I sent the following message about the ESM to all TDs on 4th May 2012:
In case you missed it, I had a letter about possible outcomes to the referendum published in the Irish Times on 2nd May [see a copy in entry immediately below].
I call on all TDs, irrespective of their party, to respect the wishes of the electorate in the event of a NO vote in the referendum by refusing to ratify the closely related ESM treaty.
To do otherwise would be a flagrant breech of democratic principles and an insult to voters.
If the referendum is rejected and Ireland has difficulty securing a second bailout, it will be forced to batten down all hatches to preserve cash and reduce outflows. Once in this type of of sovereign examinership, it would be legitimate to suspend all unnecessary payments to creditors including those related to the promissory notes and to defer bond repayments even if these actions might trigger a default. As this would have major adverse consequences for the euro, the EU/ECB/IMF would be forced to provide a second bailout, even if the ESM is closed off to Ireland, to prevent contagion, if for no other reason. This bailout will have to include a stimulation package as well as massive relief on debt linked to the bank bailouts as without these the EU/ECB/IMF might as well pour their support down the drain.
If, on the other hand, Ireland ratifies the ESM, it will have to make a contribution of €11 billion. As this money will have to be borrowed, the ESM will effectively return the €11 billion as part of a second bailout. This will push Ireland's debt/GNP ratio to well in excess of 150 per cent - a level which is absolutely unsustainable and unmanageable in the absence of massive debt write offs and stimulation measures.
Thanks for reading this. Hopefully it will generate the response being requested.
