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Buiter On Why Irish Eyes Demand A New Bailout

Tyler Durden's picture




 

While Ireland's bond performance is often held up as evidence that living-standard-crushing austerity can indeed lead to positive developments, Citgroup's chief economist William Buiter suggests, in a speech in Dublin today, that they should begin negotiating a new rescue package as soon as possible. Buiter, via The Irish Times, points to the fact that Ireland currently pays around 6% for its 'rescue-money' which could be refinanced (theoretically) at around 3% via the EFSF. He said Ireland was not like Greece but it was in very bad fiscal shape because of its bank guarantee (isn't that what Italy and Portugal are doing with the new Ponzi-bonds?). He said that clearly something had to be done about the "continuing massive sovereign funding gap" that Ireland had and which still existed after three and a half years of "fierce" fiscal austerity. While Merkel's comments today on central bank support as illusory and spending EU money appropriately, it would seem that Ireland remains in a strong negotiating position. We await the term 'referendum' to confirm the discussions have begun - and given the timing (the day before IMF-EU official's fifth review) we would expect to hear it soon.

 

 

The Irish Times: Ireland 'May Need New Bailout'

Ireland clearly needs to negotiate a stand-by second bailout, Citigroup chief economist Willem Buiter said during a visit to Dublin today.

 

Mr Buiter, a former member of the Bank of England's monetary policy committee and respected economist, said the most attractive option from Ireland’s point of view would be a reduction on the interest it pays on an outstanding €30 billion in promissory notes, issued mostly to deal with the collapse of Anglo Irish Bank.

 

He said Ireland is paying in the region of 6 per cent on this money but it could be refinanced at 3 per cent by the European Financial Stability Facility.

 

This would have attractions for the rest of Europe also as it would not be a technical restructuring of sovereign debt. It would also have the political advantage of showing recognition for the enormous effort Ireland had made to try put its house in order, he said.

 

There were two other possible options if that was not enough, he said during a press briefing.

 

The two other possible options were a restructuring of Irish sovereign debt or the revoking of the government guarantee on bank debt. He said he thought European politicians and the members of the EU-IMF troika would prefer to pursue the option of more generous official funding terms.

 

He said Ireland was not like Greece but it was in very bad fiscal shape because of its bank guarantee.

 

He said that clearly something had to be done about the “continuing massive sovereign funding gap” that Ireland had and which still existed after three and a half years of “fierce” fiscal austerity.

 

Mr Buiter's comments came on the eve of the return of EU-IMF officials to Dublin for its fifth review of Ireland's compliance with the terms of last year's €67.5 billion bailout.

 

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Mon, 01/09/2012 - 15:16 | 2047356 TruthInSunshine
TruthInSunshine's picture

Bailouts for all, I say!

With talk of 'weaker' bonuses hanging in the air, The whores of Babylon/Wall Street are on their knees, begging, pleading, mouths agape, for more QE from Ben 'Easy Over' Bernankincide & William 'iPad2RamenNoodle' Dudley:

5 Tech Stocks to Watch if QE3 Happens

Mon, 01/09/2012 - 15:17 | 2047368 trav7777
trav7777's picture

oh Danny Boy...bitchez

Mon, 01/09/2012 - 15:56 | 2047488 jon
jon's picture

oh danny, oh boy, oh boy

[animal.jpg]

Mon, 01/09/2012 - 15:56 | 2047491 CPL
CPL's picture

Feck off and gimme me muny!!

Mon, 01/09/2012 - 15:21 | 2047374 TruthInSunshine
TruthInSunshine's picture

I'm so glad Morgan Stanley can advise us of the scheduling of further, out-in-the-open sessions of QE (aka quantitative lubing), even if The Bernank is far more reluctant to do so:

Last week, in a research note, Morgan Stanley said that the next round of quantitative easing from the Federal Reserve, known as QE3, may happen between March and June.

Mon, 01/09/2012 - 15:28 | 2047386 TruthInSunshine
TruthInSunshine's picture

William Daley to step down as Obama's chief of staff 

Los Angeles Times - 19 minutes ago That was a very short stint from a very good friend of Wall Street, and signs that some big Kabuki Theater is about to break out. Get your popcorn ready.
Mon, 01/09/2012 - 16:17 | 2047547 TraderTimm
TraderTimm's picture

Somehow this doesn't surprise me. Given extrapolations from prior QE 'events', the next 'Queasing' should produce about 150 SPX points over three months. My guess is it would happen later rather than sooner, so it can stack the deck for the election cycle.

Or some market event will force their hand, such as the Euro going sub-1.27 and staying down.

Mon, 01/09/2012 - 15:27 | 2047394 slaughterer
slaughterer's picture

Market talk S&P will take rating action against France and other EZ countries today after closing bell.  

Mon, 01/09/2012 - 15:41 | 2047441 hugovanderbubble
hugovanderbubble's picture

Watch out Austria...

this is unexpected

Mon, 01/09/2012 - 16:28 | 2047575 valley chick
valley chick's picture

wasn't that last weeks rumor?

Mon, 01/09/2012 - 15:15 | 2047357 lolmao500
lolmao500's picture

Fuck?

http://www.facebook.com/pages/Global-News/355589671124970

 

Reports: Israeli President calls urgent cabinet meeting to discuss #Iran, underground enrichment may be 'trigger' needed for attack.

Reports: Israel urging the US to 'make a decision now. Are you with us or not? We must act now (on #Iran) make your choice'

Report: EU to decide on #Iran oil embargo on Jan 23, earlier than planned. Tensions escalate further.

Mon, 01/09/2012 - 15:27 | 2047399 lolmao500
lolmao500's picture

UPDATE : OBAMA WILL MAKE ANNOUNCEMENT FROM THE WHITE HOUSE AT 3PM...

Hopefully not ``I have directed US forces to attack Iran``

Mon, 01/09/2012 - 15:33 | 2047410 TruthInSunshine
TruthInSunshine's picture

William Daley to step down as Obama's chief of staff 

Los Angeles Times - 19 minutes ago

 

Daley, being the Wall Street mole that he is, wants to apparently spend more time with the family, or Obama is posturing for an appearance of being "tough on Wall Street," with the election in less than 10 months.

Mon, 01/09/2012 - 15:34 | 2047418 slaughterer
slaughterer's picture

A banker leaves, a budgeter arrives:

 


In October 2011 Daley said he plans to return home to Chicago after President Obama makes it through his re-election. “I made a commitment to put the president through his re-election, which I’m confident he will do, and then my wife and I will be back in Chicago.”[8]

On January 9, 2012, it was announced that Daley would resign as Obama's Chief of Staff.[9] Jacob Lew was announced as his successor.

Mon, 01/09/2012 - 15:53 | 2047479 chubbar
chubbar's picture

"WASHINGTON (AP) – Defense Secretary Leon Panetta says Iran is laying the groundwork for making nuclear weapons someday, but is not yet building a bomb and called for continued diplomatic and economic pressure to persuade Tehran not to take that step."

http://www.usatoday.com/news/world/story/2012-01-08/iran-nuclear-weapons/52451620/1

Mon, 01/09/2012 - 15:54 | 2047481 lolmao500
lolmao500's picture

That was yesterday. Lots of things changed.

Mon, 01/09/2012 - 15:16 | 2047361 hugovanderbubble
hugovanderbubble's picture

Austria is not AAA Hungarian Debt Exposure will hit Austria´s Rating to AA

Mon, 01/09/2012 - 15:17 | 2047367 hugovanderbubble
hugovanderbubble's picture

France has to be downgraded in hours...

EFSF is not AAA

Willem Buiter knows perfectly that Euro will drop hardly.

Mon, 01/09/2012 - 15:24 | 2047385 Alien Invader
Alien Invader's picture

here's hoping. Disclosure: short baguettes and smelly cheese.

Mon, 01/09/2012 - 15:32 | 2047379 hedgeless_horseman
hedgeless_horseman's picture

 

 

Ireland was not like Greece

True.  The Irish would need to break some shit before getting a better deal, and that probably isn't going to happen.  The Irish id was lobotomized when Gerry sold the Army Counsel down the river.  Sadly, Ireland is nicely domesticated now, providing excellent golf and sailing opportunities for wealthy English.  The Irish will not put tourism in jeopardy, while the Greeks are always more than happy to riot and strike.

Mon, 01/09/2012 - 15:44 | 2047451 hugovanderbubble
hugovanderbubble's picture

All French banks has to make huge recap to hedge from Hybrids Exposure.

BNP 14.000 Mn

Societe Generale 4500 Mn

Natixis 2.900 mn

Credit Mutuel 1.710 Mn

Credit Agricole 5100 Mn

= TOTAL roughly 27.000 Mn for top 5 biggest banks

 

This IS DILUTIVE YES OR YES...

 

SO banks has to plunge much more than current valuations.

Mon, 01/09/2012 - 15:55 | 2047484 supafuckinmingster
supafuckinmingster's picture

"The Irish id was lobotomized when Gerry sold the Army Counsel down the river.  Sadly, Ireland is nicely domesticated now, providing excellent golf and sailing opportunities for wealthy English.  The Irish will not put tourism in jeopardy, while the Greeks are always more than happy to riot and strike."

 

...as an Irishman I can honestly say that just about sums it all up.

Mon, 01/09/2012 - 15:23 | 2047384 csmith
csmith's picture

"...(isn't that what Italy and Portugal are doing with the new Ponzi-bonds?)."

 

Tyler...did you know there's a city in Italy called Poggibonzi ???

Mon, 01/09/2012 - 15:25 | 2047388 agent default
agent default's picture

Default, tell the banksters to fuck off, get back to an economy that produces real things, and tell the paper holders to stick their paper up their ass. Just break the fucking circle.

Mon, 01/09/2012 - 15:26 | 2047390 Caviar Emptor
Caviar Emptor's picture

Dominos, bitchez! 

Mon, 01/09/2012 - 15:38 | 2047431 kridkrid
kridkrid's picture

Who cares?  This fascist administration replaced the one before it and will be replaced by another after.  We've hit the accelerator under the previous two, but the direction hasn't changed for decades.  The team sport isn't red vs. blue, it's them vs. you.

Mon, 01/09/2012 - 15:34 | 2047417 JW n FL
JW n FL's picture

 

 

Offshore Judges to discuss key rulings affecting foreign businesses

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Kawaley, who will become Bermuda's next Chief Justice, effective April 1, 2012, and Bannister sit on the Commercial Division of their respective courts, while Quin's duties including hearing cases filed at Cayman's Financial Services Division.

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Mon, 01/09/2012 - 15:34 | 2047421 JW n FL
JW n FL's picture

 

 

Ireland.. the other Off-Shore!

LULZ!!

Mon, 01/09/2012 - 18:44 | 2047845 earleflorida
earleflorida's picture

fwiw dept:

and who oversees the irs? the frb system___ ref: 'federal reserve banking act - section 15

*even though the irs is listed as part of the u.s. treasury, the irs is actually a private collection agency of the frb system --- all taxes [collected] are required to be deposited in the nearest twelve frb's

**ref:  sections 10, 15, 19, and 13(3) of the frb system act

Ps.  please note the similarities of section 13 regarding china's "Big Four" --- bank of china/ china construction bank/ industrial and commercial bank of china/ and lastly, the agricultural bank of china

Ps2.  all under the umbrella of "The People's Bank of China [PBOC] --- notice the similarities, or perhaps the mirror image of america's "Federal Reserve Banking System" [FRB'S]

Mon, 01/09/2012 - 15:39 | 2047430 apberusdisvet
apberusdisvet's picture

I hate to admit it but I have to give credit to one of the biggest criminals in  Congressional history, the (dis) honorable former Senator from Connecticut and FOA who got out at a propitious time after seeing the coming implosion (that extend and pretend can only slightly defer) because, of course, he was one of the main architects.

I'm sure Daley, as well, can already feel the noose and smell the tar.

Mon, 01/09/2012 - 15:44 | 2047449 Griffin
Griffin's picture

The Irish will soon vote on changes to the Lisbon treaty, that is why Buiter is sweet talking them.

Buiter is EU blue to the bone, he doesnt give a rats ass about the Irish.

This is just foreplay before EU rapes the irish again, when that happens Buiter will be there, with a boner and a tube of lube.

Mon, 01/09/2012 - 15:45 | 2047452 terryfuckwit
terryfuckwit's picture

good luck to Ireland.. Rural Ireland laughs at Euro ruminations like most of the piigs has a roaring black economy.. plenty fish in the sea and potatoes growing. they make the old illicit white lghtemning to the quality of the best malt whiskies...average house make us and uk houses look like shoeboxes.. Laugh with them, fight with them, trade with them..but whilst you cry for them they are out dancing and laughing at you.....

Mon, 01/09/2012 - 19:17 | 2048012 smiler03
smiler03's picture

Terry, good to see you're living up to your name.

Have a look at this BBC story from 2009. Ireland makes the SECOND SMALLEST houses in Europe after the UK. As for the US, it builds the biggest in the world.

http://news.bbc.co.uk/1/hi/magazine/8201900.stm

Mon, 01/09/2012 - 15:51 | 2047476 SheepDog-One
SheepDog-One's picture

Refinancing your bailout! The new world bubble! Imagine all the swaps that can be traded!

Mon, 01/09/2012 - 18:12 | 2047880 earleflorida
earleflorida's picture

piles of shamrock profits, for sure - oh the horror of so much money growing in those potato fields

Mon, 01/09/2012 - 15:53 | 2047478 Pancho Villa
Pancho Villa's picture

Iceland doing fine after telling the banks to shove it. Ireland should just do an Iceland.

Mon, 01/09/2012 - 15:58 | 2047498 Irish66
Irish66's picture

damn it

Mon, 01/09/2012 - 16:02 | 2047511 peekcrackers
peekcrackers's picture

Irish bailout number 8 .. or 9 .. I lost count at 4ish

Mon, 01/09/2012 - 16:03 | 2047513 Eireann go Brach
Eireann go Brach's picture

May you kick the Troika firmly in their fucking balls (including you too Merkel) with your demands dear Ireland!

Mon, 01/09/2012 - 16:53 | 2047579 Griffin
Griffin's picture

Buiter in Iceland at a Gov/IMF conference in October.

http://silfuregils.eyjan.is/2011/10/

 

Professor Peadar Kirby about Irish politics and Iceland.

http://silfuregils.eyjan.is/2011/11/page/10/

Mon, 01/09/2012 - 17:12 | 2047716 Plumplechook
Plumplechook's picture

The Irish public are suffering the consequences of their politicians outrageous decision to use tax payers money to pay the bankers crazy gambling debts in full and let the public wear the cost via brutal austerity.     The following recent article in the Irish Independent by Gene Kerrigan sums it up brilliantly:

Destroying Ireland to the save the banks so the banks can save the country isn't working writes Gene Kerrigan in the Irish Independent:

We learned conclusively that the Cowen/Lenihan austerity strategy, now being implemented by Kenny/Noonan, doesn't work. This ordains that we have to destroy the country in order to save the banks, so that the banks can save the country. So, under ECB instructions, we've been feeding the bankers tens of billions; and seeking vainly to balance the books by cutting services and asset-stripping the citizens. The insane strategy of deflating an already damaged economy smothered any chance of growth. The economy contracted. Unemployment rose relentlessly.

The argument between austerity (focused on reducing deficits) and stimulus (focused on protecting jobs) has been settled. Over the past four years, austerity has turned a crisis into a catastrophe.

One of the most important lessons we learned in 2011 was this: it doesn't matter that the austerity strategy doesn't work. The Economic War Against Ourselves has the approval of the EU, the ECB, the IMF, Fine Gael, Labour, Fianna Fail and The Irish Times. This makes the strategy unimpeachably respectable and perpetually untouchable, despite its blatant failure.

You may notice that Fine Gael, Labour, Fianna Fail and The Irish Times are precisely those who cheered on the property bubble. You may notice that the EU, the ECB and the IMF benignly observed the insane gambles by German, French, UK and Irish bankers that fuelled that bubble. Among the people who matter, being repeatedly, disastrously wrong has no bad consequences.

People who oppose austerity policies are "politically motivated". The incompetent, overpaid elites who blunder onward are, on the other hand, "realists". With no political thought but peace and goodwill to all.

We learned that Tim Geithner, Barack Obama's top economics guy, vetoed any suggestion that the Irish Government might demand that bank bondholders pay some of their own gambling debts.

Some weeks later, face to face with Obama, Enda Kenny chickened out of raising that matter. Face to face with Geithner, Michael Noonan also chickened out. We learned, in short, that Irish politicians are tough when they're taking money away from blind people.

We learned that democracy is dispensable. At election time, we're told to be grateful for the sacrifices that gave us the ballot. People living under dictators put their lives on the line to achieve the right to vote -- and we rightly honour them.

We learned after last February's General Election that a mandate for change is without value, when the elite collude. Promises of change are without meaning. The right to vote becomes a child's game, a trivialising simulation of democracy.

When democratically elected politicians in Italy and Greece balked at taking instructions from the ECB they were replaced by people who never received a single vote. Their successors (bankers) were chosen by unelected but extremely powerful functionaries within the ECB (bankers).

 

http://www.independent.ie/opinion/columnists/gene-kerrigan/gene-kerrigan-austerity-doesnt-work-no-problem-2966900.html

Mon, 01/09/2012 - 23:26 | 2048842 hairball48
hairball48's picture

I hope the Irish have the balls to just tell the banks to go fuck themselves. Whistle for it.

If they did pull an "Iceland" that would mark "THE END" for the Euro....'cause I think there would be more to follow. The house of Euro cards would come tumbling down.

YeeeeeeHawwwwwwww!!!

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