http://online.wsj.com/article/SB10001424052748703560504575612593174135232.html?mod=googlenews_wsj European officials are encouraging Ireland to accept a bailout to restore confidence in its solvency and stop the spread of financial-market turbulence to other euro members, according to senior EU officials. Many European policy makers increasingly believe that early action on Ireland would be better than waiting until markets force the country's hand, recalling that repeated delays in coming to Greece's aid this spring led to a near-collapse of investor confidence in the whole euro zone, officials say. View Full Image Bloomberg The European Union flag sits with the Irish national flag on a building in Dublin, Ireland. European Union officials are due to discuss the possibility of a bailout for Ireland at a series of meetings in Brussels early next week, amid growing concern that investors' loss of confidence in Irish government bonds could spread to Portugal and Spain. Ireland's government remains reluctant to accept the loss of sovereignty and deepened austerity that a bailout would likely entail. An EU-led rescue package would include a tough policy program drawn up in conjunction with the International Monetary Fund, people familiar with the matter say. Ireland has repeatedly said it is not seeking a bailout from the EU or IMF. Irish Finance Minister Brian Lenihan told Ireland's RTE Radio One on Friday that "we have not, contrary to much speculation, applied to join any facility, or avail of any facility." However, Mr. Lenihan said European officials have grown worried about rising turbulence in the bond markets of the euro zone's weaker economies. "Our European partners are anxious to bring this matter to a resolution," he said, adding that Irish officials are "in constant liaison with the Central Bank and with the (European) Commission." European Central Bank officials are advising Dublin that tapping the EU's €500 billion ($685 billion) emergency-loan facility could help Ireland to enact a credible budget and recapitalize its teetering banking system. Although the ECB would support Ireland's use of rescue loans, the central bank isn't trying to force Dublin's hand, a person familiar with the matter said. The ECB thinks that having IMF and EU oversight of Ireland's budget—a prerequisite for a bailout—would give added international credibility to Dublin's austerity measures to rein in a budget deficit expected to top 30% of gross domestic product this year. Ireland's government is due to present a budget to parliament on Dec. 7. ECB officials worry that, given worsening financial-market jitters in the last two weeks, that may be too long to wait for a concrete deficit-reduction plan. Ireland has stressed that it faces no imminent bond repayments and still holds significant cash reserves, so it doesn't face an immediate crisis of liquidity or solvency despite investors' recent flight from Irish debt. However, fears about contagion to other indebted euro-zone members mean that some other EU countries want Ireland to act. European governments are set to discuss possible courses of action at meetings of the 16 euro-zone finance ministers on Tuesday and of all 27 EU finance ministers on Wednesday. However, under procedures agreed by EU countries in May at the height of Greece's financial crisis, a euro-zone country has to ask for help in order to trigger a bailout. Observers say Ireland's government is likely to fiercely resist pressure to raise its hand, because such a move would come with a loss of international prestige and economic sovereignty. The stigma of applying for aid from Brussels or the IMF would also further tarnish the country's unpopular ruling Fianna Fail party, which leads a coalition that holds a razor-thin majority in parliament and could be forced to call early elections next year. And some officials from other indebted euro-zone countries worry that an early rescue of Ireland, several months before it faces a possible cash crunch, could backfire by triggering market pressure for other bailouts, especially of Portugal.
i'm no financial expert but these people buying bonds at an ever increasing interest rate must know that if ireland defaults on them that they will be paid by the EU,if that's the case then it makes sense for them to bail ireland out. the sh1t's going to hit the fan eventually so why prolong the agony?
The whole thing reeks of the weeks leading up to the Greek bailout earlier this year. If memory serves me right they announced €5bn austerity cuts in their budget before they were given the money, split half and half between tax reforms and cuts in public spending. I'm assuming its going to be a carbon copy in our own budget next month. Just goes to show you can't believe anyone who says that we're fine and don't need any bailout - its like what Lenihan said in that RTE documentary 'Downfall' a while back, if he speaks the truth then everyone panics and complete confidence is lost in the economy.
Just seen Cowen lie through his teeth yet again..on RTE.He looked ill,and he and FF should be sick,as they will find it hard to ever live it down as they are about to hand the keys of Ireland over to foreigners...and if thats not bad enough,our Sovereignty is gone as well,all on their watch. What will the so called "soldiers of destiny" do with the €80 billion bailout money? Nightmare.
David Mc Williams said that there should be a mortage freeze for two years put on everybody so they can clear up personal debts. Would this make any difference at all?
Not really, if it is only a freeze the you have to pay it back again...I have heard lots about debt forgiveness but the crucial, unanswered question is who picks up the tab?
True, the sooner we hot bottom the better, as bad and all as it is at least we can look at some sort of recovery...property still has some way to fall, depending on where you are in the country..
Apart from our reputation what else have we got to lose? The bond rates for the greeks touched 19% before they where bailed out. Thats surely where we are heading.
Portugal will need a bailout before us The euro will never work with Germany and France pulling the strings!
Looks like a bailout for the banks is a moral certainty going by Prime Time tonight yet that **** of a minister they have on wont admit it after Rehn's comments tonight.
Agree 100% mate. Each week we don't take the dosh, we pay a far higher interest rate on the money our nation has borrowed on the bond market. Simply put - it's about 5% from the EU as I understand it, compared with some interest rates paid on bonds issued by the Irish State, at something like 6.7%, as memory serves. While that does not seem a lot, it's actually a massive difference when one considers the billions of euro involved. Some of the major negatives being thrown around, in the event that we accept a loan from the EU include: Talk about Ireland losing it's Sovereignty, which is absolute nonsense, truth be told we lost it quite some time ago, when we signed up to the EU in the first place and even the EEC prior to this. Between laws which saw the introduction of the "no frontiers" principal with the EU allowing free movement of people and trade, the fact that most of our legislation is either "inherited" from the times of British Rule or written through Brussels and the EU, it's argumentative as to when Ireland was truly a Soverign state, imho. It's right up there with the old "Ireland is a neutral country" line ... eh, dare I mention American planes landing in Shannon, or the INLA's bombing of what was considering a NATO listening station in the early 1980s etc ? Likewise, talk of our Government losing control of the nation's finances is rubbish, they lost control of that a long time ago and clearly if they continue to borrow something close to €19bn in the current year then they are only getting us into deeper sh1t with every move they make. Bring in professionals to help take the hard decisions, budget more efficiently etc .... Loss of National Pride, eh wouldn't it be better to swallow a bit of pride and get some serious help now when we need it ? Embarrassment for the Government, who cares ... it's better to admit your mistakes, ask for help and rectify problems, than to keep making the same mistakes time and time again due to wanting to avoid Embarrassment. Anyway, FF & The Greens have already embarrassed themselves plenty, in recent years. Ultimately, we need help and the sooner we get it the better.... Just my 2cents worth
I'm no economist but one question I haven't heard asked yet is. If we are currently borrowing do much money to run the country then at what point will we be able to not only generate enough revenues to run the country but also generate money to pay back what were currently borrowing now
the one thing which I believe is key is that if we receive the bail-out can the EU force our hand on the Corp tax rate, if they can then we are well and truely fcuked.
That's not really in heir interest though is it, how will our economy ever grow if the FDI falls through the floor and all the current foreign company shut up shop and move elsewhere as a result of an increase in te CT rate
I don't know the full ins and outs but I agree with some of the above. If we take the bailout the government will lose control of public finances. Expect the public service wage bill to be slashed, with huge job loses in the civil service, minimum redundancy payments, cuts in dole, health, infrastructure, everything in fact !!. Taxes will also need to be increased and if you don't like it you can feck off to Canada or Australia. These are things that any government FF, FG or Labour do not have the balls to do, but the guys from Europe or IMF wont give two fcuks. There should be riots on the streets, but maybe not. They will simply tell us that they are doing it for our own good and to save us from ourselves (which may be true anyway). It will be like living under a stone for the next few five years ......... but then it will be over and we can live again. Controlled by Germany or UK. If the island hasn't sunk into the sea. Depressing stuff. At least i'm off to the Avia to watch Ireland v Norway this evening ........ I'm sure that will be less depressing, but only just
Reading on the betting zone site that theres only been 4 goals scored in the last 7 games between the 2 so i wouldnt hope me breath on 90 mins of depression relief.
Anyone see cowen on RTE a few minutes ago? About time RTE asked him a few hard questions. Cowen said "we are not in negotiations" followed by more waffle and lies,which is second nature to him and FF. He is Supposed to be leader of the country..yet comes across as comical ali.
LMAO Bottom line here is we're already fuked financially in this country and need help, now. Sure, the loss of the 12.5% Corporation Tax Rate would be a severe blow, but it's no secret the rest of the EU wanted us to scrap this for years and odds are, it will be part of the deal ... but right now, if we don't get cash and someone in to manage it who can be trusted to do the right thing (rather than what they think is best to keep FF in power etc), then we won't have a future to complain about the advantages or disadvantages of a low Corporation Tax Rate (to attract multinationals into Ireland and create employment). We need a skilled, experienced, team of independent (i.e. no connections to Irish political parties) experts to come into Ireland and help us fix the mess we've got on our hands .... the sooner they take over the running of the Irish finances, the sooner we'll stop borrowing money we cannot afford to pay back and hopefully, begin the slow and painful road to recovery.
Opposite side of that argument from the Wall Street Journal... http://online.wsj.com/article/SB10001424052748704648604575620251565111376.html The Irish are a nation of gamblers. ... it would be dangerous to bet against Dublin winning its high-stakes game of poker with the European Union over a possible bailout. Ireland's aim is to secure a deal on the most favorable terms, including crucially the retention of its ultralow corporate-tax rate, a potent symbol of economic sovereignty that the minority Fianna Fail government is determined to protect at all costs ahead of next year's likely elections. Dublin still has the strongest hand. The first thing in its favor is that no one can force it to accept a bailout; Ireland has to ask the European Union for help. And given the Irish government is fully funded until the middle of next year, it can in theory drag this situation out for months. If it did that, of course, contagion would likely spread quickly across the euro zone, as Tuesday's stock and bond selloffs showed, threatening the survival of the common currency. In that sense, Ireland is armed with a nuclear weapon.