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Ireland Demands Rescheduling Of Bailout Terms, Or How Dublin Went From M.A.D. To S.A.D.

Tyler Durden's picture


So in Europe socialist beggars can be choosers. According to Reuters, "Ireland  wants to reschedule debt issued under its EU/IMF rescue package and will not accept less favorable treatment than other bailed out countries in changing the deal, its public expenditure minister said on Thursday. Brendan Howlin told Reuters that the government intended to seek to reschedule the International Monetary Fund/European Union portion of its debt in due course. "Obviously long-term rescheduling of debt is something that would be desirable and we will deal with it," Howlin, appointed in March to the newly created expenditure department, said." Congratulations to Ireland- having been boxed into a corner so deep, Ireland has now downshifted from Mutual Assured Destrcution to Self-Assured Destruction unless its ultimatum is met.

This sets up an interesting dynamic: on one hand Irish politicians will be delighted by Europe and the IMF agreeing to this ultimatum; on the other Irish citizens will perceive that this outcome will be beneficial (when in reality it will merely prolong the pain), but most importantly, on the third hand, the actual rescuers, who just happen to be the same entities that will be wiped out should Ireland implode, will also enjoy lowering the interest rate (and extending the maturity) for Irish bailout bonds, as it means they still get to bleed Ireland dry, only at a slower, and thus less volatile rate, which will guarantee a longer payment period on their loans by the Irish taxpayers. So who would be against this? Ironically, it should be the taxpayers of other EU countries (and Americans who fund the IMF, but they couldn't be bothered to think about what this means), as it will mean recoupment of initial capital will come much slower and will likely allow bailed out countries to have far greater leverage to dictate rescue terms in the future. Although with nobody at this point believing Europe will survive in the long-term, it is very likely that nobody will object to this last ditch attempt at keeping the game theory in place for a few extra months.

More from Reuters:

Ireland is hoping to get a cut in the cost of its loans from the EU but Howlin said Dublin would also like a longer-term commitment from the European Central Bank (ECB) on the provision of emergency liquidity to Irish banks.

"We want a better interest rate and we want affordable long-term liquidity for the banks. We had some comfort from the statement from the ECB after the recapitalization announcement but it is difficult when it is on a medium term basis and that is something we are working on still."

On the other hand, since all of Europe's banks now rely exclusively on the ECB for funding, it is not like the relative situation could get any worse if there is no interbank market following an event that would increase the risk profile for European countries.

ECB policymaker Luc Coene told Reuters in Brussels on Thursday that the central bank was still working on a special facility for banks frozen out of the interbank market and reliant on the ECB for funds.

In the meantime, Ireland has refused to budge on the one key topic of debate: it corporate tax rate.

Ireland is under pressure from some euro zone members, chiefly France and Germany, to raise its iconic 12.5 percent corporate tax rate in return for a one percentage point cut off the average 5.8 percent rate of its loans.

Why anyone cares what Irish corporate taxes are at this point is beyond us: most countries are already likely considering shifting to other offshore tax havens, which, for a change, are not bankrupt, and threatening to shoot themselves if the "or else" part is not granted.

More from Reuters:

Greece got a similar reduction in March after it pledged to raise 50 billion euros by selling state assets by 2015.

However, with Greece currently in talks with the EU and IMF over improving its loan terms, Howlin said it would be unreasonable for one country to get better terms than another or to force Ireland to surrender something to do so.

"It is unreasonable to piggyback domestic issues (on the interest rate cut)," Howlin, a member of the junior coalition Labour party, said.

Some euro zone officials have said Dublin could help its case for an interest rate cut by accelerating its program of cutbacks but Howlin ruled that out too.

"I don't see further austerity as being part of the bargaining chip on an interest rate deal," he said.

"It would be entirely unreasonable if interest rate reductions that are available to others wouldn't be available to ourselves ... We certainly don't want to be treated and won't accept treatment less favorable than other euro zone partners."

Howlin reiterated that raising Ireland's corporate tax was off the table but that the government would examine the effective rate of corporation tax with its European partners if that is what they wanted.

And more such Self-Assured Destruction drivel. Full think can be read here.


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Thu, 05/12/2011 - 14:32 | 1268814 Cognitive Dissonance
Cognitive Dissonance's picture

"Ireland  wants to reschedule debt issued under its EU/IMF rescue package and will not accept less favorable treatment than other bailed out countries in changing the deal......

Those damn peasant nations are getting down right uppity. Time to slap some sense into them.

Release the hounds!

Thu, 05/12/2011 - 14:37 | 1268847 LawsofPhysics
LawsofPhysics's picture

mmmm, free hound meat.

Thu, 05/12/2011 - 14:38 | 1268855 Cognitive Dissonance
Cognitive Dissonance's picture

We know what is next......right? Population re-training via police action. Here is how Madrid did it.

Thu, 05/12/2011 - 14:45 | 1268869 LawsofPhysics
LawsofPhysics's picture

That one seems a bit thin, but I guess lean meat is better for you anyway.

Thu, 05/12/2011 - 14:56 | 1268921 Cognitive Dissonance
Cognitive Dissonance's picture's what's for dinner.

Thu, 05/12/2011 - 16:31 | 1269411 Overflow-admin
Overflow-admin's picture


I just was going to say that ;)

Thu, 05/12/2011 - 16:44 | 1269438 I only kill chi...
I only kill chickens and wheat's picture

Dogs of war and men of hate
With no cause, we don't discriminate
Discovery is to be disowned
Our currency is flesh and bone
Hell opened up and put on sale
Gather 'round and haggle
For hard cash, we will lie and deceive
Even our masters don't know the web we weave
One world, it's a battleground
One world, and we will smash it down
One world ... One world
Invisible transfers, long distance calls,
Hollow laughter in marble halls
Steps have been taken, a silent uproar
Has unleashed the dogs of war
You can't stop what has begun
Signed, sealed, they deliver oblivion
We all have a dark side, to say the least
And dealing in death is the nature of the beast
One world, it's a battleground
One world, and we will smash it down
One world ... One world
The dogs of war won't negotiate
The dogs of war don't capitulate,
They will take and you will give,
And you must die so that they may live
You can knock at any door,
But wherever you go, you know they've been there before
Well winners can lose and things can get strained
But whatever you change, you know the dogs remain

Pink Floyd, "The Dogs of War"

Thu, 05/12/2011 - 14:34 | 1268817 Mountainview
Mountainview's picture

Greece, Ireland, Portugal, Greece, Portugal, Ireland....Spain and round and round it goes....

Thu, 05/12/2011 - 14:35 | 1268820 hambone
hambone's picture

Cue scene from Blazing Saddles w/ gun to own head...

Thu, 05/12/2011 - 14:59 | 1268952 camaro68ss
camaro68ss's picture

Can the house of cards fall already

Thu, 05/12/2011 - 14:35 | 1268821 bobby02
bobby02's picture

Core EU is fucked - they just don't realize it yet. Either pay the cost of bailing out PIIGS or pay the cost in an increase in euro-denominiated debt premia that will follow an EU sovereign default. Wonder which is less?

Let the Games continue!

Thu, 05/12/2011 - 21:30 | 1270398 downwiththebanks
downwiththebanks's picture

The problem comes from giving all that welfare to the banker-gangsters to spend on a spending spree of hookers, drugs, and free money for use at the gambling den!

But it's much better to focus on the effect rather than the cause when the cause is you.

Thu, 05/12/2011 - 14:36 | 1268826 SwingForce
SwingForce's picture

Off Topic, can anyone tell me why AGQ & ZSL are BOTH down? These are leveraged silver etf's, ZSL is the inverse, so 1 should be up. Thanks.

Thu, 05/12/2011 - 14:46 | 1268877 Cash_is_Trash
Cash_is_Trash's picture

Saw same shit, dunno

Thu, 05/12/2011 - 14:58 | 1268942 Bam_Man
Bam_Man's picture

Extreme intraday volatility causes tracking errors.

Stay away from 2x inverse ETF's, they are pure portfolio poison. 

Thu, 05/12/2011 - 20:01 | 1269104 buzzsaw99
buzzsaw99's picture

info is available on most funds

Thu, 05/12/2011 - 14:40 | 1268838 Iriestx
Iriestx's picture

Two choices Ireland:

1.  Nut up and go IRA-style on politicians, bankers and their families.

2.  Roll over and accept your fate as a slave.

Thu, 05/12/2011 - 16:56 | 1269499 I only kill chi...
I only kill chickens and wheat's picture

I think I'm doing it backwards, closing out my IRA's to "Nut up"

Trijicon ACOG® (Advanced Combat Optical Gunsight®)

Thu, 05/12/2011 - 17:21 | 1269603 ZFiNX
ZFiNX's picture

We Irish are no man's slave.. We will gladly die before we let any foreign scum tell us what to do.



Thu, 05/12/2011 - 14:39 | 1268856 buzzsaw99
buzzsaw99's picture

It's not even all of Ireland, it's like half. Good luck getting your money back suckers!



Thu, 05/12/2011 - 14:45 | 1268882 Sudden Debt
Sudden Debt's picture


Just go to the end of the rainbow and when you see a leprechaun sitting on a big kettle, you say:


And you'll have it all back payed in gold.

Thu, 05/12/2011 - 14:46 | 1268874 pappacass
pappacass's picture

Yeah, bit of an auld head fake there from Howlin.  He just needed to come up for some air. 

Thu, 05/12/2011 - 14:48 | 1268891 Clowns on Acid
Clowns on Acid's picture

Ahhh...(while sipping on me Guinness)

"The Oirish, the men that God made mad,

 For all their wars are merry,

And all their songs are sad."

- G. K. Chesterton

Thu, 05/12/2011 - 14:48 | 1268906 CrashisOptimistic
CrashisOptimistic's picture

Just to remind folks, the Swaps decide everything.

Credit default swaps on Ireland, Greek, etc debt would trigger on any default or restructure and there are billions upon billions of them owned by banks all over the world and . . . those . . . banks . . . have . . . refused . . . to . . . divest.

They have been begged, ordered, pressured and threatened to divest, and they have not done so.  Instead, they inform their Prime Ministers that they have vast holdings of the swaps and if those countries default, the swaps will trigger and bankrupt Germany, and France, and England and the US.  

And so, Mr. Prime Minister, you need to keep taxpayer money flowing (because eventually it will go in the banks' pockets).  

It is the indirect result of oil depletion.  The banks know there can never again be any growth, so they arrange to grow their piece of the shrinking pie.  



Thu, 05/12/2011 - 20:14 | 1270161 Escapeclaws
Escapeclaws's picture


Thu, 05/12/2011 - 21:32 | 1270412 downwiththebanks
downwiththebanks's picture


Fri, 05/13/2011 - 03:00 | 1270957 Ahmeexnal
Ahmeexnal's picture


Thu, 05/12/2011 - 14:48 | 1268908 sangell
sangell's picture

Ireland doesn't really have a sovereign debt problem. It has a broken bank problem. It can export that if it has the guts.

Thu, 05/12/2011 - 15:05 | 1268961 CrashisOptimistic
CrashisOptimistic's picture

That's a bit of a difference without distinction, but your conclusion is valid.

The swaps exist on both soveriegns AND Irish (or Greek) bank debt.  The point is not the underlying entity.  It is the refusal of banks globally to divest their swap holdings and close them out.  

They have reasoned it out.  In a world with oil capped growth, their conduit into taxpayer money is simply holding swaps and terrorizing politicians.

Thu, 05/12/2011 - 15:55 | 1269232 bingaling
bingaling's picture

Fully loaded weapons of mass destruction - I am not a big fan of Putin but if the situation was the same in Russia he would not hesitate to put people at the banks behind bars and break up the banks and give the banks business/assets to those willing to divest the swap holdings .

Thu, 05/12/2011 - 20:13 | 1270163 Escapeclaws
Escapeclaws's picture

Putin is a sociopath. You admire sociopaths?

Thu, 05/12/2011 - 21:37 | 1270426 downwiththebanks
downwiththebanks's picture

I admire people with the temerity to face up to the banker-gangsters who think the world revolves around their drug binges, welfare checks, and trips to the casino.

Moreover, to be a banker-gangster is to be a sociopath.

Thu, 05/12/2011 - 21:35 | 1270417 downwiththebanks
downwiththebanks's picture

This is the point Tyler willfully refuses to acknowledge, in all of its manifestations.  

Much easier to create idiotic diversions by blaming the silly muppets rather than the thieves telling them how to behave and what to say.

Because doing so puts blame where it belongs - don't want that.

Thu, 05/12/2011 - 14:57 | 1268939 beastie
beastie's picture

Fooking idiots. Shower of gobshites running/ ruining the country.

Did you know 70% of Irish mortgages are variable?

Did you know Debtors prison is still on the books?

Thu, 05/12/2011 - 15:00 | 1268954 Bam_Man
Bam_Man's picture

Do they serve Guiness with the evening meal in Irish debtor's prison?

Thu, 05/12/2011 - 15:02 | 1268970 slewie the pi-rat
slewie the pi-rat's picture

"Irish Reveal New Negotiotiating Tactics Upon Discovering EU Has Vaseline"

Thu, 05/12/2011 - 19:33 | 1270038 forexskin
forexskin's picture

SLEWIE - glad to see you back and cheering the lubing of the 'gears'

Thu, 05/12/2011 - 15:07 | 1268977 nah
nah's picture

aint it the bible says a bailout for a bailout.....

Thu, 05/12/2011 - 15:04 | 1268978 Eally Ucked
Eally Ucked's picture

Ireland decided to take banks debt on their own books. Now they are in situation of credit card holder making 4000$/mth and after costs he's left with 200$ and his interest on CC is 300$ now he has choice to say fuck it or borrow more and pay it counting on miracles down the road. 

Thu, 05/12/2011 - 15:06 | 1268985 falak pema
falak pema's picture

hard place and a that order...for the PIIGS.

Thu, 05/12/2011 - 15:09 | 1269002 slewie the pi-rat
slewie the pi-rat's picture

listen!  it turns out we can offer you enslavement on much better, easier terms.

really?  where do i sign?

Thu, 05/12/2011 - 15:11 | 1269012 Silver Bug
Silver Bug's picture

They either reschedule for them, or they let them default. The end result will be that they default no matter what, if they know what is good for them. But if the banks want to keep this game going and squeeze as much juice out of them as possible. They know what they have to do.

Thu, 05/12/2011 - 15:11 | 1269013 carbonmutant
carbonmutant's picture

The Irish are a special case...

Thu, 05/12/2011 - 15:14 | 1269014 Eireann go Brach
Eireann go Brach's picture

The lads from the Easter 1916 Rising era must be turning in their fucking graves watching this pathetic groveling going on, tell the EURO, Trichet and all the wankin fucking bankers to go Fuck themselves and let the ensuing doiminos fall as they may.

"They think they have forseen everything, but the fools! the fools! the fools! they have left us our Fenian dead; and while Ireland holds these graves "Ireland unfree shall never be at peace." 

Padraig Pearse

Thu, 05/12/2011 - 15:19 | 1269036 Theta_Burn
Theta_Burn's picture


Thu, 05/12/2011 - 15:20 | 1269044 carbonmutant
carbonmutant's picture


Thu, 05/12/2011 - 15:20 | 1269053 dexter_morgan
dexter_morgan's picture


Thu, 05/12/2011 - 15:59 | 1269206 hedgeless_horseman
hedgeless_horseman's picture

+ Wolfe Tone...

"To subvert the tyranny of our execrable government, to break the connection with England, the never failing source of all our political evils, and to assert the independence of my country--these were my objects. To unite the whole people of Ireland, to abolish the memory of all past dissentions, and to substitute the common name of Irishman, in the place of the denominations of Protestant, Catholic, and Dissenter--these were my means."

Thu, 05/12/2011 - 20:20 | 1270179 zippy_uk
zippy_uk's picture

So has Ireland fallen fowl of the Euro, or is the Euro about to fall fowl of Irish politics?

If I was a Eurocrat I would be shitting bricks about Ireland

Thu, 05/12/2011 - 15:19 | 1269037 dexter_morgan
dexter_morgan's picture

What, the Guinness supply running low?

Thu, 05/12/2011 - 15:40 | 1269121 boiltherich
boiltherich's picture

As a citizen of Ireland I wonder what some of you are smoking.  The destruction already happened a few years back, Herr Piper now wants his/her payment after forcing the Irish government to back with taxpayer funds all bond deposits in Irish banks, the majority of which smell distinctly of weinerschnitzel.  That government was rightly swept from office and the new government is not really a whole lot better. 

Ireland has benefited from the golden era of leverage and financial Harry Potterism, but the current punishment being dished out is far and WAY beyond reasonable, so far in fact that the country could fork over half of GDP for a century and still not have the debt paid off, and what pisses off the average paddy is that most of it was not even real debt but losses on paper only mostly over the end of the housing bubble.  A few criminal banksters and one exceptionally stupid Prime Minister and viola an entire nation goes from one of the richest in the EU to one of the poorest.

And before Yanks start in with the old socialist diatribes consider this, the VAST majority of mortgages in Ireland are adjustable rate, and you cannot discharge mortgage debt in bankruptcy even when the house has been taken in foreclosure.  Can you all say that about America?

As for shooting one's self in the head it is being proposed that commercial bond holders of Irish banks be made to take a 90% haircut, and if this happens it will likely mean the reintroduction of the punt and possibly even leaving the EU, but NOT shooting one's self in the head thus would mean decades of slow poison that leaves the average Irishman with a standard of living similar to a Bolivians. 

Allied Irish investors face a 90pc 'haircut' Junior bondholders face losing as much as 90pc of the value of their investment in the debt of Allied Irish Banks as the Irish authorities look to impose more of the cost of rescuing their banking system on international investors.

Thu, 05/12/2011 - 15:48 | 1269175 slewie the pi-rat
slewie the pi-rat's picture

As a citizen of Ireland I wonder what some of you are smoking.

ohhh.....nothing........ well, at least it's green...


Thu, 05/12/2011 - 17:41 | 1269719 I only kill chi...
I only kill chickens and wheat's picture

So Germany, France etc. will be really pissed when Ireland defaults. Why do they always get to start the really big wars?

Thu, 05/12/2011 - 20:26 | 1270199 Escapeclaws
Escapeclaws's picture

The Irish went crazy during the good times when credit was freely available. This lasted for years. Most of the money went into real estate. The economy itself became a service economy, which always leads to high unemployment and contraction when credit dries up. The country is awash in crumbling housing developments that were never sold-the result of speculation. It's really not that different from America, economically speaking. I can't help but think the Irish sold their soul to the devil and now have to give the devil his due.

Thu, 05/12/2011 - 21:00 | 1270298 unununium
unununium's picture

The first sovereign to buy PM's with everything it has, then pull the plug on the swap powder keg, will score a huge coup and make out alright.

Might as well be your beautiful and long suffering isle.

Thu, 05/12/2011 - 15:40 | 1269139 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

Ve vant ze pound of flesh,but you can pay one ounce at a time Irish.

Thu, 05/12/2011 - 16:12 | 1269296 honestann
honestann's picture

Ireland needs to take a lesson from Iceland and DEFAULT.  Only one reason exists to not default - the gangster banksters will not give the Ireland predators-that-be (politicians) nice big juicy bribes.  So what?  One human fails to get a bribe he doesn't deserve, and the rest of the country gets a tiny bit of the justice they do deserve.


Then pass a simple law that says heretofore "gold is money" and "the only denomination recognized is grams".  The government need not and should not create any money of their own at all.  What's the point?  When money is real and honest, it matters not who coins it.


Choose freedom.  End debt slavery.  That is an easy choice.  Just do it.

Thu, 05/12/2011 - 16:15 | 1269315 CrashisOptimistic
CrashisOptimistic's picture

See previous point

Default will never be permitted.  It triggers global swaps and bankrupts majors all around the planet.

They will be given gifts before they are allowed to default or restructure(same thing).

Thu, 05/12/2011 - 16:51 | 1269471 honestann
honestann's picture

GOOD.  Let those swaps bankrupt the banks.

Iceland defaulted.  So can and should Ireland.

The people should insist, and make sure it happens.

By ANY means necessary.

Thu, 05/12/2011 - 21:02 | 1270307 unununium
unununium's picture

> Default will never be permitted.

By whom?  Christ don't swallow that crap.

Default is inevitable and it's shocking the charade has gone on as long as it has.


Thu, 05/12/2011 - 16:46 | 1269364 M.B. Drapier
M.B. Drapier's picture

A few things:

  1. This is a change in the government's public position - up to now, the official plan was to pay everything back on time with the aid of an export-led growth miracle (yes, yes). The fairly sudden shift happened in response to last Saturday's Morgan Kelly op-ed. Kelly made the (obviously not new) claim that the country's public debt is going to become unsustainable, and the government obviously decided it didn't have the stomach to reply with another round of official optimism about export-led growth. Obviously they have their eyes on snapping up any crumbs they can get from the Portugese and (especially) Greek deals too.
  2. A cut in the interest rate is generally expected - Rehn is on record as saying it's going to happen - but the French are still blocking it, demanding concessions on corporation tax in exchange. There's no firm indication as to if or when maturity extensions will be on the table - presumably the Irish government expects the Greek renegotiations to produce a precedent, just as (iirc) the Greeks got a maturity extension on foot of the original Irish bailout agreement.
  3. "[S]ocialist beggars"? Despite the lavish public-sector pay, Ireland's on the whole not conspicuously socialist by the standards of the EU, or really any region of the developed world. The French government is kicking up about our 12.5% corporation tax in order to make hay with French voters about our *ahem* Anglo-Saxon capitalism which threatens the European social model.
  4. Those Nationwide (UK) ads I mentioned earlier are still running on ZH. I don't think they'll be going away soon.
Thu, 05/12/2011 - 16:45 | 1269447 IdioTsincracY
IdioTsincracY's picture

"..raising Ireland's corporate tax was off the table.."

Oh ... the wonders of a race to the bottom .... all is well for the super-rich... as Ireland undercut the other nations by lowering the corporate tax rates, the leeches came in, created a 'service economy', and really serviced the Irish people's behind.

What goes around, comes around.

We got 0%, anybody offering -2%? ...

Thu, 05/12/2011 - 18:13 | 1269821 midnight
midnight's picture

"So in Europe socialist beggars can be choosers. "

Tyler, your uneducated FoxNews grade ideological garbage is pathetic. Spare us of Glenn Beck babbling that is only "adequate" for United States.

Thu, 05/12/2011 - 18:46 | 1269910 MacedonianGlory
MacedonianGlory's picture

Socialists in Greece say that IMF is happiness

Thu, 05/12/2011 - 19:49 | 1270087 zippy_uk
zippy_uk's picture

German Banks parked on Ireland's lawn..

Thu, 05/12/2011 - 19:50 | 1270092 Coldfire
Coldfire's picture

At these levels, a default is the lenders' problem, not the borrowers'. Good thing Europe doesn't have a thousand-year history of bloody strife.

Thu, 05/12/2011 - 20:11 | 1270144 zippy_uk
zippy_uk's picture

Absolutely right ! Apart from being the most blood stained part of the planet, we all get like a house on fire (or is that a house under fire?)

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