Posts Tagged ‘ Economy ’

News In Brief-Kilkenny Man’s Hitler Cake Courts Controversy



There are monkeys loose in Belfast. Actual monkeys, running about, acting the maggot. They escaped from Belfast Zoo and have since been blamed for trouble in the Holy Lands, excessive drinking, late night parties and defecating in the street. (For those that don’t know the Holy Lands are a notoriously student populated part of the city. You’ve probably seen the area on the news when the lads have set light to a car.) Still, if you can’t beat ’em join ’em is what Martin McGuinness and First Minister Peter Robinson are reported to have said in a joint statement.

VAT on hurleys is to remain the same at 23% despite ash dieback affecting the trees they’re made from. We’ll be forced to make sliotars from spuds and our sticks from ham sandwiches! It’s not really a joke though, despite the issue being brought to the attention of a certain Noo-Nar man it was rejected as VAT can only be reduced in very “limited cases”, like if you’re a multi-billion dollar technology company. The trees may be dying off but soon it’ll be the hurley makers business dying back. Continue reading

Senior Economist Warns Ireland “Should Be Praying” for Second Bailout

The head of Economics at Dublin City University today claimed that a second bailout in inevitable for Ireland and insisted we “should be praying” that the European Union, International Monetary Fund and European Central Bank would be willing to facilitate it.

Professor Tony Foley made the comments when speaking on RTÉ’s Morning Ireland radio programme. He said such an offer would be preferable to the Government’s current proposal of borrowing approximately €12 billion on international financial markets next year as this would invariably lead to crippling interest rates as the country attempts to repay its massive debt – estimated to reach €206 billion by 2015.

Professor Foley’s comments come less than 24 hours after Citigroup economist Willem Buiter stated that Ireland should negotiate a ‘standby’ second bailout in the event we are unable to return to the markets.

European Commissioner Olli Rehn’s spokesman, Amadeu Altafaj, has labelled such speculation as unhelpful given that the first programme was delivering and that Ireland had enjoyed positive growth and banking sector reform in 2011.

In another blow to the Irish economy, a new Goodbody Stockbrokers report has predicted further protracted growth in 2012 and claimed Ireland will not achieve the 3% of gross domestic product deficit target by 2015.

Goodbody chief economist Dermot O’Leary said he expects the country’s GDP ratio to rise to 124% in 2014 and has revised down GDP growth estimates to 0.7% for this year from 1.2%.  GNP, excluding multinationals, and domestic demand will fall by 0.8% and 2.6% respectively.

Officials from the EU, IMF and ECB are in Dublin today, undertaking their fifth review of the €67.5bn loan programme. The talks are being headed by the IMF’s Ajai Chopra. The troika will review figures for 2011 and establish targets for the Government and the economy over the coming months.

Mr Chopra said, “A restructuring of the circa €30 billion in promissory notes (in relation to Anglo) provides an opportunity to reduce debt to a more sustainable level without the difficulties that Greece is currently experiencing with private sector involvement.” He added, “Another important issue is the speed at which the banking system is deleveraging.”

An Taoiseach Enda Kenny will meet British Prime Minister David Cameron in Downing Street on Thursday to discuss the ongoing debt crisis.

Irish Interest Rate Cut as Fine Gael Fail To Deliver on Promises

It has been an interesting week for the country with regard to our finances. EU ministers signed off on interest rate cuts to Ireland’s bailout plan which is predicted to save the country up to €10 billion over the course of the deal. The EU have agreed to a zero margin on the loans, which essentially means that Ireland will only pay an interest rate of whatever its costs the EU to fund the loans. There will be no additional interest rate “penalty” applied.

This good news followed positive statements from the government, specifically Minister for European Affairs Lucinda Creighton, on Friday that EU member states would agree to guarantee Ireland’s low corporate tax rate. The Minister said that she had asked for this formal guarantee to be added to the treaty granting Croatia accession to the EU, a treaty which is due to be voted on later this year. Our corporation tax rate of 12.5% is seen as a key component of our industrial strategy, however it has come under much pressure from several European countries, specifically France, who sought to have it raised in exchange for more favourable terms to our bailout. This was seen to be rather hypocritical of France after a report earlier in the year by PricewaterhouseCoopers shows that France has a nominal corporate tax rate of just over 33% but an effective rate of as low as 8.2% after various deductions. This point had been raised by Finance Minister Micheal Noonan at the time in response to mounting pressure from French President Nicolas Sarkozy. Mr Noonan also added that Ireland had “ eliminated practically all allowances so our effective rate was over 11%”.

This week also so the publishing of an Audit of Irish Debt by a team from the University of Limerick which had been commissioned by the non-government organisations Afri, Unite and the Debt and Development Coalition. Dr. Sheila Killian, who lead the research, described the results as “truly frightening”. The report found a potential national debt of €371.1 billion. This consisted of €91.8 billion in direct Government debt and €279.3 billion in State backed bank debt. The report provides some incredibly interesting reading. Not only does the €279 billion result from Bank Debt but figures also suggest that a large part of the €91 billion direct government debt was due to the banking crisis.

The report also mentions the “intricate layers of anonymity” it found in relation to bondholders involved in the banking bailout. This should not come as a surprise. The details of who exactly the bondholders are that we are spending billions to repay has never been made readily available. Given the way a lot of these financial products work (CDS, CDO) and the level of pressure that has been placed on Ireland to repay bondholders ever since the Fianna Fáil Government provided the bank guarantee, we can assume these bondholders are large EU investment banks (like Credit Suisse, Deutsche Bank) and various EU institutions.

Why the EU are applying such pressure on us to repay is to avoid a financial situation known as contagion, basically a domino effect of banks and/or economies collapsing. It is not in the interests of the EU to imply overly draconian penalties or repayment terms on the country in case we collapse entirely and default on our debts. It has given us our slap on the wrists and now needs us in fit enough condition to repay our debts, all of them. Finance Minister Noonan found that out this week, the removal of a margin on the EU loans should ease some pressure on the country, however, as transpired from Saturday’s meeting with ECB President Jean Claude Trichet when the issue of burning some of Anglo Irish Bank’s bondholders was suggested, Mr. Noonan was met with a stern no. With the mounting pressure on the EU and specifically the Eurozone area as a result of problems in Ireland, Portugal, and Greece not to mention Spain and Italy, Ireland will be heavily pressed to repay every cent possible to its national and bank creditors.

Bear in mind that the bondholders Minister Noonan suggested burning are “unguaranteed, unsecured” bondholders, meaning they leant to the banks at a level where –as the name suggests –should there not be enough money to fully pay back all creditors, then this group will not be guaranteed to be repaid what they had anticipated. Unfortunately for us, these “unguaranteed, unsecured” bondholders are in line to receive every cent back that they had gambled!

Despite pre-election claims from Fianna Gael that should they get in to Government then Anglo bondholders would have to be burned, it now appears that will not transpire. What Fianna Gael have found out since coming to power is that it’s very easy to be an armchair boxer, it’s a much tougher proposition to be in the ring fighting the fight.