what then?

Who knows but at least the agony of dragging the situation out will cease. The debt in both Ireland and Greece is unsustainable as it stands so how in the name of god is it going to be sustainable by adding more debt? It defies all logic, and economical common sense. I’m not saying a default won’t be extremely painful or a venture into the unknown, but at least we can all stop codding ourselves once and for all and actually work towards a proper resolution.

Only in lefty la la land could this be considered a good thing.

Sean I am anything but a lefty la la head as you would put it, more of a realist, something which I’m afraid, a lot of right wing economists are also. Pity you didn’t check that out before making such a stupid remark.

Hey guys!

Just going to intervene here like a schoolteacher. We welcome (and delight) in debate but please keep it on topic and refrain from making personal comments about other commenters.

As our policy reads, play the ball – not the player.

Now, back to it!
Sinead

Only in “righty la la land” could piling debt on top of debt and using every obscure financial instruments to deal with it be seen as a good thing.

Apologies Sinead.

TI stand over what I said. God knows myself and the EU haven’t been getting on all to well but the total meltdown of the European financial system and the unknowns that accompany it are not to be taken so lightly. I was not aiming the lefty la la land remark at you personally Diarmuid but I apologize for offence caused.

Yeah yeah, if Greece default and can no longer borrow money to pay wages and welfare then let´s see how heavenly things will be for the Greek people.

its a default…..not armeggedon!!!!!…………..

@John

A country will survive a default. But the idea that a default is an alternative to austerity, that the country will suddenly be able to spend more and tax less, is a lie. In the short term life will be much much worse. If you have been borrowing money to pay for day to day spending, and you can no longer borrow, then you can spend as much anymore.

The argument is that in the longer term things will be better. But how long? And how bad will that short term get?

Neil
Please enlighten me – a genuine question. Just on the basis of the above article I see that Greece is trying to rescue a 130bn bailout deal with no mention of how long this will prop up their economy. The article also mentions that they are due to make a 14.5bn bond payout next month.
Now here’s where I get stumped. For how long, under the present circumstances, will 130bn carry the Greek economy and what is the total of bond payments scheduled to be paid out for the same period?
What I’m getting at here in my simple way is by taking a risk on default – presumably by reneging on payment of bonds and refusing to accept Brussels demands thereby forgoing the bailout deal – what is the actual loss and over what time span? Surely this is the nub of the issue or am I missing something (apart from the loss of credit worthiness of course)?

And factored into all of this is the terms for repayment of the bailout deal combined with the continued payment of bonds. I really can’t understand how this can be said to be better than default.

Actually the money is coming the other direction, but stick with your fairytale.

Sorry should have read “left out anybody”

Neil, I’m surprised that you don’t know about the monies we have paid to secured and unsecured bond holders in the last few years. In addition as of 2013 we will be paying €3.1 billion a year for the black hole that is Anglo. Of course we will also have other bills to pay as well but to suggest that money is only flowing into Ireland is misleading.

@Kerry
Where does the money, about 10bn a year, come from to pay Irish debt interest? From the IMF. Where does the money come from to cover the fact that the government is spending 10bn more on PS pay and SW than its taking in in taxes, the primary budget deficit? From the IMF.

And obviously all this money is borrowing. But the issue is that we can tell the IMF to shag off and we´re not going to borrow from them to pay the bondholders (you must remember that not all this bondholder money is related to the banks though. Half of it is regular Irish government debt).

BUT then we still need alternative financing for that 10bn primary budget deficit. And indeed you need even more money if you want to get spending back to 2007 levels as everyone seems to want.

If people can give clear solutions on where Ireland gets the money to cover this 10bn primary deficit then you´re in business.

So where is it coming from? China? If so, what do they want in return?

Everyone arguing we default will never give clear answers on how to cover the primary budget deficit.

Neil, fairytale?……….if you take your head out of the sand you will see that the pain in your backside is the result of being screwed by europe (Germany & France) while your Government hold you down,

@John

It´s the cheap financing from the IMF that is allowing the government to spend 10bn more on PS pay and SW than it is getting in in taxes. Fact.

Answer my questions on how Ireland can unilaterally default tomorrow and not have to cut SW or PS pay, or raise taxes, and I may listen to you.

@ Neil Again incorrect Neil the money is coming from the IMF, ECB and EU. We would be a lot better off if we were just working with the IMF who were open to burning the bond holders. The ECB & EU insisted we pay out all the senior bond holders be they secured or unsecured meaning that we have taken a loan from the trioka of over 30 billion to cover the bonds and loans from other investors (banks). The EU/ECB insisted that to teach us a lesson we have to pay the penal interest rate of 8.6% on that 30 billion.

My solution though I fear it is to late would be to go tell the ECB/EU to go whistle and work with the IMF only.

@Kerry, I was just using the IMF as shorthand for the troika. But I don´t see what you are suggesting as answering my question.

If we burn the bondholders then the bond market is closed off for borrowing. And the IMF are not going to keep funding 10bn Irish budget deficits . They will still want what everyone is complaining about: reduce that deficit by cutting spending and raising taxes. And as they have proven in the past, they are can be vicous about how it is done. If they have full control then they could just demand that a third of PS workers are sacked or something. Look at Latvia.

neill. u say being spent on ps pay and sw. this is fg neo liberal tripe. its a way to further ur own agenda, and fgs that public spending consists of these two things which if we take down will improve the country. this simply isnt true. its a tactic to draw away from the criminal waste that is the repayment of unsecured bonds. it aint democracy if the ecb make us do it, and no govt should stand being forced to do anything. and ill tell you where ireland would get this money were we to default, quite simply the us and the uk. who have both on countless occassions since 1923 offered us funding as they are our social and economic allies. not europe in my mind.

@Sean
The government is spending 10bn more on PS pay, SW, and capital spending than it takes in in taxes. They are borrowing from the troika to pay that deficit.

That might not fit your world view, it might be something you want to ignore, but it´s the situation. Your answer may be to just increase taxes by 10bn to cover that, or indeed increase taxes by 15bn so you can have 2007 levels of spending, but I´d like you to spell out who exactly will pay those taxes.

@Sean
And no, the UK are not going to fund Irish budget deficits of 10bn a year. They´re not going to throw money at us year after year because we´re poor little Irish eejits who can´t look after themselves. They´ve given us some money already, but that´s another bloody loan.

@neill
Why don’t you just say the government is spending €10 billion more then it’s taking in? Instead of trying to place it all on PS pay and SW? Also, here’s a thought, dunno if it’s any use or even an option but if there are due to be nearly €10 billion in cuts over the next few years couldn’t we default, speed up the implementation of the cuts, so thy we aren’t €10 billion short every year and don’t need to borrow money? I mean when I’m spending more then I’m earning I cut back, I don’t borrow to maintain the same standard of living. I’m a public servant and I would take more cuts (already down quite a bit) if I new it wasn’t being used to pay of bank debt or loans taken to pay off debt but rather to spend within our means. Does that make any sense? I don’t know the answer but borrowing to pay off debt just seems retarded to me. And I definitely don’t like Ireland losing so much of it’s sovereignty.