Baling Out The Irish

[BTC]

I thought we as a country were skint, hence the cuts. So where has this few Billion come from ?

 

We're not skint for one-off payments. It's the "structural" deficit (ie. year-on-year commitments) like benefits and public sector employees' wages that we can't afford.

 

Another interesting thing is that HMG will likely turn a profit on this loan as long as the Irish pay it back. The government is having no current problems borrowing from the markets at about 3-ish %. The loans to Irish will be at around 5%. Looking like you're doing a good deed and turning a 2% profit at the same time is a bit of a result!

[Xerces Fobe2]

From a railway perspective -ideal time to get a bargain on those rather nice MK3's they no longer use.

 

Xerces Fobe

 

 

[spamcan61]

Just something my dad (ex-money market dealer, on Dollar, Pound, Francs, and the Euro in his last few years) has always said: "a single currency can't generate the competition and accumulative wealth required for the markets to expand, normally done by buying and selling in a range of different currencies on different levels of interest".

 

Don't know if it applies here, with the Euro under close scrutiny.

 

Alternative interpretation - currency speculators don't like single currencies because they stop them making money by speculating.

 

Upside as a taxpayer is not having to fund government damage limitation exercises designed to combat currency speculation.

[BTC]

Turkeys, christmas, etc

 

However there are good economic reasons why single currencies don't work unless you have an economy as tightly integrated as that in the US. What we are seeing now in the Eurozone was always inevitable, and many economists have been telling us this since its birth. Unfortunately they were drowned out by an unholy alliance of Euro-enthusiast politicians (Blair, Kennedy, Clarke, Heseltine), business leaders who stood to gain (the CBI etc.), unions et al.

 

If you rope disparate economies together without the pressure valve of an exchange rate or an escape capsule of an orderly exit (neither of which the Euro members have), a point will come when the disparities generate forces that will rupture the union. The remedy is either closer economic union (politically unpalatable to Germany et al.), the laggards leaving the union (not possible currently) or the laggards deflating with consequent human suffering (what Europe wants Ireland and the Med countries to do)

 

So lots of people are now suffering because of the political self-importance of Delors and the Brussels crowd, who ignored this advice back in 1992 when the Euro ship first set sail. The Euro is and always has been a political not an economic project. Just after its birth at the start of the decade the "stability" rules were already being fiddled - firstly to suit Germany and France. Now at the first major storm the Euro has hit the rocks, the rules have gone out of the window and once again the politicians are being reminded that economic forces are more powerful than their egos, spin doctors and desire to leave a political legacy.

 

It pains me to say it, but thank Gordon Brown we didn't go in.

[spamcan61]

Excellent summary there BTC

[Kenton]

However there are good economic reasons why single currencies don't work unless you have an economy as tightly integrated as that in the US.

 

Even there it doesn't work - just look at the enormous problems that California (and many other states) has no in balancing its books

 

The Euros' problem is that it is trying to unite many different political, soveregn and cultural diverse populations by a single currency. Without all that and one budget decided and applied by Euorope as a whole it will continue to struggle. The general attitudes to work and social welfare in the southern countries is much different than the northern countries.

[beeman]

There is only one remedy to this disastrous dilemma, give us a 'bl**dy' vote once and for all to get out of this stupid mess that has been foisted upon us without our 'permission'. DEMOCRACY under the EU does not have a negative answer to a vote as has been shown by the results in Ireland and France. When will the people of this country see some sense. To have a hand in your pocket up to their elbow, sucking your money out, makes NO SENSE, and NO FUTURE, unless you are on the benefit take , and as such will make no difference to that individual. The problem here is that so many in the UK have been bought off by the benefit handouts that an honest and just outcome is virtually impossible thanks to the Labour sweeteners. That includes the likes of the GP's, Fire service, NHS personnel ,public service, who now object to be called 'civil servants',all who have benefited by Labours handsome handouts. As long as the private sector keeps contributing by their taxes the winners will continue to feather their nest.Why should you have to work extra years to feather the nests of these 'select' people. Stand up and be counted.Why should you have to work 10/15 years more to pay the index linked pensions of these people. You are most likely to be dead before you get yours, and not index linked.

[John M]

Even there it doesn't work - just look at the enormous problems that California (and many other states) has no in balancing its books

 

The Euros' problem is that it is trying to unite many different political, soveregn and cultural diverse populations by a single currency. Without all that and one budget decided and applied by Euorope as a whole it will continue to struggle. The general attitudes to work and social welfare in the southern countries is much different than the northern countries.

 

Attempts to run a Single Currency without Monetary Union always seem to end in tears the Gold Standard, George Soros attack on Stirling in the early 1990s. It was always difficult to see the Euro working without Germany underwriting the currency.

 

As a small Nation on the perphery of Europe Ireland has always a struggle to retain and attract capial in order to develop its Economy beyond being a supplier of basic commodities to the UK and Europe.

 

Successive Irish Governement from the 1960s courted Multi-Nationals with low taxesand other incentives to attract inward investment.

 

Ireland has built up a substantial export base built mainly on IT, Chemicals and Financial Services and for over 20 years has run substantial trade surpluses.

 

Today the United Kingdom is Irelands 3rd major trading partner at after the USA and Belgium (I kid you not). Interestingly trade appears to be fairly well balanced slighty in the UKs favour around €800m in Irish exports per month.

 

Rather ironically after years of trailing Stirling for many years Ireland had to de-value the Punt to align with the other Euro currencies, the Punt was out performing the DM.

 

Unfortunately capital intensive export industry does not generate much in the way of employment or tax revenue and the employment boom from the late 90s onwards was based on tax incentives to business and lowering personal tax rates.

 

Much of this was based on the fear that in an open economy that once had high tax rates capital would pour out of the economy and developments like Temple Bar and much of Dublins Inner City Urban Renewal would not take place without some form of financial inducement.

 

I was once required to construct a 50 bedroom hotel in 16 weeks in order for the promoters to avail of business expansion scheme tax incentives.

 

Warning soon emerged after Euro mmbership the Irish Central Bank had no longer control of the exchange or interest rates and the country was swamped with cheap money from German Banks, at the same time Government narrowed the tax base further in classic Neo-Liberal fashion taxes were lowered (many people taken out of the income tax net) without any reduction in Government spending.

 

The rest as they say is history. A handfull of Developers paid over the odds for a number of brownfield development sites in Dublins Docklands at the same time as the American Sub-Prime crisis spread panic across the Worlds markets.

 

Its difficult to access what is likely to happen some serious adjustment is required in Ireland ore seriously the panic in the Bond Market is sprading to Northern Europe with Belgium coming under pressure, the Ratings Agencies are sending out warnings to relatively stable economies like Australia, what are the wider reprecussions for the UK and United States?

 

What message should the G7 Economic ministers be sending out to the Bond Markets?

 

Anyway back to the railways perhaps Mitsui might obtain a major shareholding in Iarnrod Eireann as part payment for the final batch of 17 Intercity Railcars:)

 

John

[BTC]

I was talking to some politicians over in Ireland a few years ago at a wedding (a family friend moves in political circles over there). They were full of praises about the Euro, how low their interest rates were because of it, how low that made mortgage payments and how everyone was getting richer through the consequent increase in house prices. They could not understand why in the UK we were missing out on this party.

 

When I asked them if they thought that European interest rates set mainly for Germany's benefit were far too low for Ireland, and so they risked stoking up a classic property bubble, they looked at me as if I was an alien.

 

At one point 18% of Irish GDP was in construction. In most economies it's around 5%. The warning signs were all there, but no-one wants to be a party pooper. I hear that some Irish property prices have fallen over 60% from their peak. Since in most of Ireland they don't have the land-use and planning problems that we do, a significant amount of the recently built property will probably never be lived in, the demand just isn't there. Madness. And now to add insult to injury they can't devalue their currency to get things back in balance.

 

The house price bubble was bad enough in this country because of the "wall-of-money" effect from Asian over-saving and the bankers throwing caution to winds, taking bank-breaking risks in the credit markets to supercharge their already obscene bonuses. God help us if we had joined the Euro and had had years of overly low interest rates too.

 

As I said, thank Gordon Brown. Eeek.

[shortliner]

I was sent this earlier today - it does provide a very accurate depiction of how the European financial system works.

 

It is a slow day in a damp little Irish town. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything. At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works.

[Tony_S]

I was sent this earlier today - it does provide a very accurate depiction of how the European financial system works.

 

.... No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works.

 

 

 

I think that is basically how the bank uses the money in my current account.

 

 

[ie 201]

The major problem over here is the banks, we could take the pain of our budget problems but the banks pushed us over the edge.

Will the UK get their money back, yes is the simple answer, did you need to give the loan to us, yes as our countries are so closely tied together that the collapse of the Irish economy would cause not only the collapse of the Euro but would decimate your banks and seriously effect your economy. UK banks have huge amounts of money lent to the Irish banks and they also have rather large loan books from their commercial operations here.

We ll sort out our politicans at the ballot box early next year who decided to fuel the economy when they should have increased taxes when spending was out of control in our public service and in our economy in general.

We re not the first country to need a dig out after going bust and we won t be the last

[Horsetan]

---->Meanwhile, the Irishman in the street gives his view......

 

Note: some of the language in the above may be a bit "gritty"....

[Allegheny1600]

"Michael Flatley is from Chicago"!

"F*** **f"!!!!!!!!!!!!!!!

:lol:

Best laugh for days!

John E.