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Bailout Terms Violate EU and Irish Laws

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The foolish deal also puts Irish taxpayers in an unfortunate predicament.

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Any Ireland bailout terms are onerous given that it's not Ireland that's bailed out but rather banks in the UK, Germany, US, and France (in that order).

Moreover and unfortunately, the exact deal foolishly agreed to by Irish Prime Minister Brian Cowen is not only amazingly bad for Ireland, but one of the provisions violates EU and Irish law.

Terms of Enslavement

Please consider these terms as outlined in EU agrees on $89 billion bailout loan for Ireland:

  • Ireland gets euro 67.5 billion ($89.4 billion) in bailout loans

  • The 16-nation eurozone, the full 27-nation EU, and the global donors of the International Monetary Fund each commit euro 22.5 billion ($29.8 billion).

  • Interest rates on the loans would be 6.05% from the eurozone fund, 5.7% from the EU fund, and 5.7% from the IMF.

  • Ireland will have 10 years to pay off its IMF loans.

  • The first repayment won't be required until 4.5 years after a drawdown.

  • Prime Minister Brian Cowen said Ireland will take euro 10 billion immediately to boost the capital reserves of its state-backed banks.


Comparison to Greece

For comparison purposes Greece has three years to repay its loans at an interest rate of 5.2%.

Debt Slave Entrapment

The key to understanding how quickly Ireland is made a debt slave can be found in this not-so-innocuous paragraph.

Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro 17.5 billion to its own salvation.


The last sentence in the above paragraph should read "Ireland will contribute euro 17.5 billion to its own destruction.

Moreover, once all of its own funds have been deployed, Ireland would be dependent on the IMF for life.

Salt Onto Open Wounds

Like pouring salt onto an open wound, the EU finance ministers agreed on a permanent mechanism, starting in 2013, that would allow a country to restructure its debts once it has been deemed insolvent.
One aspect of that provision is that it would encourage any country needing help to delay getting help until 2013. The other aspect is that any country wanting to renege on a bailout may wish to hold off until 2013.

Those aspects explains the provision "Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout."

If Ireland "runs down its own cash stockpile" as required by the agreement, it will be broke by 2013.

Who was negotiating these terms on behalf of Ireland? They are so egregious that one has to wonder: "What did the EU promise Cowen to accept these terms?"

Default! Say the People

The Independent reports:

A substantial majority of the Irish people wants the State to default on debts to bondholders in the country's stricken banks, according to a Sunday Independent/Quantum Research poll.

The finding that 57% favor and 43% oppose default reflects a growing view among policymakers and opinion formers that the State simply cannot support the debt burden it has taken on.

The telephone poll of 500 people nationwide has also found that a majority of around two-thirds opposes the headline measures in the Government's four-year plan.

As Ireland awaited the fine details of the international bailout, which are expected [Sunday night], it was learned [Saturday] night that the Irish delegation negotiating with the EU-IMF last week raised the issue of default.

"The Europeans went completely mad," a senior government source said.


Completely Mad

If you want to know who is "completely mad" look straight at Irish Prime Minister Brian Cowen who agreed to these preposterous terms.

Certainly Irish voters, in aggregate, are not mad.
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