Wednesday, November 24, 2010

Clear signs that the Irish bail-out is already sunk!

Last week it was noises off from Austria that forewarned the Greek government that the next tranche of EU money would be delayed. This week it was the Finnish government who first gave the clue that the Irish bail-out was far from being a done deal, by demanding continued ECB support as a necessary first step, read here. Ironic really when considering it is a Finn, Commissioner Olli Rehn setting down the ground rules for Ireland's total economic subjugation in the name of the very banks the ECB has wasted billions in trying to support.

An earlier clue to the fact that the IMF/EU rescue package had already been doomed came yesterday morning, when the package supposedly having been agreed was torpedoed well below the waterline and with devestating effects by the man who negotiated the details on behalf of the IMF, Ajai Chopra, read here.

Why would the person who had negotiated a rescue package, hoping for support for the deal in the Irish Parliament and understanding amongst the general public over the coming two weeks at that moment go public with a call for reductions in dole payments and a cut in the minimum wage? Only one suggestion comes to my mind and that is that he had exceeded his authority in the negotiations and intended to incite the other side to renege on the terms and thus save his own position to the already severely strapped Board of the IMF.

Lastly, of course, we have the fact that no details of the deal became available during yesterday. No date was set for a meeting of the Euro Group Ecofin whose agreement would be required.

On top of all that as the day went on Spanish interest rates rose, Portuguese credit guarantees grew ever more expensive and the German Chancellor, on whom the EU and the world looked for action, could only publicly wring her hands and declare it was all "exceptionally serious".

The revised budget for Ireland is due to be published today, whether it eventually passes into law or not next month, my guess is that the IMF/EU rescue package will not arrive. The now relatively small amounts available to the EU Group under the supposed shock and awe package agreed last May must now all be hoarded for Spain!

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