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Unsuccessful Irish Referendum Would Prevent A Future ESM-Funded Bailout

Tyler Durden's picture




 

While the now scheduled Irish referendum on the fiscal treaty, which will likely not pass successfully absent major concessions on behalf of Europe, will not precipitate a failure of the recently agree upon compact, as 12 out of the 17 contracting parties need to support the Eurozone, it will have an impact in that it would impact future bailouts of Ireland courtesy of preset European bailout mechanisms. In other words, should things take a turn for the worse, and they will, in the near future, Ireland will have to rely on itself to save itself. As a reminder, it took Europe 2 years to (supposedly) firewall itself from default and a collapse of its banks. How long will the same take for Ireland, because while the country may be standalone, its banks most certainly will not be. Remember that money is fungible. So are massive unrecognized Mark to Market losses. Morgan Stanley explains.

The Irish Prime Minister Enda Kenny just announced that his country will hold a referendum on the fiscal compact that 25 EU member states had agreed on last month. This decision was taken after the Prime Minister had sought advice from his state's lawyer on whether a vote was necessary. The arrangements for the referendum will be finalized in the coming weeks.

 

For the fiscal compact, the intergovernmental treaty between the member states on fiscal discipline, to come into force however, the Irish signature is unlikely to be a deal breaker, since the support of 12 contracting parties from the euro area will be sufficient. The Irish referendum will be another crucial risk event to follow, especially since an approval of the fiscal compact is one of the conditions to receive new aid from the ESM (which enters into force in July 2012), should Ireland require an additional programmme in the future.

 

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Tue, 02/28/2012 - 12:42 | 2204262 AC_Doctor
AC_Doctor's picture

Leprechauns, gnomes and fairies all agree.

Tue, 02/28/2012 - 12:41 | 2204263 alien-IQ
alien-IQ's picture

Now we can begin the cycle of Ireland based rumors to take the /ES to 1500 and beyond.

because they roll like dat...

Wed, 02/29/2012 - 00:26 | 2206900 Fedophile
Fedophile's picture

roll'n like trillions of fresh bills, bitches

Tue, 02/28/2012 - 12:42 | 2204267 JPM Hater001
JPM Hater001's picture

Every been to Ireland?  Nicest people ever.  Solid drinkers.

Don't fuck with them.

Tue, 02/28/2012 - 12:48 | 2204299 Cassandra Syndrome
Cassandra Syndrome's picture

Thanks. But a lot of them are easily deceived into fearing a no vote would cause armageddon, thanks to the sycophantic mainstream media. We need international support for the No campaign this time. I have a feeling this could happen this time around.

Tue, 02/28/2012 - 13:05 | 2204317 thedrickster
thedrickster's picture

Didn't the first three votes culminate in "No"? Fourth time was a charm?

Round up the nayerdoewells that pushed Lisbon over the line and send them packing back to the City and the non-country known as Belgium. All kidding aside, I completely agree Ireland should be made the front lines in an international battle against Euro flavor neo-feudalism.

Tue, 02/28/2012 - 12:42 | 2204268 mayhem_korner
mayhem_korner's picture

 

 

Green clovers, blue diamonds, yellow moons....

...and candy-apple red mark-to-markets.

Tue, 02/28/2012 - 12:44 | 2204274 kaiten
kaiten's picture

I´ll sign it, if I get a bailout, no problem.

Tue, 02/28/2012 - 12:43 | 2204277 spanish inquisition
spanish inquisition's picture

To promote goodwill, the ECB is donating Diebold voting machines in time for the referendum.

Tue, 02/28/2012 - 13:31 | 2204468 Lord Welligton
Lord Welligton's picture

They tried to introduce electronic voting.

But the Commission set up to investigate it found that without a paper trail the results would be unreliable.

Tue, 02/28/2012 - 14:05 | 2204579 thedrickster
thedrickster's picture

A paper trail, how quaint.

Tue, 02/28/2012 - 18:20 | 2205901 spanish inquisition
spanish inquisition's picture

Gonna have to do it the old Chicago way. "Bring out your dead!"

Tue, 02/28/2012 - 12:50 | 2204286 thedrickster
thedrickster's picture

Time for Ireland to follow their Icelandic cousins and tell the Euro bitchez where to stick it.

Escape British rule only to be ruled from Belgium, ridiculous methinks.

Tue, 02/28/2012 - 12:52 | 2204310 hedgeless_horseman
hedgeless_horseman's picture

 

 

Ireland has become England's kitchen garden and weekend get-a-way.  The remaining Irish seem to be more than happy to live a life of debt slavery working as golf caddies and waiters.

Tue, 02/28/2012 - 12:57 | 2204340 thedrickster
thedrickster's picture

With the labor market overrun by eastern euro-bitchez, what the hell else are they supposed to do?

Tue, 02/28/2012 - 13:00 | 2204353 hedgeless_horseman
hedgeless_horseman's picture

 

 

Lose the Euro, and gain independence.

Tue, 02/28/2012 - 13:01 | 2204362 thedrickster
thedrickster's picture

Of course.

Tue, 02/28/2012 - 13:32 | 2204471 Lord Welligton
Lord Welligton's picture

You have some kind of evidence for this?

Tue, 02/28/2012 - 12:51 | 2204313 radicall
radicall's picture

At least Spain is sticking to the Fiscal Compact and reaping the benefits.

Tue, 02/28/2012 - 12:52 | 2204322 Dr. Engali
Dr. Engali's picture

So now that Greece has defaulted do we move on to talking about Ireland for two years ? I'm fine with whatever happens as long as they don't fuck with the Guinness.

Tue, 02/28/2012 - 12:52 | 2204325 jmcadg
jmcadg's picture

UK will backstop Ireland. Regardless of the past, we are one. Give the EU the finger and let's get it on.

Tue, 02/28/2012 - 12:57 | 2204336 carbonmutant
carbonmutant's picture

"An opinion poll in January by the Sunday Business Post with the Red C polling agency found that 40 percent of voters would vote in favour of the treaty, 36 percent would be against and 24 percent were undecided."

Since Irish authorities have not yet set a date for the referendum many things are possible esp. with 24% undecided...

Tue, 02/28/2012 - 12:57 | 2204338 SmoothCoolSmoke
SmoothCoolSmoke's picture

Just another "vote" that the Banksters find a way to fix. 

Tue, 02/28/2012 - 13:05 | 2204377 THE DORK OF CORK
THE DORK OF CORK's picture

If I had to bet on this one  -  me thinks we are going back into the Sterling Zone.

Tue, 02/28/2012 - 13:14 | 2204411 thedrickster
thedrickster's picture

Timing might be unfortunately conducive to reviving the Deutsche Mark peg....Punt the DM.

Tue, 02/28/2012 - 22:45 | 2206613 Bobbyrib
Bobbyrib's picture

Luckily you don't have to bet. Unfortunately, your government will most likely vote to allow the continual raping of the less financially secure countries (itself included) in the EU.

Tue, 02/28/2012 - 13:09 | 2204393 thedrickster
thedrickster's picture

Oops.

"Last week, Germany's minister for European Affairs Michael Link confirmed that European Union negotiators sought to design the fiscal compact in such a way to avoid a referendum in Ireland."

http://www.irishtimes.com/newspaper/breaking/2012/0228/breaking41.html

Tue, 02/28/2012 - 22:50 | 2206628 Bobbyrib
Bobbyrib's picture

I guess the Nazi's won't be using guns this time..

Tue, 02/28/2012 - 13:24 | 2204422 boiltherich
boiltherich's picture

Fall in house prices accelerating

The average price of a house in Dublin fell by a dramatic 4 per cent in the last month of last year, while prices across the State have continued their precipitious decline, according to the latest official figures from the Central Statistics Office (CSO).

http://www.irishtimes.com/newspaper/breaking/2012/0228/breaking24.html

Retail sales fall 3.7% in January

The standard rate of VAT increased from 21 per cent to 23 per cent on January 1st, following changes announced in December's budget. As well as applying to a range of consumer goods, such as adult clothing and footwear, jewellery, cosmetics and households goods and furnishings, it also affects fees and services such as mobile phone and legal and accountancy services.

http://www.irishtimes.com/newspaper/breaking/2012/0228/breaking13.html

Over 133,000 pay household charge

Some 133,365 properties had been registered by yesterday evening, raising a total of €13.3 million. The Government expects to raise about €160 million from the charge this year but has already pledged to replace it with a property tax.

http://www.irishtimes.com/newspaper/breaking/2012/0228/breaking21.html

(NOTE:  In Ireland there is no annual property tax, instead you pay a one time stamp duty on house purchases of 7% like a sales tax up front but then never owe the government for your housing again, the 100 euro fee was imposed as an extra tax to support the bailout mechanism and is so unpopular something like 90% of households are refusing to pay it, next year the government is going to start charging an annual property tax comparable to most US households in the range of 1% of house value)

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There just is no good economic news coming out of Ireland these days, kids are graduating school with pretty much no job prospects, and they see the return of the bad old days when there were only two ways to get out of the parents house, become a priest or decamp to America.  And America no longer has the welcome mat out for immigrants unless they are willing to work for sub minimum wages. 

I would hope the referendum would fail as overwhelmingly as the Fianna Fail party did in the last general elections when after 60 years of near uninterrupted rule in both legislative and executive branches they were tossed to the point they lost 51 of their 77 seats in the Dail. 

It is not clear if a win or a loss would make any difference though, since the compact only needs a majority of members to be functional.

Ireland would be far better off reintroducing the pound and tying it to the dollar at least for a few years since a great deal of their trade is with the USA, and of course US tourism is vital and it has been gutted by the high euro.  A dollar pegged Irish pound would be a de facto devaluation which would give them breathing room they need so badly, it would restore tourism, and it would encourage job growth by US companies. 

I plan to vote against the compact, though I have never gotten my ballot in the past, this time I plan to sit in at the embassy in SF till I get my say.

Tue, 02/28/2012 - 13:25 | 2204448 hedgeless_horseman
hedgeless_horseman's picture

 

 

Ireland would be far better off reintroducing the pound and tying it to the dollar at least for a few years since a great deal of their trade is with the USA, and of course US tourism is vital and it has been gutted by the high euro. A dollar pegged Irish pound would be a de facto devaluation which would give them breathing room they need so badly, it would restore tourism, and it would encourage job growth by US companies.

AMEN!  And leave the EU, too!

Tue, 02/28/2012 - 13:41 | 2204499 Ribeye
Ribeye's picture

But the TV people said that if we vote NO the cows will spontaniously explode and we will all lose our inate abilty to be nice to tourists, 

 

And the TV people are never wrong!

Tue, 02/28/2012 - 14:01 | 2204561 thedrickster
thedrickster's picture

You forgot to mutter something about racism.

Tue, 02/28/2012 - 14:00 | 2204558 lolmao500
lolmao500's picture

Ireland needs to do it! DO A REFERENDUM AND LET IT FAIL!

Thu, 03/01/2012 - 22:22 | 2215475 cnhedge
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