ECB's Weber Backs Orderly Bank Defaults, CoCosy



HarshBuzz

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CoCos are fun yokes altogether

can you imagine how much better shape we'd be in if irish bank debt contained some element of contingent convertability?

or even, if (shock, gasp) Lenihan had forced it on the bondholders?

guess we'll never know
 

HarshBuzz

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It was the ECB who demanded we save all our banks in the first place.
do we have any hard evidence for that John?

it's something that's continually implied by the FF trolls on here (it woz de ECB wot made us save Anglo\INBS) but I've never seen any direct evidence
 

Echolalia

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Do you ever get the impression that, in latter years, Ireland will be the text book example of what NOT to do in a default situation, property crash, bank failure, etc?
 

johnfás

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do we have any hard evidence for that John?

it's something that's continually implied by the FF trolls on here (it woz de ECB wot made us save Anglo\INBS) but I've never seen any direct evidence
I don't have any hard evidence but it has been put in the public domain to a greater extent than simply implications here by FF trolls (which I certainly do not count myself among). It was stated publicly by Lenihan on the RTÉ documentary about the crash several months ago that Trichet explicitly ordered European finance ministers not to allow any banking institution to fail in the weeks after Lehman Brothers.

I'm not one of these who blame Lehman for all our woes, far from it. However, the statement was made quite clearly by our Government quite a while ago that the ECB held this position and it has never been disputed in the slightest.
 

He3

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The realisation that the policy choice was in effect between 'No child left behind' and 'No Bank left behind' had to dawn on them someday.

The delay in making the right choice has cost all of us non-bondholders dearly.
 

HarshBuzz

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I don't have any hard evidence but it has been put in the public domain to a greater extent than simply implications here by FF trolls (which I certainly do not count myself among). It was stated publicly by Lenihan on the RTÉ documentary about the crash several months ago that Trichet explicitly ordered European finance ministers not to allow any banking institution to fail in the weeks after Lehman Brothers.

I'm not one of these who blame Lehman for all our woes, far from it. However, the statement was made quite clearly by our Government quite a while ago that the ECB held this position and it has never been disputed in the slightest.
and we believe Lenihan now? :lol:
 

johnfás

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The realisation that the policy choice was in effect between 'No child left behind' and 'No Bank left behind' had to dawn on them someday.

The delay in making the right choice has cost all of us non-bondholders dearly.
Of course this is what large banks which would be lobbying Governments around Europe would want. The longer this charade continues the further they can wind down their positions on Irish debt. Everything is gradually moving in the direction of the ECB as the only holder of Irish debt. This moves the cost of the bailout onto the EU, which spreads the burden beyond German pension funds.

Of course it also does give us a slight opportunity to bargain as we have less bodies to negotiate in and the ECB would have a genuine fear of us saying get lost - for all sorts of reasons let alone the feather nesters that inhabit their offices in Frankfurt.
 

Dreaded_Estate

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I don't have any hard evidence but it has been put in the public domain to a greater extent than simply implications here by FF trolls (which I certainly do not count myself among). It was stated publicly by Lenihan on the RTÉ documentary about the crash several months ago that Trichet explicitly ordered European finance ministers not to allow any banking institution to fail in the weeks after Lehman Brothers.

I'm not one of these who blame Lehman for all our woes, far from it. However, the statement was made quite clearly by our Government quite a while ago that the ECB held this position and it has never been disputed in the slightest.

Doesn't mean it was 100% true or it should be applied in perpetuity to the point of almost bankrupting the state
 

johnfás

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And you believed him? No wonder the country is in such a state when idiot citizens go around believing what FF ministers tell them.
I think the ECB would have said they had said nothing of the sort, yes. And yes, I do think the ECB wanted all the Irish banks to be saved 2 years ago because the ECB, as well as our Government (or more particularly, probably because of our Government), underestimated the problem and thought they could get away without picking up the tab.
 

HarshBuzz

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I think the ECB would have said they had said nothing of the sort, yes. And yes, I do think the ECB wanted all the Irish banks to be saved 2 years ago because the ECB, as well as our Government (or more particularly, probably because of our Government), underestimated the problem and thought they could get away without picking up the tab.
there's certainly some truth in there

they are still underestimating it
 

johnfás

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Doesn't mean it was 100% true or it should be applied in perpetuity to the point of almost bankrupting the state
Which doesn't address my point in the slightest - I think that certain Irish banks should be allowed to collapse - I have never said otherwise and you can check my posts to that effect. I also have no time for this Government. However, to hold those opinions I don't also have to believe that the ECB read the situation correctly 2 years ago - they didn't.
 

Grumpy Jack

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That's not what I asked. What I asked was whether or not you are so-inbred and cretinoid as to believe anything that comes out of the mouth of a FF minister without seeking corroborating evidence, from a non-FF or governmental source, first?
That is a very uncalled for and unfair attack - johnfas made an interesting point re the ECB and no European banks being allowed to fail.

And the record of state support and bailouts for banks across the EU through 2007 and 2008 would, I suggest, support his point.

Here is an insight into ECB thinking in Autumn 2008 from a speech by Lorenzo Bini Smaghi, Member of the Executive Board of the ECB, in Milan on October 20, 2008 - three weeks after Cowen and Lenihan issued the blanket bank guarantee.

And while he does not explicitly state 'no European bank must be allowed to fail" the message is pretty clear that that was exactly the case at the time. And the reason was the failure of Lehman Bros in the US and the subsequent effect on the international financial system.

This is the particular section I found interesting and which, with hindsight, I would suggest informed the decisions made in Ireland and elsewhere in the EU - decisions we now know to have been catastrophic in their consequences and effects.

ECB: Some thoughts on the international financial crisis

The combination of these three factors – the worsening inequality, the economic slowdown and the high profitability of the financial sector – may partly explain public opinion and the attitude of the political authorities vis-à-vis the rescue package for the financial system.

This crisis reveals that in our advanced societies, which are subject to far-reaching changes that affect people’s daily lives, the resolution of financial crises is becoming more complex, not only in terms of costs to the community, but also in terms of decision-making procedures. There is a risk that, in order to reach the democratic consensus necessary to act effectively, matters must be pushed right to the brink so that the precipice is clearly visible. In other words, there is a risk that a mistake, such as letting a bank fail, must first be committed, and the prospect of widespread hardship must make people realise that their vital interests are at stake, before effective action can be taken successfully.

The problem is particularly acute in the case of the financial system, which is inevitably prone to instability. In particular, the financial system is typically more innovative. Since financial products cannot be patented, an institution’s ability to compete rests partly on its ability to create new products that enable it to increase returns without changing the level of risk or to diversify risk without for a given return. However, financial innovation tends to generate information asymmetries across agents, particularly between those who have created new instruments and those who buy them. Such asymmetries fuel market instability, leading to a tendency to underestimate risks until they materialise, and, subsequently, to a propensity to overestimate them when markets change direction. The procyclicality of the financial sector tends to produce a disproportionate increase in its profitability at times of economic growth and a decline during slowdowns, with self-propagation and contagion effects on the rest of the economy.

Essentially, the financial system is of systemic importance to the economy. The stability of the system is therefore in the public interest. Consequently, the system is subject to regulation and supervision. Therefore, it is somewhat problematic if rejection mechanisms develop within a society preventing effective action being taken to counter a financial crisis and contagion of the rest of the economy.
I would also suggest an apology is due to johnfas, cato.
 

Cato

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That is a very uncalled for and unfair attack - johnfas made an interesting point re the ECB and no European banks being allowed to fail.

I would also suggest an apology is due to johnfas, cato.
In his first post he asserted that something was true as Brian L had said it. That prompted my question. I have called him nothing, nor have I attacked him. I asked him a question. If he answers no then the 'tags' don't apply.

You should brush up on your comprehension skills.
 

Grumpy Jack

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In his first post he asserted that something was true as Brian L had said it. That prompted my question. I have called him nothing, nor have I attacked him. I asked him a question. If he answers no then the 'tags' don't apply.

You should brush up on your comprehension skills.
Inbred? Cretinoid?

Reads as insults and attack to me.

I notice you don't address the ECB board member's speech.
 

johnfás

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In his first post he asserted that something was true as Brian L had said it. That prompted my question. I have called him nothing, nor have I attacked him. I asked him a question. If he answers no then the 'tags' don't apply.

You should brush up on your comprehension skills.
Nope, had you read my posts you would see that I asserted that:

1) Brian Lenihan said something, and
2) Given stated circumstances that something was likely true. The specific circumstance outlined in the posts above is that the statement is in the public domain, is widely reported, and has never been disputed. Not that it was likely true because Lenihan had said it. It has been further indicated in the Financial Times over the past year that the ECB has had a policy of supporting all eurozone banks since 2008 and will likely continue to do so until 2011, and that this fact is a cause of disagreement between some eurozone members.

Given that circumstance, it is bit rich from your good self to suggest that anybody here should brush up on their comprehension skills. You are simply avoiding the questions posed by Grumpy Jack because you have dug yourself into a hole and then resorted to ad hominem attacks.
 
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Grumpy Jack

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I used them in a question, not an accusation. Comprehension, dear boy, comprehension.
You're question began:
What I asked was whether or not you are so-inbred and cretinoid as to believe...
By using the word 'so', you were seeking to put a level on exactly how 'inbred' or 'cretinoid' your target is - but the question implies you believe they are both 'inbred' and 'cretinoid' all the same.

You really should learn to use the English language correctly before throwing around little jibes. Understand the meaning of words and consider how they shape and give particular meaning to a sentence or question before using them.

Why should I? I was reacting to the suggest that anyone would believe anything come out of a FF minister's mouth, nothing more.
The speech I quoted by Signor Bini Smaghi gives credence to the claim of Brian Lenihan that ECB bank president Jean-Claude Trichet told him not to let any bank fail - as that certainly seems to have been ECB and EU policy back in 2008.
 


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