solving the banking problem

cyberianpan

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the interim IMF proposal is to increase the banks risk capital from 8 to 12%. This reflects fundamental uncertainty over the health of the banks. this uncertainty is down to 3 things
1) Tracker mortgages where the banks are bleeding
2) Large exposure to property still (via mortgages)
3) Large exposure to the Irish economy

we can't/shouldn't fix 3
we really need innovative solutions to make the property marketliquid again to partially fix 2
we simply need to securitize the funding of the trackers, and accept a haircut

absent these or similar measures, the IMF bailout is not helpful

cYp
 


Dreaded_Estate

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We may not have the capacity to solve the banking problem. We just cannot afford to fill the hole.

2) I think a liquid property market would reveal bigger holes from property related losses
 

Cassandra Syndrome

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I thought according to you Cyp from this time last year that NAMA would solve all these problems and that we would have fully funded banks flowing credit into the real economy.

What went wrong?
 

cyberianpan

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How does that work?
create an Act to facilitate securitizing residential properties. The Act would give tenants better rights. Each property fund might habve say hundreds of properties in it, but with tens of thousands of shares.Float these interntionally.

The first chunk of properties could be from Nama, subsequent ones from foreclosures. The liquidity improvement would. be massive, and rthe scale sufficient to attract international investors
 

cyberianpan

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As Dreaded Estate says this would only serve to crystallise further losses?
Most likely so, yes

But we need to detoxify

The current market is poorly liquid, hence underconfidence

Right after Nama was announced I suggested this... Absent such measures, we'll have a slow, aned unduly painful adjustment
 

Illustro

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We need to create a new State owned bank. This would operate as a Full Reserve Bank.

It would create it's own debt free money. This would establish and maintain a forward market for foreign exchange in Ireland.

We also need to provide and control an equalisation fund, designed not to peg the rate of exchange at an arbitary level, but to render as gradual as possible any movements of exchange rates which were the results of an active policy of internal development.

This would bring a full return to order.


The strategy that our govt. is taking which they are doing at the behest of the ECB and the IMF is akin to someone trying to drink themselves sober. You cannot borrow your way out of debt. That's an oxymoron.

We need to press "re-set" on the current financial system. To have any future we need to create our own debt free currency. Continuing on our current path will only lead to economic indentured servitude. Signing the "bailout" is the final nail in the coffin of our future economy.
 

MPB

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create an Act to facilitate securitizing residential properties. The Act would give tenants better rights. Each property fund might habve say hundreds of properties in it, but with tens of thousands of shares.Float these interntionally.

The first chunk of properties could be from Nama, subsequent ones from foreclosures. The liquidity improvement would. be massive, and rthe scale sufficient to attract international investors
Good idea. Nobody has thought about securitising debt yet.

You should try and market your idea. We won,t notice.
 

HanleyS

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The current market is poorly liquid, hence underconfidence
I don't believe so, I believe over confidence is more of a problem. Cutting back on subsidies to the housing sector will do a lot to bring a dose of reality. The fact that it's becoming a cash market is no bad thing.
 

Illustro

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The current market is poorly liquid, hence underconfidence
As long as monetary control is in private hands the credit/trade cycle of boom and depression will continue. They make money on the way up and on the way down. When credit can be created from thin air, liquidity is outside of our control, which puts us at the mercy of moneterists who are only interested in their own success.
 

goosebump

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We need to create a new State owned bank. This would operate as a Full Reserve Bank.
We don't need any more banks. The problem at the moment is that we have too many banks, all of which are dragging us under with them, and nobody is going to lend money to a bank that is owned by a bankrupt state.

I think had this stage the banking system has suffered a core meltdown, and we need to encase it in some sort of ECB supervised sarcophagus, a la Chernobyl, and only open it after 100 years, when inflation reduced the debt to a manageable level.

We need to consider telling the ECB that we can't actually afford to pay the debts, and that this is going to have to become an EU problem.

Anglo can be left in it vegetative state for as long as is necessary, and AIB and BOI can be subsumed into one of the State owned groups like Nordea.

If they don't agree, we'll just have to default. Its the same difference to us at this stage. Penury is the only outcome we can look forward too.
 

HanleyS

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We don't need any more banks. The problem at the moment is that we have too many banks, all of which are dragging us under with them, and nobody is going to lend money to a bank that is owned by a bankrupt state.
If and when there is any need for banking (i.e. lending) in Ireland there are plenty of foreign banks that can do the job. There is a reason why there is no body lending. We are uncreditworthy.
 
I

idij

the interim IMF proposal is to increase the banks risk capital from 8 to 12%. This reflects fundamental uncertainty over the health of the banks. this uncertainty is down to 3 things
1) Tracker mortgages where the banks are bleeding
2) Large exposure to property still (via mortgages)
3) Large exposure to the Irish economy

we can't/shouldn't fix 3
we really need innovative solutions to make the property marketliquid again to partially fix 2
we simply need to securitize the funding of the trackers, and accept a haircut

absent these or similar measures, the IMF bailout is not helpful

cYp
Fixing 2 means fixing the real economy. Properties don't have to get out of negative equity (that bubble has sailed) to be still performing mortgages, but the people have to have jobs, and to not have left the country. Lenihan somehow thinks that solving unemployment by
emigration won't have a knock on effect of people leaving their debts back in Ireland.

The ones in NAMA should just be sold off at public auction to recoup whatever possible. They will never be worth what was paid for them.

We need to also recognise that having large scale emigration is going to ruin us, and take what measures are needed to allow for individual debt forgiveness in return for giving back what the loans were secured on. Letting people start again. Ireland's punitive bankruptcy laws are just not appropriate to the existential crisis we are facing into.
 

Illustro

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We don't need any more banks. The problem at the moment is that we have too many banks, all of which are dragging us under with them,
I.
No that is not the problem. The problem is that those banks are privately owned. The concept of money being created and destroyed by private interests is ludicrous. The mega banks have more power than any government.

Also, those banks would collapse if countries began to issue their own debt free currency, so your problem of too many banks is a moot point regardless.
 


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