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So the argument made is that the Irish architect of the bailout and the German and UK governments that have been faithful servants of their own banks which are the ones most exposed to Irish debt were ready to reverse course and make the bondholders pay, as the IMF had recommended, but that the American Treasury whose only role is as a member of the IMF also reversed course and vetoed any haircut?

"The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. "

Unlikely on both counts.

by rootless2 on Mon May 9th, 2011 at 07:37:26 AM EST
[ Parent ]
I'd very much like to see the expanded version. We have several claims here:

  • The IMF proposed a haircut plan
  • At a G7 finance minister meeting Geithner vetoed that plan
  • Osborne "spoke up" for the Irish. He was the only one to do so.
  • The ECB insisted on full repaiment.
  • The only positions we get are the US and UK. No one else had an opinion?

    by generic on Mon May 9th, 2011 at 08:27:52 AM EST
    [ Parent ]
    I can think of one explanation: No single European country can veto an IMF decision. The US can. Geithner could just have been the one who formally killed the plan. Not necessarily on his own initiative, but on behalf of the creditor nations.
    by generic on Mon May 9th, 2011 at 09:12:23 AM EST
    [ Parent ]
    But of course the EU and UK are not constrained to follow IMF recommendations either.
    by rootless2 on Mon May 9th, 2011 at 09:51:45 AM EST
    [ Parent ]
    Of course. But It would have been supremely embarrassing for everyone involved were the IMF to sing from a completely different hymn sheet.
    by generic on Mon May 9th, 2011 at 11:07:29 AM EST
    [ Parent ]
    The G7 consists of the US, Japan, Germany, France, UK, Italy and Canada.

    Three of the 7 (Germany, UK, France) are home to major creditor banks of the Eurozone, Italy is the in the PIIGS but not in the PIGS, and Canada and Japan presumably wanted nothing to do with the Euro policy mess. The US happens to be the single country which can veto the IMF and has no skin in the Irish rescue game, so its position can be sold to the outside world as disinterested.

    Germany, the UK and France politely ask Geithner during the G7 conference call to veto the IMF position on Ireland, and he obliges.

    Is that an implausible scenario?

    All the same, Frank is right that he chose not to excerpt this part of the story in his diary and Geithner has been brought in by an American quoting Yves Smith...

    Economics is politics by other means

    by Carrie (migeru at eurotrib dot com) on Tue May 10th, 2011 at 02:05:40 PM EST
    [ Parent ]
    At a G7 finance minister meeting Geithner vetoed that plan

    The claim was that this occurred during a telephone conference of G7 financial authorities.

    "It is not necessary to have hope in order to persevere."
    by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 9th, 2011 at 12:12:49 PM EST
    [ Parent ]
    Well, then the US government should have a tape that could clear things up for us...

    - Jake

    Friends come and go. Enemies accumulate.

    by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon May 9th, 2011 at 02:06:32 PM EST
    [ Parent ]
    We may hear or see a transcript of that conference call yet, but not likely from the US government.

    "It is not necessary to have hope in order to persevere."
    by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 9th, 2011 at 03:33:31 PM EST
    [ Parent ]
    George Osborne has strong Irish roots and has been viewed as being consistently "helpful" to Ireland considering he is a British conservative.  Don't forget Irish/UK trade is huge and it is not in the UK's interest for the Irish economy to crash. The peace process is ongoing - as symbolised by the queens visit in a week or too. Huge numbers of Irish people live and work and vote in the UK. George Osborne has been a lot less sympathetic to Portugal/Greece.

    Index of Frank's Diaries
    by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon May 9th, 2011 at 04:07:56 PM EST
    [ Parent ]

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