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 Ireland, the World Economic Crisis and the Threat to the Euro

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PostSubject: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 7:11 pm

http://www.cnbc.com/id/26986243

I recommend this video. Hendry suggests that this crisis is a continuation of the dot.com collapse, which was papered over by pushing money into the property sector. He suggests that the Irish Guarantee is untenable and the euro at risk from this type of intervention. He says that a sovereign debt default is on the cards.

I haven't watched it myself yet, but everything in the summary seems to me to be correct.

The Irish move is profoundly threatening to the UK economy. At a time of enormous instability, when a number of UK banks are already moving their headquarters to Dublin for tax avoidance reasons, Ireland's guarantee has opened a conduit through which the liquidity of UK banks can be drained out.
Banking for the UK is more than an arm of the local economy - the UKs role as a world banking centre is its main residual international strength remaining since the end of its empire.

The Irish guarantee if called on could not be stood over and could potentially bankrupt the State and / or destabilise the Euro.

There is a question mark over the future of the Euro and the IMF has called for a coordinated EU reaction.The "G4" is meeting this afternoon. Finland has complained that the whole union should be there and deny the right of the Four to speak for Europe.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 7:46 pm

It was worth watching. The speaker is a hedge-fund manager: he says that the hedge funds are the only thing that have made money because they rightly saw that the whole thing was over-leveraged.

Quote :
By CNBC.com | 02 Oct 2008 | 04:28 PM Ireland's decision to guarantee all bank deposits will contribute to the demise of the single European currency, because it will erode the euro's credibility if it's allowed to go ahead, Hugh Hendry, chief investment officer and Partner at Eclectica Fund, told CNBC on Thursday.

The plan pledges to guarantee the liabilities of six Irish-owned banks totaling some 400 billion euros ($565 billion), more than twice the country's annual gross domestic product.

"The decision, if left to stand … my prophecy is it will bring down the currency. The euro is not a tenable currency if you have politicians making such decisions. The reality is there is no such thing as a free lunch," Hendry told "Squawk Box Europe."

"If I was German, I would say give me back my Deutschmarks," he added.

(Watch Hugh Hendry and Charles McKinnon, CIO of Thurleigh Investment Management, on CNBC above).

On Thursday, Irish lawmakers backed the plan and the government said it may be extended to foreign banks with retail units in Ireland, but it has raised questions in Brussels and London about competition and state-aid rules.

Promises of lavish spending such as this and others being discussed in Europe will erode investors' confidence, Hendry warned.

"McDonalds has got less chance of going bust than the British government," he said. "When our government comes to issue this sea of money they're going to pay through the nose … if we can't constrain that behavior, we're going to pay for it."

"We're on the verge of a sovereign debt default in Europe."

The current crisis stems from central banks easing monetary policy and flooding markets with liquidity to kick-start the economy after the dot-com bust in 2000, Hendry said.

"The reality is we should have had a stinking recession at the turn of the century. We burnt and destroyed lots of capital, we should have suffered from it," he said, adding that former Federal Reserve chairman Alan Greenspan thought he could "abolish the economic cycle" by inflating house prices.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 8:01 pm

Why is it news that a sovereign debt default is on the cards. Only a country as deluded as Ireland could fall for it. Ireland does not have a pot to piss in but yet they are gauranteeing billions.

There are still people thinking that the welfare state can continue and a free lunch exists. Well we are tapped out and broke so pay for your own health care and dole now.

Then ye can pay for the thousands of party parasites that are living off everyone else
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 8:24 pm

youngdan wrote:
Why is it news that a sovereign debt default is on the cards. Only a country as deluded as Ireland could fall for it. Ireland does not have a pot to piss in but yet they are gauranteeing billions.

There are still people thinking that the welfare state can continue and a free lunch exists. Well we are tapped out and broke so pay for your own health care and dole now.

Then ye can pay for the thousands of party parasites that are living off everyone else

Well, its not news so far as I'm concerned youngdan, its very basic maths:

Risks from the Irish Bank Bailout -Morgan Kelly
Professor of Economics, University College Dublin.

The collapse of bank shares on Monday panicked the government into announcing that they will guarantee the debt of six Irish banks. Like most decisions taken in haste this one will come to be repented at leisure.
This is the wrong solution to the wrong problem. It has put the Irish taxpayer at risk of considerable losses, and does nothing to solve the real problem of Irish banks, which is a shortage of capital. Irish banks get about one third of their funds by borrowing from foreign banks. What precipitated
the crisis on Monday was that foreign banks stopped lending to them. What we need to understand is what caused foreign banks to stop lending to Irish banks while they kept lending to most other banks in Europe. Once we understand the answer to this question we will understand how inept and potentially dangerous the government's attempted bailout really is.

The reason that foreign banks started to shun Irish banks is that international investors have gradually become aware of the scale and recklessness of Irish bank lending to builders and property speculators. Irish banks are currently owed €110 billion by builders and developers. Of every €100
that Irish residents have deposited in banks, €60 has been lent for property speculation. As the property bubble has burst, it is looking increasingly unlikely that banks will get back more than a fraction of this. In particular, very little of the €25 billion lent to builders to construct the
ghost estates and vacant apartment blocks that now blight the landscape will ever be seen again.

Foreign banks know of these toxic loans---even if Irish banks are still trying to disguise them--- and and are frightened by them. That is why they stopped lending to our banks, and why the government was panicked into taking their place. Effectively, the Irish banks are like a stupid kid who has crashed his car so often that insurance companies refuse to insure him any more. Now Brian Lenihan has boldly stepped up and solved the
problem by giving him a blank chequebook---your chequebook in fact---to keep on getting new cars as he pleases. The difficulty that Irish banks had in raising funds was a symptom of the bad debts that foreign investors know have eaten up most of their capital. By treating the symptom, the government has ignored the cause which is the shortage of bank capital.The failure of government policy can be seen in the share price of banks.

On Tuesday evening after the bailout had been announced, the shares of the three retail banks was still slightly lower than they had been on Monday morning before the panic. If all that was wrong was a shortage of liquidity then they should have roared back to their levels of a year ago.
Is this just abstract carping? Surely deposits are again flowing into Irish banks, and all their troubles are behind them. Unfortunately not.
The amount that a bank can lend is proportional to its capital: the amount of money that its owners have invested in it. As banks suffer bad debts, this capital falls and the amount that they can lend contracts. Effectively the Irish banks are heading in the same direction that the Japanese banks were in the 1990s: zombies that are kept on life support by the government, but without the capital to provide firms and households with the borrowing that they need.
However this cosy Japanese solution to an Irish problem could come unstuck if bank auditors refuse to sign off on the valuations that banks are still putting on their dead assets. This would precipitate a new crisis that would make last Monday seem like a picnic.

The Irish government should have done what the Swedes did in 1991. At the end of a property boom like ours, their banks found themselves overwhelmed with bad debts to property developers. The Swedish government stepped in and, in return for banks' admitting the scale of their losses and
firing the senior managers that had caused their problems, provided capital in return for a share of ownership. As the Swedish economy recovered the government was able to sell off its share in the banks, with the result that the Swedish taxpayer lost nothing on the bailout. In Finland, by contrast, government denied that there was any problem until their banking system had collapsed and was then forced into a ruinously expensive bailout.
The government should have offered new capital to four of the institutions, and left the others, where the real problems lie, to fend for themselves. Nobody, apart from a few property speculators, would have noticed if these others had disappeared.

Not only does the Irish government guarantee of bank borrowing fail to solve the underlying problem of bad loans; it faces the Irish taxpayer with a real risk of enormous losses. By insuring the borrowing of banks with toxic assets the Irish government has taken up where the collapsed American insurer AIG left off. It was by guaranteeing to cover any losses to institutions that lent to client banks, what was called monoline insurance, that the world's largest insurance company went bankrupt.

The particular risk that the government now faces is that Irish banks will package toxic loans as asset backed securities and sell them off with a government guarantee, passing on their losses to the Irish taxpayer. Suppose that you are a bank that has lent €100 million each to 10 developers who are having problems meeting their repayments. What you do is bundle the loans into one asset and sell it, with Brian Lenihan's signature on the bottom, on financial markets for €1 billion. When the borrowers default, the taxpayer will be left taking up the tab.The following months will see a battle of wits between banks and the financial regulator, as banks try to offload bad debts onto the taxpayer and the regulator tries to stop them. It is not hard to guess who will emerge as the winner. As this realization dawns on investors we can expect bank shares to soar in the coming weeks, and the cost of Irish government borrowing to rocket.

Irish banks were facing potential losses on their property lending of the order of €10 to €20 billion. Thanks to Brian Lenihan's master-stroke it looks as if it will be you, rather than bank shareholders, who will be taking the loss.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 8:36 pm

I didn't mean it like that. I should have said why is anyone surprised at talk of default. There could be no talk of the government offering capital to the banks because the government does not have any capital.

The government can not save the banks unless it squeezes 20 billion out of taxpayers. They don't have 20 billion to give to the government. It is over and bankruptsy was the only option.

What do FF do. They pull a stroke. It has fooled their doopy supporters but in buying time they have screwed everyone.

There will be nobody admiting to having voted for these shythehawks in a few weeks time
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 8:37 pm

youngdan wrote:
I didn't mean it like that. I should have said why is anyone surprised at talk of default. There could be no talk of the government offering capital to the banks because the government does not have any capital.

The government can not save the banks unless it squeezes 20 billion out of taxpayers. They don't have 20 billion to give to the government. It is over and bankruptsy was the only option.

What do FF do. They pull a stroke. It has fooled their doopy supporters but in buying time they have screwed everyone.

There will be nobody admiting to having voted for these shythehawks in a few weeks time

FG voted with them and also SF.

Only the Labour Party seems to have any grasp of what is going on.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 10:38 pm

FG has no backbone of course and are terrified. SF would want the state to nationalise the banks so no surprise there either.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 10:46 pm

youngdan wrote:
FG has no backbone of course and are terrified. SF would want the state to nationalise the banks so no surprise there either.

The G Four have called for a global conference and a "new Bretton Woods". They all still seem to think that the right bit of paper can fix it all.


04/10/2008 - 20:00:09
Britain, France, Germany and Italy tonight called for an international conference “as soon as possible” to consider sweeping reforms of the global finance system. The move was announced after an emergency summit in Paris at which British Prime Minister Gordon Brown and the leaders of France, Germany and Italy vowed to lead the way in restoring confidence and stability in the European economy – and urged the rest of the world to do the same.

They want the international conference to be convened before the end of next month, and its task, said French President Nicolas Sarkozy, would be to revive the current finance system set up at the Bretton Woods Conference 60 years ago, which created the International Monetary Fund and the World Bank. President Sarkozy called the three-and-a-half hour conference to bring together the four EU countries which belong to the G8 group of most industrialised countries.

But the summit’s pledges on restoring sound financial systems will be looked at again next week by finance ministers from all 27 EU member states at talks in Luxembourg. President Sarkozy, who currently holds the EU Presidency, also vowed to continue a series of private meetings with various EU leaders to push the message that continued close cooperation is needed to regulate banks and finance houses and restore consumer confidence. Before leaving London for Paris, Mr Brown announced a new national scheme, setting up a multi-billion pound fund available to small and medium-sized businesses facing trouble because of the global economic turmoil.

And in Paris he joined the others in insisting that member states should continue with their own national regimes of financial regulation – but overseen by the European Commission’s strict rules on fair competition and against illegal state aid. The new UK Business Secretary Peter Mandelson today warned of a “new wave of economic nationalism” and urged EU nations to work together to restore stability to the European financial system. He warned that unilateral action, such as Ireland’s offer to guarantee all deposits in its main banks, could “distort” the system.

Mr Mandelson told the Sunday Telegraph: “The danger of this crisis is it may spark a new wave of economic nationalism, with each country looking for a ’get out of jail free’ card. People have to realise that selective or national approaches could lead markets to look to parts of the financial system in a distorted way.” Decisions by Ireland and Greece to guarantee all deposits were “likely to create distortions because some parts of the EU system are guaranteed and some are not,” he said.

“These policy options need to be fully thought through internationally and implemented collectively if we are to avoid an ’every man for himself’ approach.”

Mr Mandelson added: “The last year has seen the global economy move into an unsustainable position. In the last two weeks it has woken up to the gravity of the situation and the limitations on governments’ ability to reverse the situation. We are all coming to terms with the depth of the crisis.”
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 11:50 pm

cactus flower wrote:
. . .And in Paris he joined the others in insisting that member states should continue with their own national regimes of financial regulation – but overseen by the European Commission’s strict rules on fair competition and against illegal state aid. The new UK Business Secretary Peter Mandelson today warned of a “new wave of economic nationalism” and urged EU nations to work together to restore stability to the European financial system. He warned that unilateral action, such as Ireland’s offer to guarantee all deposits in its main banks, could “distort” the system. . .

Mr Mandelson told the Sunday Telegraph: “The danger of this crisis is it may spark a new wave of economic nationalism, with each country looking for a ’get out of jail free’ card. People have to realise that selective or national approaches could lead markets to look to parts of the financial system in a distorted way.” Decisions by Ireland and Greece to guarantee all deposits were “likely to create distortions because some parts of the EU system are guaranteed and some are not,” he said. . .

Excellent video. The main speaker put the chips on the table and his analysis was of a very traditional sort. As a fund manager, he only thinks about cause and affect. In as much as a given theory is exercised, say neo-liberal money supply creation, he only worries about how the mechanism of finance and pricing of assets are affected. His job is to price an assets. If he finds a mis-priced asset, either over or under valued, he recomends buying or selling the asset. His bias, like every fund or private investor, is to critique the system and finds its weaknesses. He's pointed out that the Irish nation now has less street credit worthiness than McDonalds. Astonishing. McIreland, given our new massive liabilities (bank gaurantees), sees its CDS rate sky rocket. Unbelievable.

What can you say at this point? The government sold the Irish nation on the idea that they were calmly tyring to stop panic in the markets. It's the government who panicked. I imagine the average citizen didn't really know the state of affairs and probably isn't much wiser today. The government will never tell us how close to the abyss the Irish banking sector was, and they knew they didn't have the funds or the credit worthiness to nationalise the debt on the spot. Instead, they've chose to gamble and pay off the a huge risk premium, as evidenced by CDS graph on CNBC, which the tax payer will be paying for years to come.

Kudo's CF. While we have to filter out the bias of the speakers, at the very least this video gives us a picture of the ramifications of governmental action, and I'm not just picking on the Irish govt. All Western governments have to pick up their game if we are to avoid further and more harmful distruptions down the road. Will any of the bastards ever come clean or have we constructed an economic regime which requires these periodic breakdowns?

Well, the big four are meeting. It is no mistake that the UK is attending this meeting although they are not part of the Eurozone. The idea that one nation in the EU can effectively pass legislation which allows them to raid their neighbor's cubbard for cash isn't exactly gaining widespread acceptance. McWilliams's article crowing about Ireland having a competitive advantage through the bail-out legislation will have highlighted, if highlights were needed by the Euro power brokers, the uncomeptitive nature of the legislation and the horrid shewing of risk in the market place.

The CDS spreads have given the market the ability to grade the performance of Irish banking sector in the aggregagte whereas before they could only surmise on each bank's performance. The near doubling of the CDS risk spread for the Irish nation shows that the Irish financial system, in the aggregate, is far from healthy. Robbing our neighbors of their deposits will only add to the risk factor. The banks are now sitting on piles of cash, which are liabilities on their balance sheets, and they need to start lending this money pronto in order to generate loans, assets on the balance sheets, and the attendant profits. If they get this wrong in a recessionary environment, the Irish nation faces nothing less than financial catastrophe.

Maybe, just maybe, the EU will bail us out of this mess and find a way for our government ministers to save face as they repeal the banker's bail-out scheme.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sat Oct 04, 2008 11:54 pm

I heard something about it not being Anglo but AIB that were close to going to the wall last week, prompting the governments action. Is there any truth or validity in this? If so, it will be the second time in less that a quarter of a crentury we have been called on to save their sorry asses.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:14 am

Slim Buddha wrote:
I heard something about it not being Anglo but AIB that were close to going to the wall last week, prompting the governments action. Is there any truth or validity in this? If so, it will be the second time in less that a quarter of a crentury we have been called on to save their sorry asses.

Tbh, there are several names in the ring. My guess is that the collapse of any one of them would have lead to wholesale slaughter. If you didn't look at the video, there is a chart of the CDS spread (basically the insurance premium a punter would pay to cover the loss on a company's bond he/she owns) which show that once Ireland passed the bail-out legistlation our risk premium sky-rocketed. This may indicate that the Irish banking sector in aggregate is viewed unfavourably. I must add there is no statistical correlative evidence but only the factor of cause and affect as evidenced by the rise in the spread.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:18 am

It was neither of those institutions and I heard which it was from someone at the particular bank. But correct the fear was the collapse of one institution would lead to the collapse of one if not more others.

Don't think we should really be discussing which bank though.


Last edited by johnfás on Sun Oct 05, 2008 12:26 am; edited 1 time in total
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:20 am

rockyracoon wrote:
Slim Buddha wrote:
I heard something about it not being Anglo but AIB that were close to going to the wall last week, prompting the governments action. Is there any truth or validity in this? If so, it will be the second time in less that a quarter of a crentury we have been called on to save their sorry asses.

Tbh, there are several names in the ring. My guess is that the collapse of any one of them would have lead to wholesale slaughter. If you didn't look at the video, there is a chart of the CDS spread (basically the insurance premium a punter would pay to cover the loss on a company's bond he/she owns) which show that once Ireland passed the bail-out legistlation our risk premium sky-rocketed. This may indicate that the Irish banking sector in aggregate is viewed unfavourably. I must add there is no statistical correlative evidence but only the factor of cause and affect as evidenced by the rise in the spread.

Thanks for that info. It makes things a little clearer. I spend so much time trying to figure what is happening with UBS, Credit Suisse and the Cantonal Banks, I haven't given as much attention to the Irish situation as I would like.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:34 am

youngdan wrote:
I didn't mean it like that. I should have said why is anyone surprised at talk of default. There could be no talk of the government offering capital to the banks because the government does not have any capital.

The government can not save the banks unless it squeezes 20 billion out of taxpayers. They don't have 20 billion to give to the government. It is over and bankruptsy was the only option.

What do FF do. They pull a stroke. It has fooled their doopy supporters but in buying time they have screwed everyone.

There will be nobody admiting to having voted for these shythehawks in a few weeks time
Tell you what youngdan, you continue with the insults, you seem quite good at that, lord knows what it contributes, but on with you anyway.
If I’m minister for finance I’ll take youngdan’s & Morgan “doomsayer” Kelly’s worst prediction of a 20 billion cost to the taxpayer, that would be worst case 10 billion to you or me as the possible cost for saving the Irish financial system and it’s six main banks. I’ll then look at the total profit last year of those same six banks, 6.5 billion approx. and I’ll see if there isn’t some way over time of bringing those two figures together in such a way as to leave us with a functioning banking system and no cost the taxpayer. Not outside the bounds of possibility I’d say
.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:47 am

johnfás wrote:
It was neither of those institutions and I heard which it was from someone at the particular bank. But correct the fear was the collapse of one institution would lead to the collapse of one if not more others.

Don't think we should really be discussing which bank though.

You have a too forgiving nature Johnfás. Smile There is going to be a charade in the Dáil next week or the week after when some banking officials will be paraded onto an investigation committee and will give out some fulsome mea culpas. The politicos look like their doing their jobs and the bank officials will go away and do what they've been doing for years.

If I do something wrong like speeding, I am sanctioned. If a trader hurts a financial company, he/she is sanctioned. If a group of people bring the economy to near bankruptcy, the tax-payer bails them out and everything returns to the status-quo? Sad
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 12:52 am

rockyracoon wrote:
johnfás wrote:
It was neither of those institutions and I heard which it was from someone at the particular bank. But correct the fear was the collapse of one institution would lead to the collapse of one if not more others.

Don't think we should really be discussing which bank though.

You have a too forgiving nature Johnfás. Smile There is going to be a charade in the Dáil next week or the week after when some banking officials will be paraded onto an investigation committee and will give out some fulsome mea culpas. The politicos look like their doing their jobs and the bank officials will go away and do what they've been doing for years.

If I do something wrong like speeding, I am sanctioned. If a trader hurts a financial company, he/she is sanctioned. If a group of people bring the economy to near bankruptcy, the tax-payer bails them out and everything returns to the status-quo? Sad

Couldn't agree more. Some of these chancers must be put to the sword.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:03 am

Rockyracoon said
Quote :

What can you say at this point? The government sold the Irish nation on the idea that they were calmly tyring to stop panic in the markets. It's the government who panicked. I imagine the average citizen didn't really know the state of affairs and probably isn't much wiser today. The government will never tell us how close to the abyss the Irish banking sector was, and they knew they didn't have the funds or the credit worthiness to nationalise the debt on the spot. Instead, they've chose to gamble and pay off the a huge risk premium, as evidenced by CDS graph on CNBC, which the tax payer will be paying for years to come.
The fact that share prices were collapsing last Monday across the banks and that the bank heads were called in that night, with Trichet finally being phoned at 4.30 a.m. to tell him of the proposed guarantee tells us how close the the abyss.

The whole thing is well reported blow by blow here:
http://www.irishtimes.com/newspaper/ireland/2008/1004/1222959350571.html
Again, the options examined appear to have been limited and there isn't a name mentioned that would lend any confidence. John Gormley, McWilliams and Clinch, an urban planner, are all mentioned as possibly influential in the guarantee gambit. The whole thing reeks of ineptitude, cute hoordom, panic and ignorance.

The article points out that
Quote :
Not only does the Irish government guarantee of bank borrowing fail to solve the underlying problem of bad loans; it faces the Irish taxpayer with a real risk of enormous losses. By insuring the borrowing of banks with toxic assets the Irish government has taken up where the collapsed American insurer AIG left off. It was by guaranteeing to cover any losses to institutions that lent to client banks, what was called monoline insurance, that the world's largest insurance company went bankrupt
The article finishes:
Quote :
Asked about the emergency plan's possible cost, Lenihan told colleagues that banks will be levied if one of them does collapse, and that these payments would be used to settle the defunct bank's debts before the State will have to face any bill. ( Shocked )

"An awful lot is about confidence," said one Cabinet Minister. "Bankers around Dublin were doing as much damage as anybody outside them because they were all trying to get their own advantage . . . It is all right as long as the guarantees are not called in."

Your scenario of an EU override of the Irish guarantee would be one of the least bad of the awful outcomes that can be envisaged. In the meantime, the Labour Party seem worth supporting.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:04 am

In 1936 Andrew Jackson, 7th President of the US, closed down the Second Bank of the US by revoking its charter. His comments:

". . . Gentlemen, I have had men watching you for a long time and I am convincd that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin 10,000 families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin 50,000 families, and that would be my sin!"

Kind of sums it up for me. Instead of charging their losses to the bank these days, we now have the "too big to fail" doctrine and the tax-payer, in on form or another, it left to pick up the bill.

I don't see one politician of the caliber of Jackon anywhere in the world. I don't expect to see things change unless the US financial system finally crumbles. Right now the powers-that-be are attending to the symptons of the malaise and not trying in any meaningful way to address the underlying causes of the malaise.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:20 am

rockyracoon wrote:
In 1936 Andrew Jackson, 7th President of the US, closed down the Second Bank of the US by revoking its charter. His comments:

". . . Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin 10,000 families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin 50,000 families, and that would be my sin!"

Kind of sums it up for me. Instead of charging their losses to the bank these days, we now have the "too big to fail" doctrine and the tax-payer, in on form or another, it left to pick up the bill.

I don't see one politician of the caliber of Jackon anywhere in the world. I don't expect to see things change unless the US financial system finally crumbles. Right now the powers-that-be are attending to the symptons of the malaise and not trying in any meaningful way to address the underlying causes of the malaise.

Personally I think the hedge fund guys were right in what they said - the property bubble was a last throw to protract the agony of the dotcom bubble, itself a scam to try and overcome the rise in oil prices and general deterioriation of profitability of US and european industry.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:23 am

Thanks for the article CF. I can't help reading between the lines though. The major factor that caused the government to take action was the call on loans in October. This has been reported on the property pin months ago. All the bullshite (sorry) about burning the candles late in govt building is hype, spin and propoganda as is the reference to share prices. Since when did governemnts start to determine the share price of a company? Never.

The govt admitted it could not fund the bank liabilities through nationalisation so its taking a big gamble to bail-out their banking buddies. The individual consumer can fail, the banks can't.

And, we've made a very nasty enemy. Anyone who thinks the UK will just let this episode pass without reprecussion had better read up on their history. Payback will be a . . . gl

BTW the DCU analysis was very interesting and probably very true in its analysis

Sorry If my post is a bit sarky but the more I know, the angrier I'm getting. Keep up the good work.

(Still sticking w SF but you\'re right, they got it wrong once again. They're trying to to back track but it's too late. They have to start reading the machine nation site!)


Last edited by rockyracoon on Sun Oct 05, 2008 1:35 am; edited 2 times in total
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:28 am

rockyracoon wrote:
Thanks for the article CF. I can't help reading between the lines though. The major factor that caused the government to take action was the call on loans in October. This has been reported on the property pin months ago. All the bullshite (sorry) about burning the candles late in govt building is hype, spin and propoganda as is the reference to share prices. Since when did governemnts start to determine the share price of a company? Never.

The govt admitted it could not fund the bank liabilities through nationalisation so its taking a big gamble to bail-out their banking buddies. The individual consumer can fail, the banks can't.

And, we've made a very nasty enemy. Anyone who thinks the UK will just let this episode pass without reprecussion had better read up on their history. Payback will be a . . . gl

Can't argue with you here, no matter if the only gratification in all this is seeing the British livid. Banking is their core.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:33 am

I have been spot on in predicting the economic conditions since I landed on P.ie 15 months ago. Last January on the iseq thread I said that there would be a 10 billion budget shortfall above the amount slated for borrowing and said that an emergency budget was needed in February. Yey Cowan ran away from the problems for his personnel gain.

Did he address the banking problem. No he did not. He waited until the bankers came to him when the financial system was a few hours away from collapse. He is incompetent. You can take that as an insult but everyone else will take it as a fact.

You can continue to defend this buffoon all you wish but he is the problem not the solution. Why dosn't he resign and let someone in FF with a brain take over.

The economic gameplan of FF seems to be Just Hope for The Best.

I would not say the cost is 20 billion. That is wildly optimistic.

So hope for a EU print job because that is the only thing that can save ye. It will drive the people to starvation but who cares about them. Cowan only cares about himself.

Anyone with any sense is using the influx of foreign money to withdraw whatever money they have on deposit. A lucky break like this does not often happen and it should be a case of- get while the getting is good. If other countries offer this foolish guarantee, how long do you think that cash will be left with the Paddies.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:34 am

CF, I amended my post above. I'm getting angrier by the moment as the full implications start to gel in my slow moving mind. The articles you've cited have been invaluable.

I'll have to get the numpties in SF to start reading some of the posts on this site.

I've given a preference to Labour in every election but in Monaghan - forget about it. Anyway, I have too many fundamental differences with Labour rank and file, the views and ideology.

gl and keep up the good work. This site will be "must viewing" in a couple of months.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:48 am

Cheers rocky. I have my serious reservations about Labour too and they won't go the full mile imo, but they seem to have been right on this one.
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PostSubject: Re: Ireland, the World Economic Crisis and the Threat to the Euro   Sun Oct 05, 2008 1:55 am

youngdan wrote:
I would not say the cost is 20 billion. That is wildly optimistic.
You just did in your last post
youngdan wrote:
So hope for a EU print job because that is the only thing that can save ye. It will drive the people to starvation but who cares about them. Cowan only cares about himself.
This kind on nonsense lets the rest of your post down
youngdan wrote:
Anyone with any sense is using the influx of foreign money to withdraw whatever money they have on deposit. A lucky break like this does not often happen and it should be a case of- get while the getting is good. If other countries offer this foolish guarantee, how long do you think that cash will be left with the Paddies.
Not a term I imagine any self respecting Irishman cares very much for, I wonder why you use it.
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