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Germany's Most Influential Economist Tells Pat Kenny On RTE Banks Should Give Creditors A Haircut


YouKnowWhatIMeanLike

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You could tell that this Prime Time RTE programme didn't go as planned by the looks of Pats flabbergasted face.

Basically Hans-Werner Sinn (German economist and President of the Ifo Institute for Economic Research) told the man some basic economic home truths. The taxpayers should not be on the hook for depositors and creditors in private banks. Asked what to do now Hans-Werner replied to get the money from the people who took a risk in the banks. And have them share some of the burden, give'm a haircut. Well what can one say there is some truth to his position.
 
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DAZ14

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You could tell that this Prime Time RTE programme didn't go as planned by looks of Pats flabbergasted face.

Basically Hans-Werner Sinn (German economist and President of the Ifo Institute for Economic Research) told the man some basic economic home truths. The taxpayers should not be on the hook for depositors and creditors in private banks. Asked what to do now Hans-Werner replied to get the money from the people who took a risk in the banks. And have them share some of the burden, give'm a haircut. Well what can one say there is some truth to his position.
It is very sad what has happened to this country. Haircuts should have been applied 4 years ago. Ireland may enter a period of unrest in the time ahead due to a debt-to-GDP ratio beyond sustainability, prom notes imminent and a potential breakdown of CP2 and industrial unrest. The relative stability of the last two years I feel is about to give way.
 

smitchy2

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He was talking mainly about Anglo where there is only a couple of billion left.
The main creditor there is the ECB but he did not understand there is no creditors left who will take on some of that burden.
 

RobertW

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Werner Sinn called Ireland's decision to guarantee rich people (via the Irish taxpayer) as "Incredible" and suggested "Why don't you default?"
 

YouKnowWhatIMeanLike

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It is very sad what has happened to this country. Haircuts should have been applied 4 years ago. Ireland may enter a period of unrest in the time ahead due to a debt-to-GDP ratio beyond sustainability, prom notes imminent and a potential breakdown of CP2 and industrial unrest. The relative stability of the last two years I feel is about to give way.
There are still 8bn Euro in Anglo Irish Bank deposits and 12bn in bonds in AIB. It's not too late.
 

Davidoff

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What he said was that the bondholders should pay.

What I think he was really saying was that German taxpayers won't.
 

bogtrotter

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Time for our government to sit up and listen.....At the end of the day the choice is theirs, give the risktakers/gamblers who invested a hair cut, and let the ordinary folk get on with their lives without this debt burden ( which has nothing to do with them) being tied around their necks ......This is not the peoples debt and we should never have been asked to honour it...
 

YouKnowWhatIMeanLike

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Time for our government to sit up and listen.....At the end of the day the choice is theirs, give the risktakers/gamblers who invested a hair cut, and let the ordinary folk get on with their lives without this debt burden ( which has nothing to do with them) being tied around their necks ......This is not the peoples debt and we should never have been asked to honour it...
There will be a few phone calls in the morning to AIB Ballsbridge to reassure the Anglo Irish depositors that their money is safe and secure in the vaults courtesy of the Irish taxpayer. And that the pleb will pay up as promised, what a sick sick world.
 

cyberianpan

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Sinn is regarded as one of the "hardline" German economists.

I think he calls it as it is.
He is and his call should be helpful...except...

Sinn's grasp on the facts is sometimes tenuous (Google his Target 2 feud with Karl Whelan et al for an example) and here he has missed a beat

As smitchy2 pointed out above the "bondholders/depositors" have already fled Anglo with the Irish government/ECB the people now on the hook

cYp
 

oggy

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He was just another wisdom of hindsight merchant that the world is full of. Present government were full of the same but now the cold reality is hitting them right in the face and they are not measuring up
 

eoghanacht

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Werner Sinn called Ireland's decision to guarantee rich people (via the Irish taxpayer) as "Incredible" and suggested "Why don't you default?"

Would he have said the same thing back in '08 though?
 

RobertW

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He was just another wisdom of hindsight merchant that the world is full of. Present government were full of the same but now the cold reality is hitting them right in the face and they are not measuring up
Same oul crap . .

Not our fault (FF). Blame FG.
 

oggy

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Davidoff

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He is and his call should be helpful...except...

Sinn's grasp on the facts is sometimes tenuous (Google his Target 2 feud with Karl Whelan et al for an example) and here he has missed a beat

As smitchy2 pointed out above the "bondholders/depositors" have already fled Anglo with the Irish government/ECB the people now on the hook

cYp
I'm not sure many of us would share his optimism about the Irish economy either.

But it was interesting to hear someone express what is probably a very common point of view in Germany.
 

WTTR

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What I think he was really saying was that German taxpayers won't.
And he has his good reasons, which he announced to the world many moons ago

A dog does not hoard sausage.


Going into debt is fun at the beginning. The fun stops when one sits atop the debt and must pay the interest. In the past, the topic could be pushed aside by pointing to the wealthy future generations. But this is no longer an option. Firstly, since 1995 Germany is the country with the lowest growth rate anywhere. Where then is the future wealth to come from? Secondly, the future generations are shrinking due to the Germans’ low birth rates. There is probably no country in the world in which the number of births relative to the population is as low as in Germany. The baby-boomers that were born in 1964 are now forty years old. Not many people are coming after them. Even the age cohort of the thirty-year olds is 40% smaller, and the following age cohorts will continue to shrink. No, the idea that future generations will help us out of the mess is ridiculous. We ourselves are the “wealthy future generations” of whom the politicians of the past were speaking. It is us who will have to pay the bill.

Interest on the public debt amounts to more than 68 billion euro this year, although interest rates are as low today as never before. When interest rates normalise again, the interest burden will rise by half and exceed 100 billion euro. Even today, the interest burden is higher than the net borrowing of 65 billion euro permitted by the Stability and Growth Pact.

Hans-Werner Sinn
Professor of Economics and Public Finance
President of the Ifo Institute
Sadly, we have converted the bondholders into sovereign debt, while waiting for the Germans to bail us out.

Our establishment claim to be great Europeans; sadly we knew/know SFA what is happening over there.
 

stopdoingstuff

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Plenty were rightly saying that at the time but they were portrayed as extreme. Now some German says it 4 years later and it is not a problem.
 

bogtrotter

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There will be a few phone calls in the morning to AIB Ballsbridge to reassure the Anglo Irish depositors that their money is safe and secure in the vaults courtesy of the Irish taxpayer. And that the pleb will pay up as promised, what a sick sick world.
Hopefully we will find a cure soon...
 

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