EC economic analysis documents on Ireland leaked by the Bundestag once again

[Baron von Biffo]

Bluster is frantically playing down this story on DriveTime now.

[PaddyJoe]

Bluster is frantically playing down this story on DriveTime now.

He really did, didn't he. Government spin machine with its sticky fingers all over that one

[morticia]

I think they are bothered, their banks are owed an awful lot of cash by our banks. They won't let that slide.

Nope, TM, absolutely not, they won't. Add that to the fact that the rest of the periphery also owes their banks a lot of money and if we get away with not signing up, we are "moral hazard" encouraging Spain and Italy to leave the straight and narrow......and I'd imagine that there might be an awful lot of punitiveness coming our way.

Frankly, if we are going to vote no, we'd better get the Punt Nuas printed (maybe that's what the Shinners needed all the toner cartridges for), and have a plan for instant default and budget balancing. Because without the backstop of the ESM, do NOT expect the "markets" to lend us any money at all.

Lets get real here, a No vote will be taken as a declaration of economic warfare. Unlike Greece's politicians, swinging forlornly in the breeze and unable to pay either the dole or most of the public sector, we need to make sure we have an organized plan. Including getting the next door neighbours and the US onside.

If there's no sign that the No campaign has copped that, I'd suggest a Yes vote might be safer.

[C. Flower]

And again -

http://www.irishtimes.com/newspaper/...317818174.html

According to the Times, a Troika Report in draft, according to the EU Commission, a "Staff Paper" intended to be published 25th June.

It has come to us via the at this stage normal route of a Bundestag Finance Committee.

Under German law, the Bundestag must consider and approve loans to Ireland. The Irish Government may make ritual moans about this, but it is clearly an accepted part of the process of getting EFSF funding.

The report is a story of disaster -


GOVERNMENT DELAYS in reforming personal insolvency laws are a “specific source of concern” for the EU-ECB-IMF troika and could, it warned, trigger a deterioration of payment discipline.

In their sixth report, seen by The Irish Times, the troika said Nama faces “challenges . . . to meet its debt redemption charges” next year, with bond targets likely to be revised downward.

In addition, it warns that, despite cutbacks, “fiscal consolidation is far from complete”

On the plus side - Central bank and ECB funding of the banks has fallen - but has lending increased ?

Grim reading, overall.

6th Troika report in draft -

• Government delays in personal insolvency laws – “could trigger a deterioriation of payment discipline” – in other words, mass personal default, putting strains on the banks.
  
• Nama may not meet its bond redemption targets next year
  
• The Government has used its EFSF “injections” and a substantial additional fiscal consolidation is required– i.e. cuts
  
• “New recapitalisation of the banks can’t be ruled out” – i.e. the banks are still insolvent and under pressure from uncertain
• “medium term borrowing” uncertain (i.e.return to markets in 2013 out of the question).
  
• Retail remains as flat as a pancake.
  
• On the plus side, the banks are using less ECB and CB funds, but on the minus, their bad debts are increasing and banks are running out of valuable assets to sell (“deleveraging”).
• Also on the plus side, lower wages / competitiveness may allow Ireland to increase its share of global trade. FDI should continue to arrive (unless – unsaid – corporate tax rates are raised).
  
• But – “Any renewed bout of euro area turbulence, which could result in a fall-off in demand for Irish exports”
  
• “The expiration of patents on several drugs this year may squeeze industrial output and nominal growth.”

http://www.irishtimes.com/newspaper/...317818174.html

[C. Flower]

IMF has now formally released the 6th Review of Ireland.

http://www.imf.org/external/np/sec/pr/2012/pr12222.htm

Following the Executive Board’s discussion, Mr. David Lipton, First Deputy Managing Director and Acting Chair, said:

“Approaching the half-way mark of its EU/IMF-supported program, Ireland has once more met all program targets. This attests to the Irish authorities’ steadfast policy implementation in the face of headwinds from renewed financial stress in the euro area, which has led to a significant rise in Ireland’s bond spreads.
“The budget remained on track through the first five months of the year for the annual deficit target of 8.6 percent of GDP, and the authorities’ commitment to keep spending within the budget envelope and maintain sound public finances is welcome. If real GDP growth expected for 2012 were to weaken notably, accommodating a potential revenue shortfall would help protect the fragile recovery. The authorities are working to specify by Budget 2013 the measures to underpin the 2013 15 fiscal consolidation, which is important to help Ireland regain market access, as is the further implementation of the authorities’ fiscal institutional reform plans.
“Bolstering growth and job creation is central to the success of the program. Enhanced resources are needed for engaging actively with jobseekers, and care should be taken to avoid unemployment traps in the social payments structure. Reinvesting a portion of state asset disposals will support job creation, but stronger competition enforcement is needed to harness the full growth benefits of these divestments.

“Financial sector reforms must lay the basis for banks to make sound loans in support of the recovery, including by improving their capacity to manage distressed assets. Early preparation of the new personal insolvency framework is needed to address household debt distress while protecting debt service discipline. Restructuring of PTSB will need to be carefully implemented to ensure it is put on a sound footing, including through timely separation of certain legacy and nonperforming assets.
“Ireland’s sustained and forceful fiscal consolidation and policy reforms would be most effective in regaining market access and promoting recovery as part of broader European efforts to stabilize financial markets and strengthen growth in the euro area.”

Coincidence ?

[Dr. FIVE]

November we had a leak on new taxes
February was "more fiscal tightening needed" with the threat of a minibudget to boot
Today in June it's welfare and Public sector pay

Isn't it remarkable how the Bundestag keeps leaking uncomfortable issues?
That is not to say they are reading much good about us over there but it is interesting that that only things that come with a sideshow reinforcing who is calling the shots are issues that government will find very difficult to tackle without relying on that cover.

[MPB]

Nice to know our European Union membership is nothing of the sort.

Equal, heart of Europe, all nonsense. We are just part of a wider Germany.

The sooner the better we realise that this country can be run on 30 billion a year,no problem, with minimal social welfare cuts and zero tax increases, or pay cuts to those earning less than 60k a year.

[Baron von Biffo]

November we had a leak on new taxes
February was "more fiscal tightening needed" with the threat of a minibudget to boot
Today in June it's welfare and Public sector pay

Isn't it remarkable how the Bundestag keeps leaking uncomfortable issues?
That is not to say they are reading much good about us over there but it is interesting that that only things that come with a sideshow reinforcing who is calling the shots are issues that government will find very difficult to tackle without relying on that cover.

Welcome to the Fourth Reich.

[morticia]

Isn't it remarkable how the Bundestag keeps leaking uncomfortable issues?

If it happens once it could be an accident, twice could be carelessness, but three times is looking deliberate.

Someone needs to sit Geli down and explain to her very gently that the "overpaid" public servants are nursing huge mortgages and if they go down, so too will the banks. Which will have to be bailed out again, using German loans.

10% mortgage arrears is kinda teetering on the edge already, Ange !!!

[C. Flower]

If it happens once it could be an accident, twice could be carelessness, but three times is looking deliberate.

Someone needs to sit Geli down and explain to her very gently that the "overpaid" public servants are nursing huge mortgages and if they go down, so too will the banks. Which will have to be bailed out again, using German loans.

10% mortgage arrears is kinda teetering on the edge already, Ange !!!

There was a legal case in Germany, if I recall correctly, in which the Court found that Germany must have prior oversight of the budgets of States to which it has made loans.

It seems probable that the Irish Government has conceded this - but surely that should have meant a referendum on the EFSF ?

Have they made any formal complaints to the German Government ?

[disability student]

What's the story re Pringle court case as i haven't heard it for a while?

[C. Flower]

What's the story re Pringle court case as i haven't heard it for a while?

I think due on June 16th. I'm surprised that it was not taken before the Referendum.

[ang]

I think due on June 16th. I'm surprised that it was not taken before the Referendum.

June 19th

[C. Flower]

Thanks.

Here. Listen up, somebody - *anybody* - there have been a number of cases taken in Germany in relation to bailouts and on each occasion the Court has ruled that the German Parliament must have oversight over its budget - and as a major lender to the EFSF, that means also oversight over budgets of states that borrow.

http://www.spiegel.de/international/...-a-818007.html

Was there not also an issue about Irish draft budgets having to be EU approved before going to the Daíl ?

[PaddyJoe]

Thanks.

Here. Listen up, somebody - *anybody* - there have been a number of cases taken in Germany in relation to bailouts and on each occasion the Court has ruled that the German Parliament must have oversight over its budget - and as a major lender to the EFSF, that means also oversight over budgets of states that borrow.

http://www.spiegel.de/international/...-a-818007.html

Was there not also an issue about Irish draft budgets having to be EU approved before going to the Daíl ?

You're thinking of this from November last year:

The Irish and German governments became entangled in a spat on Thursday after details of the Irish budget were given to the German Bundestag, before being presented to the Irish parliament, the Dáil.

But the Irish Times, which has seen the document, said giving the information to the Bundestag was in line with German guidelines for participation in the European Financial Stability Facility (EFSF) – the German budgetary committee has to approve proposals to increase income and reduce spending before each bailout tranche can be released.

“What’s happened is the federal government meeting its legal information to inform the Bundestag about the EFSF,” one committee member told the Irish Times.

“This is widely known and seems unproblematic from our perspective. This is the day-to-day reality of a programme country.”

http://www.thelocal.de/politics/20111118-38953.html