Chapter 818 Ireland bows his head

On the 21st, the news about Ireland still did not stop. This time it was an open attack by an American institution. Eric Nielsen, the chief European economist of the Goodman Group, stood up and said, "It is a purely political choice, but at the same time it needs to be considered. risks to economic and financial stability."

He said, "After decades of fighting against England, the Irish people finally gained national sovereignty. Accepting the rescue not only hurt the relationship with international investors, but also showed the government's incompetence in economic affairs. The most critical Yes, it will open the door to foreign interference in Ireland's internal affairs. This is especially hard to accept for the Irish who have struggled to gain sovereignty."

At the same time, he also broke the news: "The low interest rate policy implemented by the European Central Bank during the economic prosperity of the decade has exacerbated the inflation of the Irish economic bubble, and now the European Central Bank's trend of countering inflation has accelerated the destruction of Ireland. According to several people familiar with the matter revealed that the ECB was so concerned about lending to troubled Irish banks on such a large scale that it had taken the lead in pushing Ireland to find alternative lending outlets."

Finally, he concluded: "After the summer rescue of Greece, European leaders firmly believe that if the debt crisis in Ireland can be resolved this time, then this crisis will not spread to other weak countries in the euro area. But unfortunately However, the performance of the bond markets of these countries is still very sluggish and disappointing. The market has speculated that some countries may apply for rescue soon after Ireland. Although there is still no evidence to prove this, such a The speculation made the market doubt whether the European rescue mechanism can really stop the debt crisis. And the movement of the euro in the foreign exchange market also confirmed this speculation.”

In Eric Nielsen's public talk, he revealed two very important pieces of information: one is that the EU was worried about the excessive scale of Ireland's debt and had planned not to assist Ireland; the other is that the European rescue mechanism is not the As indestructible as expected, the scale of 750 billion euros is likely to be exhausted, and the debt crisis is still impossible to be fundamentally resolved.

   At the same time, Goodman Company also gave its own prediction, and an analysis report and Eric Nielsen's speech were circulated at the same time. In this report, the Goodman Group predicted that Europe would need at least 85 billion to 120 billion euros to solve the debt crisis in Ireland, because it would take more than 75 billion euros to solve the debt crisis of the Irish banking industry alone. The aid funds are likely to exceed 100 billion euros.

  As soon as these two pieces of news came out, they immediately caused a sensation in the entire market.

  The previous "Wall Street Journal" report has exposed the current situation in Ireland to the world, making many people realize that Ireland urgently needs rescue from Europe. But the subsequent public statement of Goodman Company has cast a shadow on people. Even if Europe takes action, can it really save the debt crisis currently raging in the Europa continent?

  Professionals may not be interested in the current state of affairs in Ireland, but they are definitely interested in whether Ireland will apply and the viability of the euro. Because political factors were involved, the whole thing became extremely complicated and tricky. Before the situation becomes clear, they can only choose to continue to wait and see.

  …

   "God, what the **** are they going to do?"

  Ireland Prime Minister Cowen complained to Finance Minister Lenihan at his official residence, "Isn't it nonsense to say that Europe tried to let us find another way of financing?"

   "They must have participated in the US government's plan, otherwise it would be impossible to say that!"

   Lenihan said categorically, "The reason why they made such a statement is to imply to the market that Europe may not choose to rescue Ireland, at least once."

   "Maybe there is another possibility!"

Another person who looked like a scholar wearing rimless glasses then calmly analyzed, "This is what the European side instructed them to say in order to threaten us. If you still don't accept their call, then let us find it by ourselves." Method!"

  The speaker is Honor Han, Governor of the Central Bank of Ireland, who is in charge of the country's monetary policy.

  In this small official residence, Ireland's real power leaders, directors of fiscal policy, directors of monetary policy, and some economic staff gathered to discuss the current response to the situation.

The rumors that occurred in the market in the two days of the weekend greatly shocked the Irish government, because these things were completely beyond their expectations. It is conceivable that Irish bonds will still be under huge selling pressure after the market opens on Monday The two-day Treasury yields fell back.

   "How did the European side express their position?"

  Faced with two different opinions, Cowan fell into deep thought for a while, and said nothing for a long time. Both analyzes make sense, but either way, Ireland is a party under pressure. For the present, he must consider the attitude of Europe.

  After leaking the agreement on the US side to the other party, he hoped with all his heart that there would be a good negotiation result, at least in some respects, he would get a lot of concessions. But unfortunately, the European side didn't think so, and the finance ministers quickly saw through his tricks.

   "Things are not going well!"

Lenihan said with a sullen face, not without bitterness, "Germany's stance is particularly firm. It doesn't recognize this report at all, and even puts down its words forcefully. If we don't accept European aid, then we can go find it." Aid from the United States. France has not expressed its position, but I see the face of the French finance minister, and it is obvious that it does not take this agreement seriously."

  "The most surprising thing is the British side. Not only did they deny their participation in this agreement, but they also took the initiative to cut off with the Americans. What is certain now is that they will stand with the Germans."

   "Gentlemen, what do you think?"

   Cowan frowned deeper, and asked a group of staff, "This is the situation we are in now. What choice do you think we should make?"

   "We don't seem to have a choice!"

Kevin MacDonald said with a heavy heart, "Even the sovereignty factor must be put aside at this time. If we do not choose to apply for the bailout, then Ireland may really be over, especially in the "Wall Street Journal" After the report came out, it caused a great commotion in the whole society. If we still procrastinate on whether to rescue, our banking industry may not be able to sustain it soon."

"Although the public has known for a long time that we are in a crisis, it is difficult for ordinary people to have a concept of how serious the crisis is and how much impact it will have on the whole. But now this report has given them an intuitive feeling, and it will definitely accelerate the social crisis. The panic and the outflow of labor. It is conceivable that as soon as the doors open on Monday, our banks will be strongly impacted, and people will withdraw cash from them as much as possible. It’s beyond the current scale.”

   "Kevin is right!"

Another staff member named Keith Kerian also echoed, "According to the survey of the construction industry in the past three months, a large number of laborers have flowed out of the country. Even some regional construction industries have declared bankruptcy. In this case, More and more people are unemployed, and the government needs to pay more and more unemployment compensation, which will greatly accelerate the loss of our cash reserves. Maybe it will not last until the middle of next year, and we will have to declare a default on our debt.”

   "But if we choose to apply for rescue now, then we will also be at a disadvantage!"

   Cowen still has not made up his mind, "The EU and the IMF will definitely intervene in our domestic policies, and the favorable situation we have deliberately maintained will be destroyed."

   "It's ruined now!"

Horohan said slowly, "On Friday, as much as 1.8 billion euros of funds were withdrawn from our account. This is the largest single-day fund flight we have monitored. In the past two weeks, A total of more than 16 billion euros of funds have flowed out of Ireland, more than the sum of the past year. It is an indisputable fact that foreign investors are increasingly disappointed with Ireland."

   "If we don't do something, starting next Monday, the numbers will be broken very quickly, and the flight of funds will become more and more serious. The end result is almost very tragic."

"so serious?"

  Honor Han’s words greatly touched Cowan, and he asked in surprise, “Has the foreign capital started to withdraw?”

   Cowen has always believed that despite the rise in bond yields, the situation in Ireland can be maintained at least until he steps down in the middle of next year. But Huo Nuohan's words shattered his fantasy, and made him realize for the first time that the relationship with international investors had already cracked, and if he didn't take action, the whole situation might get out of control.

   "Should we apply for rescue now?"

  Although on Thursday and Friday, both Honorohan and Lenihan stated very cryptically to the outside world that Ireland may apply for European rescue at any time. But so far, both the IMF and the EU have indicated that they have not received Ireland's application request, so the whole matter is still in an unknown state.

   At this moment Cowan seems to have made up his mind.

   "It may not be a good time now, but it doesn't mean that we and Europe have no room for bargaining."

   No one spoke, they were all quietly waiting for Cowen to make a decision. But what makes them regret is that Cowan still didn't say the words with certain tone. After thinking about it for a while, Lenihan understood what Cowen was thinking. The prime minister was still worried that the IMF and the EU would dictate too much about Ireland's economic policy, which would affect Ireland's original economic policy.

   "Oh, what do you say?"

  Cowen was overjoyed, and hurriedly asked, "What should we do to make Europe make concessions? You must know that they have seen through the previous trick, and now we have no more bargaining chips on hand."

  “At present, the most criticized thing about us in Europe is that our corporate tax rate is lower than that of other countries. They hope that we can increase the corporate tax rate. What is certain is that if we apply, they will definitely use this as a negotiation condition!”

  Lenihan calmly analyzed, "But we must do something in exchange for the other party's request in this regard. My personal suggestion is to cancel the tax incentives for high-income earners in exchange for the other party's request for corporate tax rates."

"In addition, during the negotiation, we can use part of our own capital as a rescue fund. For example, we can use our country's pension reserve fund, fiscal and taxation funds as a supplement to the entire rescue plan. In this way, European countries will save a lot of money. They should Would be very happy to see this scene.”

"what?"

   "Use the country's pension reserve fund?"

   "This is too risky!"

  As soon as Lenihan's proposal came out, the faces of the others changed drastically, and they stopped talking one after another.

  Although it is said that the pension reserve fund is managed by the government, the ownership does not belong to the government. If the fund is used, it must be authorized by Congress. But from now on, it's not a problem. The crux of the matter is that using this part of the benefits will cause a very large response.

   "We don't seem to have a better choice!"

Lenihan spread his hands and said helplessly, "This is equivalent to a loan and another kind of investment. If we can get out of the debt crisis, we can just pay a part of the interest on this part of the funds. In addition, we can use the This part of the funds is charged into the reserve fund and will never be used unless it is absolutely necessary."

   "Gentlemen, this is only our expedient measure!" He finally emphasized.

   "Okay, let's do it!"

  For Cowen, these are secondary. As long as he can keep a low corporate tax rate, he doesn't care what the public thinks about using their pension reserves.

   "We apply for rescue now!" He finally made a decision!

   Thanks to book friends 555@555, Ningbo Feng, and lyangyang for voting monthly! A few days after the situation turned around, it started to decline again. I don’t know if it’s because of the weekend. I just hope that everyone can support this book unswervingly. With everyone’s support, the author has greater motivation~ Recently, I have to code it all at the same time. I started to work hard to conceive a new book. I feel that time passes quickly and there will never be enough time. If I haven’t interacted with you, please understand. Thank you again for your support, and don’t forget to vote~Thank you~

  

  

  (end of this chapter)