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That's unrelated. My point was the Irish government could have burned the bondholders (German/French banks) and let the losses hit their profits instead of pili
by purple_ducks 7y ago
That's unrelated. My point was the Irish government could have burned the bondholders (German/French banks) and let the losses hit their profits instead of piling the Irish taxpayers under a mountain of (private) debt.
- dageshi 7y agoIt isn't unrelated, it is entirely the point. The Irish don't have their own currency, when you don't have your own currency you don't ultimately control your own affairs you share them with the others who use that currency.
- purple_ducks 7y agoHow would the burning of private bondholders to the tune of €140 billion have affected the Euro currency? > you don't ultimately control your own affairs you share them with the others who use that currency The currency had nothing to do with it. The only thing which would have absolutely forced them to stand over it would have been existing EU law - which there was none. The European Central Bank can't legally stop issuing currency to Ireland just because some French or German banks got burnt.
- dageshi 7y agoBecause the euro isn't just a currency, it's the entire banking system as well. The euro doesn't work as a currency without a banking system to transmit it because people have bank accounts with banks... not the central bank. If a bunch of German/French banks suddenly get 40billion in losses what happens next? They will have to panic sell their remaining good assets to remain solvent, that transmits the problem on to the other banks that they have invested in. Because the EU banks all tended to lend money to each other. So you end up with the problem transmitting around europe (and beyond) but it's worse because everyone is trying to sell everything at the same time to remain solvent.