So the socialization of losses begins.
EU Agrees on Multi-Billion Rescue Package for Ireland
Ireland has formally asked the European Union for financial assistance, and EU finance ministers have approved the aid. The size of the rescue package is not yet clear, but it could be up to 100 billion euros. The junior partner in Ireland's ruling coalition, the Green Party, has called for an early election in January.
Just a few days ago, Ireland was insisting that it would not need a financial rescue package from the European Union. Now Dublin has changed its tune. On Sunday, the Irish government officially requested help from the EU and the International Monetary Fund (IMF). Europe's finance ministers quickly agreed to the aid in a hastily convened telephone conference on Sunday evening.
Irish Prime Minister Brian Cowen said on Sunday a package of less than €100 billion ($137 billion) had been agreed on in principle. Its main aim will be to support Ireland's ailing banks. EU and IMF experts had arrived in Ireland on Thursday to examine the country's books to get a sense of what kind of assistance Ireland would require.
The news agency Reuters quoted senior sources in the EU as saying the package would total €80 billion-90 billion. The EU's Commissioner for Economic and Monetary Affairs Olli Rehn said that the exact amount would be decided at the end of November after further negotiations. moreOf course, this means that not only will the Irish have to trash their economy, but further strains will be put on folks in the countries that have guarenteed the loan package.
Every family in Britain will have to pay £300 to bail out the Irish
By TIM SHIPMAN and HUGO DUNCAN
Last updated at 12:01 PM on 22nd November 201
Bailing out the ailing Irish economy to the tune of billions is in Britain's 'national interest', George Osborne insisted today.
The Chancellor described Ireland as a 'friend in need' as he defended plans to pay more than £7billion into an international bailout worth up to £85billion.
British taxpayers will be landed with an increase in the colossal debt burden - already £952billion - at a time of desperate cost cutting.
They will be stung three times because Ireland will receive funds from the European Union, the International Monetary Fund and direct loans from Britain.
The £7.5billion liability for British taxpayers is the equivalent of £288 for every household in the UK.
If Ireland were to default on its debts, losses of around £5billion on toxic bank debts held by Royal Bank of Scotland and Lloyds Banking Group would push the liability to British taxpayers up to £12.5billion - though the bailout should prevent that happening.
Critics argue Britain should not be involved in propping up a currency it does not support.
John Mann, a Labour member of the House of Commons Treasury Select Committee, called for MPs to be given a vote on the Irish bailout.
'What George Osborne has chosen to do is use money from the average taxpayer to bail out the bankers - including British bankers - yet again,' said Mr Mann. more
Chancellor Faces Tough Sell on Irish Bailout
By Severin Weiland
For the second time in just a few months, Angela Merkel will have to explain to voters why Germany must bail out a fellow euro-zone member state. Skepticism is growing -- amongst voters, in the media and within her party. Many want to see Dublin raise its low corporate tax.
Now that Ireland has become the second country in the euro zone to ask for a bailoutfrom the European Union, and given that Portugal may not be far behind, politicians in Germany have a problem. While the details of the rescue package for Ireland are not yet clear, one thing can be regarded as reasonably certain: As the strongest economy in Europe, Germany will once again be called upon to step up to the plate.
Germany will be the largest guarantor of the bonds that the European Union rescue fund, which was set up in the spring, will likely issue to borrow money to help stabilize Ireland. Unofficially, there is talk of guarantees worth an estimated €90 billion ($122 billion), with Germany's share possibly amounting to around €25 billion.
Chancellor Angela Merkel has yet to make an official statement on Ireland's request for help. But it won't be long before she has to explain to the German population why a bailout for Ireland is necessary. And she knows full well that skepticism about Europe and its common currency has been growing, especially since the Greece debt crisis. The latest developments in Ireland are only likely to add to those doubts. moreAnd there is tiny we-always-pay-our-debts Finland being asked to underwrite debts of folks far away doing things they don't approve of.
Finland seen strongly opposing Ireland EU bailout
By Luke Baker
BRUSSELS | Tue Nov 16, 2010 6:15am EST
(Reuters) - Finland is against putting pressure on Ireland to quickly apply for a European Union bailout, saying EU financial aid must be a last resort.
Euro zone finance ministers will discuss Ireland's debt situation at a meeting on Tuesday amid reports some EU countries are keen for Dublin to quickly tap EU emergency funds to calm markets and stop debt concerns from spreading to other countries, like Portugal.
"Finland strongly opposes the German position that the mechanism should be used just to make the markets calm down," said one euro zone source familiar with Finland's position. "The mechanism wasn't created for that purpose."
Since decisions among finance ministers over activating the European Financial Stability Facility (EFSF), which Ireland may need to access, have to be taken unanimously, Finland's view counts as much as the other 15 members of the euro zone.
Finland's staunch opposition to pushing Dublin into asking for help is partly based on its belief that the rules must be strictly adhered to but also out of domestic political concerns -- there is an election in Finland next year and there is popular opposition to more bailouts.
"Finland is already supporting Iceland, Latvia, Greece and, who knows, possibly Ireland and others," said a Finnish EU source who spoke on condition of anonymity. moreOf course, the supporters of the bailout cry that it will be widows and pension funds wiped out if the bondholders are forced to take a haircut. Well someone looked into that claim and it's 99.44% bullshit.
Who are the bond holders we are bailing out?
Sunday, 17 October 2010
The citizens of Ireland have been forced over the last two years to give the bond holders of Anglo Irish bank 20 billion euros. WHY? The Irish government recently told its people the 20 billion was not enough and they MUST give the same bond holders another 10 to 20 billion euros. WHO are these special people called Bond Holders that they must be so carefully protected even at the cost of despoiling a nation?
I tried to find out. I failed. 15th October the British Blogger Guido Fawkes published a list of the bond holders. I would like to thank Mr Fawkes, and thank Unclear for posting the link and bringing it to my attention.
So those are the names but WHO are they? I thought this was something I could help with, to add my contribution to Mr Fawkes' break-through.
It is worth knowing who they are because the Irish government has said more than once that one of the reasons the bond holders had to be protected and could not, must not, be made to suffer any losses, even though it would be PERFECTLY legal to do so, is because the bond holders are pension funds for poor Irish widows and cooperative savings funds for orphans and 'ordinary folk'. A little poetic exageration there, but only a little.
This reason, for why the Bond holders must not take any loss, was trotted out to bolster the first answer given, which was that if Ireland pissed off the bond holders then they would refuse to ever deal with Ireland ever again and Ireland would never be able to borrow ever again, ever, and everyone would die in penury, friendless and cold. That first reason started to look like it might not hold, when the Germans started to talk rather too openly about how it might be best for all, them especially, if Greece did 're-structure' its debts (default - a teeny bit). When no one said it would be the end for Greece, Ireland's 'the sky will fall in' reason for not asking its bond holders to share the pain started to look like what it was, a politically motivated lie. Thus the grannies and orphans had to be hurriedly wheeled out.
So, are the bond holders widow's pension funds and orphans' savings accounts? Well actually, NO. That too was just another lie from the morally degenerate and cringingly servile Irish government. moreSince this is little more than an exercise in bailing out fools and crooks, maybe something else should be tried.
Ireland Should 'Do an Argentina'
by Dean Baker | November 23, 2010 - 10:47am
The Irish people expected to pay in austerity cuts for their banks' sins have another option. Reject the ECB and IMF, ditch the euro
When a firefighter or medical team make a rescue, the person is usually better-off as a result. This is less clear when the rescuer is the European Central Bank (ECB) or the IMF.
Ireland is currently experiencing a 14.1% unemployment rate. As a result of bailout conditions that will require more cuts in government spending and tax increases, theunemployment rate is almost certain to go higher. The Irish people are likely to wonder what their economy would look like if they had not been rescued.
The pain being inflicted on Ireland by the ECB/IMF is completely unnecessary. If the ECB committed itself to make loans available to Ireland at low interest rates, a mechanism entirely within its power, then Ireland would have no serious budget problem. Its huge projected deficits stem primarily from the combination of high interest costs on its debt, and the result of operating at levels of economic output that are well below full employment – both outcomes that can be pinned largely on the ECB.
It is worth remembering that Ireland's government was a model of fiscal probity prior to the economic meltdown. It had run large budget surpluses for the 5 years prior to the onset of the crisis. Ireland's problem was certainly not out of control government spending; it was a reckless banking system that fueled an enormous housing bubble. The economic wizards at the ECB and the IMF either couldn't see the bubble or didn't think it was worth mentioning. more