# 6.7% for 9 years.



## Draigean (26 Nov 2010)

Last week it was being said that for Ireland to pay back the IMF at a rate of 5% would cripple the country.
Now it transpires that the rate is 6.7%, for 9 years.
Election, anyone?


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## Draigean (26 Nov 2010)

Time to increase that 12.5% corporation tax.  It's as hackneyed a Fianna Fail mantra as Lehmann Brothers.


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## Marietta (26 Nov 2010)

that is dreadful news, how on earth did they negotiate that price. i just dont know what to say.


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## pudds (26 Nov 2010)

Draigean said:


> Time to increase that 12.5% corporation tax.  It's as hackneyed a Fianna Fail mantra as Lehmann Brothers.



Do that and the multi nationals will start looking elsewhere......we have to default now....there is no other option and burn the senior bond holders...they gambled...why should we pay....lots of us never saw a tiger at all.


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## Draigean (26 Nov 2010)

pudds said:


> Do that and the multi nationals will start looking elsewhere......we have to default now....there is no other option and burn the senior bond holders...they gambled...why should we pay....lots of us never saw a tiger at all.



Not if we negotiate with them.  We don't have to raise it to 35%.  Some will leave, be we are over-dependent on FDI anyway.

Checkout Politics dot ie


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## pudds (26 Nov 2010)

Marietta said:


> what will happen if ireland defaults?




think that is more or less covered here.  Couldn't be worse than what we have now imho. 

http://www.askaboutmoney.com/showthread.php?t=143357&highlight=What+if+ireland+defaults


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## bpb52 (26 Nov 2010)

An increase in corporation tax would move jobs out of the Country. We should decrease and bring in jobs. 

I guess EU would object.

A structured default for banks has to be a serious option.

Otherwise we sink. 

Bondmarkets wont lend, so IMF/EU in driving seat. 

I thought 5% was bad, but 6.7 % is severe.


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## Marietta (26 Nov 2010)

i dont get the answer to my question, the IMF are already here so if ireland defaults now, what can they do?


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## pudds (26 Nov 2010)

> Unbelievable - we should have sent Gogartys daughter in to negotiate!!!!


 


ah yes ya can't beat the charm of the oirish...arn't we just *full* of it. Now who's laughing.


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## pugwall (26 Nov 2010)

I think the government leaked this rate to get the conversation out there. A lower rate circa 5% will probably be announced later next week.


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## pudds (26 Nov 2010)

pugwall said:


> I think the government leaked this rate to get the conversation out there. A lower rate circa 5% will probably be announced later next week.




the oul softening up approach again... jebus they can't keep playing that card anymore...the situation is too serious and do they still think were all brain dead out here in reality land.


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## onekeano (26 Nov 2010)

pugwall said:


> I think the government leaked this rate to get the conversation out there. A lower rate circa 5% will probably be announced later next week.



I hope you are right and I also hope that rather than being c. 105% of the capital it's a lot closer to the 50% haircut that I referred to above given that the whole € experiment comes down with us if we fall 

Roy

This post will be deleted if not edited immediately - just had a thought, the Shinners are begining to sound plausible at this stage :-(


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## Westie123 (26 Nov 2010)

onekeano said:


> This post will be deleted if not edited immediately - just had a thought, the Shinners are begining to sound plausible at this stage :-(



I never thought I would be thinking the same. At this stage I will vote for anyone who is willng to tell these financial rapists where to shove their bonds (hopefully where there is little or no sunshine!)


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## pudds (26 Nov 2010)

onekeano said:


> +1 and may the FFers rot in hell for pushing us towards the arms of the Shinners who still have a strong whiff of sulphur about them!
> 
> Roy



too true.....this is the best window of opportunity opening up to them against all the odds.......just hope they keep it to politics and not violent protests, god knows we don't need all that kinda stuff again.


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## Time (26 Nov 2010)

Words fail me. There are loan sharks with cheaper rates.


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## Smart_Saver (27 Nov 2010)

Don't forget if we default we have to live without any bailout, our banking system would callapse overnight - all major companies would get screwed.

(How much do Tesco/Dunnnes/Rhattigans/Microsoft/Elan/etc...etc ... across all industries have on deposit in the current banking system to pay their day to day runnings ???) 
If we default and banks go under how can we run the country ??

Also we're currently bringing in a budget to cut 7 Bill - how about cutting 20 Bill overnight ?? where would that put us ?? How many more would end up on the Dole straight away ? How many mortgage holders would go under because the taxes and payments would then be absurd ?

The bank guarantee lasts until end June 2011. We can't really default until then. The question is how to keep the country running in the short term until then and restructure the banks so that there is a sytem in place that can withstand any/all possible consequences.


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## priscilla (27 Nov 2010)

Reuters are carrying the same 6.7% as RTE, it's not looking good.


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## bluemac (27 Nov 2010)

dont know about you but i would never borrow money above 5.5% personally, and never have!!...  this is not a bail out..  we have no option now but to burn the bond holders.. and so we should.. the rate should be 2-3% same rate as the UK is able to borrow at. and the ECB should take control of our banks 100% we have shown we are not able to do anything with them... now that would be help and that would sort things out.


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## Chris (27 Nov 2010)

pudds said:


> Do that and the multi nationals will start looking elsewhere......we have to default now....there is no other option and burn the senior bond holders...they gambled...why should we pay....lots of us never saw a tiger at all.


I agree, default is the only option. At a debt level of close to €200bn by 2014, 6.7% will be €13bn per annum in interest. If you heard someone tell you that they spend 33% of their income on an interest only mortgage you'd tell them they're mad. This type of excessive amount of debt is exactly what caused this crisis, going deeper into the doodoo will only make things worse. When you're in a hole stop digging!



GoMayoGo said:


> Don't forget if we default we have to live without any bailout, our banking system would callapse overnight - all major companies would get screwed.


Why would banking collapse? Did this happen in Russia or Argentina when they defaulted? Banks can be wound down and sold off in an orderly fashion. They are not even zombie banks anymore, they are corpse banks, and the sooner they are privately taken over the better.



GoMayoGo said:


> (How much do Tesco/Dunnnes/Rhattigans/Microsoft/Elan/etc...etc ... across all industries have on deposit in the current banking system to pay their day to day runnings ???)
> If we default and banks go under how can we run the country ??
> 
> Also we're currently bringing in a budget to cut 7 Bill - how about cutting 20 Bill overnight ?? where would that put us ?? How many more would end up on the Dole straight away ? How many mortgage holders would go under because the taxes and payments would then be absurd ?


Increased taxation does not equal a budget cut. Ireland would recover in a very short period of time if it defaulted similar to Argentina, who eventually paid 30 cent on the dollar, and the budget was cut, as in actual less spending, by 50%. Gasp, surely that is impossible and would throw us into the stone age? Absolutely not. Very few people ever talk about the the US depression of 1920. When president Harding entered office in 1921 he cut the federal budget by 50% over two years and decreased taxation. By the end of 1922 the economy was not only recovering but booming. 



GoMayoGo said:


> The bank guarantee lasts until end June 2011. We can't really default until then. The question is how to keep the country running in the short term until then and restructure the banks so that there is a sytem in place that can withstand any/all possible consequences.


Of course Ireland can default before then. And there is a perfectly workable system in existence to deal with the banks and bond holders, it's called the profit and loss system.
The guarantee is absolutely worthless as it could never ever be enacted. Freeze all interest payments on bonds, call all bond holders to the table and aim for 30 cents on the euro or less.


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## Smart_Saver (27 Nov 2010)

Chris said:


> Why would banking collapse? Did this happen in Russia or Argentina when they defaulted? Banks can be wound down and sold off in an orderly fashion. They are not even zombie banks anymore, they are corpse banks, and the sooner they are privately taken over the better.


 
I believe banks would collapse becasue it would introduce an automatic run on deposits and banks would be forced to close doors. Also major depositors like these large companies would lose out big time. 



Chris said:


> Increased taxation does not equal a budget cut. Ireland would recover in a very short period of time if it defaulted similar to Argentina, who eventually paid 30 cent on the dollar, and the budget was cut, as in actual less spending, by 50%. Gasp, surely that is impossible and would throw us into the stone age? Absolutely not. Very few people ever talk about the the US depression of 1920. When president Harding entered office in 1921 he cut the federal budget by 50% over two years and decreased taxation. By the end of 1922 the economy was not only recovering but booming.


 
Did you live in Argentina after this happened or back in US in 1922 ? You're talking about the same principles in a totally different era. By the way can you follow on from that on US - why did it boom again ?? - and then go BUST massively again in the 30s ??



Chris said:


> Of course Ireland can default before then. And there is a perfectly workable system in existence to deal with the banks and bond holders, it's called the profit and loss system.
> The guarantee is absolutely worthless as it could never ever be enacted. Freeze all interest payments on bonds, call all bond holders to the table and aim for 30 cents on the euro or less.


 
Yes that was an incorrect statement - of course we can default (in fact I actually was implying we will) - but then the onus passes on to ECB - who have given us their guarantee. (By the way, you say it's worthless - I don't understand this - can you explain ?). I believe the bondholders will have to pay. Everyone is talking about it now. Angela Merkel made the statement again that they would have to take the share of the burden and I see this as an indication that it is going to happen. But we have the window where we are guaranteed by ECB until July this year to sort out as best we can our system to have the least minimum impact on the Nation.


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## soy (27 Nov 2010)

Ireland will default, the only question is when. 6.7% is not viable. The economy will continue to sink and we will not see any growth thus driving the economy ever lower and the 15bn will not be enough. 
The markets can see this, hence the bond rate is rising again. The only ones who cannot see are the politicians and they are deluding themselves. This is going to get very bad and it is hard to see how a immediate default could be any worse than the other options.


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## onekeano (27 Nov 2010)

soy said:


> Ireland will default, the only question is when. 6.7% is not viable. The economy will continue to sink and we will not see any growth thus driving the economy ever lower and the 15bn will not be enough.
> [broken link removed]



Fully agree with this, we shouldn't be wasting our time negotiating with the ECB / IMF etc etc. We should be spending the weekend talking with Portugal & Spain deicding on a common approach to the bondholders.

Roy

By the way just back from the march and it  was great to hear Jack O'Connor get plenty of booing and people telling him to get off the stage because he was just as bad as the politicians  overall a good protest!!!


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## BazFitz (27 Nov 2010)

The question is, who's gonna bail out the IMF and the EU once Fianna Fail are finished with them?

The US bailout amounted to $750 billion dollars (or circa €500 billion).  That's €500 billion for the biggest economy in the world.  We're heading for something up around the €350 billion mark if you include the ECB emergency funding of our banks, NAMA and the IMF/EU bailout.  What a country.  Fianna Fail, Seanie, Fingers et al may succeed in doing what Hitler couldn't manage...the total destruction of Europe.

I'm surprised that the others aren't considering nuking us.


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## Expat64 (28 Nov 2010)

*Germany wants punitive (7%) interest rate for Ireland*

It's possible things might not be decided tonight:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/11/germany_wants_punitive_interes.html


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