Enda's poisoned chalice

Ireland's proportional representation system is NOT complex. It's the Single Transferable Vote system, which is quite straightforward unless you really ARE intellectually challenged in the counting department.

IMF? Read: USA. Say no more; say no more!

"Voters will be watching keenly to see if those pledges can be made good. The word from Brussels appears to be that they should not get their hopes up."

Then Ireland should make Brussels reconsider. A coalition with Sinn Fein would give Fine Gael a majority government, and would stand the best chance of standing up for Ireland.

Sinn Fein like to blow people up, kindap people, rob banks and based their election HQ in a house owned by a convicted diesel smuggler. They have no part to play in Irish democracy. Also their grasp of economics is that of a two year old. They have PROMISED to reverese the cuts, where they are going to find this money that nobody else knows about, I dont know. I suppose they nicked 25 million pounds in the northern bank raid so if they do that everyday they its 9 billion pounds

The EU might not want to renegotiate, but under the current terms, it's not going to get its money back. Going from a 12% deficit (32% if you count the charges from the bank bailouts) to the 20% surplus required to meet interest repayments in 2015 is nigh on impossible.

It is economic suicide to try and achieve it. The fiscal adjustment required will take so much money out of the rest of the economy, it is hard to see where the demand could possibly come from to balance it. A number of recent studies when put together have shown that, should economic stagnation last for 3 years, it is likely to end up in a prolonged slump. If the recession is over in less than 2 years, then the recovery can be strong. In addition, in the short term, for every 1% cut from government spending, between 0.5 and 1% is taken off GDP (Study covered by the economist last November), but in a separate study over the long term, i.e. over 5 year time horizon, every 1% cut gives a 2% boost to GDP.

Unfortunately, these factors all seem to combine to give the following picture:
8 years of government spending cuts will heavily drop GDP growth. This is likely to lead to a severely prolonged slump. It might end up in higher growth, but Ireland is so far in the hole, it would need to return to celtic tiger years to recover from the social damage caused by such a shock to the employment market. Optimists might think the government spending cuts might provide this. And they might. But the current rate of interest on Ireland's 'bailout' is likely to remain a drag for the foreseeable future. These cuts will also dramatically increase social tensions, cause strikes and political unrest that will be costly, both in effort and output.

Reducing the interest on the bailout would allow Ireland to reduce the cuts in government spending, thus allowing strong net growth. Ireland's private sector, especially based on exports is likely to grow (although strong export growth has not really added new jobs at all), but freed of the headwind of government cuts, it is likely to pick up momentum quickly. A couple of years of decent growth will reduce unemployment, boosting the coffers.

Will the Irish accept years of stagnation, persistent unemployment, mounting taxes, reduced benefits and services and public employment cuts?
No. We have been patient to date, but the terms of the 'bailout' were a slap in the face.

Germany, France and Britain are all borrowing at about 2.5%. They will make a handsome profit on the 'bailout'.

If they halved the ~7% rate they're looking for to 3.5%, they will still make a profit, when Ireland pays them back, and Ireland will have only 10% of its tax take going on interest payments, instead of 20%.

That will make a huge difference.

The Irish people will not the alternative. We can, and should, default, if those looking to profit from our bank's stupidity wish not to truly help us.

We should show them the same gratitude in return.

Eats Wombats,

Your Irish PR-STV system is not monotonic. That means voting for someone might harm them. That sounds pretty intellectually challenged to me.

See www.rangevoting.org for a truly simple, monotonic voting system.

@Frank

"If they halved the ~7% rate they're looking for to 3.5%, they will still make a profit, when Ireland pays them back,"

IF!!! Ireland pays them back! Put your money where your mouth is and take a home equity loan and buy irish and greek bonds! You can also make profit....

Why there are so many people that want to do good with others people money....

The German taxpayers are not guilty of your failed banks, why should they give you subsidized loans?

@greatmongo,

No problem. We'll default.

That'll cost the German banks a pretty penny.

And if it destabilises the Euro, well, so be it.

Let the Germans clean up the mess it causes in their economy and we'll clean up the mess it causes in ours. The difference being, the Irish economy is in the toilet anyway and defaulting on all those debts might give us a chance to get out.

Suddenly that 3.5% interest rate will look like a bargain. German banks hold over €48bn in Irish bank debt, French banks €19bn, and British banks €31bn.

How much will they get back if Ireland defaults? 60c on the euro?

They'll need more capital again.

As for the governments, well, of the ~€85 billion, a third of that is from the pension reserve fund and the rest was from savings in the central bank.

So thankfully, the ECB is only on the line for a bit under €100 billion and the rest for about €40 billion, once it all washes out.

A default will cost an awful lot more than actually helping Ireland by giving it a preferential interest rate.

I would take a home equity loan if I owned a home. I don't. I'm one of the few of my friends from my generation (late 70s/early 1980s) that didn't.

The lie that they were sold will haunt them for the next decade, both in their repayments on a house that isn't worth what they paid for it and the higher taxes combined with worse services.

It will help greatly to shift Ireland back to the left though, as can be seen with the rise of Sinn Fein, the United Left Alliance and Labour in the polls.

As FF are the party of "whatever you're having yourself", expect a shift leftwards from them. They'll placate the unions angry at Labour for the inevitable cuts and disaffected youths stuck with the options of either remaining unemployed or emigrating.

It's all depressingly predictable. And familiar to those of us around Ireland in the 80s (albeit young...)

Frank

So what are you saying is:

Germany should give us a lot of free money or we will default. Awesome. This really creates a lot of trust....

I give you another solution:
Get your house in order. If you do not have the money, privatize something, reduce the social payments... etc.

You have to understand that Germans and many others have trusted you in the past. If you fail to repay your loans, you will loose this trust and in the future people will simply not lend to you, so think twice if acting like a terrorist pays of.

Remember that Germany and EU can also take foreign assets of Irish companies (ex. ships).... do you really want that?