UPDATED: Going off the bailout script, Greek-Irish style

Posted by Joseph Cotterillon Jun 15 18:08.

[UPDATE: Courtesy of Reuters, Papandreou has announced in a recorded statement that he will reshuffle his cabinet and request from Parliament a vote of confidence for his new government. Journalist Matina Stevis is also reporting that finance minister Giorgos Papaconstantinou could be replaced in the reshuffle and that the vote will take place Sunday at 2200 BST.]

Or, rule by rentiers – overthrown.

This is an entirely gratuitous picture of Argentine President Fernando de la Rua resigning office in December 2001, after months of debt crisis and popular protest:

It’s not at all related to the developments in Greece, after months of debt crisis and popular protest, culminating in Wednesday’s general strike:

(Reuters) – Greek Prime Minister George Papandreou offered on Wednesday to step down and make way for a national unity government provided it supported EU/IMF bailout plans, government sources said…

And via the FT:

Mr Papandreou reportedly offered to form a coalition government at a hastily-arranged meeting with Antonis Samaras, leader of the centre-right opposition New Democracy party… The two leaders did not reach a firm agreement although both were in favour of broadening the government to include technocrats in critical posts handling the economy, according to people with knowledge of the discussion.

After all, de la Rua had already tried the old ‘appointing technocrats’ gambit before resigning. His successor did the same, but also had the task of formally defaulting on Argentina’s debt…

Actually, to give Papandreou credit, until this month he’d seemed to defy political gravity in maintaining public acquiescence in (we won’t say support for) his fiscal reforms. It might even be that this is really a bid to forestall early elections and outmanoeuvre the New Democrats. They aren’t broadly different on fiscal reform really, but they’ve made renegotiation of the bailout a condition of joining government.

And speaking of bailout renegotiation — another extraordinary development in Ireland this evening, as reported by RTE:

Finance Minister Michael Noonan has said Ireland will go to our European partners with a plan to impose significant losses on some senior bondholders in Anglo Irish Bank and Irish Nationwide Building Society…

But isn’t this political ‘instability’ completely to be expected? Both governments find themselves against the wall, both are looking at massive taxpayer losses on bank failures. To a huge extent senior bank bond investors are already living in a post-bail-in world anyway.

Only someone who had forgotten the IMF’s debacle of reform in Argentina would think differently.

Who’s said to be supporting Noonan’s bid to burn the seniors? Interestingly, the IMF…

Related link:
And the money kept rolling in… – FT Alphaville

This entry was posted by Joseph Cotterill on Wednesday, June 15th, 2011 at 18:08 and is filed under Capital markets. Tagged with , , , .

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