""it is far from clear that Germany is willing to give up their own banks
to supervision by the ECB."
It is also unclear what will happen to insurance,
which can not be monitored by the ECB according to the EU Treaty.
Or if the conditions to be imposed in order to use the European Stability Mechanism (MEDE),
conditions that likely will go beyond the financial sector...
Showing posts with label Ireland. Show all posts
Showing posts with label Ireland. Show all posts
11/30/10
Tyler Durden and Michael Cembalest on Ireland etc...
"1. Bailouts don’t change the level of debt that countries owe,
it just shifts the creditors around.
The latest steps remind me of the desperate attempts by US banks
to lend more money on top of prior money
during the late 1980s to Latin America,
when Citibank chairman Walter Wriston’s “countries cannot default” thesis
was left in ruins.
For everyone that said last spring that “Greece 2009 is not Argentina 2001”,
they’re right; Greece’s budget/trade deficits and debt/GDP were much worse.
2. GDP figures can be misleading indicators of risk. Greece, Ireland, Spain and Portugal (GISP)
are small in GDP terms relative to Germany and France.
But their banking systems grew to be very large
(e.g., a 20% haircut on French bank exposure to GISP countries
would wipe out French bank equity).
Irish Finance Minister Lehinan
intimated that Ireland asked to be able to apply haircuts to senior bank debt,
and was told by the EU that it would make no money available if there were any haircuts,
due to fears of contagion.
What does that tell you about the risk of small countries,
or the European banking system?
3. This crisis is not just about sovereign debt/deficits.
...The problem: total sovereign, corporate, financial and household debt,
and each country’s ability to service it.
...we’re still very nervous about Spain.
Why? Its economy is still on the brink of recession.
...Risks in Spain are not just about the banks;
nonfinancial private sector debt is 220% of GDP, the highest in the world.
4. ...The EU imposed a deal on Ireland’s lame duck government
that consigns the country to a very painful future.
The continued gutting of the Irish national pension fund is, to put it mildly,
a controversial decision.
...The Irish “bailout” plan, with its EUR 54,800 cost per household,
is by all accounts a modern-era “Long Day’s Journey Into Night”.
Ireland’s future, by the way, looks a lot more bleak than Iceland’s.
Iceland took a different path (debt default and a devaluation of 60%).
Two years on, Iceland is rebounding:
exports and manufacturing are growing by 20%,
tourism is back near all-time highs,
real wages are rising, unemployment is declining sharply,
interest rates fell from 18% to 5.5% and the stock market rebounded 50% from its lows.
In Ireland, GDP is contracting at a 9.7% rate; real wages,
price levels, the money supply and exports are falling;
and unemployment is stuck at 14%."
Michael Cembalest
CIO, JPM Private Bank via Tyler
it just shifts the creditors around.
The latest steps remind me of the desperate attempts by US banks
to lend more money on top of prior money
during the late 1980s to Latin America,
when Citibank chairman Walter Wriston’s “countries cannot default” thesis
was left in ruins.
For everyone that said last spring that “Greece 2009 is not Argentina 2001”,
they’re right; Greece’s budget/trade deficits and debt/GDP were much worse.
"...since its bankruptcy and currency devaluation,
Iceland's economy and stock market have surged,
unbound by the shackles of a zombie monetary system and exponentially growing debt.
Ireland, to the contrary,
can only hope for at best a gradual decline in its economic output
instead of an outright collapse
now that European Commission council is the country's new politburo."
2. GDP figures can be misleading indicators of risk. Greece, Ireland, Spain and Portugal (GISP)
are small in GDP terms relative to Germany and France.
But their banking systems grew to be very large
(e.g., a 20% haircut on French bank exposure to GISP countries
would wipe out French bank equity).
"It can also, at best, hope that its pension fund will have a few penny farthings left
for the aging population
once it is done rescuing Europe..."
Irish Finance Minister Lehinan
intimated that Ireland asked to be able to apply haircuts to senior bank debt,
and was told by the EU that it would make no money available if there were any haircuts,
due to fears of contagion.
What does that tell you about the risk of small countries,
or the European banking system?
3. This crisis is not just about sovereign debt/deficits.
...The problem: total sovereign, corporate, financial and household debt,
and each country’s ability to service it.
...we’re still very nervous about Spain.
Why? Its economy is still on the brink of recession.
...Risks in Spain are not just about the banks;
nonfinancial private sector debt is 220% of GDP, the highest in the world.
4. ...The EU imposed a deal on Ireland’s lame duck government
that consigns the country to a very painful future.
The continued gutting of the Irish national pension fund is, to put it mildly,
a controversial decision.
...The Irish “bailout” plan, with its EUR 54,800 cost per household,
is by all accounts a modern-era “Long Day’s Journey Into Night”.
"It is precisely this option that a formerly democratic country refused to offer its citizens,
and is the reason why its entire government should be tried for treason:
instead of using empirical evidence that default and devaluation is the best outcome,
Ireland crumbled to the interests of a few parasite plutocrats,
which have just their own interests in mind,
and never those of the host nation
which ends up being abused and discarded..."
Ireland’s future, by the way, looks a lot more bleak than Iceland’s.
Iceland took a different path (debt default and a devaluation of 60%).
Two years on, Iceland is rebounding:
exports and manufacturing are growing by 20%,
tourism is back near all-time highs,
real wages are rising, unemployment is declining sharply,
interest rates fell from 18% to 5.5% and the stock market rebounded 50% from its lows.
In Ireland, GDP is contracting at a 9.7% rate; real wages,
price levels, the money supply and exports are falling;
and unemployment is stuck at 14%."
Michael Cembalest
CIO, JPM Private Bank via Tyler
This is nothing less than yet another example
that in the great collapsing game of Keynesian fundamentalist's dilemma,
he who defects, defaults and devalues first is the winner.
Congratulations Iceland.
To everyone else: enjoy the eventual revolutions.
11/28/10
Ireland II
"A selection of interviews with people who marched in Dublin...
Margaret Grehan and husband Billy, from Dublin Road, Limerick
...They gave and they told us that they could afford it – they should have known. They never thought of putting a reserve away. The people weren’t to know that the country was going into this state and now, we have to suffer while their salaries remain the same.
There’s no cuts for the people at the top. The bankers are walking free. The elderly who have worked all their lives - we’re having to pay it. Our children are paying for it and our grandchildren are going to have to pay.
...Greed got us into this, absolute greed. I mean their salaries – it’s sinful, it’s shameful but they have no shame unfortunately.
...I’m not hopeful for my sons and I’m not hopeful for my grandchildren, I’m sorry I have to say it, but I’m not.
I’m calling for honesty. That’s what our country needs now and we haven’t had a bit of it for the past couple of weeks."
Sinead Keane, Stillorgan, Dublin
...I think greed is what got us into this, we got too far ahead of ourselves. I feel so angry with the government. We put them into power and I feel they’ve really jeopardised our democratic rights over the last two years.
We need a change of Government but we need a total change in politics. There needs to be way more honesty going on. At the end of the day, we’re a democracy, we elected them but people feel we’re living in a dictatorship. Everything has been taken out of our hands. I think that loss of control on top of the loss on the economic side of things is just too much for people.”
Annie McNamara and husband Tom McNamara, Cork
...This is our kids’ future they’re playing with, they’re going to destroy everything. You cut from education, you cut from healthcare, I mean what sort of life will they have? It’s a disgrace.
It wasn’t greed for new houses and new cars that created the debt, it was the fact that other banks came here and did stuff that they weren’t allowed to do elsewhere. They’ve gambled away our future - and we let it happen, right up to Brian Cowen. He let it happen and he encouraged it. He’s after destroying this country.
...When you’re talking about cutting minimum wage, it’s an absolute disgrace. When you’re talking about cutting education and the teachers and resources for disability, these people can’t afford it – we can, cut it from us.
I think everyone in the country should come out and protest because it’s all of our futures that they are messing with.”"
Irish Times
Margaret Grehan and husband Billy, from Dublin Road, Limerick
...They gave and they told us that they could afford it – they should have known. They never thought of putting a reserve away. The people weren’t to know that the country was going into this state and now, we have to suffer while their salaries remain the same.
There’s no cuts for the people at the top. The bankers are walking free. The elderly who have worked all their lives - we’re having to pay it. Our children are paying for it and our grandchildren are going to have to pay.
...Greed got us into this, absolute greed. I mean their salaries – it’s sinful, it’s shameful but they have no shame unfortunately.
...I’m not hopeful for my sons and I’m not hopeful for my grandchildren, I’m sorry I have to say it, but I’m not.
I’m calling for honesty. That’s what our country needs now and we haven’t had a bit of it for the past couple of weeks."
Sinead Keane, Stillorgan, Dublin
...I think greed is what got us into this, we got too far ahead of ourselves. I feel so angry with the government. We put them into power and I feel they’ve really jeopardised our democratic rights over the last two years.
We need a change of Government but we need a total change in politics. There needs to be way more honesty going on. At the end of the day, we’re a democracy, we elected them but people feel we’re living in a dictatorship. Everything has been taken out of our hands. I think that loss of control on top of the loss on the economic side of things is just too much for people.”
Annie McNamara and husband Tom McNamara, Cork
...This is our kids’ future they’re playing with, they’re going to destroy everything. You cut from education, you cut from healthcare, I mean what sort of life will they have? It’s a disgrace.
It wasn’t greed for new houses and new cars that created the debt, it was the fact that other banks came here and did stuff that they weren’t allowed to do elsewhere. They’ve gambled away our future - and we let it happen, right up to Brian Cowen. He let it happen and he encouraged it. He’s after destroying this country.
...When you’re talking about cutting minimum wage, it’s an absolute disgrace. When you’re talking about cutting education and the teachers and resources for disability, these people can’t afford it – we can, cut it from us.
I think everyone in the country should come out and protest because it’s all of our futures that they are messing with.”"
Irish Times
Ireland
"When the rescue package of Ireland—or was it of the British and German banks?—was announced, the headline in one of Ireland's main newspapers was "Declaration of Dependence."
...Angela Merkel has in effect become the new ruler of Ireland, a kind of 21st-century Henry II, using clout of the financial rather than the medieval kind.
...Assuming a zero rate of interest and no population growth, every man, woman, child and baby in Ireland would have to pay back $250 a year for 2,000 years to clear the debt...
...What, for example, is one to say of the role played by the leading British banks? The Royal Bank of Scotland, by itself, extended loans in Ireland amounting to $12,000 for every man, woman and child in the country: loans that would have amounted to $3,600,000,000,000 if applied to the United States?"
Theodore Dalrymple
...Angela Merkel has in effect become the new ruler of Ireland, a kind of 21st-century Henry II, using clout of the financial rather than the medieval kind.
...Assuming a zero rate of interest and no population growth, every man, woman, child and baby in Ireland would have to pay back $250 a year for 2,000 years to clear the debt...
...What, for example, is one to say of the role played by the leading British banks? The Royal Bank of Scotland, by itself, extended loans in Ireland amounting to $12,000 for every man, woman and child in the country: loans that would have amounted to $3,600,000,000,000 if applied to the United States?"
Theodore Dalrymple
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