What If Ireland was Declared Bankrupt

sunnygirl said:
When my account in INBS matures in a couple of weeks,its heading for a RABO direct account,
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You would need to open an account outside Ireland,in Germany or Belgium,you may think that Rabo would be exempt from a currency changeover from euro to a new punt,or that in the unlikely event the Govt starts helping themseves to our savings but any bank foreign or Irish is bound by financial regulator and would have to do as they are told and comply with whatever new legislation is enacted to cover such an event.

 
..not so sure about that, the ads usually say who they are regulated by. UK banks are covered by their gauruntee as was the case with N Rock when it had problems it was the UK Government that Irish depositors had to potentially turn to
 
I'm just wondering is default now a serious option.

What actually happens when we default? Does this mean the money we owe the bondholders and ECB would not have to be re-paid? The downside would be we not be able to borrow and would need the IMF to balance the books in one go.
 
Shawady said:
I'm just wondering is default now a serious option.
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I see no way out other than a default. But as to what it would mean for us - I haven't a clue. I presume we'd have to run the country on what we take in ie. 30bn?
 
Shawady said:
I'm just wondering is default now a serious option.

What actually happens when we default? Does this mean the money we owe the bondholders and ECB would not have to be re-paid? The downside would be we not be able to borrow and would need the IMF to balance the books in one go.
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Not being able to borrow (at least in the short term) would be the biggest upside. The last thing we want to do is renegotiate debt to a lower, manageable amount and then go on another credit binge.
 
Not sure that civil & public servants, both in employment and receiving a pension, would agree with this - if there was only €30bn in the kitty, that would translate into huge cuts in payments

Current spending is €20bn on pay/pension, €20bn social wefare/transfers, €10bn elsewhere
 
jpd said:
Not sure that civil & public servants, both in employment and receiving a pension, would agree with this - if there was only €30bn in the kitty, that would translate into huge cuts in payments

Current spending is €20bn on pay/pension, €20bn social wefare/transfers, €10bn elsewhere
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And how is living within your means a bad thing? The country simply cannot afford the bloated public sector that expanded during a completely artificial and phony boom.
 
Reports in the media are suggesting Portugal are coming under pressure to accept a bailout.
My understanding is that if it becomes difficult for Spain to borrow from bond markets, they are too big to be saved by EU fund.
Would it be probable to have weaker countries asked to leave the euro and go back to use their own currency?
Could it be done if it came to this?
 
Shawady said:
Reports in the media are suggesting Portugal are coming under pressure to accept a bailout.
My understanding is that if it becomes difficult for Spain to borrow from bond markets, they are too big to be saved by EU fund.
Would it be probable to have weaker countries asked to leave the euro and go back to use their own currency?
Could it be done if it came to this?
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Check this article on the difficulties of leaving the Euro:
http://www.bbc.co.uk/news/business-11830532
 
Some eu official said today that the euro is safe but may have to be restructured to a 2 tier system, one for the pigs+ and the other for the fat cats...or words to that effect. Sorry cant remember who said this.


Sample coinage for the lower tier.

[broken link removed]
 
Wont the EU prevent a default and in view of tis couldnt the govt have told them today something like "3% or we default and lets see what happens then?"
 
dockingtrade said:
what happens to deposits in banks & the post office in a default. Can I ask where do you have you're cash?
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The little cash I have in Ireland is non-Irish banks, rest is outside of Ireland

dockingtrade said:
Wont the EU prevent a default and in view of tis couldnt the govt have told them today something like "3% or we default and lets see what happens then?"
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What are they going to do if Ireland defaults, invade?
 
There are various people suggesting that we should reject this bail out and perhaps even leave the Euro and go back to the Punt. This (they say) would allow us to devalue and get ourselves back in shape. Apparently we would have a "few months of pain" in order to sort ourselves out. What does this mean "a few months of pain". What would actually happen if this was to occur? I really am quite uneducated in this big economics stuff. And it would appear I'm not on my own!!
It does seem that 10bil per year to service this new debt is quite unsustainable. That much I do understand.
Can anyone "simply" explain the couple of queries I've lined out above?
 
elefantfresh said:
There are various people suggesting that we should reject this bail out and perhaps even leave the Euro and go back to the Punt. This (they say) would allow us to devalue and get ourselves back in shape. Apparently we would have a "few months of pain" in order to sort ourselves out. What does this mean "a few months of pain". What would actually happen if this was to occur? I really am quite uneducated in this big economics stuff. And it would appear I'm not on my own!!
It does seem that 10bil per year to service this new debt is quite unsustainable. That much I do understand.
Can anyone "simply" explain the couple of queries I've lined out above?
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Yes, €10bn in interest alone is ridiculous. Imagine if someone came to you and said they had taken a huge pay cut, and were now going to take on an interest only mortgage which would take 30% of their income. You'd think they were insane.

As for leaving the € and then devaluing the punt, this would be like jumping from the frying pan into the fire. Imagine what that devaluation would do to all the imports. Now lots of people suggest this would be good, because it would force us to make and buy more of our own stuff. But there are lots of things that cannot be made here, the most important being oil. Even a huge devaluation would not make Ireland competitive with Asian countries for manufacture of clothing and electronics, so these would still be imported, but at huge costs. Those advocating the devaluation route are simply only looking at one side of the coin.
 
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