Ireland facing up to their crisis

[Lord Tammerlain]

How about siting a current source and not a book... Something with actual numbers and NOT projections on OLD data and worst case...

WASHINGTON (AP) -- Treasury Secretary Timothy Geithner is telling Congress that the administration believes the final cost of the government's heavily criticized financial bailout effort could be as low as $87 billion.

U.S. reduces bailout cost estimate - Washington Times

That would produce a gross profit of about $17.25 billion, a more than $60 billion swing in the Treasury's view of its investment. The conversion, which is subject to successful sales and stock offerings for AIG's foreign assets and repayment of Federal Reserve loans, is being done to give the Treasury a more salable asset than the relatively illiquid preferred stock it received in the bailout. The Treasury is still weighing options on how best to sell off the shares, a process that is not expected to start until 2011, a senior administration official said.

White House slashes US bailout cost estimate - The Economic Times

Again, what would you suggest be the tax rate?

The 87 billion would be taxpayer money that was provided, not all the money or help that the financial institutions have recieved. If I recall correctly the banks have received about $2 tillion from the fed in exchange for government bonds and MBS's. The institutions have also been able to keep a large chunk of assets on their books at high asset prices when realistically they are worth perhaps 70% of what they are saying they are worth.

 

[Lord Tammerlain]

Best part about all this AB is that Ireland is on the brink of a right and libertarian minded shifts. There are talks of Irish tea parties.

Which is truely idiotic


Ireland has cut government spending drastically (excluding bank bailouts) and has had some rather low personal and definately low corporate taxes. I thought the tea party was about both of those things primarily. Where is the room for a tea party when government spending has been cut and the country already has low taxes ( unlikely to last as they will have to pay for the bank bailouts)

 

[PeteEU]

If Ireland was not in the EU, it would be able to manage it's own monetary policy. In the EU, the monetary policy of all the countries may out weight Ireland's needs. For example Germany's tax payers need to agree that bailing out Ireland is in their best interest.

Factually incorrect. The Irish membership of the EU has nothing to do with their ability to manage their own monetary policy. What you are confusing (like many right wing American's) is the EU with the Eurozone. If it had not been for the Irish membership of the EU, then Ireland would not have become the Celtic Tiger. That they built a lot of it on debt, is another matter. They should not have listened to their American cousins.

 

[PeteEU]

Best part about all this AB is that Ireland is on the brink of a right and libertarian minded shifts. There are talks of Irish tea parties.

The Irish are not that stupid to fall for that. It was in fact right wing policies that got them into the problem they are in now so.... And the only ones talking about "Irish tea parties" are American's on the right of the political spectrum.

 

[Missed AB]

The 87 billion would be taxpayer money that was provided, not all the money or help that the financial institutions have recieved. If I recall correctly the banks have received about $2 tillion from the fed in exchange for government bonds and MBS's. The institutions have also been able to keep a large chunk of assets on their books at high asset prices when realistically they are worth perhaps 70% of what they are saying they are worth.

That is a fair assessment. The numbers I took issue with were the propaganda numbers sited by justabudda of about 11 Trillion... Sited from a book published in 2009.

The comparison of the US bail pails in comparison to the Ireland debt problem right now. The suggestion that increased taxes will somehow solve the problem is beyond me. The government debt is 220% of GDP and they made gaurantees on loans to bank loans for about 11 x GDP. The missinformation used by JB compared the fictional 11 Trillion we spent on the bail out to our GDP, Iimplying that Ireland can do the same.

 

[Missed AB]

Factually incorrect. The Irish membership of the EU has nothing to do with their ability to manage their own monetary policy. What you are confusing (like many right wing American's) is the EU with the Eurozone. If it had not been for the Irish membership of the EU, then Ireland would not have become the Celtic Tiger. That they built a lot of it on debt, is another matter. They should not have listened to their American cousins.

Having access to the Irish Pound would allow the government of Ireland to from it's own monetary policy. They currently are not in the position to manage their own monetary policy. The EU, or as you more correctly want to call it Euro Zone membership is forcing the Irish government to take a bail out. The Irish government is not asking for this money, it is being forced on them.

If you wish to take exception to my calling the groups of countries which participate in the Euro Zone who use the Euro as their countries accepted currency as the EU, then that's fine. If you are taking exception to the fact that the Irish government is no longer in control of it's monetary policy because of it's membership agreement with the other Euro Zone nations, then we can debate that.

 

[PeteEU]

Having access to the Irish Pound would allow the government of Ireland to from it's own monetary policy. They currently are not in the position to manage their own monetary policy. The EU, or as you more correctly want to call it Euro Zone membership is forcing the Irish government to take a bail out. The Irish government is not asking for this money, it is being forced on them.

If you wish to take exception to my calling the groups of countries which participate in the Euro Zone who use the Euro as their countries accepted currency as the EU, then that's fine. If you are taking exception to the fact that the Irish government is no longer in control of it's monetary policy because of it's membership agreement with the other Euro Zone nations, then we can debate that.

No I am pointing out you are wrong. There is a big difference between the EU and Eurozone, hence you are factually incorrect in your definitions. There are 27 members of the EU, but only 16 members of the Eurozone.

The EU does not restrict Ireland from using monetary policy, it is the Irish membership of the Eurozone.

Hence Irish membership of the EU has nothing what so ever to do with its problems.

Now its membership of the Eurozone and hence having the Euro does mean it cant use monetary policy to get it out of its problems, but then again it should not have gotten into the problems it is in, but since it was a member of the Eurozone it had access to very cheap credit for 10 years because of the ECB keeping rates low to help a sluggish Germany out. The Eurozone aint perfect in any way, but like it or not, there would have been no Celtic Tiger (in the way that we know) if it had not been for the Eurozone membership.

It is just unfortunate that the Irish politicians and especially the banks drank from the same kool-aid the US bankers and politicians did and prioritized debt fuelled growth over future stability.

 

[Lord Tammerlain]

No I am pointing out you are wrong. There is a big difference between the EU and Eurozone, hence you are factually incorrect in your definitions. There are 27 members of the EU, but only 16 members of the Eurozone.

The EU does not restrict Ireland from using monetary policy, it is the Irish membership of the Eurozone.

Hence Irish membership of the EU has nothing what so ever to do with its problems.

Now its membership of the Eurozone and hence having the Euro does mean it cant use monetary policy to get it out of its problems, but then again it should not have gotten into the problems it is in, but since it was a member of the Eurozone it had access to very cheap credit for 10 years because of the ECB keeping rates low to help a sluggish Germany out. The Eurozone aint perfect in any way, but like it or not, there would have been no Celtic Tiger (in the way that we know) if it had not been for the Eurozone membership.

It is just unfortunate that the Irish politicians and especially the banks drank from the same kool-aid the US bankers and politicians did and prioritized debt fuelled growth over future stability.

Ireland received a strong benifit from being in the EU, direct subsidies of a few billion a year for an extended period of time. In being part of the Eurozone, Ireland was able to borrow at far lower rates then it could have if it was not part of the Euro, Ireland or its banks did not have to take out as much debt they did, but they did strongly benifit from being in the Euro zone

 

[washunut]

The 87 billion would be taxpayer money that was provided, not all the money or help that the financial institutions have recieved. If I recall correctly the banks have received about $2 tillion from the fed in exchange for government bonds and MBS's. The institutions have also been able to keep a large chunk of assets on their books at high asset prices when realistically they are worth perhaps 70% of what they are saying they are worth.

My Lord, can you even read what you comment on. The 87 billion is the projected loss, not the amount of money provided by the government. Most of that 87 billion will be from GM, GMAC, AIG and smaller crony banks that were given money through TARP. the really big losses will be from Freddie and Fannie which will probably run into the hundreds of billions. To date the Fed has made money on the assets they bought from the big banks. Do you have any facts to back up your 70% claim or is this just another fantasy?

 

[Lord Tammerlain]

My Lord, can you even read what you comment on. The 87 billion is the projected loss, not the amount of money provided by the government. Most of that 87 billion will be from GM, GMAC, AIG and smaller crony banks that were given money through TARP. the really big losses will be from Freddie and Fannie which will probably run into the hundreds of billions. To date the Fed has made money on the assets they bought from the big banks. Do you have any facts to back up your 70% claim or is this just another fantasy?

The Federal government or the federal reserve?

The federal reserve has upwards of 1.5 trillion of non governmental debt in its assets from buying MBS's and the like from the banks. The banks will be receiving 600 billion from the fed from QE2 (QE1 being the initial purchase of the MBS's). You really think the banks gave the federal reserved high quality Mbs's or most likely gave them the ones the wanted to off load but couldnt on the open market (due to risk).

Secondly the FASB has changed its accounting rules to allow financial institutions to state that assets that the banks do have like MBS's on their books at an face value rather then market value. If the banks had to books those assets at market value the majority would technically be insolvent.


[Mark-to-Market Lobby Buoys Bank Profits 20% as FASB May Say Yes - Bloomberg

FASB proposed an overhaul of fair-value accounting that may improve profits at banks such as Citigroup Inc. by more than 20 percent.

The changes proposed on March 16 to fair-value, also known as mark-to-market accounting, would allow companies to use “significant judgment” in valuing assets and reduce the amount of writedowns they must take on so-called impaired investments, including mortgage-backed securities. A final vote on the resolutions, which would apply to first-quarter financial statements, is scheduled for April 2.

FASB’s acquiescence followed lobbying efforts by the U.S. Chamber of Commerce, the American Bankers Association and companies ranging from Bank of New York Mellon Corp., the world’s largest custodian of financial assets, to community lender Brentwood Bank in Pennsylvania. Former regulators and accounting analysts say the new rules would hurt investors who need more transparency, not less, in financial statements.

 

[Missed AB]

No I am pointing out you are wrong. There is a big difference between the EU and Eurozone, hence you are factually incorrect in your definitions. There are 27 members of the EU, but only 16 members of the Eurozone.

I take no exception to the above. I do often wrongly use the 2 in the same context, as this is how most people do view it, and it keeps my typing a bit more simple... At the end of the read, the substitution of the 2 does not change the contest of the read.

The EU does not restrict Ireland from using monetary policy, it is the Irish membership of the Eurozone.

This is where you are wrong. Monetary police allows the access to money, interest rates set by the central banks, and total supply of money. Ireland does not have that control because the central bank of EUROPE is in charge of making those policies, not the individual nations.

If I am mistaken please show me something supporting exactly how Ireland is able to manipulate the EU currency, interest rates, or access to money.

...Eurozone it had access to very cheap credit for 10 years because of the ECB keeping rates low to help a sluggish Germany out...

THE ECB not Germany set the rates, yes? So how does Ireland suddenly have it's monetary policy in it's hands?

 

[PeteEU]

I take no exception to the above. I do often wrongly use the 2 in the same context, as this is how most people do view it, and it keeps my typing a bit more simple... At the end of the read, the substitution of the 2 does not change the contest of the read.

Oh but it does change the context of the read.. big time. There is a huge difference between the EU, Eurozone and "Europe". And you constantly mix them up even the responses below.

This is where you are wrong. Monetary police allows the access to money, interest rates set by the central banks, and total supply of money. Ireland does not have that control because the central bank of EUROPE is in charge of making those policies, not the individual nations.

Yes you are correct. The ECB, the central bank of the Eurozone sets those policies under the guidelines of which it was set up on. Again, you are mixing up two very big things here. The ECB is the central bank of the Eurozone, not Europe or the EU per say. The UK for example is not per say effected by the ECB calls.. although if they dont follow suit, then they are stupid beyond means.

If I am mistaken please show me something supporting exactly how Ireland is able to manipulate the EU currency, interest rates, or access to money.

It is not, since that is the job of the ECB. Ireland willingly went into the eurozone because at the time and up to the crisis was a good idea. They got access to cheaper credit than they normally would and had a much more stable currency, not to mention it made it very attractive for companies to settle in Ireland since Ireland was within the EU and within the Eurozone so the conversion costs would be next to nothing, and of course Ireland has very very low taxes.

THE ECB not Germany set the rates, yes? So how does Ireland suddenly have it's monetary policy in it's hands?

You are again mixing stuff up. The ECB has a certain set of rules and regulation it has follow, and that includes growth and inflation fighting. Germany being the biggest economy in Europe and in the Eurozone has a special place in that big equation, followed by France and so on. Since 1989 Germany has had growing pains because of absorbing East Germany and the ECB has helped Germany by keeping rates lower than they probably should have been. This in turn meant that Ireland had access to tons of very cheap credit and it used that to become the "Celtic Tiger" and in turn put its banks in the situation they are in today.

While Ireland could set its own rates and manage its currency before the Euro, its rates and policies were very closely tied to two countries.... the UK and Germany, and both Ireland and the UK were closely tied to Germany. So claiming that Ireland (or anyone other than Germany) before the Euro had any sort of independent money policy or even rate policy is really being disingenuous of the reality of the situation back then. In reality the only independence they had was the ability to name their own currency, and at the same time being under huge threat of speculators... the UK knows what I am speaking about.

 

[Missed AB]

You are again mixing stuff up. The ECB has a certain set of rules and regulation it has follow, and that includes growth and inflation fighting. Germany being the biggest economy in Europe and in the Eurozone has a special place in that big equation, followed by France and so on.

Semantics aside, My point was and still is that Ireland is not in a position to set it's own monetary policy due to it's partnership in Eurozone. They experience the fruits of the success and the pains of the tribulations. Yet, since they are a small player they have very little ability to change the direction of the ECB's monetary policy.

Had Ireland not been a state in the Eurozone, the fate of the country's monetary policy would be held in Dublin, not Frankfurt.

I will reiterate what I wrote to you in a previous post: If you wish to take exception to my calling the groups of countries which participate in the Euro Zone who use the Euro as their countries accepted currency as the EU, then that's fine (It was a mistake on my part to include/confuse the EU with the eurozone/euro). If you are taking exception to the fact that the Irish government is no longer in control of it's monetary policy because of it's membership agreement with the other Euro Zone nations, then we can debate that.

Otherwise, it just seems to be nit picking at this point.