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I labour under the impression that you have built a narrative* where the entire debt of the Irish state is hold by "evil" foreign actors,

It pretty much is. More than two thirds of the Irish national debt is the direct result of the 2008 bailout of the Irish banks - a bailout whose overwhelming beneficiaries were foreign banks who failed to exercise due diligence in their lending during the bubble years.

Them's the facts. Not my fault you don't like them.

who for some unclear reason deserve to lose their money.

Well, if you lend money to a bank engaged in massive real estate speculation, then you need to lose your shirt. And if you have a business address on Canary Wharf, then you need to lose your shirt on general principles.

A bank or multinational company who resides - probably because of the low corporation tax - in Ireland is good and should get interest and capital on their bonds.

Uh, no. That's not what I said. Did you miss the part where I said that companies that are important to the productive economy should be paid, no matter where they reside? Here's a hint:

Then you make two lines on each of the two lists: One line between people you really, really want to save (ordinary bank depositors, industrial firms, etc.) and people you kinda sorta want to save if you can (private pension funds, non-toxic investment banks - if you have any of those left - etc.), and another line between the people you kinda sorta want to save and the evil people who should take a long walk off a short pier (bookies, toxic investment banks, everything with a business address on Canary Wharf).

Then you mix the lists like this:

Domestic need-to-save
Foreign need-to-save
Domestic want-to-save
Foreign want-to-save
Evil (foreign and domestic)

Now, it is true that domestic Irish bondholders need to be taken care of before foreign bondholders. There are two reasons for this. The first reason is practical: Foreign bondholders can appeal to their own governments for bailouts if the Irish government cannot honour their bonds. The second reason is political: As long as the ECB refuses to print money on demand to support a Keynesian counter-cyclical fiscal policy for Ireland, the ECB's constituency should feel the pain before the Irish people.

A company or bank that has the misfortune not to have resettled in Ireland and still resides elsewhere should lose everything.

No, firms which serve a real economic function should not lose their money. Deutche Bank and Goldman, however, should.

So my mutual regional bank, who has perhaps bought some Irish bonds in the past, is evil and should lose everything.

Yes. Banks are very, very low on my list of businesses that need to be saved.

The equivalent Irish mutual bank, who has participated to its heart delight in the property bubble and regularly showered local Fianna Fail politicians with money is good and should take no losses at all.

Well, no. Again, I refer you to the part of my diary that you appear to find it difficult to understand:

Then you make two lines on each of the two lists: One line between people you really, really want to save (ordinary bank depositors, industrial firms, etc.) and people you kinda sorta want to save if you can (private pension funds, non-toxic investment banks - if you have any of those left - etc.), and another line between the people you kinda sorta want to save and the evil people who should take a long walk off a short pier (bookies, toxic investment banks, everything with a business address on Canary Wharf).

Then you mix the lists like this:

Domestic need-to-save
Foreign need-to-save
Domestic want-to-save
Foreign want-to-save
Evil (foreign and domestic)

The equivalent Irish mutual bank should also lose its shirt. Only thing is, the Irish banks are mostly already insolvent, which is why we're having this conversation in the first place.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 5th, 2011 at 07:11:38 AM EST
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