That Merkel torpedo October 21, 2012
Posted by doctorfive in European Politics, The IMF Republic.trackback
Friday evening, Merkel..
It will not be a retroactive direct capitalisation. If recapitalisation is possible, it will come for the future.
Friday evening, Dept of Taoiseach
The meeting of the European Council of today and yesterday reaffirmed the commitments made in the Euro Summit Statement of 29 June.
In that Statement European leaders agreed to enhance Ireland’s debt sustainability, and also agreed to break the link between bank and sovereign debt. Those commitments stand.
We understand that Chancellor Merkel was asked a direct question about the recapitalisation of Spanish banks and she replied in that context.
We will continue to work with our partners on the implementation of what was agreed in June.
The Spanish context you see?
Not the one our whole piggyback strategy relies on.
Saturday morning
The Government was urgently seeking clarification from Berlin last night after Angela Merkel appeared to have dealt a death blow to hopes of cutting the country’s massive bank debt.
It has emerged that Taoiseach Enda Kenny at the two-day summit in Brussels did not even raise the issue of the EU’s rescue fund taking over the banks
While he would not go into detail about it after the meeting, he appeared confident the issue would be decided in Ireland’s favour by the eurozone finance ministers over the next few months.
The Taoiseach, who was derided in the Dáil on Wednesday when he revealed there had been no contact with Europe since the ”seismic” June summit again fails to get anything vaguely concrete after two days in Brussels. Now we’re told have confidence in the same lowly finance ministers we’ve been playing down since Helsinki?
Cartoon accompanying Fionnan Sheehan’s ‘don’t tangle with me’ coverage in June
4pm Saturday, across the Irish press, but nowhere else
Amid fears of a stand-off, the German government today issued a statement stressing it would work closely with Ireland to “improve the sustainability of the Irish programme”.
In response, a spokesman for the Irish Government said the German statement represented a “clear affirmation of support for Ireland’s position”.
Mrs Merkel’s remarks at a news conference yesterday came in response to a question related to indebted Spanish banks.
It is understood the Irish authorities have since received assurances the Chancellor’s comments were specifically about Spain and did not relate to the Irish bailout programme.
No sign of this statement outside what the Dept of Taoiseach said a German said. After two solid weeks of bluster alleged assertions from an unnamed official now carry more weight then very public statements from three AAA finance ministers & the Chancellor of Germany.
Let’s start with the bank supervisor. Germany said no money for the banks without a European supervisor for the banks. France, Spain and the rest responded by saying fine then let’s have a bank supervisor in place and functioning by January 2013. The German response was not so fast and maybe by 2014 and maybe the ECB is not the right instrument and maybe not for all of the banks. On the surface you might think that these points are all distinct and separate but if you do; you are incorrect. The translation here is that Germany does not want to fund the European banks and so has set up a road block, a diversion, to stand in between “we will not fund the banks directly” and the desires of France and the rest who want a harmonized Europe where every country pays for everything for all of them; a socialized Europe. You see, the diversion is the bank supervisor and it allows Germany to thwart the desires of the needy countries without having to address the problem directly.
[..]Here is the issue of legacy liabilities. Here Germany has been fairly clear. The new ESM fund will not pick up the cheque and it is up to each country to pay for their own past problems. You may translate this piece of jargon into a “No” to Ireland that the ESM will not pick up the bill for the Irish banks and the same response for Spain. This new German definition puts Portugal, Greece, Spain and Ireland back at square one and effectively closes the door on any further negotiations. While all of this wrangling continues the tone at the summit was no longer the nicey-nice repartee of past meetings.
A door that was barely open up to now and a big hole ahead of the budget. One they cannot pin on anyone else unless they are prepared to admit either they or the creditors are pulling one. Big effort over the next few days I think. At home rather then Europe of course.
Europe is lucky we have the Germans, otherwise we would be facing a crisis of African style proportions. Who else would bail out the joint?
But maybe Germany was part of the problem in the first place? Lending money (or at least German banks did) to Spain, Greece and Ireland to fuel a debt driven “boom” that helped drive growth in the German economy.
Conor had an interesting point at his talk on Thursday. He had a chart showing the original nationality of companies domiciled in the IFSC in 1991 – two years after it opened. After Ireland, the next most represented country was Germany. Why? Because, in order to pay for reunification, corporation taxes went up in the Bundesrepublik and bankers, being bankers, scarpered to the most convenient bolt hole – us. And this capital flight and the loss of tax revenue prolonged the ‘lost decade’ there – a decade that only ending with the arrival of the euro and the possibility of lending to the likes of us . But the idea that ‘it’s all their fault’ may be wide of the mark.We contributed to the conditions that made a catch up necessary.
I wouldn’t subscribe to “it’s all their fault”, but I think the advantage “Germany” took of the euro, which allowed countries such as Spain and Greece to borrow heavily which in turn stimulated the Germany economy has to be part of the explanation of the euro crisis.Of course the other side was the policies pursued by the governments of those countries including the RoI. It seems to me that capitalism hasn’t solved the “problem” of nation states after all – despite the EU.
It is farcical doctorfive, isn’t it? The line from the Government is so obviously incorrect in terms of what is actually happening in Europe that it is astounding they have any credibility left.
All very reminiscent of November 2010 and a mountain of international evidence contradicting what were told here. Trouble for the government is not that the deal has been torpedoed but that Merkel has sunk the lie.
Germany is not part of the problem at all. The problem is the Irish bourgeoisie who are weak and not innovative enough. The argument that the German economy expanded on the basis of Ireland building MacMansions doesnt make sense. The building materials used in Ireland didnt come from Germany, they arent bothered exporting low tech rubbish like tiles and bricks etc. I’ve worked in Germany in the engineering sector and I’ve seen their products all over the world. Point is Germany makes stuff that the world needs and does it well. Ireland on the other hand makes very little, we export cattle hides and import shoes that how thick our economic gurus are.
We are very lucky to have the Germans to bail us out. The place would be a basket case otherwise.
*Borrowed* 68 billion and put 64 into banks?
ah it is part of the problem. human nature is the same anywhere. there greedy banks lent to our greedy banks who lent to developers to build shit apartments and they all made money. the german banks where an important part of the chain execpt we got stuck with the bill.
we are going to have to change our economic model big time. every few weeks the press get excited when someone comes out and says house prices are stabaliseing. as it stands would say the place is a basket case, germans or no germans.
Of course the main enthusiasts for throwing their money at Spain’s contruction bubble were, in fact, German banks.
Difference is, this didn’t actually bankrupt Germany, so now people who want to can pretend it’s all the fault of the Spanish government and financial institutions and not in any way their German counterparts.
We don’t have a real bourgeoisie but an excuse for one. We have a comprador fake bourgeoisie living off the scraps of the state.What little innovation there is is fairly restricted. Kerry foods and a few others. For most of our enterprise types the quest is for a state licence.Hence all the restricitive practices.et a mobile phone licence on top or a pharmacy one down a bit. Demand state controls on entry to the “profession”. Even at the bottom the hope is for a licencing system. We have large demos in favour of the Quinns, larger than many against austerity.Our history of banking, from Sadlier andd Keogh to Drumm and Fitzpatrick
WE are now closer to Corsica than to say a mediumly prosperous country. And we have FF back as the secodn party in the state.
Jim- what’s wrong with Corsica?better weather,better food,better healthcare system,better public transport(haven’t a clue if it’s true but do we really have public transport here?)and no Sindo!
On a related note
http://www.guardian.co.uk/world/2012/oct/20/corsica-intrigue-crime-politics?newsfeed=true
Meh Gari. Having read that, my verdict would be: Corsica – better weather, better food, better healthcare system, better public transport, no Sindo but in the halfpenny place compared to us when it comes to nationalist paramilitary/criminal gang feuding.
‘The net position is straightforward: the German government has made it as clear as possible that there will be no retrospective European assistance with the bank-related debt imposed on Ireland’-Colm McCarthy, today’s Sunday Independent. Merkel got the word right-’retroactive’.
joint Ireland/German statement..
“The Taoiseach Enda Kenny and Chancellor Angela Merkel spoke together this afternoon.
They discussed the unique circumstances behind Ireland’s banking and sovereign debt crisis, and Ireland’s plans for a full return to the markets. In this regard they reaffirmed the commitment from June 29th to task the Eurogroup to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well performing adjustment programme.
They recognise in this context, that Ireland is a special case, and that the Eurogroup will take that into account.”
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