Model T politics

It appears that we can elect any kind of government we want, so long as it is black.

As Jacques Chirac might say, il a manqué une bonne occasion de se taire.

35 replies on “Model T politics”

He said senior debt would not be jeopardised, otherwise there could be the risk of further contagion in the system.

And once again: grants, then, please! If Ireland is performing a vital service to the EU and the Eurozone by not permitting banks elsewhere in Europe to take a loss on their bad investments – and Mr. Rehn has now told us this – why is this vital EU program not being paid for on a pro rata basis by the EU (or even Eurogroup) members? Conversely, if grants are out of the question, then clearly the alternative of senior haircuts much not be so bad after all. Could some journalist please think to put this question to Mr. Rehn on the next occasion he opens his mouth?

”Mr Rehn said he had no doubt Ireland would rebound from its recession”

No doubt! I wonder if he would sanction the EU to write Ireland a put on our GNP growth struck at say 1.75% p.a., duration 4 years.

Kevin,

why do you not give Mr Rehn his proper title. You can use Vicreroy or Gauleiter. Either will do.

Congratulations EU, you have just given extremists the shot in the arm they need. I’m really beginning to feel that the situation is becoming politically dangerous. Unless the Greens pull the plug on this deal, by 2016 we will have high unemployment, young people who haven’t worked for years, and an anniversary. People will feel democracy has failed, that they have been stabbed in the back. A fertile recruiting ground for extremists.

As the CIRA think they are the true Republic, maybe we can shift the debt to them?

Entirely consistent with the stance on Lisbon out of Brussels and major EU capitals. I wonder do they realize how what they’re saying comes across?

It appears that we can elect any kind of government we want, so long as it is black.

To be fair to Rehn, it seems that all he did was (self-defeatingly) heighten the contradictions. It seems that FG’s strategy is to bluff and bluster about renegotiating the deal later in order to ensure its safe passage now, then make a show of futile demands for renegotiation while in office, yes?

@Rory O’Farrell

Never mind the EU, have FG and Labour got the message?

@pleite

Come to think of it, we should sell the banks to North Korea, though we might have to help them FX their high-quality dollars into euro for the bondholders.

pleite,

I think you are referring to another party that has since been subsumed into the third largest party in the Dail.

He’s pretty blunt about it. The whole charade is about bailing out banks in other EU countries, and nothing to do with helping Ireland. The solidarity is all flowing one way, and it’s not in our direction.

Let’s hope the next government is sufficiently principled and courageous to call him and his cronies out on it.

Ramming a Special Resolution Regime through the Oireachtas as soon as they get elected would be a good start. Preannouncing the non-renewal of guarantees on all bank debt dating from before the guarantee would be a good immediate follow-up. Then stay entirely silent on whether anyone else will get anything back on bank or soveriegn debt until the blackmailers cave.

“we can elect any kind of government we want, so long as it is black.” isn’t anything new particularly since the “virtual senate” that is the markets have a veto on economic policy anyway.

But I agree, it’s now official and apparently cast in stone.

We might yet see that political instability and unrest some commentators have been predicting…

@anonym:

Totally agree. Cowan was also bleating about the poor European banks in the press conference last night saying that there could be no haircuts because of the risk of contagion. Interestingly he used the phrase “dishonour our debts” rather than “burden-share” or “restructure”, as if anything that might impact senior bond holders would be immoral on our part.

Both the IT and the Indo had concilatory editorials today, obviously trying to get the electorate on board.

So it seems they are all agreed then: the govt, the EU commission, the ECB, the Irish press (as per KO’R other post about Stephen Collins). The Irish taxpayer must pay-up so that we avoid a Lehman still meltdown. To that we must retort that it is their problem too.

Noonan is right – this is a jaded government that has been overrun by the EU.

Rehn says that it is inadvisable to reopen negotiations – why? He should be asked to spell out his threat in full.

I wonder what the impact of a defeated budget would be? Immediate election and fresh negotiations? Spainish debt at 7-8%?

I think Rehn is worried about le budget not being passed.
Noonan has been pretty good over the last week. He seems to have the finger on the pulse.

@Pleite

Loving the name.

@bazza

We’re all getting good at spotting the green jerseys these days. One wonders how much of the newspaper copy in the days before the announcement was part of a patriotic effort to support our negotiating position. I’m even tempted to wonder if the social partners were maybe doing their bit with the Dublin rally. Let’s see what we’ll hear from them in the next week and a bit, now that it’s time to pull on the blue jersey and deliver another Yes for Europe.

Hmmmm….I think our government negotiated the worst deal seen since the Trojans surrendered to a wooden horse

Here’s some constructive suggestions to commentators/policy people out there:

1. Can we all agree a left/right truce around burden-shifting _within_ the polity, at least for the next few weeks? (e.g. pay cuts for junior passport clerks or a few ticks on the top rate of marginal tax are chickenfeed compared to whatever we throw into the banking system to benefit the EZ). We’re facing the equivalent of a foreign attack in diplomatic/economic terms (50% of GDP?? to save someone else’s banking system).

2. Even a prelimary analysis of how asymetrically the burden is being shared to protect the EZ’s banking system suggests that there’s much much scope for renegotiation. Would FR and DE really risk a Eurozone bank run for a few 10s of billions? My sense is that they’ll have to be burden sharing eventually when Spain hits the fan in order to prevent an existential crisis – and FR and DE know this?

I’m not sure why Irish negotiators allowed his to happen. Have they lost their frame-of-reference? Feel isolated? If any of them emails me, I’ll send them my copy of “Getting to Yes”? 🙂

Maybe someone can rent them a free copy of “Michael Collins”?

3. Has anyone written an op-ed or done anything to reach out and explain the Irish _taxpayers/citizens_ point of view on all of this to the population in France and Germany? Especially to liberal and euro-centric types – if they still exist? (e.g. explaining how this is all being percieved in Ireland, we’re paying for mistakes made not just by local financiers but by you banks and pension funds etc, permanent damage to the spirit of European unity, Versailles-level of reparations, blah. blah. blah). Unfortunately, I don’t have the language skills.

4. I suppose a step to achieve 2 could be to not pass this budget or whatever needs to happen with the NPRF!!. Mr Rehn, of course you’ll negotiate if you have to, you’re a politician!!!! And my guess is he’ll be a bit more pliable if he’s had a few weeks of spikey bond yields to concentrate his mind!!!!

Jackie Healy-Rae and Michael Lowry – time to don the Green Jersey.

Welcome to geopolitics at the high table, Irish policymakers!!!

Step 1: Ensure budget does not pass and empty seat at EU Council Dec 16 meeting when ESM is discussed

Step 2: Introduce referendum on treaty changes needed for ESM – Lisbon III

Step 3: Stop further issuance on ELG – no more State guaranteed debt

Step 4: Introduce proper legal framework for bank resolution

Step 5: Draw down cheaper IMF money first.

Step 6: When Lisbon III fails, the ESM fails. EFSF expires. Free to use IMF directly.

Step 7: Wait for Greece to default. At that time Ireland defaults on unguaranteed senior using legal framework in Step 4.

All legal, constitutional, no default on sovereign/guaranteed debt, and most funding done at 3-4% rate. Why not?

Hi Irish Policymakers and Influencers….

Agree with Bryan G – who sounds like a professional (although wouldn’t IMF stop our cash ASAP?)

Here’s the basic math on asymetry that you need to think on:

Cost of 85 Billion for 4 million Irish = 21,000 per capita
Cost of 85 Billion for 300 million EZ = 280 euro per capita

They’ll blink before losing their eurozone and facing even a 3% change of Bank Run or Lehman-Upon-Main!!!

And you’ll have the thanks of a grateful nation for your legacy.

@Bryan G
“Step 3: Stop further issuance on ELG – no more State guaranteed debt”

Ok but you are not going far enough. The has to be something wrong with a law which transfers the debt of the private banking system onto the shoulders of the citizenry. It contradicticts all priciples of natural justice and should be challenged and overturned.
Since you are proposing a referendum – I suggest that the electorate should be asked if the wish to accept the debt of banks to the bondholders. If the answer is “yes” then I will accept the democratic decision even though I still feel there is a basic injustice.

Regarding the negotiations when Cowen et al were asked if there had been any propsosal to burn bondholders – they seemed to be rather easily fobbed off by the suggestion that there ” was no appetite for this” among the EC ministers because of the “contagion” effects. If they really want to bail out bondholders let them – but I wonder how their own citizenry would take it.

Now I’m going to watch Pat Kennny and get even more enraged as somebody else tries to tell me it would be”dishonouring our debt”

@ anonym

I think you are right about the unions and the green jersey. I was at the march on Saturday, and there was definitely a Father Ted ‘down with this sort of thing’ air about it.

It was a token effort. I wouldn’t be surprised if Lenihan okayed the timing, i.e. long after it could make any difference but before the actual budget, so as not to look completely ridiculous. It was very similar to Dermot Desmond’s essay in the IT opposing NAMA, published on the day the NAMA legislation was going through the Dail, too late to effect the debate but there on the record to allow a later claim that one had opposed the madness.

There is a psychological condition call the ‘as if’ personality. It is like we have an ‘as if’ government, ‘as if’ opposition and an ‘as if’ media.

@remnant

Not a professional – just a ‘volunteer’ that has learned some acronyms!

IMF decisions are made by the Executive Board, and once Ireland was abiding by the rules and regulations of the IMF I do not think that they could arbitrarily ‘stop’ the money. Only the USA has veto power – France and Germany combined could not block a decision. Also it would look very strange if Germany tried to build an alliance within the IMF to try and stop IMF funding of Ireland at a cheap rate and force it to borrow from Germany/EU at an expensive rate all for the ultimate purpose of bailing out German/EU banks. I think it would be a step too far for the other countries.

@AMcGrath

You are correct in that there is something deeply and fundamentally wrong with a law that transfers the debt of the private banking system to the citizens of the State, but that was the decision made back in Sept 2008 and subsequently with the ELGs. I was trying to make a proposal that would abide by the laws as they stand, unjust though they are.

The best proposal I’ve heard as to overturning the State guarantee was that as decisions
made by insane people have no legal basis and as Minister Lenihan was clearly insane when he introduced a guarantee of bank debt amounting to 300% GDP, that the law should not stand. At least it would make a good court case and get Ireland onto the front pages of the world’s press again.

However I do think it important that every effort be made to remove Cowen as soon as possible and show to our European masters that the solidarity will not be all one-sided. The treaty referendum card is about the last one we have left, and a failure to attend and make any agreements on this at the mid-Dec EU council meeting would be to our advantage. This would give some time to figure out how best to play this card.

@Bryan G
“The best proposal I’ve heard as to overturning the State guarantee was that as decisions
made by insane people have no legal basis and as Minister Lenihan was clearly insane when he introduced a guarantee of bank debt amounting to 300% GDP, that the law should not stand. At least it would make a good court case and get Ireland onto the front pages of the world’s press again.”

Better the world press think we have just an insane finance minister than to convince them we are all insane by stupidly accepting this injustice. The outside world is telling us we have no choice but to default. Why continue with the pretence.

Still, what’s to stop an incoming government renegotiating this? Surely all they do is announce that, thankful though they are for the solidarity of the EU/IMF, they won’t be drawing on the facility on the current terms, but are of course open to re-opening negotiations.

What then?

“Mr Rehn denied there was any difference of opinion between the ECB, the European Commission and the IMF on whether or not senior bondholders should be ‘burned’ in the Irish banking sector.

He said senior debt would not be jeopardised, otherwise there could be the risk of further contagion in the system.

‘The EU-IMF-ECB troika worked in excellent co-operation and there was no significant deviation of positions on these issues. Our position is very clear. The senior debt, not to speak of sovereign debt, should not be and will not be restructured. It is another thing as regards subordinated bondholders,’ he said.”

If this is EU policy to address EU wide risks then the EU should pay for it collectively.

This is a shocking statement but it show exactly Trichet wanted us to go the night Lenihan rang him about the guarantee.

Making people signing up to bailouts of banks is one thing. Requiring them to underwrite the entire national banking system in the interests of others is another thing altogether. This is the kind of policy that will destroy not only the Euro but also the EU.

@zhou_enlai

… yes, we are ‘taking one for the Gipper[ECB] … and looks like it will continue until the Greeks, Hibernians, Iberians, Romans, Belgii, and especially the Franks, have had enough of it. or earlier, because we will almost certainly be returing to the ECB before any end to be in sight re our banking morass. The Goths figured this out over 1500 years ago – and look at the state they left the empire in ….

@Zhou,

+1

This is precisely my problem with the whole arrangement. It is bad enough that Ireland should suffer for its sins – which indeed are grievious, but being required to suffer further for the sins of others whose shoulders are much broader to bear the lash – and who created the occasion for our sins without seeking absolution from their voters – is totally out of order.

It may take some time for this penny to drop, but I can’t see the Irish people wearing this.

@Zhou
If nothing else, we should hammer away at this point as often as we can: we have taken one for the European Banking System – where is our quid pro quo?

We may have no impact, but we will not have to hang our heads in shame as assorted certain economists confront the greatest ever economic crisis by…..positioning themselves for jobs on the new ‘fiscal council’, or ‘economic council of advisers’ or whatever. Pathetic.

@zhou_enlai

Making people signing up to bailouts of banks is one thing. Requiring them to underwrite the entire national banking system in the interests of others is another thing altogether. This is the kind of policy that will destroy not only the Euro but also the EU.

True; but it has been quite clear that this was the EU’s policy since at least the Greek crisis.

anonym

Not a great conspiracy theory-loads of TDs will retire at the next election, lots retire at every election. None will go before the budget.

Zhou/Simpleton,
be careful now-the “guarantee was a unilateral decison” police will come after you. You should repeat endlessly the following mantra- “the guarantee was our decision, our partners told us not to do it. To doubt this truth is to doubt the goodness of the EU”

“Dishonouring our debt,” eh?
So apparently “Death before dishonour” has been the markets’ motto all this time.
Who knew?

Here I always thought it was “Never give a sucker an even break”. Or in this case, apparently, an Irishman.

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