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Ireland’s Titanic Bailout at Risk, Iceland looms ahead
The
announcement by Brian Cowen that he was resigning as the leader of the
Fianna Fail party, but is going to stay on as Taoiseach (Prime Minister)
until the March 11 election, has put the Irish bailout into question.
The November bailout of the Irish economy consisted of a series of
different financing packages being combined into a larger total.
The first funds available under the bailout were provided by the
raiding of the Irish retirement fund by its bankers. The next steps
were to be funded by the EU and IMF funding sources, once the people of
Ireland were legally subjected to the bailout requirements. The bailout
never made it to a full vote before the collapse of the Fianna Fáil
party.
This leaves Ireland in the unique position of being able to reclaim
its future, by denying its past. The citizens of Ireland have not
accepted the bailout. The coalition is not expected to be able to put
the matter to a vote before the election.
“All we know is we are going to get an election on or before March 11
but that is about it,” said Micheal Marsh, professor of politics at
Trinity College Dublin, calling the events of the past week “bizarre.”
“If the conditions in which all of this was going on were not so serious it really would be farcical.”
The people are clear they plan on voting for anyone who will fight
the bailout. This makes the chances of a post-election bail out vote of
acceptance unlikely. If the Bailout fails to be voted on in the coming
days, it may never make it to a vote.
The Irish people are overwhelmingly against the loss of their
Sovereignty because bankers were allowed to take outsized risk. The
fact that these same bankers were allowed to book extremely large
bonuses for bankrupting the nation is at the core of the problem.
The
Iceland solution, the iceberg in the European bailout process, is
becoming harder and harder to ignore as a solution to the problems of a
Sovereign state. Iceland has managed to abandon its banks, right size
its economy, and regain organic growth.
“We’re at an important turning point in many ways,” Finance Minister Steingrimur J. Sigfusson said.
“We’re mainly trying to present our own case, which we think is good
enough to make a convincing story that Iceland is a safe place to lend
money to.”
“The economy is turning to growth and we think it’s about time to
start seriously preparing to make a move on the international financial
markets,” he said. “The long-term developments have been very favorable
and the CDS on Iceland is now lower, or around the same, as it was well
before the banking crisis.”
Today, Iceland’s Sovereign CDS swaps are at levels before the
crisis. They have dropped below the level of Portugal and Spain. The
nation had its first organic growth in the last two years, from July
through September.
CDS on Iceland’s five-year debt traded at 310 basis points on Jan.
10, compared with 359.6 for Spain and 650 for Portugal, according to CMA
data available on Bloomberg.
Iceland is sitting on large FX reserves, and due to its small number
of actual citizens, it is in no need for actual funding. The first bond
offering since the crisis will be small in size, but large in symbolic
terms. Iceland will be fully rehabilitated; no one can say the same
about any of the EU states following the proscribed internal deflation
approach.
Iceland
has embraced hard pain upfront, abandoned its overleveraged banks, and
has weathered the storm. It is growing again, and is able to fund
itself. These events are a beacon to any nation that could follow the
same path.
The only question about Ireland today, is if they are going to stay
debt slaves of their banks, or are they going to embrace a return of
Sovereignty to the Emerald Island.
H/T TD @ Zerohedge
Links of interest to the story
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Alas, no. I haven't been following the Finance Bill closely enough. Though not for trying. I have yet to find a good Irish news source; the standard ones seem almost as fluff as many U.S. media outlets.
What I have seen of interest is what M.B. Drapier posted on this thread:
http://www.zerohedge.com/article/brian-cowen-resigns-fianna-fail-head-ir...
"The incoming government will almost certainly be a Fine Gael/Labour centre-left/centre-right coalition. Probably this coalition will huff and puff about renegotiating the bondholder bailout, but will avoid any showdown with the ECB or the EU Commission (or the IMF,..."
With this supporting link:
http://www.independent.ie/opinion/analysis/crippling-bailout-deal-must-b...
I hope that helps.
Many many thanks for the excellent article and links. There is little I can add except for perhaps a link to KT Tunstall's "Other side of the world" video http://www.youtube.com/watch?v=-jpYwsfC3ZY
...
Then the fire fades away
But most of everyday
Is full of tired excuses
But it's too hard to say
I wish it were simple
But we give up easily
You're close enough to see that
You're.... the other side of the world
...