing... '

Extraordinary isnt it, till you start looking at the numbers and realise the prison shortage that would result lol. Can't resort to transportation these days due to the Empire striking back some time ago. How many expenses at Westminster do you think were bona, only 3 dodgey it would appear and 1/2 million of taxpayer money spent trying to block access, hmmm. How does handing the money back anull the deed, that doesnt work normally. If somebody mugs you and you manage to catch them you dont say thats alright dude I've got some of my money back. And these are the lawmakers and law upholders. Duck Islanders.

52. At 5:02pm on 18 Nov 2010, Not Buzz Windrip wrote:
I dont understand what the various conplaints about GO putting 6Bil on the table are about. Its better to loan 6Bil to Ireland than have to cover 40+Bil to RBS.
----------------------------------------------------------

You seem confident that it will not be both.

BBC!

What was wrong with following comment? Is there a swear word? Is there a curse? Is there bad language? Is there libel? Is there defamatory language?


Or lastly, is there a truth, that you there can't fathom. One Irish paper published it without any problem...so...well? What's your problem?
Oh great instituition of truth? If you knew all I have written to the BBC "Have your Say" over the past years about the financial world & locally, you'd know I knew Ireland...& the World were going to fail. I have been proved right on both counts, & there's more pain to come.

"I knew this day would come"



I knew this day would come; because I saw it happen where I stood

I saw people take the bait, & accept the nothingness carrot

& now it's peeled back, there's no more sustenance,

There's just emptiness & fragility & lives broken in little pieces

Now each new day will remind them, they now own nothing, not even their souls nor pride



I knew this day would come; because I saw it happen as I stood

And the sad thing is, that those culpable are all laughing still

Are playing the banter, & laughing at the people & the law

And cheekily with pockets full of money still, are mockingly saying

"THANKS" for being "GULLIBLE"!



What happened to Ireland? I'll tell you, "Greed begot greed".

And it will happen further afield, for it's too contagious,

For it now to yield, it will travel down another path

And choke it's victims of their wealth, for it's a disease my friend,

And it has a name, my friend, it's called "Greed"!

Stephanie said: QUOTE: "The first is that they wouldn't be in this mess - or at least they wouldn't be in this mess right now - if the German chancellor hadn't insisted on leading the rest of Europe into a formal discussion of how sovereign debt in the eurozone might be restructured" UNQUOTE
-----------------------------

Pointless blaming Angela Merkel. It was only a matter of time before Ireland needed rescuing. A bit like the Iceland situation where the UK was blamed for the final fall; the Icelandic banks were inevitably going to crash, alas.

I thought the German chancellor's point was a good one; though it may have had unintended consequences. Somehow the markets have to be tamed or at least made to share some of the pain.

Stephanie wrote "But unlike the others, Ireland has brought labour costs down sharply since the crisis began. Wages have fallen sharply, and so have prices.

In that sense, Ireland has played by the rules of the single currency system. As a result, you can see a growth path out of this for the Irish economy within the euro, that you can't see for Spain, Greece or Portugal. If only they could just get past that mountain of private bank debt."

This is the first good thing I have heard about the Irish Economy in a long time, I don't know how true it is, but I need something to look forward for, sick of worrying.

Thanks Stephanie.

42. At 4:02pm on 18 Nov 2010, irisheuropean wrote:
'The ECB can't print money or engage in the financial tactics of quantative easing, which the UK and the US have been doing (and thereby putting more pressure on the Eurozone, as Merkel stated last week)'The

Oh yes it can.
The ECB can print more money and give it Ireland, and then it can print some more and give it Greece, Spain, Portugal et al.

Now the prudent won’t like it of course, and rightly so.

However it ceases to be a European Union if member states fail, it’s just a European nonsense.

No Bailout = No Union
No Union = No need for Euro Politicians

To keep the whole debt based monetary system spinning default is not an option. Default destroys debt, and in the current system, default cannot be allowed to occur.

#60 NBW,

"But I dont see many in court do you."

Oh Buzz, you do disappoint me. What's the point? They would only turn up and say "I did nothing illegal and I have a tribe of lawyers prepared to prove it". Now what they did do may have been unconscionable and lacking in morals but hell when did that ever have anything to do with The Law?

Imagine for a minute you had the power to solve it all, nationally I mean.
What would you do?

Well perhaps you’d print some money and pay off the unsustainable debt.
After all, why would you want to see some country (people) enslaved under the burden of debt.

And having printed some money and sorted out those that were likely to become enslaved, what would you do next?

Perhaps you’d look at what caused it.
And you’d that it, so it didn’t happen again.

So what’s missing thus far?

Father to son.

What is debt?
It’s a future promise to pay.

What is national debt?
It’s a future generation's promise to pay.

Why do the older generation make promises to pay on behalf of the younger generation?
Because they believe that it’s in their best interest.

What happens if it’s not?
You’ve got a problem.

So how do I know whether the older generation have made the right choice and acted in the younger generation’s best interest, as opposed to their own?

On that you have to decide for yourself.

I am really glad to see someone like Stephanie standing up for the irish government here.

They are not a bunch of corrupt incompetents. They are doing a reasonably good job, in a very hard situation. And the current wave of self-flagellation in ireland about loss of sovereignty is way overdone.

OK: the unlimited bank guarantee in 2008 has proven to be unaffordable. But nobody had a script for the credit crunch. Every government made it up as they went along.

And yes: they didn't inform their electorate of just how much support their banks needed. For good and prudent reasons: to save their taxpayers' money.

But basically, they've got the right policy. And they've been pretty massively dumped on by some unwisely public statements by various european heads of government and finance ministers, that spooked the bond markets.

Some of the reasons for spooking the market are justifiable. The creditors have to end up bearing some of the risk, not just the taxpayers. Otherwise it's "moral hazard". But it could have been conveyed much more clearly and less alarmingly

#71 Dempster,


"So how do I know whether the older generation have made the right choice and acted in the younger generation’s best interest, as opposed to their own?"

Answer: You have to accept that they were trying to do the best that they could in the situtation that they found themselves in; just like you will in the near future.

To the Irish.
You’re in the same situation we are.
The uncontrolled creation of money as debt has been directed at too many promises to pay that were no good.

The Bank’s that created the money, are now passing over the burden of debt from those that can’t pay, to you. In the hope that somehow you can.

And in the event that you can’t, your government is taking on the debt on behalf of your children.

What’s the age of debt consent in England?
Same as in Ireland.
There isn’t one.

To pass the promises to pay from the reckless adults to the innocent infants is one of the singularly most disgraceful and disgusting acts that any nation can perpetrate on its younger generation.

It’s happening here, and I despise it.
And for the avoidance of doubt, I’m English

73. At 9:32pm on 18 Nov 2010, foredeckdave wrote:
#71 Dempster,
"So how do I know whether the older generation have made the right choice and acted in the younger generation’s best interest, as opposed to their own?"

Answer: You have to accept that they were trying to do the best that they could in the situtation that they found themselves in; just like you will in the near future.


And do you believe that's what's currently happening at national level?
Are the next generation really going to set off in life on an even modestly level playing field?

This comment was removed because the moderators found it broke the house rules. Explain.

As an Englishman living in Ireland, I have actually been shocked by the reporting of all this in the British media. You've painted a picture of an utterly broken country, constantly showing pictures of homeless people and empty houses, as if everyone was on the brink. People in England are asking me if it really is as bad as the media make out. My reply is overwhelmingly no. Your sensationalist reporting is actually very disappointing.

I can summarise the ludicrous situation in Ireland no better than Mish Shedlock's opening paragraph in his latest post:-

"Market participants are giddy today on the great news that Ireland will go deeper in debt in a foolish attempt to bail out the German and UK bondholders who were in turn foolish enough to lend ridiculous amounts of money to Irish banks in various real estate schemes.

The Irish government was of course foolish enough to guarantee all of this foolishness which means that Irish citizens many of whom were sucked into buying property at foolish prices are now on the hook to bail out the bondholders, rubbing salt into the wounds of Irish taxpayers, not all of whom were foolish enough to freely participate in the general foolishness.

Got that?"

For complete article go to

https://globaleconomicanalysis.blogspot.com/

#75 Dempster,

Unless you hadn't noticed I have consistantly argued for strategies that run contrary to the ones that are currently being followed. However, whilst I believe them to be wrong, I have to accept that those implementing them are at least trying to make sense of a very unstable situation. I do not accept that the government and even the bankers wish to abuse the future generation.

I think you are trying to achieve the impossible. Why did I spend all of my working life helping to repay the USA for debts incurred during WW2 when no other country did? Why did I have to live through the effects of perhaps the worst management cohort this country has ever seen? Why did my parents and grand-parents have to struggle in a country that was bankrupted by another country who now seeks to lecture us on economic and financial issues? The list could go on and on.

There never was a "modestly level playing field". As for debt, national or personal, at the end of the day its only money. One day we will grow up and learn that money is merely the oil of commerce and that we should be focussing our attention upon true wealth and value.

#5. watriler wrote:

"It is their failure to supervise their banking system in the same way as the Icelandics"

I do not accept this as a reason. To my mind the regulators were so badly and erroneously educated and selected that they did not perceive the risks they were running and like the Bank of England despite being told many times in writing so arrogant they they refused to accept the regulatory errors.

Our error was to hire these people and we compound it by not firing them!

But surely Stephanie by now you must have realised that playing by the rules is the safest way for an economy to go down the drain? Committed neoliberal policies and slash and burn tactics directed against Irish citizens were just as damning as the 20 odd "profligate" years of the European South.

80 comtinued..

We managed to delude ourselves that only some kinds of inflation mattered when in fact inflation is inflation be it in retail prices, consumer prices or house prices. That is the catastrophic economic error that is, luckily for the Irish, being worked through their economy, but disastrously for the UK's competitive position it has not yet started being worked through here.

See BBC! In Ireland we have a free Press.

Sunday Tribune published me ...without making up excuses...& you're supposed to be the paradigm of Free Press.

From the Sunday Tribune, Ireland.

#27 Jaker commented, on November 18, 2010 at 4:02 p.m.:


"I knew this day would come"

I knew this day would come; because I saw it happen where I stood

I saw people take the bait, & accept the nothingness carrot

& now it's peeled back, there's no more sustenance,

There's just emptiness & fragility & lives broken in little pieces

Now each new day will remind them, they now own nothing, not even their souls nor pride

I knew this day would come; because I saw it happen as I stood

And the sad thing is, that those culpable are all laughing still

Are playing the banter, & laughing at the people & the law

And cheekily with pockets full of money still, are mockingly saying

"THANKS" for being "GULLIBLE"!

What happened to Ireland? I'll tell you, "Greed begot greed".

And it will happen further afield, for it's too contagious,

For it now to yield, it will travel down another path

And choke it's victims of their wealth, for it's a disease my friend,

And it has a name, my friend, it's called "Greed"!

For all you fiscal conservatives who have commented here, look at this amusing little vignette sent to me yesterday by an ex-banker.

"It is a slow day in the small town of Pump handle, and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the traveller will not suspect anything.

At that moment the traveller comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything... However, the whole town is now out of debt and now looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how a Stimulus package works.

75. At 9:51pm on 18 Nov 2010, Dempster wrote:
73. At 9:32pm on 18 Nov 2010, foredeckdave wrote:
#71 Dempster,
"So how do I know whether the older generation have made the right choice and acted in the younger generation’s best interest, as opposed to their own?"

Answer: You have to accept that they were trying to do the best that they could in the situtation that they found themselves in; just like you will in the near future.


And do you believe that's what's currently happening at national level?
Are the next generation really going to set off in life on an even modestly level playing field?
_________________________________________________________________________

Which generation benefitted most from our house price boom? Maybe some of this'll get passed on through inheritance, remind me: which generation decided we'd pay inheritance tax?

Which generation got a free education and decided the one after can pay extorionately for theirs? (consider also that we have an ageing population - surely this creates falling demand and should lead to cheaper fees in order for universities remain competitive?). You might not care. Wait until your kids / grandchildren want to go to uni and you're remortgaging your home to help pay for it.

Who benefits most from a protected healthcare budget? Not suggesting we dont take care of the sick (although bizzarely Plato claims we shouldn't) but this agreement does favour the older generations as logically the most likely users.

Who benefits from removal of retirement ages? The young have reduced career opportunities for longer.

Which generation decided that DB pensions are no longer affordable and thought that a DC scheme would provide a good retirement for workers.

Steph, what are the yout unemployment stats again?

Etc etc etc

I don't think you can class this as working in the interests of youth. More like keeping your snout in the trough while someone else pays.

Expect emigration to rise. France sounds good with a retirement age of 62, DB pensions and a med coast too. Think about it - learn a language for a few years and emigrate or live here in comparative poverty to pay for a generation who - frankly - took the p with no regard whatsover for the consequences.

Don't give me 'we tried our best' - look at what's actually been acheived. A young generation paying to keep their parents in comparative luxury.

So you want low wages and low taxes? It almost makes it look like some third world country. And the problem with low wages as someone pointed out is: a race to the bottom. How does Germany do it? Do their workers also get low wages in order to be competitive? Also, if low wages is the key then Ireland will loose since the Asian markets can provide that with much lower wages and much more workers.

I live in California but am a Portuguese citizen and would like to retire in Portugal. I go there almost every year and what i have seen in the past few years is amazing. Here is a small poor country living like it's nobody's business. One month vacations, buying homes that most people cannot afford, very inexpensive health care, kids with the latest gadgets,etc.... Where do people in Portugal get the money for these things? And the one thing i could never understand was: how is it that a country that is poor has its citizens living better than me: a software engineer working for the state of california whose salary just was reduced by 15 percent?
This year just when Greece was going under we went there. We have been trying to buy a place in Portugal and just cannot believe that prices have not gone down. You would think that an economic crisis would bring prices down, but not in Portugal. And people still behave as if there is no crisis. My cousin just had her state salary reduced by 5% and she is complaining.

Our most important export market per head of population, we sell more to this market than China, India and Japan put together. Every man, women and child in Ireland spends on average over 3.5K GBP per year.

Should we help this important market or let it go to the dogs as many contributors want to do? I am sure their are many on the nationalist side of politics in Ireland who would prefer that we turn our backs on Ireland now so they can regain their power through the countries mutual hatred and distrust.

Its clear we should help them and we should not be shy in promoting the fact in Ireland that when Germany dithered, Britain acted. Followed by, want do you want buy Jaguar or a Range Rover?

Having paid a 15% mortgage a 5% bond is cheap.

If the Euro is going to be a big mess for the next few years IMHO the Irish Government should get the Republic to a safe place. A simple way is, this week, borrow sufficient money to cover the next 5 years and then not borrow any more for several years.

When the big countries like Spain, Italy and France have major problems duck. Germany and Britain will not be able to cover the rest of the Continent's bills for long.

85. At 00:44am on 19 Nov 2010, Jack_Dwakins wrote:
'Which generation benefitted most from our house price boom?'

Answer: None, its just inflation.

Water food clothing shelter: Essentials.

Which generation benefits from the increase in the cost of water or food.
Same answer: None its just inflation.

The house price boom was a debt boom, that's all.

79. At 10:27pm on 18 Nov 2010, foredeckdave wrote:
'There never was a "modestly level playing field"'

All very good points FD. And all true.

Still as a father of three, I wish it were different.
Because I believe that to pass on the financial consequence of the reckless behaviour of our ‘banks’ to the younger generation is, wholly wrong.

"The Bondholders" who must be protected at all costs should be told to take a hike, I mistakenly thought capitalism was about risk & reward, you win some you lose some, in this case bondholders ( gamblers in shiny suits sitting in offices in London etc) invested in risky propositions ( Irish Banks ) , they expected to make big profits when things went well and they should be allowed to take the loss on the downside.Not sure who said "catitalise the profits & socialise the losses" but he knew what he was talking about, alternatively words of wisdom from Bob Dylan " steal a little and they throw you in jail, steal a lot and they make you king"

At least this shows the analogy between the EU's stability fund within a Euro-based EUzone, and the IMF.

The only mistake the Irish made was swallowing the US-sponsored boom-and-bust neoliberal kool-aid. They just thank God it isn't the IMF ramming dollar debt down their throats now, but a humble bank in the bloc to which they actually belong.

I find it - if not amusing, then a little puzzling - that these officials from the ECB have turned up in Dublin to audit the books of the Irish government and the Irish banks.
These wouldn't by any chance be officials from the same organisation (the EU) whose accounts have not been signed off for SIXTEEN YEARS..??
I expect they know what to look for, then...

Ireland seems to be in a good bargaining position. 5% is way too high.

My suggestion is that they offer to take the loan at 3.5%. They'll soon realise that it is an offer they can't refuse! The alternative is default.

Much better to default *after* getting a stack more cash though.

#91 Dempster,

Thanks for your reply. If anything good can come out of the mess, I really hope that we can learn the lessons and create a society and economy that is attracted to true wealth and not merely the accumulation of money.

We now demand that political decision making is transparent (we are still failing) but we have allowed a whole industry wherein sophistry rules. The trouble is that it has reached a hight where even the industry no longer understands its own products. If a product takes 10 pages of incomprehensible jargon to attempt to explain (and another 'expert' to assist) then you can be sure that there is something to hide.

This comment was removed because the moderators found it broke the house rules. Explain.

90. At 08:11am on 19 Nov 2010, Dempster wrote:
85. At 00:44am on 19 Nov 2010, Jack_Dwakins wrote:
'Which generation benefitted most from our house price boom?'

Answer: None, its just inflation.

Water food clothing shelter: Essentials.

Which generation benefits from the increase in the cost of water or food.
Same answer: None its just inflation.

The house price boom was a debt boom, that's all.

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Who created the debt and who's expected to repay far more than they ever gained? Anyone who sold a home in mass profit during the boom realised a huge investment gain. This wasn't the young. (As a side note, banks may have lent excessively, there still has to be demand - in this argument you could say the older generations are behaving in exactly the same way as bankers: should realise a huge loss but are palming it off onto others).

Food and housing are measured using different inflation measures. New Labour moved from RPI to CPI thereby ignoring housing costs in official inflation. Whilst I broadly accept that there are inflationary matters that impact on both, there are nowhere near the number of people starving than can't afford to buy a home. Not a good comparison.

(Anyone else think we're likely to see a measure of inflation accounting for long term and short term inflation soon?)

#94. david wrote:

"These wouldn't by any chance be officials from the same organisation (the EU) whose accounts have not been signed off for SIXTEEN YEARS..??"

Please recall why the books failed to get a clean bill of health - the devolved expenditure to the individual state of the EU did not have a sufficient paper trail so as to show that the monies had been properly accounted for.

#84 David
except the $100 is monetarily now in the $trillions around the world, fiscally we have chucked the kitchen sink at the economy worldwide and still we haven't jolted the patient back into life. This is because the hole is sooooo deep.

I still maintain we are missing the point - although much of the bank debt was created through the property asset bubble, sub-prime mortgages etc. there was not enough of that crappy property debt being created for Wall Street's appetite so hundreds of $billions of further debt was created via CDS (insurance) instruments dressed up as property CDO's - and European banks (Ireland, Germany and the UK all included), pension funds, hedgies etc were the mugs at the poker table who failed to identify that paper rated AAA was actually 95% sub-prime or composed of CDS insurance liabilities if the market fell. Creating this stuff was legal, but few understood it within the banks. This was a failure of bank management - this was not even on the regulators radar let alone did they have the tools to regulate. Until you read the recent book 'The Big Short' you will not really understand the source of the problem. This is/was not just property debt, although that asset bubble was the start.