We all know by now, that Ireland is in very serious trouble, and it is growing by the day.
Little known thinking, is what is being described in an article in The Post.ie, where they question:
Are depositors in the firing line?
The basis of the article is that the political parties, whoever comes into power after the election on February 25th, they will have to have a bondholder bonfire to save the Irish banks.
In reality, this means burning the Irish people and businesses, once again.
Not just by increasing the taxes, but simply confiscate about 40% of any deposits above €100,000 in the bailed-out financial institutions, regardless of them being bond holders or plain savers.
About 50% of the current bondholders, is Irish people, who will see their bonds raided.
This is a very badly thought through idea, and one that is too little too late.
One thing that they forgot to mention, is that many company’s accounts, especially larger ones, holds accounts worth more than €100,000, and if these accounts are raided, not only will the companies find themselves in acute liquidity problems, but also risk becoming insolvent, as a large part of their money to pay wages, suppliers, withheld income tax and VAT liabilities will be gone.
I don’t believe that the tax man would agree to being given only half of what they are owed, just because the company bank account got plundered by the state to bail out the banks, nor do i believe that the people working for the company would agree to have only half their wage paid out, or their suppliers only getting half their invoice paid.
This is not just a depositor BBQ, but of the people.
We will see if this happens, is massive amounts of companies hitting the wall, or simply saying – Enough, and moving out.
The politicians says there is no difference between bondholders and depositors, but there is.
A bondholder, is someone bought bonds for their money, knowing that it is a financial instrument that carries gains, but also potential risks.
A depositor, is someone who holds a shoebox (account) where they stuffed their money, in a supposedly safe place – a bank, in order to have easy ways of paying and getting paid, and they did not put the money in the bank, for the bank to play around with it, and putting it at any kind of risk.
The politicians also talks about re-negotiating the loans with the EU-IMF, but i believe they can forget it. The IMF loans are of the kind – take it or leave it, and if you take it, you agree with our rules. End of story – a perception that is backed up by a statements from the EU commission, as well as Ollie Rehn, as expressed in an article in the Irish Times.
What the Irish political establishment is going on about, renegotiating a deal with EU/IMF that includes a partial or full default on bondholders, is just not going to happen, and is nothing but wishful thinking among, what can no longer be describes as anything but delusional Irish politicians.
The two options available to Ireland, is pretty clear:
Either Ireland owe up to the debt disaster, and deal with it, or the Irish state goes it’s own way, ending up in a massive default on Irish state debts.
I don’t know what would be the most tolerable, but the way Irish politicians handle this, I believe the later case, will be, while all painful and in many ways a disaster, the preferred option, as what comes out of the ashes, will come out sooner, and in a better shape than taken the other alternative.
My short-term suggestion to any Irish individual or business is – move your money out of any of the bailed out banks, into one that has not been bailed out, preferably abroad.
This way, your euro’s will still be there, regardless of what happens in the Irish banks and economy.
This way, you can escape at least this part, and then start looking at what your options are, longer-term.
I have been subjected to enough consistent lying on a more or less daily basis lately from Irish politicians, to develop a bunch of very strong antibodies against their talk, and I no longer buy what they say, because they say one thing, and then do something completely different, and whenever they can, they stick their grubby little hands in your pocket, and take whatever they can get away with.
Nothing has changed.
