More on EFSF’s Ireland Bond

I got some flak the other day for this post on the EFSF’s fundraising efforts for Ireland because some people figured there was no problem. At this point, though, there does seem to be an issue. See here and here.

109 replies on “More on EFSF’s Ireland Bond”

As I said on the previous thread, a big problem with these bonds now is whether they are pari passu with whatever deal the Chinese get.

The title on the previous piece to which you refer was “EFSF Scales Back Irish Bond Issue”. This appears not to have been the case. That the new bond issue might be delayed seems considerably more plausible against the present disturbed market background.

The new Q & A from the EFSF is now available.

Alphaville also did its usual iconclastic job in commenting on a commentary by RBC Capital Markets.


The key point is that the EFSF should be issuing NOW (in a choppy market conditions) and not when the market is calm.

The whole point of the EFSF bonds was that they were supposed to be a safe buy when the market was scared to buy anything else.

I agree, of course, with the points made by grumpy and Tim. In fact, as Ireland is supposedly the best EFSF risk, the wheels may well be coming off what I would call the grand cash up front avoidance plan. The situation is now such that nothing short of an IMF intervention in Italy may save the day (as Donal Donovan was suggesting on the RTE midday news).

What an indictment of Merkozy! And a lucky bit of timing of the meeting of the G20?

“The situation is now such that nothing short of an IMF intervention in Italy may save the day ”

And Berlusconi is only interested in MILF.
What a tragedy !

Re 12 mth t-bills- What is happening to the deposits of the Italian banks ? If they start leaking then the game must be up.


WSJ puts it well:

‘The symbolic impact is greater.

For the European Union’s own bailout vehicle—backed by €780 billion of sovereign guarantees and rated triple-A by all three major ratings agencies— to have problems selling its debt at acceptable conditions is a huge embarrassment for the euro zone.’

The Deauville disaster continues … Europe needs a Central Bank with Real Teeth ………. not an efsf or an esm …. a modicum of real democracy and what used to be known as capitalism would’nt go astray either … not would a Commission with teeth ….. The Statal Gaullist dictatorial approach to managing Europe has failed …. abysmally .. this is the Sarkozy-Merkel Legacy ….

And from Bloomberg

““The vehicle that’s supposed to borrow on behalf of countries that can’t borrow, can’t borrow,” said Gary Jenkins, head of fixed income at Evolution Securities Ltd. in London. “They should be able to tap the market under any market conditions and it should just be a matter of price.”

I see the NTMA a redeeming 4.4b on Nov.11 out of own cash. Some piggy bank.

Frankly this is bad news. Allied with the exploding italian short bond, and the jitters around greece, the wheels are detaching rapidly.


It’ll work out fine. When Israel attacks Iran, the price of oil will go through the roof and the Gulf states will have enough money to scale up the EFSF to bail out everyone without the Chinese having to be involved at all. Just think of it as the mother of all prestige real estate deals, minus Quinlan trying to outbid the Arabs for the prime hotels. I for one welcome our new petro overlords.

@Karl Whelan
“What in God’s name is going on? 5 percent for a twelve month t-bill?”
You should take a look at short dated Irish bonds.

The focus on the 10-year is mistaken. It may be benchmark, but in ten years time there will probably be a plan. The stress is really being shown in the short-term markets.

Fortunately, no debt issuance agencies have been foolish enough to bundle all their issuance into the short-term markets. You’d never get them wizards at the NTMA falling for that one, no siree!

@ Hogan

It more or less destroyed FF. It made clowns of every senior minister in FF. Why would a political leader want that for his party ? The forces unleashed against each individual country are massive. And then there is the maliciousness .


The overspend had happened by then – the short-term markets were seen as the saviour to increased issuance. “Okay so we have to borrow heaps more, but it’s really cheap short”. Look at the HFA – 3.6 bn bailout there with another 300 mn to come as the commercial paper market dries up. Borrowing short to lend long is not good practice. Borrowing short to spend is even worse. Anyone worthy of the Finance portfolio must realise that.

Worthy, now there’s a word we don’t hear very often.

PS Karl Whelan, one of the commentators in the FTA piece suggests it might be MF Global unwinding…

@Frank Galton – “When Israel attacks Iran, the price of oil will go through the roof”

I’m kind of surprised they haven’t attacked already. There is huge doubt in Israel about Western intelligence assessments of when Iran will have a viable bomb (2-3 years) and they really don’t want to wait until they’ve actually got it…. and of course, Western intelligence has not got a great track record in terms of accuracy in assessments on WMD.

No doubt, just as we’ve sorted out the EZ crisis (there’s optimistic thinking for you) it will all blow up over there – if you’ll pardon the pun – and we will lurch from one crisis into the next. A major hike in oil prices is just what Western economies don’t need right now and I’ve no doubt that the USA has a strong headlock on Israel at this time.

I see Portugal had to to pay 4.997% for 3 month money today and Greek 2 yr now yielding 96.7%. Wow.

@ PR guy
“I’ve no doubt that the USA has a strong headlock on Israel at this time.”

QUESTION: Well, then, what do you do – then what is the U.S. Government then telling these companies, which have been extremely concerned about intellectual piracy, dummy drugs, dummy consumer products? Does – is U.S. business being unfairly impacted because of this legislative restriction, and how can the U.S. Government try to resolve it? Or rather, the Executive Branch, how can it resolve it so that the business community isn’t unduly upset by all this?

MS. NULAND: Well, obviously, she wants to make sure that these companies understand the implications of what has already happened, but also with regard to the intellectual property organization, WIPO, she wants to make sure that companies understand that Palestinian membership in WIPO could trigger – would trigger similar funding restrictions and could diminish U.S. influence in an organization that’s very important to these companies. So we need to make sure that our companies understand the implications of what’s happened and begin that conversation with them.

QUESTION: Would it be fair to suggest that perhaps, with this meeting, the State Department is hoping to induce these companies to lobby for a change, an easing of these restrictions on UNESCO funding?
MS. NULAND: I think the stage that we are at is to make sure that our companies understand what may or may not be happening in this circumstance so that we can open a conversation about how we protect their interests going forward.

MS. NULAND: Andy, let me see if I can get a little bit more for you on the specifics of the message being given, but certainly to make clear that if there’s an application to WIPO then – and the Palestinians become WIPO members, that it will trigger the same kind of funding cutoff, so already the organization will have less money to work with, but also that it could diminish our influence within WIPO, which has been very important to these companies.

QUESTION: Quite apart from the congressional lot, you’re opposed to the Palestinians having membership in the World Intellectual Property Organization?

MS. NULAND: We are.
QUESTION: You are?
QUESTION: Because the Palestinians don’t have any intellectual property, or because their intellectual property, because they’re not a state, is somehow less protectable or less worthy of protection?
MS. NULAND: Because this is a cascade effect of the decision in the UNESCO which we consider —
QUESTION: What does protecting intellectual property have to do – anything to do with statehood?
MS. NULAND: It has to do with the declaration of state status in UNESCO, which cascades into WIPO, that we are opposed to.
QUESTION: I used to think that this government, my government, had some intellect itself, but this just seems ridiculous. You are going to oppose them in some kind of international weather organization as well? The Civil Aviation Organization?
MS. NULAND: Our position on this with regard to all the UN agencies is the same.


Musta bin a flaw in stuxnet then! Jim musta fixed it.

@PR Guy

Get a grip. Last time the Persians invaded anywhere they got a hiding from the Greeks.


I didn’t mean to imply a headlock on Israel other than stopping them from nuking someone else in the Middle East.

@David O’Donnell

“Last time the Persians invaded anywhere they got a hiding from the Greeks.”

Hollywood propaganda and of course most recorded history was recorded by the Greeks who, as we now know from their EZ membership application, have a little bit of a reputation for bending the truth 🙂

I vaguely recall a battle of Thermopylae? And the Battle of the Persian Gate must at least count as a TKO. Don’t you just love the smell of burning bronze in the morning…

This EFSF news is momentous.
What are they going to do now ?

Obama’s presidency is so full of exciting developments.

Manuel Barroso has crossed the Rubicon tonight – threatening women & children.
A civil service with poltical powers was always going to be problematic for Anglo countries but this has officially broken the EU in my opinion.

Enda should begin immediate negotiations with London about getting ourselfs out of dodge especially since I think we own British assets and they own Irish Assets on a roughly neutral basis.
Maybe thats the real reason for this austerity anyhow – to create a level of Irish poverty acceptable to the British before a agreement.

Anyhow this Europe thing is F$£ked – whatever about heads of state tearing chunks out of each other – but civil servants threatening famine & pestilence is just about enough in my book.

Its what New York banks need however to bail them out of their underwater positions – they made their first motherload after Yom Kippur 1973 – they need another stimulus me thinks especially if the dollar is to remain the worlds reserve / oil currency.

Alister Darling thinks we are all up the creek..

“We’ve now got a major economic crisis which has every risk of spilling back into the banking system. It is very, very serious and they need to get a grip on it.
I don’t think Greece has got a hope in hell of actually achieving this. Until we’ve got a sensible plan to get growth going on, these problems are just going to keep going on and on. If you don’t get growth you get higher borrowing and higher debt.”

For Sale :


Includes slighly soiled large marquee with parking for 500 banks outside. Wi-fi available.

17 owners, rarely used. Lady driver.

@ Frank Galton

“As I said on the previous thread, a big problem with these bonds now is whether they are pari passu with whatever deal the Chinese get.”

I doubt that the Chinese will lend without Super Senior status.

They will let things get worse before they put their hands in their pockets.

They may also prefer direct monitization of €2Tn.

Long run puts them in a better position for hoovering up raw materials.

@The Dork of Cork

War certainly seems to improve their position that’s for sure. Bankers seem to have behind war since the Medici family, if not before.

More importantly I think, Manuel Barroso was making exactly the threats you imply. People seem to think this guy is the ‘soft’ side of the EU but I can assure you – and I have read every speech – this guy is a b’stard of the first order.

Exchequer deficit at €22.6 billion

The Republic’s deficit jumped by 50 per cent to €22.2 billion, largely as a result of the €10.6 billion given to the banks earlier this year to recapitalise them.

The department said that the income tax take was €125 million, or 1 per cent, below its budget target, while VAT was €383 million behind the projections for this year. Alan McQuaid, economist with Bloxham stockbrokers, said that the figures reflected a weak domestic economy and generally poor world conditions. He warned that the Government needs a turnaround in private demand to achieve the growth needed to make inroads into the State’s debts.

There’s an austerity hole in the demand bucket, dear Alan, dear Alan

Gosh it really is breaking news, isn’t it? Breaking down.

“We’ve now got a major economic crisis which has every risk of spilling back into the banking system”

Back to where it started

All that pimping for naff all. The shiny new propellers, pristine teak decking, the chrome plating job on the anchor…

Italy pops its head above the water and its a classic “We need a bigger boat!” moment.

Funny thing was, the audience knew that all along.

@ grumpy

“Funny thing was, the audience knew that all along.”

And on and on it goes. While Wall Street the City and Frankfurt continue to get paid top dollar.

When the “money” runs out, which it will, they will be long gone.

Mark Carney Governor of the Bank of Canada is expected to named Chairman of the Financial Services Board based in Basel by the end of the week. Mark is the offspring of an Irish couple and was born in the Yukon, Canada. We should take pleasure in the fact that the worlds top financial enforcement officer has Irish roots.

Well it looks like Greece was cut adrift tonight with Angela telling George that saving the euro was more important than rescuing Greece.
Interestingly George wanted to negotiate the bailout details before the referendum and was roundly told to p up a rope.
Another interesting thing is they now have enough money until mid-December.
So they were lying again, first it was October and then November.
But by tying the referendum to remaining in the euro he might just get it passed…that is if he lasts that long.

What does it mean for us if the Euro goes under?? Does it mean we can’t borrow from anywhere and have to bridge the deficit straight away? Does it mean we can default on bank debt, especially Anglo debt while still keeping the ATMs with cash in them? Does it mean with a devalued currency our real debt actually increases??

People have views on whether bonds should be paid or not but I would prefer to know the consequences and then work backwards. On that note Noonan said if we didn’t pay the Anglo bonds today then our reputation would be shot…….I thought the markets were supposed to be smart and could differentiate between not paying unsecured, ungaraunteed bonds for failed bank and the remainder (sovereign and other bank debt)??

@grumpy ceteris

““This referendum has changed the psychological situation massively,” Dr Merkel said.

“We want to help Greece. We want Greece to remain a member of the euro area but there is this unilateral decision taken by Greece that has changed the situation significantly,” she added.

“This is why we’re saying very clearly the sixth tranche can only be dispersed once Greece has adopted all of the parts of the decisions of the 27th of October and, additionally, any doubt as to the outcome of the announced referendum are removed. That is to say there is a positive vote on this referendum.” ….. “This referendum needs to be in its very core about the question: does Greece wish to remain in the euro area, yes or no?” the chancellor said.

I don’t think Angela has studied much social psychology – this will absolutely infuriate the Greek citizenry through its collective 20th century memory …..

….and there is a rumour going around Athens that the Neu Greek Generals have hired a poltroon of eight Irish mercenary 5*_attorney_Generals to engineer a NO Vote with the Island of Crete as the down payment.

How people think this is a masterstroke from G Pap is beyond me. Greece has about 5 weeks to sort itself out or be kicked out of the Eurozone, and probably even the EU. If you were a Greek depositor, would you have any money left in the country by Dec 1st? The country is facing complete implosion unless they oust Pap pronto. You can probably look for an annualised negative growth rate c.-15% in Nov too.

Gurdgiev attacking Margret E Ward on the twitter thingy for mentioning social justice & that goverments should control markets on the VB show.

Quite amazing really – no mention of what “the markets” really are in this discourse , they are not like a cattle market down in Bandon or the former Butter exchange in Cork.
These Markets can produce a currency , both credit & counterfeit notes packaged as insurance and yet call it money as those note holders have been bailed out by Goverment back in 2008 and continue to be bailed out as only today a credit note became money in Ireland – so that they can continue to extract a revenue from money itself and its productive users & dependents – our shared utility , our shared space.

But it seems under the euro system goverments do not have any direct power over even real money although it was a marginal power under the “sovergin republic ” system.
The Money power is up to its old tricks again today – pitting country against country.
The Euro is the ultimate expression of their power over us – a currency without a goverment.
The ECB has created this crisis so that banks can recapitalise at our expense – there can be no doubt now.
They are farming us , occasionally enjoying a cock fight down in the Riviera.
The West is a poison , I can only imagine what the east really thinks of us – now that the opium is being inhaled on this side of the globe.

@ De Roiste

If I can take a stab at answering your questions:

“What does it mean for us if the Euro goes under?? Does it mean we can’t borrow from anywhere and have to bridge the deficit straight away?”

Actually, no, despite what some will say it doesn’t mean that. First if the euro goes under, that means we’re in new currency territory. It also means that the markets will have been utterly gutted. There will be capital controls. And the deficit can be funded by the central bank. Policies could be oriented towards growth whilst the deficit is unwound.

“Does it mean we can default on bank debt, especially Anglo debt while still keeping the ATMs with cash in them?”

Sure. The liquidity would be the responsiblity of the now nationalised central bank, which would not be a German creature, nor be inclined to threaten economic war against its own state.

“Does it mean with a devalued currency our real debt actually increases??”

No, on the contrary. Our debts are denominated in euros, and if the euro no longer exists, then, if we were to honour them, they would have to be in some other currency. Presumably that would be our own. Furthermore, considering the potential for inflation, our real debts could actually be greatly reduced.

What would be important here is what happens to the industrial capacity of the country. With the new devalued currency you could presume that we would become hyper competitive, at least for a short period of time, thus providing a stimulus. But on the other side, there could be heavy trade consequences due to protectionism, a general retreat in trade, economic warfare, etc. That a large bulk of our trade happens with both the US and UK, would be to our advantage there. But then there’s the possiblity of wildcard events, or even just general mismanagement of the situation. So, that’s an open question.

There are pro’s and con’s. One of the nightmares for the core europeans is that Greece does leave and after the initial chaos starts growing strongly. They’ll try everything to make sure that doesn’t happen. Could you imagine the example that would set us?

“On that note Noonan said if we didn’t pay the Anglo bonds today then our reputation would be shot…….I thought the markets were supposed to be smart and could differentiate between not paying unsecured, ungaraunteed bonds for failed bank and the remainder (sovereign and other bank debt)??”

Noonan’s (to put it politely) being a bit economical with the truth. I’m not a market participant but a number of market participants comment on this blog: BEB, Grumpy, Tull Mc, AllThingsBeingEqual, and they argue about that. But it’s kind of besides the point. Who cares what the markets think. Make up your own mind as a citizen, and then as a country, and then let them throw their tantrums if need be. That’s the point of sovereignty/democracy. A country’s people should decide their own fate. I fancy the Greeks are mulling over that very thought right now.


“The country is facing complete implosion unless they oust Pap pronto. You can probably look for an annualised negative growth rate c.-15% in Nov too.”

So, if they oust Pap, would that implosion not happen? Is the annualised negative growth rate (whatever that means) of c.-15% not a consequence of the Troika’s failed policies? Are they not already rioting on the streets?

If I read it correctly (hat tip to Chris), it would be companies, including the Giant Squid, which I believe you work for, that would face an implosion, having been allowed engage in speculative swaps on possible credit events.

You asked another question before: What’s the difference between speculating and investing? Your answer is in that article. Goldman et al, are nothing more than a den of gamblers.

Germany will actually be relieved if Greece leaves the EZ. It will get Angela Merkel off the hook of having to help those who are unwilling to help themselves. In Germany free loaders and cheats is how they see the Greek government since the revelation that they fiddled the books to gain entry. The present Gov’t PASOK led by Papandreou brought this to light immediately after they came to power.

I have had a lot of direct experience with Greek business people and they are good business men right up there with the Lebanese as traders, wheelers and dealers. They operate all over the world, for example the company I worked for had an office in the Baltic Shipping Exchange in London. The company had its paper HQ in Geneva, operating units in Panama and real assets in Greece. I could get paid through an Amsterdam or New York bank. The Greek Government is no match for its business men who position their liquid and other assets to their own advantage.

This announcement of a referendum will allow even the small presence in Greece to be further reduced. The result is the business people will have positioned themselves in a way that it will not matter whether Greece stays in or leaves the EZ. That means there will be no big push from within Greece to accept the EZ agreement. Granted some professions are trapped and cannot diversify internationally.

The end result is most Germans will be happy and most Greeks are in for a rough decade with their seriously depreciated but beloved Drachma bringing cold comfort in a cruel world.

People who balked at a 25% pay cut will get cut over 50% within a few weeks on the new currency. The first caused rioting the second will be accepted as a fact of life. I sometimes ask myself questions about the collective intelligence of populations.

@ Mickey Hickey,

“People who balked at a 25% pay cut will get cut over 50% within a few weeks on the new currency. The first caused rioting the second will be accepted as a fact of life. I sometimes ask myself questions about the collective intelligence of populations.”

Stocks and flows. The Greek population weren’t just looking at a once off 25% pay cut, but 10 years of austerity that might, and that needs to be stressed, might bring them to a sustainable place. So their choice is, take a hit, a chaotic, crazy hit with all sorts of potential problems, but equally all sorts of potential benefits, but crucially one where they actually get to run their own country, OR they suffer “surveillance monitoring on site,” hand over the keys to their country, and for their reward suffer for the next ten years, and if they’re lucky, just maybe come to a happier place. I know which choice I’d make.

@Eoin Bond
I think any depositor in Greek banks with even the modicum Of sense has already departed. I’m hearing chilling stories of natives on the islands going to extreme measures to protect themselves and their wealth.

George has finally demonstrated to those that matters that he is not to be trusted and regardless of a referendum outcome will likely be ousted. Can you imagine Nicky or Angela ever being fooled a second time by George.

Overall though it may be the best thing that ever happened.

Quick question
If Greece reject the referendum, they do not get the next aid package, they run out of money to pay wages etc. in mid December, what is to stop them printing Euros in their national mint and pay with that.
They cannot be stopped short of all out war. If they really wanted to they could print billions of the yokes and pay all their debts back with it.

@ All

Greek referendum ain’t gonna happen folks, after Merkel and Sarlozys intervention last night. It’s dead on arrival. G Pap’s move has blown up in his face, he’s toast.

@ All

Great ambiguous quote from Mr Venizelos [finance Minister: ambitious, ‘sick’]

‘Mr Venizelos issued a statement in the early hours of Thursday after attending crisis talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

‘”Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt. This achievement by the Greek people cannot depend on a referendum,” he said.’

@ Mr Bond

In Greece once the Government blinks the die is cast, the Rubicon is reached the point of no return is passed. To stop a referendum the government would have to produce a EZ offer that would be astoundingly generous. The German mind set will not allow that to happen for numerous reasons but the one uppermost in mind would be that they must not reward aberrant behaviour since that would encourage others to follow Greece’s path.

@Disgruntled Observer
Small countries have very little sovereignty at the best of times. When a country is deeply indebted it is sovereign in name only. At the moment Ireland has a puppet government that is enjoying the illusion that it has autonomy (a Greek word) and a population where a substantial number of citizens believe it also. When your choices are the frying pan and the fire you do not have a choice. Deciding on what might be the less painful route in the long run when the mountain of debt has to be whittled down whether a country stays or leaves is not an easy decision.

I could go on and say we are not Iceland, we backstopped the banks, bondholders and all. Before the Euro we were beholden to GB and the US to reduce currency fluctuation (Punt). The serious question is do we trust our Government to manage our currency or is it better that it be left to Brussels, Frankfurt and Berlin. A stable currency is a valuable asset which is blatantly obvious when one travels to countries with unstable currencies and they ask for payment in Euros, Swiss francs, US dollars. For example Argentina has currency restrictions in place and one needs a permit from the government for each foreign exchange transaction. We passed our own Rubicon three years ago and no amount of posturing will allow a safe return.

Eoin bond you seem thrilled at the suppression of democracy, and enraged that the Greeks would dare ask their people what they want. Why?

“Merkel and Sarlozys intervention”
Shades of Háchaizing there. Forgive me if i find the leaders of two large countries bullying a smaller one distasteful and not a source of glee.

I love the sound of Wallerstein in the morning

“Premise No. 4 is the description of what happens in a structural crisis, which the world-system is in at the present time, has been in at least since the 1970s, and shall continue to be in until probably circa 2050. The primary characteristic of a structural crisis is chaos. Chaos is not a situation of totally random happenings. It is a situation of rapid and constant fluctuations in all the parameters of the historical system. This includes not only the world-economy, the interstate system, and cultural-ideological currents, but also the availability of life resources, climatic conditions, and pandemics.

The constant and relatively rapid shifts in immediate conditions make even short-term calculations highly problematic—for the states, for enterprises, for social groups, and for households. The uncertainty makes producers very cautious about producing since it is far from certain that there are customers for their products. This is a vicious circle, since reduced production means reduced employment, which means fewer customers for producers. The uncertainty is compounded by the rapid shifts in currency exchange rates.
Market speculation is the best alternative for those who hold resources. But even speculation requires a level of short-term assurance that reduces risk to manageable proportions. As the degree of risk increases, speculation becomes more nearly a game of pure chance, in which there are occasional big winners and mainly big losers.
At the household level, the degree of uncertainty pushes popular opinion both to make demands for protection and protectionism and to search for scapegoats as well as true profiteers. Popular unrest determines the behavior of the political actors, pushing them into so-called extremist positions. The rise of extremism (“The center cannot hold”) pushes both national and world political situations toward gridlock.”

Martin Wolf concurs

“Bobby decided not to respond to this teasing. “So,” he asked thoughtfully, “what’s going to happen next?”
“If I knew that, I wouldn’t be a mere economic journalist,” his father said.
Bobby smiled: a familiar remark.
His father did not notice. “Maybe, the momentum gained by the US and the big emerging markets, especially China, will let the world ride through the shocks. The OECD calls the outlook ‘moderately encouraging’.
“Alternatively, you could argue that the massive fiscal deficits are unsustainable and that attempts to rein them in, in the eurozone and UK, are going to cause renewed recession and political strife. We have also barely begun reducing private debts, which will take years. The banks are far too big and have too many doubtful assets on their books. Meanwhile, emerging countries are too small and weak to be locomotives for the world. Some people worry that China is overheating or suffering from huge asset price bubbles, too, though I disagree. And then there is geopolitical uncertainty over North Korea and Iran. In short, markets are volatile because of all the uncertainty out there.”
Bobby was beginning to find this familiar: his father tended to see the gloomy side. But he could be wrong, as his mother enjoyed pointing out.
“Anyway,” concluded his father, “these aftershocks are likely to go on for years, with fiscal worries undermining confidence in the financial sector and back again. It will affect you, too: western governments are going to be short of money for decades. It’s going to be miserable. But you can learn Chinese and go east.”

@Mr. Bond,

I wouldn’t underestimate the Greek PM’s resilience. Mamy of the political classes and those who exercise economic power and influence are aghast because they may be forced to undergo the kinds of structural reforms they’ve resisted for years. He is relying on the people – all of the people – making a sensible decision. And this is what frightens those seeking to protect the gains they’ve secured duing the credit-fuelled boom.

But his hand is weakened by the bad package the EZ has imposed. A package for a comprehensive default is required – not this partial default which guarantees a decade of pain running fast to stand still. It presents no prospect of an exit.

The EZ has the resources, but not the political will, to develop and apply such a package. Hesitant and partial actions are causing the cost of clearing up the mess to escalate. The designs of the EU’s Grand Panjandrums rarely fare well when exposed to a requirement to secure some democratic legitimacy. EZ collapse is not inevitable, but it becomes more likely with each passing day.

The EFSF has until mid November to get the spons together for the next dose of bailout for Ireland. What happens if they can’t sell anything at the mart ?

Papandreou is toast. He walked into a situation where he was humiliated by Merkel etc. and was forced to change the content and timing of his referendum, as I commented here. He is toast more for incompetence by failing to anticipate this obvious step by Merkel than anything else. No point in picking a fight and then falling at the first hurdle, no matter how worthy the cause; but in this case the real cause was to continue in power as PM without calling elections.

@ Phillip II

given that it looks like the other 299 elected-members of parliament, none of whom were consulted by the PM-who-thinks-he’s-a-President, seem dead set against the referendum, is this not democracy perfectly in action? Having a destabilising referendum foisted onto the public because the executive will not do its job is not democracy. Everything thats come out of Greece over the last 72 hours suggests that almost no one actually wants a referendum.

As i said earlier, Pap and/or the referendum is toast.



I’m not against democracy, i just want someone adult in control at the wheel.

The Greek Referendum is neither here not there. The EFSF is junk. Try again. Fail again. Fail worse.

@ Seafoid

history will judge him badly. Everyone in Greece has been humiliated by his actions over the last 4 days. His act of insanity will likely lead to the formation of a unity government, the passing of the austerity bailout bill, and then new elections. He only made an effort on his own behalf, no one seems to get that the average Greek does not want the referendum or exit from the Euro…

@ BEB,

An adult in charge sounds exactly like the kind of democracy the generals would love. I don’t know the demographics of Greece, but I imagine the bulk of the Greek population are not children.

So I second Phillip II’s question. What do you have against democracy, i.e. the people decide on matters of extremis? Or is democracy just a once every five year event for you?

@ D.O.

you seem to imply that a referendum is the only form of democracy that is acceptable to you? Should we just do away with the parliament altogether and have a series of never-ending referenda? Or should we expect a government to just do its job? If there was a large section of the Greek parliament wanting a referendum, i’d give more support for one, but they don’t. And, as i said, everything that has come out of Greece over the last few days suggests that no one bar the anarchists and communists setting fire to cars want a referendum.

And, as i said…


@ All


The debate on here about the Greek referendum has been revealing – almost no one actually had a clue what they were talking about.


– G Pap is the Prime Minister and therefore beholden to his parliament. He is not the President and does not have presidential-like powers
– This announcement of a referendum was almost surely a brazen act of political selfishness
– He did not consult even his Finance Minister
– He did not consult the EU or IMF
– He required a majority vote in parliament to actually get a referendum to the people in the first place, but almost the entire parliament has revolted against his suggestion
– The average Greek on the street, while angry at the austerity measures being suggested, fully wants Greece to remain within the EU/EZ and not unilaterally default. Pap’s referendum put all of these goals at risk.
– Being keep suggesting there may be a Greek coup or have random comments about “Greek generals”. Greeks find these comments a mix of bizarre, hilarious and offensive.
– The average Greek has been humiliated by Pap’s actions this week
– The Eurozone has been thrown into fresh dissaray by Pap’s actions this week, which were ultimately self serving and pointless. We are closer to EZ implosion because of Pap’s decision.
– Pap’s decision has, if anything, reduced down the ability of the Greeks to renegotiate last week’s deal. Merkozy has told them to put up or shut up by Dec 5th.

Oh, and now seems like G-Pap will resign in the next few hours. Democracy in action fellas, accountability in action fellas. Whats to complain about?

I don’t disagree that people are generally sheep who want to live a quiet life until they are slaughtered but back in the days of Maastricht nobody in the tertiary irish elite told me the how the Euro was going to be structured into a anti state currency completly out of the control of republics and therefore making this and other republics obsolete.
First republics are poltical jurisdictions where the rule of law comes before democracy.
But if the money power is outside the structure of state is it really operating under the law ?
If so whose law ?
I take the opposite view from your good self , it is the Irish who have been humiliated most during this dark episode of European history.
Their passivity is shocking to some – we can be bought very cheaply it seems.

@disgruntled observer

Thanks for the answers!! The Euro component of the European project is looking more and more like a noose around our collective necks…… makes you wonder why the establishment are so pro Europe and haven’t been considering this option……first step would be to test what would happen if we didn’t pay the anglo bondholders.

@ De Roiste,

To be honest, the type of currency you use has important implications for power relations inside a country. A currency should fundamentally reflect the strength/weakness of a countries trading patterns. It’s relative strength should be determined by the strength of the states industrial base. A large number of financial crisis result directly from having currencies pegs that are entirely inappropriate to an economy. Argentina is a case in point. The role of the Gold Standard in the Great Depression is another.

At various times countries will require a weak currency for two reasons, 1. cheap credit to enable industrial development, and 2. competitiveness of said industry. Even wealthy countries can favour this if the situation requires it. A depression is one such time.

However, there will always be resistance to weakening a currency, or abandoning one. Setting a currency peg based on a dominant industry’s trading patterns is a direct subsidy to that industry and can retard a country’s development. Maintaining parity with sterling here come what may was one of the direct causes of our lack of indigenous development and was based about the live cattle trade with the UK. Conor McCabe covers this with Sin’s of the Father. We were in the absurd situation of having an entirely inappropriate currency for our development and strangled any possible industrialisation with sterling parity, and we’re now in the absurd position of having a completely inappropriate currency to get us out of this mess with the Euro. This is why FDI is the only thing they know here. They take no responsibility for actually developing an indigenous base, and they won’t now either, because maintaining the Euro is about serving existing wealth. It’s the same both here and abroad. Nothing else. Think banks, think NAMA. Everything is bent to finance.


Was our directly elected FF/GP gov. just doing it’s job when they gave the bank guarantee? For most things governments don’t need to keep going to the people, but for some things direct consent is required!!! Your line of thought is a dangerous one and unfortunately it’s shared by far too many.

I would imagine the big question now is whether Greek politicians can form a unity government or whether the Conservative opposition (remember them? the ones who cooked the data in the first place) see this as an opportunity to seize back power for themselves.

George looks well and truly cooked to me (and maybe Silvio goes soon too) so it’s either unity government and maybe a period of calm or it’s snap elections and who knows what.

It’s a bit early to say whether Papademos would lead a unity government and I expect Venizelos will have his own thoughts about that!

@ D.O.

“Your line of thought is a dangerous one and unfortunately it’s shared by far too many.”

It seems its shared by the majority of the Greek parliament.


If Pap had front run this and said that any deal would always have to be referred to the electorate, there would be no major problem here. The problem is that, having negotiated with the Greek govt, the Troika now find that the Greek government isn’t actually willing to sign off on anything, and can’t even trust the Greek government to let it know about major decisions that are about to be made. Moreover, these aren’t even being made by the Greek government, but by a solo-running Greek PM hell bent on keeping power and political cover. But this, in your eyes, is democracy. Bizarre stuff if you ask me. Pap went for a selfish hail mary pass and got blown out of the water by all around him both internally and externally.

@ All

G-Pap to resign in the next half hour, ex ECB bigwig L-Pap to take over. Its a voluntary resignation, non-coercive, and therefore not a credit event… 😀


“history will judge him badly. Everyone in Greece has been humiliated by his actions over the last 4 days”

Everyone in Greece has been humiliated by the bailout medicine imposed over the last 18 months. 4 days are neither here not there. Doctors follow the hippocratic oath- first do no harm. It’s a pity the bailout didn’t follow the same principles.

Popular memory is very slippery and doesn’t always follow the winners. There won’t be any Greek winners anyway.

Here’s another loser who made it in posterity

@ Seafoid

Greek anger has been focused externally for the last 18 months. Now its focused internally. Before this week Pap did nothing which went outside of Troika orthodoxy. This week has seen him fight for his own legacy rather than the Greek people. He will be judged badly by whoever wins.

One thing GPap has done is to shortcut all the potential opposition crap that would have been spouted about ‘renegotiating the deal…if only you elect us’.

Much less opportunity for faffing around so.

@Disgruntled Observer
One of the better examples of the futility of debasing a currency is Italy. The Italians have done it again and again an again to the point where they were a standing joke. The Germans who were shocked to the core by hyperinflation in the 1920s’ looked on in horror.

Debasing a currency provides short term relief leaving all the previous impediments to productivity in place. It is much like drug addiction, short term euphoria and long term suffering. Debasing currencies is associated with incompetent governments and tuned out electorates looking for the easy way out.

I love Euronews
Its propoganda is so bad its good , its the complete opposite of the Home service really.
Anybody they interview in the Greek streets is a middle aged sheep with something to lose – no dissent is observed.
Perhaps that is why we live in such strange times – almost everybody is old while the remaining young people age mentally before they can reach intellectual critically.

Parliamentarians that publicly rejected the need for a referendum now have to vote with the existing parliamentary majority because if they believed that the current parliament majority did not represent the will/best of the people then they should have welcomed a referendum.

The act of calling for a referendum has in practice ensured that Greece will have a cross-party agreement on Greece continuing on under current conditions. I’d say that the act of calling for a referendum was a very good thing. The Greek PM made a sacrifice for Greece.

Hold up. We’re back on. At least for G-Pap’s reign of madness.


@ Seafoid

“It is very difficult for an outsider to define how a people will respond to a national trauma.”

Correct. You may want to inform the other 200 odd comments between this thread and the main Greek one of this fact. I asked the other day whether we were all so sure that the Greeks themselves actually wanted a referendum…

Noonan sorts it all out. From Bloomberg ….

“The ECB needs to “go into the market and say ‘We have a wall of money here and no matter how much speculation there is, we’re going to keep buying Italian bonds or any other euro bonds that are threatened’,” Irish Finance Minister Michael Noonan told Dublin-based RTE Radio yesterday.”

And the markets are all up considerably.

@ Mickey Hickey,

“Debasing currencies is associated with incompetent governments and tuned out electorates looking for the easy way out.”

If it is the default option in ever situation I would agree with you. But as I said, the choice of type of currency is about power relations. It always has been. See the debates about the gold standard in the US during the Great Depression. Coming off the gold standard was exactly what was required, but it was resisted fiercely.

Besides, I think you’re using the wrong analogy. Think of it more like insulin and sugar. You’ve got to get the balance right or you become diabetic, but if you have an immediate problem you better not be shy with the needle.

If short-sellers are correct in their analysis then the ECB would make a big loss by using the ‘wall of money’ approach.

If short-sellers are wrong in their analysis then the ECB would make a big profit by using the ‘wall of money’ approach.

I do not think the ECB should venture into the risky business of putting the quality of its analysts against the quality of the analysts of the short-sellers.

@Dork of Cork

“Anybody they interview in the Greek streets is a middle aged sheep with something to lose – no dissent is observed.”

TV and radio vox-pops are not always as randomly chosen/spontaneous as you would think. I have lost count of the times I have roped in family, friends and neighbours to talk to camera/mic and pretend they are a ‘man on the street’ and I wish I had €50 for every time they simply repeated what I told them to say.

@Bond. Eoin Bond

“Hold up. We’re back on.”

On until Friday maybe. I can’t see how George can win any vote of confidence. Angela is still bugging me about writing his resignation letter citing stress clouding judgement etc. I told her that I did but I accidentally left it on some guys desk at Lloyds.

So are we risk-on or off today? I’m getting confused. Wish I had done that Euro sell I was thinking of before I left home this morning. Curses.

@ PR Guy

nah, G-Pap is gone, its all about the exact structure of how he goes now. Opposition/his own party could force it into a messy resignation, but seems like he may be ‘allowed’ to form an interim government with opposition, get the package passed thru parliament, and then go for fresh elections. Maybe he saunters off into the night at that stage. There will be no referendum, and there will be no confidence vote.

Whether he meant it or not (some now arguing this was a ‘mutually assured destruction’ argument/ploy by G-Pap), he has ensured there will be complete political concensus behind the passing of the bailout package as-is.

The yield on Greece’s two-year notes rose to 107.26 percent today
Maybe jto fancies a punt.

Looks like Mr. Bond got it right. G Pap is toast; referendum pulled; opposition backs deal; possible (temporary) Govt of National Unity ratifying deal to secure next tranche of funds.

Shame. Had great hopes for George. Really rattled the Grand Panjandrums. Highlighted the fact that this half default deal is worse than no deal. Elections likely as Greece slides into economic depair and ungovernability.


At 107% I might have a punt myself!

@Bond. Eoin Bond

“There will be no referendum, and there will be no confidence vote. ”

I haven’t heard anything about the confidence vote being pulled. Thought George was attending the debate this afternoon

On another subject altogether Mr Bond, is there any truth in the rumour that French banks are dumping Italian debt as fast as they can? And I see your next film is to be called ‘Skyfall’. Are you ‘aving a larf?


Italian 10 has eased off a little by the looks of it but I thought Draghi was hinting that support for them won’t last forever. Once the froth around Greece has subsided, no doubt the ‘teenage scribblers’ will move on to something else and Italy may well find itself the centre of attention next week as I don’t think Silvio managed to impress anyone at the G20 with his promises – I’m not sure Obama even spoke to him when he was working the attendees just before the photoshoot a little while ago. I’m still betting on him and George to have gone by the end of the month.

Anyway, I’m looking for the next housing bubble. This might be a long shot lads (and lasses):

@ All

G-Pap making a speech to parliament at the moment. Bizarre if what he says is true. He’s claiming this was all a rouse/ambush to get Samaras to play ball and accept the package. He’ll enter negotiations with Samaras over a transition govt, but is not willing to sign just anything. He’s either the greatest political genius of our times, or just a great spoofer. Either way, he clearly had absolutely no interest in the “democracy” element of this referendum, it was a cold, calculated political move, as a minority of us here identified immediately.

@PR Guy
I’m reading that Silvio has failed to secure backing for the latest austerity cuts and is being called on to resign.
Problem for Silvio is if he were to resign his immunity would be lifted.
I don’t know if he has managed to outrun the statute of limitations.
The Italian 10 yr are in a little now and presumably the ECB are buying all the banks are unloading. BNP got rid of 11b of sovereign bonds and you can be sure others are following suit. Better get 90 cents on the dollar for Italian 10 than wait for them to go to Greek levels of 29 cents on the dollar.
Looks like the EFSF will need at least 2 trillion the way things are going, if not more.

@ Bond Eoin Bond

Self preservation, I think. Wonder what Samaras will do? He has been very consistent despite a lot of pressure from Euro heads.


“Problem for Silvio is if he were to resign his immunity would be lifted.”

The penny has just dropped. Of course.

I tend to agree with you about the need for 2 trillion+ and was just speculating on another thread about why Cameron was talking about making a bigger contribution to the IMF and whether the fragrant Christine, who has been working the G20 crowd hard in the past 24 hours, is just getting some commitments in place ahead of any possible ‘too big to bail’ e.g. Italy. She’s a canny lady. The EFSF couldn’t do it on its own.

George is something else. He saying no election as they would be bankrupt by the end of an election and to add insult to injury is blowing smoke up Samaras rear end for accepting the package.

I wonder how Samaras will respond.


“I trust the wisdom and the maturity of the Greek people and I trust it more than what is now called the political establishment. I believe deeply in democracy and this is my principle, this is well-rooted in our poliical party.
So when I announced this initiative, apart from the reactions, Greek people heard for the first time in many years that we’ll listen to what they have to say, but we’ll ask them. We believe in their opinion.”


ta for confirming that French banks are not doing what they have been told to do by Emperor Nikki …. poor Nikki – and his party pooped by St Georges going ‘all-in’ and all those lovely photoshoots on his butter-box with the baby and O’Bama as the saviour of the er .. free … world have been … er .. postponed … I hear a rumour that Jed_Ward have also pulled out from the post-match entertainment

@The French

Time for a change …

If George gets away with this it probably would be the biggest political stroke of all modern times…as one commentator explains..”

“As David Gow explains, Papandreou’s message could be boiled down to “Ensure I win tomorrow’s vote of confidence, then ratify the October 26/27 summit decisions and negotiate the fine details of the deal under national emergency conditions.”

From CNN

“Perhaps Papandreou should make sure there is a helicopter on standby, to rescue him from the presidential palace should he be forced to flee from angry protesters — as Argentine President Fernando de la Rue was in December 2001.”


Things are hotting up…better tell Blind Biddy that she will not be able to seek sanctuary in the Irish Embassy in Teheran if Netenyahoo starts sending his Scuds down there as Gilmore is closing it down. I believe our Eamon is ahead of the curve…Osborne preparing for a Euro implosion and Eamon preparing for all out hostilities.
Don”t know why he closed the Vatican..must be that little spat with Enda.
Shure we are selling nothing to the Vatican, not even rosary beads.

I wonder if those new Scuds that Israel have operate on Google Maps..would be very handy taking out individuals opposed to peace loving Benjy.


Don’t see the logic, political or economic, in closing the embassy in Teheran! I do not agree with this decision.

Blind Biddy is now in Tel Aviv – invited to a seminar on Golda Meir (James Connolly the point of intersection) where I believe she is trying to talk some sense into the hot-heads who are thinking the unthinkable. She has, wisely, left the mobile phone somewhere else – so might have to wait a while for an update. She keeps the bazooka in the hand_bag just in case …

@all ICELAND Fans IMF Update

IMF Survey: Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis As policymakers continue to grapple with the problems facing the crisis-hit countries in the euro area and the clouded economic outlook for the global economy, attention has turned to Iceland, which three years ago saw its entire banking system crumble in just a few days.

I just came across an article from 2009

“Economy will never recover unless Nama fixes bank sector ” by ALAN AHEARNE

Nama will improve the banks’ funding position by forcing the banks to take losses on their most difficult classes of property loans now, rather than over time. This will leave the banks better able to raise funds for on-lending to the economy.
Providers of funds, such as foreign banks, pension funds, insurance companies and large corporations will have more confidence to lend to and deposit funds with Irish banks as a result of the Nama operation. Moreover, Nama will pay the banks for the loans using bonds issued by the Government. These bonds can be exchanged for cash on international markets and at the European Central Bank.
Importantly, this is not true of the loans themselves. In other words, Nama is a form of so-called “quantitative easing” for our economy, in which assets such as bonds can be turned into cash from the central bank.

Given NAMA didn’t fix the banking sector does this mean the economy will never recover?


You should keep going back over those old posts. If not quite hilarious, it certainly provides light relief.

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