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Monday, November 29, 2010

Ireland Should Default

Columnist Vox Day has provided a very precise assessment of the economic crisis in Ireland and the bailout option offered by the European Union...

"According to figures published by the Bank of International Settlements, the Irish government now owes $146 billion to German banks, $134 billion to British banks and $54 billion to French banks that have invested in Irish banks and Irish bonds. This means that if the Irish government refuses to default on the debts incurred by its failed banks, it will put every single man, woman and child in Ireland on the hook for $76,781.61 for the benefit of the European bankers to whom the Irish bankers owed that money.

Fear that the Irish will follow the example of the Icelandic people and refuse to pay loans they never took out are why the International Monetary Fund and the European Union are so insistent upon the Irish government accepting what is described as "a bailout package" but is actually a loan of around $112 billion with many insidious strings attached. This loan will take the European banks and the Irish banks safely out of the picture, while the people of Ireland will be forced to pay the Irish bankers' debts to the people of the various European countries who have been forced to take the risk that previously belonged to the German, British and French bankers who originally made the loans.

It isn't necessary for the Irish people to be impoverished for multiple generations in this way. After the failure of the biggest bank in Iceland, Dutch and British banks tried to force the Icelandic people to pay them $16,400 apiece to settle bad debts incurred by the owners of Landsbanki. Fortunately for Iceland, some of the politicians in Reykjavik were made of less corrupt stuff than Brian Cowen and his Fianna Fáil government and they took the matter to a referendum in which only 1.5 percent of the electorate voted for the "bailout." And contrary to the dire predictions of the furious banking elite, the island nation did not sink into the Atlantic as a result."

Agreed. Indeed a majority of the Irish people would rather default, but I don't think their leadership is listening. As we see the Fianna Fáil government becoming synonymous with "Epic Fail" one harkens to the cry of Scottish independence fighter, William Wallace.... Freedom!


Jquip said...

It will be default no matter what. Nothing says "capacity to repay a loan" like a man taking a loan to make the payments on the loans he can't make payments on.

Such folly ought be reserved for subprime home loans.

Froggie said...


Economic geniuses at work.

JD Curtis said...

This 3 minute video by Nigel Farage hits the nail on nthe head. Link