In simple terms - why is the EU bailout so bad for Ireland?

[fender]

If Ireland is given the bailout do we repay the money at the higher rate than normal borrowings?

Will the bailout give some level of stability to Ireland for a while or does it do completely the opposite and why?

What say will the EU have in Irish affairs after this bail out?

Are FF worried about saving their own jobs or is there genuine concern on their behalf that the bail out is bad for the country?

Can we afford to pay back the bailout money as well as the sovereign debt?

 

[steviel]

Im not sure austerity measures will be particularly worse than what is planned by Lenihan.

But the most worrying thing I saw today on the news was a British and a German politician in separate news stories practically salivating at the prospect of getting their hands on our corporation tax rate. The British MP (I cannot remember who it was) moaned for a while about Britain having lost investment to Ireland due to the corporation tax rate over the last few years, then linked a potential £7bn UK share of an Irish bailout to the amendment of the tax rate - he did it subtly, but to me the message was about as subtle as a brick. We have nothing without our tax rate

 

[Duke of Marmalade]

im not sure austerity measures will be particularly worse than what is planned by lenihan.

But the most worrying thing i saw today on the news was a british and a german politician in separate news stories practically salivating at the prospect of getting their hands on our corporation tax rate. The british mp (i cannot remember who it was) moaned for a while about britain having lost investment to ireland due to the corporation tax rate over the last few years, then linked a potential £7bn uk share of an irish bailout to the amendment of the tax rate - he did it subtly, but to me the message was about as subtle as a brick. We have nothing without our tax rate

+1

 

[Paddyman]

The bailout will make it difficult for crony capitalism to thrive along with the attendant corruption and lack of regulation so loved by Fianna Fail/Fine Gael and their banker/developer friends.
Which is better for Ireland: regulation like that in Denmark, Germany and the Netherlands or the regulation that gave Seanie Fitzpatrick and Michael Fingleton time and space to thrive?
Without the bailout we are finished. Tax rates will be academic. The price of survival will be to dance to the tune of the ECB. It will be payback for our anti -EU do-it-alone antics.
Guff about sovereignty from John Bruton , Enda Kenny, Brian Lenihan and Brian Cowen is a bit rich considering we have never had economic sovereignty in this state.
My, didn't Brian Cowen look sovereign as he grovelled before our new Viceroy, Olli Rehn.

 

[orka]

Im not sure austerity measures will be particularly worse than what is planned by Lenihan.

I agree but my concern is that whatever Lenihan has planned will not be implemented because of the various interest groups resisting every step of the way. Any delay while various people yak on that it's not fair to them, they didn't cause the problem etc etc will just drag us down even further. I don't like the expression 'we are where we are' as it's often used as an excuse not to look to the past and apportion blame but unfortunately as a country we ARE where we are and we have to dig ourselves out of a big hole. I think any sign that Lenihan's plans are being resisted to an extent that makes them ineffective in the required timeframe - and we'll HAVE to take a bailout - which I think will be more readily accepted as people will realise that it's the end of the line - resistance is futile. Unfortunately, I think it will come to that. The austerity plan will be tough, will be resisted, will collapse and will be replaced by something similar/worse linked to a bailout.

 

[shanegl]

Im not sure austerity measures will be particularly worse than what is planned by Lenihan.

But the most worrying thing I saw today on the news was a British and a German politician in separate news stories practically salivating at the prospect of getting their hands on our corporation tax rate. The British MP (I cannot remember who it was) moaned for a while about Britain having lost investment to Ireland due to the corporation tax rate over the last few years, then linked a potential £7bn UK share of an Irish bailout to the amendment of the tax rate - he did it subtly, but to me the message was about as subtle as a brick. We have nothing without our tax rate

Who can blame them, looking at some of the ridiculous carry on of British businesses funelling their profits through Ireland?

 

[shnaek]

Which is better for Ireland: regulation like that in Denmark, Germany and the Netherlands or the regulation that gave Seanie Fitzpatrick and Michael Fingleton time and space to thrive?

Regulation wasn't the main issue -we had a regulator with an adequate staff, we had the central bank, and we had the department of finance and they didn't do their job. What we didn't have was a competent government.

 

[Purple]

Could we try playing hard-ball here? After all the survival of the Euro is in the balance so while we are a small player at the game we can kick over the whole table if we like and they know it.

 

[Purple]

Regulation wasn't the main issue -we had a regulator with an adequate staff, we had the central bank, and we had the department of finance and they didn't do their job. What we didn't have was a competent government.

+1 but I'd add that our regulator and our public servants weren't competent either.

 

[csirl]

Could we try playing hard-ball here? After all the survival of the Euro is in the balance so while we are a small player at the game we can kick over the whole table if we like and they know it.

+ 1.

We could also schedule another Lisbon Referendum on the basis that we did not get the jobs we were promised for passing it the second time round.

And then finish off by saying if they dont adhere to our demands, we'll leave the EU and ban EU fishing vessels from our vast territorial waters.

 

[Firefly]

+1 but I'd add that our regulator and our public servants weren't competent either.

I reckon their hands were tied by Bertie - nothing like a property boom to keep the votes coming in.

 

[Firefly]

Could we try playing hard-ball here? After all the survival of the Euro is in the balance so while we are a small player at the game we can kick over the whole table if we like and they know it.

I totally agree with this. If we're not sorted then all eyes to Spain and Portugal..which will be a lot more expensive to bail out. Also, Anglo was only able to lend because it obtained funding from French and German banks...surely their responsible for making their bets?? That's why I think the banking bailout should be a European problem to fix rather than an Irish only one.

 

[Complainer]

Regulation wasn't the main issue -we had a regulator with an adequate staff, we had the central bank, and we had the department of finance and they didn't do their job. What we didn't have was a competent government.

No, we didn't;

I reckon their hands were tied by Bertie - nothing like a property boom to keep the votes coming in.

Wasn't it Bertie who told the Office of Director of Corporate Enforcement that they'd have to 'take their place in the queue' for more staff? Wouldn't want to have too many of those nasty investigators round the place, eh Bertie.

 

[Purple]

The historical parallels here are amazing; It was a debt crisis that forced the 13 loosely confederated states of the former British colonies in North America to call their second constitutional congress in 1787 (which resulted in the present US constitution). Basically some individual states had incurred massive debts (mainly from France) to fund their war of independence whereas others had little or no debt. The main topic of discussion was whether that debt should be shared amongst all of the states as a federal debt, since it was incurred for the betterment of all of the states, or whether it should be borne by the states that incurred it. It was this topic that catalysed the movement towards a stronger federal government and turned Jefferson and Washington from friends into enemies, enemies that came close to leading opposing sides in a civil war.

So, we now have debt in some loosely confederated EU states that was funded by banks in other EU states. If the bearers of the debt give the two fingers to their creditors then the Germans etc get a proverbial kick in the nuts. If they cow down and beggar themselves then we face the tyranny of the strong. Should this remain a problem of debt between EU states or should be become a problem of EU debt? What does the EU do, is it here to protect the interests of the large states or to build a socially and economically cohesive Europe?

 

[Shawady]

Could we try playing hard-ball here? After all the survival of the Euro is in the balance so while we are a small player at the game we can kick over the whole table if we like and they know it.

David McWilliams on RTE this morning saying exactly this. They played a clip of him on the Marian Finunace show from Jan 2009 and what he predicted then is what has panned out. He made this suggestion back then. Pity no one took notice.
He reckons we were in a much stronger position then to look for help and the government have basically been bluffing for the past 2 years.

 

[Purple]

Wasn't it Bertie who told the Office of Director of Corporate Enforcement that they'd have to 'take their place in the queue' for more staff? Wouldn't want to have too many of those nasty investigators round the place, eh Bertie.

Every year the Financial Regulator got reports from the banks clearly showing that they were massively overexposed to one sector, massively over concentrated within one group of individuals and massively over-leveraged and every year he said “that’s fine lads, keep up the good work”.
If staff shortages were the main problem we would not be in the mess we are in.

 

[frankmac]

Every year the Financial Regulator got reports from the banks clearly showing that they were massively overexposed to one sector, massively over concentrated within one group of individuals and massively over-leveraged and every year he said “that’s fine lads, keep up the good work”.
If staff shortages were the main problem we would not be in the mess we are in.

Yes but its nice to know that he was paid off with golden handshake and a handsome pension.

 

[galleryman]

i agree but my concern is that whatever lenihan has planned will not be implemented because of the various interest groups resisting every step of the way. Any delay while various people yak on that it's not fair to them, they didn't cause the problem etc etc will just drag us down even further. I don't like the expression 'we are where we are' as it's often used as an excuse not to look to the past and apportion blame but unfortunately as a country we are where we are and we have to dig ourselves out of a big hole. I think any sign that lenihan's plans are being resisted to an extent that makes them ineffective in the required timeframe - and we'll have to take a bailout - which i think will be more readily accepted as people will realise that it's the end of the line - resistance is futile. Unfortunately, i think it will come to that. The austerity plan will be tough, will be resisted, will collapse and will be replaced by something similar/worse linked to a bailout.

+ 1

 

[sunrock]

Could we try playing hard-ball here? After all the survival of the Euro is in the balance so while we are a small player at the game we can kick over the whole table if we like and they know it.

The time to play hard ball was when the private bankrupt irish banks came to the government and asked for a bail out. Our government couldn`t haven`t been more helpful , bailing them out and giving a guarantee that saddled the irish taxpayer with an unpayable debt. The big foreign bank bondholders were delighted.
You are now suggesting we play hard ball as we lay prostrate before our paymasters, begging for a bailout and with no real cards left to play except for the PR spin they are feeding to the irish public.
The government will stoop to any level,will grovel on their knees if necessary to keep whatever funding they can get to keep paying salaries ,welfare etc.
Of course they will have to implement a savage budget and the public will moan but will have to take their medicine.
The government can threaten to leave the euro but it is an idle threat. First we`d be even worse off even if our borrowing wasn`t cut off.
Secondly the EU could cut off the funding that pays the salaries of public sector workers and welfare recipients if they wanted to.
Our government and future governments will be doing the EU and Imfs bidding for a long time to come.

 

[Chris]

Every year the Financial Regulator got reports from the banks clearly showing that they were massively overexposed to one sector, massively over concentrated within one group of individuals and massively over-leveraged and every year he said “that’s fine lads, keep up the good work”.
If staff shortages were the main problem we would not be in the mess we are in.

I agree, the problem was not some obscure, hidden item in the balance sheets, that required hundreds of people to try and figure out. This is such a typical move by government: something is not working so lets through money at it.
The only new regulation we need now is not of the banks but of the government to stop writing cheques to private corporations, no matter how big or important. The banks took private money and loaned it to private individuals. At no stage in this should the government become a player and the public a pawn!

Why is the EU bailout bad for Ireland? Because it doesn't solve the underlying problem: unmanageable levels of debt. The debt will still be there and will have to be repaid with interest. The only thing that would now be good for Ireland is a default on debt to reduce it to levels that are manageable. Ideally in the process bond yields would still go through the roof and stay there, so that the political elite would be forced to tax for their pet projects. You'll find them in a lot more difficulty trying to convince taxpayers to part with their hard earned cash.