• Steve H. Hanke
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Here They Come: Ireland Demands Renegotiation Of Its Bailout Terms To Match Spain

Tyler Durden's picture




 

Well that didn't take long. The ink on the #Spailout is not dry yet (well technically there is no ink, because none of the actual details of the Spanish banking system rescue are even remotely known, and likely won't be because when it comes to answering where the money comes from there simply is no answer) and we already have an answer to one of our questions. Recall that mere hours ago we asked: "We also wonder how will Ireland feel knowing that it has to suffer under backbreaking austerity in exchange for Troika generosity, while Spain gets away scott free." We now know. From the AFP: "Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday." And with Ireland on the renegotiation train, next comes Greece. Only with Greece the wheels for a bailout overhaul are already in motion and are called a "vote of Syriza on June 17." And remember how everyone was threatening the Greeks with the 10th circle of hell if they dare to renegotiate the memorandum? Well, Spain just showed that a condition-free bailout is an option. Which means Syriza will get all the votes it needs and then some with promises of a consequence free bailout renegotiation. In other words Syriza's Tsipras should send a bottle of the finest champagne to de Guindos - he just won him the election.

But back to Ireland. From AFP:

"Ireland raised two issues: one is the need to ensure parity of the deal with Spain retroactively on its bailout from EFSF," one European government source told AFP, referring to the temporary rescue fund, the European Financial Stability Facility.

 

Another European government source confirmed the information.

 

Ireland secured an 85-billion-euro ($112 billion) rescue deal from the European Union and the International Monetary Fund in November 2010, but only after agreeing to draconian austerity measures.

 

Unlike Ireland, Spain's economy minister said a deal on financing for the country's troubled banks would not impose any conditions on the wider economy.

 

Dublin plans to raise the issue during the next meeting of eurozone finance ministers to be held June 21, the sources said.

 

Eurozone finance ministers said Saturday they were willing to give Spain up to 100 billion euros to help its troubled banks, which are suffering due to their massive exposure to the ailing property sector.

Congrats Germany: you have now opened the Pandora's box of infinite moral hazard, bailout renegotiations and unconditional rescues. Anything less than a pari passu bailout to Spain's, which the economy minister touted as having no political strings attached, will incite a revolution.

Oh, and the IMF has just been made obsolete.

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Sat, 06/09/2012 - 20:12 | 2511227 Caviar Emptor
Caviar Emptor's picture

You don't need to be concerned about Moral Hazard when competition and supply and demand no longer play a aprt in the conduct of business. Welcome to the post-capitalist utopia!

Sat, 06/09/2012 - 20:52 | 2511306 gwar5
gwar5's picture

Exactly.  My mistake was assuming the bankers were in possession of some morals to have skin in the game to start with. My bad.

Sat, 06/09/2012 - 21:20 | 2511342 LeisureSmith
LeisureSmith's picture

Quick! Scramble the moral hazmat paratroopers.

Sat, 06/09/2012 - 19:43 | 2511170 veyron
veyron's picture

I for one am glad to see this bickering ...

Sun, 06/10/2012 - 03:57 | 2511725 Itch
Itch's picture

Americans like nothing better than to see Europeans fuck it all up, it makes they're fuck-ups seem a lot less severe. Its a perfectly natural response in a geo-Freudian type thingymajig.

Sun, 06/10/2012 - 08:30 | 2511848 Flying Tiger Comics
Flying Tiger Comics's picture

bullish on schadenfreude

Sat, 06/09/2012 - 19:47 | 2511173 Joebloinvestor
Joebloinvestor's picture

Hilarious.

They want to keep their sovereignty, so each is different from the other, but when it is to their advantage, they want equal treatment and they want it retroactive.

Why wouldn't the same apply for interest rates then? 

I always thought a "deal is a deal", good bad, or indifferent.

Sat, 06/09/2012 - 20:21 | 2511244 booboo
booboo's picture

Sooo, you are saying that they are all women.

Sat, 06/09/2012 - 22:47 | 2511468 Ropingdown
Ropingdown's picture

Isn't this a bit harsh?  After all, the saying on Wall Street is that "a contract is just an opportunity to renegotiate."  Happens all the time.  Military contracting?  Same thing, demanding elaborate respecifications urged into action by your favorite politicians.  If your power has increased enough since the contract signing, figure out how to put a psuedo-legitimate face on your new demands for PR, then go for it.  I don't like it, but that is and long has been the way of the world here and everywhere else.

Sun, 06/10/2012 - 12:22 | 2512177 Joebloinvestor
Joebloinvestor's picture

Contracts are renegotiated all the time, but in doing this, the EU problem is never gonna get fixed.

Why not renegotiate debt on a daily basis?

That ought to be good for a few permante govt jobs.

With the added benefit of being able to kick the can daily.

Sat, 06/09/2012 - 19:48 | 2511175 gun4A
gun4A's picture

SHORT EUR TOMORROW BIG TIME!

Sat, 06/09/2012 - 20:31 | 2511268 Matt
Matt's picture

Are you certain this isn't somehow bullish for the Euro?

I mean, down is up, short is long, everything you know is wrong these days.

Sat, 06/09/2012 - 20:58 | 2511318 machineh
machineh's picture

Short the euro, with a record short position already on?

Go ahead, jump to the crowded side of the boat, and tip the sucker over.

This is why I closed a short silver position on Friday ...

EURO POP --> DOLLAR WEAKNESS --> PM STRENGTH

Sat, 06/09/2012 - 22:15 | 2511421 Calmyourself
Calmyourself's picture

Why the hell short the euro?  Tomorrow all the traders across the world come to their senses and realize this, this is the day they understand the whole damn thing is broken?   Their livelyhoods are over a huge monetary reset is coming and they are finished, yeah short the euro..   Until people get hungry, short virtually nothing..

Sun, 06/10/2012 - 01:38 | 2511636 xtop23
xtop23's picture

Long EUR / Short USD / long PM's Monday morning.

Let the market digest the bounce and the fact that nothing has changed, then go the other way. 

Sat, 06/09/2012 - 19:49 | 2511177 world_debt_slave
world_debt_slave's picture

what's good for frick, is good for frack

Sat, 06/09/2012 - 20:15 | 2511183 LouisDega
LouisDega's picture

What bailout. Theres a bailout going on?  Whats a Bailout?

Sat, 06/09/2012 - 19:53 | 2511185 RobotTrader
RobotTrader's picture

Bottom line is that TPTB will do what it takes to avoid a meltdown.

 

Lehman from 2008 seems like yesterday.

"It Won't Happen Here" says Ben.

I'm sure all the ECB, BoJ, Fed, and Bank of China officials are all keenly aware of the risk of letting things get too far out of control.

Therefore, it is a "dead lock cinch" that just when things seem to be teetering, TPTB will always come to the rescue.

Sat, 06/09/2012 - 20:00 | 2511199 canardo
canardo's picture

until they don't

Sat, 06/09/2012 - 20:46 | 2511292 Sabibaby
Sabibaby's picture

or can't.... The medicine with unintended consequences...

Sat, 06/09/2012 - 20:01 | 2511200 junkyardjack
junkyardjack's picture

The question to ask is if you were one of the winners in today's society, would you do everything that you could to maintain your status or would you allow society to collapse and hope that you are able to figure out a way to prosper in the new form?  The current financial system will continue until citizens do what is necessary to create change and the truth is that society isn't in such dire conditions that people will be willing to do anything about it for a long period of time.

http://www.youtube.com/watch?v=buDSm2ckn50

Sat, 06/09/2012 - 22:19 | 2511432 Calmyourself
Calmyourself's picture

Until their is hunger, real hunger nothing changes everything depends, everything on keeping the status quo and they have the printing presses..  No law, contract, CDS, derivative nothing changes until people get extremely motivated by hunger.  If they can contain that nothing wil l  ever change just the slow eventual grind into the prison planet some of us suspect.

Sat, 06/09/2012 - 20:07 | 2511216 PC Load Letter
PC Load Letter's picture

There is bailout fatigue around the world. Eventually they will allow someone to fail

Sat, 06/09/2012 - 20:13 | 2511232 Caviar Emptor
Caviar Emptor's picture

Never. Why kill the golden goose? They can ride that gravy train forever

Sat, 06/09/2012 - 20:40 | 2511240 algol_dog
algol_dog's picture

You can be sure the FED is tied into this by the balls, likely through some back-ass doorway.

Sun, 06/10/2012 - 08:47 | 2511234 francis_sawyer
francis_sawyer's picture

Rescue... RESCUE...???

Yeah ~ Thank God I have a printing press so I can keep RobotTrader feeling safe & happy with his lululemon longs...

~~~

Is this world pathetic, or what?...

Sat, 06/09/2012 - 20:32 | 2511273 whoflungdung
whoflungdung's picture

You don't mean"Dead Cock Lynch" now, do you??

Sat, 06/09/2012 - 20:36 | 2511282 LeBalance
LeBalance's picture

super durrrrr....

lou sir......

describe the "way" to avoid a meltdown in con-fidence at this point, RoBoT.

my my my greece, and ireland, and spain.  All their bailouts are free and unconditional.

its all free.

no cost for free paper.

no conditions.

 

how  long do those circumstances last?

not unto the biz week!

not one second into the overnight on Sunday.

 

it is over.

Sat, 06/09/2012 - 19:55 | 2511189 junkyardjack
Sat, 06/09/2012 - 19:57 | 2511191 srelf
srelf's picture

Erin Go Bragh!

 

Sun, 06/10/2012 - 03:33 | 2511711 piliage
piliage's picture

Perhaps this week, Erin go Bratwurst?

Sat, 06/09/2012 - 19:58 | 2511194 canardo
canardo's picture

Man, this is going to be good. The tangled web is getting ever more tangled.

Sat, 06/09/2012 - 20:00 | 2511196 monopoly
monopoly's picture

This is great, Ireland gets what is fair, since that is what Spain has negotiated. Greece gets to spend again witha spanking new Govt. Spain probably needs 400 Billion not 100 and Italy in the background is already figuring out how they too will benefit from the generosity of the German people.

I never new Germans were so free with their marks, eh, Euros. They used to be a very fastidious people. How times have changed and how generous.

And of course since we are on the hook for about 17%, we can just withdraw the money out of one of our savings accounts. Oh wait, we don't have any savings. Ok, Ctl:P. There, done.

Sat, 06/09/2012 - 20:35 | 2511278 Matt
Matt's picture

The best thing for the Germans to do would be to give them what they want, that is to let the ECB just directly monetize bank debts all over the Eurozone, and to let everyone else live through Weimar Act II. 

Until they experience this for themselves, no one else will have the fear of hyperinflation.

Why make yourself liable with bonds, when you can just let them print? Just defect first and start buying gold quietly but quickly.

Sat, 06/09/2012 - 22:24 | 2511436 Calmyourself
Calmyourself's picture

The Germans are fastidious alright, the worlds best conditioned pavlovian dogs, fer cripes sakes the men piss sitting in order to maintain their PC credentials..  If you are counting on Germans to do much except except save all the loungers at three AM and loll around pools in the Caribbean getting shitfaced your counting on the wrong folks to fix this.  Most emasculated "men" on the planet.

Sun, 06/10/2012 - 20:49 | 2513089 monad
Sun, 06/10/2012 - 21:56 | 2513164 Calmyourself
Calmyourself's picture

Oh yeah, decadent too..

Sat, 06/09/2012 - 20:02 | 2511203 VonManstein
VonManstein's picture

completley fucked !

im leaving the UK next year get some mining action down under

Sat, 06/09/2012 - 21:02 | 2511321 machineh
machineh's picture

Too late -- China's crashing and will take Australia down with it.

Move to Spain and buy in at the bottom!

Blood in da streets, mate!

Sat, 06/09/2012 - 20:02 | 2511205 Poor Grogman
Poor Grogman's picture

Socialism at it's finest moment...

Sat, 06/09/2012 - 20:03 | 2511206 Caviar Emptor
Caviar Emptor's picture

It's the Bailout Fiesta Bowl! 

Welcome to the after-party!

"Who let the banks out?" 

 

Sat, 06/09/2012 - 20:05 | 2511209 M.B. Drapier
M.B. Drapier's picture

We also wonder how will Ireland feel knowing that it has to suffer under backbreaking austerity in exchange for Troika generosity, while Spain gets away scott free.

Huh? How did Spain get away at all? It didn't get grants; it didn't get a bailout directly to the banks; Spanish taxpayers are on the hook for the losses at Spanish - and so, indirectly, German - banks. The core won again with its (accidental) vendor-finance scam - make bad loans to private-sector peripheral banks, make the peripheral taxpayer pay to cover the losses. The only difference is that this loan doesn't come attached to IMF-style structural-reform requirements - which may not exactly be a good thing for Spain - and Spain gets to avoid being formally in external assistance - which is a political figleaf.

Sat, 06/09/2012 - 22:39 | 2511459 Ropingdown
Ropingdown's picture

Yes, but they're giving Spain the chance to fix its banking system without specific austerity orders for how to achieve national solvency.  The Irish? Not so much.  Why?  I suppose the Troika believed the Irish couldn't meet the original bailout terms but the Troika knew it was only buying time until it could be sure that the Irish loans were the only large ones upon which the German banks would take a total loss. The continent is what matters, not the islands and disjoint bits on the Aegean, perhaps.

Sat, 06/09/2012 - 20:06 | 2511215 dcb
dcb's picture

if anyone wants to make a bet on where udn is going I;m saying about 27.10

Sat, 06/09/2012 - 20:07 | 2511219 proLiberty
proLiberty's picture

Fiat money is embezzelment of wealth by dilution similar to when a bartender waters down the booze.

 

Sat, 06/09/2012 - 20:20 | 2511242 lakeside
lakeside's picture

Or, when you tell her "honey I pulled it out before I leaked, I promise" , or, "don't worry you don't have to swallow, I'll let you know.". This is becoming an orgy of maniacal proportion, don't you love it?

Sat, 06/09/2012 - 20:10 | 2511223 Caviar Emptor
Caviar Emptor's picture

Right on schedule. We are now fully de-sensitized to bank and sovereign bailouts. When it TARP and Greece we were all horrified. The banksters and politicians had to pretend to be in pain over the decision. 

Hehe

Now we won't even think much of it and soon, we won't even want to be bothered with being notified. Might interfere with something new or important. Or maybe news on the kardashians.

Bailouts are no longer a deviation from the program. It's the rate of re-bailout that now will seem different (Ireland, i'm looking your way). But hey, that'll pass too. 

Sat, 06/09/2012 - 20:30 | 2511265 Poor Grogman
Poor Grogman's picture

Faster and faster the bailouts come

Then inflation will start to run.

In the end it will all be clear.

That FIAT MONEY is to fear....

Sat, 06/09/2012 - 22:30 | 2511442 Ropingdown
Ropingdown's picture

Liked your rhyme don't like fiat but people forget

Fiat's only to trade real things so you'll have no regret.

Holding land, art, and gold and more cash than you've debt

Lets you sleep well at night sure your cash calls get met.

Sat, 06/09/2012 - 20:11 | 2511225 Conman
Conman's picture

Hey Greeks here's your chance to renegotiate as well. Tell your little bro Malta to come to the party too.

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