The economic problems facing the Republic of Ireland are immense and especially worrying for us on Ynys Môn considering how much the Port of Holyhead relies upon a steady flow of people and cargo between us and the Irish ports of Dublin and Dun Laoghaire. Holyhead is in fact the busiest ferry port in Wales handling around 2.3 million passenger movements each year and sustaining approximately 900 jobs -- well over half of those with Stena, and the remainder with Irish Ferries, port service companies, and various other transport businesses. In 2009, according the latest figures available from the Department of Transport, Holyhead Port handled a total of 2.85 million tonnes -- the vast majority of it roll on/roll off. All of this injects much needed money in to Anglesey's fragile economy.
Of course Ireland is not just important to Holyhead and Anglesey, it is also one of the UK's largest trading partners. British exports to Ireland are three times British exports to China and five times the exports to India, furthermore Irish trade exceeds total UK trade with the emerging markets of Brazil, Russia, India and China put together. For these reasons I am pleased to see that the UK Government is prepared to help Eire and hope that this along with the IMF loans will help to buffer any possible knock-on effects on ferry traffic at Holyhead.
66 comments:
How does the roll on roll off system inject money into Anglesey? Most of the trucks already have have full fuel tanks to avoid paying our extortionate fuel taxes. The drivers are well fed ready for the rest if their journey. Away they go. I'm thinking the only monies raised from this system are the financial fines for drivers who drive defective trucks and happen to be one of those pulled over by vosa at the bodedern check point. I wait to be corrected.
The UK helping Ireland was bound to happen - our banks exposure to Irish debt is immense and 7Bn to try and stop a total collapse along Iceland lines - which would all but destroy RBS and seriously damage Lloyds costing the UK taxpayer hundreds of Bns, is a gamble worth taking. If it saves our exposure it was money well spent. If it fails then 7Bn will be the least of our problems and be neither here nor there, merely loose change.
I note that the EU is now dropping hints that the Irish having an early election would not be a good thing. So much for the EU's claims that it doesn't interfere in sovereign issues of member states.
Well - it's not often I find myself in disagreement with The Druid - but this time, sorry and all that, I do.
There is no point in the UK borrowing £7billion in order to lend Ireland £7billion - a £7billion, by the way, which is just about equivalent to the total of UK Government "cuts" this year (they're not cuts really, public spending is still rising)
There is also the delicate matter of not knowing whether Ireland will ever pay it back. I'd place a bet with Paddy Power that Ireland won't. George Osborne says he "expects" Ireland to pay it back - but that is not the same as saying Ireland WILL pay it back.
Let's face it - 3 million people aren't ever going to be able to pay back seven thousand million pounds on top of everything else they owe.
There is also the delicate matter of which currency is used, and what rate of interest? Quizzed about this in the Commons yesterday Osborne said he didn't know - but would hopefully come up with some answers by Friday. ...Hmmm - not exactly confidence inspiring.
As for the value of Anglesey's links with Ireland well, you only have to look at Holyhead to see all the massive benefits that the Irish passing trade brings.:-(
The reason the the UK is so keen to help out the Irish is the domino effect.
I've heard the current Irish deficit described as the Lehman Bros of nation states and the loss of confidence in the ability if Eire Inc to made good on it's debts could well trigger the dreaded double dip recession.
If this happens the domino effect will hit Greece, Portugal, Spain, Italy and the UK hardest.
My own concerns centre around the likely move towards measures of a totalitarian/repressive nature by the UK state, should fiscal breakdown lead to public unrest.
Recent legislation like the Terrorism Act has been shown to have had little effect on terrorism but a somewhat larger effect on civil liberties and has increased state intrution into the private life's of the citizens.
This document details arrests, charges and convictions under the Terrorism Act:
http://rds.homeoffice.gov.uk/rds/pdfs10/hosb0410.pdf
Personally I found it difficult to interpret this document given the way it has been set out, but the recent trend has been an increase in the use of the act to make arrests where subsequent prosecutions are non-terrorism related.
Please note that I am not saying that I am against the Terrorism Act - just it's use as a 'stop and search' mechanism, without the 'reasonable suspicion' clause found in 'normal' criminal legislation, that I question.
I see Anon at 11:48 has beaten me to the question re the *local* contribution from traffic to Dublin. I'd be interested in any evidence that shows the value contributed around the A55 by HGVs exceeds the costs (construction, repairs to wear+tear) they bring. Wot no container ferries?
I'd also be delighted to see the breakdown of the UK's trade with Ireland. How much of the UK's exports to Ireland are "financial services", involving the very banksters that are about to benefit yet again from being bailed out by the long-suffering taxpayer. There is a list of "Irish" bondholders who would lose out if the Irish banks were allowed to face the natural fair-market consequences of the bank's stupidity. They're mostly not well known Irish names, but they're recognisable financial-sector names.
These bailouts are a "protection racket". Till someone stops it, the banksters will continue to come back and extort money off honest working (and/or benefit-receiving) people every few months. By all means protect the retail savers, as per any appropriate legislation, but the bond holders *knew* that their investments were not guaranteed, why waste £7bn of desperately-needed UK taxpayers money to bail them out? If it's truly a profitable loan as some will claim, why not let the profitable private sector carry it; it's peanuts on their scale.
I hope that the Irish government will secure the EU/UK/Swedish loans, go to the polls and then without too much fuss leave the Euro. They can't leave now or that would totally unsettle the markets and as Germany would not lend to Ireland on the basis of Ireland departing the euro, Ireland has to grab the money first and then run. As for the UK contribution I agree we may never see the money back which is why the BoE will be turning its printing presses on in February to cover this and other 'magic' monies we will by then need.
Anon 12.50 and 11.48
If this RoRo trade went via another Port then a severly reduced Holyhead facility would need less workers/infastructure etc?. Something along those lines.
And as for not helping them out. Should we wait for them to go bust and then try and work out what to do when that affects us? It's a bit similar to fighting islamic terrorism in Afganistan/elsewhere as opposed to here on our streets. Far less messy.
Anon 13.13
"Far less messy".
You mean "Far less messy for us"
I doubt whether Afghan's and Pakistani's would agree with the first statement.
All I will say is, if you've got any money in the bank get it out before it disappears again.
Prometheus
Yes that's exactly what I mean and I stand by it. Given that the threat is real (not even Chamberlain would deny it) I take it you'd prefer it all to happen here in the UK and in the other, however-many Nations that are there fighting, then? If so, I'm sure glad your ilk do not hold sway.
14.35
What a remarkable statement.
Do enlighten us as to how your money actually dissappeared from the bank before.
@ anon 15.28:
"How wude" - please go back and read my earlier comment, where you will see that I'm not against the Terrorism Act, I'm just against it being used inappropriately.
The document I refenced shows that there have been some 200+ convictions under the act, so it is working in the area it was intended.
I am concerned at the 'state of fear' that is being created.
I'm perfectly happy that the security services are doing a wonderful job stopping terrorist threats, however I don't need my own anxiety levels cranking up by reports of bombs that don't go off and bomb threat practice exercises from Namibia.
I already trust that MI5 & MI6 do their jobs well enough without having to know what they have done.
Do you think they should tell us about EVERY instance of terror related activites?
Now that really would be frightening.
Maybe my 'ilk' do already hold sway. I might be a Liberal. :)
and as for "I take it you'd prefer it all to happen here in the UK and in the other, however-many Nations that are there fighting" - Well, truthfully I'd prefer that it didn't happen anywhere at all.
From a Conservative perspective, this is something of a thorny issue, because the 'old guard' anti-Euro brigade like Redwood are actually opposed to Osborne's intentions.
For once, I think Redwood might have a point, because there are clearly enormous problems affecting such a wide range of very different economies trying to work to a common plan. It seems we have a core of healthy nations supporting a whole gaggle of 'poor men' of Europe.
As to the ability of 3 million people to pay back £7billion - what about their ability to pay back the remaining £93 billion or so they are to get in total?
prometheus
"Well, truthfully I'd prefer that it didn't happen anywhere at all."
That goes for the rest of us and so you don't hold some moral high ground on that. I'm not taking issue with yout Terrorism Act views. I'm responding to your holier than thou response to my 'far less messy' remark. Again trying to show that you hold some moral high ground.
Isn't it well known that it's far better to fight your battles on your opponents land? I'll reiterate by saying that no amount of hand wringing moralising about others makes it better, if it is to happen, to fight on your own ground rather than theirs.
I drew attention to similarities with the consequences of not helping Ireland out. Do all we can now not some acrimonious Operation Stabledoor afterwards.
Anon 16.40:
Fair comment.
I'll try not to be so moralising in future.
Better be careful Prometheus with your moralising, look where it got you. Stuck on that cold rock facing the Irish Sea winds and an occassional eagle coming by and picking away at your exposed liver! Poor soul;),
Can we get back to the bailout, please?
Photon - As to the ability of 3 million people to pay back £7billion - what about their ability to pay back the remaining £93 billion or so they are to get in total?
It's a tad worse than that. Its £7Bn to us, then their bail-out of €80Bn (which they have to repay, plus interest, within 3 years), then their government is liable for 100% underwriting of their banks - €88oBn plus. Only it's not their government that's liable because governments have no money - it's the Irish people. So the people themselves are liable for anything from definately just short of €100Bn that has to be paid back within 3 years, to potentially around one Trillion. With a population smaller than Gtr Manchester and Birmingham combined? Little chance I suspect.
The way I look at the 7Bn is like when you see an old mate on his uppers and bung him £20. You know you'll never get it back and he'll just piss it straight up the wall but it makes you feel better for the giving. That's what I think about the £7Bn. And it is Christmas after all
Druid: Between 1995 and 2002 I was involved in property development in Ireland and Northern Ireland.
I have a few points to make:
1. There was corruption in zoning land...
2. There was corruption in local politics....
3. My company was competing against a "wall" of local matress money....buying blindly.
4. Mortgages of 35 years were the norm
5. Every piece of land was "a million"
6. Found some Dubliners became arrogant...never previously like this....
7. Nobody wanted to be left behind - everyone wanted to ride the wave..
8. Banks were lending on low margins competing against one another but on crazy LTV's.
9. The Euro made things more expensive...Ireland had 3 currencies when I was operating there.
10. "Ordinary" people were buying expensive riverside apartments for Euro: 400k plus.
This was the point (2002) when I exited Ireland because it became too hot in commercial property.....
I have absolutely zero sympathy for Ireland and I often used to tease the property guys there that one day the Celtic Tiger would be the Celtic Pussycat.
Clearly there are economic reasons for the bailout but these guys thought they could take on the world...clearly not!
The prevailing concensus on here (this blog) is that Eire is going to find impossible to pay this money back.
There's plenty in the news about the outward migration of young graduates who would have been the skilled and higher waged earners in the Irish economy.
There's talk of unemployment benefits being reduced on a sliding scale against time, so there will be pressure on anyone in receipt of benefits to leave the country to seek work, and/or crime rates will soar, (after all people have to eat).
Many of these graduates (and other unskilled workers) will be coming to the UK (and the EU) as there are no immigration restrictions on the Irish. (Although Canada and New Zealand seem to be favoured destinations).
As all these factors kick in it looks less likely that Ireland will be able to service it's debts. If market confidence falls then the interest rates on the money they have already borrowed will rise and amount the Irish government will be paying back as their bonds and guilts mature will also increase the national debt.
I can't see any way out of this and furthermore it seems to reflect the greater problems of the Eurozone (not just the Ecu) writ small.
So the question is what will happen when (and not if) Ireland finds itself bankrupt?
Maybe lessons can be learnt from Argentina who also went bankrupt some years ago, but the rest of the world economy was bouyant then.
China may be able to help, but it is starting to have problems with internal food price inflation and that won't be conducive to China inflating the value of the Yuan, the current bone of contention with the US trade and finance departments; neither of which will help the European economy.
So the question I raise above isn't just limited to the shores of Ireland. It also includes the question of what the consequences of that collapse will be for us?
And that was what my original post on this thread was about.
Anonymous 23 November 2010 11:36
'How does the roll on roll off system inject money into Anglesey? '
4000 employable people in Holyhead, 1000 of them are direct or indirect workers in the Port so no Ro/Ro results in more local unemployment – simple
Prometheus - A bit of a story about current emigration from Ireland :-
http://www.bbc.co.uk/news/magazine-11815001
And as for the Americans and their problem with the Yuan - Is it the Chinese over-valuing? Or is it the Americans deliberately devaluing the dollar through QE and those devaluing the worth of what they owe China? And don't all countries manipulate their currencies and the exchange rates via interest rates anyway.
"Holyhead Port handled a total of 2.85 million tonnes -- the vast majority of it roll on/roll off. All of this injects much needed money in to Anglesey's fragile economy".
"4000 employable people in Holyhead, 1000 of them are direct or indirect workers in the Port so no Ro/Ro results in more local unemployment – simple".
Arguably both comments hold no weight. There would still be a transient populace with or without the trucks. I've witnessed horse boxes, rally teams, business people, holiday makers, relatives, sports teams, the list goes on. None of the above actually inject money into the Isle of Anglesey. The statements above sail very close to the wind of deception. Not a single person who travels through "our" gateway spends a penny(apart from the fat yanks who can't resist a Maccy D just to see if they are as good as the american version)or even stops to look at the coastline. Half of the 2.8500000000 trillion tonnes is landed at night. A quarter in winter, and the rest just pass through whilst looking at the mountains on their way to englandshire. Ok a few jobs would be lost but there have been times (when Maggie had her way)when there was no trade in tonnage or trucks, and hey, we managed. The Micks got themselves into this mess and they should be looking to the Germans for help not us. I was there recently and was asked t o pay 5.50euros for a pint of the black stuff. I refused and bought four cans for 6 euros. They've got no-one else to blame except themsleves. Bout ya
I've just watched this:
http://www.channel4.com/programmes/britains-trillion-pound-horror-story
The analysis of the public sector costs and the national debt seems pretty reasonable.
However holding up Estonia, Lithuania, Latvia and Russia as shining examples of applying the Hong Kong economic model to the UK is a bit of an error.
I had to agree with this analisys from the blog 'Left Outside':
"... it has all the right facts but in the wrong order.
For example, the industry of the UK didn’t decline because of high taxes, as is claimed. It was a combination of a changing international division of labour and the fixed investment in out of date machinery of British Industrialists. To expensive to junk, not profitable enough to keep up with the Germans and Americans. A cursory glance at the literature would have shown that.
Hong Kong is not where the Asian economic miracle began, that would be late 19th Century Japan (or 13th century China). It is not much of an economic model either because it takes up a few square miles and houses a few million people and is served by a diaspora of millions of Chinese. It is also placed at crux of one of the most important trading and financial zones in the world".
For balance I also read George Monbiot's article 'The UK’s Odious Debts' which gives another side of the same coin, but looks at the insiduous effect of PFI's in the UK.
http://www.monbiot.com/archives/2010/11/22/the-uks-odious-debts/
I was left wondering whether the banks count as a 'service industry' - as they don't 'produce' anything tangible.
The one question not tackled in film was the inherent problem of interest rates on the economic system.
Bringing the debate back to a local level (and my level of understanding of economics) for a moment, it does seem that a fundamental error made at the time of the A55 construction was the incredibly few opportunities to get off the darned thing.
For example, miss the junction for Llangefni and it won't be until Treban, between Gwalchmai and Bryngwran, that you can turn back. Sure, the cost of junctions was probably the reason for so few of them, but in the longer term, it surely must have been a false economy, for the A55 really did become the Anglesey bypass.
It is said on BBCnews this morning that Anglesey Aluminium site is for sale at almost £10M....whether this includes its substantial farm estate is not known.
Who would buy such a site in the current economic climate ?
Who would risk investing in gutter-politics Anglesey ?
Who would de-contaminate the site ?
It might sell better in smaller lots.
Hong Kong is not where the Asian economic miracle
I lived in Hong Kong for three years. The 'economic miracle' of Hong Kong doesn't involve most of the population. The overwhelming majority of the population live in what are their equivalent of council houses - cramped 2 bedroom apartments - one room for the parents and infants, the other shared between the older children and grand parents. Then they have a small liviong room, ans a combined kitchenette/bathroom. Only the very very rich can afford to buy property (you need to be a millionaire several times over) and only the medium rich and europeans can aford to rent private. There is no NHS and if you cannot afford health insurance (and most of the population can't) you have to rely on handouts. (It's not unusual to see people with broken limbs or severe lacerations begging outside the hospitals.) We used to sponsor a ward in a Kowloon hospital where children with kidney failure went to die because their families couldn't afford dialysis.
Hong Kong looks glorious on TV and in real life the harbour area at night looks better than TV. But ecionmic miracle to the ordinary poulation it certainly is not.
Hong Kong is brilliant of you are rich or european. It's the pist for the people.
Anyways, back to Ireland. Good article in last weekes Irish Independent (URL below). The chilling paragraphs are these:-
"Here are the numbers. As of yesterday, the ECB was sitting on assets of e1,878bn. These are government bonds and bank IOUs which the ECB takes as collateral for the cash it lends to the banks. Interestingly, the Irish central bank's assets total €185bn.
So, the Irish central bank's assets are about 10pc of the ECB's. An unusual situation for a country that is only forecast to add 1.72pc of eurozone GDP in 2010.
If we look deeper, we see that the ECB has lent a total of €516bn to commercial banks within the entire eurozone. The Irish central bank has lent €165bn to banks based here. (Our GDP for 2010 is forecast to be €155bn.) So of all money lent to banks in the eurozone, 31pc is lent to banks based in Ireland.
What does all of this tell us?
That the Irish banking system is bust. But more importantly, the amount of money that is passing through the books of our central bank is completely unsustainable to a country of our size. "
Full article http://www.independent.ie/opinion/columnists/david-mcwilliams/david-mcwilliams-ecb-bailout-is-the-only-card-we-have-left-to-play-2423740.html
TGC:
Re: A55 'bypass'
I was always curious about why there wasn't a junction near the Mona Industrial estate.
Yes you can turn off at Llangefni (about a 1-2 miles away from Mona) but the roundabouts at the junction are a nightmare and are easy for HGV's to navigate.
As a by-pass it's hard to call in economic terms as on the one hand it stops all that heavy (and damaging) traffic going through the villages, while on the the other hand all the villages lose any hope of passing trade, from other island locals as well as from tourists.
My last post should have read:
"the roundabouts at the junction are a nightmare and are NOT easy for HGV's to navigate"
What IS required off the A55 at Mona is a Truck Rest Stop with shower and toilet facilities...this is being proposed by someone is it not ?....and it might also provide direct access thro' to the show ground ?
Its an idea with merit ?
"Its an idea with merit ?"
It probably is. But it'll only get off the ground if a couple of those in the right circles can get a better-paid job out of making it work. That's where the 'Big Society' idea has some merit - putting good ideas to work without creaming-off vast sums in salaries, to boot.
Brawd o Amlwch - a laudable idea and I'm sure the drivers would welcome it but you then have to ask how would it be paid for and in these austere times would it actually generate any income (other than possibly for a burger van) and would that income cover the cost of maintaining it.
(Sad that the nation's finances have come to this cold-bloodedness but that's the banks for you.)
Promo @ 21.25 on the 23rd.
According to 'Roubini Global Economics' post today, around 80 billion euros of Ireland's public debt is held by non- residents. I wonder if it is a co-incidence that this is roughly the amount Cowan is negotiating for. The figure comes from (Bank of International Settlement)BIS data, the same lot that stress tested the EU banks recently. Anyway my point is that I suspect some politicians in Ireland are looking for a way of getting out of the Euro without being left with hugh debt owed to non-residents that cannot be supported by a currency that will then depreciate very rapidly. How this effects Anglesey could be fairly fundamental, as John Lanchester suggests in his very readable book Whoops! He suggests that a possible trigger for the next crash, (which some think will lead to a depression) is a panic in the Eurozone. The signals today are that the markets are now turning on Spain and if that continues panic certainly will ensue. On the bright side however Lancaster thinks the next crash may mean that politicians (G20) are finally forced to get a grip and the banks will finally be restricted to old-fashioned banking (takers of deposits and givers of sensible loans) without being leveraged at 30plus to 1 on their capital, or taking bets.
My bet remains that the printing presses still have a lot of work to do.
outsider - the same lot that stress tested the EU banks recently.
These aren't the same stress tests that the Irish Banks passed with ease only a few months ago by any chance? ;)
Outsider and Red Flag:
Who are the Bank of International Settlement?
PS. Thank you Paul for restoring unmoderated initial comments.
It makes life a lot easier when I know my comment has gone through without having to wait.
Prom - The BIS is for want of a better description the Central Banks bank. It's not answerable to any government and some would argue has more power over a country's central bank than that country's own government. They have (and can weild) a huge amount of power over a government very quietly and very discreetly.
You can read a bit about them here:-
http://en.wikipedia.org/wiki/Bank_for_International_Settlements
The greatest loss to Eire, will be the migration of 100's of thousands of it's young and desperate, the futureless, this will be the biggest worry for the Irish Government, a problem we have had for years, our young leave this Island and never to return, leaving us with an even bleaker future, sad times, this is the reality, and this is the future.
The repercusions of the banking crisis and the Irish Government made interesting listening on Radio 4, the facts were horrific, the ripple effect is coming soon, the wash will hit Holyhead, less transport using the docks, the ferries will be coming over from Ireland with people moving over here to get away from the living hell that will envelope the country, it will come, and it will be a shock for Holyhead, I just hope that this economic storm will be over soon.
Robert Peston's blog on the BBC site and the comments attached to his blog today are worth a read, apparently Henry C Simons and Irvine Fisher ( economists at the time of the last depression advocated the abolition of the system of fractional reserve banking (FRB) and wanted banks to hold 100% capital, but the blogger says the politicians were too connected to the bankers of that era and it was beyond the pale to suggest that the bankers/establishment of the day should be asked to give up their money printing business! the blogger references 'The Dying of Money' by Jens O Parssen, published 1974 (page 150).
Getting back to Anglesey, Frances Maude answered a question in parliament today, during Cabinet Office Questions, apparently the government is going to set up an information and support service to help people who want to set up Mutuals. The Druid has elsewhere suggested that SOME of the 'Shell' Trust fund could be used as seed money for SME's on the island. I suggest the people in Amlwch who want to see the fund help create jobs in their area have a think about whether setting up a local mutual with such seed money could help.
Red Flag: 18.53
Thanks for the link.
So they are who we all ultimately owe the debt to.
I wonder what would happen if they just wiped the slate clean?
It's just numbers nowadays since we abandoned the gold standard and sold all our reserves, isn't it?
Anglesey needs an alternative enterprise agency - Menter Monopoly have been playing with EU money for long enough and their toys should be removed and given to another more deserving child.
A big problem is the german insistance that bond holders take a fair 'hit' on the value of their bonds. British banks - RBS & Lloyds - hold huge volumes of Irish debt as do British pension funds. They would be crippled literally overnight by what she is proposing but Merkel insists she is "not for backing down" and doesn't see why Germany should - by propping up Ireland - in turn prop up British interests at the expense of her own people when we aren't even in the euro anyway.
Certainly Germany's hard line stance has led to the money markets pulling even further away from Ireland despite it's bail-out.
Red Flag - of course Merkel will remember that after WW1 when Germany could not repay its debt's it simply printed more DM's. Ireland has a simple choice now - its never going to repay its debt without making the majority of its citizens become impoverished for a generation - it can attempt to force that on them, or it can leave the Euro.
Outsider:
I don't understand why leaving the Euro would help the Irish economy - that would just alarm the sovereign fund and central bank lenders and increase the interest rates that they apply.
The crazy thing about all these bond and bail-out lenders is that as they see the risk increase they increase their interest rates - which in itself makes it less likely that the economy in question is able to service those debts.
Looking at it all from a global perspective I would have thought that all the central banks (or BIS, going from their board membership), would bring down the level of interest charged to those economies in the same state as Ireland, thus making more likely that they will be able to repay their debts - no-one's going to get anything back if they go bankrupt, due to a loss of investor confidence which itself has been caused by the interest rate increase.
Promo @ 11.15
Irish Finance Minister Brian Lenihan last September decided to get the Irish Banks to come clean about their losses in an attempt to calm the international money markets and in readiness for the Irish Governments next sale of gilts. (Of course Ireland was borrowing from the European Central Bank at a cheaper rate than the bond markets were charging the Irish State direct, so I don't know quite why he did that but you can't blame him for wanting better transparency.) Anyway as a result of that exercise the Irish Government committed its taxpayers to some 50bn euros towards further stabilising the Irish banks. The cost of Irish soveriegn borrowing fell as the markets thought ok now we know the worst- for Irish banks. However they then looked at the other EU countries who had not been so forthcoming and of course Portugal, Spain and Italy were in their sights. The European Financial Stability Facility (EFSF) (lots of German money!)does not have deep enough pockets to provide loans to those countries should they fess up in the same way. So some see the bail-out being forced on Ireland by Merkel et al as a way of stopping the contagion. However all it does in practice is force more debt on the Irish.
Outsider
The view from down under - they agree with you.
http://www.youtube.com/watch?v=NOzR3UAyXao&feature=player_embedded
Promo - to answer your question about why the Irish would be better of leaving the Euro, well as I say when they made the bank debts more transparent and put in place the promise of more taxpayer money to support the banks the interest rates on Irish State bonds fell - making it easier for them to promise to pay their debt. Then Merkel et al meddled. That is the story of being in the eurozone.
The Irish can't take sensible decisions to help themselves.
The bond markets expect the Euro to fracture and if it does it does present a golden opportunity for the G7 and/or G20 to really clear out the zombie banks and put in place a banking system suitable for a stable world in the C21st century. Or is that too much to hope for?
The clip that just keeps on giving ...
http://www.youtube.com/watch?v=MdsfxbuOjTQ
Outsider :- You have to wonder what exactly the Germans are up to especially when you consider that they have been printing & minting Deutschmarks since May when the Greek crisis started as a 'contingency plan'.
Puck- Happiness! Happiness! If anyone else wants to improve their 'happiness index' this evening they should look up the 2 You Tube links posted above by you earlier today.
Not sure where to post this:
"Railways to get £8bn investment"
http://www.bbc.co.uk/news/business-11834531
"Although the new carriages will be given to the franchises, and represent good news for passengers - the train companies will want extra money from the government to run them".
What I don't understand is why are the government buying these carriages when the train companies are privatised and have just put the fares up, (again), even if they are franchises; (they could sell the rolling stock on if they lose the franchise).
Following the £7B pound to Ireland that's £15B extra government spending announced in the same week,; and only a month after taking £7B pounds out of the welfare budget.
Am I missing something?
I'm off to re-read 'the ragged trousered philantropists'.
Prom - The entire privatisation of the railways is a complete fraud. They are subsidised a huge amount and are totally unable to function as pprivate businesses.
What's worse, despite running at horrendous losses for which the tax payer foots the bill, they still pay healthy dividends to their shareholders.
The whole thing stinks. It's either a private enterprise - in which case it stands on it's own two feet or fails, or it should be re-nationalised. Biut at the moment it's a hybrid from which rich investors are making a fortune whilst the tax payer is footing the bill.
"a hybrid from which rich investors are making a fortune whilst the tax payer is footing the bill. "
No, how could that happen?
After all, surely we must have learned from Gordon's approach to PFI, and subsequently to the banksters? Surely ?
There used to be something in between Clause 3 and Clause 5. I can't remember what it was, can anyone help me?
Looking-glass Economics
'... surely we must have learned from Gordon's approach to PFI'
Today playing with my paintbox I mixed some blue, red, orange and green together and it all turned Brown - curiouser and curiouser.
Rhodri Morgan's letter in the FT today argues that Ireland's 12.5% corporation tax is taking big business away from Wales (and Scotland, England and the North of Ireland). In exchange for the UK's contribution to the bail-out he argues for some constraint on the competitive advantage that tax rate gives them. He goes on to ask "What, after all, would happen if the whole of Europe went for a 12.5% tax rate? Where would the tax receipts come from to bail out Ireland".
Well first off we need to understand where the bail-out monies are coming from:-
1. The IMF (mostly the US Federal Reserve, in the short term this would be their printed money as the US has a massive deficit. In the long run I suppose there is a chance that it might actually come from US taxes)
2. The Swiss, they probably will be using tax revenues (public and corporate).
3. The ECB (emergency bail-out fund). Again this will be printed money though Germany has an annual budget surplus.
4. The UK - we too will be using printed money.
5. In the longer term 1,3 and 4 above may be borrowed money, raised by the national governments from the bond markets etc. Only then is there a possibility that tax revenues raised from future generations will pay that money back.
But what Rhodri also needs to understand is that in Ireland Corporation Tax represents a larger proportion of the total amount of tax raised each year than in any other EU country, precisely because the rate is low enough to attract business and encourage growth and enterprise.
Without Merkel et al spooking the markets, Ireland may not have needed a bail-out. Could it be she wanted to engineer a situation to get rid of Ireland's lower corporate tax rate, or merely to control fiscal policies throughout Europe!
a correction to my blog above - Germany has an annual trade surplus, its budget deficit is now over 3.5% of GDP. sorry!
Red Flag - how did you learn that Merkel started printing D-marks this spring? I can certainly believe it was/is the case. Did you notice the report in the Daily Telegraph (27th Nov) by Louise Armitstead. Putin is in Germany for meetings with Merkel, he has publicly expressed support for a stable european currency which he said Russia might be part of, he said "we should move away from the excessive monopoly of the dollar as the only global reserve currency" apparently he believes reliance on the dollar makes the world economy vulnerable. Oh, and he thinks Europe is undervaluing the assets of the state-controlled gas giant Gazprom.
outsider - there were several reports in newspapers (including the FT) that they had commenced as a 'contigency measure' when Greece went tits-up should the euro fail or more likely they walk away from it. Although it became widely reported when Greece went, there are reports that actually it's been going on since Oct 2009.
Anyway here's one story from late May and nearly every newspaper carried similar around that time.
http://www.express.co.uk/posts/view/176668/Germany-Marks-its-territory
Holyhead never recovered after the forming of the Irish Free State, Its postition as a route for Irish politicians to Westminster was no more, It is now merely a through route for euro wagons since most people fly anyhow!
if the Irish (bail-out) budget is not approved next week, and according to a report in the Irish Times today all the opposition parties have signalled they will vote against it (the Irish coalilition Government only has a majority of 2), then there is a reasonable chance that Ireland will exit the euro and the Irish punt will be worth less. In those circumstances the Irish will want to attract more tourists, and will also be hoping to export more to the UK and European mainland. This has the potential to generate more business for Holyhead town and port.
outsider, politics is a dirty world inhabited by people of low morals and lower scruples (except the Druid of course. God forbid)
The Irish budget will pass next week. Sufficient 'antis' will either abstain or be absent from the vote with a 'stomach bug' or some such nonsense (mind you, there's a near-even bet that some of the FF TD's may be mysteriously absent as well). BIFFO is a spent force and he will face the electorate early next year and prove the old saying that the careers of all politicians ultimately end in failure.
They might have been stupid enough to get themselves in this mess but they aren't stupid enough to commit suicide. The impact of dropping out if the euro would devastate them and knock them back to a standard of life of 50 years ago or more.
Personally I think it will happen eventually anyway because I believe they will default with in a couple of years but I don't think they'll do it willingly next week. It would probably be the best thing for them but sadly like all drowning men they will clutch at straws - in this case 85BN of them.
Ireland is sorted for now with sticking plaster and a prayer. It's who's next that's the big question. 'Saving' Ireland seems to have made no difference to the decline of the euro and the stock markets are continuing to fall. Borrowing rates for the PIIGS are unaffordable, Germany has started selling volumes of PIIG bonds just to get shot of them and Italy seems to be coming under huge pressure.
Bit of edited plagiarism to consider:-
""Of projected Irish tax revenues in 2014 of €36bn, some €10bn – or around 28 per cent – will be eaten up servicing bondholders, with very little chance of the interest burden being reduced to manageable levels for decades thereafter. Much above 15 per cent marks what credit rating agencies call the point of no return, where interest begins to compound and the chances of reducing public debt therefore become close to impossible.""
Red Flag "Ireland is sorted for now with sticking plaster and a prayer. It's who's next that's the big question".
Spain from the market reports going out today.
Re:Bit of edited plagiarism to consider
as I've said before the problem is actually the lenders of these loans not the recipients - by charging higher interest to those with the most problems in paying back they just increase the likehood of default and the horrendous knock on effects that will follow for the rest of us.
However this seems to be the inescapable road of the unacceptable face of capitalism.
Write large in the 'kick the poor' sentiments/actions of the coalition governments. (I include housing cuts in this)
Public welfare cuts = £7B
Loan to Ireland = £7B (that probably will get written off)
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