Noonan: "Imprudent" to burn senior bondholders

goosebump

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.

This represents a complete volte face for Fine Gael on this issue; even as late as yesterday evening, on the Front Line, Brian Hayes repeated the Fine Gael commitment to renegotiate with senior bondholders as soon as Fine Gael were in Government.

This now also sets Fine Gael at odds with Labour, who have repeatedly called on the Government to put the senior debt on the table and who have promised to renegotiate the debt when they are in Government.

Of course, what we are actually seeing here is Fine Gael start getting their ducks in order for their inevitable entry into Government, where they will have to deal with the same harsh realities as the current Government, and where wiffle-waffle about 'hey presto' solutions to the banking crisis will have to be left behind on the Opposition benches.

No doubt further nuances will emerge on policy positions in the coming weeks, up to the point in January next year, where pretty much everything Fine Gael have been telling the Government they should do about the banks will be conveniently forgotten.

Personally, I welcome this, but it goes to show how much of a farce the entire debate about the banking crisis has been to date.

There were never any options. Its just a pity we had to wait for a new Government before we could have mature and informed discussion about what we needed to do.
 


NewRepublic

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More a case of Europe having us against a wall and some in FG realising this.

What alarms me more is not the fact that his stance sounds at odds with labour, but that it sounds at odds at what the likes of Brutan and Varadker has been saying. Is this a solo run or is this new FG party policy.

Always seems to be the case with FG lately. No shortage of policiy positions from individuals, but it never seems clear if its the party stance. Not the first time there has been a contradiction. The NewEra document being another case in point.

I'd have to disagree with your points regarding options. We have/had options but we never had the leaders with courage in both the Government and the opposition to take the real issues on. There's a strong possibility (not definate) that we will find ourselves unable to pay our debts. Will this confirm that the policy position of saving the bondholders is indeed the only option? I think not. Of course Goosebump you can always argue with my positions and thats fair enough.
 

TonyB

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Am not sure Varadkar went that far last night, though I did post that I was concerned that he had seemed to set expectations of a renegotiation a little high. It is certainly open for the new government to adjust the parameters of the deal, but I'm not sure that the changes will be dramatic. Therefore to set the expectation that there will be *any* renegotiation could be interpreted in many many ways, most of them wrong. Varadkar can claim that the integrity of his position remains intact despite Noonan's clarification, but it is a Jesuitical claim (I'm going to stop using that word after tonight :) ) and one that's not helpful.

Noonan's right. It would be nuts to screw with these people, in these circumstances. There are other ways to do this.
 

Catalpa

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.

This represents a complete volte face for Fine Gael on this issue; even as late as yesterday evening, on the Front Line, Brian Hayes repeated the Fine Gael commitment to renegotiate with senior bondholders as soon as Fine Gael were in Government.

This now also sets Fine Gael at odds with Labour, who have repeatedly called on the Government to put the senior debt on the table and who have promised to renegotiate the debt when they are in Government.

Of course, what we are actually seeing here is Fine Gael start getting their ducks in order for their inevitable entry into Government, where they will have to deal with the same harsh realities as the current Government, and where wiffle-waffle about 'hey presto' solutions to the banking crisis will have to be left behind on the Opposition benches.

No doubt further nuances will emerge on policy positions in the coming weeks, up to the point in January next year, where pretty much everything Fine Gael have been telling the Government they should do about the banks will be conveniently forgotten.

Personally, I welcome this, but it goes to show how much of a farce the entire debate about the banking crisis has been to date.

There were never any options. Its just a pity we had to wait for a new Government before we could have mature and informed discussion about what we needed to do.
To renege is a Default

That is the Nuclear Option and Noonan is quite right to be extra cautions on what he is saying here.

Now morally of course its a great position but for a senior politician likely to be in Government in a few months time to publicly call on TV for debts now carried by the Irish State to be reneged on would spiral things totally out of control.

He has to be careful here.
 

NewRepublic

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Noonan's right. It would be nuts to screw with these people, in these circumstances. There are other ways to do this.

It would be nuts to screw with these people, why?

Because they will turn on us?

Sorry they already have. Are we not best to seek renegotiations now as we are definately out of the markets for the foreseeable future rather than in a few years time, possibly prolonging the stay of our european and IMF "overlords". Horse has already bolted. The Bond markets don't believe we will pay our debts back.
 

Radix

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Is it black today Noonie?

Naw, it'll be white tomorrow!

This guy is just making it up from day to day.
 

Iarmuid

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.

This represents a complete volte face for Fine Gael on this issue; even as late as yesterday evening, on the Front Line, Brian Hayes repeated the Fine Gael commitment to renegotiate with senior bondholders as soon as Fine Gael were in Government.
Will this shore up FF support? They were right all along? Surely not?.:confused::eek:petunia
 

corelli

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.

This represents a complete volte face for Fine Gael on this issue; even as late as yesterday evening, on the Front Line, Brian Hayes repeated the Fine Gael commitment to renegotiate with senior bondholders as soon as Fine Gael were in Government.

This now also sets Fine Gael at odds with Labour, who have repeatedly called on the Government to put the senior debt on the table and who have promised to renegotiate the debt when they are in Government.

Of course, what we are actually seeing here is Fine Gael start getting their ducks in order for their inevitable entry into Government, where they will have to deal with the same harsh realities as the current Government, and where wiffle-waffle about 'hey presto' solutions to the banking crisis will have to be left behind on the Opposition benches.

No doubt further nuances will emerge on policy positions in the coming weeks, up to the point in January next year, where pretty much everything Fine Gael have been telling the Government they should do about the banks will be conveniently forgotten.

Personally, I welcome this, but it goes to show how much of a farce the entire debate about the banking crisis has been to date.

There were never any options. Its just a pity we had to wait for a new Government before we could have mature and informed discussion about what we needed to do.
Reneging and negotiating are not the same thing. It would be quite feasible for FG, if in office, to call the senior bond holders in and indicate that paying them off in full exposes the State to an increased risk of actual default and coming to an arrangement.
 

Green eyed monster

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I always knew Noonan was blowing smoke, politically capitalising on public anger with some of his statements over the last few days.

The general rules of loaning money are that the lender takes a risk, for these senior bondholders we now know there is no risk so who are they? They should be categorised as unsafe to borrow from and no way should anybody (especially a government) ever agree to guarantee their loans again (even if they do mislead their people by claiming it is some kind of confidence measure).

These lenders are the ones who are truly 'toxic'.
 

Simon.D

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.
I think this statement gives even more weight to the notion that there is an EU wide default being planned at the moment to hit senior bondholders all at once, and somewhat fix the broken banking sector, and that our politicians have been asked to collude in this process and hold off on a default until the rest of the EU is ready to go.... It's the only logical explanation as to why our main parties are happy to send us down sh!t creek, assuming they're not all completely incompetent.... It's all potentially smoke an mirrors to try and dupe the bond markets...
 
G

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On Prime Time tonight, Michael Noonan said he believed he would be "imprudent" to renege on senior debt in the Irish banks other than as part of an EU wide initiative.

This represents a complete volte face for Fine Gael on this issue; even as late as yesterday evening, on the Front Line, Brian Hayes repeated the Fine Gael commitment to renegotiate with senior bondholders as soon as Fine Gael were in Government.

This now also sets Fine Gael at odds with Labour, who have repeatedly called on the Government to put the senior debt on the table and who have promised to renegotiate the debt when they are in Government.

Of course, what we are actually seeing here is Fine Gael start getting their ducks in order for their inevitable entry into Government, where they will have to deal with the same harsh realities as the current Government, and where wiffle-waffle about 'hey presto' solutions to the banking crisis will have to be left behind on the Opposition benches.

No doubt further nuances will emerge on policy positions in the coming weeks, up to the point in January next year, where pretty much everything Fine Gael have been telling the Government they should do about the banks will be conveniently forgotten.

Personally, I welcome this, but it goes to show how much of a farce the entire debate about the banking crisis has been to date.

There were never any options. Its just a pity we had to wait for a new Government before we could have mature and informed discussion about what we needed to do.
Disingenuous Goosebump. Noonan is right to say that it has to take place within an EU-wide context now. But it is only out of bounds since the weekend. Prior to that it was in play, Honahan even admitted that. But once the ECB got it locked down and got Merkel backtracking and had it explicitly stated by the EcoFin group on Sunday that door closed. It is completely wrong to say that burning senior bond holders wasn't an option. The way it played out after Merkels comments meant it wasn't the chosen option.
 

NewRepublic

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Reneging and negotiating are not the same thing. It would be quite feasible for FG, if in office, to call the senior bond holders in and indicate that paying them off in full exposes the State to an increased risk of actual default and coming to an arrangement.
That sounds awfully like common sense to me. If the bondholders by way of the secondary markets are telling us we can not afford our proposed debt levels, well then surely to god it makes sense to negotiate, even if it were just to extend the payment periods.
 

goosebump

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Reneging and negotiating are not the same thing.
Of course the are.

How do you negotiate if the people you are negotiating with know that you have no intention of not reneging on the debt?
 

NewRepublic

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Of course the are.

How do you negotiate if the people you are negotiating with know that you have no intention of not reneging on the debt?
So your saying no matter what, we will physically be able to pay the debt back?
 

corelli

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Of course the are.

How do you negotiate if the people you are negotiating with know that you have no intention of not reneging on the debt?
Because you indicate factually, in this instance, that if they don't negotiate the chances are that, through no fault of our own, by virtue of simple debt mountains, they are increasing the possibility of default. That we simply will not have sufficient revenue to pay them anything.
 

TonyB

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It would be nuts to screw with these people, why?

Because they will turn on us?

Sorry they already have. Are we not best to seek renegotiations now as we are definately out of the markets for the foreseeable future rather than in a few years time, possibly prolonging the stay of our european and IMF "overlords". Horse has already bolted. The Bond markets don't believe we will pay our debts back.
No. We need to establish a position of strength. We don't have to draw down all the money. We need money now, and we need the promise of future money now. That's what we've bought. We absolutely need this.

What happens next is that - with money, and the promise of future money - the country stabilises. The Eurozone crisis is managed away. The bond market vultures move to some other targets. And we shore up our economy.

Then - and only then - we restructure our debt. Doing it now is absolute suicide.
 

goosebump

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Disingenuous Goosebump. Noonan is right to say that it has to take place within an EU-wide context now. But it is only out of bounds since the weekend. Prior to that it was in play, Honahan even admitted that. But once the ECB got it locked down and got Merkel backtracking and had it explicitly stated by the EcoFin group on Sunday that door closed. It is completely wrong to say that burning senior bond holders wasn't an option. The way it played out after Merkels comments meant it wasn't the chosen option.
It was never an option. It can't be done without exposing the State the an equivalent liability further down the balance sheet. That has been the situation since day one. That is why no senior debt holder has suffered any loss in any bank in any country in Europe over the last 3 years.

You seem to be suggesting that we had to rule this out as part of the deal, given the vice grip the EU has us in. Even if that were true, the grip has been there from the beginning, in that the ECB have been providing liquidity to our banks.

Furthermore, Hayes and Varadkar repeated the claim over the last 48 hours. Why would they have done this, if the events of the weekend had ruled it out?
 

He3

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I think this statement gives even more weight to the notion that there is an EU wide default being planned at the moment to hit senior bondholders all at once, and somewhat fix the broken banking sector, and that our politicians have been asked to collude in this process and hold off on a default until the rest of the EU is ready to go.... It's the only logical explanation as to why our main parties are happy to send us down sh!t creek, assuming they're not all completely incompetent.... It's all potentially smoke an mirrors to try and dupe the bond markets...
What do you base that assumption on?
 


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