the UK offers to loan £10bn to R.O.I.

[jas72]

I have no sympathy whatsoever, a country with a minimum wage of nearly 12 euro an hour and dole payments that are in excess of what some people earn in the UK in a full time job? Tsch, serves them right for wasting the funds they had.

Acutally they didn't have any funds according to the government.

They let companies set up basically tax free. This caused a housing boom coupled with the banks offering unlimited credit to developers who in turn used the collateral from their land buying to secure more loans.

Since the loans were never repaid the developers and banks never had to pay any taxes. Most if not all of the banks senior management walked from this fiasco with millions of Euro in their back pockets (sums of 81 million have been mentioned.)

I flat out refuse to believe that senior management in the banks didn't know how this would end. Offering 200 million loans to developers because the value of their land had shot up 300% in the last 5 years!


Now the man in the street has to take it and so does his kids grandkids and great grand kids as Ireland PLC is now owned by IMF and ECB. No chance of ever paying off these loans.

Bertie Ahern is still smiling though.

 

[Mr Jack]

they will most likely print 7 billion pound

No. They will borrow 7 billion on the open market. Because we have a good credit rating as a country we will pay a low rate of interest on this. We will then lend that money to Ireland at that rate of interest plus a few percentage points.

Each year, or whatever, we will pay interest on our debt but Ireland will pay a larger amount of money to us to service their debt to us.

So, unless Ireland defaults then:

1. We make money on the loan (win)
2. Ireland pays less on the loan than it would on the open market (win)
3. Ireland's economy benefits from the extra money and solvency (win)
4. We profit from sustained exports to Ireland (win)
5. Diplomatic relations with Ireland improve (win)
6. The investors loaning money to us make a reasonable return on their investment while incurring very low risks (win)

So, basically, everyone wins on this.

 

[scorza]

I was confused by the Chancellor describing Ireland as "a friend in need". Leaving aside the Arthur Daley saying about a friend in need being a blumin' pest, when has Ireland been a friend to the UK? 1916, helping Hitler out in WW2, the IRA, a deliberate policy of attracting UK businesses to move to Ireland (hows that working out for you lads?), hell - they even joined the Euro to stick two fingers up at the UK not that any of us were bothered.

 

[scorza]

I flat out refuse to believe that senior management in the banks didn't know how this would end.

I heard that at one of the Irish Banks, before the global economic crisis, the CEO instructed the board members to buy shares to shore up the share price. The board weren't exactly thrilled at this prospect so the CEO arranged for loans to the board members so they could buy the shares. Well things all went south, the CEO got sacked (with a huge severance payment of course) and is now suing the now-nationalised for arranging a fraudulent loan to himself, which he himself arranged.

Oh btw, this guy has had to give up his Irish citizenship and of course is now a UK citizen (yipee), living in the USA

 

[Gilly]

So, unless Ireland defaults then:

...and if they do?

 

[Vonhelmet]

I was confused by the Chancellor describing Ireland as "a friend in need". Leaving aside the Arthur Daley saying about a friend in need being a blumin' pest, when has Ireland been a friend to the UK? 1916, helping Hitler out in WW2, the IRA, a deliberate policy of attracting UK businesses to move to Ireland (hows that working out for you lads?), hell - they even joined the Euro to stick two fingers up at the UK not that any of us were bothered.

They. Buy. Loads. Of. Our. Stuff.

 

[Cuchulain]

I was confused by the Chancellor describing Ireland as "a friend in need". Leaving aside the Arthur Daley saying about a friend in need being a blumin' pest, when has Ireland been a friend to the UK? 1916, helping Hitler out in WW2, the IRA, a deliberate policy of attracting UK businesses to move to Ireland (hows that working out for you lads?), hell - they even joined the Euro to stick two fingers up at the UK not that any of us were bothered.

Perhaps for some reason the British Gov. still feel responsible for their slightly less fortunate cousins after we invaded them 800 years ago, though, to be fair, 800 years of complaining about the English has more than made up for it.

 

[Cuchulain]

They. Buy. Loads. Of. Our. Stuff.

What stuff? We haven't exactly got the worlds most thriving manufacturing industry.

 

[scorza]

They. Buy. Loads. Of. Our. Stuff.

Ah that's what a true friend is, a customer. No wonder no-one likes me, I'm not selling them enough stuff

 

[Vonhelmet]

What stuff? We haven't exactly got the worlds most thriving manufacturing industry.

Well, whatever it is, they're buying it.

 

[Cuchulain]

Well, whatever it is, they're buying it.

It doesn't offset throwing £10bn at them, what are they going to do if we don't bail them out, throw their toys out of the pram and start importing .. I don't know .. wood or whatever we sell them from somewhere further afield and more expensive?

 

[JBuk]

They won't be able to import anything if they have no cash?

 

[Cuchulain]

They won't be able to import anything if they have no cash?

Just because the country is in debt it doesn't automatically infer that all industry in Ireland suddenly stops trading.

 

[Vonhelmet]

It doesn't offset throwing £10bn at them, what are they going to do if we don't bail them out, throw their toys out of the pram and start importing .. I don't know .. wood or whatever we sell them from somewhere further afield and more expensive?

That's not the point. The point is that our businesses will lose customers, so our economy will suffer.

 

[JBuk]

Just because the country is in debt it doesn't automatically infer that all industry in Ireland suddenly stops trading.

no, but they won't be buying as much which will have a huge knock on effect on other economies

 

[Slam62]

They. Buy. Loads. Of. Our. Stuff.

No, they borrow loads of our money, which we have borrowed of someone else, so we need them to pay us interest so that we can pay it to someone else. What happens when in 4 years Ireland is full of unemployed people and has no money, but we still want our interest.

Our govt are now being pathetic, £7bn would provide a lot of services. It's time to let the banking sector go, the price to keep them solvent is too high and the wrong people have to pay.

 

[Cuchulain]

no, but they won't be buying as much which will have a huge knock on effect on other economies

Not as huge as you're trying to make out, we still export much MUCH more to other countries (USA for example, more than double), it was £15bn to Ireland in 2009 and dropping rapidly.

 

[Gideon Lorr]

that's not irony, that's just plain ridiculous (if true) why do they need a loan then?

Yeah, fully true. I'd show a link, but I only have the article from the printed edition of the Economist. I'll see if I can find it online (if it isn't pay walled- the article is called 'threadbare').

Found it:http://www.economist.com/node/17522578?story_id=17522578&CFID=149147648&CFTOKEN=53789291

Why do they need a loan? Because of a range of reasons, but mainly that once doubt set in (thanks to a load of comments by EU leaders, what happened in Greece, etc etc), a bail out was inevitable. Like a game of chinese whispers the situation snowballs.
The other thing to note is that the loan is based over a three year period, so whilst they can cover payments until next year, after that the situation is doubtful as they have given a blanket guarantee to Irish Banks, who are right now struggling to get money in the markets. So in the medium term, the loan could end up being fully needed.

Yes it'll be nice for markets to buy up huge chunks of those loans in bonds at nice high interest rates.

Actually they are offerred at competitive rates, as they are given to low risk banks/companies/government, who are extremely unlikely to default on them (hence they can have low interest rates). If the interest rates were set too high, the take up would be poor wouldn't it? The Bank of England isn't there to make a few quid, it is there to keep monetary stability, so it was in its own interest to make QE work.

 

[izzy eckerslike]

Are these the same Tories that earlier in the year said that if they had been in power they would not have even bailed out the UK banks but now jump to support a Euro country ?

 

[JBuk]

Not as huge as you're trying to make out, we still export much MUCH more to other countries (USA for example, more than double), it was £15bn to Ireland in 2009 and dropping rapidly.

I don't have time to discuss this anymore but imo you're not looking at the bigger picture

imo a bailout/loan now could save us many more billions in the coming years