As We Have Clearly Anticipated Since Early 2010, Ireland is About to Go

From CNBC: Ireland Does Not Rule Out EU Rescue Possibility

Ireland did not rule out the
possibility of turning to the European Union for help, while an Irish
newspaper reported that the Prime Minister may approach Brussels as
early as Tuesday.

The Irish Independent said Finance Minister Brian Lenihan may ask his European counterparts in Brussels
on Tuesday if it would be possible to funnel funds into Irish banks
which he has already promised to pump up to 50 billion euros ($68.38
billion) into.

“There is no question about Irish
sovereign debt – the question remains about the funding of the banks.
The banks are having trouble getting money,” the newspaper quoted the
source as saying.

“We have to find out – could you go
to the fund and get money for the banking sector? Lenihan at ECOFIN
presents an opportunity to discuss it. It would be the banks that would
have to pay it back – not the state.”

The total amount of outstanding
European Central Bank loans owed by Irish banks rose to 130 billion
euros as of Oct 29 from 119 billion on September 24, data published on the Irish central bank’s website showed on Friday.

As if BoomBustBlog subscribers didn’t see this coming a mile and a year away – Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ! I will be reviewing and adding to my extensive work on the Pan European Sovereign Debt Crisis
this week since that situation is about to explode. I will also reveal
the likely haircuts to be taken on Irish debt as well with the
publication of our Irish haircut model. Remember how nasty those
Portuguese haircuts looked – Introducing the Not So Stylish Portuguese Haircut Analysis???

You think those are ugly? You ain’t seen nothing yet!

In the meantime I suggest that paying Subscribers review our Irish analysis and related contagion material: 

• Ireland public finances projections
• Sovereign Contagion Model – Retail (961.43 kB 2010-05-04 12:32:46)
• Sovereign Contagion Model – Pro & Institutional
• Irish Bank Strategy Note
• Euro Bank Soveregn Debt Exposure Final -Retail
• Euro Bank Soveregn Debt Exposure Final – Pro & Institutional
• Sovereign Debt Exposure of European Insurers and Reinsurers (Empty 2010-05-19 01:56:52)

There is plenty (and I do mean plenty) of material for those who
don’t subscribe to see how the current Irish situation was essentially
manifest destiny (Euro-toxic asset edition), as excerpted from Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ! Wednesday, April 14th, 2010

We have performed a cursory overview of the risks inherent in Ireland though previous “preview” posts: Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe and Reggie Middleton on the Irish Macro Outlook.
For the most part, Ireland has considerable embedded risk through both
foreign claims on troubled countries (ex. PIIGS) and significant bank
NPAs as a percent of its GDP.

Below is an excerpt from our recent forensic Ireland analysis. Subscribers, please download the most recent report here: Ireland public finances projections_040710:

A deteriorating external environment and a
correction in the domestic housing market made 2009 a difficult year
for the Irish economy. Ireland’s GDP growth registered a fall
of 7.5% (the highest rate of decline since the country’s records have
been compiled) with a fiscal deficit of 11.7% of the GDP for 2009.
Moreover, amidst an ailing banking system Ireland’s economy is
further expected to report a 1.3% decline in its GDP and a fiscal
deficit of 11.6% of the GDP for 2010, as per the government estimates.
Consequent to rising fiscal deficit, government’s debt levels have
also increased enormously from 24.8% of GDP in 2007 to 44.1% in 2008
and 64.5% in 2009. This rising debt is further fuelling an increase in
fiscal deficit through an increase in interest expenditure. Thus, in
its 2010 Budget, Ireland’s government plans to secure structural
improvements to the expenditure base, which is expected to result in a
savings of €4 billion. However, considering the current
economic slowdown and rising unemployment, deterioration in Ireland’s
tax revenues is expected to continue in 2010, which will negate the
impact of expenditure savings, and result in further widening of the
fiscal deficit to 12.6%, as per our estimates.

Moreover, as per the government’s “Stability Programme Update –
December 2009″, the government plans to bring down its fiscal deficit
from 11.7% in 2009 to 2.9% in 2014 (below the European Union target
of 3%), primarily backed by a strong economic recovery starting 2011.
However, we believe that this targeted reduction is based on overly
optimistic growth targets, which are difficult to achieve.

The current government estimates fail to take into account
additional funding that the government might have to infuse to
stabilize Ireland’s banking system, which will further increase the
government’s budget deficit.

• According to Bloomberg (March 31), “Ireland’s banks need $43
  billion in new capital after “appalling” lending decisions left the
  country’s financial system on the brink of collapse. The fund-raising
  requirement was announced after the National Asset Management
  Agency said it will apply an average discount of 47 percent on the
  first block of loans it is buying from lenders as part of a plan to
  revive the financial system.”
• Ireland’s banking system is critically dependent on the government for financing. At
  the end of January 2010, Central Bank of Ireland’s lending to
  banks was €98 billion, which is equivalent of 60% of the country’s
  2009 annual GDP. Moreover, it represents 13% of total Eurosystem
  lending to banks compared with Ireland’s 2% share of Eurozone GDP.
  Ireland’s lending to banks is much higher compared to other troubled
  European countries - the Bank of Greece’s lending to banks amounts to 20% of Greek GDP while numbers for Spain and Portugal are much lower.

In addition, Ireland (like practically every other country in the EU, see Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!) unrealistically optimistic in their GDP growth projections.

Additional and ample publicly disseminated opinion and research that illustrated the true conditions and prospects of Ireland:

1. Many Are Still Underestimating the Damage That Can Be Done By Ireland’s Bank Troubles Wednesday, September 8th, 2010
2. I
   Suggest Those That Dislike Hearing “I Told You So” Divest from Western
   and Southern European Debt, It’ll Get Worse Before It Get’s Better! Friday, August 27th, 2010
3. Here’s
   More Proof of the Sheer Lunacy of the European Bank Stress Tests:
   Passed Banks are Already Trying to Collect on Defaulted Claims of
   European Nations Tuesday, July 27th, 2010
4. Death
   by a Thousand Irish Cuts: The Poster Child of Austerity Measure
   Success Gets Downgraded After Several Devastating Expenditure
   Reductions That Really, Really Hurt the Irish People! Monday, July 19th, 2010
5. BoomBustBlog Irish Research Becomes Reality Wednesday, May 12th, 2010
6. Introducing The BoomBustBlog Sovereign Contagion Model: Thus far, it has been right on the money for 5 months straight! Tuesday, May 4th, 2010
7. Beware of the Potential Irish Ponzi Scheme! Thursday, April 29th, 2010
8. Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ! Wednesday, April 14th, 2010
9. Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe Tuesday, March 30th, 2010
10. Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! Tuesday, March 23rd, 2010
11. Financial Contagion vs. Economic Contagion: Does the Market Underestimate the Effects of the Latter? Monday, March 8th, 2010
12. The Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western European Countries Tuesday, February 16th, 2010
13. What Country is Next in the Coming Pan-European Sovereign Debt Crisis? Tuesday, February 9th, 2010
14. The Coming Pan-European Soverign Debt Crisis Sunday, February 7th, 2010

Comments

[tony1983]

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[moneymutt]

yeah, this sounds sutainable:

"...Next month the government will deliver its latest austerity budget with the aim of slashing a further €15bn from public spending on top of the €14.5bn it has already been forced to cut. But Kelly has argued that the public sector cuts are "an exercise in futility" when compared with the €70bn bill for Ireland's bad banks. "What is the point of rearranging the spending deckchairs, when the iceberg of bank losses is going to sink us anyway?" he asked in the Irish Times last week.

Put at its starkest, for the next six to seven years, every cent of income tax paid by Irish citizens will go to cover the banks' losses."

http://www.guardian.co.uk/world/2010/nov/14/ireland-economic-crisis

[moneymutt]

by the way, why do economist always stay in academia and never measure the results of their real world experiments. If austerity works, then the fiscal tightening in Ireland would reduce deficits, but it didn't, did it? As spending fell, so did revenues...hmmm?

Perhaps there is a more "sophisticated" alternative debt slavery...a different approach to clearing debt and recharging an economy (default) but why bother when you are the banks and you get to bleed everyone dry...

[Eternal Student]

"by the way, why do economist always stay in academia and never measure the results of their real world experiments."

Oh, my guess is that they like their steady paychecks, without having to do real work. It's a sweet gig if you can get it. And the main effort is to keep the people who give you money from catching on.

[moneymutt]

when will the ponzi scheme be too short of new investors?

soon it seems, both US banks and European countries are teetering upon having to reveal their insolvency.

Just one of the PIGS honestly saying, we are "outta here EU" and the banks go tumbling down. US homeowners walked away, but govt saved the banks...now if PIGS walk away????

[shushup]

According to the price action in the U.S. stock market today - this is meaningless.

[Robslob]

That statement is false...the Fed is not letting the market discover "fair price"...if you think I am wrong then lets get one thing straight...if the Fed wasn't in the market would you still be?

I have a canned answer for that: "fuck no"...

[Lord Peter Pipsqueak]

Does anyone think that the bankers of Europe have spent the last forty years building the corrupt political/economic system as the EEC and its commensurate agricultural policy and currency to have it fall at the first fence?Over forty years of bribes,corruption,political chicanery and manipulation to let a tiny country like Ireland (or Portugal,Spain whatever) de-rail the whole project? Get real.

German politicains may rant and rave about the inflationary consequences of bailing these countries out and the long term consequences, but as always, the banks are in control and what they say goes.

In a post industrial econonmy such as Europe(read also UK and USA) the bankers years ago realised that their lending model was not going to work in the future,a replacement for future lending demand was required and the solution was the housing market.BY creating the conditions for a perpetually rising market via national economic policy,bankers could ensure future loan growth from declining industrial demand would be repalaced by consumer housing demand. There was one slight problem in that the birth rates in Euroland were declining rapidly,obviously this meant that the demand for overpriced houses would obviously reach an upper limit that would restrict furthe rhouse price growth.The solution was simple,via a combination of local planning resrictions on planning permission for new builds and an open door policy of third world immigration,there was soon an unlimited demand for new houses.This combined with a ZIRP meant house prices could only go up.

The effect this policy of unlimited immigration on the national identitiy and ethnic mix has had on the UK and many other European countries has simply been devastating.

It has been estimated that within 30-40 years the white British will be a minority in their own country.What say have they had in the transformation of their country?None,the politicians have sold the country,its people,its culture and its heritage for a couple of pieces of silver,to appease the banks' desperate greed.

May they rot in hell.

 http://www.dailymail.co.uk/news/article-504354/White-Britons-minority-dozen-towns-30-years.html

http://www.dailymail.co.uk/news/article-1283521/Immigration-soars-20-Labour-crackdown.html

[Vendetta]

diluting a cultural identity as much as possible is a globalist strategy to help enable theft of sovereignty at some point thru supranational entities like the world bank, IMF, etc.  Kind of like the immigration problems Germany had during and after the wiemar years... helps radicalized the citizenry.

[zelter]

I don't think you ought to make any economic sense of the multiculturalist religion. The truth, as harsh as it may be, is simply that our managerial elites want to kill indigenous Europeans and their diasporas by crowding them out to extinction. E.g., not even when the diversity project hits a hard and costly ecological wall do they plan to stop the ethnic cleansing:

http://www.nytimes.com/2010/07/11/world/asia/11water.html

I am hoping for a better future once the entire lark collapses, and the due punishment and redress for ethnocide; that's all we can do at this point -- pray that this is over soon, that we relearn who we are as European peoples, and value our kind's existence enough to restorse our nations.

Indigenous peoples have the collective and individual right not to be subjected to ethnocide and cultural genocide, including prevention of and redress for:

    (a) Any action which has the aim or effect of depriving them of their integrity as distinct peoples, or of their cultural values or ethnic identities;
    (b) Any action which has the aim or effect of dispossessing them of their lands, territories or resources;
    (c) Any form of population transfer which has the aim or effect of violating or undermining any of their rights;
    (d) Any form of assimilation or integration by other cultures or ways of life imposed on them by legislative, administrative or other measures;
    (e) Any form of propaganda directed against them.

Although at the moment the British government pretends there are no indigenous peoples in Britain:

notes the Government's continued refusal to put these rights on a firm legal footing and ratify Convention 169, on the grounds that there are no indigenous peoples in the United Kingdom

http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=38437

[Goldenballs]

Well its been a real long relationship probably 50 billion years but we Brits and the Goats on the Isle of Man are really gonna miss you over there,but don,t worry we,ll meet again real soon as we are on our way as well.As our great Sage,Luminary and Z-part actor Gordonius Brownus Pantus said "  We,ve beaten Bust " just before he pressed the button on the computer and sold off half the countries Gold reserves at the worst possible price and time,a real modern example of a bad lad gone badder,he sealed our fate and long term relationship,but we,ll be there with you soon both without a pot to piss in,locked forever in a death spiral,how romantic.........................

[doomandbloom]

i think banzai has changed the rules of blogging for ever :-)

[Rainman]

The PIIGS are old DOGS that soon won't hunt no mo. One or more must be put down so the remaining stronger DOGS will be left with some feed. Natural selection will prevail sooner or later. 

[thebark]

So once again we have a situation that DOESNT MATTER.....until it does. Its amazing how many "black swans" there are out there flying around. When one of them crashes, when the first domino falls......look the fuck out....its going to get scary fast. 

[MGA_1]

So, it's about $1T = 6 months stable economy.  How many Greek Isles is that?

[Eternal Student]

The big question of course is "when?". Supposedly the EU is pressuring Ireland to take out another loan.  If they do, they could use that money to make their current payments, and drag the whole issue out longer. Sort of like paying off your underwater mortgage using your Credit Card, when you don't have a job.

We've seen this kicking-of-the-can-down-the-road for a while. Sure, it will have to end at some point. But, again, the big question is "when"? Possibly not next year at all, maybe the year after, or not, depending on what happens.

[szjon]

^{It seems the Germans want an increase in the corporate tax rate, (currently 12.5%) this makes it easier for Merkel to take back to her voters, less competition. Ireland cannot raise this as lots of multi-nationals will up sticks and leave. Google, boston scientific, medtronic etc, etc.}

^{This could get interesting yet.}

[Lndmvr]

One potato, 2 potato, 3 potato , 4?........

[jus_lite_reading]

No worries for the EU- Germany will continue to pump billions of EUROS into the PIIGS for all eternity just as the Fed will pump billions of dollars into the money pit US economy.

FDIC, SS, USPS all insolvent- The Fed comes to the rescue.

[tom a taxpayer]

Breaking News: Ireland plans to drop Euro, adopt Potato currency.

Ireland plans to change its currency from the Euro to the Potato, a new currency convertible to potatoes, according to an "in the know" source who wishes to remain anonymous until the official announcement of the "switcheroo".  The Irish Finance Minister shortly will announce a one week bank holiday during which Irish bank deposits denominated in Euros would be converted to Potatoes. The new Irish currency will be redeemable in potatoes and issued in these denominations:

One Pound of Potato Note

Five Pounds of Potatoes Note

Ten Pounds of Potatoes Note

Twenty Pounds of Potatoes Note

One Hundred Pounds of Potatoes Note

Five Hundred Pounds of Potatoes Note

One Thousand Pounds of Potatoes Note

Squabbling over what variety of potato will be depicted on each Note is delaying the Note printing process. Lobbyists for the two most popular varieties of potato, the Rooster and Kerr's Pink, are waging a behind-the-scenes last-potato-standing cage fight to win the coveted prize: engraving of their potato on the face of the One Thousand Pounds of Potatoes Note. Less ""floury" varieties will have to be content to be depicted on the lowly One or Five Pound Note.

One other hurdle is how to cushion the "switcheroo" to repay bondholders of Irish bank debt with Potato Notes rather than Euro Notes. Bondholders are not big potato eaters and prefer to eat caviar, foie gras, escargot, Wiener Schnitzel, and children of future generations. To sweeten the deal for bondholders,  for each one million Pounds of Potatoes bond conversion, the Irish Finance Minister plans to add a one-time issued Note for one thousand pounds of Irish blood pudding, a traditional Irish sausage made from pig's blood, onions, herbs, spices, oatmeal or barley.   

During the bank holiday the Irish Finance Minister intends to convert Euro (EUR) to Potato (PTO) at the rate on One Euro = Two Potatoes. For those interested in Forex trading, here is handicapping of key exchange rates assuming the Irish launch the Potato next week:

PTO/USD = .68

PTO/EUR = .5

PTO/GBP =  .42

PTO/CHF = .67

PTO/YEN = 55.75

The reckless debt acquired by Irish banks is forcing the Irish government to abandon the Euro and establish its own currency and control over monetary policy. To rebuild public confidence in the Celtic Tiger, Ireland has decided to establish a hard currency redeemable in hard potatoes. When  asked why Ireland is choosing potatoes rather gold to back the new currency, the "in the know" source responded, "Well, you can't eat gold, can you now. Hi di-diddly-idle-um, diddly-doodle-idle-um,diddly-doo-ri-diddlum-deh."

When  asked about the potential for a bank run in which the Irish public demands their Notes be redeemed for potatoes, the "in the know" source responded, "Well, if you go to the bank in a bank run and redeem, say, Notes for 10,000 Pounds of Potatoes, what, pray tell, are you going to do with 10,000 pounds of potatoes?...sell them to the all the other lads who redeemed thousands of pounds of potatoes?  And how many pounds of potatoes can you carry out of the bank...10,000 pounds? There arent enough wheelbarrows and donkey carts in all of Ireland to cart away the potatoes in a bank run, so there will be no bank run.   Argh, isn't that the beauty of the switcheroo. Too-ra-loo-ra-loo-ral,..come on, sing along...

"Too-ra-loo-ra-loo-ral, Too-ra-loo-ra-li,
Too-ra-loo-ra-loo-ral, hush now, don't you cry!
Too-ra-loo-ra-loo-ral, Too-ra-loo-ra-li,
Too-ra-loo-ra-loo-ral, that's an Irish lullaby."

http://kids.niehs.nih.gov/lyrics/irishlull.htm

[Vendetta]

they would likely have many outstanding receipts against each potato they may have in their vaults.  Like how they've structured PM ETFs

[Ned Zeppelin]

LOL here. Very funny! Kudos.

[Gone Full Retard]

Reggie clearly predicted the potato currency.

[Cone of Uncertainty]

"It would be the banks that would have to pay it back – not the state.”

That is the money line in the quoted article.

That comment is so rich, so delightfully ridiculous, that is should be burnt into the forhead of the person that made it.