Join Date: 08.03.2005
Model Reformer in Trouble: Ireland Lobbies to Have Europe Share Banking Risk
Ireland's reform policies have been widely praised for helping it emerge from the crisis, but the truth is bleaker. If the government fails to get European taxpayers to assume some of the risk of its ailing banking sector, the country could soon require another bailout.
Join Date: 06.06.2012
You really need to understand what happened. How many years into the crisis and you still don't explain to your readers what happened?
Look at this clip where a the ECB's Klaus Masuch is left speechless by Irish Journalist.
Some months ago I wrote here in response to another article:
"Germans do not understand their banks' role in the Euro Crisis, say the Irish".
Your article does not inform your readership of the real background.
Some people have written:
"German money should belong to Germans." (1)
which is true, but therefore:
"German private bank-loans should belong to German private banks",
whether the loans make a profit or a loss.
And this is what we're talking about here.
Ireland (the Government & the Irish people) did NOT get this money originally!
It was the debt of Foreign banks (including German) that Ireland was forced to (continue to) guarantee that is central to this crisis!
You should understand that Ireland (the government & the people) DID NOT receive this money. This is unlike the situation in Greece, Spain, Italy etc., where the sovereign did actually get the money.
In the discussion about money owed to bond-holders people used the phrase "if Ireland can't or won't pay it back".
It was incorrect to use the word 'back'.
What was being considered was whether to 'pay it', or not, but as we, the Irish citizens, never received this money in the first place it was and is wrong to talk about paying it 'back'.
In fact not only did Irish taxpayers not receive the money, the fact that FOREIGN banks lent the money irresponsibly meant that the vast majority of Irish people were disadvantaged by massively inflated house prices. Sensible people never wanted this money to flood into Ireland in this way in the first place.
Foreign PRIVATE risk-taking banks lent money to PRIVATE banks in Ireland. Later when these PRIVATE banks were going bust, in an attempt to stop a contagious disaster throughout Ireland and Europe, the Irish government said they'd try to guarantee this private debt (but the Irish citizens weren't asked and certainly did not agree to it).
Professor Honohan and others said that Ireland prevented an event worse than the Lehman's collapse in Europe. When it was obvious that the little Irish citizen couldn't possibly pay this huge debt belonging to private risk-takers, and were not going to renew the guarantee, Europe (ECB etc.,with major German influence) stepped in and insisted that there should be no 'frightening the horses', and haven't yet let the debt be given back to those whom it belongs to.
There was (& is being made again) a real solid economy, based on real things, before this cheap money flooded in, looking for private sector "investment opportunities". Ireland took ~30 years putting the pieces in place to create this solid economy, and then two parasite so-called professions - bankers (foreign & Irish) and property lawyers - came along and not only sucked the blood out of the economy, they expelled huge numbers of the next generation to emmigration. And they did this sitting in offices putting immoral contracts & 40 year mortgages down on paper, pushing house-prices out of reach for any sane calculation (but then lending 12 times salary to panicked novice first-time-buyers who are now also destroyed), they didn't create ANYTHING, they didn't even physically build any part of one of the surplus houses, and they could've done all that they did with 18th Century quill pens & ledgers and so on, so out of touch are they with what it means to contribute in a modern society.
As one U.S. commentator asked (1): "Why should the Irish people be forced to bail out the Germans who loaned the Irish banks the money in the first place? Shouldn't the German bondholders who took the risks be required to take a major haircut? Isn't that how capitalism works?"
(1) New York Times article responses: http://dealbook.nytimes.com/2011/10/...rish-debt/?hpw