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Mitsui2

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...Plus you neglect the fact that the Irish Government has welded the banks' debts to the State's, so that banks' deficits are impossible to separate from the States' in any meaningful fashion.
 

markjbloggs

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Nov 24, 2009
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A good description on the surface.

More pertinent questions:

1. What exactly went on over the years in the metaphorical 'Galway races tent'

2. We have had a lot of good tribunals over the years. Why has there not been a full public tribunal on the policy decisions that have effectively sunk this version of the Republic, especially the bank guarantee?
Could I add a 3rd question - What exactly is being hidden in the wreckage of Anglo Irish Bank ?
 

HarshBuzz

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Ah HB, I'm disappointed !!! It's in there - specifically mentioned in para that talks about the amount our banks have been taking off the ECB
you hid it in brackets!

I see it now
 

adrem

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We also have a very serious sovereign bond crisis.

At the current we simply cannot borrow, we may have cash until June but is very unlikely the rates will come down before we re enter the market.

I think you also mis diagnose the banking problem. The state guaranteed banks cannot borrow because the state's cresitworthiness is seriously impaired.

mmm not sure - we have a sovereign crisis because the State guarantees the banks and the markets believe that the cost of funding the banks is going to be exacerbated by the low growth we will experience as a result of the austerity measures. Reasonable indications are that if we took the bank uncertainty off the table (definitively!!) then the sovereign debt costs would fall. DoF assumptions in the 15bn estimate were for a 6.5% average cost of funds in 2011 - up from 4.77% in 2010. I think that is reasonable in an environment where the banking issue was off the table.

Obviously disagree somewhat with the second point - see above. It is of course somewhat circular - the banks cant raise funds because the State creditworthiness is questioned, the States creditworthiness is questioned because the State is backstopping the banks which can't raise funds etc. Take the banks issue off the table and that in itself will significantly improve the States creditworthiness. Of course the 15bn and 6bn are necessary to maintain the State budgetary credibility
 
Joined
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De boys from de rescuue fund has arrived powering down de collins avenue.... Dere keepin a low profile..

[ame=http://www.youtube.com/watch?v=b-_ixdAzAAY]YouTube - Panzer![/ame]
 

adrem

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...Plus you neglect the fact that the Irish Government has welded the banks' debts to the State's, so that banks' deficits are impossible to separate from the States' in any meaningful fashion.

Not quite true. It is possible (and Honohan and Elderfield have done it) to separate the 2. The purpose of exercise now is to lock down the Bank debt separate from the Sovereign debt. You are right though - the reason we are using EFSF and EFSM mechanisms is because we guaranteed the bank debt.

btw nationalising all the banks in 2008 would have had the exact same impact.

The only way this wouldn't have arisen would have been if we had let one (or more) of the banks fail - ie become insolvent and refuse to pay depositors (amounts over €100k) or bondholders. I'd prefer (with respect) not to have this thread descend into the arguments for and against this again - there's loads of threads on that already!!
 

Harmonica

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Why have the Irish banks now reduced themselves dramatically as they are clearly not anything like the financial size they were years ago and no sign they will recover any time soon. I don't like to see any one lose their jobs but when the tax payer is paying for all this their should be big staff cuts and branch closures. Seems we have state nationalised the debts of the banks but nt the assets.
 

Squire Allworthy

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Not quite true. It is possible (and Honohan and Elderfield have done it) to separate the 2. The purpose of exercise now is to lock down the Bank debt separate from the Sovereign debt. You are right though - the reason we are using EFSF and EFSM mechanisms is because we guaranteed the bank debt.

But the government would need to off load the banking liability for any other solution makes them part of overall government liabilities.
 

gayguy2000

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Messages
295
The only real conclusion I can come to as to why no one is protesting over at the National Conference Centre now, where Cowen is, or protesting at all, is because the dole is too high. Am I right? Our country has been mismanaged into a charity case.
 

paulp

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7,688
Good post, just on this part

.

In order to secure that position we have to bargain very hard and have yet to win the final argument - the lack of restrictions (loss of sovereignty) issue. The current liklihood is that we will win that argument and the current 4 year plan will be accepted as is without amendment - there will be an assumption that the €6bn budget will be passed and implemented though and it is possible that the IMF will insist on reviewing the terms if that doesn't happen.

.
Christine Lagarde is making noise about Ireland having to raise it's corporation tax

In an indication of potentially tough negotiations ahead, France said Ireland may have to raise its ultra-low 12.5 percent corporation tax rate -- a taboo in Irish politics -- in return for the assistance package.

French Finance Minister Christine Lagarde said Irish business taxation was abnormally low by European standards.
Irish central bank expects EU/IMF loan | Reuters
 

lady go ga ga

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Nov 26, 2009
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nwo wake up morons this is a social country hence social welFARE those on the dole as in the majority need it to live not their fault that the pigs have built and borrowed more and more and more brainwashed by greed sine a cara
 

Goldencircle

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http://www.guardian.co.uk/discussion/comment-permalink/8418258

WhistleblowerIRL

17 November 2010 9:06AM


Ireland is having relinquish its hard-fought sovereignty as a result of a complete breakdown of banking law enforcement and repeated attempts to cover-up the ineptitude of the government and the regulator.

I am the person referred to in Senator Norris' statement below. Norris is an independent senator with no party affiliation.

I resigned from my position as the risk manager of a foreign bank operating in Dublin in 2007. We breached minimum liquidity requirement by BILLIONS of Euro on a regular basis. I made sure the Regulator was notified at least on one such occasion.

In his statement to the Irish Seanad (Senate) in February this year, Senator Norris concluded:

"...I would like her [Deputy Brady] to take the message back to the Minister for Finance, Deputy Brian Lenihan, that there is ministerial responsibility in this matter.

This is a grossly serious matter which has been reported to the Financial Regulator. A man has lost his job as a result. He honourably resigned. The degree of breach was 40 times the accepted margin. This is a disaster. If we are not prepared to face the issue and investigate it when it has been laid before the House, there is absolutely no hope for the financial system or its reputation worldwide.

... I have made very clear requests that this matter should be examined. How can the Financial Regulator investigate himself? He was in breach of his responsibility. That is the first point.... It is not too much to ask in this Parliament that this should happen. I want the process to start tonight.... ."

I have brought the matter to the attention of several senior TDs (MPs) and Senators at all the major political parties; alas, silence prevails.

Whilst the catastrophic over-night breach that I had reported to the Regulator could have been theoretically remedied immediately, it is virtually impossible for it to have been a 'once-off' event, had we been abiding by the terms of our banking license. Chaos prevailed and by the time the Regulator's team arrived for a scheduled audit, they made sure that communication with the London consultancy whom I had brought-in to sort out the mess, was promptly cut-off. By then, I was no longer attending the office, but was on 'garden leave'.

Although my position had been confirmed by the bank's board of directors only shortly before my resignation, and my resignation clearly stated that it was due to integrity issues at the bank, the Regulator's team made no attempt to contact me then, or at any time since then.

The official protocol of Senator Norris' statement is available under 'Financial Regulation' (3rd from the end of the list) at:
Parliamentary Debates (Official Report - Unrevised) Seanad Éireann Tuesday, 23 February 2010 - Page 1

The workings of Ireland's Financial Regulator are best displayed in the following example from the actual regulation in relation to liquidity management. This is the link to the 2006 legislation that came into force in 2007, as seen in paragraph 9.4 Implementation (page 27 of pdf):
http://www.financialregulator.ie/in...equirements for Management Liquidity Risk.pdf


Having failed completely at enforcing his own regulations, the Regulator then re-issued the above regulation in June 2009. Although the preamble refers to Banking Acts dating as far back as 1942, there is no reference to the fact that these liquidity requirements came into force in 2007. Here is the link to the 'new' regulation. The person who can find paragraph 9.4 in this document might also be able to find Ireland's missing billions (observe pages 28-29 of the pdf file):
http://www.financialregulator.ie/in...management liquidity risk June 2009 Final.pdf

Parag. 10 which stipulates possible imprisonment penalties for breach of liquidity regulations remains unchanged. Ireland is now on the verge of financial meltdown due the most severe liquidity crisis it has ever faced, yet not a single executive is in prison.

The only specific response by official Dublin to Norris' allegations appeared in Ireland's Business Post:
Norris raises red flag at IFSC | The Post

The Regulator told the Post that his records differ; quelle surprise?

PS to follow...

-----

1. In his reply to Senator Norris, Minister Lenihan referred to Ireland's reliance on ECB funding through-out the liquidity crisis, in return for which Ireland was offering full cooperation with Eurozone countries. However, although Minister Lenihan was provided by Senator Norris with the name of the offending bank, Minister Lenihan did not give any indication that the authorities in the central-European country in which the parent bank is domiciled were informed of this calamitous breach. Surely, had Minister Lenihan, or the Irish Regulator, informed their continental counterpart of this incident, they would have been eager to state that on record?

Sachsen Landesbank and Hypo Real-Estate (Depfa) Bank both neared collapse on account of their mismanaged and poorly regulated Irish operations. LBBW Bank and the German taxpayer, respectively, will be paying for these fiascos for years to come. Would it not have been proper order for Minister Lenihan to ensure that the failings of this yet-to-be-named Dublin-domiciled bank, which is part of one of the largest banking groups in central Europe, to have been brought to the attention of its regulating authorities? Perhaps that would just have been too embarrassing; it was bad enough that an ex-governor of the Central Bank of Ireland sat on Depfa's board of directors when it was allegedly about to go under:
Former Irish Depfa directors may be sued by parent group - The Irish Times - Sat, Jan 02, 2010

Derek Scally, The Irish Times correspondent to Berlin, wrote last August:

"...as long as things weren’t broken, no one saw a need for a fix. An unholy trinity of events changed that, beginning in September 2007.

After years of record returns, Saxony’s Sachsen LB state bank realised its Dublin-based subsidiaries had been gambling off the balance sheet and needed €17 billion overnight to save the entire group from collapse. A second pile of debts worth €600 million were subsequently uncovered

.

A whip-around from Germany’s banks saved the day, and a fellow state bank eventually bought the Saxon operation. But the near-disaster meant years of gossip about the IFSC [Irish Financial Services Centre, WhistleblowerIRL] in Germany turned into open speculation about the veracity of Dublin’s reputation as a serious financial marketplace.

Then in June 2008 the Irish rejected the Lisbon Treaty, a document the average German had never read or heard of. No matter: the No was perceived here as a slap in the face from Irish ingrates to generous Germans, a view which, when fixed, was impossible to shift.

Four months after Lisbon, Ireland was back in the German headlines after the IFSC-based Depfa bank, a subsidiary of Munich’s Hypo Real Estate (HRE) property lender, ran out of funding and required a package of emergency loans and guarantees that would eventually top €100 billion. Amid a huge political scandal in Germany, HRE was finally nationalised."


Ireland shakes off 'Wild West' reputation in Germany - The Irish Times - Fri, Aug 13, 2010

2. The Irish government has made sure that all of the so-called bank investigations, Regling & Honohan in the past, Nyberg in the present, will not go near the foreign banks operating in Dublin. These have been kept outside the remit of their mandates.

Regling & Honohan did as they were told by Minister Lenihan and did not mention names of specific executives who drove the Irish banks into the ground. So you see, its no one's fault really.

3. Minister Lenihan announced on RTE (the national tv station) that bankers were not being sent to prison because the Irish law does not provide for it. He rightfully counted on the fact that no one would remind him of paragraph 10 of the Liquidity Regulations (see my comment above). Where is the esteemed Law Society of Ireland? Why have the Law departments of Ireland's universities kept silent about this? could it be because they are all paid by the state?

4. The only people who are paying the price for the crimes committed by bankers and the Regulator, with the blessing of the government, are my fellow Irish citizens - the young who are forced to leave the country by the thousands, the families who can not afford the next mortgage payment, and the elderly and infirm who await their misfortune with horror.

5. A prominent member of one of the opposition parties recently said to me - "we can't afford the consequences of revealing this story, we already have enough to deal with if we come to power".


Prime Minister Cowen was Minister of Finance when I resigned in 2007.

Generations to come will judge our politicians harshly for allowing our country to be destroyed.
 

Dreaded_Estate

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That is not why we are in crisis now, though in months to come could be an issue



This is why we are in crisis right now... there was a run

cYp

Well the sovereign issue is only not a crisis now if you think something miracolous is going to happen between now and Mar/Apr.

The strategy of kicking the can down the road is over. I think most now accepts that the sovereign will not be able to return to the market in the new year to borrow. So even if we don't need a sovereign bailout right now we will need one very shortly. The game is pretty much up.
 

ocoonassa

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Certainly it is very difficult to see - under the current law - how the senior debt holders could be punished in the absence of some dramatic events. First the two weakest of the big banks, Anglo Irish Bank and Allied Irish Banks, would probably have to be declared insolvent. And second, almost all the many billions of euros that Irish taxpayers have already pumped into these banks would have to be written off, which would be extremely painful.
Did you ever get the feeling you'd been scammed?

Really, seriously, hugely scammed?

I'm inclined to think that is what is actually going on, we're being scammed, and an absolutely massive transfer of wealth, from the poor to the rich, is taking place. This with the full connivance of our corrupt political class who rely of the fraudsters in the financial sector to fund them.

What I don't understand though, if people like Dr Hudson below are correct, what I don't understand is why people aren't angry and are playing along with being scammed. What's with that? Is there something I'm missing?

[ame=http://www.youtube.com/watch?v=3pwAFohWBL4]YouTube - Six Minutes with the Renegade Economist - Michael Hudson Special...[/ame]
 

adrem

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Messages
924
Did you ever get the feeling you'd been scammed?

Really, seriously, hugely scammed?

I'm inclined to think that is what is actually going on, we're being scammed, and an absolutely massive transfer of wealth, from the poor to the rich, is taking place. This with the full connivance of our corrupt political class who rely of the fraudsters in the financial sector to fund them.

What I don't understand though, if people like Dr Hudson below are correct, what I don't understand is why people aren't angry and are playing along with being scammed. What's with that? Is there something I'm missing?

YouTube - Six Minutes with the Renegade Economist - Michael Hudson Special...

How does one transfer "wealth" from the "poor" to the "rich"???? If they have "wealth" how could they be "poor"??
 

Dreaded_Estate

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mmm not sure - we have a sovereign crisis because the State guarantees the banks and the markets believe that the cost of funding the banks is going to be exacerbated by the low growth we will experience as a result of the austerity measures. Reasonable indications are that if we took the bank uncertainty off the table (definitively!!) then the sovereign debt costs would fall. DoF assumptions in the 15bn estimate were for a 6.5% average cost of funds in 2011 - up from 4.77% in 2010. I think that is reasonable in an environment where the banking issue was off the table.

Obviously disagree somewhat with the second point - see above. It is of course somewhat circular - the banks cant raise funds because the State creditworthiness is questioned, the States creditworthiness is questioned because the State is backstopping the banks which can't raise funds etc. Take the banks issue off the table and that in itself will significantly improve the States creditworthiness. Of course the 15bn and 6bn are necessary to maintain the State budgetary credibility
I agree that taking the banks of the states balance sheet would improve our credit worthiness but at this stage it is an almost meaningless point. Because the government guarantee makes that impossible, they have joined us at the hip and there is no getting away from it now. Even with a IMF/EU banking bailout we will be still paying for it, just at lower rate of interest.

However, even without the banks Ireland would still be in a weak position. In 2011 we will still have the highest deficit in Europe and will have more cutting in front of us that any other of the PIIGS.
We also have significant weaknesses within the domestic economy that will take years to fix.

So it isn't all just the banks nor is it all just the sovereign. And regardless government policy has made them one and the same.
 

ocoonassa

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How does one transfer "wealth" from the "poor" to the "rich"????
All you had to do was watch that video there, it explains all.

If they have "wealth" how could they be "poor"??
Your mistake is in thinking that there is an equal ratio of poor people to rich people and that individual poor people are rich.
 

Libero

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May 22, 2004
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adrem said:
There is a huge amount of confusion evident in the P.ie site and in the wider physical and online media about whats happening, why, whats changed since the early autumn etc. Most times threads tend to divert into anti Govt, anti opposition, anti public sector or just anti everything rants which, whilst perfectly understandable, add to the confusion.

So - on this thread - can we keep away from the ranting raving screaming shouting cursing and stick to the facts as we know them.

Here's my attempt at clarity.

At the moment our big issue is the banks...
No. You're missing the point.

I'm with John McHale. At this stage, the banks are a cause, and now a symptom, of the real disease.

The government has pushed the line in recent days that the flair up in the crisis is all about the banks. There is little doubt that the trigger was ECB concern about their large and rising exposure to the Irish banking system. But the idea that the banks are the problem and the state is fine – happily pre-funded as it is through the middle of next year – is nonsense. As it stands, the Irish state is not creditworthy...

The last thing we need is another incorrect diagnosis of the problem.

The Irish Economy » Blog Archive » Not All About the Banks
 

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