Lenihan in Denial

blucey

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Finance minister Lenihan seems to be in denial of the need for irish banks to recapitalise (joined there with Eugene Sheedy). What I wonder is : why? Every commentator from every direction is ageed on this, he debate being on the source of the funds not the need for them. Is is in denial, in over his head, incompetent or inept, or just in a funk?
 


peadarmc

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well body of evidence...youve answered your own question! he IS in denial, he IS in over his head, he IS incompetent and inept!
 

wombat

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Its a bit like the property bubble, keep denying the obvious in the hope it will go away.
 

peadarmc

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anyone wana take bets that there'll be a bank bailout similar to the builder bailout in the next actual budget?
as opposed to statements and garauntees...how likely is it the goverment will announce allocation of exchequer and taxpayers money to prop up the banks?
 

blucey

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anyone wana take bets that there'll be a bank bailout similar to the builder bailout in the next actual budget?
as opposed to statements and garauntees...how likely is it the goverment will announce allocation of exchequer and taxpayers money to prop up the banks?

We need this well before the next budget - unlike the builders the eocnomy cannot function without a banking system. Either we wait for Mr Santander or Herr Doktor Commerz or Monsieur SocGen or we do it ourselves. And who would put shareholders money into the irish banks now. so, we are stuck with a raid on the NTMA....But maybe Brian Lenihan knows something he isnt telling us.
 

carlovian

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The problem for Lenihan is hes been defending the guarantee on the basis that no taxpayers money has been used to bail out the banks. For 2 weeks FF were calling it a master policy that other countries would follow.

Imagine what will occur when he raids the pension reserve to bail out the banks while at the same time increasing class sizes and taking medical cards from pensioners.

Everyone knows that the banks need capitalisation and the market wont do it so guess who that leaves. But that action will be the toughest political move ever.

The other problem is that hes a lawyer whos an inexperienced minister and he knows nothing about finance !!!
 

Sidewinder

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Yeah, they only have one plan: re-inflate the housing bubble.

That's it.

The Budget was based around this: a bit of tinkering around the edges to save a few shekels and make it look like Hard Decisions Are Being Taken, each designed to enrage and distract attantion away from the Builder Bailout which gets bigger and bigger the more we hear about it. They plan to borrow up to €10bn now to finance tens of thousands of sub-prime mortgages on unsellable worthless empties.

That's the real story here. FF have only ever had one economic policy, ever since the 1960s: High Land Prices. It's at the core of everything, at the heart of how everything else operates. And they are now in the process of bankrupting the entire nation and causing untold misery for millions, all to defend their Holy Grail of overpriced shoeboxes.

They only have one plan: divert all resources into creating a new property bubble and get house prices soaring again and all the sheeple scrambling to Get On The Ladder. 2005, how are ya, nice to see you back.

That's it. That's the entire extent of the economic "thinking" that goes on with FF.
 

wombat

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peadarmc

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yes but is lenihan not actually undermining the banking sector by offering government sponsored "subprime" mortgages?
 

gulliblepleb

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FF know if they recapitalise the banks they will

1) earn the wrath of the shareholders if they devour their equity
2) earn the wrath of taxpayers if they recapitalise and give the shareholders a break
3) admit gross incompetence in the management of the economy, and regulation of our banking sector
4) The developers will get burned

they have waited as long as they dared but no sound of the cavalry's hooves in the distance such as big big cuts in interest rates.

They might be on the way but they wont get here in time to save the the businesses that depend on bank loans.

While Rome has been burning the Nero has stood by and fiddled.

The banks could have sought a right issue when their share price was at its zenith.
 

blucey

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yes but is lenihan not actually undermining the banking sector by offering government sponsored "subprime" mortgages?
next you will want joined up thinking from FF.
Last week : Batt O'Keefe says universities must rectuit more overseas students. Previous week: Batt O'Keefe says universities must spend less on advertising and promotion. That sort of stuff is repeated day in day out in FF land...where we alas live.

Why Peadar do you think he is not listening to the advisors? Is he that thick?
 

peadarmc

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next you will want joined up thinking from FF.
Last week : Batt O'Keefe says universities must rectuit more overseas students. Previous week: Batt O'Keefe says universities must spend less on advertising and promotion. That sort of stuff is repeated day in day out in FF land...where we alas live.

Why Peadar do you think he is not listening to the advisors? Is he that thick?
Point very much taken! :oops: :D
 

Odyessus

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1) earn the wrath of the shareholders if they devour their equity
2) earn the wrath of taxpayers if they recapitalise and give the shareholders a break
3) admit gross incompetence in the management of the economy, and regulation of our banking sector
4) The developers will get burned

they have waited as long as they dared but no sound of the cavalry's hooves in the distance such as big big cuts in interest rates.

They might be on the way but they wont get here in time to save the the businesses that depend on bank loans.

While Rome has been burning the Nero has stood by and fiddled.

The banks could have sought a right issue when their share price was at its zenith.


1) earn the wrath of the shareholders if they devour their equity
2) earn the wrath of taxpayers if they recapitalise and give the shareholders a break


How can recapitalising the banks both anger shareholders by devouring their equity, while at the same time giving them a break?

Do you mean making them broke?
 

gulliblepleb

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You cant save the shareholders with a soft loan and do right by the tax payer and vic

1) earn the wrath of the shareholders if they devour their equity
2) earn the wrath of taxpayers if they recapitalise and give the shareholders a break


How can recapitalising the banks both anger shareholders by devouring their equity, while at the same time giving them a break?

Do you mean making them broke?
How long can soft loans to developers be rolled over at the tax payers expense? The longer they are allow to play in the game with our chips the more they will lose
 

Sidewinder

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Foreign banks don't want to buy the Irish banks, at least not at this stage, because the perception abroad is that the Irish banks are all

a) insolvent anyway
b) sitting on huge undeclared losses
c) sitting on a loan book that is of highly dubious quality
d) appallingly badly managed with non-existent credit control
e) technologically about 20 years behind UK & European banks
f) operating in an overpriced uncompetitive economy heading for a 3-5 year slump and
g) operating in a stinking corrupt environment with rampant croneyism, politically-directed "regulation", and political interference from gombeen politicians on the take

11 years of Bertienomics and a mafia economy finally coming home to roost, folks.
 

blucey

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Interesting article in the Tribune business section today. They talked to a bunch of finance professors (Hutchinson - UCC,Hutson-UCD, Lucey and Lane in TCD, Connor -Maynooth) and all were unanimous on the need to recapitalize, soon. One assumes the minister will ignore them as well.
Edit : Mail on Sunday also talks to Ahearne -UCG and McCarthy-UCD who are ad idem on this.
 
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grassroots

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Interesting article in the Tribune business section today. They talked to a bunch of finance professors (Hutchinson - UCC,Hutson-UCD, Lucey and Lane in TCD, Connor -Maynooth) and all were unanimous on the need to recapitalize, soon. One assumes the minister will ignore them as well.
Edit : Mail on Sunday also talks to Ahearne -UCG and McCarthy-UCD who are ad idem on this.
The govt does not want to put money in. Its banking on the Global economy recovering.
The regulator does not want to admit he was incompetant
The management do not want to dilute shareholders-especially themselves
They also want to keep their jobs.

So it official Ireland's interest to do nothing.
In the meantime the govt will raise taxes, cut capital spending and pour money down the public service black hole.

Ireland will be the new Japan of 21st century, with falling living standards, falling population and zero growth for the next decade.
 

cyberianpan

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Interesting article in the Tribune business section today. They talked to a bunch of finance professors (Hutchinson - UCC,Hutson-UCD, Lucey and Lane in TCD, Connor -Maynooth) and all were unanimous on the need to recapitalize, soon. One assumes the minister will ignore them as well.
Edit : Mail on Sunday also talks to Ahearne -UCG and McCarthy-UCD who are ad idem on this.
Eugene Sheehy can either :

1) ask the markets for more money or
2) keep his job

but not both.

He is playing for time

Banking ‘Know Nothings’ are keeping their heads in the sand
Sunday, November 09, 2008 By David McWilliams
Considering they had neither the financial nous to foresee the global downturn, nor the courage to release accurate figures on the state of their institutions, how can the inept leaders of our banks now expect our trust?
...
The problem is simple: if the bank admitted that the problems were as bad as they were, the management and board would have to resign because they would need new capital. New investors would not trust the same people who got the banks into this mess in the first place. So we are experiencing a game of cat-and-mouse between the market and management and, all the while, share prices keep falling.
...
Ireland’s financial Know Nothings - the lads who blithely brought us to the abyss - are trying to save their own skins and, in the process, are risking the future of the economy. This is the worst of all worlds.
Lenihan may not be totally to blame here. The senior civil servants in Finance & the Central Bank are of very low calibre. People like Eugene Sheehy run circles around them.

The government shored up the banks, we now find the banks aren't making many new loans... why ? So they can fix their capital deficiency by waiting it out (some existing loans will repay).

Meantime the government thinks PWC will actually find out the problems in the banks :lol:. Ask the "dogs in the street" about the role of Auditors in CAD/Basle ... I can happily reveal that one "large Irish bank" was all ready to go for building some "random walks"/monte Carlo style stress testing of their loan books (as part of CAD/Basle compliance) until the auditor ploitely pointed out: That means you won't know the results in advance... (at which point they balked).

First step to fix this crisis is a clean sweep of Finance, The Central Bank & The Regulator ... actually scratch that: first step is breeding pigs that fly , much more achievable.

cYp
 


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