SIR –The Economist persists in referring to the European Union-IMF loan facility extended to Ireland late last year as a bail-out (“Muddle, fuddle, toil and trouble”, March 19th). Rather, it is a loan that enables Ireland to repay maturing high risk and high yield bonds in Irish banks, bought when those banks were engaged in idiotic lending. These were purchased by many careless European pension funds and banks. Those debts were then assumed by the Irish taxpayer as a result of a monumentally stupid bank-guarantee scheme introduced by the Irish government in late 2008.
If this represents a bail-out, it is Irish taxpayers bailing out German pensioners.
Eoin O’Malley
School of law and government
Dublin City University
Originally posted by FMF A letter in last week's The Economist:
SIR –The Economist persists in referring to the European Union-IMF loan facility extended to Ireland late last year as a bail-out (“Muddle, fuddle, toil and trouble”, March 19th). Rather, it is a loan that enables Ireland to repay maturing high risk and high yield bonds in Irish banks, bought when those banks were engage ...[text shortened]... g out German pensioners.
Eoin O’Malley
School of law and government
Dublin City University
German pensioners can bail themselves out, with lots of Jewish gold teeth, paintings, crucifi, etc... as well as collectables, properties and from what I won't name but further.
Oh! They were all found and allocated to the correct non-existent families? 😲
Interesting article, but not the whole story. People want to have the cake and eat it too. "Market forces" are what allowed Portugal to be able to finance government expenditure at very low interest rates and so it actually gave Portuguese governments more options that they had before. The problem is that this doesn't mean that debt can be piled on until eternity. And many other European countries are also in a situation where they are at the mercy of market expectations and will have serious problems if they change.
I honestly don't think the so called "bail-out" will solve anything for the countries involved. Seems to me the only purpose is to slowly shift ownership of the debt away from the (mostly German, British and French) banks before the inevitable default. We just can't reduce the debt/GDP ratio if we are still paying the type of interest rates that are being bandied about. Same for Greece and Ireland. So what's needed is a partial default...and it would be better for the countries involved to do it as soon as possible.
07 Apr '11 12:22
@Palynka
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