From “Mish” at Global Economic Analysis – Irish Government Collapses, Six Cabinet Members Resign, Election March 11; How To Negotiate Haircuts:
In a fitting tribute to a disgraceful performance by Irish Prime Minister Brian Cowen in which Cowen crammed losses of Irish banks down the throats of taxpayers, his government has at long last collapsed…
How To Negotiate Haircuts
The… opposition parties expected to win the March 11 election and form the next coalition government… have pledged to reopen negotiations with the EU and IMF.
I offer the following suggestions on how to negotiate.
The correct procedure is to announce intent to default with a statement something like “The Irish government refuses to bailout UK, German, French, and US banks too stupid to realize that Ireland was in the midst of a gigantic property bubble.”
No doubt EU, ECB, and IMF will offer to cut interest rates to 2% or some such number, perhaps even 0%.
The correct response to that sort of nonsense should be “This is not be a question of interest rates. This is a question regarding principal and principles. In regards to the latter, Irish taxpayers cannot and will not make foreign investors whole for their piss poor decisions. In regards to the former, and as a gesture of goodwill, we are prepared to offer 2 cents on the dollar for all debts owed.”
That should set an appropriate tone for the “negotiations”. It will also send bondholders a very badly needed message.
“Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management.”