Will Ireland really succumb to the Commission?
In the Irish Bailout negotiations, the European Central Bank and the Commission had vetoed the proposal to force some of the bank losses back onto the bondholders.
On Tuesday Dec 7th the Irish parliament will have to vote on the new budget. If two MPs vote with the opposition, Ireland might not have a new budget until after the general election in January. It’s a safe assumption that the present government will be ousted in January. I wonder whether the pimps in Brussel in this case have a plan B.
The Irish situation is almost as hopeless as the Greek is. And its easy to understand why Germany was pushing so hard for this “bailout”. German banksters were particularly keen to lose money in the Irish property market.
Mr. Market is betting on the ECB stepping in, otherwise there would not be a market for PIIGS IOUs. Probably Mr. Market is right. However, a closer look at the EU ministers statement suggests Mr. Market should not become too complacent. There might be a hidden landmine in this text:
“For countries considered solvent, on the basis of the debt sustainability analysis conducted by the [European] Commission and the IMF, in liaison with the ECB [European Central Bank], the private sector creditors would be encouraged to maintain their exposure according to international rules and fully in line with the IMF practices. In the unexpected event that a country would appear to be insolvent, the Member State has to negotiate a comprehensive restructuring plan with its private sector creditors, in line with IMF practices with a view to restoring debt sustainability. If debt sustainability can be reached through these measures, the ESM [European Stability Mechanism] may provide liquidity assistance.”
and then :“On this basis, the Eurogroup Ministers will take a unanimous decision on providing assistance.”
In plain English every member can veto the next bailout if a country is declared to be just illiquid!
Hopefully Mr. Market hasn’t noticed yet and the Irish will pass a budget that meets the demands of the Commission.