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McWilliams and the Banks Guarantee


boomtownwrath

New member
Joined
Nov 21, 2004
Messages
3
- I had posted this in the discussion on tonight's Q&A on RTE but I believe it's worth posting here -


A longtime lurker and non-poster, I'll expect my comments to be taken with a grain of salt, but nevertheless I feel moved to set the record straight.

I know for a fact that not only did McWilliams suggest the guarantee scheme in his article in the SBP, he explicitly advised John Gormley and Brian Lenihan on this course of action going back nearly two weeks. Furthermore, he was consulted by the Government in the days leading up to Monday night's decision including some marathon phone calls from a park-bench in Tianenmen Square, Beijing, where Maccer is flogging The Pope's Children to an even more bewildered nation.

The officials in the Department of Finance are naturally quietly irate. They're briefing all around them because they've been bypassed and rendered redundant. They have been shown to be inflexible, doctrinaire and incapable of lateral or independent thought, opposing the scheme as they did until the 11th hour.

Meanwhile, Lenihan has been praised for his manly resolve and an initiative which may prove his lasting political legacy. The dissenter's creed has finally been found to contain truth and the hierarchy's has finally been found out. No wonder they're running scared. I say set John McGuinness on the lot of them!
 

junketman

Member
Joined
Mar 25, 2008
Messages
66
Well it's about time the government consulted an economist.

It's the only way out of the mess our country is in.
 

FakeViking

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Joined
Jul 26, 2006
Messages
9,005
Well it's about time the government consulted an economist.

It's the only way out of the mess our country is in.
I'd go for consulting a soothsayer myself, but then again from watching the FF/PD attempts always floundering into deeper incompetence at the taxpayer's expense (if it works, it's our careful decision making, if it fails, we're a small open economy subject to global trends, which to me is like the old you can fool some of the people some of the time ...)
 

gulliblepleb

Member
Joined
Oct 2, 2008
Messages
48
Would it not be as well to let him take the wheel

rather than trying to drive from the back seat?

Bring him into the Cabinet
 

Seos

Active member
Joined
Nov 19, 2005
Messages
153
Would it not be as well to let him take the wheel

rather than trying to drive from the back seat?

Bring him into the Cabinet
possibly but a mistake frequently made is that the best adviser is the best leader which is a lot of the time not true and making them leader just means you're gaining a mediocre leader and losing a brilliant adviser.

I am of course only speaking about in general, I have no idea at how good a minister he would make.
 

geraghd

Well-known member
Joined
Dec 22, 2003
Messages
474
- I had posted this in the discussion on tonight's Q&A on RTE but I believe it's worth posting here -


A longtime lurker and non-poster, I'll expect my comments to be taken with a grain of salt, but nevertheless I feel moved to set the record straight.

I know for a fact that not only did McWilliams suggest the guarantee scheme in his article in the SBP, he explicitly advised John Gormley and Brian Lenihan on this course of action going back nearly two weeks. Furthermore, he was consulted by the Government in the days leading up to Monday night's decision including some marathon phone calls from a park-bench in Tianenmen Square, Beijing, where Maccer is flogging The Pope's Children to an even more bewildered nation.

The officials in the Department of Finance are naturally quietly irate. They're briefing all around them because they've been bypassed and rendered redundant. They have been shown to be inflexible, doctrinaire and incapable of lateral or independent thought, opposing the scheme as they did until the 11th hour.

Meanwhile, Lenihan has been praised for his manly resolve and an initiative which may prove his lasting political legacy. The dissenter's creed has finally been found to contain truth and the hierarchy's has finally been found out. No wonder they're running scared. I say set John McGuinness on the lot of them!
So how are you sure that they aren't naturally quietly irrate because they also presented the Minister with such an option, the option was taken, and then McWilliam takes the credit for suggesting it even though it's as natural an option that even officials in the Dept of the Gaeltacht would have come up with it if they were doing Finance's job for the week that was in it?
 

jfk2008

Active member
Joined
Sep 10, 2008
Messages
157
Step 1: accomplished.

Step 2: government to capitalise banks in return for share-holding and oversight of management decisions

Step 3: write off bad debts, call in loans from building developers, restore clarity to balance sheets

Step 4: pray
 

boomtownwrath

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Joined
Nov 21, 2004
Messages
3
So how are you sure that they aren't naturally quietly irrate because they also presented the Minister with such an option, the option was taken, and then McWilliam takes the credit for suggesting it even though it's as natural an option that even officials in the Dept of the Gaeltacht would have come up with it if they were doing Finance's job for the week that was in it?
Because the officials, up to and including very senior level, were dead set against the plan until the 11th hour.
 

geraghd

Well-known member
Joined
Dec 22, 2003
Messages
474
Because the officials, up to and including very senior level, were dead set against the plan until the 11th hour.

Well *assuming* they were, it doesn't mean they didn't present the proposal as an option anyways.
 

boomtownwrath

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Nov 21, 2004
Messages
3
Well *assuming* they were, it doesn't mean they didn't present the proposal as an option anyways.
Do I understand your point correctly as being that Department of Finance officials are justified in briefing against McWilliams because those same officials presented, among other options, a plan McWilliams proposed to John Gormley and Brian Lenihan up to ten days earlier, argued against it and lost the argument? It seems a curious and unlikely scenario. What is more likely - and in fact the case - is that cosseted Department advisers have been wrongfooted by a man they regarded as a dangerous maverick.
 

geraghd

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Joined
Dec 22, 2003
Messages
474
Do I understand your point correctly as being that Department of Finance officials are justified in briefing against McWilliams because those same officials presented, among other options, a plan McWilliams proposed to John Gormley and Brian Lenihan up to ten days earlier, argued against it and lost the argument? It seems a curious and unlikely scenario. What is more likely - and in fact the case - is that cosseted Department advisers have been wrongfooted by a man they regarded as a dangerous maverick.
My point is that the likely scenario is that a range of proposals were presented to the Minister, proposals that were drawn up maybe months if not longer beforehand, and that the Finance officials advised against for for particular ones on the basis of various arguments. I have no idea whether they were against or for a bank guarantee but the fact that McWilliams was arguing for it I willing to bet made very little difference and I doubt he was the only one to come up with the idea (said Dept officials already presenting to the minister in the scenario I just detailed).
 

Rialtas

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Joined
Sep 1, 2004
Messages
6
My point is that the likely scenario is that a range of proposals were presented to the Minister, proposals that were drawn up maybe months if not longer beforehand, and that the Finance officials advised against for for particular ones on the basis of various arguments. I have no idea whether they were against or for a bank guarantee but the fact that McWilliams was arguing for it I willing to bet made very little difference and I doubt he was the only one to come up with the idea (said Dept officials already presenting to the minister in the scenario I just detailed).
I think McWilliams wins this argument from my own standpoint. I have observed the evolution of Ireland's economy from over here for years now, and McWilliams tried to alert the general public to a massive asset bubble and its inevitable consequences while the politicians and their advisors were talking about a soft landing. This is all a matter of record.

When McWilliams was giving this analysis, available free to any reader of the Sunday Business Post online, and predicting a similar outcome to that seen in Japan, the Dept of Finance was consistently wrong in their forecasts - underestimating both surpluses (it seems deliberately) and deficits.

If you were a minister and you were faced with a choice between McWilliams and your own officials, whose track record would you have found to be the most credible at 4.30am on Monday 30th September 2008?

Lenihan does deserve credit however for making the right judgement in this matter. I am sure when cabinet records are released history will show that in so doing he preserved the Irish state for a little longer at least.
 
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geraghd

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Joined
Dec 22, 2003
Messages
474
I think McWilliams wins this argument from my own standpoint. I have observed the evolution of Ireland's economy from over here for years now, and McWilliams tried to alert the general public to a massive asset bubble and its inevitable consequences while the politicians and their advisors were talking about a soft landing. This is all a matter of record.

When McWilliams was giving this analysis, available free to any reader of the Sunday Business Post online, and predicting a similar outcome to that seen in Japan, the Dept of Finance was consistently wrong in their forecasts - underestimating both surpluses (it seems deliberately) and deficits.

If you were a minister and you were faced with a choice between McWilliams and your own officials, whose track record would you have found to be the most credible at 4.30am on Monday 30th September 2008?

Lenihan does deserve credit however for making the right judgement in this matter. I am sure when cabinet records are released history will show that in so doing he preserved the Irish state for a little longer at least.

Im sure accurately projecting budgeted deficits and surpluses is an almost impossible task to be fair.
 

Rialtas

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Joined
Sep 1, 2004
Messages
6
Im sure accurately projecting budged deficits and surpluses is an almost impossible task to be fair.
Perhaps, but failing to recommend that ministers take action 2 or 3 years into a speculative bubble was not impossible. Two, three years ago the dept of finance and the central bank should have been telling the bankers, "lads, thats it, stop it now". Lending to developers and consumers was totally out of control and steps should have been taken to restrict M3 (remember that?). After all, the central bank had the data and the birds in the trees could tell that people hadn't earnt their new-found wealth.

The Central Bank & Financial Services Authority of Ireland

take a look at the sheer scale of lending when the boom was 'getting boomier'.

Check this out:

".. In the year to December 2005, there was a general increase in credit across all
fifteen sectors, with eleven sectors experiencing annual growth rates in excess of 20
per cent.

There was strong growth in credit to the Real Estate Activities sub-sector, where
lending expanded by 58.2 per cent, and Construction, which grew at 46.6 per cent.

Personal sector credit, which accounted for over 41 per cent of the annual increase
in PSC, expanded by 26.8 per cent, reflecting strong demand for residential
mortgages..."
 
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nuj

Well-known member
Joined
May 26, 2004
Messages
520
I know for a fact that not only did McWilliams suggest the guarantee scheme in his article in the SBP, he explicitly advised John Gormley and Brian Lenihan on this course of action going back nearly two weeks.
"In the present climate (where property is nearly a dirty word and where there is an I-told-you-so attitude from some of the more smug, negative commentators who, with respect, have never taken a risk in their life, never given anybody a job and certainly have never promoted Ireland Inc as a place to invest) there are steps that Ireland Inc and those of us in the property world can take to improve our profile and our ability to get investment into our country. Our main attribute is, and always has been, our people. We have the best brains and the most enthusiastic professionals, be they agents, surveyors, solicitors, accountants or bankers, all of whom are needed to identify, secure, acquire, finance and deliver projects....

If the Government was to persuade the Central Bank to guarantee all deposits in Irish banks operating under a banking licence from the Central Bank in the State, the effect would ensure that depositors considering investing in Ireland would know they had a State guarantee and that the banks would always ensure their money was repaid."

The words of Noel Smyth, disinterested property developer and solicitor, in the Irish Times on 17th September last.

They were bonkers then, and they're bonkers now. Even if McWilliams manages to stake a prior claim to them.
 

ruserious

Well-known member
Joined
Jan 3, 2011
Messages
29,603
I think McWilliams wins this argument from my own standpoint. I have observed the evolution of Ireland's economy from over here for years now, and McWilliams tried to alert the general public to a massive asset bubble and its inevitable consequences while the politicians and their advisors were talking about a soft landing. This is all a matter of record.

When McWilliams was giving this analysis, available free to any reader of the Sunday Business Post online, and predicting a similar outcome to that seen in Japan, the Dept of Finance was consistently wrong in their forecasts - underestimating both surpluses (it seems deliberately) and deficits.

If you were a minister and you were faced with a choice between McWilliams and your own officials, whose track record would you have found to be the most credible at 4.30am on Monday 30th September 2008?

Lenihan does deserve credit however for making the right judgement in this matter. I am sure when cabinet records are released history will show that in so doing he preserved the Irish state for a little longer at least.
Thought I'd reawaken this zombie thread to analsye now 4 years later what part DmcW played on the guarantee.

The reactions to the above poster should also prove quite funny.
 

cozzy121

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Joined
May 26, 2009
Messages
5,001
Thought I'd reawaken this zombie thread to analsye now 4 years later what part DmcW played on the guarantee.

The reactions to the above poster should also prove quite funny.
Well worth a debate, except the bertie-apologists will just claim that McWilliams exercised his magical powers over the innocent lenihan cowen and the elected representatives of the oireachtas to pass the legislation.
 

Davidoff

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Joined
Oct 4, 2010
Messages
1,485
McWilliams was 100% correct about property values.

And 100% wrong about the bank guarantee.
 

yosef shompeter

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Joined
Dec 4, 2011
Messages
2,770
I think this is one of the great whodunnits in Irish public life. A significant piece of the jigsaw is Trichet who told Lenihan that the banks must be saved at all costs... now where did I read this? Someone should piece together a definitive document. (oh but that would entail a public sworn enquiry or release of documents or tribunal or something)
 
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