Economy Rigging 1

IRELAND AND THE DEBT BONDAGE January 30, 2011

Filed under: Uncategorized — bashstreetkidjailbreak @ 10:16 pm

ANON :

The solution to this problem is the following, it is difficult, everyone will have to pull together, but read this first: http://bit.ly/gsPO8Y

“…Dr Roubini argued that compelling senior bondholders to take pain was part of the solution to the financial bind in Ireland.

“You have to have a whole programme that leads to fiscal austerity that leads to stabilisation of the public debt, which resumes economic growth and competitiveness, so the challenges the country is facing are very difficult.

Dr Rogoff, a professor of economics at Harvard, said Ireland had “good fundamentals” outside the debt problem and said most of the country’s growth story was real. For any incoming government, the task would be to maintain that and not undermine it.

However, he said it will be difficult for Ireland to avoid some form of debt restructuring. Asked if he was referring to sovereign or bank debt, he said “I’m afraid it might be the sovereign debt”, since the sovereign had guaranteed bank debt.

“It’s not reasonable to say that senior bank bondholders should get bailed out and I think it undermines the whole sense of justice, the whole social fabric in Ireland and elsewhere to have these massive bailouts,” he said.

He acknowledged the view of the European authorities that senior bondholder haircuts were “very dangerous” but the questions that arose were what was in Ireland’s interest and what was in Europe’s interest.”

“There may be contagion. The question is how long can Ireland take the pain that’s necessary? A year, two years? Maybe. But three or four? Countries outside of Romania maybe, under Ceausescu, really haven’t done this and so it’s possible but it’s very demanding.”

Also, Daniel Gros of http://www.ceps.eu/ made a similar point when interviewed on Morning Ireland, that we have a choice between long term Ceaucesco like austerity and a short 2 yrs sacrifice.

We couldn’t do the following if we did not have good fundamentals, good export led growth, good agri sector, good corporate footprint. Because our manufacturing base has been decimated, its possible impact on that side of our economy is negligible.

We need to reset the economy.

Because banking debt has become sovereign debt and because of this we are within perhaps 2 yrs of a default, we need to do an orderly default right now.

This means we have to leave the euro, it no longer has a future for us for the foreseeable future, at least 10 years, plus rising interest rates in Europe can catapult Ireland over the edge, even if we chose not to leave, but to stay. Also, leaving the euro would provide a solution to the peripheral problem from the European perspective.

PuntNua or adoption of sterling as a currency to follow the euro could form the basis of bilateral support from the UK as we go through the process.

The process would be similar to the Icelandic one. Debt restructuring would include burning senior bondholders. We would need interim support and aid from allies everywhere including close neighbours.

The economy could be reset in as short a time as two years. But prospects for growth would be tremendously high thereafter.

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