Nationalisation Watch / Govt. rethinking 3.5 billion bailout for the banks?

Auditor posted this on the Iceland thread. It offers a market judgement on the Irish banks and economy, and the way they have been handled in the last few weeks.

cactus flower wrote:

Auditor posted this on the Iceland thread. It offers a market judgement on the Irish banks and economy, and the way they have been handled in the last few weeks.

Not really, it reflects the fact that the Government has offered to guarantee the banks risk, extra risk = extra risk of default.

tonys wrote:

cactus flower wrote:

Auditor posted this on the Iceland thread. It offers a market judgement on the Irish banks and economy, and the way they have been handled in the last few weeks.

Not really, it reflects the fact that the Government has offered to guarantee the banks risk, extra risk = extra risk of default.

That graph's the change in what it costs to insure against Government default - that's not paying the interest on the bonds or what. Ultimately it means less likelihood of a loan - or stricter conditions if we do get loans (from the IMF) - in Iceland's case it's 18% interest on mortgages -- can you imagine that here

Government cooks up scheme to Recapitalise banks....

http://www.rte.ie/news/2008/1214/bank.html

Here was I hoping that somehow, just somehow, there was some rhyme and reasons to the governments inaction - in that they were going to follow the fiscal conservative route and let the rot die of its own accord. Now they really do look like they have lost all self-confidence and are just following the rest of them.

Respvblica wrote:

Here was I hoping that somehow, just somehow, there was some rhyme and reasons to the governments inaction - in that they were going to follow the fiscal conservative route and let the rot die of its own accord. Now they really do look like they have lost all self-confidence and are just following the rest of them.

They were just hoping that if they closed their eyes it would all go away.

Jaysus 10 billion - first it was 2 or 4 now 10. This is fairly mad stuff I think. We're bailing out a ton of gamblers who made atrociously bad decisions. The taxpayer is going to have to fork up 10 billion over the next while now and this won't be the last 'bailout' if it's not the first...

And some PD bastard had the gall to cut me down in a p.ie discussion once on what he perceived as a 'wage slavery' discussion but it wasn't. It's no lie - there are wage slaves and cash kings. There will be burnings for this though.

10 fucking billion.

Auditor #9 wrote:

Jaysus 10 billion - first it was 2 or 4 now 10. This is fairly mad stuff I think. We're bailing out a ton of gamblers who made atrociously bad decisions. The taxpayer is going to have to fork up 10 billion over the next while now and this won't be the last 'bailout' if it's not the first...

And some PD bastard had the gall to cut me down in a p.ie discussion once on what he perceived as a 'wage slavery' discussion but it wasn't. It's no lie - there are wage slaves and cash kings. There will be burnings for this though.

10 fucking billion.

If Sidewinder was right, its a drop in the ocean.

cactus flower wrote:

Does anyone think the Government has a clue what the implications are of a blank cheque for the banks?

No. But they had a rock solid idea of what would have happened if they hadn't done it when they did. I don't think people realise what was about to happen.

Within hours one Irish bank was about to go under. (They were packing away their computers, so certain were they of failing as soon as the markets opened the next time.)

That collapse was going to pull down two other sectors of the Irish economy. (I cannot name them without giving background information that cannot be shared.)

Within 24 hours one or two other banks would have been pulled under in the economic hurricane that had been triggered by the collapse.

By the end of the week, all but probably two Irish banks would have been pulled under, in part through a run on the banks from customers who had seen bank collapses and two important sectors of the economy collapse in previous days.

The scale of what was about to happen was worse than you could have imagined. I get paid on Fridays. If Lenihan had not acted as he did, I would not have gotten paid. The bank I had my account in might not have survived. The bank where my employer keeps their money was one of those likely to have collapsed, and with it I would have not been paid. That would have been the case for over one million people in this state.

To give perspective,
- if my employer lost their money I would not get paid.
- one of the banks on the brink of collapse is used by my landlord. If it had collapsed, there would be chaos in the mortgage market, affecting the place I rent.
- my doctor runs his business through one of the banks. (He told me afterwards what his bank was. He has no idea how close he came to losing that bank and so his surgery. The attached pharmacy is also run through that bank.)

So if the government had not acted, I could have lost

- my income
- my job
- my home
- my doctor
- my local pharmacy (due to illness I need to get certain medicines regularly. I couldn't if it had collapsed. If I couldn't I would collapse!)
- my family would have lost their property and savings.
- so would up to one million Irish people.

This website BTW would have collapsed as would p.ie and almost the entire internet service in Ireland as businesses running servers collapsed with their banks.

Most of the shops you shop in would have collapsed. If you go to the gym, that gym would no longer be there now if Lenihan had not given that guarantee.

It may not be enough but it may have given us a fighting chance we would not have had if they had allowed the dominos to fall the next morning.

In effect Lenihan was in the equivalent of standing in Sarajevo in 1914 beside a gunman, watching the archduke Franz Ferdinand driving up the street, aware of all that was to come from those shots, and being able at that moment to prevent them, with no idea if somewhere else on the street someone also has a gunman. He prevented certain disaster but has no idea if the disaster is envitable and will strike somewhere else.

Oh and BTW, if you think you are seeing tough cutbacks - you haven't seen the start of them yet. The government is still only talking about stopping pay increases. In six months time they will be faced with having to tell every teacher, guard, nurse and everyone else in the public service their pay has to be cut.

And if you are a third level student, start saving. Fees are coming back. The only question is when.

The only thing you haven't mentioned Papal Knight is how this crowd of geniuses got us into this position in the first place.

Auditor #9 wrote:

Jaysus 10 billion - first it was 2 or 4 now 10. This is fairly mad stuff I think. We're bailing out a ton of gamblers who made atrociously bad decisions. The taxpayer is going to have to fork up 10 billion over the next while now and this won't be the last 'bailout' if it's not the first...

And some PD bastard had the gall to cut me down in a p.ie discussion once on what he perceived as a 'wage slavery' discussion but it wasn't. It's no lie - there are wage slaves and cash kings. There will be burnings for this though.

10 fucking billion.

Remember, auditor, those bank bastards have us all by the balls. I hate them every it as much as you, but if they go down we go down too - and we lose our jobs, our homes, our money and everything around us. Yes they are gamblers. Yes they are idiots. But in stopping them going down we are saving ourselves. If they go down we are well and truly fucked.

cactus flower wrote:

The only thing you haven't mentioned Papal Knight is how this crowd of geniuses got us into this position in the first place.

Sheer fucking incompetence, that's how.

A government that failed to manage the economy properly.

Greedy bankers with their noses in the trough.

The effects of the Thatcher/Reagan/McCreevy mantra of deregulation. They forget that those regulations were there to stop this happening.

But however it happened, it has happened. We have got to find a way out of this mess.

So they should be nationalised: keep the people running them on (on half rations) under tight supervision by a few sturdy Swedes and Finns who've done it before.

cactus flower wrote:

So they should be nationalised: keep the people running them on (on half rations) under tight supervision by a few sturdy Swedes and Finns who've done it before.

That may well be the outcome.

Papal

I don't know if it's true that our society would have collapsed as you describe - if there was at least one ball between the men in the Dáil they'd have done it Sweden-style. Get in the receivers and liquidate all the bad shit and keep whatever rudimentary system was necessary for functioning of the economy. This might have taken a couple of months to rig up but we are gone a couple of months since then anyway.

No, I cannot accept that these pricks need the bailout. Sinn Fein were making Nationalise the Banks noises before the last election and this may be what will have to happen yet. As ever it could be done in an orderly way - creative destruction - or it could be done in a ham-fisted, muddle-through, bailout the boys way and of course we'll pick the latter.

This will end in more tears than just from cutbacks. It will come out that these lads will keep their bonuses and more and then the steel lids of the sewerage drains will be hurled through the windows of banks the country over. There will be burnings.

Papal Knight wrote:

cactus flower wrote:

The only thing you haven't mentioned Papal Knight is how this crowd of geniuses got us into this position in the first place.

Sheer fucking incompetence, that's how.

A government that failed to manage the economy properly.

Greedy bankers with their noses in the trough.

The effects of the Thatcher/Reagan/McCreevy mantra of deregulation. They forget that those regulations were there to stop this happening.

But however it happened, it has happened. We have got to find a way out of this mess.

The very crux of the problem. The deregulation hysteria was like a cult, one that grew to include even supposedly left-leaning politicians. I can only hope that they have been snapped out of their hypnosis now, and some signs seem to be positive (when even American Republicans recognise it), but I have a sneaking suspicion that, like any discredited cult ideology, it will make a comeback in a new form some years down the road.

Joan and Dicky are discussing it on the Week in Politics now.

Has anyone actually said how much there is in the Pension Fund? I thought a few weeks ago the story was that only a couple of billion was worth cashing in.

Is the 10 billion all there is?

cactus flower wrote:

Has anyone actually said how much there is in the Pension Fund? I thought a few weeks ago the story was that only a couple of billion was worth cashing in.

Is the 10 billion all there is?

If the pension reserve fund went the way of the ISEQ .... They said there was 2 to 4 billion of cash in it. They'd have to have it diverse enough to spread the risk and some of it must be available fairly handy.

The lads on the Week in Politics were saying there was stringent terms attached to the money - including the pay of executives. It's stability they'll be looking for for a while now not risky speculation so why would these lads continue to get whoppers of salaries ? Their job will be more like petrol-pump attendants nwo, handing out the machine lubrication when required instead of Casino Royale gamblers. They should be lucky they have jobs at all and I wouldn't be surprised if there are noises now about the Regulator and ... banking practices again .

Auditor #9 wrote:

cactus flower wrote:

Has anyone actually said how much there is in the Pension Fund? I thought a few weeks ago the story was that only a couple of billion was worth cashing in.

Is the 10 billion all there is?

If the pension reserve fund went the way of the ISEQ .... They said there was 2 to 4 billion of cash in it. They'd have to have it diverse enough to spread the risk and some of it must be available fairly handy.

The lads on the Week in Politics were saying there was stringent terms attached to the money - including the pay of executives. It's stability they'll be looking for for a while now not risky speculation so why would these lads continue to get whoppers of salaries ? Their job will be more like petrol-pump attendants nwo, handing out the machine lubrication when required instead of Casino Royale gamblers. They should be lucky they have jobs at all and I wouldn't be surprised if there are noises now about the Regulator and ... banking practices again .

Yes- only a few days ago Lenihan said there was only a couple of billion available. Now there is 10 billion. The bottom of the barrel is being scraped then.

Very good analysis of it this morning by David Murphy on Morning Ireland. I'll put up a link later.

Massive jump in shares this morning ! Anglo jumps 14% to 43 cents !

The Pin on it

(it's not pretty)

Told you to buy Anglo at 33c...

Also on PK right now - how it will affect you if you have shares...

Could be actually very good for the country as many of these banks have plenty of profit. I'm not familiar with the shareholding options anyone can have least of all the government but couldn't the country get some dividends from this each year ?

Having the likes of Alan Dukes, Ray McSharry, Dick Spring etc. hanging around to watch them gives some confidence doesn't it ?

I know one of the people who is going onto the boards to oversea them - a highly competent individual who is going to destroy anything in his path.

Auditor #9 wrote:

Also on PK right now - how it will affect you if you have shares...

Could be actually very good for the country as many of these banks have plenty of profit. I'm not familiar with the shareholding options anyone can have least of all the government but couldn't the country get some dividends from this each year ?

Having the likes of Alan Dukes, Ray McSharry, Dick Spring etc. hanging around to watch them gives some confidence doesn't it ?

At the moment your very good graphic of notes disappearing down a drain says it all. If the world survives the depression, much of the bad debt was used to buy land and property all over the world. If there is inflation and if the land is held onto it may in time come good. In that event, and in the event that we have a functioning economy, something might come good in 10 years or so.

if there was hyperinflation and a certain amount of earnings maintained, that could dramatically reduce the debt burden, but at a price of all kinds of other damage.