David McWilliams: Debt-for-Equity, not IMF Madness

From David McWilliams – Pouring More Cash Down Banking Black Hole Is Theft:

There is no hope of Ireland ever being able to repay this amount. Nominally, if there is a large growth of inflation in the European and Irish economy, it might be possible, but with tight monetary control from Frankfurt, that is not going to happen.

So we need burden sharing with bank bondholders to reduce the liability the State has encumbered itself with through the mishandling of the bank guarantee. The alternative being presented by the run on Spain is that sovereign default is not only more likely, but should be viewed as being in Ireland’s best interest. Loading up on IMF and EU debt right now — in order to bail out the banks — only makes sense for us if we have no intention of paying the money back…

Death Star

The Debt Star is under construction

The honest thing to do is to realise what the problem is (the banks) and admit that pouring further cash into those black holes is theft — from either the Irish taxpayer if we pay the loans back or from the IMF/EU if we default on their loans. The honest thing to do is pass a bank resolution which swaps the debt for shares — a debt-equity swap in the banks — and get that €120bn liability off the national and international balance sheet.

Then we can start to sort out the real problems in the Irish economy, and show the IMF the madness that is contained in their latest spin on ‘expansionary fiscal contraction’…

Read More.

This entry was posted in Bankers' Bailout, Debt Default/Restructuring, Solutions and tagged , . Bookmark the permalink.

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