In addition, the Irish banking sector would be a 20-times-bigger smoking crater than Iceland's were it not for the Euro. The fact is that just the impossibility of an attack on the currency has allowed the Irish government to get away with a blanket guarantee of all liabilities or all banks (which adds up to several multiples of GDP) without having to actually make good on it or accounting for it explicitly as government debt. If you had had the punt, the reaction of the markets would have likely turned that massive contingent liability into a disaster. But the markets can't attack the Deutsche Mark so the Irish government gets to make promises they can't possibly keep because they won't likely be forced to make good on them.
NAMA is a different issue - that's an actual, not contingent, liability. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
NAMA is a different issue - that's an actual, not contingent, liability
Nah - its off balance sheet - in a special purpose vehicle - so its not really real in the world of "modern" accounting.
If there is a negative with the Euro for us, it is that it made the lunacy of the bank guarantee to bond-holders possible. Otherwise we would (presumably) have let the banks go into into examiner-ship (our Chapter 11) or some such purgatory, and reconstituted them as new banks the next week - with shareholders and non-senior bond-holders and not taxpayers taking the hit. notes from no w here
Like I said, the Irish banking sector would be a 20-times-bigger smoking crater than Iceland's were it not for the Euro. It's a mixed blessing. I'm not sure what's worse for ordinary people. Systemically, in the long term, maybe the smoking crater is preferable. But zombie banks are less immediately painful. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
