Irish Bank Debt Negotiations : The Euro Area summit is 'a game changer' for Ireland

[PaddyJoe]

What does soon mean, PJ? I wonder what will change the game in the wrong direction. Will it be something sudden an shocking or a slow slide into default . I also wonder what will happen if we need another bailout. Or if we go back to the markets will there be more problems.

The carefully fostered illusion that austerity is working and Ireland is turning the corner is not going to hold much longer. Two more bad quarters(maybe even just one) and markets are going to be running a mile again.
There was a telling blog post by Stephen Donnelly this week in which he described meetings he had recently in the US with well known economists who seemed to think that all was well in Ireland until he mentioned the debt levels and lack of growth.
A little bit of analysis was enough to convince them that Ireland is screwed.

[PaddyJoe]

This piece in the Examiner today looks to be based on a carefully contrived briefing from an Irish EU source:

A deal will be done for Ireland on bank debt and a decision will be made on this before Christmas, says a Luxembourg-based source close to the Eurogroup of finance ministers.

We may not have to wait for Spain after all. Wishful thinking?

"Ireland can be dealt with separately. There is no reason why this cannot be the case. Spain seems to think it does not have to make its mind up [about a bailout]."

On Merkel pouring cold water on Irish debt relief:

the Eurogroup source said "that is not the same interpretation [of these comments] as we are taking."

"The German government is very well disposed to Ireland and it is very impressed with the progress that has been made on the [EU/IMF bailout] programme," said the source. "But the problem is with the German public. The fear is that there will be a challenge to what is happening and this will end up in the German Constitutional Court."

http://www.irishexaminer.com/busines...as-208168.html

Same old rigmarole really. Irish sources brief RTE, the IT and the Examiner on the negotiating position only to get blown out of the water a day or two later.

[Captain Con O'Sullivan]

Yes it is complete localised bullshyte not least because there are backroom meetings going on today between ECB officials and Spanish government officials. Rajoy is doing the Lenihan/Cowen thing in Spain of scoffing at the notion of bailout discussions while his officials are actually discussing possible bailout terms.

If the Irish 'analysis' is based on there being no current talks between Spain and the ECB they are wrong.

[Captain Con O'Sullivan]

'The results of independent stress tests of the Spanish banking sector will be published on 28 September.

But previews are already being sent to the country's financial institutions.

The BBC has been told that the Spanish government has already put in place economic reform plans that would allow it to apply for a bailout immediately.

Spain's conservative Prime Minister Mariano Rajoy has in the past insisted Madrid would not become the fourth European capital in recent years to apply for such a bailout, but sources indicate such a programme is now likely.' http://www.bbc.co.uk/news/business-19675961

If those 'Irish sources' are saying Ireland may not have to wait for Spain then they are completely unaware that Spain is highly likely to officially ask for a bailout before next Friday- and the timing of it will possibly be after Euro markets close and quite possibly after the US closes one night next week I'd have thought.

EDIT:

Just noticed this - DCON on the 'Is the ECB pushing Spain towards a bailout?' thread, quoting an FT article yesterday;

EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week.

According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring they are in place before a bailout is formally requested.

Looks like next week alright as Rajoy would find it impossible to argue that Spain hasn't requested a bailout with these plans for next week.

My bet is still late Thursday night 27th Sept although Friday night 28th after NY closes would make most political sense.

[ang]

Enda backpedals speaks -

#Ireland PM Kenny on € crisis measures: “In examining how to move ahead, let us not distract ourselves chasing rainbows"

[PaddyJoe]

The Barroso speech today following his meeting with Enda wasn't quite as reassuring as it's been reported by de Indo:

We had an exchange of views on the Commission's proposals for a banking union, in particular the single supervisory mechanism. We are both determined to see the single supervisor in place as soon as possible, not least because it is an essential condition for the ESM to directly recapitalize banks. I will make clear at the next European Council in October that we must stick to the commitments we made in June European Council. It is a question of credibility for the EU and for all the member states that are our Union.

Those 'commitments' were thrown together at 2 am and are loosely enough worded to mean whatever people want them to mean.
http://europa.eu/rapid/pressReleases...=SPEECH/12/679

[MPB]

The Barroso speech today following his meeting with Enda wasn't quite as reassuring as it's been reported by de Indo:

Those 'commitments' were thrown together at 2 am and are loosely enough worded to mean whatever people want them to mean.
http://europa.eu/rapid/pressReleases...=SPEECH/12/679

Ambiguous statements are the only way a pretend Union can work.

Everything they say has to mean all things to all men. Sure the Lisbon Treaty debate was about what the words actually meant, rather than what they actually said.

Even today Barrosso said that he was determined to make sure that what was agreed in June was adhered to.

Anybody know what was agreed in June?

In no statement from the June meetings, did they say that the ESM would take over Irelands Banking debt.

[PaddyJoe]

Ambiguous statements are the only way a pretend Union can work.

Everything they say has to mean all things to all men. Sure the Lisbon Treaty debate was about what the words actually meant, rather than what they actually said.

Even today Barrosso said that he was determined to make sure that what was agreed in June was adhered to.

Anybody know what was agreed in June?

In no statement from the June meetings, did they say that the ESM would take over Irelands Banking debt.

As a reminder:

EURO AREA SUMMIT STATEMENT - 29 June 2012 -
• We affirm that it is imperative to break the vicious circle between banks and sovereigns. The Commission will present Proposals on the basis of Article 127(6) for a single supervisory mechanism shortly. We ask the Council to consider these Proposals as a matter of urgency by the end of 2012. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly. This would rely on appropriate conditionality, including compliance with state aid rules, which should be institution- specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding. The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally.
• We urge the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.
Brussels, 29 June 2012
EN
1
• We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilise markets for Member States respecting their Country Specific Recommendations and their other commitments including their respective timelines, under the European Semester, the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. These conditions should be reflected in a Memorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.
• We task the Eurogroup to implement these decisions by 9 July 2012.
________________________
EN
2

Slippery stuff...

[Dr. FIVE]

Stephen Donnelly introduced as Dan O'Brien in Europe today,

what a slur

[MPB]

As a reminder:


Slippery stuff...

Note the words, possibility, Memorandum of Understanding and conditionality.

[DCon]

Barosso is now reduced to "urging"

EUROPEAN COMMISSION chief José Manuel Barroso urged EU leaders not to renege on their pledge to break the link between bank and sovereign debt after talks with the Taoiseach.

Echoing words used in Brussels yesterday by Enda Kenny, Mr Barroso said Europe’s credibility was at stake in the debate over a summit deal in June to allow the European Stability Mechanism bailout fund to rescue stricken banks

Although Mr Kenny had said it was always his understanding that the June deal embraced existing “legacy” debts in the banking system, Mr Barroso declined two opportunities to say whether that was his sense too. “I’m not now going to enter in any kind of discussion on semantics about the interpretation of the conclusions of the European Council,” he said.

Enda:

“Be in no doubt we will be punished if we resile from the decisions that are made or if there is either backsliding or stepping away from what has already been agreed,” he said last night in Brussels.

http://www.irishtimes.com/newspaper/...324839900.html

[DCon]

A picture says a lot!

[Slim Buddha]

Note the words, possibility, Memorandum of Understanding and conditionality.

I am noting, in relation to Ireland

"This would rely on appropriate conditionality ....with the view of further improving the sustainability of the well-performing adjustment programme".


Deserves an award of its own for its shrouded intent.

The "Iron Fist in the Velvet Glove" award.

[Dr. FIVE]

Enda still talking about the June in the dáil

[Baron von Biffo]

Gump has run up the white flag. No deal on bank debt before the budget he says.

http://www.breakingnews.ie/ireland/b...ed-569416.html