@gary – that’s exactly what happens in a default situation, you get paid what the defaulters can afford, not what you’re owed.

A review of our membership seems the best option, we can then shake of the “untermensch” status we’re currently subjected to thanks to the FG/FF quislings

Brendan & Gary – please don’t take this personally but you are both displaying a shocking lack of knowledge with regards to what is actually happening in the markets – point 1) we shouldn’t default on sovereign debt but on the privately borrowed banking debt which was borrowed by shareholder owned institutions not by the Irish state. These bank bonds are now trading on the secondary bond market – i.e. where it is sold by the original owners to anyone who is willing to buy it at around 30 – 40 cents on the euro – in other words they are taking the hit already expecting a default – its priced in. Those who are buying those bonds are hoping to make a killing by the Irish government paying it a 1 Euro – so we are not paying back the original bond holders but rather hedge funds who are speculating – that’s the current reality. The markets expect us to default and think its unrealistic that we actually pay this. I work in this sector and have had investment managers tell me that they think we are insane as a country to be paying this debt as most of the original bond holders have sold there holding at a loss on these bonds already!

This has to do with an accounting concept called fair value accounting where you price the bond at the market value which as I said is 30 – 40 cents.

Point 2) Iceland defaulted on its banking debt – is back in the bond market after 3 years paying an interest rate around the 4% – 5% mark – far lower than Ireland’s current rate even though we both went into trouble around 2008 – in market terms – Iceland did the right thing – Ireland didn’t. Also the Icelandic currency devalued approximately 40% during that period so what sovereign bond holders got paid back was less than they paid out – that’s why you pay an interest on a bond – this is the risk premium – i.e. the extra money that a bond holder will get paid for taking on the risk of lending a sovereign money in the first place – sometimes the bondholder wins – sometimes they lost.

Point 3) Argentina defaulted on everything about 10 years ago and they are back in the bond markets. Russia is another example – its so false to state we would never be able to borrow again – its just not market reality.

Markets don’t have memories – they have investment analysis which determines where they can make money – they know there is a risk wherever they lend and react accordingly – if they think you are a solid risk they will lend you money regardless of the past. The reason they are attacking the Euro zone is that they know every step taken so far in relation to Ireland, Greece etc, is so far from dealing with the actual problem that it is unsustainable.

if the euro collapses debt forgiveness kicks in. Reject any treaty put before us the euro will go anyway. Let us take control.

Today in Government, Enda came back and held an emergency meeting with his closest advisers…
The LIttle People were there in force, they were obviously protecting the Gold… The Tooth Fairy was quite vocal (she insists that the amount of gold fillings were worth protecting and not just cast aside when the tooth crumbled)
Santa Clause, he was just concerned that if Enda signed up to the Treaty, his Toy enterprise might have to move to Germany, Pinochio has been living quietly with an exceptionally long nose buried inside Little Miss Muffet’s tuffett…hmmm, he was pretty well ignored.
Snow White signed up several TD’s as her new Dwarfs, Sarcozy is apparently desperate to join as Grumpy, she is giving that one a bit of thought.
Cinders was outside protesting, she lost her place as an adviser when Joan Burton stepped in, The Social Welfare cuts didnt go down too well with Cinders.
Seems there were a few unfamiliar fairies lingering around too.

Perhaps you should read this independent article on Icelandic bonds in June 2011 from the Economist – explains my point

http://www.economist.com/blogs/freeexchange/2011/06/europes-debt-crisis-0

Referendum we decide. We should pull out, team up with Britain as lots of our exports go there. Keep our corpo tax. And burn the bondholders whole we are at it. We will suffer from a bad punt to start but will pick up. We will be left behind Germany and France anyway. The two of them are having a love affair, so let’s get our and compete with them. Ireland’s politicians need self belief when we make our trips to Europe and not be school yard bully victims. Jesus look at the American companies who have planted themselves here. They can’t abandon and feck off to Europe because of the language barrier for starters. We have penty of reasons that big companies would stay here. Get out

Again Stephen your overall points are wide of the mark. Yes if we left the Euro, we would have to cut our deficit immediately. But we still have to do that anyways if we stay in the Euro – the only difference is we do it now rather than taking another 3 or 4 years for which we have to borrow money and pay interest and extra debt back – thus making the cuts and tax hikes even steeper – so again economically leaving the Euro makes more sense – why borrow more to do what we have to do anyways?

As when we entered the Euro – business contracts would be exchanged at a fixed exchanged rate – if it was planned properly.

Credit would also be available as we would have defaulted on our banking debts making our banks at last one of the most solvent in Europe and if we have our own printing presses – we can print credit – high inflation yes but that’s coming anyways when the ECB start printing.

I’m fascinated that people think we can just leave the Euro and have all debt denominated into a new ‘punt nua’ one to one. Why the hell would anyone who we owe money to agree to swap 1 to 1 to currency which will lose 30-50% of it’s value. It doesn’t make sense, they would lose 30-50% of their money. Money, which it has to be said, was given to us in good faith, to fund mostly our overspending. And if we default on our debt no one is going to give us money, no one. I think we should cut our overspending but I fully appreciate the horrible consequences of doing that overnight.

….and now it’s a good move to leave it

@Gary – If we leave the Euro I’m assuming we would default. In this case it doesn’t really matter what our creditors ‘agree’ to. It would certainly be very tough in the short term and I’m not convinced that this is the right thing to do at this moment.

As you say we would likely find it difficult to access funding from the markets so would need to slash public spending immediately and extreme capital controls would need to introduced to to prevent capital flight. However, It is important to also point out the positives of this scenario which include fiscal self determination, devaluation, growth of our real economy, return of our sovereignty. In Argentina which suffered the largest default in history in 2001 unemployment returned to single digit figures by 2006 and the economy is booming today.

Unfortunately the EU ‘deal’ as proposed paints just as gloomy a picture. Mandatory austerity, extreme fiscal control on the one hand but with no restrictions on capital markets and no action on the unsustainable debt levels by the ECB on the other. These rules enshrined in law are a recipe for mass unemployment and zero economic growth for years. Also the very reason we were locked out of the markets in the first place is bacause we were stiffed with private bank debt by your friend Angela. If you look what happened to our bond rates around this time you will see this. Also as I’ve said before the proposed introduction of a financial transaction tax would be a disaster for the IFSC seeing as the City of London will not countenance such a tax….and there’s also the lack of guarantees on the CT rate. Altogether a very poor deal for Ireland which more or less gaurantees debt serfdom for the forseeable future.

Personally I don’t think this deal will get off the ground as it may be scuppered by national parliaments or referenda. It is also possible that the crisis may overtake it in the mean time, there are some French and German banks effectively bust due to their lending binges that are on life support from the ECB who acted along with other central banks a couple of weeks ago to stave off a major credit crunch which would have seen another banking collapse.

I think our best bet is if the deal does not go through and they are forced to rethink and come up with a real fiscal union where the ECB will act like a central bank should and print money. The alternative scenarios are certainly not attractive.

Put it to the people. Then the government can re-run the vote as many times as it takes to get the result they want.

The Euro is a dismal failure and has destroyed the economy of too many countries. We need to leave this sinking ship and tell the IMF to piss off while we’re at it.

Funny, other reports on the CNN survey highlight first and foremost how the majority of Irish people would have no problem leaving the euro.

This is why I uninstalled the journal app and stopped surfing over here.