You read my mind and beat me to it :) :)
Yes interesting Timing …

Scare-mongering at its very best!!!

What influence do you think Ireland has over Moody’s?

What was Moody’s rating of Ireland during the “boom” years? (also known as the “building a massive structural deficit years”)

Oh I’d always take what the rating agencies say with a large pinch of salt. I was curious though about how we could effect the timing?

The ratings agencies have been discredited.

Their AAA ratings of CDOs , those bundles of subprime mortgages, in the US caused the crisis back in 1997.

There is something very wrong with the system when the markets still pay heed to them.

While I agree at an emotional level, your comments are mainly populist.

To test this ask yourself how you would rate Ireland, if you controlled a pension fund, would you invest it in Ireland?

We currently spend €50bn and have an income of €30bn, we are overspending by 20bn (2/3′s). I.E. we are completely bankrupt. We are currently being bailed out by the ECB and IMF to make up this shortfall.

The Austerity we are facing is required to balance our budget and is unrelated to debt repayments, that is a red herring in many ways. We are being overtaxed to pay for government spending, where there seems to be total reluctance to reduce.

We receive bad rating from this agencies (who I also hate), based on the facts above.

Voting yes means we will continue this cycle of borrowing to fund the deficit. The bank debt is not a red herring – socializing the bank debt is the price we’re paying for access to funding. If we dealt with our public spending deficit we’d be in a much stronger negotiating position. We’ve received bad ratings from the agencies and from the markets every time we’ve participated in the EU “plan” to resolve the financial crisis because they don’t believe it’s credible or sustainable.

@Sheolawn

Good points and I agree with a lot that you say.

Consider this, yes the debt were socialized which is disgusting, but they exist as virtual debts. By that i mean we are repaying them slower than we are borrowing and we are repaying with money we borrow. They can never crystalize until we balance our budget, at that stage they become a problem because we will have to fund the repayments out of our taxation.

Next we can never receive a debt write down or cancellation until we can balance our books, for that to happen it would encourage irresponsible government spending, not only that it would reward it. Because of these facts we are being allowed to borrow to repay debts (i.e. the bailout) and encouraged to balance our budget (i.e. the austerity program).

Once we achieve a balanced budget independent of the debt repayments, there is an excellent chance we will get debt forgiveness, for the very reasons we can all agree on….ie that they are not our debts.
Until that time it will never even be considered, the reason it will be considered is simple, it is in no ones interest to have any country in europe stuck in a debt trap, and the european union works to a collective good. A common market is not helped by having a crippled country (or in reality a number of countries) due to socialized debt. The next step will be to socialize the debt europe-wide, to take a hit with the benefit being freeing up europe to compete competitively internationally in a new world, dominated by emerging markets.

For the reasons above, 1. the illusion of debt repayments being the cause of austerity, and 2. the potential for debt forgiveness post budget repair. That is why I use the term red herring.

Lastly I would make the point that the ratings agencies are completely irrelevant to us, we are not borrowing from the markets, and will not be in a position too until we can escape from bankruptcy (greater government spending than taxation income). No european plan will effect the ratings until we are a viable country again, and that won’t happen till we balance the books.

This is my view of the larger picture, what do you think?

@HelloGoogle Tracking: I agree, I always thought that eventually things would would work out. As you say, it’s in nobody’s interests to create an unsustainable situation – eventually the debt has to be written down in some way.

However, it’s been a while now and I worry that we’ll never get to the point where our own budget is balanced. We should have dealt with this more aggressively in the early stages. The “bailout” allows our government to avoid confronting reality and is pushing us into a situation like Japan in the 90s. Zombie banks and a dead economy.

The role of rating agencies is not to predict the future, they have to analyze how likely a country or company are to repay on investments, taking into account all the facts available at the time.

Ireland is obviously a bad risk, since we are bankrupt. If you disagree tell me how Ireland can repay on investments when it has a 20bn deficit?

It can’t……hence the bailout.

These are realities, and I suspect voting no to the Fiscal agreement (which is a set of rules to prevent irresponsible budgetary governance in the future), can only be to our detriment. As one of the most irresponsible countries such a result would be giving the finger to Europe which is bailing us out………

and the the logic of that is?

This of course assumes the IMF will just be happy to continue to fund us without us making further harsh cuts and raising additional taxes. I think you’re assuming an awful lot.

we can get a loan from the IMF

Recently the IMF said Ireland should get a write down on its debts

The IMF, on our present bailout, charges us a lower interest rate

If we did not spend more than our income from taxation, then we would not need to borrow from anyone. Not from the troika, ESM, or the markets.

The fiscal agreement encourages countries to have deficit at a maximum of 3% (we are currently 66%, excluding debt repayments), and this would facilitate a reasonable borrowing rate from investors if required. And any sensible person would agree that this is correct and a good idea.

The ideal is not to have to borrow at all.

You’re right, but it’s not a good reason to vote yes. Why should we vote yes so that our irresponsible government will continue to be able to fund the deficit? This needs to change, otherwise we’ll eventually have to deal with an even bigger mess.

Very interesting point Skeolawn…….

Exactly, we will be facilitating the government borrowing to fund the deficit. I think the alternative is not being able to fund the deficit, which would lead to mass layoffs in the public sector overnight and the grinding to a halt of nearly all services. This would also lead to the stopping of dole payments or a reduction to levels where people could not survive.

Essentially the utter collapse of the entire country, not to be too dramatic, but you understand the picture?

It is a choice between to evils, I would chose the borrowing to fund the deficit until we can balance our budget over time, then we would be in position to get a write of of socialized debt as it is ridiculous to expect us to pay it. But I can understand why it cannot happen until that stage. Refer to my earlier post in reply to you above for more detail.

That is why I would vote yes, but the choice is entirely up to you.

Terry T
No is the only reasonable way to go…
trust your own thoughts.Take the risk !