Bollitics - Ireland, the Euro and the future of the EU

[Meath_Villan]

This really is the beginning of the end for the euro I think, talk already of hitting them for a further reduction on top of what was originally intended and if greece goes ...to follow them

[peterms]

Is that relevant? If they were to do the unthinkable and exit the EUR, they would still require paper money.

Yes they would. But so much that the task of printing it would be so great that they would need to get it done before making a decision, never mind implementing it? When cash is such a small part of total money? Sounds unlikely.

[Awol]

A long, interesting and very depressing article detailing the state of things in Ireland, and the brutal agenda that Europe are pursuing to utterly destroy that nation as a warning to others.

Ireland's future depends on breaking free from bailout

OPINION: Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business, writes MORGAN KELLY

WITH THE Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable. By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed.

Ireland is facing economic ruin.

While most people would trace our ruin to to the bank guarantee of September 2008, the real error was in sticking with the guarantee long after it had become clear that the bank losses were insupportable. Brian Lenihan’s original decision to guarantee most of the bonds of Irish banks was a mistake, but a mistake so obvious and so ridiculous that it could easily have been reversed. The ideal time to have reversed the bank guarantee was a few months later when Patrick Honohan was appointed governor of the Central Bank and assumed de facto control of Irish economic policy.

As a respected academic expert on banking crises, Honohan commanded the international authority to have announced that the guarantee had been made in haste and with poor information, and would be replaced by a restructuring where bonds in the banks would be swapped for shares.

Instead, Honohan seemed unperturbed by the possible scale of bank losses, repeatedly insisting that they were “manageable”. Like most Irish economists of his generation, he appeared to believe that Ireland was still the export-driven powerhouse of the 1990s, rather than the credit-fuelled Ponzi scheme it had become since 2000; and the banking crisis no worse than the, largely manufactured, government budget crisis of the late 1980s.

Rising dismay at Honohan’s judgment crystallised into outright scepticism after an extraordinary interview with Bloomberg business news on May 28th last year. Having overseen the Central Bank’s “quite aggressive” stress tests of the Irish banks, he assured them that he would have “the two big banks, fixed by the end of the year. I think it’s quite good news The banks are floating away from dependence on the State and will be free standing”.

Honohan’s miscalculation of the bank losses has turned out to be the costliest mistake ever made by an Irish person. Armed with Honohan’s assurances that the bank losses were manageable, the Irish government confidently rode into the Little Bighorn and repaid the bank bondholders, even those who had not been guaranteed under the original scheme. This suicidal policy culminated in the repayment of most of the outstanding bonds last September.

Disaster followed within weeks. Nobody would lend to Irish banks, so that the maturing bonds were repaid largely by emergency borrowing from the European Central Bank: by November the Irish banks already owed more than €60 billion. Despite aggressive cuts in government spending, the certainty that bank losses would far exceed Honohan’s estimates led financial markets to stop lending to Ireland.

On November 16th, European finance ministers urged Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown.

At this stage, with Lenihan looking set to exploit his strong negotiating position to seek a bailout of the banks only, Honohan intervened. As well as being Ireland’s chief economic adviser, he also plays for the opposing team as a member of the council of the European Central Bank, whose decisions he is bound to carry out. In Frankfurt for the monthly meeting of the ECB on November 18th, Honohan announced on RTÉ Radio 1’s Morning Ireland that Ireland would need a bailout of “tens of billions”.

Rarely has a finance minister been so deftly sliced off at the ankles by his central bank governor. And so the Honohan Doctrine that bank losses could and should be repaid by Irish taxpayers ran its predictable course with the financial collapse and international bailout of the Irish State.

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.

In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.

The bailout represents almost as much of a scandal for the IMF as it does for Ireland. The IMF found itself outmanoeuvred by ECB negotiators, their low opinion of whom they are not at pains to conceal. More importantly, the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, and €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy. Lending to an insolvent state, which has no hope of reducing its debt enough to borrow in markets again, breaches the most fundamental rule of the IMF, and a heated debate continues there over the legality of the Irish deal.

Six months on, and with Irish government debt rated one notch above junk and the run on Irish banks starting to spread to household deposits, it might appear that the Irish bailout of last November has already ended in abject failure. On the contrary, as far as its ECB architects are concerned, the bailout has turned out to be an unqualified success.

The one thing you need to understand about the Irish bailout is that it had nothing to do with repairing Ireland’s finances enough to allow the Irish Government to start borrowing again in the bond markets at reasonable rates: what people ordinarily think of a bailout as doing.

The finances of the Irish Government are like a bucket with a large hole in the form of the banking system. While any half-serious rescue would have focused on plugging this hole, the agreed bailout ostentatiously ignored the banks, except for reiterating the ECB-Honohan view that their losses would be borne by Irish taxpayers. Try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.

Instead, the sole purpose of the Irish bailout was to frighten the Spanish into line with a vivid demonstration that EU rescues are not for the faint-hearted. And the ECB plan, so far anyway, has worked. Given a choice between being strung up like Ireland – an object of international ridicule, paying exorbitant rates on bailout funds, its government ministers answerable to a Hungarian university lecturer – or mending their ways, the Spanish have understandably chosen the latter.

But why was it necessary, or at least expedient, for the EU to force an economic collapse on Ireland to frighten Spain? The answer goes back to a fundamental, and potentially fatal, flaw in the design of the euro zone: the lack of any means of dealing with large, insolvent banks.

Back when the euro was being planned in the mid-1990s, it never occurred to anyone that cautious, stodgy banks like AIB and Bank of Ireland, run by faintly dim former rugby players, could ever borrow tens of billions overseas, and lose it all on dodgy property loans. Had the collapse been limited to Irish banks, some sort of rescue deal might have been cobbled together; but a suspicion lingers that many Spanish banks – which inflated a property bubble almost as exuberant as Ireland’s, but in the world’s ninth largest economy – are hiding losses as large as those that sank their Irish counterparts.

Uniquely in the world, the European Central Bank has no central government standing behind it that can levy taxes. To rescue a banking system as large as Spain’s would require a massive commitment of resources by European countries to a European Monetary Fund: something so politically complex and financially costly that it will only be considered in extremis, to avert the collapse of the euro zone. It is easiest for now for the ECB to keep its fingers crossed that Spain pulls through by itself, encouraged by the example made of the Irish.

Irish insolvency is now less a matter of economics than of arithmetic. If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP.

Economists have a rule of thumb that once its national debt exceeds its national income, a small economy is in danger of default (large economies, like Japan, can go considerably higher). Ireland is so far into the red zone that marginal changes in the bailout terms can make no difference: we are going to be in the Hudson.

The ECB applauded and lent Ireland the money to ensure that the banks that lent to Anglo and Nationwide be repaid, and now finds itself in the situation where, as a consequence, the banks that lent to the Irish Government are at risk of losing most of what they lent. In other words, the Irish banking crisis has become part of the larger European sovereign debt crisis.

Given the political paralysis in the EU, and a European Central Bank that sees its main task as placating the editors of German tabloids, the most likely outcome of the European debt crisis is that, after two years or so to allow French and German banks to build up loss reserves, the insolvent economies will be forced into some sort of bankruptcy.

Make no mistake: while government defaults are almost the normal state of affairs in places like Greece and Argentina, for a country like Ireland that trades on its reputation as a safe place to do business, a bankruptcy would be catastrophic. Sovereign bankruptcies drag on for years as creditors hold out for better terms, or sell to so-called vulture funds that engage in endless litigation overseas to have national assets such as aircraft impounded in the hope that they can make a sufficient nuisance of themselves to be bought off.

Worse still, a bankruptcy can do nothing to repair Ireland’s finances. Given the other commitments of the Irish State (to the banks, Nama, EU, ECB and IMF), for a bankruptcy to return government debt to a sustainable level, the holders of regular government bonds will have to be more or less wiped out. Unfortunately, most Irish government bonds are held by Irish banks and insurance companies.

In other words, we have embarked on a futile game of passing the parcel of insolvency: first from the banks to the Irish State, and next from the State back to the banks and insurance companies. The eventual outcome will likely see Ireland as some sort of EU protectorate, Europe’s answer to Puerto Rico.

Suppose that we did not want to follow our current path towards an ECB-directed bankruptcy and spiralling national ruin, is there anything we could do? While Prof Honohan sportingly threw away our best cards last September, there still is a way out that, while not painless, is considerably less painful than what Europe has in mind for us.

National survival requires that Ireland walk away from the bailout. This in turn requires the Government to do two things: disengage from the banks, and bring its budget into balance immediately.

First the banks. While the ECB does not want to rescue the Irish banks, it cannot let them collapse either and start a wave of panic that sweeps across Europe. So, every time one of you expresses your approval of the Irish banks by moving your savings to a foreign-owned bank, the Irish bank goes and replaces your money with emergency borrowing from the ECB or the Irish Central Bank. Their current borrowings are €160 billion.

The original bailout plan was that the loan portfolios of Irish banks would be sold off to repay these borrowings. However, foreign banks know that many of these loans, mortgages especially, will eventually default, and were not interested. As a result, the ECB finds itself with the Irish banks wedged uncomfortably far up its fundament, and no way of dislodging them.

This allows Ireland to walk away from the banking system by returning the Nama assets to the banks, and withdrawing its promissory notes in the banks. The ECB can then learn the basic economic truth that if you lend €160 billion to insolvent banks backed by an insolvent state, you are no longer a creditor: you are the owner. At some stage the ECB can take out an eraser and, where “Emergency Loan” is written in the accounts of Irish banks, write “Capital” instead. When it chooses to do so is its problem, not ours.

At a stroke, the Irish Government can halve its debt to a survivable €110 billion. The ECB can do nothing to the Irish banks in retaliation without triggering a catastrophic panic in Spain and across the rest of Europe. The only way Europe can respond is by cutting off funding to the Irish Government.

So the second strand of national survival is to bring the Government budget immediately into balance. The reason for governments to run deficits in recessions is to smooth out temporary dips in economic activity. However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost. To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise.

Cutting Government borrowing to zero immediately is not painless but it is the only way of disentangling ourselves from the loan sharks who are intent on making an example of us. In contrast, the new Government’s current policy of lying on the ground with a begging bowl and hoping that someone takes pity on us does not make for a particularly strong negotiating position. By bringing our budget immediately into balance, we focus attention on the fact that Ireland’s problems stem almost entirely from the activities of six privately owned banks, while freeing ourselves to walk away from these poisonous institutions. Just as importantly, it sends a signal to the rest of the world that Ireland – which 20 years ago showed how a small country could drag itself out of poverty through the energy and hard work of its inhabitants, but has since fallen among thieves and their political fixers – is back and means business.

Of course, we all know that this will never happen. Irish politicians are too used to being rewarded by Brussels to start fighting against it, even if it is a matter of national survival. It is easier to be led along blindfold until the noose is slipped around our necks and we are kicked through the trapdoor into bankruptcy.

The destruction wrought by the bankruptcy will not just be economic but political. Just as the Lenihan bailout destroyed Fianna Fáil, so the Noonan bankruptcy will destroy Fine Gael and Labour, leaving them as reviled and mistrusted as their predecessors. And that will leave Ireland in the interesting situation where the economic crisis has chewed up and spat out all of the State’s constitutional parties. The last election was reassuringly dull and predictable but the next, after the trauma and chaos of the bankruptcy, will be anything but.

[peterms]

A long, interesting and very depressing article detailing the state of things in Ireland, and the brutal agenda that Europe are pursuing to utterly destroy that nation as a warning to others.

Ireland's future depends on breaking free from bailout

Excellent article, though I disagree with the premise about budget balancing; the alternative is to withdraw from the euro and create sovereign currency for whatever level of capital investment will create jobs doing necessary things. Don't fuss about it being a "deficit" and don't issue debt to cover it.

How interesting that the article describes yet another in a long sequence of meetings to decide how much of the gambling losses of **** bankers get shoved up the arse of the Irish people. At which of these decision points did this model western democracy seek the consent of the people for the massive liabilities it was incurring on their behalf?

[Awol]

At which of these decision points did this model western democracy seek the consent of the people for the massive liabilities it was incurring on their behalf?

The election. Unfotunately the only party that said they would actually stick up for the people were a bunch of terrorists! Shows how thoroughly corrupted the system is really.

[peterms]

At which of these decision points did this model western democracy seek the consent of the people for the massive liabilities it was incurring on their behalf?

The election. Unfotunately the only party that said they would actually stick up for the people were a bunch of terrorists! Shows how thoroughly corrupted the system is really.

Yes. As far as I can recall, the only country which has made any attempt to deal with the bankers' debt issue in anything approaching a democratic way has been Iceland. Am I forgetting anyone?

[ender4]

A long, interesting and very depressing article detailing the state of things in Ireland, and the brutal agenda that Europe are pursuing to utterly destroy that nation as a warning to others.

Ireland's future depends on breaking free from bailout

that was a great read.

[CVByrne]

Fact of the matter is Ireland won't default and will just take the debt and pay it back eventually. Life is fine here if you didn't saddle yourself with debt, people who are in negative equity are in that situation because they decided to take out huge mortgages for buying a home. Nobody forced anyone to take out loans, this country was involved in a collective mania, people want to blame someone and accept no accountability.

I don't bother reading Irish news anymore, I don't care what latest piece crap there is about the bailout or defecit or whatever. I use BBC to get the news now. If you bought into the mania you're stuck here and you need to clean it up for the next generation.

I'm sick of this place and the moaning of people who won't accept responsibility for anything.

[peterms]

Fact of the matter is Ireland won't default and will just take the debt and pay it back eventually. Life is fine here if you didn't saddle yourself with debt, people who are in negative equity are in that situation because they decided to take out huge mortgages for buying a home. Nobody forced anyone to take out loans, this country was involved in a collective mania, people want to blame someone and accept no accountability.

People accept responsibility for their own debts. The issue is about also accepting responsibility for the debts of the banks, which has bugger all to do with the Irish people, same as in every other country where the thieving freeloaders are conspiring to hand their gambling debts to ordinary people.

[CVByrne]

Very true, but why elect a government that wants to pay for the banks. Despite what people want to say the majority of the country wants this course of action or at the least wants to defer the decision making to a government that wants to take this course of action.

There were parties like sinn fein and the socialists that said they would default. They got very few seats. Bottom line is regulation was terrible as that was the policy of fianna fail, the party reelected by this country again and again. The banks could have been stopped from the reckless lending but the government was asleep at the wheel.

There are all these radical ideas like default, but it's not the course of action people want and the last government made the decision for us on the banks when they gave the guarantee. There's no turning back from then other than a national default.

[snowychap]

The banks could have been stopped from the reckless lending...

Nobody forced the banks to make these reckless loans; people want to blame those who were enticed to take them out and not force those who got rich off the back of it to be accountable.

[CVByrne]

And the people responsible in the banks should take most of the blame and certainly shouldn't keep their fat retirement packages, but where was the regulator? Nowhere because that's the kind of regulation Finna fail wanted.

Bank boards are going to be under pressure from institutional shareholders to make more money and lacked the moral courage to do the right thing and not copy anglo irish bank. So that's where the regulator needs to get involved. To stop these things from happening.

Also this nonsense that banks pushed mortgages on people, the weren't ringing up like a phone company does, they weren't pushing their wares in the streets. They didn't need to. No the government pushed the country to the property obsession and the media made a fortune off selling it too.

Every budget would increase tax relief on montages with special incentives for first time buyers and rent relief was never touched. Everybody is complicit, yet because the banks had to be bailed out by the last government it's where the ire is directed. I'll never forget a current events show on the front line where a woman was saying they couldn't afford their mortgages on their home and investment property. Well boo **** hoo you greedy woman trying to line your own pockets in property speculation.

Too many people refuse to take responsibility for their actions. It's pathetic and the ones who have actually suffered through no fault of their own are the ones with no voice.

[snowychap]

Also this nonsense that banks pushed mortgages on people, the weren't ringing up like a phone company does, they weren't pushing their wares in the streets.

I don't know what was happening in Ireland but that kind of thing was happening over here.

Everybody is complicit...

Pretty much everybody, yes. Including those who got (are still getting) richer on the back of the debt-fuelled economy.

[snowychap]

Europe moves to end passport-free travel in migrant row

European nations moved to reverse decades of unfettered travel across the continent when a majority of EU governments agreed the need to reinstate national passport controls amid fears of a flood of immigrants fleeing the upheaval in north Africa.

In a serious blow to one of the cornerstones of a united, integrated Europe, EU interior ministers embarked on a radical revision of the passport-free travel regime known as the Schengen system to allow the 26 participating governments to restore border controls.

They also agreed to combat immigration by pressing for "readmission accords" with countries in the Middle East and north Africa to send refugees back to where they came from.

The policy shift was pushed by France and Italy, who have been feuding and panicking in recent weeks over a small influx of refugees from Tunisia. But 15 of the 22 EU states which had signed up to Schengen supported the move, with only four resisting, according to officials and diplomats present.

The issue will be discussed at a summit of EU prime ministers and presidents next month. But the "reforms" of the Schengen system also need to go through the European parliament, where there is likely to be strong resistance to empowering national governments to reinstate controls.

The border-free region embraces more than 400m people in 22 EU countries, as well as Switzerland, Liechtenstein, Norway and Iceland. It extends from Portugal to Russia's borders on the Baltic, and from Reykjavik to Turkey's border with Greece.

The move to curb freedom of travel came as the extreme nationalist right, which is increasingly influencing policy across Europe, chalked up a notable victory in Denmark, which announced it would unilaterally re-erect controls on its borders with Germany and Sweden.

The centre-right minority government in Copenhagen capitulated to the fiercely anti-immigrant nationalists of the Danish People's party to secure parliamentary backing for long-term budget, welfare and retirement policies. "I have worked hard for this," said Pia Kjaersgaard, the far-right leader.

Despite the 'fortress Europe' mood gripping EU leaders, the Danish decision stunned many because it was taken just hours before an emergency EU meeting devoted to immigration and the Schengen regime.

The German government complained that the open border should not be "sacrificed for domestic political reasons".

The European commission said it would scrutinise the decision to see if it complied with the Schengen rules. There were calls in the European parliament for Denmark to be kicked out of the Schengen regime. But the Danish government promised that border and customs checks would not extend to passport controls, and that this remained compliant with Schengen.

Denmark already has the tightest anti-immigration laws in Europe. The government there said a permanent return to national controls was aimed at combating cross-border crime.

The sudden shift in Denmark, as well as the new curbs on freedom of movement, highlighted how a resurgent Europhobic far right across the EU is translating success at the ballot box into policy victories.

Italy's anti-immigrant campaign is headed by the interior minister Robert Maroni, of the xenophobic Northern League in the Berlusconi coalition. The campaign in France is seen as an attempt by President Nicolas Sarkozy to dilute the growing appeal of Marine Le Pen, the new leader of the extreme Front National.

The minority centre-right coalition in the Netherlands, as in Denmark, is propped up by tacit support from the Muslim-baiting Freedom party led by Geert Wilders.

The robust nationalism, most recently evident in Finland, is fuelling demands for the repatriation of powers from Brussels, a trend likely to be welcomed by David Cameron and the Tories.

"The problem is all about trust. How do we get out of this without bringing down the system?" said one EU ambassador. "The challenges get bigger every day and the question is whether all this can be kept under control."

The policy shift has also been triggered by acute nervousness about the impact of the Arab spring. "There are hundreds of thousands on the shores of north Africa. Something extraordinary could happen any day," said a senior EU diplomat. "If Gaddafi uses this weapon, he can create a lot of problems for Europe."

The Guardian revealed this week that the Gaddafi regime is allowing thousands of sub-Saharan African migrants on to overcrowded, unseaworthy ships in an apparently calculated attempt to use migration to pressure Nato and the EU countries against backing Libya's rebels.

While a consensus has emerged among EU governments on rowing back on Schengen, the European commission maintained that national passport and border controls could only be reintroduced "as a last resort", temporarily in extreme circumstances.

The commission's emphasis paves the way for a power struggle in the weeks and months ahead over who should police the Schengen rules and decide whether and why a country may suspend the open-borders regime.

At Thursday's meeting, Germany insisted the powers had to rest with national governments and that the European commission would be bypassed. It was supported by France, Austria, and the Czech Republic.

Cecilia Malmstrom, the commissioner for home affairs – who calls the borders-free zone a "beautiful achievement" – argued that the powers should be vested in Brussels.

Sandor Pinder, the Hungarian interior minister, who chaired the meeting, warned that individual countries should not be allowed to act alone in deciding to restore border controls. "That could trigger a chain reaction and shatter confidence," he said.

[LondonLax]

A lot of people in Europe live in one country and work/go to uni in another.

It would suck to have to go through customs every day on your commute to work

[peterms]

And the people responsible in the banks should take most of the blame and certainly shouldn't keep their fat retirement packages, but where was the regulator? Nowhere because that's the kind of regulation Finna fail wanted.

Bank boards are going to be under pressure from institutional shareholders to make more money and lacked the moral courage to do the right thing and not copy anglo irish bank. So that's where the regulator needs to get involved. To stop these things from happening.

Also this nonsense that banks pushed mortgages on people, the weren't ringing up like a phone company does, they weren't pushing their wares in the streets. They didn't need to. No the government pushed the country to the property obsession and the media made a fortune off selling it too.

Every budget would increase tax relief on montages with special incentives for first time buyers and rent relief was never touched. Everybody is complicit, yet because the banks had to be bailed out by the last government it's where the ire is directed. I'll never forget a current events show on the front line where a woman was saying they couldn't afford their mortgages on their home and investment property. Well boo **** hoo you greedy woman trying to line your own pockets in property speculation.

Too many people refuse to take responsibility for their actions. It's pathetic and the ones who have actually suffered through no fault of their own are the ones with no voice.

Regulation has been weakened in many countries because the banks have been engaging in many years of lobbying and quiet pressure for that to happen. It's a bit rich now to say that they should have been more tightly regulated (which they should) and that because they managed to get their way on "light touch" regulation their losses should be passed to everyone else (they shouldn't). It's the banks that wanted and achieved a lax regulatory regime, it wasn't forced on them by a third party.

Yes, many parties were complicit in the extension of private debt to unsustainable levels. So why exactly should individuals be left with their debts, and also pick up the debts of the banks on top of that? Which of these two parties was meant to be the professionals, exercising care, judgement and professional standards, and being paid extremely well on that basis?

And the idea that banks boards were pressured into dodgy deals is laughable. Peer pressure to be among the high fliers, no doubt. But the logic of the system is that bank growth (and bankers' excessive pay) has been made possible only by the extension of credit beyond what the economy could sustain. They had a direct financial self-interest in creating more and more debt, and that is exactly what they did.

Already, they are back to their old ways, paying ludicrous bonuses, dodging tax and the rest of it. The old arrogance never went away, but is now more openly expressed. We hear things like it's not that HSBC (was it?) is too big, it's that the UK is too small. Pathetic. Break them up, regulate them properly, repudiate the debts they attempt to push onto us, make them pay tax, and in general bring them under some sort of effective control.

[villa89]

Fact of the matter is Ireland won't default and will just take the debt and pay it back eventually.

That's about as far from a fact as you can get. Estimates predict a national debt of somewhere in the order of €250 billion euro. The interest on that level of debt would be such a high percentage of the overall Tax take for a small country like ireland that we couldn't even afford to pay the interest, nevermind the principle.

A quick look at Ireland's external debt to GDP ratio Here shows how bad things are, yes it is 1,120% and its only going to get worse not better.

We can't pay our debts back, ever. The sooner the irish government,ECB and other Euro countires face up to that the better for everyone. Fortunately for us it looks like Greece is going to go tits up before we do.

[CVByrne]

I agree with 90% of what you say there peter. The banks did manage to get regulation weakened. But it's the governments fault for weakening regulation. I don't elect private companies to run the country. No the tax payer shouldn't have to shoulder the debts of the banks, the previous government made that decision for us. We are now stuck with that decision, the state and banks are one now.

Yes the bank boards of the two main banks here were under pressure from shareholders to copy anglo. They were just lacking the morals and courage to refrain from reckless lending., they wanted the gravy for themselves too.

Also on the back to their old ways, it's not here. There had been a pay freeze since 2007 and bank bonuses are taxed at 90%. The constitution was changed in december so that the minister of fiance his dictatorial powers over all financial institutions.

[CVByrne]

Fact of the matter is Ireland won't default and will just take the debt and pay it back eventually.

That's about as far from a fact as you can get. Estimates predict a national debt of somewhere in the order of €250 billion euro. The interest on that level of debt would be such a high percentage of the overall Tax take for a small country like ireland that we couldn't even afford to pay the interest, nevermind the principle.

A quick look at Ireland's external debt to GDP ratio Here shows how bad things are, yes it is 1,120% and its only going to get worse not better.

We can't pay our debts back, ever. The sooner the irish government,ECB and other Euro countires face up to that the better for everyone. Fortunately for us it looks like Greece is going to go tits up before we do.

I mean that we will not just outright default. That a solution will be made with europe and a repayment of at least a large chunk of the debt will happen. There just will be no outright default.

Irelands problem are that young taxpayers like me who claim the least from the state than we contribute are just going to leave. Why stay? I always wanted to move to London. The recession stopped all plans, but I'm defo going now.

[Awol]

"There are hundreds of thousands on the shores of north Africa. Something extraordinary could happen any day," said a senior EU diplomat. "If Gaddafi uses this weapon, he can create a lot of problems for Europe."

The Guardian revealed this week that the Gaddafi regime is allowing thousands of sub-Saharan African migrants on to overcrowded, unseaworthy ships in an apparently calculated attempt to use migration to pressure Nato and the EU countries against backing Libya's rebels.

Paging PIW...