Moreover and unfortunately, the exact deal foolishly agreed to by Irish Prime Minister Brian Cowen is not only amazingly bad for Ireland, but one of the provisions violates EU and Irish law.
Terms of Enslavement
Please consider these terms as outlined in EU agrees on $89 billion bailout loan for Ireland
- Ireland gets Euro 67.5 billion ($89.4 billion) in bailout loans
- The 16-nation eurozone, the full 27-nation EU, and the global donors of the International Monetary Fund each commit euro 22.5 billion ($29.8 billion).
- Interest rates on the loans would be 6.05 percent from the eurozone fund, 5.7 percent from the EU fund and 5.7 percent from the IMF.
- Ireland will have 10 years to pay off its IMF loans.
- The first repayment won't be required until 4 1/2 years after a drawdown.
- Prime Minister Brian Cowen said Ireland will take euro 10 billion immediately to boost the capital reserves of its state-backed banks
Comparison to Greece
For comparison purposes Greece has three years to repay its loans at an interest rate of 5.2 percent.
Debt Slave Entrapment
The key to understanding how quickly Ireland is made a debt slave can be found in this not so innocuous paragraph.
Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro 17.5 billion to its own salvation.
The last sentence in the above paragraph should read "Ireland will contribute euro 17.5 billion to its own destruction"
Moreover, once all of its own funds have been deployed, Ireland would be dependent on the IMF for life.
Salt Onto Open Wounds
Like pouring salt onto an open wound, the EU finance ministers agreed on a permanent mechanism, starting in 2013, that would allow a country to restructure its debts once it has been deemed insolvent.
One aspect of that provision is that it would encourage any country needing help to delay getting help until 2013. The other aspect is that any country wanting to renege on a bailout may wish to hold off until 2013.
Those aspects explains the provision "Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout."
If Ireland "runs down its own cash stockpile" as required by the agreement, it will be broke by 2013.
Just who were the morons negotiating these terms on behalf of Ireland? They are so egregious that one has to wonder "What the hell did the EU promise Cowen to accept these terms?"
Default! Say the people
The Independent reports Default! Say the people
A SUBSTANTIAL majority of the Irish people wants the State to default on debts to bondholders in the country's stricken banks, according to a Sunday Independent/Quantum Research poll.Completely Mad
The finding that 57 per cent favour and 43 per cent oppose default reflects a growing view among policymakers and opinion formers that the State simply cannot support the debt burden it has taken on.
The telephone poll of 500 people nationwide has also found that a majority of around two-thirds opposes the headline measures in the Government's four-year plan.
As Ireland awaited the fine details of the international bailout, which are expected tonight, it was learned last night that the Irish delegation negotiating with the EU-IMF last week raised the issue of default.
"The Europeans went completely mad," a senior government source said.
If you want to know who is "completely mad" look straight at fools like Irish Prime Minister Brian Cowen who agreed to these preposterous terms.
Certainly Irish voters, in aggregate, are not mad.
European Banks "Nearly Bust" If Euro Collapses
To help understand the pressure placed on Ireland, please consider European Banks �Nearly Bust� If Euro Collapses, Evolution Says
The European banking system would be �nearly bust� if the euro were to be abandoned which means the 16-member currency �cannot and should not go,� Evolution Securities Ltd. said.In Search of Madness
�If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately,� said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a �great buying opportunity.� Devaluations mean write-offs �of a size that would render the whole European banking system completely insolvent.�
If Spain, Italy, Greece, Portugal and Ireland devalue by 30 percent on the way to readopting national currencies, total losses for German banks alone would be 120 billion euros, said de Frias. That�s almost half the total equity of German lenders, he said.
In such a scenario, losses at U.K. banks would reach 80 billion euros, equivalent to nearly half the equity of Barclays Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc., he said.
�And this is only the banks. What would happen with the investments of the large European multinationals� like Siemens AG, Tesco Plc and others. �More multi-billion losses, and future profits lost.�
Once it�s clear that the euro will survive, �it will become clear that some of our banks are 50 percent, 70 percent or 80 percent� undervalued, he wrote.
If you are searching for madness, the statements from Arturo de Frias, head of bank research at Evolution, certainly qualify.
Somehow European banks would be �nearly bust� if countries abandoned the Euro but otherwise banks are as much as 80% undervalued. Yeah right.
Excuse me for asking the obvious but what happens if the Euro is saved but after extending "bailouts", Ireland, Greece, Portugal, and Spain simply opt to default?
To Ireland With Love
Some may have missed this weekend's edition of Sunday Funnies so I offer this repeat.
IMF's Trojan Horse Gift to Ireland
I believe we have all heard the story and know how it ends.
For additional commentary and details including a comparison of Ireland and Iceland, please see
- To Ireland With Love
- Don't do Stupid Things; "Tell the EU and IMF to Shove It!"
- Ghost Estates and Broken Lives: the Human Cost of the Irish Crash
By agreeing to take on that debt and sticking it to the Irish taxpayers who will be forced to accept various austerity measures to pay back that debt, Irish Prime Minister Brian Cowen and Finance Minister Brian Lenihan just sold Ireland down the river.
50 Ways to Leave the Euro
With a tip of the hat to Paul Simon
The problem is all inside your head, I say to thee
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave the Euro
You just slip out the back, Jack
Make a new plan, Stan
You don't need to be coy, Roy
Just get yourself free
Hop on the bus, Gus
You don't need to discuss much
Just drop off the key, Lee
And get yourself free
Make a New Plan, Stan
I am not a lawyer, but I suggest it is not up to either the EU or Prime Minister Brian Cowen to casually violate Irish law and the laws of the EU. Given the terms of agreement violate both EU and Irish law, the agreement is therefore unconstitutional.
If I am correct, all it takes is for the next Irish Parliament to abide by the will of the people and say "It's time to make a new plan, Stan. The old plan was unconstitutional."
As an alternative, I suggest "Drop off the key Lee and get yourself free." After all, there must be "50 ways to leave the Euro" and threats of doing so would soon get Ireland a much better deal than the preposterous terms Prime Minister Brian Cowen and Finance Minister Brian Lenihan agreed to.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
No comments:
Post a Comment