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THE BUSINESS NEWS giant The Financial Times last night warned Spain against following Ireland down the path of saving the banks at the expense of the state coffers.
An editorial posted just after 8pm on FT.com referred to the current Spanish crisis in which the country’s largest bank, Bankia, is seeking a €19bn bailout. The cost of borrowing for Spain rose to its highest level in six months yesterday morning as investors dumped their Bankia shares. By lunchtime, Spain’s Prime Minister Mariano Rajoy had said that the government would prop up the bank by issuing it with a government promissory note, which would then act as collateral which it could present to the ECB. This is what happened in Ireland in 2010 when the State issued just such a note to give Anglo Irish Bank a digout.
Reuters Spain yesterday reported that a government source told them that the path taken by Ireland and Germany in propping up banks was a valid one.
However, FT.com’s editorial warned that Rajoy’s comment that he would not allow any bank in Spain to fail would “lead into the trap that engulfed Ireland”. The editorial went on:
That is the message Ireland’s government insisted on as it piled private banks’ debts on to its puny sovereign shoulders. By the end of 2010 markets had lost faith in Dublin’s ability to repay and it was strong-armed into a eurozone rescue loan.Ireland’s folly made clear that the interdependence of sovereigns and national banks is at the heart of the monetary union’s present dysfunction.
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It’s Good to see it being spelled out by an outside respected paper and not being spun by some greasy Irish politician. The plain truth of it is we should not be paying back the debts of Anglo Irish bank.
I’m guessing the red thumb was someone who hit it by accident….
Bertie Ahern, Jim Power, Brian Cowen, EndaKenny, M Martin, Phil Hogan, Seanie Fitz, Fingers Fingelton, David Begg ALL voting yes! VoteNo to banksters!
No, it means we should not have guaranteed Angle in the first place. Now that we have, we must persevere. Then again, not to have guaranteed the bank would have led to who knows what financial chaos. The lesson is, don’t vote in governments who allow lax regulatory regimes and tax breaks for their friends over several years.
Sounds about right. Great to hear plain talking.
It is incredible the burden of debt these clowns have brought to bear on the people of this nation.
Cowen and Lenihan.
Lenihan has passed away and I’m sorry but I’m not going to pretend otherwise.
They have bankrupt this nation with their quick middle of the night decision without any meaningful analysis.
The banks lied to them and they lied to us. ‘Oh, we couldn’t let the banks fail, there would have been no money in the ATM’s the next day’.
We would have about a week of chaos and about 6 weeks of instability and the banks would have kept going.
The bond holders would have taken control of the banks and kept open the useful bits, the cashier operation, the bit we need.
They took a leap in the dark and fell into a black hole.
Cowen is gone very very quiet now.
I guess he thinks if he stays quiet we will al forget about him.
This is why I’m voting no.
There is no plan B but there will be within 48 hours of a no vote.
There is a plan B.
We’ll be voting again, hopefully with a better deal in place for Ireland.
Don’t worry Spain just leave all the thicko decisions to the Irish we are good at making a balls of everything. Just don’t do what the spineless corrupt stupid paddy’s do. Very simple.
Guaranteeing Anglos debt will one day be recognised as the biggest crime in Ireland’s history! And the irony being that no one was ever convicted or possibly even charged for committing this atrocity against its people!!
Remembering my first reaction to news of the “promissary note” – who benefits? Follow the money. Now we’re calling it “paying our way”.
Could someone forward a copy of that article to Kenny & Gilmore.
We need help.
We cannot carry this burden of debt on our own. The sums are too high.
I do not want to see the innocent children of this country look back at this generation and say ‘thanks a million’ actually thanks a 100 billion.
It is unsustainable.
We are too keen to be the good boys (and girls) in the class.
Well perhaps we should throw a few tables around the room.
I am not wreck-less, I understand the situation we are in but I think Europe needs to share to load here.
I have no problem with austerity but I’m damned if we are going to be carrying more than our fair share while the clowns who threw money at Anglo get rewarded for stupidly.
Common Currency?
Common Problem!
The problem is Sean we have a master debater in charge of Ireland going around Europe telling everyone that the ‘Irish went a bit mad’ he also has some sort of hang up about having a stamp saying defaulter stuck to his forehead. Sadly given that caliber of ‘leadership’ thing will not change in the short or medium term.
vote no tomorrow and chuck the government and their pensions down the toilet. Rip it up and start again. our kids won’t be amused if we don’t do something soon. grow a pair Ireland.
I agree with Seán’s comments; we should never have nationalized the debts. It was the work of a dysfunctional society where bank chairmen had undue influence on politicians out of their depth.
Still and all, I’d be wary of advice from London. If the euro sorts itself out, it could well replace the dollar as the world’s premier currency, and leave sterling as an increasingly anachronistic sideshow.
Most of the UK’s trade is with the eurozone. London isn’t in the euro but it needs the euro, otherwise their currency, which is seen as safe and stable, becomes too expensive by comparison, increasing costs and reducing competitiveness there. Nothing anachronistic about the pound, or the Swiss franc for that matter, but they lose if their currencies are seen as safe, therefore expensive, while the massive euro collapses.
Isn’t it unbelievable then that this government wants us to borrow more money from the ESM to add to our huge sovereign debt,and then they talk about housekeeping , its the equivalent of giving a mortgage holder , who can’t pay their mortgage,a bigger mortgage ‘insane!!
ECB won’t allow this – not in a million years.
They have already called Spains bluff on this one…
dont you mean 900billion years
As long as Spain does not have a plausible, articulate panda eyed lying incompetent as Finance Minister, a sot as Prime Minister and a cabinet and party of crooks and goms to back them up, then they might just have a chance.
There are kids in the Joy tonight who haven’t done a fraction of the damage these guys have done. Some of these youngsters came from very difficult domestic situations. I’m not justifying it but just questioning why some people are locked up while Fitzpatrick plays golf.
The kids in the Joy never played Golf with Brian Lenihan or Brian Cowen or Bertie or McDowell. They wouldn’t know the first thing about the Galway race Tent.
Is it there mistake that they never made sure they did the above before engaging in criminality, or is the more probable explanation that we should not tolerate any criminality whether it be at the top or the bottom.
I agree 100%, there are scobies in jail for robbing houses, while people who destroyed the economy through financial fraud, corporate mis-governance, corrupt payments are still walking the streets.
After 4 years since we bailed out the banks not a soul has been arrested. Those who misled and ran the country are still walking around without a care in the world. Should make peopled decision easy tomorrow.
Sean Fitzpatrick was arrested
Out of all the wild comments on this site, this is the standout. Like it or lump it, Ireland now needs to pay back the debt it took on, but the fact that nobody who caused this situation is in prison is itself criminal.
Conor why exactly do we NEED to pay back the debt? To gain access to markets? For what?
Alex, market access is not an end in itself it is the means to the end – funding public services and development. Public finances (globally) depend on the bonds markets, the sovereign needs to be credit-worthy.
The imposition of that private debt on the Irish State was as unjust as it is unsustainable. We elected a government on the promise of an unequivocal assertion of the views of the Irish people on this issue to the powers that be in Europe. Instead Enda Kenny explicitly became an advocate of the powers that be in Europe to us. He comes across as a decent human being, photogenic and charming but as a leader in a time of crisis the man is beyond incompetent. Hiis admission that he never even sought a write down of the debt is also completely at odds with the promises he and his party made to get elected, they cannot be trusted. Lucinda Creighton when asked about the injustice of the assumed private bank debt simply stated that it’s all sovereign debt now and we must accept it, what an attitude after their campaign promises and their admitted failure to assert the will of the Irish people on this issue. The international markets engaged in simple arithmetic and soon discovered that Ireland with all that assumed private debt was no longer a solvent concern and could not be financed at affordable rates, the powers in Europe that insisted on the imposition of the private debt then stated they would finance us with a “bailout” plan, the “bailout” plan is nearing completion we have had continued cuts in spending but by the Governments own admission we will still need another 30 billion borrowing in the immediate two years after the bailout, markets still ireland as a busted flush and the Govt have tacitly reversed their position and are now stating that we will need another ESM bailout as well. Its a perpetration of injustice, assume all the speculative debt then bind yourself into repaying it at Europes timeline, cut expenditure and becoming lncreasingly less investable. Its still as unjust as it is unsustainable, we need to cut the debt burden and we still need to cut our cloth to fit out table and explain to anyone currently overpaid by the state that they have no right to excess incomes from an insolvent state that is struggling to meet the needs of its most vulnerable. Like in 08 if we had real leaders we would have endured a short term upheaval greater than we did by letting certain banks fail but we would have avoided the injustice of the assumed private bank debt, kept the country on a sustainable footing and remained capable of accessing the markets. Ultimately we have to be able to stand on our own two feet as a state , the men and women who lost their lives to bring independence to this part of the Island would not want it in the grips of moneylords, enough is enough we have to assert our dignity and self respect before its all gone as well.
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