Ireland Optimistic for Promissory Note Deal Post author By Philip Lane Post date March 9, 2012 Eamon Quinn has an interview with Lucinda Creighton here. Categories In Uncategorized 106 Comments on Ireland Optimistic for Promissory Note Deal ← The Glidepath Rule → The Mechanics of European Fiscal Governance 106 replies on “Ireland Optimistic for Promissory Note Deal” I’m going to guess the deal will not be concluded by the end of March. “Things are happening and I am confident that things will happen in due course….” This is a nothingburger. Also what are the ‘techincal details’ – pushing back some payments isn’t rocket science. Is Lucinda Creighton not the “senior official” that Eamon Quinn used to make a similar story a couple of days back? There is nothing whatsoever tangible in this interview. There’s an airy suggestion of optimism and the hope that events in Greece, which the ECB has stressed, underlined, highlighted is U-N-I-Q-U-E, will see a different stance on Irish bank debt. If Eamon Quinn ever gets a “senior official” from the ECB to express optimism in a deal which will reduce the NPV of the PNs then our ears might justifiably prick up. Noted. No comment at this time as a mark of respect to Herr Professor Karl Whelan’s sojourn in the Trappist monastery in Clonskeagh. @PL You might add the ‘d’ – who knows, HELLO magazine might pick this up. When speaking of the Ecb it is helpful to remember that structurally,it is an opaque and disfunctional entity,e.g.: http://voxeu.org/index.php?q=node/6980 often we’ve heard governing council members speak out of turn,and sometimes one might suspect executive board members were doing likewise. It is unclear how the GC even works (17 members is far too unwieldy to make decisions). Thus absent assurances from Draghi himself,I suspect little can be known. Also the ball is in Ireland’s court to explain the benefits received from the cheap ELA to date…even some figures on this blog would be helpful(e.g. Showing cost against “healthy” inter bank rates) There’s no doubt that the Zeitgeist from here on in is a hardened attitude towards the periphery from the core in the wake of the Greek ‘solution’ (lol – that’s what Sarkozy said) being delivered. The writing is on the wall. Schauble today: “…not the tiniest hope or danger that other nations would restructure their debt.” And plenty of others today repeating the mantra that what happened in Greece has been a ‘one off’ and nothing even remotely like giving a periphery country some slack vill be allowed to happen again. Head down all day today – haven’t heard… any rumblings from ISDA? Who is Lucinda Creighton anyway? Was she some leading financial guru/economist before she became a politician and knows all about the ins and outs of these things? She comes across as a lawyer who’s maybe done a bit of PR! They are all spinning furiously. Arthur Beezley is reporting that the ECB will not agree and is saying that we can find the money by cutting public sector pay and social welfare. how to win a positive result in the referendum. No wonder Draghi doesn’t want to think about a negative outcome. In the meantime Richard Bruton is reported in the IT that we are paying down our debt. Joan Burton forgot to tell him about the 50m a day we are borrowing which she mentioned last week in connection with possible social welfare cuts. @ PR Guy She hasn’t even got the PR background I’m afraid – she was a student politician while in university and spent her time between there and the Dail ‘training’ for various unused legal qualifications. http://www.lucindacreighton.ie/about-lucinda/ @Edward v2.0 Thanks for the link: “2003-2004: The Health and Safety Authority; Press Office” That’s a sort of PR Girl role. I think I know a younger version of this lady. Daddy is a TD and she spends her time between the Dail and doing various ‘training’ and courses (aka swanning around) because she doesn’t need a career as she keeps telling me she will ‘get Daddy’s seat when he retires.’ Good to see we are training them young into their sense of entitlement. Have a good weekend one and all. I am going into rugby mode and entertaining cheque-signers. FYI “Where are the 130 billion euros of aid to Greece going?” The response by Die Gazette is unequivocal: financial institutions outside of Greece will get 40 percent of the rescue package, Greek banks 23 percent, and the European Central Bank 18 percent. The remaining 19 percent are earmarked for financing needs in Greece itself.” http://www.presseurop.eu/en/content/news-brief/1599061-greek-aid-will-go-banks matrixsQuidesque Draghi seems to have continued with the Catenaccio system he inherited from Trichet at the ECB . http://en.wikipedia.org/wiki/Catenaccio I see the new Greek bonds are trading in the grey market at about 25cents on the euro on an if and when basis. So much for success? @ David Well if the primary deficit is near zero (and the future stream of primary deficits can be zero), then you would expect that loans are needed just for debt servicing (indeed I wonder if the 19% is not too big). All this raises a much more fundamental issue that I’ve emphasised on several occasions … a government has more clout when it makes extraordinary efforts to cut its *primary* deficit down. Credit to Greece when due. “Contrast and compare” (this kind of thinking though seems quite foreign to just about everyone). You could also note that provision of loans to Greece by official creditors is mostly at some future date (we did see a bill issued in support of the programme earlier this week). ‘Credit to greece when due.’ Whiskey tango foxtrot? Greece has been sacrificed to the market. The latest bailout does nothing to help the country. Ciaran O’H point is reasonable. You are in a stronger position with the bank if you are in surplus. Also, when you have among the highest level of public service wages and transfers, those who lent you the money are entitled to ask you to make some life style choices. @ Tull So long as they don’t include cutting back on military hardware. That would interfere with business. Cutting our military capex budget will save diddly squat. Better to shave the egregious premium that public sector workers earn- about 40% or so according to the CSO. That might even be egalitarian . If all supposed solutions to the Promissory problem were a spectrum then the range of difference between the opposite ends would be huge. Even if Lucinda said it was a good deal I think’i’d be sceptical. Considering Richard Bruton is conflating the recent report of 50% youth unemployment in Greece with the debt deal last night I am not 100% convinced about this Govts analysis. Tullmacadoo what would cutting the public secor wage and pension bill by say 25% save, net of tax and inclusive of any downstream effects on demand? In your answer remember that this will be a once off cut…..? your post is proof that while there are no simple solutions there are an infinite amount of simplistic ones…. FYI http://www.washingtonpost.com/world/financial-derivatives-agency-greek-deal-is-credit-event-triggers-credit-default-swap-payouts/2012/03/09/gIQAJ3qf1R_story.html A cut of nearer 33% in the bill for pay and pensions sounds about right over a couple of years with about half the savings reinvested in capex and services. Clearly the saving in the deficit would be less than one for one. We may have to do it any way if we are outside the ESM. I would expand ( again ) on Ciaran’s point. Ireland will simply do willingly whatever it is told until such time as the rest of the EZ can tell that it’s citizens have been appraised of, and support actions resulting in if needed the closing of the primary deficit and the possibility on no Market access for some time. That doesnt mean choosing to do so, it means putting it in the pocket of the negotiators. Perhaps the cold war opt-out has flavoured Irish attitudes too much, ‘deterrent denial’ or something. Croke Park has subtle costs too. Grumpy “ye can have Croke Park but ye can’t have a cut in the PN” Apologies to the late Paddy Hillery. Tullmacado: savings would amount to…? A number considerably above zero. Also if as I anticipate we vote no then it will have to be done. How much though? Seriously, what financially would this achieve. Politically it would break the givernment, and some would caper and leap with glee, the people for whom as Karl Whelan (rip blog wise) suggested any public sector wage over zero is too much. So, what would it save? 1b? 2b? Would it be “worth it”? @ All Essential reading on the question; where did the money go? http://www.independent.ie/opinion/analysis/dr-alan-ahearne-debt-still-a-huge-challenge-despite-our-foreign-assets-3044969.html The idea that the taxpayers of Germany, or any other country for that matter, are going to pick up the tab of reducing the NPV – which is, apparently, the appropriate buzzword – of the banking bailout should by now be seen for what it is; a pipedream. BB/DOCM, Eliminating the primary deficit & reducing the PN are inextricably linked. Get your day to day affairs in order & you are nearer to telling the BUBA zealots that they can GFT. @Tull Looks impossible withen the Euro – unless you are a fan of living withen & amongest a social breakdown. Do you live in a gated premises ? with big dogs and stuff. Dork, Tinned food & shot gun. No dog. I realise the comfortably off don’t like it but reality coming. @Ordinary May They love ‘credit events’ on Wall Street late on a Friday evening – the saloon owners that it. @Ciaran O’Hagan Just passing on the info on those ‘capital flows’. To get to a ‘real primary deficit’ ,or indeed a reasonabley real zero, Greece needs to lay its hands on the Revenue that is simply not being collected; such institutional reform, and massive attitude change, will not happen in a year and a day or in three yrs either. Local Revenue has international cred in this area so could possibly assist …. but odds are Greece will be in ‘escrow handcuffs of the financial system’ with present EZ policy for quite some time. Admiteddly large, Kiel Institute for the World Economy suggest that the 50% is too low and should have been >85% …. And now we appear to have a ‘credit event’ …. CDS CDS CDS … any comment on this one ……? @tull You p1ssed off that you missed holding up a little star at the postponed bash of the ultra-blue paddy_done_again roight pee-dee wing of the fine gael party? Chill out man! We have a credit event at last – celebrate. @Tull S$£t – and Jack Lynch once told me a Hurley would do for most occasions – but that was before 1979. I begining to think a 50 % devaluation will not be so bad once the money supply rises – zee Germans won’t like it though. No more new BMWs down in Glandore for a while me thinks. @ Tullmcadoo I agree! For the reasons advanced by others and notably COH. The recent claims about “restoring Ireland’s international reputation” are so much rubbish. Either you are (i) creditworthy or (ii) sufficiently solvent to make your creditors blink! @ All By the way, are we witnessing the “death of the PR spinners” buried under their own stupidity? (No offence intended to PR Guy!). @ DOD Yeah, filling up nicely now 🙂 Bill Withers on a Friday night BBC4 and Scotland tomorrow ! DoD, Sure we got a credit event. Greek govt liabilities cut by 50% including pensions and wages. It is not enough. There will be more cuts in all liabilities. If we want to say cut the debt by say 20% of GDP then all those on the public payroll- salaried, dependents, service providers are going to take a bigger hit. The alternative as the Dork says is to do a solo run. I doubt I would get a star now. @ DOD Yeah, filling up nicely now 🙂 Bill Withers on a Friday night BBC4 and Scotland tomorrow – how bad could it get? @DOCM “The idea that the taxpayers of Germany, or any other country for that matter, are going to pick up the tab of reducing the NPV – which is, apparently, the appropriate buzzword – of the banking bailout should by now be seen for what it is; a pipedream.” Agreed if Ireland were a single domino. But it isn’t. And Spain is directly behind. Belgium then. How many Triple As are left? Not many . The art is in plucking the maximum amount of feathers without killing the turkey. Because there are other bigger turkeys with similar feather ratios. Nobody wants any panic in the birdhouse or amongst the foxes. And everyone wants their money back. We’ll be back again to risk off at some stage . And pragmatism can do wonders. @ seafóid To quote the well-known African proverb; “when elephants fight, the grass (green) gets trampled”. Mixing metaphors a bit, the only (Irish) turkey in this scenario has already been well and truly trampled. @DOCM – far as I know, that proverb has a second part, to wit: “when elephants make love, the same thing happens”. Not sure what the relevance of either part is to the thread. @Seafoid/DOCM A pipe dream and Enda knows it…looks like he is setting up the learned Professor for the blame judging by the following from the examiner… “”I’ve every faith in the Governor of our Central Bank, Patrick Honohan, in the discussions that he’s having at ECB, and obviously as those discussions evolve, together with officials, we will be briefed on the up-to-date position.” @ Cet agreed-the noble teacher with 30 odd years of doing and achieving nothing in the Dail, other than holding his seat, is setting up the Governor to take the fall it is the only thing those in the Dail are any good at is making sure that when the music stops the parcel is not on their laps or when the music stops they are not the only ones left without a seat a question if one posts using a new email address-does it go through moderation?? @ Desmond brennan The ECB governing council has 23 members: 17 + 6 executive members including the president. @ All On the issue of public pay, the argument made by trade unionist Dave Thomas in The Irish Times this week simply is not credible: “Average public sector pay will always come out ahead of the private sector due to the skilled, highly professional nature of the work involved and the qualifications that are required to perform it. Rarely, however, is this part of the argument incorporated into such discussions.” Times have changed since ‘our Johnny’ was lucky to get a big job in the civil service in Dublin. Finnish pay, which is similar to the Irish average pay, is higher in the private sector for all age ranges than in local government. Central government staff in their 40s have a small premium of about 4%. Overall, private sector pay is above the average. @ Tull Cuts in pay further depress the real economy. That brings down GDP and still leaves a debt overhang. Agree need cuts but need to quit this European farce. Eureka, If I made the argument that Bankers bonuses need to be preserved because a) of the high quality and complexity of the tasks they perform & b) it would depress the economy. It is clear that to get a deal on the PN we have to give something on pay & welfare. BTW you are probably right on the euro but current policy demands from the extremely badly governed Core will solve that issue. I am not advocating the preservation of bankers bonuses just in case the mob heads in my direction. Is Patrick Honohan, the governor of the Central Bank of Ireland leading the negotiations on the promissory notes with the ECB? http://www.irishexaminer.com/breakingnews/ireland/taoiseach-backs-honohan-in-debt-negotiations-542948.html A widely respected and very capable man, but as governor of a national central bank in the eurosystem, Governor Honohan is torn between his loyalty to the domestic economy and his obligations to the wider EuroZone. @ Jagdip Singh Another bank – the ECB – is missing from this qualifying quotation by the Taoiseach but its total independence, one would hope, is so well understood that it goes without saying. “Well I’m quite well aware that obviously the Central Bank is an independent organisation and is not subject to the diktat of Government,” @Ceterisparibus Enda: ”I’ve every faith in the Governor of our Central Bank, Patrick Honohan, in the discussions that he’s having at ECB, and obviously as those discussions evolve, together with officials, we will be briefed on the up-to-date position.” If a politician said that about me, I would be feeling very vulnerable right now. He’s put him at arm’s length with the ball very firmly in the Guvn’rs court. @Guvn’r Honohan If I were you, I would get a couple of statements of your own out in the press sharp’ish. Spell out who’s accountable for what and who’s responsible for what. Make sure people know where that buck stops when this doesn’t happen. @All C’mon Ireland. @ Tull Why pay and welfare specifically. What about balancing it and increasing tax on those over 100K? What are you spending it on? Cut every price to government 5% on consumables and capital items – if you are making any less that that you should be out of business anyway. Check the savings and take it from there. That is where I would start anyway. Then the politicians salary and benefits …………. and on down the line finishing with pay under 40k and welfare. To tie all into PS pay (some of which is outrageous in the extreme I agree) and welfare is to miss the breadth of total Government spending. @ Tull Point always is that the fiscal piece should never have been let get separated from the debt piece. The term on PN will be extended but only if Croke Park is reviewed – and govt is in a very tight spot there. Am trying to figure what to do in referendum. Yes means more of the same (which is not going to work) and no means big problems running the state. My heart definitely says vote no – it might be our last chance to extricate ourselves from this European monster @ Ordinairy Man But every penny you cut goes straight to pay a bankers bonus in Frankfur or London or Wallstreet. It diverts money to an even more distasteful elite overseas. It doesn’t work either. @ DOCM ‘Another bank – the ECB – is missing from this qualifying quotation by the Taoiseach but its total independence, one would hope, is so well understood that it goes without saying’ That is, with respect to your erudite contributions, the Big Lie. Central banks in the western world are beholden to private vested interests in banking and capital markets. The LTRO ‘stroke’ was a huge bailout for those players, even though it has stored up future problems in the form of inflation, and cannot resolve any of the structural problems besetting the EZ. I am a bit confused on this issue. Help me out here someone pleases. On the one hand, the government with its armory of Tax, Talent and Tall Tales lugs about a megaphone broadcasting news of recovery, growth and returning to the bond market. Yet, in other hand sits the alms bowl and, as usual, stenciled on the inside is the message Ireland deserves a break on debt. If it doesn’t get a break on debt well it just can’t get into recovery mode. The positions don’t square up. They are contradictory. @The Alchemist This is where I come in 😉 @ The Alchemist. It makes sense if you view Ireland as a busker and not a beggar. It talks itself up, laughs as it cuts itself and even swallows fire. The crowd claps, and laughs and throws some cash its way. But that’s all it is. Busking for a living – waiting for our big break. @ Paul Quigley You may well be right! That was not the point that I was making. As far as the handling of this particular issue is concerned, it is absolutely vital that, to quote Barry Fitzgerald in the Quiet Man when the hero goes courting, that “all the proprieties are observed”. Otherwise, the courtship threatens to be short; and messy. @ Eureka My point is to keep as much disposable income in the local/micro economy. The more we can keep spending going at this level the quicker we can get to some kind of stability and try to maintain employment. I agree, up the line the money is eventually exported, but that is another arguement on the lack of value added manufacturing in this country and Europe as a whole. @Paul LTRO will be dramatically deflationary because it functions by subtracting credit deposits from people via tax rises. – the inflation will come latter because of rational investment deferred to some infinite point in the future. Ireland amongst many other things needs to get a grip on its public sector costs. If pay in the public sector is so far ahead of the private sector why would anyone with a brain want to work in the private sector. In an economy the public sector is just a necessary function to the economy and not the economy. Ireland should have the objective of having the lowest cost public sector possible. Fairness is important but Ireland needs to grow and the public sector costs are a drag on growth. @ Expat That’s a view but it’s not uncontestable. You’re advocating the Republican view of small government. I wouldn’t support that view and so would many others. Lets start with what is wealth? Do we measure it in individual terms only? Is there a social component to it too? I wonder if some functions in society are best paid for from a central tax generated fund (public sector)? Take education for example. Shouldn’t everybody have a shot at public education funded in this way? This doesn’t make this less valuable than education funded through the direct contributions of parents. It’s just a different way of doing it. So what is Croke Park really costing us? The opportunity costs? Besides large scale immigration, unemployment of 17-18%, lets not pretend and count in the self employed, unemployed. We are now, and rightly so, told don’t ask us for write downs or write off’s while your public sector, quango’s, unions and politicians are still on the vino, venison, pheasant, dates, ice cream caviar whatever you fancy yourself. All this is ‘eating’ into the Bailout No. 1 at a rate of knots, as are the impressive overpayments and protection money in reverse being dished out to those on welfare. This makes the inevitability of a second Bailout a virtually certainty. CP means the indiscriminate loss of jobs from within the public sector and glacial changes and moving of the deck chairs on HSS Public Service, when any human resource specialist will tell us that, what is required, is targeted redundancies and pay benchmarked to what the state can afford without trying to force the next generation into become indentured debt slaves. They are our children are they not? You would not think it by the way we behave! We are heading towards 2013, continuing to hemorrhage debt from bailout No.1 after which we will quite simply fall of the funding cliff unable to re-enter bond markets or get our hands on ESM. Unable to grow because we we will be signed up to austerity in perpetuity. @Expat Why do Americans always think the private sector is productive – its mainly waste based enterprises. Americans have simply access to more resourses and therefore waste them at a quicker more efficient rate. – this is expressed in GDP growth. US = worlds reserve currency = first call on worlds resourses US energy self sufficiency = 0.775…….. & growing (IEAe 2009) Ireland = Euro user = non sovergin political construct. Ireland energy self sufficiency = 0.1037 (IEAe 2009) If we grow the conventional private sector again at least as we used to know it our imports will go Ballistic man. We simply cannot pay as we don’t print our own debt never mind the worlds reserve . As we go forward as they used to say in Ireland inc less and less countries will want tertiary European manufactured goods and will just want the oil first thank you very much. Eventually even mighty Germany will succumb to the energy vice unless it gets its finger out. Its difficult to endure pathetic governance at the best of times, but this PN nonsense takes the biscuit; its a pity biscuit manufacturing left our shore, but that’s another matter… So in Franz Kafka’s ‘Castle’, the ECB are toiling 7*24 with superhuman efforts to restructure our odious and unctuous and unconscionable IBRC PN debt knell ? Nah, as O Leary says, they’re all over there on junkets sleepily whittling away the wasting time waiting for the opportune time to fleece our negotiators once again. No doubt one of these days, 17th March, April 1 (?) fanfare will fill the air and we’ll be given the glven tidings of great joy. Flush from technical discussions lasting into the ECB nights, we’ll get the announcement: our PN’s to be given an extended maturity date of 30yrs. Yeah, don’t be cynical, its a rubbish deal foisted on Irish citizens, the debt of crony speculators and useless, greedy bankers, fed by a useless ECB currently being destroyed by an unworkable currency model whose days are numbered. So, when political moment for this is right, Schauble, Monti, Merkel and Sarkozi, will give the nod to the above. Their glove puppet Vichy debt management government of LB/FG will turn the black news into white. You couldn’t make it up ! @Expat in USA Re “Fairness is important but Ireland needs to grow and the public sector costs are a drag on growth.” Where did this myth arise that MNC’s, the wealthy, should not pay for the public sector; that wealth should not be taxed, that destroying the public sector to feed the insatiable greed of the wealthy, is a good thing; that a no tax regime for the wealthy leads to growth? This is a Third world model ruining society both in the US and Ireland. We need an enlightened approach to tax eg: http://www.sweden.se/eng/Home/Work/The-Swedish-system/What_is_the_Swedish_model/Taxes-and-society/ Of course in Ireland the odious debt of bankers competes for debt repayments against monies otherwise earmarked for public services. Commonsense indicates a 50:50 default to fairly rebalance this equation, no ‘buts’ @Expat in the USA: “If pay in the public sector is so far ahead of the private sector, why would anyone with a brain want to work in the public sector”? You put your finger on it. That should be true IF pay in the public sector IS so far ahead of the private sector. But as many of us who have tried to hire people with key skills into (for example) research positions in the public sector have found, private sector candidates aren’t interested. Wonder why that is? @ tull Tinned food & shot gun. No dog. I realise the comfortably off don’t like it but reality coming. Excellent planning for the future. Your plan is cut everthing and give it all away. You have the biggest gun so you can wait for the dawn because then anyone with a gun will be ok when the sun comes up. Really thats it? As a public servant I am all in favour of benchmarking pay. Lets publish everyone’s income. public and private sector. All income including share didvends, rental income, consultantcy income and income from “other sources”. Then lets look at Tax paid on said income. Plese stop the ranting. Anybody who thinks that cutting wages is going to get us out of this situation is deluded. Everyone works for the government or works for someone who works for the government. All industry bar none relies on the government. It is naive and dishonest to pretend otherwise. The governement is the customer. There job is to insure the money gets circulated. They have failed in this task. To say lets cut Public servants and people on social welfare’s wages by a further 33% for what. You know it will save nothing. There will be social upheaval. Are you suggesting that we also cut the fees paid by government to private sector suppliers and contarctors by 33% also. Really. All those plumbers and cleaners and paper suppliers and consultants and SME’s and drug companies and EVERYBODY. Really? As the individual paid by the state to clean up after guys with shot guns have there say I worry about your philosphy. @Jane Gray “Wonder why that is?” It’s no different hiring private sector to private sector. In times of hardship, people are disinclined to jump ship if they think their present company is likely to survive. Why move to a new company and suffer from ‘last in, first out’? Unfortunately, what they don’t know of course is what conversations are taking place in the boardroom of their current employer! Robert Browne post is a classic of hate. It’s demented and is the sort of commentary that has made this site all but useless. For shame, on him and on the “moderators” for allowing this degeneration @ Bundesboy, hands off the censor button, criticising Robert Brown, should be enough for you. @Robert Brown…Croke Park has its problems; there is need for radical haircutting primarily at top echelons of public service where indeed spending has gotten out of control. We have too many overpaid TD’s producing little at enormous expense. Croke Park has already been whittled away as balance of payments are brought into line. If we remain in the euro, the biggest turkeys will be eaten last, so wouldn’t worry about CP. However, perhaps you should direct ire at the ECB, at the terrible consequence and moral hazard of the taxpayer responsible for public services, schools and hospitals etc, shouldering the burden of bankers who’ve squandered the public purse. Perhaps he might even have a useful binding condition there re debt ‘what the state can afford’. Instead what we have is no banker goes to jail, politicians, debt negotiators included. We will ‘honour’ the debt of rogue bankers and developers with debt we cannot afford and cannot pay back!! Bankers and financial services look jealously at funding for state public services they believe should instead go to pay interest on debt for bailout 1, 2, 3 etc ? There is of course the case to be made for perpetual debt, debt designed to keep vassals in harness forever to the ECB while the local debt managers get well paid for carrying out the job of debt extraction…… Its long past wakey, wakey time, go ró-áirithe in dTir na N’Óg 🙂 @ Colm Re Bundesboy – there’s more to this than you understand, I believe @ Tull/BW2/Paul Hunt/other regulars Take a guess at what I’m suggesting… Colm McCarthy: ECB, IMF square up over Irish debt hopes http://www.independent.ie/opinion/analysis/colm-mccarthy-ecb-imf-square-up-over-irish-debt-hopes-3046245.html @ Mr Bond I’m another – but I’ve no idea what you’re suggesting. Or rather, I could make some guesses but I’d probably be wildly wrong. On Colm’s article in the Sunday Independent “The IMF went on to support the case for a favourable modification to the terms of Ireland’s financing of bank rescue costs.” Hmmm, the IMF didn’t think the case was worth mentioning in its staff report and it was only via adlib comments by the Irish mission chief Craig Beaumont that anything supportive from the IMF emerged. Nothing official in the staff report, nothing from Ajai Chopra and nothing from the IMF MD, former French finance minister Christine Lagarde. False hope is still hope, but the IMF’s primary objective is to see this country back to sustainable finances, and as crushingly brutal as the budget adjustments will be, the IMF can reasonably hope to see a balanced budget and get its money back even with the existing level of bank debt. So if the attempted distinction of the IMF and ECB as good cop/bad cop might not be realistic. They’re both bad cops when their objectives clash with our national objectives. @ Gavin You probably weren’t on here way back when. Things got ugly back then. I won’t ruin the suspense just yet. It wouldn’t be fair on BW2 in particular. @ Bond, Eoin Bond Can’t imagine what you might mean!! Agree with you Robert on CP but not everything else. But this recession is tough on everyone Well almost everyone @Gavin Colm McCarthy may be 100% correct in analysing the split between the ECB and IMF on PSI , but I think he is off the mark if he thinks Ireland can drive a wedge into that split in favour of Ireland either on the PN note issue or any other. The ‘principals’ in the Troika are not for turning. For ‘principal’ in the Troika read Schauble and Merkel. The real Troika staff and indeed Troika principals are mere functionaries. Ireland now has no choice except to sign the treaty. There is once again a loaded gun pointed at Ireland being held by the financial market, the Troika and ourselves. We simply do not have the leadership in this country to stand up for the country or to turn the country round sufficiently quickly so that it does not matter if the gun goes off. JR, I find your comment mystifying. The Irish govt., through diligent staff work and some quiet diplomacy has managed to persuade the IMF and possibly the Commission of the need to change the terms of the PN. Thus far, part of the ECB are unwilling to change. We can probably guess that it is the Germans and their satellites (NL & Finland) that are adapting the dog in manger. Shouting, threats or foot stamping will not move these guys. The govt will have to patiently make it’s case. It is boring, time consuming and frustrating. @ Tull We will get lengthening of the payment term or suspension of repayments. There will be no debt write-down. And, besides, we owe the money to ourselves ultimately anyway. Govt should not put too much effort into this one. A slight indifference and ambivalence regarding the European project might start serving us better @ All FYI http://www.independent.ie/opinion/columnists/brendan-keenan/brendan-kennan-if-we-all-want-jobs-we-need-more-bubbles-3046432.html @ DOCM Construction touches a huge range of economic players both in products and services. 126,000 employed in early 1998 then peaked at 280,000. @ All Irish Public Pay & Pensions: Minister Brendan Howlin read a statement to the Dáil on Thursday and it’s clear that anyone fearing radicalism from this man should rest easy. He spoke of planned pay savings of 20% by 2015 compared with 2008 but if 2006 — the peak year of the boom – – was the benchmark year for savings on the total central government public pay and pensions bill, there would be no savings at all. In 2001 the Exchequer net pay and pensions bill was €10.2bn; it was €16.2bn in 2006; €18.7 in 2008 and €17.1bn in 2011 – – an increase of 5.6% since 2006 and 67.6% since 2001. The net cash cost of public staff pensions (after an employee’s normal deductions) was €876m in 2001; €1.4bn in 2006; €2.0bn in 2009 and €2.3bn in 2011 and by 2015 close to €3bn. Date for 2011 excludes local government staff – – of 30,000 in 2011. @ Finfacts, There’s quite an interesting OECD overview of Greek economy and changes proposed here including a section on Greek pension entitlements. http://www.oecd.org/dataoecd/6/39/44785912.pdf I’m wondering how safe are pension entitlements against future clawbacks? Will future clawbacks including changes to entitlement benefits only be applicable to new pension agreements? I’m assuming the contrary, that pension entitlements are not safe but may be the subject of future clawbacks, but is this correct? @ Colm Greece is seriously threatened with sovereign default. Constitutional norms will take second place to expedient management. Either state payments will be haircut by decree, or retain nominal value in an inflation/exit scenario. Pensioners shafted either way surely, but maybe not as badly as some other sections of the society. @ paul quigley + 1 But similar haircuts boomeranged in Argentina: “As a result, Argentina’s government had to pay higher and higher interest rates on loans issued in dollars. By the mid-1990s, it was clear the country was headed for a financial crisis. The IMF tied a bailout to a tough austerity program, and Argentina cut pensions and government employees’ pay. Instead of stimulating the economy, leaders focused on battling the country’s deficit. Greece Calling By the time the IMF finally approved the first capital infusion after months of negotiations, it was too late. “If they’d stepped in two years earlier, we could have avoided the 2001 crash,” Machinea says. He believes Europe could stand to learn a lesson from that experience: “The longer they hold off on saving Greece, the higher the cost will be.”” http://www.spiegel.de/international/world/0,1518,804856,00.html Isn’t the same austerity programme being tried here? See where that went in Argentina above? Next couple of years should be very interesting ! Tin hats should be mandatory. Those who left the public service last week hoping to enjoy their pensions should maybe feel less secure than they do at the moment. @Tull “I find you comment mystifying…” I commend the Irish staff for their continuing work on the PN issue but I do not think it will bear fruit in the near term. I am reacting to the reports of the ‘The ECB (monster) strikes back by Arthur Beesley’. Look at this from Draghi’s point of view. Is he prepared to do battle with Schauble, Merkel and all the doctrinaire staffers at the ECB on this issue. He has large battles to fight. Purely from his perspective to go out on a limb on this one does not make sense. If combined with some kind of EZ bank resolution scheme, which is long overdue and needed, then he may be prepared to do battle for that because the issue itself has huge EZ implications. I say this fully believing that the ECB / bondholders have less right to the bond money that the IRA or whoever had to the Northern bank money. [I have not yet seen a European or ECB legal justification for the imposition of private debts of the EU public or EU States. I have seen plenty of opinions on other matters from the ECB] On the treaty issue, though it pains me to say it, I will vote yes. I may take a leaf out of the DeValera ruse book by looking the other way as I mark my vote. My reasons for changing my mind are as follows: 1. Ireland is between a rock and a hard place. The Europeans and ECB / Germany in particular would freeze us out not only from finance (ESM) but also on trade issues. 2. We do not have the leadership at national level to forge an independent pathway out of this crisis which rejecting the treaty would require us to do. 3. We do not have the leadership at national level or the cohesion or homogeneity as a nation to spread the existing burden of crisis fairly. Another severe jolt if not distributed fairly (which it would not be) would start a spiral of disintegration akin or worse to that in Greece. 4. The treaty itself, while it may contain some useful items, will ‘be honoured more in the breach than in the observance’. Witness Spain (Rajoy), France (Hollande, hopefully). JR, I see your point now and it is fair. I will reluctantly be voting no as a) it is a barny treaty. It is impossible to calculate a structural deficit for a country with an incalculable trend growth rate. B) no one is going to adhere to.it. The New Spanish govt has kicked it to Row Z. C) German aggrandisement needs to be stopped again. D ) the only way to get the neccedsary structural reform is if we don’t have access to the ESM. @Tull Your points are all valid and point D is more than valid. Quo Vadis! @Tull The ESM Treay, afaik, has yet to be voted on in the Dail. Might make more sense to postpone this vote until after the ‘Fiscal Corset’ referendum. Nonsense generates strange bedfellows! DOD. Possible excuses for delay a) the parliamentary draughtsman is sick b) the football c) state exams d) officials seconded to prepare for EU Prez e) a suspected outbreak of Foot & Mouth . October it is. @Eoin Again! That’s the problem with these awful anonymous contributors. @Bond Eoin Bond “Take a guess at what I’m suggesting…” …that Bundesboy is someone we all know and love (but by another name)? @ Bundesboy Easy on there boy! I take it, you are just having a little rush of blood to your immature head! I don’t know who you are, who you used to be, or who you think you might be. However, the “boy” part of your name might hint at a testosterone fueled, acne driven rant, against those, who like myself, are not part of a cosy census club, and in whose company you were tempted to show what a big boy you really are. Now that you have got that off you chest, maybe you might like to have a second attempt at explaining yourself or even a third attempt? It’s not coincidental, that Mario Draghi has rejected or slapped down Enda’s nominated gladiator by refusing to even bother to put the PN topic on the ECB agenda. Draghi wants to keep the expansion of the money supply as a function of the ECB and not cede it to wide boys at the DoF who told the late Brian Lenihan about those Leaving Certificate promissory notes and bills of exchange he had forgotten about. It appears many people in Europe, notice the extraordinary salaries still being paid out by a “bust” country, they see the CP gold plated life raft floating serenely by in the middle of an EU existential crisis and they cannot help but scratch their heads as on the side of the vessel they see the name “Bailout 1”. Then they look at the overgenerous welfare state in Ireland and give another scratch! The only cogent argument I hear for the FC is; where is the money going to come from in Q3 of 2013 to continue to finance CP and welfare. Also, maybe Joseph Ryan’s points at 2 and 3 above. Sad though that we end up voting for austerity in perpetuity because of that. As an aside, but not too much of an aside, I look to Greece and what do I see? I see the end of the beginning. http://www.zerohedge.com/news/eight-hundred-pound-greek-gorilla-enters-room PR Guy : Eoin Bond sees professors everywhere lets not forget. Personally, i think he is him….. Everyone else : think we are being strung along with ‘will they wont they’ re the PromNotes, string it out till when we get a vote, then suddenly ‘no, sorry?’ @ Joseph Ryan ‘2. We do not have the leadership at national level to forge an independent pathway out of this crisis which rejecting the treaty would require us to do. 3. We do not have the leadership at national level or the cohesion or homogeneity as a nation to spread the existing burden of crisis fairly. Another severe jolt if not distributed fairly (which it would not be) would start a spiral of disintegration akin or worse to that in Greece’ Now you are sucking diesel, as they say down the country. Leadership is critical, and it is incompetent, corrupt leadership which has left us in our current pickle. The road out, if there is one, is going to be very rough, and I doubt we will enjoy the fate which the technocrats are preparing for us. If Merkozy had shown some real will to tackle the bankers, instead of targeting the ‘lazy periphery’, their prescriptions for Ireland might have more cred. As it is, their strategy goes no further than making bondholders whole, and letting ‘southern economies’ go to the wall. What happened to the stuctural programme ? http://www.bis.org/publ/work346.pdf @observerstatus “think we are being strung along with ‘will they wont they’ re the PromNotes, string it out till when we get a vote, then suddenly ‘no, sorry?’” A similar thought had crossed my mind. But surely our leaders would not be so cynical….. 🙁 This paper posted by Philip Lane http://www.centralbank.ie/publications/Documents/01RT12.pdf clearly shows why Ireland does not have much choice other than do what the ECB asks for. Equatorial Guinea’s GPD is about the same as Ireland’s, but most residents of the West African nation have to scrape by on the equivalent of $2 a day. They were optimistic once. @Overseas commentator How? @ All This contribution by Stephen Kinsella on the topic is of interest. http://www.independent.ie/opinion/analysis/how-not-if-we-repay-debts-is-the-key-issue-3047343.html I am a bit puzzled by these comments. “Find a way to defer or defray some of the interest cost, defer the payment for a few years, or write the principal down somehow. The first and last options aren’t really runners”. versus; “The interest costs essentially boil down to one part of the State — the Department of Finance — paying another part of the State — the IBRC. So we should focus on the total capital reduction, and not a writedown in interest payments”. What capital reduction? If I understood Minister Noonan correctly in his recent extensive TV interview with Sean Whelan of RTE, he stated clearly (i) there would be no capital reduction and (ii) if a deferment arrangement was put in place, this would ultimately result in a higher overall cost. anyone know what the consequences would be for AIB & Bank of Ireland covered bonds of moving the tracer mortgages (which I assume would be in the covered bonds pool) to IBRC?k Olli Rehn has just added another empty phrase to the European lexicon “pacta sunt servanda” respect your commitments and obligations, as he spoke about Ireland paying back its PN’s. I hope Patrick Honohan has brushed up on the old Latin. Pity, “pacta sunt servanda” was not respected when it came to the Stability and Growth Pact. @Robert Browne Patrick might find this useful. http://www.nyprr.com/latin_for_lawyers_bookmarked.pdf @ PR Guy My daughter just finishing a law degree must give her this as she will be heading to the states. A useful link thanks! @Robert Browne Took a lady lawyer out for dinner once (before Mrs PR Guy came along). She was very arrogant and boring. Every time I asked her a question her reply was always “allegedly”. I asked her when she would qualify. She got all huffy and puffy and said she had already qualified. I said (as I got up from the dinner table, halfway through the main course, to pay the bill and run away): “I didn’t think you had because you clearly haven’t got past ‘A’ in the legal dictionary yet.” I can be a right bitch sometimes. Comments are closed.