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

Papal Knight wrote:

Guys, I think the vote on AIB share price is in bad taste. This is a rather sensitive issue and I don't think we should have a gimmicky vote on it. If AIB does go down we are well and truly fucked.

Sorry Brian.

Haven't you noticed we're trying to talk it up ?

tonys wrote:

Auditor #9 wrote:

Is tonys on the piss ?

???

Thought you might be celebrating with a few shcoops

It is not the banks going down, it is the entire country. Tally-Ho

johnfás wrote:

I wonder will she do it in her jammies.

Does Mary wear "jammies"? Dior negligè, surely?


Amazing that this turkey was passed yesterday. Not so surprising was how it was timed to coincide with the Obamarama going on in Washington. Still, we are stuck with it now so lets ask the real question

Qui bono???

Youngdan

Some seem to believe that issuing guarantees when you don't know the extent of the liability and without due consideration as to your ability to pay is a good idea. They fail to see that governments acting in that manner does send out a very clear message about the running of the country and believe that risking the country over a bank or two is such a good idea.

You will never convince them otherwise Party loyalty can blinker and those working or invested in the sector have understandable personal interests.

There is an idea afloat that Banks are in some way different from other businesses and that they are needed to meet their customers financial needs. Yes you need banks, and yes businesses need their credit arrangements or they become insolvent, but was this the most prudent and cost effective way of insuring that that happened? Also how does the nationalisation of Anglo fit into this wider picture?

It reminds me of the howls from posters back on the McWilliams thread when I said that Ireland should immediately default and reintroduce the punt. They say things would be terrible but they fail to understand that it is going to be even more terrible if they don't and they will be forced to default anyway.

It appears that people think that the government can generate wealth. Everyone who relies on government do not even question this. I saw a clip of the head of the nurses and the head of the teachers saying that no way would they accept cuts. They don't get it. I would fire every teacher tomorrow.. Hire anyone that wanted to work at 7 euros an hour back and to hell with the rest of them. That is leadership. Cowen does not have it and should resign.

Getting back to the banks. There is two possibilities. Cowen does not understand the issue at all or else he is deliberately acting in a treasonous manner. Take your pick.

The moment of panic was of a Monday night late if I remember correctly. Cowen would have been told that the banks were about to fail. He would have been told to do something. It would never have entered his skull that the best thing would have been to do nothing. He in his head is all powerfull. So why did he do what he did.

He only thought first and foremost of himself and the political ramifications of his actions.

He should have let them all fail and pay out the 18 grand insured to each depositor. To hell with the international bondholders.

To hell with the shareholders as investors must be prepared for losses and they have lost everything anyway.

To hell with depositors who lost because that will teach them not to put their cash into monkey banks. Everyone knew they were monkey banks.

Instead he like an eejit gaurantees a muti-billion euro liability that nobody knows what size it is. He has bankrupted the whole country and the only bright spot is the fool is going to destroy the euro with any luck.

What happens from here remains to be seen.

Slim Buddha wrote:

Amazing that this turkey was passed yesterday. Not so surprising was how it was timed to coincide with the Obamarama going on in Washington. Still, we are stuck with it now so lets ask the real question

Qui bono???

There's noise of impending Bond trouble - in February - so it might mean that some people getting coupon interest won't be so they'll have to engage in getting a transfusion from elsewhere. Cui no bono ?

Loads of those politicians last night were incredulous of, very uncomfortable with and utterly wary of the pace of this move last night. Fear got the better of them in both Houses.

Probably the greatest mistake was not having someone play the role of Devil's Advocate. Nobody said hang on a minute we are co-signing a big loan here and it could break us.

It was a moment when a leader was needed and all they had was a politician. A man who would not be there except for the fact that his father was there before him. It would be better to pick a workman off O Connell street at random and at least he would be smart enough not to sign for something he could not pay.

We will see what happens

youngdan wrote:

Nobody said hang on a minute we are co-signing a big loan here and it could break us.

Half of them said it. And I'd say many who voted for it were thinking it.

Loads of them in both houses simply asked for the information to be presented to them, if necessary with the names blacked out, just the figures but they were told it was "confidential". When information doesn't come out, alarm bells start ringing.

youngdan wrote:

Probably the greatest mistake was not having someone play the role of Devil's Advocate. Nobody said hang on a minute we are co-signing a big loan here and it could break us.

It was a moment when a leader was needed and all they had was a politician. A man who would not be there except for the fact that his father was there before him. It would be better to pick a workman off O Connell street at random and at least he would be smart enough not to sign for something he could not pay.

We will see what happens

Well, it was put to the vote and opposed by the opposition. That will not be much comfort to us when we are dealing with the fall out. Your post above is right youngdan, but imo the damage was done when these loopers were given the loans in the first place. A default would have put BOI and AIB immediately under the hammer. The Bank Guarantee would surely have made us liable for most of the Anglo Irish liabilities even if we had let it go.

People don't want to consider the appalling vista that this government is still primarily interested in its own and its funders' self interests. Cowan is dreaming that this will all be over by the next election no matter what he does or doesn't do, and banks on the poor calibre of the opposition. He thinks in the worst event he can blame the IMF for the devastation. He hasn't a thought about the realities of our economic position and what best to do in the common interest.


Lenihan said there were only 5,000 Irish debtors, but it was "systemic".

Newspaper articles on this subject as the country wakes up to owning a new piece of ... kit. And as one politician there last night said, babies born today might also end up owning this thing.


http://www.examiner.ie/story/Ireland/idcweyaumh/rss2/

Quote :

Anglo Irish had to be rescued because it was of "systemic importance" to the country, with a balance sheet in excess of €100 billion.

Contrary to some impressions, the bank lent to a wide range of customers and not just developers, although the latter formed a very important part of Anglo’s balance sheet, said Mr Linehan.

...

"Anglo will be managed on a commercial basis at arm’s length from the Government allowing the full potential of the bank’s business to be realised," Mr Lenihan said. "The Government will be appointing a new board to oversee the running of the bank and to prepare a comprehensive business plan to enable Anglo to continue as a going concern."

There was "no question" of winding up the bank, he added.

Mr Lenihan also said Anglo had about €70bn outstanding in loans and advances to customers, but rejected suggestions this was all bad debt: "As with any bank, there is a mixture of mostly good loans and some that are distressed."

While it was clear there would be losses "on some of the loans", Anglo had about €7bn of shareholder funds and other capital available to it to offset any losses on the loan book, he said.

The lads in the Dept. of Finance who made MASSIVE accounting calculation errors for last years figures are now in possession of this loan book.

To clear up some confusion. I am talking about a few months back when Cowen gave the gaurantee on the night when the banks were close to collapse. I have not seen any of the Dail debate but it would be a joke anyway(the vote not the debate) as they are subject to a whip.

Audi on the night some people told Cowen not to gaurantee anglo only the big 4 but what was needed was an adviser watching Cowen's back to sternly warn him of he making a mistake in a field where his knowledge might not be the best.

Surely he has on his personnel staff the likes of a financial guy, a foreign affairs guy, an american situation guy etc. their job is to give him the straight talk

youngdan wrote:

To clear up some confusion. I am talking about a few months back when Cowen gave the gaurantee on the night when the banks were close to collapse. I have not seen any of the Dail debate but it would be a joke anyway(the vote not the debate) as they are subject to a whip.

Audi on the night some people told Cowen not to gaurantee anglo only the big 4 but what was needed was an adviser watching Cowen's back to sternly warn him of he making a mistake in a field where his knowledge might not be the best.

Surely he has on his personnel staff the likes of a financial guy, a foreign affairs guy, an american situation guy etc. their job is to give him the straight talk

Garret Fitzgerald said Government in his day had 17 economists and now there are 3. Cowen has Merrill Lynch and some civil servants, but people say he listens to IBEC and the IFA.
It is a mystery to me where he gets his advice.

Labour and the late Tony voted against the Guarantee. Gormley was wakened by a Guard sent to bring him to the meeting, but he wouldn't get up. I am hoping Papal Knight might be able to tell us more about this. I want to know what Gormley said to the Guard.

youngdan wrote:

To clear up some confusion....

And you believe he was given the straight talk and made a poor decision i.e. he was a bad leader ?

I am not sure of that. I don't know if he grasped what giving the gaurantee entailed. I am not sure he acted in good faith even.

Why is he taking advice from Merril Lynch. Whose side do you think they are on.

I would have let the banks fail, one of them and if necessary all of them.

Before anyone criticises anyone let them say what they would have done.

That goes for the likes of Papal Kmight as well should he give us his cuckoo story about armageddon if the bank failed

youngdan wrote:

It appears that people think that the government can generate wealth. Everyone who relies on government do not even question this. I saw a clip of the head of the nurses and the head of the teachers saying that no way would they accept cuts. They don't get it. I would fire every teacher tomorrow.. Hire anyone that wanted to work at 7 euros an hour back and to hell with the rest of them. That is leadership. Cowen does not have it and should resign.

I agree. All governments can do is spend or redistribute wealth created by others. They can also, sure as hell, increase costs needlessly. Was talking to someone in a very large UK house building business, his cost for energy ratings, house information packs and similar pointless nonsense, in the second half of 2008 in a flat market is more than 500,000 sterling!!!! Wealth creation would be a subject worth a separate thread when there is more time, as there are quite a few misconceptions as to who actually creates wealth.

Another reality that is missed is that I can employ a skilled tradesman (and I mean skilled) for a month in India for what one of the local lads want for turning up for a day in Ireland. I would like to see a cogent arguement as to why anyone would invest in a bloated economy with high expenses, but that is another thread.

youngdan wrote:

Getting back to the banks. There is two possibilities. Cowen does not understand the issue at all or else he is deliberately acting in a treasonous manner. Take your pick.

I agree it is either fool or complicate. I prefer to be charitable and assume fool.

You really do not want the country to go bankrupt. The reason I went over to Argentina late last year was to ensure that people could be paid in neighbouring countries if that miserable government lived up to former standards. I don't think people realise what a country going bankrupt actually means. The pay cheques stop arriving, services stop.

youngdan wrote:

I am not sure of that. I don't know if he grasped what giving the guarantee entailed. I am not sure he acted in good faith even.

I don't think he fully realised the true seriousness of the decision. In reality it is actually very simple as it is no different from a personal guarantee, and the same constraints and obligations pertain. I could however imagine a relation arriving on the doorstep in the middle of the night and asking for help or the family business is sunk. Rule 1 in business is never get bounced into making important decisions in haste. With the Banks there is all that mystic of what they do and their importance.

youngdan wrote:

I am not sure of that. I don't know if he grasped what giving the gaurantee entailed. I am not sure he acted in good faith even.

Why is he taking advice from Merril Lynch. Whose side do you think they are on.

I would have let the banks fail, one of them and if necessary all of them.

Before anyone criticises anyone let them say what they would have done.

That goes for the likes of Papal Kmight as well should he give us his cuckoo story about armageddon if the bank failed

Youngdan - The Minister dealt with these points in the Dail. The Guarantee does not cover all liabilities. The officials debated the consequences of nationalising one bank and guaranteeing the others. The advisers did not propose letting one bank fall.

Perhaps you should read up on the guarantee so that you can get a grasp of what it entails? As far as I can tell, none of us pontificating here have an understanding of that basic point, myself included (and it appears we can add Morgan Kelly to our gang.).

And now, Emily Dickinson's word of advice to the economists:

Tell all the Truth but tell it slant—
Success in Circuit lies
Too bright for our infirm Delight
The Truth's superb surprise

As Lightning to the Children eased
With explanation kind
The Truth must dazzle gradually
Or every man be blind—

Zhou_Enlai wrote:

youngdan wrote:

I am not sure of that. I don't know if he grasped what giving the gaurantee entailed. I am not sure he acted in good faith even.

Why is he taking advice from Merril Lynch. Whose side do you think they are on.

I would have let the banks fail, one of them and if necessary all of them.

Before anyone criticises anyone let them say what they would have done.

That goes for the likes of Papal Kmight as well should he give us his cuckoo story about armageddon if the bank failed

Youngdan - The Minister dealt with these points in the Dail. The Guarantee does not cover all liabilities. The officials debated the consequences of nationalising one bank and guaranteeing the others. The advisers did not propose letting one bank fall.

Perhaps you should read up on the guarantee so that you can get a grasp of what it entails? As far as I can tell, none of us pontificating here have an understanding of that basic point, myself included (and it appears we can add Morgan Kelly to our gang.).

And now, Emily Dickinson's word of advice to the economists:

Tell all the Truth but tell it slant—
Success in Circuit lies
Too bright for our infirm Delight
The Truth's superb surprise

As Lightning to the Children eased
With explanation kind
The Truth must dazzle gradually
Or every man be blind—

Somewhere, it must be on the thread, I posted a link to all the details of the guarantee, forwarded by Joan Burton. The document voted on initially was lacking in any detail: it was drip fed over the following few days and weeks. The Irish bank guarantee was unique - no other government attempted to do it and it shredded our credibility internationally. It was perceived as a me fein gesture reckless of the impact it would have on banks abroad, as money poured in to the Irish banks. It forced other countries to undertake competitive measures, which haven't helped them either. It has left Government in a position in which its leverage over the banks was much reduced as the Guarantee was already in place. It also reduced the ability of Government to let banks go bust, without enormous cost to the State i.e. to us.

That Guarantee might have to require closer scrutiny..

The Truth must dazzle gradually
Or every man be blind—

that's a beauty

Auditor #9 wrote:

That Guarantee might have to require closer scrutiny..

The Truth must dazzle gradually
Or every man be blind—

that's a beauty

Does this mean we have to be drip fed the horrible truth?

Or is it a case of the blind leading the blind, or even the blind leading the partially sighted?

OK lads and ladies, with one exception on this page we have a collection of how we are doing everything arseways and making a bad situation worse, from the deliberate Armageddon lunacy of Youngdan to the loathing of Irish politicians in general and/or FF politicians in particular, leading to the insane but somehow related conclusion that banks don’t really matter, you can let one go and everything else will be fine. If you really believe that go ask the Americans about Lehman Brothers & fallout.
If we let one go then either they all go or we take them over, that’s it, there are no other possibilities, international money & what there is of home grown will run as far away from us as they can get.

So, here we are, having taken on board your collective wisdom and at best we are now Iceland, with no banks, a maximum individual wealth of 18,000 Euro, but with all our debt still owing, 90% of businesses & jobs with, at best, about 3 months to live and f.ckall we can do about it.

Now, please, lads & ladies, take your economic story to its end, the Government has followed your advice, the situation is as outlined above, please, leave aside the political whinging for a moment, purely economically, take us home from here.

Your hypothesis is only valid if you believe in the domino theory. Where exactly does saving Anglo fit into the essential National interests? I am not getting at FF if it were FG I would be saying exactly the same.

I often think that all politicians should have the experience of personally telling people they are redundant. It is a horrible thing to have to do, especially if you know the people well, but it makes you very hard headed. I do not accept your hypothesis that if one bank went down all would fall, I do not accept that the government had to guarantee as they did. We know what they did, and we know where we are now as a result of that action. It is not terrible good is it? If you have limited resources you need to ensure that they are soundly allocated.

IMHO what they have done has helped drag the likes of Allied Irish down.

I don't think we will ever agree. Time will tell though.

Squire wrote:

Your hypothesis is only valid if you believe in the domino theory.

In this case it isn’t a theory, it is the only result possible.
If you were an investor in Irish banks, be it AIB, BoI or any other and you seen the Irish Government were willing to let an Irish bank go down and their international investors go down with it, what would you do?.
I would suggest, you know damn well what you would do, you would take your investment in whatever Irish bank it was and hightail it away as fast as your little legs would carry you, which would result in the government having to take over what banks remained.

This whinging about what the Government has done without an alternative end product, is just exactly that, whinging without an end product, which is fine if that is what you people want to do, but lets not pretend it’s some higher intelligence or financial acumen at work, because without an end product, it isn’t, it’s just whinging.

tonys wrote:

Squire wrote:

Your hypothesis is only valid if you believe in the domino theory.

In this case it isn’t a theory, it is the only result possible.
If you were an investor in Irish banks, be it AIB, BoI or any other and you seen the Irish Government were willing to let an Irish bank go down and their international investors go down with it, what would you do?.
I would suggest, you know damn well what you would do, you would take your investment in whatever Irish bank it was and hightail it away as fast as your little legs would carry you, which would result in the government having to take over what banks remained.

This whinging about what the Government has done without an alternative end product, is just exactly that, whinging without an end product, which is fine if that is what you people want to do, but lets not pretend it’s some higher intelligence or financial acumen at work, because without an end product, it isn’t, it’s just whinging.

A number of banks have been closed down around Europe in the last six months, and I don't see their economies in default as a result.