As Expected, Ireland Is First To Demand Debt Relief In Greek Bailout Aftermath

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When we commented on the October 26 European "EFSF Bailout" which has since been long forgotten, the one take home message from the embedded 50% cut in Greece debt is that "this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece." This was followed up by a post that half confirmed or thesis: "Bloomberg notes that Ireland has not even waited for the ink to be dry before sending out feelers on just what the possible "rewards" may be: "Greece’s failure to cut spending and boost revenue by enough to meet targets set by the European Union and International Monetary Fund prompted bondholders to accept a 50 percent loss on its debt. While Ireland won’t seek debt discounts, the government might pursue other relief given to Greece, including cheaper interest payments on aid and longer to repay it, according to a person familiar with the matter who declined to be identified as no final decision has been taken." There is one very important addition here: "While Ireland won't seek debt discounts" yet." A month later, the "yet" is "now."

As Telegraph's Ambrose Evans Pritchard reports, "The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues. "We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan. "We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks." In other words, (s)quid (after all who can forget Goldman International Chairman Peter Sutherland's role in the Irish bank bail out) pro quo, Clarice. Oh, and lest anyone think that the debt relief demands ends here, don't be silly: Italy is coming. Very soon.

From The Telegraph:

Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters.

 

Mr Noonan said Ireland's public mood has turned very sour.

 

"We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said.

 

The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum.

 

The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case.

Ah, there's that phrase again.

Ireland took on the bulk of the debt from its oversized banking system in 2008, resisting a chorus of calls for the country to follow Iceland's example and walk away from private bank liabilities. Had Ireland done so, it might have set off a catastrophic chain reaction across Britain and Europe.

 

The fateful move has saddled the taxpayers with colossal losses from Anglo Irish and other banks, and will push public debt to near 118pc of GDP by 2014. There is a widespread resentment in Ireland that taxpayers were sacrificed for the greater cause of Europe without receiving any acknowledgement from the EU's creditor states.

And so forth. Yet who can blame the Irish people - it is perfectly in their right to demand bank impairments. We wish them luck. We also urge them to promptly depose of the GS International Chairman as cleanly and efficiently as possible. Because in the meantime who has already benefitted? Artist's rendering below.