Back to the Irish problem

 

          We are about to discover how worthwhile voting is if you are both in the EU and in the Euro.  The Irish election threw out the ruling party, which crashed to third place. A new Coalition is likely, made up of parties who wish to renegotiate the terms of the Irish loan and bail out from the EUand  IMF.

               The mood music from Berlin and the other leading Euro capitals is not favourable to the two main demands of the potential new government. There is a reluctance to concede much if any cut in the interest rate Ireland has to pay for the money she borrowed. There is a frisson against the proposal that bond holders in the main Irish banks should take more of the losses.

                  The other main Euro area  governments do not see why they should subsidise the Irish borrowing rate any more, as the rate agreed was well below the current  market rate for Ireland  to borrow . Nor do they relish the idea of unsettling bank bond markets at a time when the European banks need to borrow large sums to refinance themselves. The Irish crisis was created by the European Central Bank’s insistence that it cut back the amount of money it was lending to Irish commercial banks. They do not wish to go back to a crisis where they might be called upon to lend more to the Irish banks again. They want the bond markets to take more of the strain of refinancing.

              Both sides face a problem. The new Irish government has to achieve something by way of renegotiation. If they do not it looks as if the election was a waste of time, and leaves the new government following more or less the same policy as the old government. If the EU gives too much ground it fears it could undermine the attempts of the European Central Bank and the Eurozone leaders to install some more discipline into public and bank finances, and to wind down the special measures used during the crisis.

              If there is too long and public a spat over this it will be bad news for stability in the Eurozone. Last year there must have been a run of   bad briefings against weaker member states and banks, which created a crisis atmosphere concerning the peripheral Eurozone members. So fat this year there has been more discipline which has helped take it off the front pages and calmed nerves a bit.

                 Now they have to show how the EU responds to a democratic  expression of anger about the consequences of an economic failure made worse by being locked into the single currency, and having to deal with the European Central Bank as the lender of last resort to the Irish banks.

               The implied level of cuts and tax rises to meet the requirements of the loan will be difficult to achieve, especially if there is little growth owing to the stress in the banking system and the deflationary policies being followed.  Ireland, like some other countries, needs to grow its way out of debt and deficits. It cannot devalue to promote exports, nor can it easily create more credit in  its banks owing to the way they are now regulated by the EU authorities.

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52 Comments

  1. Posted March 1, 2011 at 7:01 am | Permalink

    The election allowed to the Irish to change just the faces but nothing else. Democracy it is not by any true measure.

    In order to depress me further, following the profoundly depressing appointment of Lord (Chris) Patton to the BBC trust, I hear that the European courts now seems to think they are are best people to decide insurance risk not the industry from the claims history facts, according to gender and other factors. Mad even by the very high madness standards of the EU!

    Gender risks are not the same and never will be even if the European court determines they are – please escape from this EU insanity somehow.

    • Posted March 1, 2011 at 3:03 pm | Permalink

      Why not read the judgment? It consists of just thirty-six short paragraphs. The Case No. is C-236/09
      http://curia.europa.eu/jcms/jcms/j_6/

      • Posted March 1, 2011 at 5:56 pm | Permalink

        I do not have time to read the judgement nor do I need to it is simply mad in principal. Insurance premiums should reflect the risks taken on not some absurd equalities religion or part of social services wealth redistribution system. It just means more pointless work for lawyers and more inefficiency for the whole industry and everyone ends up worse off.

        One get the impression that the main purpose of the EU and the legal
        judgements is simply to drum up new business for the courts and lawyers at the expense of productive industry and the population.

        Are the EU not content with having already damaged hugely the industries of fishing, rubbish recycling, agriculture and energy production.

        The BBC needless to say just points out the some will win and some will loose not the insanity of actual the proposal.

        • Posted March 1, 2011 at 6:13 pm | Permalink

          Perhaps they should extend the equality judgement to medicine too so men should clearly have regular smears and women regular prostate examinations.

          The price for a man wishing to insure against developing say prostate or testicular cancer should clearly be the same as those for a women. Visa versa for cervical cancer I assume.

          Clearly we need also a huge push on Women’s chess as there is clearly massive “discrimination” there preventing them from taking their true 50/50 position in the world rankings and for may other sports too and in Maths and Physics courses too.

    • Posted March 2, 2011 at 12:47 am | Permalink

      The economics of the EU judgement are bad.

      It will result in more road deaths and injuries as subsidised dangerous males will afford to drive instead of being priced off the road, while safer females will be priced off the road instead. It will encourage safer risk females to consider not paying for insurance that overrates their risk. As premiums increase and more are uninsured the group who become overcharged starts to include medium risks. Higher premiums all round will of itself lead to more uninsured drivers. The end result is higher costs for everyone, and less safe roads.

      The impact on pensions will be to make it unattractive for men to save for a pension, because they will not get an annuity that reflects their shorter life expectancy. That will in turn increase the burden on the state as well as leaving men in poverty in retirement. Only by seeking an annuity offshore could this be avoided – at the expense of currency risk for the annuitant, and diversion of pension funds away from EU equities, Gilts and Bunds to other non-EU securities, and the further demise of EU financial institutions.

      • Posted March 2, 2011 at 2:53 pm | Permalink

        Mark writes: “It will result in more road deaths and injuries as subsidised dangerous males will afford to drive instead of being priced off the road, […]”

        Some may have been priced off the road but there are reportedly a million drivers that have no motor insurance at all. I think that has been true for a number of years now, despite various clampdowns.
        http://www.independent.co.uk/life-style/motoring/motoring-news/ministers-clamp-down-on-britains-uninsured-drivers-2179745.html

      • Posted March 2, 2011 at 5:06 pm | Permalink

        And the endless extra work and costs as they will have to find new ways to determine risk such as expensive monitoring devices some of these will enable them to determine gender fairly accurately by different driving patterns and styles anyway so pricing will be the same but with the addition cost of monitoring added on. Then doubtless the lawyers will argue that this is back door “sex discrimination” anyway and then even more absurdly take it on to age discrimination.

        With annuities men would daft to buy an over priced “sex equalled” annuity and women a life policy in the EU when they can get an offshore male one for less. So they will have to abolish that freedom too. Endless pointless and expensive anomalies everywhere from this judgement.

        • Posted March 2, 2011 at 8:58 pm | Permalink

          “And the endless extra work and costs as they will have to find new ways to determine risk such as expensive monitoring devices …”

          I fear that that’s exactly what they have in mind. They couldn’t get people to accept “pay as you drive”, so now they’ll seek to use insurance as a means of driving this hideous policy through.

          The infrastructure is already in place – the M4, for instance, has “pay as you drive” detectors, which the last goverment spent 10 years or so (of irritating road works) installing.

    • Posted March 2, 2011 at 8:00 am | Permalink

      Interestingly, one of the factors in the US mortgage crash was the community reinvestment act along with Faniw & Freddie who were told to make loans to those who were being discriminated against (ie the non-creditworthy). This politicing destroyed the US mortgage market, her banks and her housebuilders.

      It is interesting to see what will happen to insurers a few years down the road.

  2. Posted March 1, 2011 at 7:08 am | Permalink

    I read an article in this month’s Standpoint in which Niall Ferguson (who I’ve always had a lot of time for) suggested that the PIIGS crisis was engineered by Germany in order to let the Euro compete in the race to the bottom with the dollar and pound, as it wouldn’t be politically feasible for German leaders to call for a cranking up of the printing presses as the other two have. The ‘run of bad briefings’ mentioned above may well be alluding to the same thing.

    As for the Irish situation, I read a few months back that within 3 years 25% of tax take in Ireland will go to servicing the interest, before a penny is paid back on the principle – imagine the situation if there is to be more borrowing (as there must be, especially with the left significantly strengthening their position in the recent election). Ireland will have to default at some point and that should be the starting point for any discussion of their problems.

    Greece is in a similar position and will have to default at some point too.

  3. Posted March 1, 2011 at 7:24 am | Permalink

    If the Brits had voted in another government while they were being bailed out by the IMF in 1976, it wouldn’t have changed the IMF conditions.

    In a way the Irish are in a more hopeful predicament: ultimately the eurozone needs a performing and competitive Ireland, which is demonstrated by the many billions of EU money Ireland already received over the past decades. Overnight-changes can only be small however.

    • Posted March 1, 2011 at 12:15 pm | Permalink

      PVL: “If the Brits had voted in another government while they were being bailed out by the IMF in 1976, ”

      But in that scenario the new government would still have been at liberty to refuse the terms of the agreement. Something the Irish State cannot do today.

      PVL: “In a way the Irish are in a more hopeful predicament …”

      Only if you think that being coerced into indentured slavery up until the tenth generation is a hopeful predicament. The debts of the Irish banking sector dwarf the Irish GDP.

      Far better to have allowed the banks to fail. The Irish government could have:

      1. prosecuted the illegal activity that contributed to the crash and
      2. used the infrastructure of the failed banks as the shell to refinance a new debt free banking sector.

      Something we should have done in the UK too.

      A number of major US financial instutions, one or two minor European banks and a couple of British Banks have failed and been propped up by various states at the expense of the tax payer.

      NOT ONE BANKING OFFICIAL HAS BEEN PROSECUTED.

  4. Posted March 1, 2011 at 7:37 am | Permalink

    Thre was no point in the Irish voting again. They have just elected more pro-EU Parties who won’t take the necessary action to get Ireland out of the mess – which is leave the Eurozone.

    One unnamed Brussels apparatchik had the following to say on Ireland’s election (as reported in the Daily Telegraph):
    It makes no difference whether it is Fianna Fail or Fine Gael leading the Irish coalition. The country is now run by the Franco-German Reich and whoever is called Taosieach will do as he is told by the EU.

    This is what one unelected Brussels Bureaucrat had to say about Ireland’s situation and Democracy. Here is the EU in all its ‘glory’ with the mask off ……….

    “As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout “must be applied” whatever the will of Ireland’s people or regardless of any change of government.

    “It’s an agreement between the EU and the Republic of Ireland, it’s not an agreement between an institution and a particular government,” said a Brussels spokesman.

    A European diplomat, from a large eurozone country, told The Sunday Telegraph that “the more the Irish make a big deal about renegotiation in public, the more attitudes will harden”.

    “It is not even take it or leave it. It’s done. Ireland’s only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told,” said the diplomat. ”

    So there you have it. The Irish people don’t matter. What they say or want is of no importance; what the EU wants the EU gets.

    Irish Democracy is dead. And British Democracy isn’t far behind, with our own PM announcing on Al Jazeera that there will be no IN/OUT Referendum on the EU because he believes it is in British interests to be inside the EU (whereas the people, of course, indicate very clearly whenever they can, that they want out). He made that announcement whilst swanning around the Middle East/North Africa preaching about democracy and ‘the will of the people.’ In other words, he is a Class One Hypocrite.

    The EU is un-Democratic and anti-Democratic – and so are the political elite of this country.

    • Posted March 1, 2011 at 9:22 pm | Permalink

      The saddest thing is that the eu is anti-Europe. As it gets more teeth Europe’s decline will worsen.

    • Posted March 1, 2011 at 10:34 pm | Permalink

      they can of course emigrate.

  5. Posted March 1, 2011 at 7:38 am | Permalink

    Lets face it. It’s going to end in tears either way.

    As most people on your site have been saying for years, the standard of living has been supported by low interest. In fact, at the heart of the current problems, I think Gordon Brown took advantage of low mortgage repayments to increase taxes and create Government jobs that cannot be afforded. Oh what a mess we’re in.

    As has also been said on this site falls in the real standard of living have been happening, but have been disguised as they have effect those in transition from student, to job, to job, to retirement. Today Ed Millibands “squeezed middle” is an acknowledgement that these falls can no longer be hidden.

    The biggest casuality will be house prices. With inflation falling, and wages stable, and costs rising houses must fall or not sell. We have only just become aware of our slide out of prosperity, even though we have been sliding down for years.

    • Posted March 2, 2011 at 1:10 pm | Permalink

      Is inflation falling?

    • Posted March 2, 2011 at 7:16 pm | Permalink

      The biggest casualty should be house prices, they are artificial and distort the whole of the money market, at some point the bubble will burst and the values will have to be adjusted.

      • Posted March 3, 2011 at 4:52 pm | Permalink

        Not so. The only way it will occur is if vast amounts of householders fail to finance the mortgage. I am trying to sell a flat at present, but there is a limit on how low I can go. For instance, myself and almost all householders will just not sell. The demand will outstrip the supply, and the buyers will eventually pay the asking price.

  6. Posted March 1, 2011 at 7:41 am | Permalink

    Im sure that the EU’s first priority in negotiating with Ireland is to get them to commit commercial suicide by raising corporation tax to the unsustainable levels seen elsewhere in the EU, like the UK.

  7. Posted March 1, 2011 at 7:42 am | Permalink

    Isn’t the back and forth between the Irish and the ECB etc a bit of a sideshow? They’re bankrupt pure and simple?

  8. Posted March 1, 2011 at 7:51 am | Permalink

    Number one rule of negotiation, be prepared to walk away. Will the Irish do that. I think the Government will only be prepared to hold a referendum on withdrawal.

    • Posted March 2, 2011 at 9:11 pm | Permalink

      Indeed.

      Declan Ganley, the Irish businessman who led the 2008 No vote to the Lisbon Treaty, said Ireland must “have the balls” to threaten debt default and withdrawal from the single currency.

      “We have a hostage, it is called the euro,” he said. “The euro is insolvent. The only question is whether Ireland should be sacrificed to keep the Ponzi scheme going. We have to have a Plan B to the misnamed bailout, which is to go back to the Irish Punt.”

      Ireland has HUGE negotiating power here, because Merkel has stated that Germany will do whatever it takes to save the Euro. She foisted the bailout onto Ireland to save the Euro. This means that she believes that if Ireland defaults, there’ll be another bank contagion.

      So, Enda Kenny can put it to Merkel that if she wants to save the Euro, she must lower the interest rate to Ireland.

      Will he have the balls to do it, though?

  9. Posted March 1, 2011 at 8:11 am | Permalink

    Unfortunately we in England are ourselves too ppoor to help the Irish. So Germany rules.

    • Posted March 4, 2011 at 1:19 am | Permalink

      Germany is too poor to bail out all five PIIGS. Germany’s accumulated deficit is 74% of GDP, about the same level as UK’s, although ours is rising faster. And if you include PFI debts, the UK’s deficit is 150% of GDP.

      Nobody has enough dosh to cure the Euro’s problems. At least some of the PIIGS must leave the Euro zone, then partially default by paying back their debts in inflationary currency. If this mechanism is denied to Ireland (or spurned by them) there will be a much bigger default – and we are a major creditor of Ireland.

  10. Posted March 1, 2011 at 8:11 am | Permalink

    There is a way forward.
    The USSR was ruled by a few old men in a room in Moscow, who made policies in secret and had no idea and just didn’t care about the man in the street in Moscow – much less about the man in Mongolia, Chechnya, or Yogoslavia, so the USSR built up internal strains that split it apart.
    The Irish could and must take back the Punt. That will restore Irish independence and repair their battered country and spirit.

    It will also be a blow for Democracy against Tyranny and will give hope and leadership to the people of Greece and Spain.

  11. Posted March 1, 2011 at 8:45 am | Permalink

    We already know how worthwhile it is voting if you are in the EU: Answer not very.

  12. Posted March 1, 2011 at 9:05 am | Permalink

    Today’s ECB figures show that as fast as the Central Bank pumps money into the Irish banks, the customers take it out again.
    The whole thing is a sick joke.

  13. Posted March 1, 2011 at 9:25 am | Permalink

    Newly elected Government in a Sovereign State v. Federal Bank

    Will the ECB recognise the democratic will of the Irish people not to accept the loan terms imposed on them? Yes. I have a feeling that they will.

    It just puts more pressure on the ECB and provides a moral base for the other PIGS to negotiate hard and long when the time comes. Which puts more pressure on the Euro and the international apper money system generally.

    But nobody’s worrying about inflation now anyway, are they?

  14. Posted March 1, 2011 at 9:28 am | Permalink

    The Irish election achieved nothing as the new lot that have staggered into power are just as guilty of (word left out) and incompetence as the last lot. The Irish people have as little real choice as the British do. We are allowed to vote for pro EU candidates or very pro EU candidates. No stand will be made against EU interference, manipulation, extravagance or lack of democracy. In fact I believe the only real chance of us getting out from under the euro heel is if the whole charade collapses and the sooner the better.

  15. Posted March 1, 2011 at 9:53 am | Permalink

    Ireland has another option, default and leave the EU. Ireland was used as a taxhaven by banks from outside of Ireland and those banks are now holding Ireland to ransom. If Ireland defaults it could start a run on those banks. Tough. The Irish people should look after themselves , they owe nothing to the carpetbaggers.

  16. Posted March 1, 2011 at 10:06 am | Permalink

    Why is Germany so intent on Ireland towing the line ?

  17. Posted March 1, 2011 at 10:20 am | Permalink

    Nearer to home, I see that our government has again caved in at the first sign of opposition, this time on removing quangos. I should have remembered Sir Humphrey’s rule of Inverse Relevance: the less government intends to do about something, the more they keep talking about it. There is a total lack of determination to sort out Labour’s mess other than by increased taxation and inflation. I am wondering when the money markets are going to conclude that we are the next basket case after Greece, Ireland and Portugal.

  18. Posted March 1, 2011 at 11:12 am | Permalink

    I’m one of those people who has always liked the Irish (I’ve some good Irish friends) but never managed to understand them as a people!
    They fought for independence from Britain, and no sooner had they got it, that they signed up to join the EU which gave them less freedom than they could have got as part of the UK. They have their own independent currency and then sign up for the Euro (or at least the politicians did). I must say that this is the only thing in which I have ever agreed with Sinn Fein, who opposed both.
    Like here, judging by what my friends say, even before the present financial crisis, the majority of the Irish would have left the EU if they had a chance as they feel it is interfering in too many ways.
    I don’t think the debts will ever be paid off; past experience has shown that in times of hardship large numbers Irish will emigrate which reduces possible taxation income and increases the proportion of elderly reliant on the state. They all have friends and family in the major English speaking countries, and I suspect, even now, strings are being pulled to get work permits, etc.
    I may be an engineer with limited understanding of international finance, but my instinct says that, for the Irish, the only way Up is Out!

    • Posted March 2, 2011 at 8:18 pm | Permalink

      Nothing wrong with engineer we need more of them – at least engineers understand the principal of positive feedback which Major and most of the cabinet failed to understand during the ERM fiasco.

      Weak UK economy so weak pound against Major’s silly arbitary DM level so up go interest rates and the economy gets weaker and then the pound gets weaker against the DM again so up go interest rates again ……….

      They also understand that generating random intermittent wind and PV energy at many times the cost of more valuable, on demand, coal/gas/nuclear electricity is totally mad and not even green in any rational way.

      • Posted March 2, 2011 at 8:22 pm | Permalink

        And that predictions of the future climate in 100 years based on computer projections are basically just guesses not real science.

  19. Posted March 1, 2011 at 11:28 am | Permalink

    Ireland became Europhile because a vast amount of European money, in effect, kick started its transition from stagnacy to prosperity. The money stopped flowing some years ago, but economic policy maintained the illusion. Do the Irish have the will to escape the Euro or even the EU? Probably not.

  20. Posted March 1, 2011 at 11:56 am | Permalink

    The Irish can’t have it both ways. Ireland received huge development grants from the EU. They doubtless still do well out of CAP.

    Devaluation – it just a cheap trick that robs saves and puts up prices!

  21. Posted March 1, 2011 at 11:58 am | Permalink

    There is no way for the Irish to grow their way out of this: they are just too indebted – BIS data show that at end Q3 2010 Ireland’s gross external debt totalled 2.32 $trillion, or about $520,000 per head man woman and child. The only issue is how they will achieve default, and what the aftermath will be.

    The German press has already labelled Enda Kenny as the Sturmfuehrer against the EU: whether he really has that degree of forcefulness, or whether he will end up more like Lear raging against the storm remains to be seen. He will need some allies in the EU scrum.

    It is of note that several of the PIIGS boasted extremist groups of nationalists that indulged in terrorism – in several cases in the wider Europe – during the 1970s and 1980s. Some will remember the Red Brigades, IRA activity in Germany and Holland, ETA and so forth. Arab revolution could foster that kind of approach at one level in copycat fashion. The EU should be considering a more peaceful resolution.

  22. Posted March 1, 2011 at 12:00 pm | Permalink

    The Irish population are determined to re-negotiate the terms of the bailout with the compromise being that they will not insist that the senior bondholders (mainly the UK and Germany) take a hair cut. If you are in any doubt then consider that the same sentiments were expressed forcefully that the Irish should raise its corporation tax rate from 12%.

    As Ireland is a major economic partner of the UK, Osborne will be pleased to see how effectively Ireland has responded to the crisis. Ireland has a surplus of 10 per cent while the UK is still in deficit. In December 2010 Irelands exports increased 21% on the previous year. In December Irelands surplus was e3.7bn while the UK trade deficit was £4.8 in the same month.

    Inward Investment Performance Monitor 210 ranked Ireland number 2 in the world for attractiveness to foreign investment ( I would say the 12% corporation tax would have some relevance ). Overseas backed projects rose by 15% and mainly involved the setting up of HQ’s in Ireland, placing Ireland 2nd only to the Netherlands in that respect. Interestingly Ireland has risen to 5th out of the top 100 nations for R&D.

    Ireland like the UK cannot compete with Asia on labour costs but we have an superior advantage in both innovation and design. Incidentally the 21% increase in Ireland’s exports for December was mainly accounted for by the pharmaceutical industry. Mining is also showing a strong recovery as Ireland is 2nd biggest producer of Zinc in europe.

    Lucky for its partners Ireland should be leading the recovery because of the flexibility of its workforce and the very small size of its state running at 11% of GDP compared to 45% GDP thanks to 13 years of Labour maladministration. I can see the UK will move towards a lowering of corporate taxation now that there is a census forming on the benefits to the economy.

  23. Posted March 1, 2011 at 12:04 pm | Permalink

    JR: “We are about to discover how worthwhile voting is if you are both in the EU and in the Euro.”

    For a bright cookie, John Redwood can be a little slow on the uptake. Two Irish Referenda where the Irish were compelled to vote twice until they got the ‘democratic’ result their European Union masters required and he still deluding himself that voting in the European Union is anything other than a fraud and pretence.

  24. Posted March 1, 2011 at 1:37 pm | Permalink

    At some stage not very long in the Future there will be (strong protest-ed) in the UK and elsewhere,and it will ignite the masses all of them,and the ruling classes will see the modern version of the Tumbrills,after all we have already had one in the form of the Lady and her disbled Daughter who committed suicide by setting their car alight a couple of years ago.Even
    a left wing commissioned report fronted by Cruddas and D.Milliband had far reaching consequences in its findings regarding immigration,all other issues are the same,we don’t want a single penny going on foreign aid as but one example.This monster of a BIG STATE
    has to be demolished and it will be,if it is by consent all the better otherwise all you at the top take the consequences .BE WARNED,the people won’t be frightened any more just like as what started in Tunisia.

  25. Posted March 1, 2011 at 2:09 pm | Permalink

    Ireland still has the option that was always there – to leave the Euro, reinstate the Punt and generate a bit of inflation. This will enable them to repay their debts in clipped coinage, a partial default in practice. We shouldn’t complain; a Conservative government did something similar in 1989/90 when for two years there was a PSDR (Public Sector Debt Repayment) instead of the usual PSBR.

    All the alternatives to Ireland leaving the Euro zone now look singularly unattractive for all concerned.

  26. Posted March 1, 2011 at 2:24 pm | Permalink

    Brian, This government already knows that it only has four years left before being discarded. They will do all they can to create jobs for them to get a nice safe haven after the next Labour government is elected. Removing quangos or damage to the EU would only deprive them of bolt holes.

    As an aside, why are we so concerned about Libya when we totally ignored Shri Lanka?. ((Oh, silly me, Shri Lanka does not have oil!!))

    BobE

  27. Posted March 1, 2011 at 2:36 pm | Permalink

    So what would happen if Ireland stops paying interest? and unilaterally sets its own terms. Given most debt is held by the EU. Who would blink first? Would they really need to threaten to leave or be permitted to leave the Euro?
    I am not so sure a done deal will work with the independent minded Irish , they may not take this lying down. Or the rate may have been set high to reduce later.

    The debt won’t just go away so the problem will not resolve easily. Its going to take real German money transfers and ever closer union.Do they really want to pay for a captive Euromarket or do they prefer a hard DM.

  28. Posted March 1, 2011 at 2:51 pm | Permalink

    Excellent summary, Mr Redwood. Well said!
    Also, there is the fact that Greece, Spain and Portugal are watching carefully to see if Ireland gets preferential treatment. this must make the German Bankers very careful.
    Second we plebs know nothing of the EU. I have seen just two vignettes. The first was when hugh Fernely Whittenstall approached an MEP outside Head Office only to be shrugged off with disdainful arrogance. The second was in Birmingham airport when an arrogant Eurocrat was shouting instructions over the phone to a flunkey.
    (words deleted)

  29. Posted March 1, 2011 at 3:23 pm | Permalink

    Advice to the new Irish government:

    If I were you I wouldn’t start from here.

  30. Posted March 1, 2011 at 7:36 pm | Permalink

    Will the new government be able to re-negotiate loan terms?

    I do not think so, otherwise everyone would be wanting to re-negotiate their way out of unfavourable agreements, and agreements would then not be worth the paper they were written on.

    A deal is a deal, if you do not like the terms, then do not sign up for it.

    One possible way out is to leave the EU and default, which is probably the negotiation ploy that will be used. Problem is you have to undertake to do exactly that if your negotiations fail.

    Afraid the EU has Ireland by the short and curlies.

    • Posted March 2, 2011 at 12:01 am | Permalink

      I don’t know how well travelled you are but I can take you to parts of the world where contracts are only worth the paper they are written on , so long as they are of benefit to both parties. It seems that we might need to consider that we have joined this club and view the future with some care.

  31. Posted March 1, 2011 at 11:01 pm | Permalink

    Perhaps Ireland should have gone the way of Iceland – they are now recovering.
    “Iceland Is No Ireland as State Free of Bank Debt, Grimsson Says”

    ““The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.” ”

    Iceland has shown the World how to cope with Financial Chaos – let the Banks Fail.

    Ireland has taken the worst possible route – the road to more debt. So has the UK.

    Thanks to Gordon Brown and Labours bankrupt – literally – policies. Liam Byrne was right – there is no money left.

    With Gordon Brown selling Gold and encouraging the Banks to risk all, and Tony Blair smiling with Colonel Gaddafi, wouldn’t it had made more sense electing Laurel and Hardy as Prime Minister and Chancellor?

    • Posted March 2, 2011 at 9:22 pm | Permalink

      Conrad writes: “Perhaps Ireland should have gone the way of Iceland – they are now recovering.”

      “[…] it is doubtful whether Icelanders would be keen to hold and use kronur if they were not forced to by capital controls. Easing these will be tricky. Local savers have little choice but to buy government debt, keeping yields artificially low. Firms and householders are overburdened with debts, some of which are indexed to inflation. House prices have plummeted, leaving many householders in negative equity. Around 40% of the new banks’ assets are non-performing. Not many Icelanders believe in recovery.”
      http://www.economist.com/node/17732935

  • 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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