Welcome to the new version of European Tribune. It's just a new layout, so everything should work as before - please report bugs here.
Display:
This whole Ireland is insolvent meme is nonsense.

Perhaps you should be arguing this point with the bond raiders, who seem unusually keen to assure everyone otherwise.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Feb 6th, 2011 at 03:48:36 PM EST
[ Parent ]
The wisdom of "the markets"? Come on.

And if you swear fealty to "the markets", how do you think they will react to a default?

by IM on Sun Feb 6th, 2011 at 03:53:46 PM EST
[ Parent ]
The markets can stay irrational longer that one can stay solvent.

In the case of Ireland, if you think Ireland is solvent, then it is in fact being subjected to an irrational run (withdrawal of short-term liquidity). The proper response in that case is for the Central Bank to provide liquidity at a reasonable non-market rate.

Instead of that the Central Bank tells the Irish government to call in the IMF.

Also, when the European Council tries to organise a collective fiscal facility, Germany screams "no bail-out clause!". When the ECB tries to buy sovereign bonds in the secondary market, the (German) Chief Economist and the Bundesbank chair wrongly claim that is forbidden by treaty (the treaty forbids buying at issue, which is bad enough already). The European Commission, Council, Ecofin and Central Bank are all such neoliberal market-worshippers that they actually take the market's assessment of Ireland's solvency at face value.

The Irish "rescue package" entails, under any plausible scenarios, including the ones put together by the Ecofin, an actual increase in the Irish debt burden, while at the same time demanding IMF-style "conditionalities". Some "rescue". No wonder the Irish government didn't want to be "rescued" and had to be forced.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Migeru (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 04:07:03 PM EST
[ Parent ]

Display:

Occasional Series