TARP...Irish style...

[GRG55]

An apologist commentary on Ireland's proposed NAMA [National Asset Management Agency] "bad bank" plan. The justifications and rationalizations will sound very familiar...so familiar that I wonder if they hired Hank Paulson as a consultant...:rolleyes:

Like it or not, NAMA is the only credible plan we have

THE headline in yesterday's 'Financial Times' said it all: "Dire Land", as a full-page article outlined the woes that have befallen Ireland's once high-flying economy.

But the medicine that the Government has prescribed to deal with what the influential financial paper highlighted as the "industrialised world's deepest recession" is proving difficult to swallow.

Appearing before a key Oireachtas committee yesterday, Finance Minister Brian Lenihan gave his staunchest defence to date of plans to establish the National Asset Management Agency, which is being set up to take over €90bn of risky property loans.

He rebutted suggestions that the plan amounts to a bailout for developers -- stressing that insolvent players in the market will be liquidated as the 'bad bank' makes the hard decisions that the original lenders have refused to.

And though he is also trying to convince a sceptical public that the plan does not amount to an unfair bailout of the banks that will unjustly enrich its shareholders, it will be another two weeks before we will have any idea as to whether he is just playing to the galleries to get the most controversial piece of legislation in the history of the State over the line...

...A glance through the draft legislation that aims to give rise to NAMA shows just how all-powerful the minister will become once it is up and running...

In June 2008 the Irish voted down the EU's Lisbon Treaty with a 53.4% "No" vote. The Government claims that it has negotiated a variety of assurances from the EU on issues that were of apparent concern to Irish voters that rejected the Treaty [abortion, military neutrality, taxation, and the retention of a European Commissioner per EU member] and has set a second referendum date for October 2, 2009 for a re-vote.

If the natives are restless about NAMA who knows if the government will get its wish of a "Yes" vote on Lisbon...

[GRG55]

Re: TARP...Irish style...

...In June 2008 the Irish voted down the EU's Lisbon Treaty with a 53.4% "No" vote. The Government claims that it has negotiated a variety of assurances from the EU on issues that were of apparent concern to Irish voters that rejected the Treaty [abortion, military neutrality, taxation, and the retention of a European Commissioner per EU member] and has set a second referendum date for October 2, 2009 for a re-vote.

If the natives are restless about NAMA who knows if the government will get its wish of a "Yes" vote on Lisbon...

Looks like a firm "Yes" vote this time...

Irish Minister Martin Claims Victory in Lisbon Vote

Oct. 3 (Bloomberg) -- Irish Foreign Minister Micheal Martin claimed victory in a second referendum on the European Union’s new governing treaty, as early tallies put the “yes” side ahead and opponents conceded defeat.
“It looks like a convincing win,” Martin said in an interview with Dublin-based RTE Radio in Dublin today. “It’s good for Ireland.”...

...Prime Minister Brian Cowen agreed to another vote after securing guarantees from European leaders to safeguard Irish neutrality, power over taxes and the right to keep its EU commissioner. Opinion polls before the vote also showed people were preparing to back the treaty, seeking Europe’s shelter as the economy shrinks at the fastest pace in the euro region and banks struggle to cover bad debts.

“It is very clear that there is a large ‘yes’ vote,” said Declan Ganley, leader of Libertas, which campaigned against the treaty. “I respect the outcome. I respect the result and the people have spoken.”...

...The ballot comes against the backdrop of a deteriorating economic and fiscal situation in Ireland. The economy, once Europe’s most dynamic, may shrink by about 8 percent this year. Unemployment has more than doubled to 12.6 percent and the government yesterday said the full-year budget deficit would be wider than it previously estimated.

Before the vote, Cowen said Europe’s help had aided Ireland’s banking system. Patrick Honohan, the newly appointed head of the country’s central bank, said in a July 21 speech that the European Central Bank had lent Irish banks a “staggeringly large sum of money” to repay borrowings on the international money markets.

“We wouldn’t really have got through the last few months without the EU,” said Terry Prone, a political analyst who runs the Dublin-based Communications Clinic. “It was cool to vote ‘no’ last time. It marked us as disaffected and independent thinkers. It’s not cool to vote ‘no’ this time.”...

[jk]

Re: TARP...Irish style...

Looks like a firm "Yes" vote this time...

Irish Minister Martin Claims Victory in Lisbon Vote

Oct. 3 (Bloomberg) -- Irish Foreign Minister Micheal Martin claimed victory in a second referendum on the European Union’s new governing treaty, as early tallies put the “yes” side ahead and opponents conceded defeat.
“It looks like a convincing win,” Martin said in an interview with Dublin-based RTE Radio in Dublin today. “It’s good for Ireland.”...

...Prime Minister Brian Cowen agreed to another vote after securing guarantees from European leaders to safeguard Irish neutrality, power over taxes and the right to keep its EU commissioner. Opinion polls before the vote also showed people were preparing to back the treaty, seeking Europe’s shelter as the economy shrinks at the fastest pace in the euro region and banks struggle to cover bad debts.

“It is very clear that there is a large ‘yes’ vote,” said Declan Ganley, leader of Libertas, which campaigned against the treaty. “I respect the outcome. I respect the result and the people have spoken.”...

...The ballot comes against the backdrop of a deteriorating economic and fiscal situation in Ireland. The economy, once Europe’s most dynamic, may shrink by about 8 percent this year. Unemployment has more than doubled to 12.6 percent and the government yesterday said the full-year budget deficit would be wider than it previously estimated.

Before the vote, Cowen said Europe’s help had aided Ireland’s banking system. Patrick Honohan, the newly appointed head of the country’s central bank, said in a July 21 speech that the European Central Bank had lent Irish banks a “staggeringly large sum of money” to repay borrowings on the international money markets.

“We wouldn’t really have got through the last few months without the EU,” said Terry Prone, a political analyst who runs the Dublin-based Communications Clinic. “It was cool to vote ‘no’ last time. It marked us as disaffected and independent thinkers. It’s not cool to vote ‘no’ this time.”...

i guess no one mentioned that it was being in the eurozone that set up the irish bubble in the first place.

[GRG55]

Re: TARP...Irish style...

i guess no one mentioned that it was being in the eurozone that set up the irish bubble in the first place.

Each "national bubble" has its own pattern and characteristics. Do you think that Ireland's bubble required membership in the EU as a necessary and sufficient condition? Or just the former, combined with internally sponsored policies and actions that created the right witch's brew [a la Iceland].

[unlucky]

Re: TARP...Irish style...

Each "national bubble" has its own pattern and characteristics. Do you think that Ireland's bubble required membership in the EU as a necessary and sufficient condition? Or just the former, combined with internally sponsored policies and actions that created the right witch's brew [a la Iceland].

What I find most interesting about the Irish situation is the response of the govt. to the bursting bubble. As in the UK/US, the banks have been bailed out / propped up with the help of the ECB. But unlike the UK/US, the Irish govt is in the process of effectively withdrawing fiscal stimulus, rather than boosting it.

The reason is that the govt recklessly expanded spending during the bubble, using revenues artificially buoyed by expanding property taxes. When the bubble burst, these revenues disappeared, leading to a fiscal deficit expected to hit 12% of GDP this year (despite spending cuts and tax hikes already in place). Now the govt is under pressure from the EU to return to "sustainable deficit levels" and plans another hefty round of spending cuts this year. (The annual deficit is currently about 25 billion euro; the govt is committed to reducing it by 4 billlion this year, 4 billion next year, 2 billion the following year, etc).

While the Irish economy is not comparable to the UK and US, the effects of the cuts may be interesting to watch from the perpective of understanding what happens (politically + economically) when a govt withdraws stimulus in the midst of a depression. The Irish trade unions are apparently hoping for massive protests this winter. Given that Ireland is a very open economy though, it is likely to benefit from stimulus being applied in other countries.

[jk]

Re: TARP...Irish style...

Each "national bubble" has its own pattern and characteristics. Do you think that Ireland's bubble required membership in the EU as a necessary and sufficient condition? Or just the former, combined with internally sponsored policies and actions that created the right witch's brew [a la Iceland].

not the eu, the eurozone. interest rates were set for the german economy, too low for ireland. cue the "celtic tiger" bubble.

[GRG55]

Re: TARP...Irish style...

not the eu, the eurozone. interest rates were set for the german economy, too low for ireland. cue the "celtic tiger" bubble.

Two notch downgrade...

Euro trims gains after Fitch cuts Ireland rating

Wed Nov 4, 2009 6:30am EST

LONDON, Nov 4 (Reuters) - The euro trimmed gains against the dollar and the yen while the spread between Irish and euro zone government bond yields widened on Wednesday after ratings agency Fitch cut its sovereign rating of Ireland.

Fitch downgraded Ireland's long-term rating to 'AA- ' from 'AA+', with a stable outlook. It said the move reflected the severity of the decline in nominal GDP and the exceptional rise in government liabilities...

[Diarmuid]

Re: TARP...Irish style...

Two notch downgrade...

Here is probarbly why... to say I am seething at the criminality is a gross understatement. The people of Ireland need out of this squandering of theirs and their childrens labour and future. There should be provisions or choice available in a so called representative consentual democracy to say no more I do not nor will not consent to this type of governance any longer. I waive the benefits and accept my responsibilities for self and kin. :mad:

EU warns debt is on course to hit 100pc of output

Urgent corrective measures needed in upcoming Budget



Looking up: EU Monetary Affairs Commissioner Joaquin Almunia delivers the Autumn 2009 Economic Forecasts for the 27 member states in Brussels, Belgium yesterday.




By Brendan Keenan

Wednesday November 04 2009

Next month's Budget may set the economy back further, but without it the country's national debt could reach 100pc of output (GDP) by 2011, the EU Commission has said in a new analysis.
The Commission is forecasting a decline of 1.4pc in Irish GDP next year. But Brussels is not taking the impact of next month's Budget into account, because the details are not yet known.
"Depending on the specific measures that are eventually implemented, a dampening effect on consumer demand cannot be excluded," the Commission says in its autumn economic forecast.
Correction
On the other hand, it says that faster correction of the economy's problems might give more support to consumption and investment by helping confidence.
The Government's plans include a correction of 4.3pc of GDP -- around €8bn -- in the Budgets for 2010 and 2011.
Unless there is a compensating boost from confidence, this could also reduce the modest 2.6pc growth forecast for 2011.
These forecasts are higher than those in the Commission's estimates last May, but it warns of the struggle facing the Irish economy in trying to return to strong growth.
It worries about the drag on future consumption as people try to reduce their debts, particularly from over-investment in housing. The recession is being driven by a lack of domestic spending, it says, with this year's fall in consumer spending the biggest in 25 years.
Pressures on household balance sheets also mean continued pressure on tax revenues. "The shift away from tax-rich domestic growth to export-led growth with sluggish employment and consumption growth, would lead to only a moderate tax revenue increase once the economic recovery takes hold," the report says.
The Commission said the recession in the EU had ended, saying the eurozone economy is set to make a gradual recovery in coming years, with growth of 0.7pc in 2010 and 1.5pc in 2011.
"The EU economy is coming out of recession," EU Economic and Monetary Affairs Commission Joaquin Almunia said.
However, the road ahead is a challenging one, he warned, with fears of further increases in EU unemployment.
The report expects firms to increase labour shedding in the coming quarters, with the jobless rate reaching 10.25pc in 2011.
"The financial crisis implies a number of risks for labour market developments -- including the possibility of a 'jobless' recovery, persistently high unemployment and a shrinking workforce," the report warns.
- Brendan Keenan
Irish Independent

Fume - the victims of the theft (poorest and least educated and hence weakest) are going to jail for failure to pay up.

One debtor sent to jail every day since bank bailout deal

By Mary Regan, Political Reporter
Tuesday, November 03, 2009

AT least one person was sent to jail every day because they were unable to pay credit card bills or meet loan repayments to banks, credit unions or other lenders in the months following the Government’s rescue of financial institutions.

Despite banks promising a more flexible approach to loan defaulters, there was a rise in the rate of imprisonment for debtor offences after the state guarantee was introduced just over a year ago.

Figures show 32 people were handed down sentences in the run-up to Christmas last year because of inability to meet loan repayments despite banks getting a capital injection of €5.5 billion in December.

The official Department of Justice figures show the problem of spiralling debt led to 306 cases of imprisonment last year and 186 cases up to June of this year – the latest date for which figures are available.

This does not include the estimated 25,000 cases of homeowners in mortgage arrears.

In a written response to a Dáil question Justice Minister Dermot Ahern said: "The average length of sentence imposed on each offence was 27 days. The average length of sentence served was 20 days. Some persons paid their debt while in prison which would automatically release them from their sentence."

He said: "The number of such persons held in custody at any one time is a tiny fraction of the overall prisoner population."

Despite an almost doubling of the rate of imprisonment in the first six months of this year compared with 2007, Mr Ahern said there is no one in custody due to a failure to meet repayments.

Cases are expected to reduce because of a High Court ruling in June that places the onus of proof on banks that a defaulter has refused to pay.

However the laws were last night described as outdated and the Government was urged to bring in legislation to ensure debt cases are not dealt with in the courts and defaulters are not sent to jail.

The Free Legal Advice Centre (FLAC) is calling for new laws to put formal debt management plans between banks and debtors on a statutory footing.

Senior policy researcher at FLAC, Paul Joyce, said the current laws are "woefully inadequate in terms of their appropriateness for 2009" and are "not adjusted to the reality of our consumer credit society".

He said: "A lot of the bubble was based on consumer spending. Where did the people get the money? They borrowed it."

The revised Programme for Government agreed between Fianna Fáil and the Green Party last month promised to "create a new system of personal insolvency regulations".

But there are no concrete plans to do so and legislation has not been drawn up in the area.

The Irish Bankers Federation said it has developed a new protocol on debt management which requires lenders to work with borrowers.

This story appeared in the printed version of the Irish Examiner Tuesday, November 03, 2009

Read more: http://www.examiner.ie/ireland/one-d...#ixzz0VzX0AFHO