Just supposing the very worst happened...

M

Mayo1969

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I know the chances of the scenario of ALL Irish banks going bust is at such long odds that it was relatively easy for the Irish Govt to come up with a back up guarantee of a [FONT=&quot]€[/FONT]400 billion package relatively confident in the knowledge that things would never get that bad and it would never be called upon to its full degree

BUT...

If things did get that bad what would be the fate for Ireland - Would we be declared bankrupt as a country or would each civilian of the state be deemed personally liable for an individual [FONT=&quot]€125k or so? And has it ever happened that a country has gone financially bankrupt? (Some would argue that many countries have been morally bankrupt for years!)
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pjordan said:
If things did get that bad what would be the fate for Ireland
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It would be must the same as before with up to 60% taxes, 17% interest rates (we would drop out of the euro), inflation to match and Uncle Gaybo will be on the radio each morning telling us the country is banjacksed.
 
pjordan said:
[FONT=&quot] And has it ever happened that a country has gone financially bankrupt? [/FONT]
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Not sure. Plenty of instances of currencies going into meltdown such as German Weimar Rebublic, Zimbabwe, Italy and the lire, the old French franc etc. Currency meltdown was the classic way of welching on the national debt without being technically bankrupt.

The euro is a unique experiment, several independent countries under one currency. Would Frankfurt/Paris/London bail out a "bankrupt" Ireland? After the rejection of Lisbon?
 
Plenty of countries have gone technically bankrupt and defaluted on debt. Most recent big cases were Russia and Argentina.

I believe the Seychelles is likely to be the next to go!
 
Guys, Libor rates are soaring as are Ted spreads etc. Thats a strong indication of systemic risk in the system.

Nobody knows whats going to happen but everybody should protect themselves. Buy some gold, keep some cash on hand.

I am not trying to be alarmist. Systemic risk is reality out there now.

The idea that the govt has the power/ability to arrest this process is wishful thinking.
 
lemur said:
Buy some gold, keep some cash on hand.
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if you did this, & presuming you werent comfortable with putting it under the mattress, wouldnt you nearly have to put it into a bank safe.

& if they went bust & were "robbing" people savings, whats to say your cash & gold wouldnt go the same way.

Do we have safe deposit box companies in Ireland? (if we dont could this be the reason for the dearth of hollywood films, thinking The Shawshank, Trainspotting where safe deposit box plays an important role ;)).
 
I would have thought that the direct implication would be a downward review of Sovereign debt rating for Ireland inc. Currently AAA, but could move to the rating of the 2 main Irish Banks (and the ones with the biggest potential call on the guarantee). AIB and Bank are both AA or thereabouts.

The risky move of the guarantee could lead to Ireland inc having to pay higher debt servicing costs on our national debt on a lower rating at a time when the debt is about to balloon from circa 36% of GNP to circa 44% of GNP. Does not sound pretty.
 
David McWilliams would be on TV straight away saying "I told you so".
 
bond-007 said:
I wonder what George Lee would say?
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"It's a bad day for the banking system, a bad day for Ireland, a bad day for Europe...a bad day for everyone. From here, things can only get worse as there's it's hard to see a solution to this particular crisis."
 
marksa said:
The risky move of the guarantee could lead to Ireland inc having to pay higher debt servicing costs on our national debt on a lower rating at a time when the debt is about to balloon from circa 36% of GNP to circa 44% of GNP. Does not sound pretty.
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That has happened already as far as I know ...as a nation we are paying 0.3% more even on our existing borrowings , as a result of the 400bn deal, which adds up to an awful lot of money
 
I don't have anything to add to the forecasts above, but I paid that 60% rate in the 80's although earning a modest salary; I remember the cutbacks only too well. I am incandescent with rage over this Govt's ineptitude - the Financial Regulator office was set up in 2003 and was supposed to protect consumers and help maintain a healthy banking system. The Central Bank has disgraced itself - again - by not pulling the banks back 5 or 6 years ago; the big property gamblers should have been told at the time - sorry, you're overstretched, we won't lend you another 150 million to buy a new site etc etc. Unless they lose their jobs, Irish homeowners will not renege on their mortgages. Our banks have always leaned towards the rich and it is always the rich who leave them high and dry.
But now we all have an enormous potential debt hanging over their heads. Even if it is "only" 20 Billion, that represents hospital beds and staff, schools, disability sector losses which are life and death to many Irish people. When has the Gov. rushed through legislation to repair some of our rat-infested schools? to repay the money wrongly taken by the HSEs from elderly patients? No, that took months and years.
I think the sheer scale of the guarantee shocked people too much to protest. But if all of us have to pay for the big property gambler's losses, and we will - though cutbacks, pension reductions etc -then protest may just be on the same scale as the guarantee.
 
Can i ask the question. - Governments all over the world are trying to buy their way out of a recession. Q.? Is it possible to buy our way out of a recession. ?

In my opinion , this is a self inflicted problem and the Irish people ahve been too spend thrifty with their money over the alst numebr of years .
 
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