Irish take $90B bailout

posted at 10:15 am on November 29, 2010 by Ed Morrissey

Ireland became the second EU nation to accept a bailout this year after fears that its banking sector would collapse.  Like Greece in the spring, Ireland will have to impose an austerity program and promise to tap its public-sector pension funds before accessing any further lines of credit.  And like Greece, Ireland can expect domestic discord and unrest from the terms of the $90 billion bailout, which may not solve their problem anyway:

Ireland on Sunday reached agreement with the International Monetary Fund and the European Union for an emergency bailout package worth $90 billion, a rescue meant to both shore up that nation’s buckling banks and confront investor fears that Dublin’s problems are spreading to other European nations.

By agreeing to the bailout terms, the cash-strapped government in Ireland will be given fresh resources to recapitalize its hard-hit banking sector. Saddled with bad loans from a U.S.-style real estate bust, Irish banks have come under enormous pressure, with fearful depositors pulling out billions in recent months.

But in return for the loans, Ireland was forced to pay a relatively hefty 5.8 percent interest rate, higher than the 5.2 percent charged to Greece for its $145 billion bailout. In addition, Ireland will need to slash billions from its budget to save cash and had to promise to tap $23 billion in reserves from its own pension funds before it accesses the new lifeline.

The tougher terms appeared to be a warning to other financially troubled nations in Europe that they would have to pay an increasingly higher price for help if they could not manage to restore market confidence on their own.

British MP Daniel Hannan hates to say “We told you so,” but the Tory notes that EU skeptics had warned for almost a decade that the influence of Brussels would result in disaster for Ireland:

Ireland’s collapse is a direct and immediate consequence of the euro. As early as 2001, Irish economists were warning that the boom was getting out of control, and that interest rates needed to go up. But, of course, therewere no Irish interest rates any more: There was only the European Central Bank. Its policy of cheap money was arguably excessive even for the core European economies; for Ireland, it amounted to catastrophically pro-cyclical monetary policy. A credit bubble was inflated; the bust, when it came, was commensurately painful. …

The credit crunch was just the beginning of Ireland’s euro-related troubles. Unable to devalue, the country suffered as the United Kingdom, its largest export market, gave itself a 25 percent competitive advantage.

Ireland’s position has now become calamitous: debt and unemployment are rising, prices and incomes are falling. GDP is down by an almost unbelievable 20 percent from peak. And here’s the really bad news: These problems will carry on for as long as Ireland is in the euro. Bailout or no bailout, Eire’s economy diverges cyclically and structurally from Continental Europe: Save by occasional and fleeting coincidence, its interest rates and exchange rates will always be wrong.

I traveled through Ireland in 2001, and can tell from personal experience that the EU was enormously popular at the time.  Hannan’s right about the economic differences between Ireland and the Continent, but the EU at the time had invested a lot of money in Ireland.  In one way, it was similar to Porkulus in that every project with EU funding had a big sign informing passersby about the origin of the cash behind the project, complete with the EU flag.

Hannan wants Ireland to join the Anglosphere economically, presuming that the UK doesn’t take the leap into the euro itself.  That may make sense on paper, but the Irish probably aren’t eager culturally to make themselves dependent on the English if they can move forward independently.  The “Celtic Tiger” was more than just the best economic period for Ireland in centuries; it was a chance to stand apart from the nation that conquered and oppressed them for almost a millenium.   I’d guess that the Irish would rather take their chances with Brussels over London even after this collapse, and that it would be political suicide to suggest otherwise in the Dáil.

Besides, the bailout has plenty of Anglospheric participation as it is.  The IMF will put up a third of the cash, which means that American taxpayers will almost certainly be contributing a substantial share of the money — as we did with Greece.


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I’m ashamed to be Irish.

…and no, we are NOT lucky.

Potato famine, fair/easily burned skin, alcoholism, and now this.

We are NOT lucky.

blatantblue on November 29, 2010 at 10:18 AM

Go n-éirí an t-adh libh.

That’s easy for you to say!

Shy Guy on November 29, 2010 at 10:19 AM

Just more money printing…this time by the EU and ECB

PatriotRider on November 29, 2010 at 10:19 AM

There won’t be enough money to bail out Portugal, Spain and Italy…

PatriotRider on November 29, 2010 at 10:20 AM

Erin Go Broke

Hening on November 29, 2010 at 10:21 AM

The IMF will put up a third of the cash, which means that American taxpayers will almost certainly be contributing a substantial share of the money — as we did with Greece.

We need to get out of the IMF pronto.

Rebar on November 29, 2010 at 10:22 AM

‘The Euro Game Is Up! Just who the hell do you think you are?’ – Nigel Farage MEP

Some in the EU can see the writing on the wall.

This dude is awesome.

Dr.Cwac.Cwac on November 29, 2010 at 10:22 AM

We are NOT lucky.

blatantblue on November 29, 2010 at 10:18 AM

Good music though!

WashJeff on November 29, 2010 at 10:22 AM

Erin Go Broke

Hening

Heh, heh!

honsy on November 29, 2010 at 10:23 AM

90 billion? That’s all?

We’ve spent, what, almost $3 TRILLION in a little over two years with TARP, Porkulus and other assorted various bailouts?

This bailout is an act of thrift compared to our spending…

catmman on November 29, 2010 at 10:25 AM

Dr.Cwac.Cwac on November 29, 2010 at 10:22 AM

Beat me to it….this is as unvarnished as you can possibly get by a politician….outstanding!!

PatriotRider on November 29, 2010 at 10:25 AM

We need to get out of the IMF pronto.

Rebar on November 29, 2010 at 10:22 AM

Amen to that.

Good music though!

WashJeff on November 29, 2010 at 10:22 AM

True!

blatantblue on November 29, 2010 at 10:29 AM

90 billion? That’s all?

We’ve spent, what, almost $3 TRILLION in a little over two years with TARP, Porkulus and other assorted various bailouts?

This bailout is an act of thrift compared to our spending…

catmman on November 29, 2010 at 10:25 AM

Yeah, but think about it…Ireland has about 4.5 million people. There’s almost twice as many in NYC alone! So 90 billion is a LOT of money.

I’m ashamed to be Irish.

blatantblue on November 29, 2010 at 10:18 AM

*smack!*

Get a hold of yourself, blue! One taste of Tullamore Dew will get ya back!

JetBoy on November 29, 2010 at 10:30 AM

Get a hold of yourself, blue! One taste of Tullamore Dew will get ya back!

JetBoy on November 29, 2010 at 10:30 AM

I could go for an Irish Carbomb. Guinness, Bailey’s Cream and Jameson

oh boy

blatantblue on November 29, 2010 at 10:36 AM

Gee, I remember when Ireland was held out by us righties as an example of how a pro-business environment will create growth. I guess that example was a mirage — like the pot o’ gold at the end of me lucky rainbow.

tommylotto on November 29, 2010 at 10:37 AM

Irish pension funds are being forced to fund a portion of the bailout. On a related matter, France has taken control of public pensions funds and will force them to invest a portion of the funds in Gov’t securities. Hungry had made this move earlier this year. The UK is looking at mandatory enrollment in pension funds and I’m sure the default investment option will be govt securities.

Watch out. Govt’s are getting desperate as the Fiat currency debacle unfolds. Watch out for your 401K’s, a couple of Dems have been talking about taking control 401k’s over the past year.

WisRich on November 29, 2010 at 10:38 AM

George W. Bush must be so proud for launching the banksta bailout era. His “TBTF” lie has gone viral.

Lies Across America

Americans love authority figures who act as if they have all the answers. It matters not that these egotistical monuments to folly and hubris (Bush, Obama, Paulson, Geithner, Greenspan, Bernanke) have committed the worst atrocities in the history of our Republic, leaving economic carnage and the slaughter of thousands in their wake. The most dangerous man on this earth is an Ivy League educated, arrogant ideologue who believes they are smarter than everyone else. When these men achieve power, they are capable of producing catastrophic consequences. Once they seize the reigns of authority these amoral psychopaths have no problem lying to the American public in order to achieve their objectives. They know that Americans love to be lied to, so the bigger the lie, the more likely it is to be believed.

Rae on November 29, 2010 at 10:39 AM

We need to get out of the IMF pronto.

Rebar on November 29, 2010 at 10:22 AM

Not to mention the World Bank, OECD, and the whole supra-national alphabet soup that’s leaching our tax dollars to bail out socialists and dictators around the world.

Oh, and the Federal Reserve, as well.

Inkblots on November 29, 2010 at 10:40 AM

I could go for an Irish Carbomb. Guinness, Bailey’s Cream and Jameson

oh boy

blatantblue on November 29, 2010 at 10:36 AM

It’s not eve 11 am….

Yeah, you’re Irish alright!

btw the Gaelic phrase Ed wrote there means…”Good Luck!”

JetBoy on November 29, 2010 at 10:41 AM

Erin Go Broke

Hening on November 29, 2010 at 10:21 AM

We have us a thread winner! Give that man a kewpie doll!

NavyMustang on November 29, 2010 at 10:42 AM

JetBoy on November 29, 2010 at 10:41 AM

Only ’cause it’s reminiscent of chocolate milk!

blatantblue on November 29, 2010 at 10:43 AM

Was it the Euro that caused Irish politicians to send spending soaring, the past 10 years? The only austerity being required is to send spending back to what it was, before the bubble fed explosion of such. Something the leftist trash will resist, I know…they’re already marching to preserve their welfare checks.

MNHawk on November 29, 2010 at 10:43 AM

Gee, I remember when Ireland was held out by us righties as an example of how a pro-business environment will create growth. I guess that example was a mirage — like the pot o’ gold at the end of me lucky rainbow.

tommylotto on November 29, 2010 at 10:37 AM

Ireland pretended that it was implementing a new policy of self-reliance, but obviously it wasn’t. It’s self-reliance that impresses conservatives–not borrowing.

RBMN on November 29, 2010 at 10:45 AM

Erin Go BLAAAAAAAAAAAAAAAAAAHHHHHH!

pilamaye on November 29, 2010 at 10:47 AM

Gee, I remember when Ireland was held out by us righties as an example of how a pro-business environment will create growth. I guess that example was a mirage — like the pot o’ gold at the end of me lucky rainbow.

tommylotto on November 29, 2010 at 10:37 AM

Ireland pretended that it was implementing a new policy of self-reliance, but obviously it wasn’t. It’s self-reliance that impresses conservatives–not borrowing.

RBMN on November 29, 2010 at 10:45 AM

It was taxes on business that brought Ireland to this point. They got outrageous over the last few years, and business there moved out elsewhere. Just another example of high taxes killing another economy.

JetBoy on November 29, 2010 at 10:49 AM

All these bailouts due is postpone the day citizens get really pissed at their govt.

Paul-Cincy on November 29, 2010 at 10:50 AM

Erin Go Broke

Hening on November 29, 2010 at 10:21 AM

Hehe.

Seriously though, How about from now on when there is a “boom” going on somewhere in the absence of real and significant new primary wealth-producing activities, we recognize it for what it is instead of making up cute nicknames for it like “Celtic Tiger”.

forest on November 29, 2010 at 10:52 AM

All these bailouts due …

Paul-Cincy on November 29, 2010 at 10:50 AM

Sorry! Total Freudian slip on my part. Meant to say “all these bailouts do”.

Paul-Cincy on November 29, 2010 at 10:53 AM

After supporting Obama, Daniel Hannan is dead to me. He talks a good game but anyone who calls himself a conservative and yet supported Obama in 2008 is either practicing the highest form of cognitive dissonance or a snake oil salesman peddling the latest product he thinks the public will buy. He’s the last person who should be pulling out the “I told you so” card.

jnelchef on November 29, 2010 at 10:58 AM

tommylotto on November 29, 2010 at 10:37 AM

I was just in Ireland two years ago. Hubby and I were a little confused on the tipping etiquette. We were told not to tip because bartenders and servers made a generous living wage and would be insulted by the extra money.

Ireland went against the free market system, establishing wages set at arbitrarily high levels set by “the unionised private and public sectors, regulated by tripartite ‘social partnership’ agreements of which national wage agreements are the central feature.”

Not exactly the cornerstone of a “pro-business enviroment”.

Fallon on November 29, 2010 at 10:59 AM

I’m ashamed to be Irish.

I will never be ashamed to be Irish. This too shall pass.

Fallon on November 29, 2010 at 11:02 AM

Ireland was doing fine, better than any other EU country, after slashing taxes and spending. But the inevitable boom required rates to rise and as the quoted article notes, their currency was no longer theirs to control. The rest of the EU was envious of their low corporate tax rates which lured businesses; raising those rates was more or less forced upon them by Brussels, but the indicated help never came after they did.

The EU may have been popular among those Ed met in 2001, but the referendum failed at least once, and only succeeded on a later try. That game was fixed: those countries which rejected the EU were set to have vote after vote until they approved it, but once approved no further vote would be permitted to rescind.

Adjoran on November 29, 2010 at 11:03 AM

The problem with leaving the Euro is that Ireland’s debts are denominated in Euros.

In past times (pre Euro) the thing a country would do in this circumstance is to devalue their currency so that business will pick up and and the debt is repaid. Makes the citizens poorer, but c’est la vie. But that won’t work well now. If the Irish were to leave the Euro and recreate the Irish Pound then devalue then the face value of the debt would increase by the amount of the devaluation.

The Euro is making it REALLY hard to get out of this mess.

Buckland on November 29, 2010 at 11:10 AM

I will never be ashamed to be Irish. This too shall pass.

Fallon on November 29, 2010 at 11:02 AM

And then we’ll die.

LOL that’s a good Irish phrase:

This Too Shall Pass, and Then We’ll Die.

blatantblue on November 29, 2010 at 11:11 AM

Erin Go Broke

Hening on November 29, 2010 at 10:21 AM

Stole my post! Well done…

Khun Joe on November 29, 2010 at 11:12 AM

Go n-éirí an t-adh libh.

To which I will add about 20% of Gaelic wrt Ireland’s current situation,

Cach!!

The author will not be held responsible for mispelling the above word. Most online Gaelic dictionaries don’t handle swear words well.

Jim708 on November 29, 2010 at 11:19 AM

This is an interesting additional piece to puzzle. I just saw an analysis (don’t have the link handy) showing that Ireland also has a spending problem. When things were going great they couldn’t spend the money fast enough. Now they’re stuck with entitlements and no money to pay for them (sound familiar?). Good to know they’ll have to start chopping back spending as part of this agreement.

Rufus on November 29, 2010 at 11:25 AM

$90 Billion! That’s it! Hell, in this country we spend that much on scones and lemon ‘crud’!!!!!!

Dread Pirate Roberts VI on November 29, 2010 at 11:36 AM

Irish pension funds are being forced to fund a portion of the bailout. On a related matter, France has taken control of public pensions funds and will force them to invest a portion of the funds in Gov’t securities. Hungary had made this move earlier this year. The UK is looking at mandatory enrollment in pension funds and I’m sure the default investment option will be govt securities.

Watch out. Govt’s are getting desperate as the Fiat currency debacle unfolds. Watch out for your 401K’s, a couple of Dems have been talking about taking control 401k’s over the past year.

WisRich on November 29, 2010 at 10:38 AM

Yes, that will happen here. An outright takeover of 401K, IRA, etc, can’t happen here because it might lead to a c-war, but a plan to force buying of US securities might work. It will be sold by a naked appeal to nationalism. Imagine that from progressives!

As usual the downside will be deferral of difficult budget cutting decisions, lower returns for later retirement, and much less capital for investment in the private economy.

slickwillie2001 on November 29, 2010 at 11:43 AM

Okay, there has to be a way to make some money on this,,,,puts, calls,,etfs,,what. euro puts,,spain puts.

retiredeagle on November 29, 2010 at 11:44 AM

All these bailouts due …

Paul-Cincy on November 29, 2010 at 10:50 AM
Sorry! Total Freudian slip on my part. Meant to say “all these bailouts do”.

Paul-Cincy on November 29, 2010 at 10:53 AM

You were so right the first time. Next up…Portugal, I believe.

If Europe wasn’t so bent on cultural suicide, I’d almost feel sorry for them.

Canadian Infidel on November 29, 2010 at 11:45 AM

Good ole USA. We bail out everyone. I have done comparisons and the EU is a bigger base than the US. The total bail out amounts they have come up with compare to our recent “stimulus”, which the EU didn’t help finance. In addition our TARP sent billions directly and indirectly to those same governments. Isn’t it time that we quit financing their socialists whims?

Oleta on November 29, 2010 at 11:46 AM

Green no more. Ireland is now the ash-colored nation.

I still like Irish whiskey though.

Bishop on November 29, 2010 at 11:51 AM

Europe squandered all the money they did not have to spend on first rate militaries because we had our military all over Europe” protecting” them. We have enabled their welfare/cultural suicide. Lets get off the sinking ship, pull our troops back here where they belong on our border and rebuild our country.

retiredeagle on November 29, 2010 at 12:42 PM

Meh, should have stayed part of Great Britain. Not every people are capable of ruling themselves.

jarodea on November 29, 2010 at 1:10 PM

I was last in Ireland in 2004 and the Celtic Tiger was still in full swing. Dublin was booming and the young Irish were partying hard. I remember having some conversations about their future. No one saw an end to the boom…they sold their souls to the Euro. Now the EU thinks they own them.

d1carter on November 29, 2010 at 1:29 PM

I don’t know where you were traveling in 2001, but it wasn’t Ireland if you think the EU was “enormously popular” at the time. If the EU was so “popular” in Ireland, why did they reject the Treaty of Nice in 2001? The governments had to bring joining the EU to a vote THREE TIMES before it was passed in 2009 in Ireland. The left and the right were against it–Sinn Fein and the Catholic Church were opposed, an unlikely alliance, but CORRECT as it turned out a year later in 2010. This is a devastating event in Irish History. They fought a civil war during the 1920s to gain their sovereignty from Britain; this is the end of Irish sovereignty. It makes me physically sick to see what’s happening.

Irish Voters Rejected the Treaty of Lisbon in 2008, like they rejected the Treaty of Nice in 2001

http://en.wikipedia.org/wiki/Treaty_of_Lisbon

http://en.wikipedia.org/wiki/Treaty_of_Nice

http://www.guardian.co.uk/world/2008/jun/12/ireland.eu

mountainaires on November 29, 2010 at 3:23 PM

Ireland never should have bailed out the banks; should have defaulted, Says Peter Schiff.

Take a lesson, America.

http://www.youtube.com/user/SchiffReport#p/a/f/0/kgOovAcsLA8

mountainaires on November 29, 2010 at 3:34 PM

mountainaires on November 29, 2010 at 3:23 PM

You are correct. I prayed the Irish would not sell their independence. I am not Irish, but I love Ireland and the Irish people…I hope I live long enough to see them fiercely independent once again…

d1carter on November 29, 2010 at 3:52 PM