Questions journalists should ask of the EU’s Irish loan team today

 

1. What is the money to be spent on?

2. What is the legal base for the EU Stabilisation fund which includes non Euro contributors?

3. How will the Euro area raise the money from the special purpose vehicle for bails outs, and at what likely interest rate?  Who stands behind the special purpose vehicle?

4. What is their forecast of the increases in interest payments in Ireland over the next two years?

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13 Comments

  1. Bill
    Posted November 28, 2010 at 10:23 am | Permalink

    Another question

    Even if the rescue leads to short term stabilisation, the problem that caused the problem is unresolved. Your current crisis is a symptom of the main problem –

    You are fixed into a currency and interest rate with Germany how is this fundamental problem to be addressed?

  2. JimF
    Posted November 28, 2010 at 10:25 am | Permalink

    And while (y)our eyes are turned towards these problems, your colleagues are still spending in incontinent fashion all the way through to Olympics in 2012, preparing to delay housing benefit reforms for another year. Another year of prospective employees turning their noses up at working because they’ll lose benefits.
    I think I’d rather we go bankrupt donating my taxes to Iraid as donating them toward keeping our housing market pumped beyond the reach of my kids, thanks all the same.

  3. Epigenes
    Posted November 28, 2010 at 10:34 am | Permalink

    Mr Redwood,

    The answer to all four questions is – Nobody knows. Your questions are, of course, rhetorical.

    How long before the Euro, as it exists now, fails?

  4. lifelogic
    Posted November 28, 2010 at 10:59 am | Permalink

    They might ask but I doubt if they will get any sensible answers.

    I rather doubt if the people giving the UK agreement to the foolhardy scheme even know the answers or asked themselves – let alone the politicians who are far too busy with royal wedding bank holidays and measuring UK happiness to bother about a few billion here or there.

  5. Lindsay McDougall
    Posted November 28, 2010 at 11:35 am | Permalink

    Answers to questions:

    1. With the collapse of property prices in Ireland, the toxic assets of the Irish banks have become still more toxic, so these banks are even more insolvent than we thought. The Irish government is committed to bailing these banks out, no matter what the cost. We believe that the size of the loan (at 5% pa rather than the bond market’s 8%) will be more than is needed, and therefore improve sentiment.

    2. Because the EU Stabilisation fund includes non-Euro Member States it has no legal basis.

    3. The other national governments, and in ultimo their taxpayers, stand behind the special purpose vehicle. How can it possibly be otherwise?

    4. You make the assumption that the EU has made such a forecast. If it has, it may be the same as forecast to be made by the Irish government in its December/January budget – or it may not.

  6. Stuart Fairney
    Posted November 28, 2010 at 1:18 pm | Permalink

    Completely batty. Utterly insane.

    This is ineptitude on stilts. Why are we touching this?

    I am in despair. The political class has failed us totally and yet all the front benches seem to think this is a great idea.

  7. Denis Cooper
    Posted November 28, 2010 at 1:35 pm | Permalink

    I think they should also ask how it is legally permissible under Article 125 TFEU for each member state which participates in the European Financial Stability Facility to guarantee 120% of its own contributions in case other member states default.

    http://www.efsf.europa.eu/attachment/faq_en.pdf

    “A14 – Would the EFSF default if one of its member countries defaults?

    The credit enhancement mechanisms under the Framework Agreement are designed to avoid such a situation. If a country were to default on its payments, guarantees would be called in from the guarantors and payments could be made from the cash buffer. If a guarantor did not live up to its obligations, guarantees from others could be called in to cover the shortfall.”

    Page 4 here:

    http://www.efsf.europa.eu/attachment/efsf_framework_agreement_en.pdf

    “In respect of Funding Instruments … each Guarantor shall be required to issue an irrevocable and unconditional Guarantee … in an amount equal to the product of (a) the percentage set out next to each Guarantor’s name … (b) 120%, and (c) the obligations of EFSF… each Guarantor shall issue its Guarantee to guarantee all Funding Instruments … ”

    How can this possibly be compatible with Article 125 TFEU?

    On page 99 here:

    http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:EN:PDF

    “… A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.”

    Unless of course the meaning of “a specific project” is stretched to include “a specific project to preserve the eurozone intact” …

    It makes no difference at all that this agreement between the 16 eurozone states has been made outside of the EU treaties and involves a Special Purpose Vehicle incorporated in Luxembourg, it being a general principle of EU law that EU member states are not permitted to enter into other international agreements which are incompatible with the EU treaties.

  8. electro-kevin
    Posted November 28, 2010 at 5:06 pm | Permalink

    The question shouldn’t be about the bail out but why we (and Ireland) are still in the EU at all.

  9. Johnny Zero
    Posted November 28, 2010 at 6:30 pm | Permalink

    We seem to be collectively forcing ourselves into a European Recession which could become a depression by increasing the interest levels paid on any debt. As Bond Yields increase in Ireland, Portugal and Spain it becomes clearer by the day, that these Countries have no possibility of paying back extra Billions of Euros at levels of interest around 5% or6% The Irish People would have an extra debt of over £5000 per family per annum. We have reached “critical mass” where the risk for a return no longer makes sense and many now go for cash or gold or other commodities and just wait out the storm. Do you honestly think that the Euro can survive this one in its present form?

  10. david
    Posted November 29, 2010 at 9:24 am | Permalink

    Hmmm is there anything here;-

    http://www.dailyexpress.co.uk/posts/view/214359/Nigel-Farage-Why-we-would-all-be-Better-Off-Out-of-this-chaos

    you disagree with? Time to switch John, if you did you’d score 10/10 on Mr Cameron’s ‘Happiness Index’ ‘gwan you know it makes sense.

  11. Str0ngh0ldBarricades
    Posted November 29, 2010 at 10:54 am | Permalink

    You missed out

    5/ Is this an affordable solution for Ireland, and how will it pay the loan back?

  12. Simon
    Posted November 29, 2010 at 4:44 pm | Permalink

    The first question journalists should ask is of themselves .

    “Have journalists fulfilled their function in a democracy of keeping the public informed and warning them of impending tyrany ?”

    The lack of any meaningful criticism of the EU on radio , TV or newspaper shows they became instruments of the NWO a long time ago .

    Even when something controversial is written , the censorship in the most popular internet search engines will quite often prevent you from finding it .

  13. Jaeger LeCoultre
    Posted December 13, 2010 at 7:04 pm | Permalink

    Absolutely with you it agree. Idea good, I support.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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