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Ireland: The rescue is official

Robert Peston | 15:03 UK time, Sunday, 21 November 2010

There will be formal confirmation this evening from the Irish government that it is applying for rescue loans from the European Union and the International Monetary Fund (IMF).

Since the request won't be refused, this can be seen as a "high-level" announcement that the rescue is happening, according to officials.

There is expected to be a statement from the finance ministers of the EU's member states welcoming Ireland's application for financial support.

The total value of these loans - or more properly of these lending facilities - is expected to be less than 100bn euros (£85bn), although the definitive amount won't be fixed for a few days, until a team of experts from the IMF, European Commission and European Central Bank has finished their evaluation of the "hole" in the finances of Ireland's big banks.

The lending facility for Ireland is expected to have a life of three or four years, long enough (in theory) for Ireland to restore the health of its banks and to reduce the deficit in its public finances from 12% of GDP (excluding taxpayers' financial support for banks) to a target of 3%.

It is hoped that would be long enough for Ireland to restore its reputation as a credit-worthy nation among commercial lenders and investors.

The UK will contribute to the rescue package, even though - unlike Ireland - it is not a member of the eurozone. What is less clear is whether the UK will make a direct, bilateral loan to Ireland, or whether the UK's help will be via its position as a shareholder in the IMF and as a participant in the 60bn-euro (£51bn) European Stability Mechanism.

The Chancellor, George Osborne, is considering the provision of a direct loan to Ireland, because the UK is not a member of the 440bn-euro (£376bn) European Financial Stability Fund, which will make the biggest contribution to the rescue package, and because the UK and Irish economies are closely intertwined, both in terms of trade and in the role played by Irish banks in Northern Ireland.

The way was cleared for Ireland to make an application for help from the EU and IMF by a statement made by President Sarkozy of France that EU member states would not insist that the Irish government abandon its cherished low rate of corporate tax.

On Tuesday, the Irish government is expected to set out its updated deficit reduction plans.

However there is unlikely to be agreement for several more days on how the emergency loan of up to 100bn euros from the EU and IMF splits between financial support for Irish banks and a more general lending facility for the Irish government.

Even so, investors and banks are expected to be reassured by tonight's formal statements from the Irish government and the EU that rescue loans have been requested and are expected to be provided.

Update 1652: Although it has been inevitable for several days - and on its way for months - Ireland's decision to request financial help from the European Union and International Monetary Fund is momentous.

And the reason is that until two years ago, Ireland looked like Europe's greatest economic success story.

Over 20 years, it grew at rapid rates that are more typical of Asia's fast-growing economies - until its GDP per head overtook that of the UK.

But much of the growth during the current millennium came from massive unsustainable borrowing on international markets by Ireland's banks. Those banks in turn pumped up a dangerous property bubble - which has now exploded - by lending far too much to developers and home-owners.

It will be some days before we know precisely how much of the rescue loan goes towards mending Ireland's fragile banks and how much is lent to the government - so that the government (whose grip on power is shaky) can be sure of filling the excessive gap between what it spends and dwindling tax revenues (until that gap is closed by massive spending cuts and tax rises over the next four years).

But, in the meantime, Ireland's admission that for now it cannot pay its way in the world proves - some would say beyond any reasonable doubt - that the Irish model of economic success is seriously flawed.

Update 2140: The British contribution to the Irish bailout could be fairly substantial. As well as contributing indirectly through the 60bn-euro European Stability Mechanism and the IMF, the UK Treasury has tonight officially confirmed for the first time that it may provide a direct bilateral loan.

Sweden, like the UK, may also provide a bilateral loan.

The rationale for a direct British contribution to Ireland's rescue package is that the UK is a substantial purchaser of British exports and Irish banks play an important role in Northern Ireland.

Also, Royal Bank of Scotland has £53bn of "credit exposure" to Irish borrowers. So the bigger the crisis in Ireland, the worse the losses on these loans - which would hurt British taxpayers both as owners of more than 80% of RBS and as insurers of many of these loans through the Treasury's asset-protection scheme.

In that sense, there is financial logic for the British government to participate in rescuing the Irish economy, to limit losses for British taxpayers.

Comments

Page 1 of 2

  • Comment number 1.

    Personally I find the idea that the British Tax Payer has to lend the Irresponsible Irish money that could be raised through taxation abhorrent.

    While I appreciate a bailout is necessary, the Irish could be doing more to raise funds through their own fiscal policy, before running cap-in-hand to their neighbors who they are undermining through their corporate tax policy.

    We are in effect subsidizing American Corporations to enable them to make profits at our expense...

  • Comment number 2.

    The assumption that Ireland restores its creditworthiness is based on the premise that the Irish people will absorb the packages of austerity measures, which will surely include further tax rises on top of those already in place. A probable alternative is the election of a government with a different and more radical agenda. Should this happen then a default and/or exit from the Euro look much more likely. What then for all of these new loans being made in Euros? In such circumstances would they ever be fully paid back? Most likely not.

  • Comment number 3.

    The global economy is maxed-out: Debt & oil are the 2 main drivers of this contraction, and the endgame is in progress for our system of capitalism (with the money-supply created by banks lending at interest). Will it be fast or slow? What form will the phoenix from the ashes take as the 'developed' world starts to address the primary issues of limits to growth and sustainability? Discuss.

  • Comment number 4.

    And, for anyone interested in alternative ways of providing money-supply (particularly in Ireland) here is an option which can facilitate trade in the absence of banks:

    http://theliquiditynetwork.org/

  • Comment number 5.

    So people are still being left to clean up the mess and take the hit for the likes of the Sir Greedies of this world.

    Who will bailout the IMF at the end of all this?

  • Comment number 6.

    I suspect George Osbourne just wants to pay the money directly to the UK banks who lent too much money into Irish Republic, not to anyone over the water who might just pay off those German & French banks in the same boat.

    Regards,

  • Comment number 7.

    global_citizen wrote:
    "Personally I find the idea that the British Tax Payer has to lend the Irresponsible Irish money that could be raised through taxation abhorrent."
    --------------------------------------------------------------------------------
    But I thought that the UK doesnt have any money to lend them, I can only assume that unlike Ireland we are still able to borrow the money (for now), and we will then lend that borrowed money to the Irish as apart from anything else, the Irish owe RBS (which is owned by the British taxpayer) a fortune, which would bring down the bank should they default
    Unless I have this wrong, we will give borrowed money to the Irish, so that they can pay us back ......or am I missing something ?

  • Comment number 8.

    3: "What form will the phoenix from the ashes take as the 'developed' world starts to address the primary issues of limits to growth and sustainability? Discuss."
    --------------------------------------------------------------------------------
    I came across this website which I have read through several times.....interesting
    http://www.howitends.co.uk/

  • Comment number 9.

    3. At 15:41pm on 21 Nov 2010, skintnick wrote:
    ".....the endgame is in progress for our system of capitalism"

    Just cos a country got out of it's depth, got carried away and spent more than it could afford, doesn't mean it's the end of the world as we know it.

    It's cutting it's cloth, it's in for hard times. Politicians will play the blame game. It's not the first, and won't be the last. It's been happening for centuries. The world will keep turning.

  • Comment number 10.

    That's bad moderation!

    Ok, it wasn't the bankers that brought this about - must have been my grannma!

  • Comment number 11.

    Oh, and the IMF will never ever run out of money. Once they have bailed out every country on the planet five times over, they'll be off to rescue the economy of the planets Pluto and Mars! No problems.

  • Comment number 12.

    So when can the UK expect to be bailed out as heaven knows we are in a far worse position!

    Who will bail us out? Just the IMF - if we are really really lucky.

  • Comment number 13.

    It is plain to see that the Irish revolution was bought out years ago just like the American one.
    The people revolted and sent the tyrannies of monarchy and (in the case of America) its bankers packing.
    However, the exercise of power and control work on a big timescale and as long as wealth is moving in their direction then those in charge (reallly in charge) are happy.
    Money can buy anthing, even revolts, because most people think it is rather clever knowing which forms to use and which buttons to push so that others can be controlled, but not clever enough to ask why.
    It will be very interesting to see if the spirited Irish will lay down and give in to this, as their country is sold at knock-down prices to the rich.
    They have been conned by a massive bankers' construct called The Euro.
    This is a lesson for all.
    Do not trust anything devised by bankers.
    In fact, consider the very opposite of what they say.
    The only sound and fair money/credit system is one created, controlled by and benefiting all in society.

    http://www.positivemoney.org.uk/


  • Comment number 14.

    This has all been engineered by the banks so that the predatory free-market anarchists can hoover up what remaining state assets still exist in Ireland (just as is happening in the UK). Assets which Irish taxpayers have taken generations to build up...

    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8148882/US-firms-warn-Irish-over-tax-move.html

    ‘It seems the sale of some state assets will be included in the measures. These may include the government's 25pc stake in Aer Lingus, the national carrier, as well as its National Lottery licence and the country's separate gas and electricity boards.’

  • Comment number 15.

    13. At 16:15pm on 21 Nov 2010, thomas_paine wrote:
    "...It will be very interesting to see if the spirited Irish will lay down and give in to this..."
    Read Joyce.

  • Comment number 16.

    Thank's for the update Robert.

    I am not convinced that investors and banks will be reassured.

    This facility is an attempt to halt the contagion of the crisis within Europe. The abuse of the global economic system has been going on for at least a decade and Ireland's difficulties are merely a minor symptom (no offense intended) of a very much greater problem.

    The global economy has been deluding itself for at least 15 years. We've had it all - Junk Bonds, LTCM, Enron, Lehmans, AIG, Merrill, Madoff, CDO's, Derivatives, Sub-prime etc ... etc ... That represents a huge wall of mismanagement that will take many years to correct - always assuming that the political will exists to tame capitalism and restore sanity to the marketplace.

    Hopefully, the era of rampant greed and hubris is at an end. Perhaps nation economies will finally accept that annualized double-digit growth is simply not possible. Everything has it's limit!

    Why do we make life so difficult ...

  • Comment number 17.

    Was there ever any doubt that they would grab the package with both hands. Ireland never was slow to take any handouts it could get. It's just a pity that the British taxpayer is expected to bail them out rather than see them default on their debts to British banks. Pity their dislike of the British didn't extend to borrowing British cash.

  • Comment number 18.

    16. At 16:28pm on 21 Nov 2010, Vercingetorix wrote:
    ".......Hopefully, the era of rampant greed and hubris is at an end. Perhaps nation economies will finally accept that annualized double-digit growth is simply not possible. Everything has it's limit!...."

    In other words, people will have to cut their cloth. The pendulum swings back.


  • Comment number 19.

    As an N. Irishman, I would advise our European friends not to lead a penny until this lot (Brian Cowan et al) are removed from power.

    The cronyism and corruption killed the golden goose in the end and the current government is the problem and not part of the solution.

    The people of Britian and Europe would be shocked if they knew how much civil servants are paid, even more so knowing they will keep this salaries if the governments gets it's way.

    The British people would be more shocked to find that firms which created the bubble that burst are now being employed to advise on getting out of the mess.

    You couldn't make it up you know.

  • Comment number 20.

    global_citizen: "Personally I find the idea that the British Tax Payer has to lend the Irresponsible Irish money that could be raised through taxation abhorrent."
    Mangizmo is correct, the British tax payer won't directly pay anything, how it works is that Britain will loan money from the bond markets at (for example) 4% interest and then loan that money to Ireland for (again example) 5%. This in the long term means Britain gains money. Although it's not a very profitable investment, however if Ireland was allowed default then Britain would be forced to loan possibly more money(then they alone would be giving to Ireland) to their banks who have substantial investments in Ireland.

    James: "A probable alternative is the election of a government with a different and more radical agenda. " That is incorrect it is not at all probable. There is only one party in the Dáil(parliment) who hasn't agreed to the "consensus on cuts" and that's Sinn Féin who have no chance of being part of any government after the next election and even they only want to extend the deadline from 2014 to 2016!

  • Comment number 21.

    Why am I being left with the feeling that Ireland has been sacrificed for the greater good of other European nations?

    It is true that Ireland has been struggling for some time with the debt-hole its banks had created but until now had satisfied all the necessary criteria largely through clear statements as to its financial integrity.

    So why is all this happening now?

    Is Ireland being cast as a ritual victim to protect the interests of other more indebted countries with elites who do not wish to face the scarey music?

    I expect this is all about bank bond-holders across the Euro-zone not wishing to face the prospect of a haircut and the affect this would have on interest rates and the value of the Euro.

    What does it portend for all of us? Are we all going to be sacrificed for some greater good we know not the what of no matter how hard we struggle to make ends meet after the ruin the banks have inflicted upon us? Only time will tell.

  • Comment number 22.

    "But I thought that the UK doesnt have any money to lend them, I can only assume that unlike Ireland we are still able to borrow the money (for now), and we will then lend that borrowed money to the Irish as apart from anything else, the Irish owe RBS (which is owned by the British taxpayer) a fortune, which would bring down the bank should they default
    Unless I have this wrong, we will give borrowed money to the Irish, so that they can pay us back ......or am I missing something ?"

    My point is the Irish could be doing more to minimize the deficit through:

    a.)
    Their own fiscal policy, namely increasing corporate tax, which at 12.5% has room for an increase.

    b.)
    Refusing to pay out on debts in full and negotiating partial settlements.

    This is how this process should be working, the UK, EU & IMF should be acting as LOLR, stepping in when all other options have been exhausted, instead we are jumping in to underwrite the speculators who should have known better, and american corporations making profits at our expense.

    That is the basis of my objection, its the order in which things are happening - first do everything you can - then come cap in hand - not the other way around.

  • Comment number 23.

    No. 18 blacksheep44:

    I live in hope!

    I do believe (gulp) that this is may be the crisis that finally makes intelligent people ask the question:-

    "What is life all about?"

    Money? ... no way!

  • Comment number 24.


    The Irish state is being bullied into taking a loan to cover poor investment decisions by British banks. Describing it as 'aid' to Ireland is a deception.

    Think about it!

  • Comment number 25.

    no doubt about it - our children are going to have to pay for the excesses and greed of the baby boomers.

    and the next candidate is .....Portugal....Spain.

  • Comment number 26.

    Ireland: the rescue is official.
    I am so sorry to hear this news.
    I hope that there will be no impact on Irish sovereignty. I dislike that the IMF is involved in any way.
    I feel that this decision has more to do with keeping Chinese investment out of the EU than a real need for Ireland's application for financial support.
    I never felt that Ireland was not creditworthy or responsible. I thought it was adequately financed through June, 2011, at which time it would post bonds, which China had already confirmed it would purchase.
    The UK's contribution is likely the most bitter piece of the rescue package for Ireland to swallow.
    At least Ireland will not be forced to abandon its cherished low rate of corporate tax.
    I find myself feeling bad for Ireland. I feel this was a political decision - to avoid China gaining any more influence in the EU. Some of this pressure had to come from the United States of America which is so very much against Chinese succerss.

  • Comment number 27.

    I wonder who the role models were for the Irish banks?
    Could it be that they saw the "success" that Thatcher's sell offs had on the British banks that they simply thought "That's the way to do it" and promptly filled their boots.
    Now Osborne has to make sure that Thatcher's public sell offs have to stay viable at least until she is history.
    To do so he has to ensure British banks get compensated by the Irish government.
    To do so he has to help in the bail out.
    To do so we all get lumbered with debt.
    Arguably Thatcher's debt...

  • Comment number 28.

    "1. At 15:27pm on 21 Nov 2010, global_citizen wrote:
    Personally I find the idea that the British Tax Payer has to lend the Irresponsible Irish money that could be raised through taxation abhorrent."

    global_citizen... Your comments here show a lack of understanding around the problem. The funds would be borrowed from EU funds and the IMF, not British taxpayers. Ireland also pays into these funds, think of it like splitting a bill at a restaurant; seemingly you would be there arguing about how you didn’t have a starter, and how Ireland had a coffee and a desert while the rest of Europe just pay a share knowing that it is in everyone’s best interest; the value will be reciprocated over time. The UK is Irelands biggest trade partner. If Ireland has further economic problems, the effect will be passed on. The Money will be paid back with interest. I’m sick of reading the lazy journalise term “Cap in hand”, the economies of Europe are so interconnected that effectively Ireland is being strong armed into taking a loan for the good of us all, it’s not a robbery of UK taxpayers. However, I'm rather frustrated by Mr Lenihan's comments on Corporation tax. Why are the Irish Government intent on defending the rich at the expense of everyone else? I've heard it argued that the low taxes bring in business, naturally this idea would hold. However, a small rise in taxes for businesses operating their European bases from the ROI should not be out of the Question. If everyone has to pay, why not the businesses too? Facebook and Google have large operations here, enjoying the skilled workforce supplied by the taxpayers (Google do not employ anyone without a degree, check out their jobs pages in the ROI), however over the last 3 years regular taxpayers have endured a 2% "Levy" that is taken gross of tax, a tax on income that will later be taxes, compounding the value to the Government. The budget will also raise taxes and PSRI (this is similar to National Insurance, however there is no NHS here so it’s confusing as to what its actually used for) AND the levy. So the comments I've read about Ireland being able to tax itself out of problems are frankly wrong. Taxing people won’t stimulate the economy, this can only be done by the people spending more, and if I get less every month I just don’t know what I can do. Incidentally I work for an Irish company that is owned by a large American one. We’ve made millions of Euro over the last 3 years with no increase in pay due to “Market conditions”. If corporation tax were raised the American company may well see diminished profits and sell to an Irish one (we’ve been subject to a takeover for the last two years) for a quick profit. I’d be much happier if I didn’t see millions of Euro being pocketed by firms overseas, maybe then our economy would be healthier and we wouldn’t need to be bailed out. Don’t blame the workers, I’ve always paid my tax and I guess I’ll continue to do-so.

  • Comment number 29.

    No. 26 BlueBerry:

    Ireland need not regret any UK help - we're neighbors - that's what we do!

  • Comment number 30.

    "My point is the Irish could be doing more to minimize the deficit through:

    a.)
    Their own fiscal policy, namely increasing corporate tax, which at 12.5% has room for an increase."
    In the next budget they are going to cut 6 billion euro from the deficit, that is the largest cut in the history of the state. that's 3.6% of GDP, the equivalent of the UK cutting around 70 billion in one year! If we cut any more the paradox of thrift would kick in (the more you try to save the more the economy shrinks meaning you end up increasing the deficit) and that's optimistically assuming that it won't kick in with these size cuts anyway.

    "b.)
    Refusing to pay out on debts in full and negotiating partial settlements. "
    The EU, including the UK doesn't want us to do that, the whole reason why this bailout is being advanced by the EU and UK is so that Ireland doesn't do that.

  • Comment number 31.

    Seosamhoc: "Mangizmo is correct, the British tax payer won't directly pay anything, how it works is that Britain will loan money from the bond markets at (for example) 4% interest and then loan that money to Ireland for (again example) 5%. This in the long term means Britain gains money. Although it's not a very profitable investment, however if Ireland was allowed default then Britain would be forced to loan possibly more money(then they alone would be giving to Ireland) to their banks who have substantial investments in Ireland."

    The reality is there is a cost which isn't being priced in.

    As any financier knows, the more you borrow, the harder it is to borrow more. The UK are using up extensive credit lines with no real understanding of how we are going to be repaid - or in fact if the Irish state can even afford to repay...

    Realistically at a time of high economic uncertainty we should be keeping our powder dry, and putting the pressure on the Irish to do the two things they need to, in order to minimize the help needed (see above tax & negotiated settlements) at which point the LOLRs should step in.

  • Comment number 32.

    why should we worry about ireland..lets worry about us, and redirect the bank bonus,s to people who deserve it. I was over in ennis the other day the people there are hardly living in the gutters.

  • Comment number 33.

    The reality of the Irish government's turnaround on this bail out is staggering.From vehemently opposing the offer from the EU to accepting it with almost slavering enthusiasm means only one thing. The government was more afraid of losing political power in Ireland than it was of losing Ireland itself. The mindset is not uncommon amongst western governments who played this insane game of Russian roulette with the world's economy.At least in Greece the problem had been inherited from a previous regime.In Ireland the perpetrators are still at the helm,although the government is expected to fall in the New Year.The arrogance and insouciance of politicians and financiers is lethally destructive to citizenry who duly elected them with the implicit trust of protecting their best interests only to be betrayed.Such is modern democracy and I'm sure the middle east will truly appreciate our export of it..............

  • Comment number 34.

    If this just a facility to just borrow cash (in simple terms) and the irish don't have to spend to lot of it, is this a papering over the cracks type of loan? To pacify panicking bankers who loaned the money in the first place?
    On the Tv and radio comments have being made as the UK is the biggest creditor (well the banks again that we all own) when profits are being made will we all have out taxes cut? VAT go down? Jobs created?

    Thought not, not in my life time ( and on just 40!)

  • Comment number 35.

    "The reality is there is a cost which isn't being priced in.
    As any financier knows, the more you borrow, the harder it is to borrow more. The UK are using up extensive credit lines with no real understanding of how we are going to be repaid - or in fact if the Irish state can even afford to repay..."
    --------------------------------------------------------------------------------
    Thats the way I see it, there is the risk of Irish default, the UK is in a very precarious position....but all the sales of trinkets to celebrate the royal wedding will save us all......dooooohhhhh I forgot.... even they will be made in China

  • Comment number 36.

    (just a slight correction to my previous post, the 70 billion is dollars and that's 3.2% of UK GDP (I made a typo using my calculator) 3.6%(the correct figure) of UK GDP would be around 49 billion pounds.
    "As any financier knows, the more you borrow, the harder it is to borrow more. The UK are using up extensive credit lines with no real understanding of how we are going to be repaid - or in fact if the Irish state can even afford to repay..."
    That is why I said directly there will be a small rise in the amount of interest the UK must pay on further bonds because of it but the amount I've heard mentioned before was the UK would loan 7 billion pounds which won't have much of an impact on the UK's bond rates as to how Ireland will be able to repay see my above post on how much we are cutting. This is all assuming that Ireland will use any bilateral agreements at all which it may not and "The li"'s points above apply to the other funds.

  • Comment number 37.

    The Li: "Your comments here show a lack of understanding around the problem. The funds would be borrowed from EU funds and the IMF, not British taxpayers."

    With all due respect it is you who lacks the understanding of what is happening:

    I accept the EU & IMF putting money in is inevitable at some point, whether the UK should is another matter. Please see my additional posts above addressing issues like UK liquidity, our ability to raise finance from the markets in the future and whether a LOLR should be stepping in until all other options have been exhausted.

    When in fact we should be cutting our losses and minimizing our exposure our politicians are trying to save face by making out that the banking investments into Ireland are salvageable, and as a result are increasing our loans into the country.

    In Roulette Terms this is known as doubling up, and is symptomatic of everything that is wrong with the EU decision making process, political expediency over sound economic policy.

  • Comment number 38.

    The Irish government has just betrayed the people who elected it.
    Thinking about our world makes me sad for the fate that awaits our children.

  • Comment number 39.

    Let us know what Mr Osborne is doing as soon as you hear, please.

    Someone above asked about why this Irish thing blew up last week. Good question. Reading a number of articles, I am wondering whether the European Central Bank played a bigger role in this than is being currently reported. The clue might lie in the eligibility criteria for their Securities Markets Programme and recent and potential credit downgrades.

    So, how will the markets react to more loans ( not bailouts) to Ireland and a further financial squeeze on the peripherals. Perhaps they will move on to the next target,as they did after Greece, or decide this is all an enormous buying of time to a reckoning happening some time down the road.

    Perhaps the Germans will start talking about creditors taking the pain, again. In fact, the reaction in Germany is of more interest to me given that they are principal guarantor.

  • Comment number 40.

    17. At 16:29pm on 21 Nov 2010, kaybraes wrote:

    Was there ever any doubt that they would grab the package with both hands. Ireland never was slow to take any handouts it could get. It's just a pity that the British taxpayer is expected to bail them out rather than see them default on their debts to British banks. Pity their dislike of the British didn't extend to borrowing British cash.

    kaybraes, perhaps you could expand on your comments. What previous handouts have the Irish taken? How are British taxpayers bailing out Ireland? My understanding is that its the IMF and Europe, not Britain who are negotiating the loans. And as for defaulting on loans to British banks, surely this would only pass the problem on to Britain?! Then you would find yourself in the same situation. I'm most confused about your comments on "their dislike of the British didn't extend to borrowing British cash." what does this even mean? Maybe if you expand upon the points I can understand what you are driving at but it just looks like you have a dislike of the Irish, and are tagging comments onto this blog because nobody else will listen to you. You're not adding anything insightful to the debate. This should not be used as a forum for bigotry.

  • Comment number 41.

    Never mind bailing out the Irish banks (again)...

    There's only one way to get effective banking regulation...KILL THEM!

    ERIC CANTONA "KILL THE BANKS" (A MUST SEE)!
    http://www.youtube.com/watch?v=-Uop5R7E314&feature=related

    ‘In France, they are not wasting their time. They are organising themselves to withdraw their money on the 7th December 2010.’


    Eric Cantona's call for bank protest sparks online campaign

    http://www.guardian.co.uk/world/2010/nov/20/eric-cantona-bank-protest-campaign


    SAY, OOH-AH-CANTONA, SAY-OOH-AH-CANTONA!

  • Comment number 42.

    If George Osborne decides to do a separate bailout deal with the Irish I hope we will be told precisely why and at what risk and cost. I suspect it will be entirely for domestic political reasons.
    I hope that Ireland will be forced to increase its corporation taxes. They are bad news for the UK.

  • Comment number 43.

    While the current problems in the Irish Economy are seen by most as a bad thing, I believe that one grouping will take a polar opposite opinion, Sinn Fein. In all the present mess it was quietly announced this week that Gerry Adams MP is to vacate his Westminster seat at the next election in order to fight for a seat in the Dial. Now, Mr Adams has always been a very very astute politician even if you don't like him. So, his reasons for this change should be carefully considered. He says that the present Irish government is a shambles and needs to be held to account. Doubtless this is true, but consider this; SF is now the main party of Nationalist/Republican opinion (even if, in the past, it's ways of "getting the vote out" were highly suspect) and as such holds great sway in the politics of the North. Furthermore, it has slowly but surely built it's base in the South. The Provo's 'Long War' towards a united Ireland may seem to have ended but they never said it would be all bullets did they? A serious push in the South at the next election (which has to come soon given the state of the country) may well propell SF into a share of power. This will be the precurser to Unification of political power, and ultimately a United Ireland almost by the back door. Never forget Martin McGuinness' words at the SF Congress to originally agree to fighting for seats in the Dial. To save a serious split in its rank he declared to the doubters "Don't go my friends, we will lead you to the Republic". Never underestimate SF, they are bright, intelligent people, and strategy has been their watchword for 30+ years.

  • Comment number 44.

    23. At 16:48pm on 21 Nov 2010, Vercingetorix wrote:
    ....."What is life all about?"

    Money? ... no way!......

    Of course it isn't. More people will watch X Factor than the news. More people blog on football forums. The reason we only seem to get revolutionaries on this blog is because the silent majority are happy enough with their garden, their kiddies and their pint. Things close to them. Why waste their life worrying about something they can't change. I'm not knocking it, like I've said before, it's human nature. It's also what Joyce argues (my post @15).

  • Comment number 45.

    What gets me is all the savage cuts the UK tax payer is having to accept, coupled with the redundancies, pension hits et al are now going to be wiped away and some by our commitment to bail out Ireland through IMF or European scheme and George Osborne thinks we can also stump up even more as a direct loan.

    So George please explain to me how and why we the UK public should accept this double whammy and when can we expect to see even more cuts to cover up this shortfall .

    I would also like to know what the contingency plan is when the next country fails and how many more as yet unborn generations will be footing the bill to pay back what you and your banking friends have caused.

  • Comment number 46.

    42. At 17:31pm on 21 Nov 2010, Robert wrote: "I hope that Ireland will be forced to increase its corporation taxes. They are bad news for the UK."

    While I think that we should raise our corporation taxes (but not now). Ireland being FORCED to do so would be worse news for the UK considering the strong view it takes on individual countries' sovereignty.

  • Comment number 47.

    Just two points:
    1. Ireland was independent for 90 years now they are a suburb of Brussels
    2. When can we in the U.K expect Ireland to pay back the money they will receive from the various organisations which we in the U.K have contributed to?

  • Comment number 48.

    No. 44 blacksheep44:

    Putting aside this latest crisis, never forget that it was 'human nature' that got us to this place. It may not be perfect - but I'll take it over a cave anytime!

    You try, you make mistakes, you learn, and you come up with something better!

    You get there in the end ...!

  • Comment number 49.

    The Irish are going cap in hand to the EU and IMF for a bail out! Just one problem, the EU and the IMF dont have any money. The poor beleagured tax payers of other westernised lands are once again going to foot the bill.
    Surely the Irish situation like the Greece situation shows that the Euro is a dying currency kept afloat by the German taxpayer and the EU is finished and serves now only as a politcal gravy train for sponging politicians and unelected dictators.

  • Comment number 50.

    Those who argue that "the Irish" caused this problem are generalising too much. The various Irish governments of the last decade or more have been guilty of, at the least, stupidity and "Celtic Tiger" hubris. Irish individuals, too, may have taken on far more mortgage debt than was sensible, but the market has punished them for that.

    But what about the Irish corporates (especially in property) who massively over-borrowed, took the profits in the good (bubble) times, and then went bust, with directors and shareholders probably shielding their (substantial) personal assets behind limited liability?

    This looks more like Iceland with every passing day.

  • Comment number 51.

    The "best of luck" to the people of Ireland.
    But ALL of us have to learn not to trust "property booms".
    Japan in the 1990s.
    UK in the early 1990s.
    US in the 1980s (savings and loan crisis).
    Sub-prime in the USA.
    The recent Spanish property collapse.
    The current banking problems in the UK.
    All property-related lash-ups.
    Australian banks are STILL involved in property bubbles in some areas.
    Is China about to have its own property-related problems?
    UK banks have now started introducing some "common sense" into the property markets, making things very awkward for some.
    But why should the young be excluded from the property market?
    Why should property be only for the middle-aged and old?
    It's a bitter lesson for the public, the banks and governments everywhere....not just in Ireland.
    Good-sense valuations, and good-sense loans. No alternative.
    Property is made from bricks, not gold. The young cannot afford gold.

  • Comment number 52.

    At the moment there is much confusion about what is being bailed out.

    Is it the country or the Irish banks? Or are they so intertwined it is both.

    It seems that Eire itself did have a package to bail itself out had it not given a 100% guarantee to support its banks.

    So if there is contagion does anyone have enough money to bail everyone out and if not what happens next

    It won't be until the true extent of the banks' finances are known that the true extent of the problem can be revealed and just how far the tentacles are stretching

    No doubt we will see some reaction on Monday morning.

  • Comment number 53.

    A legitimate Cout D'Tait?

    This is not a RESCUE it is a cout d’tait – the IMF (in my footsteps) and ECB (every country behaves) are manoeuvring the PIGGS towards economic domination – Ireland and Greece are now STATES of Europe and Portugal and Spain will follow.

    Its a Cracker!

  • Comment number 54.

    global_citizen:

    Ireland does not need direct intervention from British taxpayers. Our other European partners and the IMF are quite capable of assisting, however, its in the UK's best interest to ensure Ireland has liquidity as so much trade takes place between the two countries. If Ireland defaults then it loses its spending power. Trade partners have to keep a symbiotic relationship otherwise they look elsewhere for trade, now would Germany and France be happier lending cash knowing it is to be used to fund the purchase of their own exports, or those of the UK? Its obvious why the UK is considering a direct loan, and its not simply to benefit Ireland.

  • Comment number 55.

    51. stevewo:

    Spot on. Property bubbles are ALWAYS a disaster.

    Houses should be homes, not investments. I've often wondered whether central banks should take action to kill any above-inflation movements in property prices, in order (a) to prevent speculative bubbles, and (b) to ensure affordability for young people, but guess this might be too idealistic.

    But Gordon Brown went too far the other way, by ignoring asset price inflation altogether when giving the BoE a rates policy mandate tied entirely to CPI.

    At least the FSA has now made sensible proposals to impose much more conservative mortgage lending rules.

  • Comment number 56.

    The smart move for British creditors would be use the loan facility to cash in their loans to Ireland as far as practical. So if this package enables RBS to reduce their loan book to Ireland by considerably more than the British contribution to the loan facility, it will be a good deal for the British taxpayer. Will that happen?

  • Comment number 57.

    This is not a bailout of Ireland but of UK banks and the rich. The teetering global fiat debt money system is breaking down. Protect yourself.

  • Comment number 58.

    @25 obsidian_white
    I know Bankers tend to be thought of as avuncular figures; but not all of them are baby-boomers. I guess some of the younger ones have had a hand in this mess.
    .....

    @ 48 Vercingetorix. Get where in the end? When you don't know where you're going any road will take you there!

  • Comment number 59.

    This is what happens when you vote the same government for 13 years. We believed the politicans, the bank managements, the regulators and we basked in a big bubble hoping it would shrink and not collapse. Our own Gov worried more about their reputation, their legacy and their cushy jobs. Whats the difference between Iceland and Ireland? They just crashed faster.
    I am thankful for the outside funds but our own elected greedy government, greedy public unions and naked greed of our own Irish banks has bankrupted us. We will celebrate a historic 100 year anniversary in 2016 not as a sovereign nation but as an IMF/EU funded developing nation. It shows we cannot run our own affairs without the help of foreign powers. We now have a growing export -our skilled citizens who will enrich other nations and mourn what could, what should have been..
    We will have a new gov in 2011, one unable to make independent choices and saddled with horrific debts. Picture France and Germany bailing out the UK after doing a deal in Westminster, now you know how we feel.....

  • Comment number 60.

    This morning Alex Salmond was still assuring us that the Republic has a GDP 30% higher per head than the UK. Either Salmond is lying ("impossible" I hear you cry) or we are about to borrow even more money than we have already to help a country that is richer than we are. Next time I see a Big Issue seller I will tap them for a loan - he or she will obviously have an obligation to aid the better off.

  • Comment number 61.

    However dressed up the UK contribution to Ireland is no more, or indeed no less, than another bank bailout. We in the UK chose not to join the European Union chasing the idiolic fantasy of a common monetary policy with an associated common currency. So why are we being dragged into of bailing Ireland out? firstly we are told that they are an important trading partner - nonsense they WERE an important trading patner-they are bust, trying to steal our business base by offering low corporation tax and will certainly be coming to the UK in droves for our jobs which of course we cannot stop. Secondly, our fundamenatlly flawed banks, driven by greed encouraged by equally as greedy shareholders gambled with our miney and lost!!!! - Again!!!!!

    If we bail out Ireland then of course much of the sacrifice we have been asked to make to reduce our defict will be wasted, add this to the forecasted drop in tax revenues expected by the coalition one questions what the plan?

    My solution - simple raise a charge over the banks to cover Irelands bailout repayable over 5 years with interest. Let those who failed us repat us!

  • Comment number 62.

    The uk will get involved "..because the UK and Irish economies are closely intertwined, both in terms of trade and in the role played by Irish banks in Northern Ireland. "

    Err.... there is no logic there. So the UK trades withe Ireland. So what, we trade with lots of countries. Lot the Europeans bail out there errent partner. Let hte UK reap some reward because of that bail out, not take part in it.

    The bailout will be sufficient to fund them without our taking part and in out circumstances we have no business doing this. We DIDN'T join the Euro for this amongst other reasons so why back peddle now?

  • Comment number 63.

    I categorically refuse to blame Ireland for the situation it now finds itself immersed in.

    As a country, they did nothing different from the majority of developed nations. They fell for the bullshit!

    Let's consider just where the source of this crisis resides:-

    Derivatives - Wall Street!
    Sub-Prime - Wall Street!
    Black Scholes Option Pricing - Wall Street!
    Efficient Market Hypothesis - Wall Street!
    Perfect Competition - Wall Street!
    Junk Bonds - Wall Street!
    CDO's, CDS's, CDS's squared - etc... etc... - Wall Street!

    So, why exactly, are we hitting on Ireland? We in the UK fell for the script as did many other countries. We just as eagerly paid through the nose for overvalued properties. We were just as dumb!

    So, please, place blame where it deserves to be placed.

    Ireland's a victim - not a beggar. And don't you forget it ...

  • Comment number 64.

    IRISH GOV’T SELLS OUT ITS PEOPLE

    http://www.zerohedge.com/article/ireland-sells-out-its-people-germanys-bankers-will-apply-rescue-tonight

    ‘And so the can has been kicked down the road one more time as Ireland's Brian Lenihan has just sold out his country to the IMF, the ECB and the Fed for a few extra years of puppet control. RTE reports that EU Finance Ministers are due to hold a conference call later this evening during which Ireland is expected to make a formal request for a financial rescue package. What is not discussed is how the Irish people, now likely furious at being manipulated over a lost cause will express their anger over being the latest sheep used to bail out Europe's ever more insolvent banking system.’

  • Comment number 65.

    I dont have a house yet I am told to pay an Electoral Council Tax
    I dont have a Bank account yet I am forced to support the Bankers
    I have never been to Greece yet I am told I have to support Greeces economy
    I am told that the Uk is skint yet 7 billion is ringfenced to support "overseas" aid
    I am told that the UK state needs to shrink by 40% but we can still support Ireland over inflated state
    Tomorrow I will take soveignity from my neighbour
    I am told that I am a stakeholder and shareholder in this aid
    However, I am told that I can never cash in on my ownership



    Who is benefiting from my enforced contribution to all these bailouts?

    I need a bailout too!



  • Comment number 66.

    Ireland’s 4.5m people accounted for three times as many exports from the UK as China in 2009 and more than the combined exports to the Bric countries of Brazil, Russia, India and China. [Source: http://www.ft.com/cms/s/0/61ea26f8-f1ad-11df-bb5a-00144feab49a.html

    This is a staggering statistic considering the size of these other countries relative to Ireland. The British tax payer would NOT be bailing out Ireland. The use of this "cap in hand" term is insulting to Irish people. It is in the UK's interest to support any IMF/EU bailout to Ireland. It is also the reason why George Osborne is considering a direct loan to Ireland. He is not an economist (but an average historian) but even he (or his advisor's) understand the importance of a strong Irish economy to the UK economy. When the so called 'celtic tiger' was booming it without question resulted in the economy doing well here. If the Irish economy was allowed to crumble, then they would not be importing as much from the UK. This would have a serious impact on the economy here. Who would the business' here sell their products too?

    I believe Ireland is being forced to accept this bailout package by its European partners. Ireland does not need to consider borrowing any IMF/EU funds until mid 2011. Ireland introduced severe austerity measures several months before any other EU member (this includes the UK). The Irish government (who I believe together with the Irish banks/property developers are responsible for the mess in the Irish economy) was lauded the world over for introducing such drastic measures. Spain and Portugal have to borrow money from the IMF/EU right now. Greece has already done so. Italy may have to also. These are the so called PIIGS. These are the facts.

    Ireland is being forced to take this bailout because if they do not then it means any loans that Portugal and Spain (and possibly Italy) HAVE to take they will be forced to pay much higher interest rates. Ireland taking this bailout reduces the impact on loans required by its European partners. Interest rates being pushed up has a knock on effect for any other nation (in the EU or elsewhere) that needs to borrow money in the future. This is why the IMF is involved.

    Ireland should use this mess to reform its financial system in such a way that it protects public services (which should never be privatised) that benefit all and citizens from ever having to bailout the banking system in future. Then when a meltdown occurs again, the ordinary person is protected as much as possible. Governments should operate like any individual. They should save (when all public services etc. are paid for) as much as possible when times are good: a reserve fund that is never touched. This way when times are bad they can use this emergency reserve fund to maintain their high level of public services whilst their economy tries to recover. This would ensure that the citizens don't suffer when it comes to their health and well being, education etc. but may suffer still financially in terms of their personal income being reduced due to salary reduction or redundancy. This would not be pleasant in that you may not be able to enjoy the same social life but at least the things that truly matter (such as your health, eduction etc.) would be protected.

  • Comment number 67.

    John Lytham and Global Citizen, your commetns are bordering on the racisism. The UK will have a small input to this loan, and the assistance is more in self interest as trade from the UK to Ireland exceeds that from the comined trade the UK does with India, China & Russia. Also up to 200,000 uk jobs depend on the Irish ecomony.

    As for the IMF involvement, did you both forget these guys made a visit to your shores in 1974

  • Comment number 68.

    I agree with Global-citizen to an extent.What he fails to realise is that 99% of ordinary irish citizens are not to blame for the current situation.The fault lies with a weak government who controlled a weak financial regulator who in turn let the bosses of our top banks loan billions of unsecured loans to their friends in the building industry while lining their own pockets with with paper profits which did not exist.

  • Comment number 69.

    Post 60 Alex Salmond is talking out of his rear. Ireland was part of his arc of prosperity with Iceland that showed that plucky small countries could be a success especially ones with overly large banking sectors.

    The fact that both Iceland and Ireland have imploded seems to have passed him by.

    A few posters have begged the question why are we bailing Ireland out. The truth is we aren't really bailing the Irish out but the Irish banks that the Irish government stood full square behind when the crisis came about.

    A widely quoted, and apparently accurate figure, is that the three main Irish banks owe approximately EUR 700 billion (or about EUR 17,500 for every Irish person be they man woman or child). This is of course secured against assets not only in ireland but also in the UK and across Europe.

    The only problem is people aren't really sure how much the collateral is actually worth but educated guesses put the banks seriously into negative equity.

    Of the money owed approximately 30% is to UK banks of which Alex Salmond's favourite Scottish banks which had to be bailed out so extensively by the UK taxpayer hold a vast majority of the Irish loans from UK banks. Of the other debt approximately 25% is to a number of German banks including the various Landebanks.

    If you wonder why the Germans wanted a deal just type the words "German Landesbank" and "Debt crisis" into a search engine.

    The three or four year deal is intended to try to allow the banks to unwind much of that debt without causing a property catastrophe across both Ireland and the UK. The lending banks want an orderly winding down and also the chance to pick up a few bargains rather than an implosion which costs UK banks what could be up to EUR 50 billion.

    You see a fair share of the Irish borrowing went on help keep afloat Gordon Brown's property bubble in the UK. One very large Irish developer / property owner I have had dealings with argued that they came to Britain because they had bought up pretty much anything worth anything in Ireland.

    The UK hotel sector in particular was a favourite investment home for the surplus Irish Euros as was commercial property. A well known example is the Belfrey hotel famous for the Ryder Cup amongst others which is owned by the Quinn Group who have had their run ins with the banks and government during the Irish crisis.

  • Comment number 70.

    Several key lessons from this:
    1) Lower businesses taxes do NOT lead to wealth for all. Ireland has corporation tax far lower the rest of EU and is in crisis. The UK is lowering taxes legally and with its friendly regime at the HMRC de facto.
    2) Once the banks and finance capital get one set of cuts they come back for more. The cuts budget being discussed today in Dublin are the third tranche. There was one two months ago when they had another bank bail out and one last year. What do you think will happen in the UK?
    3) Goldman Sachs are in charge of the Irish bank bond issue. How much do you think they, and the rest of the banks, are making?
    4) Germany, UK and other top EU countries are offsetting the crisis onto the weaker countries because their banks and financial institutions are involved in the crisis. Portugal and Spain will be next. Germany has already put forward new rules on voting.
    5) Ireland and Greece's budget deficit is worse than the UK's so can we not have any of the Tory propaganda about "UK has the worse budget deficit in the G20 and we have to cut".
    5) The crisis that opened up in 2008 is of global proportions and will not disappear with a few quarters tepid growth. But the ruling class has a different view, Lord "we have never had it so good" Younger is not isolated, many think like that. But we are in a situation like that between 1919 and 1940, crisis and stagnation; and with China and India challenging the hegemony of the US, just like the UK and Germany declined between the wars and were challenged by the US and USSR.
    6) Do you want another 1930s or war. Don't you think that the time is to argue, campaign protest for a better way of running society?

  • Comment number 71.

    It's strange how governments everywhere go to extraordinary lengths to try to keep inflation under control, because too much inflation is economically damaging.
    But the same rule is not applied to property inflation.
    In fact, they ignore property inflation.
    Property hyper-inflation?....Oh, that's a boom!
    Rubbish.
    Excessive property inflation and hyper-inflation are even more damaging than all other measures of inflation.
    "But we can't stop property over-inflation....it's the law of supply and demand".
    Rubbish.
    A simple, strict set of lending rules.....and property inflation will track general inflation and not go into disastrous orbit.
    Wise up world, mortgages can destroy banks and countries just as easily as they can destroy individuals.

  • Comment number 72.

    69. At 20:26pm on 21 Nov 2010, Ian_the_chopper wrote:

    > A widely quoted, and apparently accurate figure, is that the three main
    > Irish banks owe approximately EUR 700 billion (or about EUR 17,500 for
    > every Irish person be they man woman or child).

    If only! Do the math again - it's more like a quarter million per person. Yes - that's right. Getting on for that, anyway.

  • Comment number 73.

    Apparently people don't trust the banks or governments. Otherwise why would so many be going out buying gold?

    http://www.bbc.co.uk/news/business-11796346

  • Comment number 74.

    'But, in the meantime, Ireland's admission that for now it cannot pay its way in the world proves - some would say beyond any reasonable doubt - that the Irish model of economic success is seriously flawed.'
    ............................
    It's called having your cake and then choking on it ... but at least the Irish had a model of success ... the model was let down by over borrowing and re-lending in staggering amounts ... but the rest of the Irish model was sound, from an Irish point of view ... good domestic economy, good exports, protection of that economy by curtailment of foreign interests buying assets in Ireland ... the Irish made sure that side of the asset buying was done in England.

    It just goes too show ... that too much of one straightforward activity ... borrowing and lending ... can cause so much damage ... a routine economic management issue i.e. how much should sensibly be borrowed and re-leant... the 'big picture' on finance.

    But in Britain; England particularly ... outside of London there has been and there is still no sustainable model of economic success ... so I would say that in terms of economic models and 'protectionsim' ... Ireland is still ahead of the UK ... and is still capable of achieving overall economic improvement before the UK!

    Money or the lack of it is one thing ... but having a national economic strategy and doing the right things in the domestic economy is still more important than even 'money'.

    'Action' is more important than pessimism about money ... that is what is now lacking in the UK ... e.g. true radicalism, unorthodoxy, leadership.

  • Comment number 75.

    Post 72. Jacques. You are right. Or at least a lot closer than I am. When the figures get that large they lose all effective meaning.

    On a recalcualtion I think my figure was too low by a multiple of ten (though how much children and OAP's may be able to contribute is debatable).

    You may well be right re a quarter of a million per adult.

  • Comment number 76.

    These loans to EU states from the EU stability fund should not be called 'rescues'.

    The so-called markets act as amplifiers of sentiment. When people believe that Ireland can continue to build ever more expensive houses, the markets fund them to the hilt. When people suddenly believe Ireland will never build a house again, the markets turn 180 and try to profit by shorting the bond markets. In so doing, they actually become causes of the problem rather than observers of it.

    The EU stability fund short-circuits these market amplifiers and renders the entire system much more healthy than it would be otherwise.

    It is not healthy to refer to this arrangement as a rescue or a bail out. It is well managed funding of member states, so that member states do not have to suffer the boom and bust madness of being at the behest of a tiny minority of speculators, bankers and hormonal day-traders, most of whom care not one jot about the well-being of the individuals or organisations involved.

  • Comment number 77.

    Why, why! The Country is broke. Why 'lend' more money which is never going to be repaid! This bail out is grasping at straws - pure madness. And where is this money coming from, digitally generated?

  • Comment number 78.

    @ 75. At 21:04pm on 21 Nov 2010, Ian_the_chopper wrote:

    > You may well be right re a quarter of a million per adult.

    Yes. The scale of the misdeeds by bonkers-bankers defies belief. I’ve been here banging on about it for years, but people just brush it off, as if it’s nothing.

    Those bankers are poison – deadly poison. And the only antidote is to impoverish them personally.

  • Comment number 79.

    13. At 16:15pm on 21 Nov 2010, thomas_paine wrote:
    They have been conned by a massive bankers' construct called The Euro.

    =======================
    I think you made a typo - you hit a 'b' instead of a 'w' - the ankers who made the euro are Politicians, the credit crunch was the other set of ankers begining with a "B"

  • Comment number 80.

    79. At 21:30pm on 21 Nov 2010, DevilsAdvocate wrote:

    > I think you made a typo - you hit a 'b' instead of a 'w' - the ankers ...

    Yes - a crude yet highly accurate synposis of the situation!

  • Comment number 81.

    Are all these central bankers so dim ?

    After much speculation, Ireland unexpectedly and surprisingly will confirm that they have requested a loan that they neither want or need.

    The Irish banking system wants and needs the loan but the ECB can't loan direct (apparently) so they ask the Irish government to borrow it so that they can loan it to the banks.

    Why doesn't the ECB announce that there will be an unlimited borrowing facility (with each use of the facility being subject to review) for as long as Ireland or indeed any EuroZone country need it. Standard rate = 5% and print the money as and when required.
    The Eurozone as a whole could then raise long term money on the international bond markets utilising the rating of the zone (presumably AAA) rather than individual countries being picked off by the sharks.

  • Comment number 82.

    Ireland should be given a very long time (decades) to repay these loans.
    The interest rate should also be fixed very, very low.
    What's the point of putting too much pressure on the Irish people?...it won't help the situation.
    If Irelands banks and property market can recover in a few years time, they may be able to accelerate repayments.
    Being in the Euro system, Ireland cannot devalue its currency or print its way out of the problem, so normal commercial terms should not apply.
    Ireland needs assistance, not an impossible burden.

  • Comment number 83.

    @66 (This way when times are bad they can use this emergency reserve fund to maintain their high level of public services whilst their economy tries to recover.)

    People need to get their heads round the fact that this latest event is just part of the climax to a 60-year build up where we've now reached Peak Debt. Mountains of worthless paper in the virtual economy and the real economy shackled by oil at $80 (and rising, even in a recession!?) with other depleting resources and commodities including food increasing sharply in price. There will be no "recovery" until the credit contraction plays out - maybe in the form of a "greater depression" which might last a very long time. Systemic change is necessary (the end of debt-based money, and usury?) and a wholesale overhaul of the financial sector for the benefit of people, not banks and multinationals.

    The tragedy is that any body which has put aside savings for a rainy day as spacon08 suggests, will find the value of those assets much reduced if inflation takes hold. For the rest, deflation is perhaps even worse? Hold on tight folks...

  • Comment number 84.

    "Over 20 years, it grew at rapid rates that are more typical of Asia's fast growing economies - until its GDP per head overtook that of the UK."

    Hmm. Do the Irish (or the UK for that matter) maintain any statistics as to how much growth in GDP there would have been over that period if fake profits due to the property bubble were excluded? Presumably the capital gains of individuals didn't count towards the published GDP, but profit accruing to companies involved in property development and speculation would have done, and of course much of the profit accruing to the banking sector was derived from the property bubble too.

    If this fake bubble-related contribution to GDP was discounted, was growth (and GDP) actually as high as it seemed in the 20 years before the bubble burst? And has the subsequent recession actually been as deep as the puiblished figures show?

  • Comment number 85.

    76. At 21:25pm on 21 Nov 2010, Oblivion wrote:
    It is not healthy to refer to this arrangement as a rescue or a bail out.
    ===============
    It may not be healthy, but it is honest, and my Mum told me that honesty was always the best policy.

  • Comment number 86.

    At 21:25pm on 21 Nov 2010, Oblivion wrote:

    "It is well managed funding of member states, so that member states do not have to suffer the boom and bust madness of being at the behest of a tiny minority of speculators, bankers and hormonal day-traders, most of whom care not one jot about the well-being of the individuals or organisations involved."

    But will this latest intervention ease any of this pressure? This will be the third time the Irish Government has pumped funds into the bottomless pit that is its banking sector (this time using EU/IMF funding) with no guarantee that the balance sheets are any more credible than they were 12 months ago. How confident can decision-makers be that they know where this is leading and will they recognise the final denouement when it hits them?

  • Comment number 87.

    70 littlekeefer

    A few more lessons
    Ireland's low business taxes are not the reason for their present problems. This is down to bad loans within their banking sector,an uncontrolled property bubble followed by recession, high budget deficit and deflation.

    Ireland and Greece are not members of the G20 as individual countries hence the assertion that we have the largest budget deficit is in fact true.


  • Comment number 88.

    After a Decade of 'Trade' with Ireland the net of which has been in 'our' favour
    1998 2.1 Billion
    1999 3 Billion
    2000 3.2 Billion
    2001 3.4 Billion
    2002 3.2 Billion
    2003 4.6 Billion
    2004 5.6 Billion
    2005 7.5 Billion
    2006 8.6 Billion
    2007 9.4 Billion
    2008 9 Billion
    1998-2008 Total 59.9 Billion - Pink Book 2008 - all this 'hard work' is now to be wiped off thanks to those ‘clever’ French ‘over certified in cleverness’, ‘under experienced in the real world’ bureaucrats who designed the Euro - so we can all be 'united' as if being 'united' was a universal virtue - if you went for a swim and were 'united' with other swimmers with a rope you'd all drown !
    This problem is not due to 'Lazy Irish workers' etc any more that it’s due to ‘Lazy Greek workers’ in Greece. The 'boom' in Germany is also not due to the 'hard work' of the German worker - it's due to "Finance" - in particular the Euro – The Euro is too strong for the Greeks and the Irish etc and too weak for the Germans. If it is to continue then Germany and the countries that 'profit' from the weak Euro need to pay - not loan - an annual “currency mis-match” fee to the countries that suffer from the Euro being too strong for them – in order to re-establish the situation that would occur if all the countries had their own old currency - Oh here’s an idea why not get rid of this ridiculous artificial currency invented by people who couldn't get a proper (outside government) job and have all these countries have their own currencies back ?
    PS Mr Peston, I have to say that Irleland was never 'doing well' - Prospect Magazine had a front cover picture a few years ago a house brick made of gold and had a headline about Ireland's economic miracle or something like that - I laughed when I saw it - did you ?

  • Comment number 89.

    I seem to remember the UK getting major assistance from the IMF a few decades ago.

  • Comment number 90.

    jeepers peoples - theres a lot of anger out there on this one.

    but remember that money isn't real - its just a promise to pay and if the ability to pay in the future is less then it is actually worth less - so what will happen will be higher inflation to take down the debt in real terms and make most people poorer. The only tragedy is that the hard won lessons learnt probably will be forgotten in 50 years time.

    ho hum. prime the printing presses my dears - we go to save the world.

  • Comment number 91.

    First of all why is the bailout fund only 440 billion when the last I heard it was 600 billion (anyone remember shock and awe (ha ha)) so there seems to be 160 billion gone missing somewhere.
    Having said that the countries who pledged money to the bailout fund were amongst others you guessed it Ireland, Spain, Portugal, Italy , Belgium.
    I have to say if was in charge of Ireland's economy I would have been playing a massive game of chicken(could have happened) waiting for the the first country to blink. You have to look at it rationally if you are in charge of an economy which is effectively bust, you are bust, and that is it. However, if you are thoughtful and inciteful and you know your plight is causing deep concern to others who would also be in major trouble (britains banks and the rest of europes too) if things didn't go 'tickety boo' well it is time to sit on your hands and see what others can do for you. In effect you have the knapp hand and can arrange just about what you like. That is what I would have done. Nasty I know, but when your responsible for 4.5 million people you have to do what you have to do.

  • Comment number 92.

    41. At 17:30pm on 21 Nov 2010, DebtJuggler wrote:
    Never mind bailing out the Irish banks (again)...

    There's only one way to get effective banking regulation...KILL THEM!

    ERIC CANTONA "KILL THE BANKS" (A MUST SEE)!
    http://www.youtube.com/watch?v=-Uop5R7E314&feature=related

    ‘In France, they are not wasting their time. They are organising themselves to withdraw their money on the 7th December 2010.’


    Eric Cantona's call for bank protest sparks online campaign

    http://www.guardian.co.uk/world/2010/nov/20/eric-cantona-bank-protest-campaign


    Great idea. We cannot rely on the banks and their political friends to reform themselves for our benefit. Wretched, wretched RBS again, spraying money around in all sorts of exotic places. At the very least put your money in a building society or credit union. The average Brit will not wake up from his X factor induced torpor until inflation hits 25% or more, and a loaf of bread costs £15, or is not available at all. None of us are served by flaccid media reporting, and badly educated economists. Liam Halligan in the Telegraph writes some sense about the Irish financial crisis, departing from the usual establishment rhetoric.

  • Comment number 93.

    One domino after another, like the house of cards this helping one another out has got to stop. If we have to play pass the parcel with the debt let it sit fairly and squarely with the institutions that pumped up the value of property globally eg the lending institutions.
    They thought they were smart strapping everybody upto the limit to get the max bonus or commission and look at the mess thats been created. The UK will be the next to need a bail out every country is so interlinked financially with one other through these credit default swaps. Warren Buffet called them atomic bombs waiting to go off and he was right, events have proved him right. They need banning, debt should stay in the country and the institution were it was created not passed around.

  • Comment number 94.

    7th december. It will work. If it gains momentum we should all be worried.

  • Comment number 95.

    I expect the UK Government to make sure that the terms of any loans or facilities guarantees the transfer of an appropriate level of Irish assets as collateral.

    The other problem is that the Irish economy is too small to domicile these large private banks. As demonstrated, when things went wrong, the Irish Government was not able to meet its obligations. A transfer to foreign ownership of one or more of these banks, at a discount to assets of say 60% to allow for bad debt, is now called for as part of the down sizing of the Irish Banking sector.

  • Comment number 96.

    ...... Royal Bank of Scotland has £53bn of "credit exposure" to Irish borrowers. So the bigger the crisis in Ireland, the worse the losses on these loans - which would hurt British taxpayers both as owners of more than 80 per cent of RBS and as insurers of many of these loans through the Treasury's asset protection scheme.

    In that sense, there is financial logic for the British government to participate in rescuing the Irish economy, to limit losses for British taxpayers.....


    Robert

    You must be joking! Can one look any shorter? This is complete nonsense; Ireland is drowning in even more debts while its economy will see the rats flee the sinking ship, i.e. the economy will go down the drain in parallel. The Ponzi scheme to the 1000th power and you speak about limiting losses for the taxpayer?! The same taxpayer that owns the rest of the PIIGS and more, for example this joke of a currency called EURO?
    Limiting losses?

    caw

  • Comment number 97.

    In your TODAY piece at 8.04am Robert, you omitted the words 'fraud', 'widespread' and 'corporate'. Why? Until the corporate fraud, especially in the building and property sector is dealt with, a large part of the underlying cause of Ireland's problems will still be in place.

    Still causing the problem.

  • Comment number 98.

    When such a major event as this recession takes place, the reasons should be clear.

    Looking at the comments, we see such a wide and opposing range of theories.

    Are we so stupid!

    Robert, you must use your position to educate.

    If you do not do this, we will go further into the mire, and repeat our foolish actions again. (bonuses all round - hee hee!)

  • Comment number 99.

    Let's be quite clear - this is about bailing out banks again. Any distinction between an Irish bank and a British one is essentially pedantic when the latter have so many dubious loans to the former.

    Robert, perhaps you can help us out - when Lloyds, RBS etc reported their profits and calculated their bonuses earlier in the year, did they make any provision for losses on risky loans to Irish banks? At some point, I may well have to find the funds to pay for residential care for my parents, or education for my children, so it would be very helpful to know just how much liability I (and every other taxpayer) will have to pick up for the bankers' incompetence, and whether there is any end to the "surprises" hidden in their accounts.

  • Comment number 100.

    re #87
    Got to take issue with you on that! If you give a sector an easy ride (12% tax on corporates - what was it on individuals?), if you take too much tax up front, if you tax the wrong things, if you take too much tax too far down the income scale, then - inevitably - you are going to come unstuck at a (near) point the future. Add corporate fraud and incomptence in business and Government into the mix and the recipe for disaster is more than complete.

    We might have completely avoided 2007/2008/2009 had we had a different fiscal balance in this country. Just one part of the puzzle. Without it, we would have had a bumpy ride but we would not be where we are now.

    We might have handled the sub-primes. We might have handled the credit card debt. We might have handled the overblown property sector. But the combination of inflation plus consumption plus state spending plus plus increasing commodity prices, with the addition of FISCAL INBALANCE - it sunk us.

 

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