Ireland Goes Bust

[David Guyatt]

One thought strikes me more and more - and that is what we are experiencing is a coup d'etat of the western banking system by means of an "inside job".

The foregoing post does nothing to relieve this growing suspicion.

[David Guyatt]

In an interview on BBC News minutes ago, George Osborne said it was in Britain's "national interest" (to bail out Ireland) six times in less than two minutes.

Doth he "pronounce" too much?

[David Guyatt]

I need to add that the UK is contributing (up to E7BN) to the European rescue package to Ireland - but is additionally lending a further £7bn via a bilateral agreement.

Why?

[Magda Hassan]

I have been wondering the same thing David. It is a hard sell to those whose disability payments are being stopped for 3 years, 20% VAT and no more sports for kids in these draconian cuts we are seeing there. :damnmate:
People are screaming right now. This looks so un-necessary to any 'normal' (non banking non pollie) person. They will be crucified by the voters so what is so necessary about the loans?

[David Guyatt]

It's a good question.

Might it be that British banks are in the hole with loans to Ireland or irish banks that are outside the criteria for the European rescue? Is it simply another bankers heist?

We're not being told.

[Mark Stapleton]

In an interview on BBC News minutes ago, George Osborne said it was in Britain's "national interest" (to bail out Ireland) six times in less than two minutes.

If Ireland has forfeited its sovereignty then GB is the most logical candidate to fill the void. Britain seems to have shitloads of money to throw around--except on social welfare.

Ireland is still a good brand name even though they're broke.

Buy in gloom, sell in boom.

[Jan Klimkowski]

One thought strikes me more and more - and that is what we are experiencing is a coup d'etat of the western banking system by means of an "inside job".

Yes.

Magda's posting of the insider whistleblower testimony on the previous page definitively proves that both the Irish government and EU financial regulators knew precisely how false and fraudulent the books of key banks operating in Ireland were as early as 2007.

However, across the globe, the only action taken was to cover up the truth and throw taxapayer money at banks across Europe and America. With the odd exception such as the coup de corporation directed against Lehman Brothers by investment bank rivals.

Meanwhile, the Irish opposition has called for an immediate general election:

Ireland's PM under pressure to quit

• Coalition partner demands general election
• Backbenchers in Brian Cowen's own party want him to go
• PM's credibility 'shattered' by economic bailout
• Green party says Irish 'misled and betrayed'

Henry McDonald, Lisa O'Carroll, Nicholas Watt guardian.co.uk, Monday 22 November 2010 13.43 GMT

Pressure is mounting on Brian Cowen to step down as Ireland's prime minister after one of the governing coalition's partners called for a general election and backbenchers in his own Fianna Fáil party moved against him.

Party sources have told the Guardian that backbenchers want Cowen to resign as taoiseach shortly after the country's cost-cutting budget on 7 December, saying his credibility was "shattered" after Ireland agreed to seek an international rescue package worth an estimated €90bn (£77bn).

Meanwhile, the Green party today said the electorate felt "misled and betrayed" by recent events and they now needed "political certainty".

The moves by the Greens and the pressure from within Fianna Fáil increase the likelihood of a general election in the new year.

The Greens pledged to support Cowen's administration until the negotiations with the International Monetary Fund and the European Union are concluded, but said it wanted the country to go the polls in the second half of January.

"Leaving the country without a government while these matters are unresolved would be very damaging and would breach our duty of care," the party said in a statement. "But we have now reached a point where the Irish people need political certainty to take them beyond the coming two months."

John Gormley, leader of the Greens, said he had discussed the issue with Cowen, who had expressed disappointment about their decision.

Gormley said the party had always said it would only continue in the administration as long as it would benefit the people, but leaving the country without a government would be damaging and breach is duty of care.

He said the decision was made last Saturday after a long series of meetings. At a specially convened press conference in Dublin today, he said the last three weeks had been traumatic for Irish people.

"Since entering government in June 2007, we in the Green party have worked to fix and reform the economy. It has been difficult. We have taken tough decisions and put the national interest first," he said.

Gormley said there had been significant communication problems within government in recent days, and that the Greens had not been able to receive clear answers to their questions.

Pressure on Cowen to resign had mounted today with two backbenchers breaking ranks. Cork TD Noel O'Flynn called on Cowen to step down after the budget.

http://www.guardian.co.uk/business/2010/...l-election

I hope the Irish people take to the streets and demand an immediate general election prior to any ratification of the IMF/EU Shock Therapy proposal.

As a small footnote, "Sneerer" Osborne has strong generational and political links to Ireland as a member of "The Ascendancy":

The Protestant Ascendancy (Irish: An Chinsealacht Phrotastúnach), usually known in Ireland simply as the Ascendancy, is a phrase used when referring to the political, economic, and social domination of Ireland by a minority of great landowners, Protestant clergy, and professionals, all members of the Established Church (the Church of Ireland and Church of England, both being the State Churches) during the 17th through 19th centuries and, in a portion of the island, into the 20th century. The sense of Ascendancy is seen as excluding primarily Roman Catholics, as they have comprised the majority of the Irish population island-wide, but this can be misleading, as members of the Presbyterians and other Protestant denominations, along with non-Christians, were also excluded politically and socially. Even the majority of Protestants were effectively excluded from the ascendancy, being too poor to vote. In general, the privileges of the Ascendancy were resented by Irish Catholics, who remained the majority of the population.

http://en.wikipedia.org/wiki/Protestant_Ascendancy

[Jan Klimkowski]

Breaking on news channels - Irish PM says his government will call general election AFTER the budget is passed.

In other words, the democratic will of the Irish people can only be heard after the Shock Therapy contract has been signed, electrodes have been attached and the juice turned up to 11 by the IMF.

What a crock. :evil:

[Jan Klimkowski]

No wonder the corrupt Irish government won't allow their people to vote on the "bailout". It's state-sanctioned economic terrorism and looting.

Straight from the Chicago Boyz Shock Therapy template for the "Third World", now applied to the "First World" ....

Ireland warned it will have to stump up state assets in bailout
Eamon Quinn

Aer Lingus: collateral damageBord Gáis and the Electricity Supply Board, Ireland's motorways, CIE, the national oil reserves, our stake in Aer Lingus as well as the best parts of the Dublin banks and the whole of the national pension fund are likely to be pledged as security in return for the tens of billions of euro in loans the government will receive from the IMF, the European Community and the European Central Bank.

The warning, from markets sources, comes as the talks between the Irish authorities and the IMF-led troika were due to extend through today and into this week. The talks were focusing on ways of limiting the amount of the private banking debts that a generation of Irish citizens will be made to pay for.

But in an investor note this weekend, Société Générale in Paris, which helps sell Irish sovereign bonds for the government, said there were calls from around Europe for Ireland to stump up "collateral" in return for its bailout loans.

"When a developing county is given aid, we can understand why no security is required. Not so when a government has access to reserves, investments and state holdings. We see this aspect of the aid package as a litmus test of how soft on moral hazard Europe might be. We also see a tough onus placed on the government in question to implement serious austerity."

Local economists believe the total size of the open-ended bailout funds could exceed €100bn if the ECB were to demand back some or all of the loans it advanced to the Irish banks in recent weeks. Europe may, however, inch toward a tougher line than the government and burn the private bond holders in the Irish banks. In relation to the IMF?presence, a government spokesman said the "objective there is to access funds for Ireland at a much better rate", adding that currently rates of 8% plus being charged by the markets were prohibitive.

The Sunday Tribune has also learned that, in the days leading up to last weekend, ECB officials made their growing concerns known to Dublin about the open-ended amounts of cash that Frankfurt and the Irish Central Bank were pledging to Anglo Irish, AIB and Bank of Ireland. Leading central bank watcher Lorcan Roche Kelly said that funding of over €165bn had been loaned by the ECB and the Irish Central Bank to all Ireland-based banks by the end of October.

Leading European consultants who have monitored the heave by big states such as Germany and France and now Britain to neutralise Ireland's advantageous 12.5% corporate tax rate say that Ireland has suffered major damage with multinationals considering creating thousands of jobs here. "The comments by the German, French and Austrian finance ministers just cannot be swatted away," said John Hume, of Hume Brophy Consultants in Brussels. The Irish Central Bank has provided more than €34.6bn in emergency funds to lenders, believed to be Anglo, Irish Nationwide and EBS, while Frankfurt separately provided an estimated €90bn to the main lenders and €40bn to banks in the IFSC, according to estimates.

Brian Lucey, associate professor at TCD, said that the open-ended bailout loans, which Ireland may not need to tap, would be huge if the troika wanted to deliver a fund to cover the week-by-week funding of the banks, the banks' additional capital as well as the budget deficits and repay back sovereign debts for three to five years.

http://www.tribune.ie/news/article/2010/...tate-asse/

[Keith Millea]

Published on Monday, November 22, 2010 by The Guardian/UK Ireland Should 'Do an Argentina'

The Irish people expected to pay in austerity cuts for their banks' sins have another option. Reject the ECB and IMF, ditch the euro

by Dean Baker


When a firefighter or medical team make a rescue, the person is usually better-off as a result. This is less clear when the rescuer is the European Central Bank (ECB) or the IMF.

Ireland is currently experiencing a 14.1% unemployment rate. As a result of bailout conditions that will require more cuts in government spending and tax increases, the unemployment rate is almost certain to go higher. The Irish people are likely to wonder what their economy would look like if they had not been rescued.

The pain being inflicted on Ireland by the ECB/IMF is completely unnecessary. If the ECB committed itself to make loans available to Ireland at low interest rates, a mechanism entirely within its power, then Ireland would have no serious budget problem. Its huge projected deficits stem primarily from the combination of high interest costs on its debt, and the result of operating at levels of economic output that are well below full employment – both outcomes that can be pinned largely on the ECB.

It is worth remembering that Ireland's government was a model of fiscal probity prior to the economic meltdown. It had run large budget surpluses for the 5 years prior to the onset of the crisis. Ireland's problem was certainly not out of control government spending; it was a reckless banking system that fueled an enormous housing bubble. The economic wizards at the ECB and the IMF either couldn't see the bubble or didn't think it was worth mentioning.

The failure of the ECB or IMF to take steps to rein in the bubble before the crisis has not made these international financial institutions shy about using a heavy hand in imposing conditions now. The plan is to impose stiff austerity, requiring much of Ireland's workforce to suffer unemployment for years to come as a result of the failure of their bankers and the ECB.

While it is often claimed that these institutions are not political, only the braindead could still believe this. The decision to make Ireland's workers, along with workers in Spain, Portugal, Latvia and elsewhere, pay for the recklessness of their country's bankers is entirely a political one. There is no economic imperative that says that workers must pay; this is a political decision being imposed by the ECB and IMF.

This should be a huge warning flag for progressives and, in fact, anyone who believes in democracy. If the ECB puts conditions on a rescue package, it will be very difficult for an elected government in Ireland to reverse these conditions. In other words, the issues that Ireland's voters will be able to decide are likely to be trivial in importance relative to the conditions that will be imposed by the ECB.

There is no serious argument for an unaccountable central bank. While no one expects or wants parliaments to micromanage monetary policy, the ECB and other central banks should be clearly accountable to elected bodies. It would be interesting to see how they can justify their plans for subjecting Ireland and other countries to double-digit unemployment for years to come.

The other point that should be kept in mind is that even a relatively small country like Ireland has options. Specifically, they could drop out of the euro and default on their debt. This is hardly a first best option, but if the alternative is an indefinite stint of double-digit unemployment, then leaving the euro and default look much more attractive.

The ECB and the IMF will insist that this is the road to disaster, but their credibility on this point is near zero. There is an obvious precedent. Back in the 2001, the IMF was pushing Argentina to pursue ever more stringent austerity measures. Like Ireland, Argentina had also been a poster child of the neoliberal crew before it ran into difficulties.

But the IMF can turn quickly. Its austerity programme lowered GDP by almost 10% and pushed the unemployment rate well into the double digits. By the end of the 2001, it was politically impossible for the Argentine government to agree to more austerity. As a result, it broke the supposedly unbreakable link between its currency and the dollar and defaulted on its debt.

The immediate effect was to make the economy worse, but by the second half of 2002, the economy was again growing. This was the start of five and a half years of solid growth, until the world economic crisis eventually took its toll in 2009.

The IMF, meanwhile, did everything it could to sabotage Argentina, which became known as the "A word". It even used bogus projections that consistently under-predicted Argentina's growth in the hope of undermining confidence.

Ireland should study the lessons of Argentina. Breaking from the euro would have consequences, but it is becoming increasingly likely that the pain from the break is less than the pain of staying in. Furthermore, simply raising the issue is likely to make the ECB and IMF take a more moderate position.

What the people of Ireland and every country must realise is that if they agree to play by the bankers' rules, they will lose.

© 2010 Guardian News and Media Limited

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.