Can Ireland renegotiate its IMF/ECB/EU deal?

The Irish parliament (the Oireachtas) was stood down today.  Brian Cowen the outgoing Taoiseach has been effectively run out of town and will not contest the general election.  The general election will take place on Fri, 25 Feb.  The potential alternative government leaders have been posturing for the past several days about renegotiation the bailout deals. 

It is hard to see this as anything other than empty, vacuous, meaningless, political posturing! The horse has bolted and the stable door is off its hinges. Those with massive ambitions to renegotiate have no leverage.

The bailout deal was not negotiated in the first instance. Those whose interests were threatened arrived in the country, walked the streets, sniffed the air, took the Government by the scruff of the neck and told them that they were no longer in control of the economic stewardship of Ireland. The interest rate was prescribed unilaterally, as were the ongoing detailed quarterly reporting and compliance arrangements. That in a nutshell is how Ireland has been humiliated and joined the line of other can’t cope, won’t cope headless-chicken nations – where ministers abandon their roles abruptly and for no rational or coherent reason.

Apart from the bail-out proposition, over 80% of national debt is due to foreigners. Those foreign interests together with the IMF, ECB, EU and HM Treasury have the Irish authorities under the heel of their jackboot and they have no option but to be as compliant as a prisoner seeking goodwill in return for good behaviour.

The relationship the Irish Government has with these stakeholders is going to provide a salutary lesson in the concept of moral hazard and how its consequences cannot be always shuffled and finessed into the ether, as has been the case for too long within the country.

What the electorate will take a particular interest in is the capacity of the alternative government to bring about change in spheres over which they ought to have some control and leverage – for example, the gigantic scale of fees paid for professional advice and the ancient restricted structures that facilitate these charges; the cost of running the NTMA and its foster children and the transparency of these entities being specimens of how a government and their senior civil servants could demonstrate that their bargaining power and focus is not totally exhausted.

When the Fingleton 2008 ‘€1 million pre-contracted bonus’ has been redeemed the Government will have shown negotiating form. When bankers appear in the criminal courts the country will have demonstrated a sense of resolve and can begin to lay claim to be taken seriously. But blather at the onset of a general election campaign is just that.

EU, ECB and IMF set to put the jackboot into maudlin Cowen

Ireland endured the consequences of an impaired reputation in the global financial markets since September 2008 but this has now morphed into serious doubts about its credibility and the credibility of its Central Bank Commission.  The market will not trust its numbers.

Financial markets are spooked by the losses in Irish banks.  These had been estimated at €11.2 billion but have risen to €45.55 billion, mainly as a consequence of the toxic cess pit – Anglo Irish Bank.

Will the Central Bank Commission survive the scrutiny of the IMF and the EU? Its principal role is to oversee standards of corporate governance in Irish banks and to vet incumbents appointed to senior roles in the banks.  Will an umbilical link between the disgraced board of FÁS, the State training agency, which has been stood down for grievous failure of corporate governance enhance the credibility of this Commission as an umpire of corporate governance standards? 

National Irish Bank, a wholly-owned subsidiary of National Australia Bank engaged in a decade long episode of untrustworthy behaviour which not just undermined the Central Bank from 1988 to 1998 but also undermined the integrity of the national tax system which led to 9 senior managers of National Irish Bank being disqualified to act as an officer of any company.  How can this Commission demonstrate credibility in overseeing the calibre of senior appointments in Irish banks against this background?

Foreign borrowing as a percentage of the Irish net national debt has increased from 28.5% in 2001 to 80.6%. The underlying foreign debt has increased from €10.3 billion to €72 billion. The Irish State deficit from January 2001 to October 2010 has risen to €51.92 billion. This reflects Government expenditure in the decade of €376.85 billion while corresponding tax revenue was €324.9 billion. Retail savings in State institutions account for 13% of the national debt.

The sooner this jaded, depraved, incompetent, lame-duck government of no standards and no class and their administrative peasants and toadies are out of existence the better.