Does Nama mean we have surrendered sovereignty.

A lot of the Lisbon treaty talk revolves around Ireland surrendering sovereignty to Europe but in taking the ECB low interest loan aren’t we at the mercy of Europe’s decision makers going forward.

This rate is not fixed in any treaty and as such can be set to anything and could even vary for different governments.

Couldn’t it then be used a bargaining chip (behind the scenes) next time Europe wants us to vote for something against our will such as tax harmonisation?.

Needless to say I’m sceptical to the extent which the ECB is free from influence by heads of European governments.

Would you say the 0.5% over ECB is set low to enable our government to sell the Nama idea to the people and that is unlikely to track the ECB rate going forward?

sfag

You are quite right! Very well spotted. We should immediately insist on paying 3% over the ECB rate and this would demonstrate our independence.

Brendan

Ridiculing others ideas is hardly constructive.

If the NAMA bonds are short-term (i.e. have resets) those are the appropriate rates for them. What price they will attract in the market (once the ECB is no longer giving unlimted repo) will, I suppose, depend on what the market thinks of the government's credit rating. If the deficit is still high, it will take a dim view; if the recession is dragging on, it will take a dim view; if asset prices continue to fall, it will take a dim view. Therefore there is a chance that we could be facing a second banking crisis at a later date when the ECB turns off the cash flow and the banks have to look to the interbank market for liquidity funding.

Whether the scheme gets approval from the ECB/EU is yet to be seen - a decision on whether it is state aid will only be made after it has been implemented.

But I don't think NAMA per se will beholden us to the EU/ECB. It will beholden us to the credit markets. Such is the life of a government that is running a serious deficit...

edit: oh and it's not a loan. The funding mechanism is available to all states and has always been available.
The ECB rate is set for the euro. There is, I believe, no possibility of variable rates.
We still don't know whether the rate is ECB+0.5% or euribor+0.5%, the full duration of the bonds (whether they will be short-term or long-term with resets). Etc, etc.

Some sharp posts from yourself Brendan on a couple of threads today.

I'm not seeing the love......

Hi sfag

Apologies. No offence meant. I was trying to show, dramatically, that your suggestion led to an illogical conclusion.

You start many threads which have a different and interesting take on things which adds to the value of Askaboutmoney.

Brendan

Of course we have surrendered sovereignty. We surrendered it when we joined the EU. We surrendered it big time when we joined the Euro. And we have been forced cap in hand to surrender a bit more.

But the positives easily outweigh this surrender of sovereignty. Would we really like to be in an isolated economy with its own currency and with all those trade barriers we used to have?

Joining europe means you have already surrendered sovereignty.

I would say that we delegate sovereignty to the EU.


We choose to give it decision-making powers in some areas, in others we share power.

Folks,

Please restrict this discussion to NAMA and sovereignty and avoid going off track to sovereignty generally.

Thanks

Brendan

If you depend on someone or somebody for your solvency then they, at the very least, have a lean on you. If you are a country then they can dictate how you conduct your affairs. Given a choice between the ECB and the IMF I know who I’d pick (modernisation and reform of the IMF over the last decade or so not withstanding).

Debt was used to carve up the Ottoman Empire, annex countries, overthrow governments and instigate wars. Bond holders (European and American banks) were the driving force in world politics in the second half of the 19th century. They used, and were used by, their governments as instruments of colonial advancement.

Bottom line; he who pays the piper calls the tune (remember that the only power Parliament got from the King in England was the sole right to levy taxes. The King retained everything else, which was nothing).

How we re-float our economy will have a much bigger impact on our sovereignty than Lisbon; Lisbon is a side show in that context.

Brendan said:

sfag

You are quite right! Very well spotted. We should immediately insist on paying 3% over the ECB rate and this would demonstrate our independence.

Brendan

Click to expand...

3%!! How about us paying 10-15% above the ecb rate....lucklily i never had to but older people will remember paying 15% on their mortagage back in the 80's....18% on their personal loans etc.

We werent too worried about our sovereignty when we were getting x billions in EU aid.

It always amazes me how short peoples memories are.

Does anyone know how and from whom the IMF gets its money?

Purple said:

Does anyone know how and from whom the IMF gets its money?

Click to expand...

Most of the money comes from members contributions when they join. When a Country joins, they are assigned a Quota based on the size of the economy. These Quota's are denominated in Spcial Drawing Rights which is the IMF's 'currency' if you like. The Quota also decides a Country's voting power. The US is the largest member of the IMF with a quota of SDR 37.1 billion. Ireland has a quota of SDR 838.4 million. Today 1 SDR = USD 1.7727. This changes daily and the value is linked to a basket of currencies.

The size of this quota also dictates how much a country can borrow. It's usually 100% of it's quota annually or 300% cumulatively. However, this can go higher.

In addition, different countries fund the IMF by transferring assets to it. Recently, the EU, US, Russia, China and others have added (from memory) 500 bn in funds to the IMF for its digout funds.

The IMF is also selling some of its gold stores to provide more cash for clunker countries.