EU begins Irish Republic bail-out talk (or do they?)

[AB Editor]

///On Tuesday, Prime Minister Brian Cowen told parliament that he had not asked for bail-out money and that the Irish economy was well funded until next year.///
Source: http://www.bbc.co.uk/news/business-11771574

///This €70 billion bill for the banks dwarfs the €15 billion in spending cuts now agonised over, and reduces the necessary cuts in Government spending to an exercise in futility. What is the point of rearranging the spending deckchairs, when the iceberg of bank losses is going to sink us anyway?///
Source: http://www.irishtimes...ml?source=patrick.net

Are the Irish just too proud to take the hand-outs required to save their economy? And are they putting other European countries at risk with this misplaced "pride"?

[ummmm]

Do you know...if you go to college in Ireland they double your dole money?? Only just found that out.

[123everton]

Of course the I.M.F etc has been a huge success in the developing world over the years, the Irish are about to experience what Brazil and others suffered for ecades, no wonder they're worried at the attack on their sovreignty.

[jackthehat]

The moment that the entire edifice looks like it is about to topple, there will be some swift re-arrangement or altering of the rules and the regulations to ensure that it doesn't happen..........

[jake-the-peg]

I think the key point is that the Irish government is saying that they are funded until next year. They do not seem to have a medium or even long term plan to extract themselves from their difficulties.

Taking the bail out would be politically damaging for Cowen but he doesn't seem to have another realistic option.

Unlike us their defecit is greater than their GDP and prospects for growth seem unlikely.

And they don't even have Gordon Brown to blame!

Cowen seems to be looking to buy himself time - but I can't see what he can achieve in that time - if he can come up with a workable plan that doesn't involve taking the bail-out he'll be rightly feted as an ecconomic Houdini.


Incidently Ireland buys £15 Billion of our goods and services a year

More than China, Australia, Hong Kong and Japan put together
http://www.guardian.c...trade-exports-imports

We really need Ireland to get out of this

[123everton]

Didn't F.D.R tell people to stop paying their loans and just pay their taxes?
There's a lot of suggestions that these loans were obtained fraudulently and designed to
I'm thinking of Dany Shechter's film.

[123everton]

Bloody keyboard!!!
"Designed to fail."

[jake-the-peg]

Doesn't help Everton - infact it kind of got us where we are today

Let's suppose people massively default of their loans and put the banks into difficulties.

The banks start foreclosing on loans to businesses and on mortgages to remain solvent - or because they are in administration.

Buisnesses can't get other loans, people can't get other mortgages and presto the economy collapses you've got another depression.

This is the too big to fail scenario

[123everton]

From the little I understand of this event foreclosure was an avenue denied to the banks.
Admittedly I'm looking at the crisis from a more U.S oriented perspective, where there is a clear problem with the legality of the foreclosures.
Maybe they should be allowed to fail.
We need to redevelop are economies, everything's predicated on debt, we have a form of capitilism that doesn't use capital.

[jake-the-peg]

How can you stop a bank from foreclosing.

If a company goes out of business it still has assets and those assets need to be either liquidated to part pay off investors or taken on as going concerns by others.

In this case that (mostly bad) debt portfollio would have to be taken over by Government because nobody else would buy it.

That's kind of what's happened but without actually closing down the bank.

Why would you not close down the bank as failed? because that would cause all the investors in other banks to panic and pull out their money causing a domino effect.

Remember too who all these investors are - they are pension funds, they are the companies that employ many of us.

A lot of the money that backs up the banking system is in one way or another borrowed from us!

[123everton]

I'm not entirely clear as to the event, I think it related to farming, I suppose it was like an economic year zero.
Thankfully I have no debts, so I should be able to scrape by.

[jno]

jake, there's some stuff on foreclosures here

http://www.realestate...argo-us-bank-3272.php

These actions seem to be based on legal grounds but I suppose the imperatives behind them are political.

[Whickerman]

Ummm - if you go to college here in Ireland you cannot claim dole when studying at all. All people under a certain age - think it's 21 or 23 - have had their dole payments reduced by 50% in the past budget but if they're graduates that doesn't apply. So I guess it's more that the payment isn't halved, rather than it's doubled.

As to any bail-out - it's not a handout, it's a loan IF it happens. Right now they need to get funding to the banks, not the country as such, but the only way to get money to the banks is for the govt to borrow it (chicken an egg thing). The IMF etc cannot loan to anyone except a country.
Cowen is screwed. Actually, we probably all are here, but he's definitely finished. This is all due to a bank collapse (Anglo Irish Bank) and the tens of billions that the govt guaranteed so that the bond-holders (the pension schemes etc) didn't go bust. Only the govt didn't have tens of billions spare.
Jake the Peg is 100% correct btw.