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The question is what will the people use for money if they go up north to shop?I read recently that Germany finally paid off their debt from WW1.Ninety years to pay and financed another war in between. Some nation that.Those people know how to work.Bad warmongers, excellent automakers, brilliant footballers.
A famous Politician once said:
"Their is nothing more dangerous than a Fed-Up German"
Ireland may not get away from the Chancellor Merkel unscathed
The average interest rate on the bailout loans is set to be around the 6% mark.
Bring on the DEFAULT
One of the best articles I’ve read lately, from yesterdays Telegraph…
Good article Cav, I genuinely feel sorry for the people of Ireland, their own political class has thrown their own country into serfdom.
But almost nobody understood the implications of monetary union: in Dublin, in Berlin, in Brussels, and Frankfurt. They were almost all beguiled, (though I doubt that the ECB’s Axel Weber and Jurgen Stark ever were).
.. the Eurosceptics understood it competely and they are telling the Irish now, not to approve this arrangement and default. I fear that the Europhiles will have the day, yet again.
By my reckoning (which may well be wrong) the last sovereign default from what can be termed a ‘stable European democracy’ occurred in Germany and Austria in 1932…
Third-world and South American defaults or debt restructurings have occurred since, as have ones in the post-communist fledgling democracies of Eastern Europe but default by Ireland would be something new…or frighteningly old
At the end of 2014 our debt will be around 190 billion. Interest on that will be almost 9 billion per annum. Projected government revenue of 35 billion leaves around 26 billion after the interest payment. Running the country if all the cuts and projected growth are achieved will cost about 35 billion (those are very optimistic and probably bogus government estimates) which leaves a shortfall of 9 billion, leading to more cuts, less investment, more deflation and loan interest rates becoming more burdensome. A classic debt-deflationary spiral/trap until the inevitable default.
A lot of my fellow countrymen were foolish, ignorant and became very conceited and arrogant during the boom and will rightfully have the bear the burden of the personal credit they ran up. But as a country or a people we were never malicious and we should not pay for other peoples gambling debts. The crucifixion being handed down from Berlin has a surreal malice attached to it imo.
"The Road From Here
……while growth is possible, Ireland now faces three complications.
First, without a domestic banking sector, Irish economic growth simply will not be as robust. Foreign banks will expand their presence to service the Irish domestic market, but they will always see Ireland for what it is: a small island state of 4.5 million people that is not linked into the first-class transport networks of Europe. It will always be a sideshow to their main business, and as such the cost of capital will once again be considerably higher in Ireland than on the Continent, consequently dampening domestic activity even further.
Second, even that level of involvement comes at a cost. Ireland is now hostage to foreign proclivities.
– Ireland needs the Americans for investment, and so Dublin must keep labor and tax costs low to keep the Americans interested, but not so low as to endanger income it needs to service is newfound debt mountain. Ireland also dares not leave the eurozone, if it did the Americans would just use the United Kingdom as their springboard into Europe, despite the fact that leaving the eurozone would allow them more flexibility in dealing with their euro-denominated debt.
– Ireland needs the European Union and the International Monetary Fund (IMF) to fund both the bank bailout and emergency government spending, making Dublin beholden to the dictates of both organizations despite the implications that could have on the tax policy that attracts the Americans.
– Ireland needs European banks’ willingness to engage in residential and commercial lending to Irish customers, so Dublin cannot renege upon its commitments either to investors or depositors despite how tempting it is to simply default and start over.
So far in this crisis these interests — American corporate, European institutional and financial — have not clashed. But it does not take a particularly creative mind to foresee circumstances where the French argue with banks, the Americans with the Germans, the labor unions with the IMF or Brussels, or — dare we say — London, one of the funders of the bailout, with Dublin.
The entire plan for recovery is predicated on the intentional surrender to a balance of foreign interests over which Ireland has negligible influence. But then again, the alternative is a return to the near-destitution of Irish history in the centuries before 1973. Tough call.
Third and finally, even if this all works, and even if these interests all stay out of conflict with each other, Ireland still has much in common with maquiladoras, the foreign-owned factories in Mexico at which imported parts are assembled by lower-paid workers into products for export.
Not many goods are made for Ireland. Instead, Ireland is a manufacturing springboard for European companies going to North America and North American companies going to Europe.
And this means that Ireland needs not just European trade, but specifically American-European trans-Atlantic trade to be robust for its long-shot plan to work.
Considering the general economic malaise in Europe, and the slow pace of the recovery in the United States, it should come as no surprise that the Irish economy has already shrunk by about a tenth since the peak just two and a half years ago."
Hi wit . i don’t really agree with some of he stuff in that article, it’s a bit opinion becomes fact
Ireland needs to default and get out of the Euro, the Irish people shouldn’t be bailing out all of the European banks on their own .. the burden needs to be shared out a it.
I have been around for a long time and can now easily recognise goobly gook when i read it. The road from here is just that.ireland are in the eu since the fifties and dont have to justify their right to be there.Allowing banks which don’t deserve to be in business to fail is part of the capitalist system and deservedly so. The country suffered from high wages which led to computer companies pulling out and going to Poland. Again part of the capitalist system and rightly so.But what next for poland?And what next for ireland? I suggest that the irish invite the chinese to invest there.They will need an entry into Europe soon and ireland is the ideal place to go.They have the money but not the linguistic skills to enter the EEC alone. They need a country with English which is already a part of the EEC. Ireland fills that bill.They need people willing to communicate with the negotiating skills that they lack. I am not talking about the government but the industrialists of China.Looking to China to partner them is Irelands best bet to ride the current crisis.
I have been around for a long time and can now easily recognise goobly gook
Ah, Goobly Gook – I remember him, top class North Vietnamese spin bowler …….
AP
The fifties- the seventies.No need to tie ourselves up with minor(details) facts.Have somebody tell you exactly how much money we owe.And that is a fact.As for the North Vietnamese spin bowler, he was a googly,with an amazing change of face.
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