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Monday, November 29, 2010

Ireland accepts EU bailout.. what it means financially?

 Ireland's leaders have sold out its people.  But instead of 30 pieces of silver, they got a big loan with an expensive repayment plan and suffering for every Irish man, woman and child so that its banks can recoup its lost money.

**  Note:  1 euro is equal to $1.32..   so 85bill euros would be $112.2 billion US

From IrelandTimes..

"The European Union has approved an €85 billion rescue package for Ireland which, if drawn down in its entirety today, would attract an average interest rate of 5.83 per cent."

~ 5.83% of 85 billion euro is approx 5 billion euro (or approx. $6.6 billion US)-  This is interest.  So you could say Ireland will really be paying back approx. 90 billion euro ($118.8 billion US) for a nation of 4.5 million people- the same population as the state of Oregon.   One last point..  the IMF and the EU only charged Greece 4.5% interest

 "Of this €10 billion will be used to immediately to recapitalise the banks to bring them up to a core tier 1 capital ratio of 12 per cent, with a €25 billion contingency."

~  35 billion euro or 41% of the total loan will be going to strengthen the banks.

 "The remaining €50 billion will be used to meet the budgetary requirements of the State.  Ireland has also secured an extra year – until 2015 – to meet its target of reducing its budgetary deficit to 3 per cent as part of the agreement."

 ~  This is called austerity-- budgetary cuts on social services and salaries, higher taxes, new taxes on things such as water, prices of goods and services increase...

"Under the terms of the deal the State will contribute €17.5 billion of the required funding, €12.5 billion of which will come from the National Pension Reserve Fund and €5 billion from “other domestic cash resources”.

And one last thing...

"EU economics commissioner Olli Rehn said the Irish rescue plan will not compel senior bank bondholders to take a “haircut” on their liabilities."

~ Wheww.. we wouldn't want investors to accept the fallout from risk taking

 So what do the Irish think and feel on this move by their government?

“The Fianna Fáil government has shown no backbone, no negotiating ability and no authority"- Labour Party leader Eamon Gilmore.  He also added that the bailout deal negotiated by the Government amounts to a "national sell out" that will leave the country crippled with debt.

“The Government was cleaned out in the negotiations and has not acted in the best interests of Ireland. At the very least we could have expected a low rate of interest on the loans, EU agreement on a jobs and growth package, and agreement to share the cost of rescuing the banks with the bond holders. The Government came away with none of these,”-- Fine Gael finance spokesman Michael Noonan

“The 5.8 per cent interest rate is unaffordable...  The decision to force the state to take €17.5 billion out of the Pensions Reserve Fund to pour into the black hole that is our banking system is a disaster.” -- Sinn Féin president Gerry Adams

~ Many people outside of Ireland may not care about this nor what happens to Ireland but they should for it is a precursor of what is to come for other nations down the road as the global economy deteriorates more under the weight of obscene national debts and international banking.

So what is the real difference between Ireland and the US? We can print more money.  Ireland couldn't.

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