All advertising is free till May 1st 2008. Please contact Webmaster@CraicOn.com

Ireland close to capitulation

Posted Saturday, November 27, 2010

 E-mail this page    Printer-friendly page

Capitulation

The EU/IMF had to step in after €10bn was removed from Irish banks in a matter of weeks late August / early September.

The Government had guaranteed all savings up to €100,000.

However, as it turns out, they were not in any fit state to guarantee those deposits.

So, emergency measures needed to be taken.

Austerity

The finishing touches are being taken to the €85bn that Ireland is to be loaned by the EU/IMF and an austerity budget full of cutbacks and tax rises is to be debated on December 7th.

So, has that brought confidence back?

Not a bit of it.

Downgraded

Yesterday the credit rating agency downgraded Anglo Irish to junk status and the AIB and Bank of Ireland to just above that.

It will make it very difficult for them to borrow money from anybody.

Also yesterday the rate at which Ireland and its banks can borrow on the market went to a record 7% above what the Germans can borrow at.

Too Risky

People who could loan us money want a massive premium to do so?

Why?

They think it is very risky to loan us money.

Money Out

Has confidence returned?

Well, I spoke to one frequent visitor to Moville who had returned just to take his money out of the Irish banks.

My 12-year-old son was even asking if his first Communion money and money he got for presents was safe in the bank and whether he should take it out.

Does that sound as if confidence has returned?

Default

David McWilliams has already said that he expected Ireland to default by Paddy's Day.

Very often when a person feels very bad the start of the person's recovery is when they throw up.

It's not very pleasant but a lot of the badness is being expelled from their body.

Maybe that's what Ireland needs.

They need to 'throw up' and be done with it.

Coming Soon

I can sense it coming close.

A party which is against the cuts won the Donegal South by-election.

People will be taking to the streets this weekend.

People are withdrawing their money from the bank (that's how David McWilliams forecast the end would come).

The Budget may or may not go through.

Can't Pay

We cannot pay all the money back that we have borrowed and will borrow.

Some of the loans have a 35-year end date.

That means that my 17-year-old duaghter will be paying it back through her taxes till she is 52.

Serious Danger

Countries are deemed to be in serious danger of default if their borrowings exceed 100% of everything they produce in a year - their GDP.

Ireland's borrowings are about to become 200% of GDP - or double the danger level.

In other words we owe the equivalent of everything, goods or services, that we produce for two years.

And then there is the interest on that.

By 2012 the Government will be paying 37% of all taxes they get in interest - and that's before the loans they are trying to get now.

Throw Up Time

The end is nigh.

We are about to collectively throw up.

And that may be the best thing that could happen to us.

The sooner the better.

Then we can start afresh.

The Celtic Tiger is still alive.

It's just that you can't see him for all the rubble from the Construction collapse.