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THE PROSPECTS of Ireland seeking an improved arrangement on its banking debts have been dealt by a blow, after it emerged that Germany had blocked Spanish attempts to have bailout funds injected directly to banks and not distributed via the government.
It is reported this morning that Spain had sought to have its €100 billion in new loans – agreed upon by Eurozone finance ministers in a conference call on Saturday afternoon – lent directly to the banks, meaning the loans would not be considered part of the country’s national debt.
This was rebuffed by Germany, which ensured that the cash was distributed directly to the government – a precedent which will damage Ireland’s hopes to secure a similar arrangement separating its banking liabilities from its sovereign debt problems.
Despite the cash being distributed as a loan directly to the Spanish government, however, the loans do not come with the same severe terms and conditions that have marked previous EU bailouts for Greece, Ireland and Portugal.
This morning, though, Dow Jones newswires quoted EU competition commissioner Joaquin Almunia – a Spaniard who previously held Olli Rehn’s current job of economics commissioner – as saying the bailout would come with some terms and conditions.
He said the interest rate applied to Spain’s loans, and the exact schedule of when the loans would be released to Spain, had not yet been decided.
It is thought that the latter conditions will not be finalised until an audit of the banking sector, outlining the exact extent of any potential capital shortfall, is published later this morning.
Speaking on Newstalk’s Breakfast show, junior finance minister Brian Hayes said Ireland again insisted it could eventually secure an improved arrangement on its promissory notes, which would ultimately be the “game-changer” allowing Ireland to return to the markets more quickly.
He added that it was “not true” to suggest Spain had escaped without financial conditions, saying the funding wuold come with ”very substantial conditions attached to their financial sector” won’t be known until the end of the month.
Taking fire at Sinn Féin’s claim that Spain had been given a better deal than Ireland, Hayes said the only reason Spain was set to be given a lower interest rate was because it was receiving the cash only from the EU, and not from the IMF which charges higher interest rates.
Discussing the possibility of funding being given directly to banks, Hayes commented that there had been “some discussion in connection with the idea that a bigger European-wide bank resolution plan would be put in place”.
Those discussions based on premise that European authorities might fund banks directly… That’s not the majority view of the eurozone at the moment.Will that change over the next couple of months? I can’t answer that question.
The world’s markets have welcomed the Spanish deal, with futures on all the major European markets in positive territory after the largest Asian markets recorded strong gains.
The euro has reached a two-week high against the dollar, trading at $1.2603, while the cost of borrowing for the Spanish government has fallen significantly to around 6 per cent for 10-year loans – having stood at 6.2 per cent when markets closed on Friday.
The cost of borrowing for Germany, meanwhile, had risen by 0.05 per cent to 1.377 per cent as of 8:30am Irish time.
All Germany is doing is reinforcing the belief that it wants other countries to be kept in austerity while their own economy continues to be strong.
One wonders why.
i’m going to keep boycotting aldi and lidl. great bargains to be found in dunnes and tescos still. you’d be mad to drive a rotten merc and who wants their stinking sausages???
“i’m going to keep boycotting aldi and lidl”
That’s cutting off your nose to spite your face.
Hayes is a spoofer the EU/ECB money was at a higher rate than IMF money
Correct you lie Hayes !!!!
In case anyone is wondering where John is getting his figures from…
So when does my life improve with all these borrowings. Money being lent every where markets climbing on spain getting a monstrous loan. Banks taking every penny. I’m just kinda wondering since I’m working paying my way paying the Banks way. When does my life improve when do I see some light at the end of the tunnel. Or like every working person in this country who work to better their life. There’s no deal for us were just getting up in the morning to pay the debts of Banks and every other friend of Bankers.
you don’t, you shut up and take it like a good citizen.
Thinks can only start to get better when Irish realize that our politicians don’t give 2 f??ks about us. They are still lining their pockets while people suffer. Depression is rising, suicide is rising, crime is rising and so on. Ireland is broken beyond repair unless our whole political system is reformed.
Anglo will be paying out €1 billion before the end of June to unsecured senior bond holders. Who are the fools in this story I wonder……
Us :-(
All this is being done in order to push things closer to Germany’s desired end game. The more debt they apply to countries and not institutions, the more unsustainable the financial situation becomes for those countries. The more unsustainable the debt becomes, the more likely they are to be able to force us into a full fiscal and political union with Germany at the helm. What Germany failed to achieve through two World Wars, they are now within touching distance of achieving through over 60 years of diplomacy and economics.
But at this point in the game what can you really do about it?
I think it’s a mistake though to suggest that this is some sort of 60 year game plan. Rather I suspect that German protectionism has seen a route through the crisis that favours them and is pursuing it. And really, if we were in their position would we put the best chance for our countries behind the best chance of others?
Goodwin’s Law
Godwin refers to use of Nazi analogy. As EM has mentioned both the first and third reichs and has made no overt reference to Hitler or the Nazis I feel beholden to invoke Cohen’s law.
Is now a bad time to suggest that because David referenced ‘Goodwin’s Law’ and now ‘Godwin’s Law’, he may have been referring to an entirely different law, and therefore by referencing Cohen’s Law you have in fact become its own victim?
You think perhaps he was refering to these lads: http://www.goodwinslaw.com/ (the only obvious reference a quick google brought up)
In which case I might understandably ask why he referenced a law company in Singapore in this context.
Or he made a typo.
@David Higgins
I’m not referring to the Nazis as a sole example. German foreign policy since the foundation of Germany as a single nation state under Bismarck has been built around making Germany the most influential and powerful country in Europe. Bismarck’s foreign policy was based around trying to take the place of France as the most influential nation state in Europe while ensuring that the Austro-Hungarian empire was subservient to the new Germany. When Kaiser Wilhelm II came to power, he was determined to try and challenge Britain naval supremacy as a matter of national pride. This led to tensions with Britain. He also got Germany involved in the race for Africa in order to compete with Britain and France. This is at a time when the biggest empire meant the most influential, so again, you can see the mindset. Germany, like the other powers at the time, played its fair part in World War I and, indeed, acted quite aggressively in giving Austria a carte blanche to go after the Serbia, knowing it would inevitably lead to war with Russia. Germany was never invaded during the First World War, indeed, they invaded five countries. Then World War II happened, largely based on Germany’s sense of nationalism and desire to dominate Europe as they failed to do in World War I. And since the foundation of the EU (not EEC), Germany has consistently sought to dominate European affairs. Germany’s policies since the Eurozone crisis began in 2008 has consistently been geared towards fuller fiscal and political integration of the EU member states. Austerity is a German demand and a German policy with a united Europe as the goal as I have outlined above. Some might argue that it wouldn’t be such a bad thing to have Germany, the most successful and efficient economy in Europe, in charge of our affairs, especially with us having made such a ham fisted effort at self government and surrendering our sovereignty so easily. This is not having a pop at Germany. I am merely pointing out a trend which has been evident and evolving since 1868.
The key difference is that FF were here and insisted on protecting Anglo Irish bank and its key donors. They knew that if an outside authority had oversight in to Anglo’s loans and dealings that wide ranging criminal proceedings would have resulted and that the party would also be exposed, its leading members shown to have received favourable loans and terms from the bank.
The symbiotic relationship between FF and Anglo Irish still exists, look at PJ Mara, one of the most powerful FF backroom men for decades in Poznan with Sean Fitzpatrick, where they are paling around together. They will pull in every favour, pressure and threaten at all levels to ensure that men like Fitzpatrick are never held to account.
As if Ireland was ever going to get a good deal on it’s bank debt! Unfortunately we are stuck with this FOREVER! Our politicians can huff and puff all they like but this is just smoke and mirrors to try and convince us that they’re actually trying to get us a good deal when it fact they are just looking after their own finances, their family and their pension. To hell with the rest of the Irish people is what they’re really thinking!
Cal Mooney is right! Our Government don’t have the courage to put it up to the Germans! As long as they’re not having to impose cuts on themselves or the wealthy and powerful, not much will change! It’s all about staying in power for as long as possible, and accumulating as much free state cash as they can! This is why they haven’t gone near Croke park yet! They want to find out just how far they can go in imposing cuts on the least well off before addressing the more powerful elements in society! Deep down they know that they haven’t a hope of surviving a full term, therefore it’s all about taking every cent they can get while they can!
I think it’s worth remembering the distinct differences between the two situations in Ireland and Spain.
The “deal” that Spain has gotten is on the initial money it receives for its banks.
The “deal” that Ireland is looking for is for a restructuring of the repayment of the money we’ve received for our banks.
A deal that would lower the interest rate or extend the term of the promissory notes has not been prevented by the Spanish deal.
The issue this touches is on the idea of separating the banking debt from sovereign debt.
What a load of trip David. The whole world knows that Spain got a better deal, because the Spanish played a much better game of poker that Edna and Gimpmore. Neither of our negotiators are up to the job. You can try and sell us your party line as much as you want, but everyone in Ireland knows the truth. You guys are not up to the job.
We needed real negotiators going to fight on Irelands behalf. We still do. Forcing us to vote Yes only weakened our hand to Germany (not strengthened it). But Enda and Gilmore couldn’t care less, as long as they are taking their 500,000 per year total compensation package from the irish tax-payer. FFg/Labour are the greatest threat that this country has ever known. They are selling our sovereignty away and forcing lowest and middle incomes into poverty traps that will last for at least 10 years into the future. You guys should be ashamed of yourselves.
Spain’s main demand of the loan being separate from their national debt was rejected.
They played a better hand did they…..
Cal, instead of ranting an inaccurate diatribe, why not contribute to the point David was making?
Your childish name calling belittles the point you were trying to make, if you actually were.
David highlights the difference between the Spanish banking bail out terms indicating that, contrary to the headline, this will not affect Irish attempts to negotiate the promissory note terms. He is correct.
You rant blames Gilmore and Kenny for not negotiating better bailout terms for Ireland. Which considering they were in opposition at the time of negotiating the bailout is somewhat far fetched!
Your reaction to David’s point is worrying, and one would hope the majority are not so rash in their judgements or indeed vague in their memories. This is the ridiculous populist rubbish been preached by some of the political parties at the minute.
Ireland have entered into a bailout. Now we have to try renegotiate terms to deal we have already signed up to. The negotiating terms Spain had at weekend are a long way away from what Ireland currently has after signing up to the programme in 2010
@Bill, just as a matter of course, I should point out that the headline doesn’t refer to a deal on the promissory note, but rather the broader goal of decoupling bank debt from sovereign debt.
Bill/David Higgins/Declan Cotter…
This is an extract from an international news web-site (associated with News Week). I don’t mean to belittle your arguments that Spain got exatcly the same conditions that Ireland got, but i must insist on the truth being told, rather than listen to FFg/Labour Spin:
The Bailout Comes Without Conditions
Rajoy was also quick to point out that, unlike the bailouts that went to Greece, Portugal, and Ireland, Spain’s banking bailout comes with no “conditionality.” While the banks that receive funding will have specific conditions placed upon them, officials say Spain itself will have no new economic rules imposed upon it from outside and will not have to accept cuts to the government’s budget. However, Rajoy plans to continue with the austerity measures his government has already put in place.
Spain Didn’t Want to Be Bailed Out
Spain wasn’t quick to jump on the bailout bandwagon. The country previously had resisted asking for international help, after watching the requirements placed on Greece, Portugal, and Ireland. Prime Minister Rajoy repeatedly insisted that there would be “no rescue of the Spanish banking sector,” while a senior minister said that “the men in black would not be coming to Spain.” But the self-assurance wasn’t built to last. German news outlet Spiegel learned that Germany Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble decided that Spain should be required to take bailout funds and pressured the Spanish government to accept them.
Cal 1 – David, Bill 0
The daily beast sounds like a very reliable course… From what I have read, Spain has to get its deficit from 109% to 103% by 2014….. That means austerity…Whether they like it or not…. But maybe the ‘Dailybeast’ know more
Where would you consider a reliable source Declan, if you’re an educated man you hardly believe anything fine Gael tell us, they are incapable of telling the truth, compulsive liars, and all the proof is there.
Declan et all …
OK, here is another link, with Noonan etc … specifically calling out the same details as my previous ‘ambiguous’ link.
This one comes from another spurious site called Journal.ie
http://www.thejournal.ie/noonan-welcomes-spanish-request-for-banking-bailout-480928-Jun2012/
It just broke there now!!!! Spain will be monitored the same as Ireland, Greece and Portugal…. So I ask again…. How exactly did Spain get a better deal than Ireland??? If anything its worse because they have to align the deficit quicker…
Christ Declan…
OK, here is one from another dubious source (from this morning)…. Financial Times.
http://www.ft.com/cms/s/0/c8e85ba6-b31a-11e1-83a9-00144feabdc0.html#axzz1xU93btRY
‘Spain’s bank bailout of up to €100bn comes without the same conditionality as the programmes for Ireland, Portugal and Greece that were agreed with the troika – the European Commission, European Central Bank and the International Monetary Fund.
Under the existing troika programmes countries are subject to rigorous quarterly inspections by EU and IMF officials and must sign up to a detailed memorandum of understanding and strict targets covering tax, spending and social welfare. These quarterly visits have become political lightning rods in Athens, Lisbon and Dublin where there is public concern over a loss of economic sovereignty.
“Many Irish people looking at the deal this morning will be asking themselves why is there one set of conditions for us and another for Spain,”
Now, will you drop the pretense that we are being subjected to the same conditions as Spain.. We are not.
We must get formal approval every 3 months from the troika in order to continue the draw-down of the bailout/
Spain will not be subjected to this humiliation. You can continue to support your party line on this, or you can just admit the facts. Either way, i don’t care.
In fairness to Declan the Irish Times is reporting that it will be over seen by the troika.
http://www.irishtimes.com/newspaper/breaking/2012/0611/breaking3.html
Also I see Noonan has said this agreement will bring “much-needed confidence and stability in the euro zone” tad confused I thought that was the fiscal compacts job?
Kerry,
Thanks for the article, but the article is very clear in so far as saying the Troika will only be overseeing and approving the restructuring of the banking debt. And not the day to day management of the Country like Ireland is subject to.
So even though Spain is in exactly the same position as Ireland with respect to its Fiscal spending (9% deficit compared to our own 8.6% deficit), Spain is NOT being subjected to the same rules.
The Irish times article is very cleverly written to give the reader of the article the impression that we and Spain are being treated the same, but the following paragraph sums it up, and goes to show how biased the media ion this country are, in supporting the Governments spin.
The IMF would be fully involved in monitoring Spain’s programme even though it was not contributing funds, and banks that received aid must present a restructuring plan, he said.
“!Mr Schaeuble told Deutschlandfunk radio: “The Spanish state is taking the loans, Spain will be responsible for them… There will likewise be a troika. There will of course be supervision to ensure that the programme is being complied with, but this refers only to the restructuring of the banks.” ..
Sorry Cal… Just not seeing it…. They have to reduce their deficit to 103% by 2014… That means huge austerity…. End of story… Added to that there has already been massive cuts in Spain…
As an aside Cal….How the hell do you get the time to write such long comments…Your boss must be very understanding :-)
Trust me Declan, i do work long hours every day. I love my job, and appreciate having it. I would never do anything to put my job at risk. I am salaried, so the hours i do every day are my own. I work well into the evenings/nights based on need. I work in a meritocracy environment (ie not unionized) which means that if i am not performing as well as i need to, i do not get a pay-rise and promotions are out of the question.
Where i lose time writing comments during the day, i more than make up for them by working extra hours at home. Sad, i know, but its my choice.
For all the blogging/commenting i do, i do it for self-less reasons. I am not a member of any party, and very recently, i would have been of the opinion that SF’s policies would not be workable. However, as i have watched their policies develop and their professionalism in holding the Governments to account, i have to admit, i am very impressed by them. I have written comments on here stating that I don’t agree with some of their current behaviors. I find it incredible that they still sell IRA memorabilia from their offices/shops.
But I am sure they won’tr continue to do that much longer. By the same token, i have praised individual initiatives by various Government ministers, so no-one can accuse me of being blind support of one party over another.
If folks want to label me a Shinner, which often happens on here, then so be it. I probably deserve the label for supporting so many of SF’s policies, but as i said above, i am not blindly following them. If they slip up, i hold them to account the same way i hold any party or individual to account.
I am hearing loads of commentry that Spain got a better deal than Ireland and I am struggling to establish why this is the case? Can someone explain or is it as I expect complete rubbish… Way i see it Spain have to get from 9% to 3% faster than us meaning if anything the austerity will be worse??
Careful Now Declan.
The comments section of this site doesn’t like reasoned analysis like that.
Ah wonderful, David Higgins talking about reasoned analysis. You should try it David rather than spout your parties lines and rhetoric everytime you are on here.
You clearly only read stuff that validates your strongly held opinions David.
Germany will protect its core institutions, it’s done well out of the Eurozone, and having weaker satellites ensures it’s dominance. So the idea of being helpful is a misnomer. Whether this is by design or in pursuit of a grand plan is uncertain; but in looking back at how predatory the European banks were is stuffing money into the African and South American countries in the 60′&70′s they no longer had the territory to be predatory, so in effect they have now they s***t on their own doorstep this time. We all look at the EU as to what we can get out of it – Germany is no different. But the big difference for us is that for too long we’ve let our self serving politicians erode sovereignty to the point we are one of the weakest links – there is a better way to fight back and from within the system – make it happen join sli nios fearr – google it!
How has Ireland done Martin? From the euro project as a whole?? I visited your web page…Not impressed…
gavan your the head off damien duff:)
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