Irish pushback strategy - we get mail | 305 comments (305 topical, 0 editorial, 0 hidden)

Re: Irish pushback strategy - we get mail (none / 0)

You mean pressuring Ireland to accept reality?
High unemployment, ruined "Irish" banks, shrinking economy, a very high budget deficit. All this did exist in Ireland last november. It was not only a figment of the imagination of evil foreigners.

I would be happier with real facts. All we have now is your interpretation of the motives of the ECB and the major european countries.

by IM on Fri Feb 4th, 2011 at 10:51:35 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

The fact is all that has been done to the Irish banks is buy their bad assets at inflated prices, as well as guarantee their debt. 100 bn of ECB loans don't change that. The bondholders still have the bulk of the bonds they used to have, since the ECB has only bought about 80bn in sovereign Eurozone bonds so far.

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:09:27 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

But isn't there replacement? The Irish banks got 100 billion or from the ECB and quite substantial sums from the Irish government. All this money has to replace some body else's money. And somebody else are the once existing private creditors.

So a default of the banks alone will not achieve much. It has to be default of the irish government.

by IM on Fri Feb 4th, 2011 at 11:34:10 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

IM:

The Irish banks got 100 billion or from the ECB and quite substantial sums from the Irish government.

That's just liquidity, in exchange for those 100 billion in cash, the Irish banks have to park more than 100 billion in assets, at the ECB's own valuation, as well as pay interest.

That replaces short term lending and deposits, not bonds which are long-term liabilities.

The once existing long-term bondholders continue to be long-term bondholders. Or have traded the bonds with other private bondholders since the ECB is not known to be buying bank bonds (at least, nobody is screaming bloody murder if they're doing it: they just complain about buying government bonds).

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:38:31 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 3)

I'm not inventing anything, by the way...

ECB Tried to Force Ireland Into Bailout, Minister Says - Bloomberg

ECB officials, who say they are politically independent, told Ireland on a Nov. 12 conference call that it should seek outside help to rescue its banks and contain a debt crisis, according to a person briefed on the discussion.

It is simply unconscionable for a central bank to say "look for outside help" regarding its own banks.

ECB Tried to Force Ireland Into Bailout, Minister Says - Bloomberg

ECB President Jean-Claude Trichet said the bank can't afford to set its monetary policy to help individual countries.

Unless that country is Germany, that is. Also, the ECB is saying monetary policy trumps banking supervision.

Asked whether the ECB pushed Ireland into accepting a bailout, he told lawmakers in Brussels today that "we couldn't adjust our policy to take into account the situation of Ireland."

Considering Ireland has 1% of the EU's population...

European Union officials "were leaking in the papers that Sunday, quite incredible pressure on this country," Ahern said today, adding that he won't stand in the next general election for personal reasons.
An ECB spokesman declined to comment on his remarks.

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:17:31 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Ahern?

Consider your source. Ireland is a story of neoliberalism run wild. Your new theory, that everybdody was peachy until the evil ECB intervened, may be popular with eurosceptics and other such ilk. It is hardly supported by the facts.

by IM on Fri Feb 4th, 2011 at 11:21:31 AM EST
[ Parent ]

Hardly supported by the facts (none / 0)

Meh.

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:27:07 AM EST
[ Parent ]

Re: Hardly supported by the facts (none / 0)

So your speculation about Portugal has now support your speculation about Ireland? Turtles all the way down.

by IM on Fri Feb 4th, 2011 at 11:29:21 AM EST
[ Parent ]

Re: Hardly supported by the facts (4.00 / 4)

Dude, it's Reuters saying the Frankfurter Allgemeine and FT-Deutschland published rumours coming from the German government which Reuters determined couldn't be substantiated.

In June, about Spain.

Then Ireland, then Portugal.

Let me remind you that Spain's response to the rumours was to threaten to publish bank stress test data, at which point Germany was livid and did its utmost to water down what was finally publshed a month later. Also, publication of banks' sovereign debt exposure was made voluntary, with Deutsche Bank being the only major bank refusing to disclose any data.

It's all circumstantial but it's pretty damning.

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:33:51 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

What new theory? The ECB has failed to intervene in the proper direction, and when it has intervened, it has done so in less than helpful manner. While at the same time Trichet has been undermined by certain national central bankers and chief economists, and people in the EU institutions have been making damaging leaks to the press while proffering to aim for financial stability.

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

by Carrie (migeru at eurotrib dot com) on Fri Feb 4th, 2011 at 11:29:57 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 1)

Well, yes the ECB. Still, the root of the problems of Ireland is in Ireland. Do you deny this?

I don't like this nationalistic narrative evil foreigners picking on innocent little Ireland.

Ireland after all, has been showered with EU-subventions until a few years ago. And it was very big on no regulation and on tax dumping. They still want to keep their corporation tax rate. Is this the fault of some german cabal too?

by IM on Fri Feb 4th, 2011 at 01:21:30 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

The reason we're talking about telling foreign creditors to fuck off and die is that domestic Irish creditors are a domestic Irish distributional problem. Foreign creditors are the ones with the motive, means and opportunity to use the European institutions as leverage to get the Irish public to pay for their poor judgement.

Yes, domestic Irish holders of sovereign bonds should also be told to fuck off and die, unless they are important to the Irish economy. But that's an internal Irish question of whether the Irish government wants to impose Austerity^TM on the Irish people in order to pay off Irish oligarchs.

I'm not sure if you're trying to argue that the bulk of the Irish sovereign debt is held by ordinary non-oligarchic Irish citizens and businesses (which is almost certainly false) or you simply have been labouring under the impression that I am not in favour of telling Irish oligarchs to fuck off and die (I am very much in favour of that, but that doesn't have anything to do with the European Union or the ECB).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 5th, 2011 at 01:51:39 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

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, who for some unclear reason deserve to lose their money.

Because of this xenophobic paranoia you have a xenophobic solution: 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. A company or bank that has the misfortune not to have resettled in Ireland and still resides elsewhere should lose everything.

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

Meanwhile the Irish elite is laughing all the way to the bank*.

*( or Meistererzählung, but I don't want to fuel your xenophobia)

*( Not a Irish bank! Only idiotic foreigners would keep their money there! Lichtenstein, Cayman Islands)

by IM on Sat Feb 5th, 2011 at 06:24:20 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Meistererzählung, but I don't want to fuel your xenophobia

We're beginning to tread into "that was uncalled-for" innuendo territory here.

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

by Carrie (migeru at eurotrib dot com) on Sat Feb 5th, 2011 at 06:33:22 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Ok, that was to far. Xenophobia goes much to far. But you could tell him to cut it back on the godwin violations.
(Cowen ist not Hitler and Fianna Fail is not the NSDAP)

Still, the analysis - foreigners forced the Irish to do this and that is nationalistic. The idea that all debt I don't like is owned by foreigners anyway is simplistic and a dangerous illusion. The proposed solution is much to oriented on the nation state.

We shouldn't infantilize Ireland and especially the Irish elites. They are responsible and this shouldn't be hidden behind a cloud of anti-EU rhetoric.

by IM on Sat Feb 5th, 2011 at 07:14:27 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Nobody is infantilizing Ireland, and Cowen was not a nazi but an incompetent fuckwit ideologue. See what Klaus Regling and Patrick Honohan had to say about the Irish bank fiasco.

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

by Carrie (migeru at eurotrib dot com) on Sat Feb 5th, 2011 at 08:20:09 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Yes? I still remember this facts. The Irish crisis was made in Ireland. You all seem intent to forget that.

by IM on Sat Feb 5th, 2011 at 08:37:39 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

Well - apart from the parts that weren't, you're quite correct.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Feb 5th, 2011 at 08:41:31 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 1)

Even if, so what? If i see a thief robbing a man, i don't care, because he is not robbing me? It is naive to think that Ireland is some kind of a basket case. Only 2 yrs ago politicians all over wanted to be like irish themselves. Politicians are neoliberal puppets everywhere and in every party.

by kjr63 on Sat Feb 5th, 2011 at 12:47:28 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

As per xenophobia: It has been mentioned elsewhere in the thread that not one (correct me if I'm wrong now) of the fiercer participants arguing with you on this in this thread is Irish. Irish xenophobia in this context would be some sort of autophobia, which seems, somehow, unlikely...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sat Feb 5th, 2011 at 06:41:53 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 5)

IM is complaining about anti-German xenophobia, but is it xenophobia when German economists agree that the direction German economic policy makers are pushing the EU in is misguided?

GERMANY IS UNFIT FOR THE EURO (Joerg Bibow)

Not for the first time in its history the German people have been irresponsibly misled by a political leadership that seems to have lost any sense of history, any sense of order and stability in Europe, and any sense of Germany's key contributing role to the current crisis. As ever, the mindset of lawyers frames the political debate among a political class that seems inhumanly uneducated in matters of economics. If economic voices are heard at all, it is usually the voice of the Bundesbank. It is a peculiar democracy that expects either its constitutional court or central bank to have the final word of wisdom.

Berlin weaves a deficit hair-shirt for us all (Wolfgang Münchau)

I can foresee two outcomes. First, Germany might end up in a procyclical downward spiral of debt reduction and low growth. In that case, the constitutionally prescribed pursuit of a balanced budget would require ever greater budgetary cuts to compensate for a loss of tax revenues.
...
One could also construct a virtuous cycle - the second outcome. If Germany were to return to a pre-crisis level of growth in 2011, and all is well after that, the consolidation phase would then start in a cyclical upturn.
Either of those scenarios, even the positive one, is going to be hugely damaging to the eurozone. In the first case, the German economy would become a structural basket case, and would drag down the rest of Europe for a generation. In the second case, economic and political tensions inside the eurozone are going to become unbearable. ...
...
While the balanced budget law is economically illiterate, it is also universally popular. Average Germans do not primarily regard debt in terms of its economic meaning, but as a moral issue. ...
... The balanced budget constitutional law is therefore not about economics. It is a moral crusade, and it is the last thing, Germany, the eurozone and the world need right now.

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

by Carrie (migeru at eurotrib dot com) on Sat Feb 5th, 2011 at 11:16:07 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

What the hell has this with anything? What exactly has the debt bake or other nonsense to with the question of the neoliberal irish policies. Do the two economist you cite think Ireland is a economic model? I doubt that.

by IM on Sun Feb 6th, 2011 at 12:05:55 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

You really are not paying attention to your own government's policy position, are you?

The "debt brake" has now become a condition that Germany wants to impose on the entire EU as a conditionality for allowing enough money to be lent to get over the sovereign debt crisis.

Since the debt brake is economically harebrained, default and let the chips fall where they may is looking better by the day, to be honest.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 12:42:49 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Nationalistic nonsense. I am not responsible for the policy position of the german government. And Ireland brought itself to ruin without any debt brake. So you are suddenly of the opinion that Ireland is able to service its debt, if not for the newest german demands?

by IM on Sun Feb 6th, 2011 at 02:23:54 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 1)

No, Ireland is not able to service its debt, therefore it will be defaulted on sooner or later. Given that, better that it be sooner rather than later. And the German policy proposals not only have nothing to do with the causes of the crisis (since Germany brought itself to ruin without any debt brake, as you say), they do nothing to resolve it.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 02:32:28 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

If Belgium and Italy were able to handle this level debt, since twenty years now, Ireland should be too. And how exactly the german debt brake in 2009 was bale to cause the Irish property bust and bank bankruptcy in 2008 I really don't get.

And Germany did get somewhat better through the crisis, because it did talk austerity, but did do stimulus.

by IM on Sun Feb 6th, 2011 at 02:49:53 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 1)

Everyone did stimulus in 2009.

Just like everyone is doing austerity in 2010.

And if "doing stimulus" is how Germany got out of the crisis, countries that haven't still gotten out of the crisis should continue to do stimulus.

Nobody is claiming that the German debt brake caused anything before it was enacted. The claim is that the debt brake is strongly deflationary, which will only make growth more sluggish and debt more unsustainable in the future, and is therefore incredibly harebrained.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 02:55:49 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

If Belgium and Italy were able to handle this level debt, there's no reason for the markets to cut off credit to anyone in the Eurozone now. Therefore the markets are insane and support at below market prices (as opposed to punitive rates) should be provided by those parts of the Eurozone still enjoying access to the credit markets, for the sake of Eurozone financial stability.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 02:58:33 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

But that is exactly what is happening now. And you demand that Ireland thanks its european partners by defaulting on her debt. That model can't work.

What is necessary, if it is necessary, is a new deal about the interest rate. But that is not the same as a default on sovereign debt engineered to hit only foreigners.

And am not sure why you want to argue about german economic policies 2008-2010: Clearly fiscal expansion, reaching their height in the first half of 2010. Is that really in doubt anymore?

This whole Ireland is insolvent meme is nonsense. There have be quite a number of countries with a public debt around 100% of gdp.

by IM on Sun Feb 6th, 2011 at 03:42:17 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

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 ]

Re: Irish pushback strategy - we get mail (none / 0)

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 ]

Re: Irish pushback strategy - we get mail (none / 1)

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

Re: Irish pushback strategy - we get mail (none / 1)

No, that's not what's happening.

What's happening is that the Irish sovereign is being funded at 5.7 % when it should be funded at 0.0 %.

The fact that the ECB has finally woken up and started doing its job w.r.t. the private Irish banks (a decade late and a billion € short) does not excuse the fact that the ECB still isn't doing its job and printing money on demand for the Irish government.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 6th, 2011 at 06:55:17 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 3)

I am not responsible for the policy position of the german government.

Analogously, no individual Irishman is responsible for the economic policy of the Irish government. Or are they? You have argued elsewhere on this thread that they are.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 02:46:28 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Did I talk about individual irish citizens? There is a collective responsibility in a democracy. And the opposition during the years of the celtic tiger was very small. And because of this responsibility you can't do something like a foreigners only default.

by IM on Sun Feb 6th, 2011 at 03:26:34 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 3)

The ECB isn't doing its job. If the ECB were doing its job, the Irish sovereign would be funded at 0.0 %, and we wouldn't be having this discussion.

Since the ECB is obviously unresponsive to the plight of Irish widows and orphans, the Irish state has a duty to protect Irish widows and orphans, and incentivise the ECB to start doing its fucking job and printing money on demand at 0.0 % to sovereigns needing stimulus. The easiest way to incentivise proper behaviour from the ECB is to cause pain to the ECB's political backers. Which means causing pain to the Frankfurt-based banks, and which means causing pain to Mrs Merkel's government.

You call it nationalist. I call it realpolitik. If you have some alternate suggestion for how to get the ECB to start providing unlimited stimulus money for the Irish economy at somewhere around the Frankfurt overnight rate, then I'm all ears. But so far you have presented no viable political strategy for how the Irish can continue to do stimulus without defaulting. And you have provided no political strategy - nevermind a credible one - for how the Irish state can obtain the necessary liquidity for continued stimulus without either leaving the €-zone or threatening to default on foreigners first, in order to pressure those foreigners' governments to pressure the ECB.

Since you seem so keen on applying collective punishment to Ireland for electing Fianna Fail, you may think of it as applying collective punishment to any polity that doesn't pressure the ECB to start doing its fucking job and printing unlimited money for use in Keynesian stimulus.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 6th, 2011 at 07:06:27 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

I am not responsible for the policy position of the german government.

But the Irish pensioners and unemployed that you're happily throwing under the bus are responsible for the actions of their government?

You can't have it both ways. Either the Irish people don't deserve to suffer for electing evil morons to high office, or the German people don't deserve to get bailed out, because they elected evil morons to high office.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 6th, 2011 at 06:50:45 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Bailed out by whom?

Don't you think there is collective responsibility?

by IM on Mon Feb 7th, 2011 at 09:24:49 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

No, I don't believe in collective responsibility. I don't believe that it is legitimate to murder a Teabagger just because he voted for a torturing war criminal. And I don't believe that it is legitimate to murder an Irish widow's pension just because she voted for a crooked finance minister.

I do believe in defeating neoliberal policies whenever and wherever they sully humanity with their depravity. In this particular situation, defeating neoliberal policies means defeating Austerity. Defeating Austerity means threatening Mrs. Merkel and Messrs. Weber and Stark with a sufficiently big stick that they start printing money wholesale. And the only stick Ireland has that is big enough to make Messrs. Weber and Stark shit their pants and start printing money wholesale is the threat of making several major German financial institutions insolvent.

And if a German pension fund or two is collateral damage in that fight, well then there's nothing wrong with insolvent private pension funds that better public pensions won't solve.

If you have a better plan for how to fight back against "Hartz IV For Ireland," then I'm all ears.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 7th, 2011 at 09:40:50 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 3)

Ironically, as the only Irish person actively involved in this discussion, I have defended IM's views as representative of many in Ireland - (Particularly conservatives who see the crisis has a heaven sent opportunity to cut back public expenditure dramatically).

However no one in Ireland has any sympathy with the banksters and regulators who are the most immediate causes of the crisis and whom many would wish to jail. What is more difficult to track down is those who benefited from the property boom - farmers who sold land etc.- partly because the beneficiaries are much more small scale and diffuse, partly because much of the money would have been invested in banks or property at home or abroad and so much was subsequently lost.

There is also a huge generational problem. Virtually all the beneficiaries (except a few banking whizzkids) are older, and most of those suffering are younger - the unemployed, emigrants, and those in negative equity because they bought their house (with a huge mortgage) since c. 2003.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Feb 6th, 2011 at 01:54:40 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

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

Friends come and go. Enemies accumulate.

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

Re: Irish pushback strategy - we get mail (none / 0)

Well, we view the basic facts different.

There also seems to be a value dissonance. I like my regional public bank and my regional/local saving bank. I think the are a valuable part of the German banking system and should be defended against the ravaging neoliberalism. As should be the equivalent parts of the banking system of other European countries. (And the state bank of North Dakota)

And you do discriminate against other Europeans:

Domestic need-to-save
Foreign need-to-save
Domestic want-to-save
Foreign want-to-save

A clear hierarchy of needs against foreigners.

by IM on Sat Feb 5th, 2011 at 07:28:21 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

There also seems to be a value dissonance. I like my regional public bank and my regional/local saving bank. I think the are a valuable part of the German banking system and should be defended against the ravaging neoliberalism.

Well, yeah. If there's enough money to go around to keep banks from losing their shirts, then local banks and state-owned banks should be at the front of the queue.

But the fact is that if a bank becomes insolvent, there are established procedures to resolve that situation without any major loss for the real economy. The bank's management is decapitated, the assets sold off, and its shareholders and unsecured creditors get to take a haircut. But the economic function - credit analysis, information gathering, transaction clearing and money creation - will still be carried on during and after a bankruptcy.

When a manufacturing firm goes bankrupt, on the other hand, there is a significant risk that it is going to be disassembled and sold as scrap. Which destroys its economic function. And when a pension fund is insolvent, retirees get shafted. So all in all, if you have to shaft someone it's better for everyone, except the shareholders and management, that you shaft a bank than a manufacturing firm.

And the proportion of banks that are simply evil is arguably higher than the proportion of manufacturing firms that are simply evil.

And you do discriminate against other Europeans

Yes, because foreigners have another safety net.

In the best of all possible worlds, the EU would come together and make a list of firms and individuals who needed to be bailed out for the common good, and another list of firms and individuals who need to go whistle for their money. And then the EU would, collectively, bail out the people who needed to be bailed out.

In the world we actually have, the EU is not going to bail out the Irish retirees. And while the German government might bail out German retirees, it isn't going to bail out Irish retirees. So shafting the foreigners in preference to the Irish is the only way the Irish government can incentivise other governments to lend material support to a rescue operation that could ensure that nobody had to be shafted (except the hedge funds).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Feb 5th, 2011 at 08:03:04 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Uh, is your German regional public bank insolvent?

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

by Carrie (migeru at eurotrib dot com) on Sat Feb 5th, 2011 at 08:17:16 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

I hope not. Sparkassen and Genossenschaftsbanken tend to be the healthy part of our banking system. But if the great lets default plan succeeds, they can get hit too. For no good reason.

by IM on Sat Feb 5th, 2011 at 08:31:30 AM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 3)

If they get hit it will be because they could not resist investing in what should have been an obvious raging real estate bubble. That is a good reason, regardless of where the bubble occurred.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 5th, 2011 at 06:03:53 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Ahern?
Consider your source.

Ahern, Dermot, the Justice Minister, not Ahern, Bertie, the former Prime Minister.

Here's another account:

FT Deutschland picked up a story, according to which the Irish justice minister Dermot Ahern blamed the ECB for pushing in Ireland into a decision to apply for a bailout, without having the opportunity to make a proper evaluation of the process. (The way he phrased it suggests that he thought the action not merely politically unacceptable, but also legally doubtful.)

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 12:50:54 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

As far as I understand Irish politics, it is probably the same family. And I would not trust the word of member of the current government. Next they will blame the sidhe.

by IM on Sun Feb 6th, 2011 at 02:03:36 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

As far as I understand your comment, it's bigoted. And it happens to be wrong in this instance, too.

Ahern was born into a family that had no association with party politics. ...
...
In late 1994 Bertie Ahern (no relation) succeeded Albert Reynolds as leader of Fianna Fáil.

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

by Carrie (migeru at eurotrib dot com) on Sun Feb 6th, 2011 at 02:29:17 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Not bigoted. Irish politics do have a problem with to many political dynasties.

And you are defending a liar. The same wikipedia article showed me that Ahern was on November 15th still claiming: There is no bail out.

So I why should I trust his claims now?

by IM on Sun Feb 6th, 2011 at 03:12:24 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

Irish politics do have a problem with to many political dynasties.

So much for collective democratic responsibility.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Feb 6th, 2011 at 03:57:58 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Is that an Ireland only exception or do think all democratic states are not democratic in true sense, so their citizens are just subjects, not do be made responsible for the mad antics of their overlords?

by IM on Sun Feb 6th, 2011 at 04:06:43 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 2)

There is a misunderstanding of the structure and nature of citizen responsibility for their government in the western democracies. Let me illustrate:

Osama:

The US government is guilty of thousands of murders of Muslims around the world, in actions of imperialist intent [True]
The US government is elected by the people of the US, in free and democratic (usually) elections [True]... THEREFORE
I can inflict personal punishment on individual US citizens because of they share a collective responsibility for their government. So it's OK to blow up the twin towers because that's the only way I can punish (random) Americans for their complicity in their governments machinations, because of which all of them have enjoyed perks like cheap oil forever.

Now the premises of the argument are true, but the conclusion does not follow. Citizen responsibility is a different sort of responsibility than criminal responsibility and can not be addressed by an international equivalent of a penal system. Before you say that this is physical punishment, I assure you that the results of ECB/IMF policy in the EU and Ireland will be very physical for many people, most of which were the people at the bottom of the ladder, the least responsible for whatever their banker overlords had indeed decided. In fact should Ireland not default, those least affected by the depression that will ensue will be the buggers at the top who were most implicated in and most responsible for this whole debacle.

How's that for justice?

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Sun Feb 6th, 2011 at 08:27:53 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (none / 0)

Good question. I agree that collective punishment against citizens of a democratic state is justified. But not in every case. Democracy is after all based on individual rights that majority vote cannot nullify. In this case we are talking after all very much about housing, and that is, or at least should be, in the realm of individual rights. (And of course economic collective punishment in practise never punishes collectively)

by kjr63 on Mon Feb 7th, 2011 at 08:06:27 PM EST
[ Parent ]

Re: Irish pushback strategy - we get mail (4.00 / 4)

The negotiations with the ECB were carried out b the Central Bank Governor and senior civil servants in the Dept. of Finance and the Cabinet was "bounced" into accepting a fait accomplit very late in the process. Yes they did ultimate accept the deal but both the manner and the content of the decision was unconscionable and is a primary reason why we now have a general election in which the Governing parties will be shafted.

My diary is primarily aimed at ensuring the next Government doesn't act quite as stupidly.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Feb 6th, 2011 at 03:07:57 PM EST
[ Parent ]

Irish pushback strategy - we get mail | 305 comments (305 topical, 0 editorial, 0 hidden)

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