# Will Ireland default on its debt?



## Purple (19 Jan 2009)

Taking into account the collapse in our banking sector, our S&P rating and our shrinking economy (only Latvia will do worse this year), how safe is our sovereign debt (how far away are we from defaulting)?
If we nationalise AIB and BOI will that be the tipping point?


----------



## bogle (19 Jan 2009)

No


----------



## Sunny (19 Jan 2009)

We are a long long way from even approaching that scenario. The Government would do everything in its power to avoid it like they in the 1980's. The ECB and the European Union would also step in well before that as they couldn't allow a member of the Euro default as it would severely damage the credibility of the currency.

Spain lost its AAA rating this morning so we are not alone!


----------



## Purple (19 Jan 2009)

Sunny said:


> We are a long long way from even approaching that scenario. The Government would do everything in its power to avoid it like they in the 1980's. The ECB and the European Union would also step in well before that as they couldn't allow a member of the Euro default as it would severely damage the credibility of the currency.
> 
> Spain lost its AAA rating this morning so we are not alone!



Do you think the ECB will honour our (very unpopular) promise to underwrite our banks if they collapse and the state guarantees that we are in no position to honour are called in?


----------



## lemur (20 Jan 2009)

The gubbermint does not have the funds - not even close -to bail out the big banks. I dont want to be alarmist here but one big bank going under would probably cause a chain reaction with the other banks pulling them down. 

Who knows how the ECB would respond but I would expect it to try and save the euro as a priority. The different scenarios and how they would play out are anybody's guess.


----------



## marshmallow (20 Jan 2009)

Lots of very scary scenarios to think about, but if all does collapse is there a chance we might be asked to leave the Euro (or just kicked out). If so are we facing an Argentinian style crisis? Things certainly seem v bleak at the moment.


----------



## darag (20 Jan 2009)

If the government were to default on anything they should "default" on the bank liability guarantee.  The deficit problem, while very serious, can be tackled over time and the borrowing strain it creates is continuous but relatively gradual compared to the economic explosion which would occur if the ticking financial bomb the government are holding (the bank guarantee) ever goes off.  

Even this default 'though would be an absolute disaster for the country.


----------



## sfag (20 Jan 2009)

If the Government ends with a debt of 100 billion due to bad debts defaults on all the banks would than not bankrupt the country? - if not how much would it take?. Remember the debt will grow each years they have done nothibng yet to curb spending.


----------



## Purple (20 Jan 2009)

sfag said:


> If the Government ends with a debt of 100 billion due to bad debts defaults on all the banks would than not bankrupt the country? - if not how much would it take?. Remember the debt will grow each years they have done nothibng yet to curb spending.



The government couldn't raise that sort of money.


----------



## Spondulicks (23 Jan 2009)

No- we will surrender our brightest and best ie the bankers, to work for the lenders for the market value of their labour. Our remuneration committees clearly believe they are worth a lot.


----------



## FAUGH45568 (3 Dec 2009)

Bump..............

Dubai pebble in the Ocean should be a warning that all is not what it seems at the moment..


----------



## bigspender (7 Dec 2009)

Purple said:


> Taking into account the collapse in our banking sector, our S&P rating and our shrinking economy (only Latvia will do worse this year), how safe is our sovereign debt (how far away are we from defaulting)?
> If we nationalise AIB and BOI will that be the tipping point?



The last time we were in this much trouble (ie 1987), no one saw the unprecedent growth of the next 20 years. We've climbed out of this before, we can do so again.


----------

