Ireland - Hero to zero!

Mr_Mumble

Statement from Eurozone countries:

21 November 2010

Statement by the Eurogroup and ECOFIN Ministers

Ministers welcome the request of the Irish Government for financial assistance
from the European Union and euro-area Member States. Ministers concur with
the Commission and the ECB that providing assistance to Ireland is warranted
to safeguard financial stability in the EU and in the euro area.

In the context of a joint programme EU/IMF, the financial assistance package
to the Irish state should be financed from the European financial stabilisation
mechanism (EFSM) and the European financial stability facility (EFSF),
possibly supplemented by bilateral loans to be negotiated by EU Member
States. The United Kingdom and Sweden have already indicated today that
they stand ready to consider a bilateral loan.

EU and euro-area financial support will be provided under a strong policy
programme which will be negotiated with the Irish authorities by the
Commission and the IMF, in liaison with the ECB.

The programme will address the fiscal challenges of the Irish economy in a
decisive manner. It will build on the fiscal adjustment and structural reforms
that will be put forward by the Irish authorities in their Four Year Budgetary
Strategy next week. This strategy will provide the details of the Government's
commitment to achieve fiscal consolidation of EUR 6 bn in 2011 as part of a
strategy leading to a 3% of GDP deficit by 2014, implying an overall
consolidation of 15 bn in the 4 year strategy, which contains an annual review.
Given the strong fundamentals of the Irish economy, decisive implementation
of the programme should allow a return to a robust and sustainable growth,
safeguarding the economic and social cohesion.

The programme will also include a fund for potential future capital needs of the
banking sector. By building on the measures already taken by Ireland to
address stress in its banking sector, a comprehensive range of measures !!!8211;
including deleveraging and restructuring of the banking sector !!!8211; will contribute
to ensuring that the banking system performs its role in the functioning of the
economy.

After approval by the Irish Government, the programme will be endorsed by
the ECOFIN Council and the Eurogroup, in line with national procedures, on
the basis of a Commission and ECB assessment.

Mr_Mumble

and the Irish statement:

Government Statement

21 November 2010
The Government today agreed to request financial support from the European Union and the Euro Area Members States. The IMF will also be requested to assist in the provision of support.

The Government welcomes the agreement reached at the Eurogroup meeting today that providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the Euro Area.

In the context of a joint programme EU/IMF, the financial assistance package to the Irish state should be financed from the European financial stabilisation mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU Member States.

EU and euro-area financial support will be provided under a strong policy programme which will be negotiated with the Irish authorities by the Commission and the IMF, in liaison with the ECB.

The programme will address the budgetary challenges of the Irish economy in a decisive manner on the basis of the ambitious budgetary adjustment and comprehensive structural reforms that will be contained in the Government's Four Year Budgetary Strategy. Given the underlying strengths of the Irish economy, decisive implementation of the programme should allow a return to a robust and sustainable growth, safeguarding the economic and social position of the people of Ireland.

A central element of the programme will also be to support further deep restructuring and the restoration of the long-term viability and financial health of the Irish banking system. It will build on the extensive measures taken by Ireland to strengthen its banking sector, via guarantees, recapitalisation and asset segregation. These measures have helped to maintain financial stability of the Irish banking sector at a time the both the banking system and the Irish economy have confronted significant challenges reflecting both domestic and international factors.

The programme will address the potential future capital needs of the banking sector. By building on the measures already taken by Ireland to address stress in its banking sector, a comprehensive range of measures - including deleveraging and restructuring of the banking sector - will contribute to ensuring that the banking system performs its role in the functioning of the economy.

Since the last Eurogroup meeting on the 16th November there has been very constructive and positive engagement and dialogue between the Irish authorities and the Commission, the ECB and the IMF in order to determine the best way to provide necessary support to address continuing market risks, especially as regard the banking system, in the context of the four-year budgetary plan and the upcoming budget.

amcluesent

I wonder if U2 & Bono were heavily invested in Dublin property development and the like and will be taking a haircut?

buglawton

In the early 1970s, my maths teacher used to digress in into economics and draw a triangle on the board that included S.E. England, N.W. France and Central Germany. He said that that's where the naturally rich parts of Europe and and where they will stay. Forgot his exact reasoning. 40 years on and... has anything changed?

Mr_Mumble

Perfunctory press releases from the IMF and ECB. The FT (£) say the deal will be between 80-90bn Euros but amazingly this line appears:

"An official said the precise size of the package would not be disclosed, unless eurozone ministers insisted on doing so."

?!

The politicians and bureaucrats were (and still seem to be hoping) the bazooka of the EFSF will not need using. Seems rather astonishing to me, the markets will see through this very quickly.

The FT goes on to say it'll be the end of November before the details get ironed out with 10bn euros of further spending cuts and 5bn euros of tax rises on the cards.

buglawton wrote: »

In the early 1970s, my maths teacher used to digress in into economics and draw a triangle on the board that included S.E. England, N.W. France and Central Germany. He said that that's where the naturally rich parts of Europe and and where they will stay. Forgot his exact reasoning. 40 years on and... has anything changed?

Scandinavian countries have made very good use of their natural resources in recent decades. Norway with its oil & gas while Sweden have leveraged timber - see Ikea! - and have plenty of big successful industrial firms (e.g. Electrolux, Saab, Atlas Copco, Ericsson, ABB). Finland haven't been left out of the non-resource success stories either, see Nokia.

Despite this disaster Ireland is in far better shape than it was 40 years ago. The Irish people are, currently, richer than Brits. You can say that is because the Irish have been using their European handouts to create a tax advantage (i.e. low corporation tax to attract inward investment while still having the ability to have high welfare payments). Personally believe this view is a little unfair on the Irish. If Ireland's politicians hadn't guaranteed the banking debt in 2008 but instead took the decision to have orderly bankruptcy proceedings the IMF wouldn't have been needed.

Of course, there are still basket cases relative to, most of, Northern Europe. Greece and Portugal are the two obvious examples but its feasible Spain and Italy can't continue within the Euro long-term either (unless the Eurozone adopts large fiscal transfers).

bigheadxx

Mr_Mumble wrote: »

Perfunctory press releases from the IMF and ECB. The FT (£) say the deal will be between 80-90bn Euros but amazingly this line appears:

"An official said the precise size of the package would not be disclosed, unless eurozone ministers insisted on doing so."

?!

The politicians and bureaucrats were (and still seem to be hoping) the bazooka of the EFSF will not need using. Seems rather astonishing to me, the markets will see through this very quickly.

The FT goes on to say it'll be the end of November before the details get ironed out with 10bn euros of further spending cuts and 5bn euros of tax rises on the cards.




Scandinavian countries have made very good use of their natural resources in recent decades. Norway with its oil & gas while Sweden have leveraged timber - see Ikea! - and have plenty of big successful industrial firms (e.g. Electrolux, Saab, Atlas Copco, Ericsson, ABB). Finland haven't been left out of the non-resource success stories either, see Nokia.

Despite this disaster Ireland is in far better shape than it was 40 years ago. The Irish people are, currently, richer than Brits. You can say that is because the Irish have been using their European handouts to create a tax advantage (i.e. low corporation tax to attract inward investment while still having the ability to have high welfare payments). Personally believe this view is a little unfair on the Irish. If Ireland's politicians hadn't guaranteed the banking debt in 2008 but instead took the decision to have orderly bankruptcy proceedings the IMF wouldn't have been needed.

Of course, there are still basket cases relative to, most of, Northern Europe. Greece and Portugal are the two obvious examples but its feasible Spain and Italy can't continue within the Euro long-term either (unless the Eurozone adopts large fiscal transfers).

They are only richer if you believe that money spent is the same as money earned. Irelands GDP is entirely based on borrowed money, much the same as the UK and most other western countries. All that borrowing has brought us a lifestyle we do not deserve, property developments in places that make no commercial sense and an economy built on consumption rather than production.

Irelands bailout is a necessary action by the west in order to keep the current system in place. The debt, like all our debts will never be paid back and will be eroded by tolerated " higher " inflation much like our own.

Mr_Mumble

Irish bailout *fail*

RTRS-IRISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 530 BPS, 25 BPS WIDER ON DAY

PORTUGUESE FIVE-YEAR CREDIT DEFAULT SWAPS AT 460 BPS, 39 BPS WIDER ON DAY

SPANISH FIVE-YEAR CREDIT DEFAULT SWAPS AT 281 BPS, 20 BPS WIDER ON DAY

GREEK FIVE-YEAR CREDIT DEFAULT SWAPS AT 1000 BPS, 37 BPS WIDER ON DAY

Irish 10 year bond yields are still above 8%.

Here are some really scary numbers for those who want to keep going down the bailout road:

The cost of a bailout on the Irish scale for Portugal, seen as the next weakest link among the EU’s high-deficit countries, would cost 100 billion euros, based on a package of 60 percent of GDP. For Spain, whose banks have also come under strain from the collapse of its real-estate bubble, a bailout of 60 percent of GDP would cost 632 billion euros. For Italy, the region’s second-most indebted nation after Greece, the figure would be 912 billion euros.

The PIIGS are looking at a commitment of £160bn to support the EFSF to support, umm, themselves.

worldtraveller

The Irish PM has just said that after the 2011 budget he intends to seek the dissolution of parliament.

Mr_Mumble

Ireland to buy majority stake in Bank of Ireland

The Irish government is poised to take a majority stake in Bank of Ireland, which will leave the Republic without a single significant lender independent of state control.

The increased government stake is under discussion as part of an €85bn rescue package from the European Union and International Monetary Fund, which aims to restore confidence in Ireland’s troubled economy and its ailing banking industry

http://www.reuters.com/article/idUSLDE6AM2EI20101123
&
http://www.ft.com/cms/s/0/62c33278-f733-11df-9b06-00144feab49a.html

I do wonder whether I'm living in Eurasia sometimes; acquisition is austerity!

Mr_Mumble

S&P cuts Ireland's sovereign credit rating

LOS ANGELES (MarketWatch) -- Standard & Poor's Ratings Services late Tuesday cut its long-term sovereign credit rating on Ireland to A from AA-, and its short-term rating to A-1 from A-1+. The new ratings reflect the agency's view that the Irish government appears likely to borrow "over and above" the agency's previous projections to fund further bank capital injections into Ireland's banking system. S&P said it also may further downgrade the ratings if negotiations over the terms of an IMF-EU financial aid program, or if talks over Ireland's 2011 budget, "fail to staunch wholesale funding outflows."