Yes, you can burn senior bondholders?

robut

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Restructuring banks: Don't start from here | The Economist

"The Kazakh restructuring, completed in September this year, is unusual because instead of getting a state guarantee, the majority of the creditors of BTA Bank, the biggest problem, shared the pain. Even senior bondholders, who are high in the pecking order, were hit."

"Most BTA creditors were offered a menu of options which included a haircut on their assets, various combinations of senior and subordinated debt, and a small stake in the bank’s equity to keep them interested in its future. The government faced down those who warned that, if senior bondholders and trade creditors were included, the market would ostracise Kazakhstan for years. Around $12 billion of bonds and commercial debt was reduced to $4 billion. The external debt of the Kazakh banking sector, which was 26% of GDP when the crisis struck, has been roughly halved."

There you have it guys .. And Lenihan & Co telling us for the last two years we CANNOT touch the Senior Bondholders.

On RTE RADIO 1's Late Debate last night - 25/11/10 - a well experienced Markets bod of many years pretty much said the same thing. That even Senior Bond holders do not expect 100% safety .. they invest with risk also.

If this is the case FF / Lenihan are holding out for these senior bond holders because:

1. They do not want to burn them out of being honourable // looking to the future for the "ould" sod

2. Because German, UK, French banks / investment funds ( senior bond holders ) are into OUR BANKS for 10's of Billions. If IRL PLC burns them, then German, UK, French banks will feel the cold chill .. this is the "Contagion", FF's political Euro buddies!

Rob

PS - Above Economist article found via a Brian Lucey Tweetee tweet :D
Twitter
 
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eoghanacht

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Default is a must. We have to do it ASAP and in an ordely fashion on OUR terms
 

Kalan

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limericklady

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Argentina once it defaulted and threw the IMF out recovered.

"What the people of Ireland and every country must realize is that if they agree to play by the bankers’ rules, they will lose."
Ireland should 'do an Argentina' | Dean Baker | Comment is free | guardian.co.uk
I'm told that after Argentina defaulted they were never able to go back to the market again. Anyone know if that's true?
We couldnt survive without going back to the market, right? Especially if we dont have IMF/EU support for the next 3 years?
 

Gerard1978

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I'm told that after Argentina defaulted they were never able to go back to the market again. Anyone know if that's true?
We couldnt survive without going back to the market, right? Especially if we dont have IMF/EU support for the next 3 years?
I am not sure but Russsia, and Germany defaulted and have no problems in the markets now. Markets dont look back, they look forward, and the news five minutes ago is history
 

robut

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Remember this ..

When DEFAULT is being discussed in last few days in the media IT IS NOT a Sovereign Default .. IT IS to Bank Default.

The difficulty is that FF "Socialised" the bank debt by guaranteeing the banks / bondholders back in late sept 2008. In the markets eyes AND maybe legally - this joined the Banks Debt to the Sovereign. Thats why its all being treated as one at the moment.

If the banks default it is done as an ORDERLY DEFAULT - that is for every Euro owed they get back say, 30 cent, therefore lowering the dept owed by IRL.

BUT I am sure their are ways out of this here in Euroland .... eventually ... where nothing is impossible!

Follow the yellow brick road .. clickity click!

Robut
 

foreign

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Only till 31.12. after this date, the guarantee is gone. Go for it! Your banks can't refinance the one or the other way.
 
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Kalan

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bank default

Whatever about a sovereign default a haircut for the banks is certainly feasible and necessary; necessary to prevent a sovereign default.
Noonan has suggested a few times that there are tensions between the IMF and the ECB on this matter.
There are also tensions between the EU and the ECB which tends to act in Germany's interest.

"The European Union's executive arm, the Brussels-based EU Commission, floated a proposal on Wednesday to double the size of Europe's €440 billion ($588 billion) bailout fund for euro-zone governments, but the idea was dismissed by Germany, according to people familiar with the situation."
Germany Dismisses European Plan to Double Emergency Bailout Fund - WSJ.com

The problem for Ireland is it does not have a government with the political legitimacy to deal with the issue; the walking dead government is unable to deal in Ireland's interest with the IMF/EU.
FG/Lab should openly state that they will not be bound by any agreement signed by Cowen. But it seems that some in F.G and Labour may even welcome the straitjacket that will be imposed by the Memorandum of Agreement on Irish economic policy and prospects for development. Gilmore seems to be abdicating responsibility even before he's in government, saying he will implement the budget proposals even though Labour will vote against them. This is a position which will de-legitimate any incoming government of which Labour is a part. Its a recipe for political, social and economic chaos.
 


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