Posts Tagged ‘International Monetary Fund’

The Real Argument for Renegotiation

Posted on February 23, 2011 in Economy

Minister for Finance Brian Lenihan at a press conference on economic growth on February 18.

In this article from The Irish Independent, Colm McCarthy lays out the argument for renegotiation from the perspective of potential default (read: “not paying”).  While admittedly a bit technical, the article makes some important points that can still be grasped by a casual reader.  Among these is the banks’ continuing liquidity crisis. (Read: “They need cash.”)  The banks need to sell assets fast, but the attractiveness of these assets is steadily declining as the rates of non-performance (“not paying”) and default (“can’t pay”) increase for loans made by Irish banks.  To McCarthy, the possibility that the Irish banks simply can’t make enough cash from these sales provides the real argument for renegotiation.  (Imagine making a $100 loan, but then transferring it to someone who will give you cash.  The difference here depends on getting $90 in cash versus $50 in cash.)  My favorite quote from the article is below:

“The problem with the bank guarantee is not that it was unfair, although it was. The problem is that it was a mistake, and mistakes, fairness aside, have to be undone as a matter of practical policy.”

Seems accurate, no?

After the Race

Posted on February 20, 2011 in Economy, Politics, Required

Borrowing its title from Joyce’s Dubliners, this article surveys the ongoing economic and political crisis in Ireland.  The article provides a great review of many of the topics we have already discussed in class, including the IMF bailout, migration patterns, and the exceptionally personal nature of Irish politics.

The Economist

17 February 2011

Fintan O’Toole on the Economy & Election

Posted on February 9, 2011 in Economy, Politics, Required

Fintan O'Toole, Irish author and columnist

In this opinion piece, Fintan O’Toole — a well-known Irish columnist — explains his decision not to run for a seat in the Dail in the coming general election.  Essentially he argues that time constraints would not allow himself and other independently-minded individuals to mount a legitimate campaign for reform, and that a halfhearted effort would actually be more damaging to the Irish psyche than not trying at all.  He notably asserts that a structured sovereign default is a necessary and inevitable part of Ireland’s economic recovery, and claims that the structure of the Irish government naturally inhibits democratic accountability.

Renegotiation and the General Election

Posted on February 5, 2011 in Economy, Politics

In a recent post for The Irish Economy blog, Karl Whelan discusses the potential for renegotiation of the EU-IMF bailout plan.  Contrary to popular political pundits, Whelan points to signs that the deal can in fact be restructured.  He goes on to argue that renegotiation needs to be a key part of election discussions.  Check out his 5-point argument here.  Whelan isn’t the only one urging candidates to demonstrate their intentions to restructure the EU-IMF deal: check out Elaine Bryne’s blog post for some important similarities.

With Economy, Ireland is Lost for Words

Posted on February 1, 2011 in Economy

In a recent blog post, Dr. Elaine Byrne discusses the stunned sentiment of many Irish citizens as they try to stay afloat in the economic and political worldwind that has surrounded them in recent weeks.  Bryne hints that “denial” might be the best word to describe the state of affairs in her country.  Most notably, she points to the 5.8% interest rate set for the IMF-EU bailout as a sign that monetary policy-makers may not fully grasp the seriousness of the debt crisis faced by Ireland.  With a recent telephone survey revealing that 57% of the sample group favor defaulting on debts to major bondholders, it will be interesting to see what direction interest-rates talk take.

Check out Elaine’s blog post here.

Lower Interest Rates Find Support in EU

Posted on January 29, 2011 in Economy

An EU official revealed last week that Ireland’s calls for a lower interest rate are finding some support from the European Commission and eurozone governments.  Ireland currently will have to pay an average interest rate of 5.8% on its €67.5 billion ($91 billion) bailout from the IMF and the European Commission, but many economists warn that such high interest payments may make the nation’s debt burden unsustainably large.  Eurozone finance ministers have discussed the issue, but the discussions are still in their beginning stages.

A full article covering the interest rate discussion can be found here.

Q&A: Irish Republic Bail-out

Posted on January 27, 2011 in Economy, Required

Ireland and the European Union have agreed to an 85 billion euro bailout aimed at repairing Ireland’s struggling economy. This BBC News article provides the answers to some frequently asked questions regarding the rescue package, including how Ireland got into this dire situation and how the EU’s bailout intends to rebuild Ireland’s economy.

This image, taken from the linked article, depicts the massive economic hole Ireland is in. (Source: Eurostat)

Read the full article here.