So why can’t Ireland get a Spanish deal?

 It’s the obvious question isn’t ? Here it is posed by Stephen Kinsella in The Irish Economy

Spain’s banks are getting a series of loans. Hooray. The rather vague Eurogroup statement on Spain is here. It’s being reported that Spain will require up to 100 billion euro for its banks, which will be added to its national debt. The money will come in tranches, first from the EFSF, and then later from the ESM. There aren’t specific austerity measures attached to this series of loans. People in Ireland are sure to lose their minds over the fact that there won’t be specific conditionality attached to these loans, and the IMF will be ‘observers’ rather than actually part of a Troika of funders. The talk generally is likely to be something like ‘why couldn’t we get such a deal’, and apparently Minister Noonan will be bringing this up with his colleagues at a later

And lo! The answer pops up on cue , from “Irish sources” quoted in Eurobusiness

Ireland wants to renegotiate its rescue plan to benefit from the same treatment as Spain, which looks set to win a bailout for its banks without any broader economic reforms in return, European sources said on Saturday.

ADDS Sunday night from the BBC’s Robert Peston on the “Messy Spanish Rescue”

If Spain has succeeded, as it claims, in persuading Germany and the other eurozone governments to hand over the 100bn euros with no strings attached that relate to Spain’s spending and taxing – to its budget – then Ireland would have a powerful case for demanding a renegotiation of its bailout package.

Here is why: if it hadn’t been for the reckless lending by Ireland’s banks, Ireland would not need to have been rescued; in that sense, its plight is identical to Spain’s; yet the rescue it received undermined the budget-making autonomy, the fiscal sovereignty, of the Irish government, in the way that the Spanish rescue will not do.

But re-opening the Irish rescue package would be a hideous can of worms for eurozone members.

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  • I dont think the Irish should be focusing on what deal they might have got. There are much bigger events happening that make such concerns completely insignificant.

    The (apparently limited) bailout of Spain is a panic reaction by European leaders who fear a potentially disastrous contagion following the Greek election in a few days time.

    This will not save the Euro. Ireland should be preparing for the Euro to break up.

  • ranger1640

    In the Soviet States of Europe, all states are equal, but some states are more equal than others.

  • lover not a fighter

    The weather !, Our Politicians ! Theres a big Island in the way (Britain) stopping the boats getting here with the money.

    Ah alright !. It was/is our politicians that just lie down and let the bankers tickle their under bellies as they instruct them to sell out their country.

  • Comrade Stalin

    In Ireland the state took ownership of the banks in exchange for the bailout funds. At least there is a (small) prospect of the exchequer recovering something.

    I see no suggestion that this is happening in Spain, where there appears to be a specific effort to present this as a bank bailout rather than a state bailout. Does this mean that the banks will now have a massive trainload of state loans on their books which would, in turn, mean that they would not be meeting modern bank capitalization requirements ?

  • cynic2

    Ireland is a minnow. Spain is huge

  • Drumlins Rock

    in the world of “what if..” and the Irish Referendum was due next week, would it have passed?

  • Greenflag

    ‘ would it have passed?’

    Fear of the unknown will trump anger everytime and everywhere unless of course a population is destitute and the Irish most of us anyway are a long way from that state . Per capita GDp is still in the $40,000 range . Greece is much closer to the bottom of what’s tolerable in any modern european state at least for the bottom 50% of the population .

    Spain is somewhere between Ireland and Greece in terms of GDP per capita with higher youth (18-24) unemployment but of course the Spanish economy with 40 million people is much bigger than Ireland’s in total with $1.4 trillion as compared to Ireland’s $200 billion even if Spain’s GDP per capita is lower at $30,000

  • Greenflag

    Yes it would have passed .

    The No’s had no practical alternative in the short term and a single country by itself particularly a small country like Ireland is virtually powerless when the big banksters ‘gang up’ with the bigger States 🙁

    Iceland is a special case unfortunately.

    Ireland can only hope that the larger states Germany, France, UK ,USA etc eventually bring some financial order to world currency markets and some stability . Nothing on the horizon this year though .Perhaps after Obama’s and Merkel’s re-elections ? In the meantime if you are a man or woman of faith -pray -.If not cast a cold eye and keep yer wits about ye !

  • tuatha

    Coz 60% (of 50%, ie a THIRD of the electorate) of us voted to sell our children & grandchildren into servitude, yea even unto the third generation, on the terms accepted by Biffo & his buffoons?

  • ObserverStatus

    The difference is, I think, that Spain is still able to raise funds in the bond markets albeit at a very large (and near unmanageable) premium while the premium asked of Ireland is even higher and not sustainable/attractive. The Irish state needs the bailout out funds to run its day to day operations. The Spanish government is not at that point, yet.
    This is an attempt to ring-fence the Spanish banking system from the Spanish state in the hope that the yields on Spanish bonds will decrease with less banking pressure. However Spain will still have a budget deficit of about 8% of GDP and the Spanish regions spending is still not in check. As has been always the case over the last three years, what ever the European politicians say, the opposite will happen. I think the Spanish banks will need a bigger bailout than the $100bn being mooted.
    The yields on Spanish government rise again and the country will need to be bailed out. Italy will come under pressure. Greece will need a third bail out. Cyprus will need a bailout. Portugal will need a second bail out. Ireland will need a second bailout. The political consensus and actions needed in the short term to save the euro is beyond politicians, unless democracy is overridden. The euro in its present form has a very short future! The Spanish government (not banks) bailout could be the tipping point.

  • Greenflag

    ‘voted to sell our children & grandchildren into servitude, ‘

    They did’nt .They voted to save themselves from servitude ,probable even worse financial chaos and uncertainty and ‘capital ‘ flight which would have meant an even longer delay in regaining access to the international bond markets -if ever.

    As to Biffo and his buffoons ? I recall Biffo’s government paying US Investment bankers a $7 million ‘fee’ for advice on whether or not to guarantee all foreign bondholders . Merrill Lynch advised them not to- but they (Biffo & Co) did the opposite . The Irish Banks in particular Anglo Irish ‘lied’ to the Irish Government re the full extent of their ‘debts’ .This ‘phenomenon of ‘lying’ a,k,a ‘understating’ or in plain english not actually knowing or knowing but not wanting to reveal the extent of the mess until personal financial escape parachutes were prepared – was also seen in Greece ,Iceland , the USA and elsewhere in this crisis .

    Historically societies have frequently sold their children into slavery if the ‘price’ was right . Usually it would have been the leaders, kings or chiefs who would collect the dosh in return for the ‘children ‘ . St Patrick was a ‘slave’ .The Victorians (the rich) thought little of shoving 4 and 5 year old children up into soot packed chimneys .

    While it’s easy to look back and blame Biffo and his cronies -we the people -we the people -must also accept some of the responsibility for voting them into power .Was there an alternative in 2007 ? Were FG & Labour ever advocating legislation which would have suppressed the property bubble before it became an economy destroying mess .

    It’s at this point that ‘history’ repeats itself .In the mid 1980’s to 1990 some 250,000 emigrated from the Irish Republic as a result of the ‘failure’ of the then politicians 1973-1987 to tackle the problems left behind by the oil price inflation and the huge public sector wage bill which the country could no longer afford . In the midst of crisis the politicians on all sides were still offering the people ‘free money ‘ in return for their votes .The people took the money and a few years later lamented the ’emigration’ of their ‘children’

    The reason we don’t see the mass emigration today that was witnessed in the 1980’s is for two reasons only .One is that family size i.e number of children has halved since the 1960’s and 70’s and the other is that neither the UK nor USA are the magnets they once were except of course for those younger people with ‘marketable /technical /professional ‘skills .

    Deja vu in a way .BTW -SF don’t have the answer either and they know it.