Mish Moved to MishTalk.Com Click to Visit.
Today the Irish Government sold its citizens into debt slavery by agreeing to guarantee stupid loans made by German, British, and US banks. Those loans fueled one of the biggest property bubbles in the world. Ireland has since crashed.
Ireland Agree To Bailout
Please consider Ireland Seeks Bailout as ‘Outsized’ Problem Overwhelms Nation
Ireland applied for a bailout to help fund itself and save its banks, becoming the second euro member to seek a rescue from the European Union and the International Monetary Fund.Bondholders Should Foot Entire Bill
Irish Prime Minister Brian Cowen said he expects talks on the package to be completed in the “next few weeks.” Finance Minister Brian Lenihan said the loan will be less than 100 billion euros ($137 billion), though he refused to give any further details at a press conference in Dublin today.
“A small sovereign like Ireland faced with an outsized problem that we have in our banking sector, cannot on its own address all those problems,” Lenihan said. Ireland may not draw down on the entire loan, he said.
While Ireland may not fully use any cash it gets from the EU and IMF, Lenihan said the size of the package “is important to demonstrate” the “firepower that stands behind the banking system.”
The Irish turmoil has also reopened tensions about the governance of the euro region after German Chancellor Angela Merkel last month called for bondholders to foot more of the bill of European bailouts. Her stance, criticized European Central Bank President Jean-Claude Trichet, sparked a bond market selloff.
Trichet is pissed about common sense statement by German Chancellor Angela Merkel about who should foot the bill. Actually, Merkel did not go far enough. When you make stupid loans you pay the price. Or at least you should.
But no! Trichet as well as the Irish Prime Minister seem to think that Irish taxpayers should bail out the Irish banks (which is in reality a bailout of German, and UK banks that made piss poor loans to Ireland).
Why the average Irish citizen should have to bail out foreign bondholders is beyond me, but I do note that the same happened in the US with taxpayers footing an enormous bill for Fannie Mae, Freddie Mac, and AIG.
No matter what stupid thing banks do, prime ministers and presidents are all too willing to make the average taxpayer foot the bill for the mess. That by the way,is one reason why we get into these messes in the first place.
For a full text of the actual bailout agreement, please see Government statement on request for support. I must say it is pretty boring lacking in details.
Firepower of Stupidity
Finance Minister Brian Lenihan bragged about the “firepower that stands behind the banking system.” Yes there is firepower alright, a firepower of stupidity.
Wikipedia notes the population of Ireland is approximately 4.35 million. Going into debt to the tune of $137 billion would saddle the average Irish citizen with $31,494.
How long will it take to pay that back? For whose benefit? Perhaps a better question is will it be paid back?
By agreeing to take on that debt, and sticking it to the Irish taxpayers who will be forced to accept various austerity measures to pay back that debt, Irish Prime Minister Brian Cowen and Finance Minister Brian Lenihan just sold Ireland down the river.
For additional insight on how the crash affects Ireland, please see Ghost Estates and Broken Lives: the Human Cost of the Irish Crash
Mike "Mish" Shedlock
Click Here To Scroll Thru My Recent Post List