ktlight
9th May 2011, 07:05
Economist Morgan Kelly reveals in the Irish Times today that a deal last November to haircut approximately 30B Euro of Irish bank debt was sabotaged by financial terrorist Tim Geithner. The 20B Euro or so reduction in Irish bank debt entailed by the haircut would not, of course, have saved Ireland from sovereign default, but it would have been a symbolic victory and would have set a good precedent.
But Geithner and the ECB would have none of it. Kelly recounts a G-7 conference call in which Geithner struck down the deal to haircut bondholders. Remarkably, it was the IMF who originally proposed the (very modest) haircut in the first place, and argued against bailing out unguaranteed bondholders. The ongoing economic and political upheaval we are witnessing in Ireland is just one more example of what Hugh Hendry has called "The Economic Consequences of the Bailout."
Kelly's Irish Times op-ed is worth reading in its entirety. He makes a strong case for Ireland getting out of the bailout altogether. In fact, he argues what we have been saying all along: Ireland has no choice about whether to default -- it can default now on the bank guarantee, or it can default on its sovereign debt later on. The choice is clear. The only question is whether Ireland will be able to force her politicians to make the right one.
source
http://dailybail.com/home/the-terrorist-who-got-awaystrikes-again.html
But Geithner and the ECB would have none of it. Kelly recounts a G-7 conference call in which Geithner struck down the deal to haircut bondholders. Remarkably, it was the IMF who originally proposed the (very modest) haircut in the first place, and argued against bailing out unguaranteed bondholders. The ongoing economic and political upheaval we are witnessing in Ireland is just one more example of what Hugh Hendry has called "The Economic Consequences of the Bailout."
Kelly's Irish Times op-ed is worth reading in its entirety. He makes a strong case for Ireland getting out of the bailout altogether. In fact, he argues what we have been saying all along: Ireland has no choice about whether to default -- it can default now on the bank guarantee, or it can default on its sovereign debt later on. The choice is clear. The only question is whether Ireland will be able to force her politicians to make the right one.
source
http://dailybail.com/home/the-terrorist-who-got-awaystrikes-again.html