• It has come to our attention that some users may have been "banned" when they tried to change their passwords after the site was hacked due to a glitch in the old vBulletin software. This would have occurred around the end of February and does not apply after the site was converted to Xenforo. If you believe you were affected by this, please contact a staff member or use the Contact us link at the bottom of any forum page.

Myopic Lenihan: cheapest bailout in the world so far


HanleyS

Well-known member
Joined
Jan 11, 2007
Messages
817
Irish Times said:
MINISTER FOR Finance Brian Lenihan has said the bank guarantee scheme was "a necessary first step" and "the cheapest bailout in the world so far".

...

Speaking before the lunch, Mr Lenihan repeated that he wanted the banks to raise any additional capital needed to protect against unforeseen losses by private means in the first instance.
He said the banks' capital needs were being reviewed.
Irish bailout cheapest in world, says Lenihan - The Irish Times - Fri, Oct 24, 2008

Where does Mr Lenihan think the banks are going to find E15 Billion in private sector investment in the current environment? He's taking us all for fools and the markets know it.
 

John_C

Active member
Joined
Jul 6, 2005
Messages
129
I've only read the newspaper reports which quoted him as saying that the banks could offset their loss making loans with other profitable ones. Did they misrepresent what he said?
 

HanleyS

Well-known member
Joined
Jan 11, 2007
Messages
817
If you look at the thread I've linked in my above post you can see what he said (or rather didn't say). The idea that they could offset what will be short term losses against their short term profits is nonsense. He was pretending that these bad debts will develop over the long term. He's a spoofer just like Lenihan and the whole of the banking fraternity.
 

John_C

Active member
Joined
Jul 6, 2005
Messages
129
Thanks,
I had a look there and he said, "This leaves a balance of €15 billion secured directly on the underlying property. There will undoubtedly be some losses on these exposures.".

Some losses on 15 billion is not the same as losses of 15 billion minimum.
 

HanleyS

Well-known member
Joined
Jan 11, 2007
Messages
817
Quite correct. I was using a figure I heard from a journalist yesterday. I should have used my own from earlier.

The bad debts won't result in a total loss. It's likely to be 66% plus though on those loans alone. That's over €10Bn.
 

Odyessus

Well-known member
Joined
May 16, 2007
Messages
12,987
Quite correct. I was using a figure I heard from a journalist yesterday. I should have used my own from earlier.

The bad debts won't result in a total loss. It's likely to be 66% plus though on those loans alone. That's over €10Bn.



So what? How does that harm the man in the street?
 

grassroots

Well-known member
Joined
Jan 7, 2007
Messages
2,424
It ultimately means that we're going to have to stump up €10Bn plus to recapitalise the banks or let the financial system collapse.
There will be losses in other credit classes as well such as BTL mortgages, corporate credit, investment property lending ex construction, car loans etc. So E8-10bn is a de minimus figure for the system as a whole. Without a re-cap, merger of 1 or 2 or trade sale there will be no functioning banking system in the country. Small business and personal borrowers will have reduced asset to credit, asset prices will continue to fall, business will contract and the economy will slump. Where does that leave the public finances?

Lenihan should underwrite a rights issue for at least one of the big 2 quoted banks making it a national champion. He should then use his power to dispose or break up the rest.

If he just lets the situation rumble on, the economy is doomed to sub zero growth for years.
 

sarak2

Member
Joined
Oct 1, 2008
Messages
14
read UCD economist Morgan Kellys article in the irish Times about this; it cocludes with;

"Three weeks ago, bubble turned irrevocably into bust. Brian Lenihan was faced with a choice between rescuing two banks and the handful of developers through whom they placed real estate bets, or recapitalising the financial infrastructure on which the other four million of us depend.

He chose the former. The grave consequences of this extraordinary decision, both political and economic, will ensure that in the coming months we shall all get to live in interesting times."
 

Digout

Well-known member
Joined
Oct 2, 2008
Messages
1,396
read UCD economist Morgan Kellys article in the irish Times about this; it cocludes with;

"Three weeks ago, bubble turned irrevocably into bust. Brian Lenihan was faced with a choice between rescuing two banks and the handful of developers through whom they placed real estate bets, or recapitalising the financial infrastructure on which the other four million of us depend.

He chose the former. The grave consequences of this extraordinary decision, both political and economic, will ensure that in the coming months we shall all get to live in interesting times."
here is a link to the article for those interested
Things are going to get much worse - The Irish Times - Fri, Oct 24, 2008

FF are only interested in looking after the builders, they have no interest in the people of Ireland
 

badboy2

Well-known member
Joined
Oct 30, 2007
Messages
971
the economy is doomed to sub zero growth for years.
Is the term recession that hard to use.

This problem was caused in part by the uses of derivatives to obscure the hole the banks were in.

No we have to listen to nonsense like sub zero growth.

There is no such thing as sub zero growth. People use it to make things sound better than they actually are.

In other words its part of the problem.


Everyone accepts that confidence is one of the key drivers of economic growth. However we have just had a catostrophic economic collapse and confidence is currently "sub zero".

A little bit of honesty and transparency in the debate would be more likely to rebuilt confidence than some "management speak"
 

muck_savage

Member
Joined
Aug 26, 2008
Messages
74
grassroots said:
Without a re-cap, merger of 1 or 2 or trade sale there will be no functioning banking system in the country. Small business and personal borrowers will have reduced asset to credit, asset prices will continue to fall, business will contract and the economy will slump. Where does that leave the public finances?
Don't worry the developers will get their pound of flesh via the Fianna Fail taxpayer sponsored subprime mortgage scheme.

And ******************** everybody else.
 

cHeal

Well-known member
Joined
Mar 31, 2008
Messages
303
How much has the government actually had to spend to so far to stabilise our banking system?

How much has the US spent? Britain? Germany?

I'd say it's going alright so far, hopefully the losses we have to cover will be at the lower end of estimates.

Personally I think the insurance scheme should be extended indefinitely and made mandatory, we could then use insurance premiums to very effectively regulate banking activity.
 

smitchy2

Well-known member
Joined
Jan 28, 2008
Messages
1,817
The state guarantee raised the interest rate(eg:3 to 4%) which Ireland can borrow at state level as our risk profile has increased. This has come at a time where the state has to borrow large amounts of money just to keep up with current spending.
Added the likelihood we will have to recapitalise some banks to keep them up to international levels- this money will also have to be borrowed at higher interest rates than before.
So to say that it has not cost the government is deceitful in the least by Lenihan.
 
G

Gimpanzee

Is the term recession that hard to use.

No we have to listen to nonsense like sub zero growth.

There is no such thing as sub zero growth. People use it to make things sound better than they actually are.
Now, now - sure weren't Bert and the boys always going on about unprecedented 'super zero contraction' rates in de rare auld times? Mind you, I think Bert might have shortened it to 'grote' on occasion.
 
G

Gimpanzee

How much has the government actually had to spend to so far to stabilise our banking system?

How much has the US spent? Britain? Germany?

I'd say it's going alright so far, hopefully the losses we have to cover will be at the lower end of estimates.
we haven't even started. It can't and won't be done on the cheap.
 

cHeal

Well-known member
Joined
Mar 31, 2008
Messages
303
Well we shouldn't be borrowing at all really, borrowing is a rip off of the tax payer, it creates inflation, which is a stealth tax and then we still have to repay that principle + interest. I think the majority of people were ready for some pain in this country and I think if he had raised the income tax rates by a few percent he would have got away with it. As it is, he introduced stealth taxes and a crazy income levy, took away medical cards and cut corners on public services and then borrowed money. The whole thing was a farce. He should have increased income tax and set out a plan for shrinking the public service employee numbers to save money.

He saved 2 billion out of a budget of over 200 billion, that's not even 1%. The middle class and working class people of this country, ordinary joes are probably looking at having to trim their weekly spend by 10 to 15% and all the government could achieve was a 1% reduction. Pathetic.
 
Top