"Seismic shift" in EU policy following latest summit, & a better deal for Ireland

golfwallah · 01-01-2015 11:46am

realitykeeper wrote: »

Ireland was not some uneducated proletariat peasant. It had central bankers, a well funded financial regulator and lavishly paid politicians who were supposed to know what they were doing. So no Europe did not make bad decisions, the problems in Ireland were entirely of Irish making and only Ireland should pay for them.

Getting a deal from Europe was never on the cards nor should it be. Irish politicians made the mess and they should clean it up - without help from the EU or IMF.

Called "moral hazard", isn't it?

Lessons learned the hard way are remembered and less likely to be repeated.

But I can understand the desire to get someone else pay for your mistakes, if if they did seem to be a good idea at the time you were making them.

What I can't accept is politicians deceiving the electorate by painting themselves as being better than their opponents and being able to "get a better deal". The reality is they are not any better - just different folk playing the same game as before but in altered circumstances.

hfallada · 01-01-2015 12:38pm

realitykeeper wrote: »

Ireland was not some uneducated proletariat peasant. It had central bankers, a well funded financial regulator and lavishly paid politicians who were supposed to know what they were doing. So no Europe did not make bad decisions, the problems in Ireland were entirely of Irish making and only Ireland should pay for them.

Getting a deal from Europe was never on the cards nor should it be. Irish politicians made the mess and they should clean it up - without help from the EU or IMF.

Ireland had a central bank that didnt know what it was doing and it was severely understaffed. The Central Bank has had to doubled its staff since the crisis started despite the fact, they have less banks to regulate now. The central bank was clueless on what it was doing. They didnt know how to regulate the banks as regulate was too light touch. German bank officials used to fly to do to shady bank deals that were allowed in the IFSC, but banned in Germany.

The wealthy state of Europe eg Germany, Netherlands, Austria etc. Are as much to blame as Greece, Itaty, Spain etc for the Euro Crisis. If you look at the German capital outflows and compare it to PIIGS trade deficits. They are a near perfect match. German allowed all these countries to take on easy loans, that shouldnt have been issued. But turned a blind eye as it benefited Germany so much. eg record trade surplus. German firms have been fined for selling arms on credit to Greece, as officials in Greece were paid bribes to buy the weapons

Someone in the ECB should have said 10 years ago. There is too much money being lent to weak countries like Greece, Spain etc. Its creating a bubble and will have long term issues. But the ECB was to fixated on how weak the German and French economy was back then.

realitykeeper · 01-01-2015 8:57pm

hfallada wrote: »

Ireland had a central bank that didnt know what it was doing and it was severely understaffed. The Central Bank has had to doubled its staff since the crisis started despite the fact, they have less banks to regulate now. The central bank was clueless on what it was doing. They didnt know how to regulate the banks as regulate was too light touch. German bank officials used to fly to do to shady bank deals that were allowed in the IFSC, but banned in Germany.

The wealthy state of Europe eg Germany, Netherlands, Austria etc. Are as much to blame as Greece, Itaty, Spain etc for the Euro Crisis. If you look at the German capital outflows and compare it to PIIGS trade deficits. They are a near perfect match. German allowed all these countries to take on easy loans, that shouldnt have been issued. But turned a blind eye as it benefited Germany so much. eg record trade surplus. German firms have been fined for selling arms on credit to Greece, as officials in Greece were paid bribes to buy the weapons

Someone in the ECB should have said 10 years ago. There is too much money being lent to weak countries like Greece, Spain etc. Its creating a bubble and will have long term issues. But the ECB was to fixated on how weak the German and French economy was back then.

Wrong on all counts. The Irish central bank was far from clueless. They knew what was going on as did the financial regulator, the politicians and a sizable chunk of the general public. I was cleaning toilets during the celtic tiger years and it was obvious to me and many ordinary people I knew that the housing bubble would pop and the banks would have a tidal wave of defaulters to deal with. Everyone knew, they were just too greedy to restrain themselves while the house prices were growing.

Furthermore, it is entirely wrong to expect Herr und Frau Shmitt in Dusseldorf to have known about the madness that was going on here. Even German bankers could not reasonably have been expected to have known that the Irish and the other pigs were lying through their teeth to the rating agencies.

Those who borrow should pay, in full, on time, as agreed. Or, they should face immediate, punitive sanctions and penalties. The Germans are an honorable people, is it too much to expect others to be so too?

DeJa VooDoo · 01-01-2015 9:22pm

realitykeeper wrote: »

Wrong on all counts. The Irish central bank was far from clueless. They knew what was going on as did the financial regulator, the politicians and a sizable chunk of the general public. I was cleaning toilets during the celtic tiger years and it was obvious to me and many ordinary people I knew that the housing bubble would pop and the banks would have a tidal wave of defaulters to deal with. Everyone knew, they were just too greedy to restrain themselves while the house prices were growing.

Furthermore, it is entirely wrong to expect Herr und Frau Shmitt in Dusseldorf to have known about the madness that was going on here. Even German bankers could not reasonably have been expected to have known that the Irish and the other pigs were lying through their teeth to the rating agencies.

Those who borrow should pay, in full, on time, as agreed. Or, they should face immediate, punitive sanctions and penalties. The Germans are an honorable people, is it too much to expect others to be so too?

Maybe if people who borrowed to put a roof over their heads weren't paying so much in extra taxes and USC's etc etc to pay the banks debts they'd have enough money to pay their own.
Seems to me the banks want it both ways.
How much of the €10 billion they were given in order to write down peoples debts has actually been used for the purpose it was intended for?

golfwallah · 01-01-2015 10:47pm

DeJa VooDoo wrote: »

Maybe if people who borrowed to put a roof over their heads weren't paying so much in extra taxes and USC's etc etc to pay the banks debts they'd have enough money to pay their own.
Seems to me the banks want it both ways.
How much of the €10 billion they were given in order to write down peoples debts has actually been used for the purpose it was intended for?

Looks like more than the bankers want it both ways - we all want it that way, if we can have it, particularly when it comes to money borrowed from abroad.

It's human nature - borrowers don't want to be lectured on how to spend borrowed money.

Remember the furore back in 2007 over a German diplomat's remarks on lavish Irish spending on new cars, hospital consultants' pay, etc. - see this Irish Independent article.

Nor do borrowers like re-paying borrowed foreign money, when, in the final analysis, it was spent in creating an asset bubble and public sector over-spending. Has happened many times in similar situations before (e.g. U.S. states' foreign loan defaults in the 1840's - although most of this foreign debt was eventually repaid).

realitykeeper · 02-01-2015 7:41am

DeJa VooDoo wrote: »

Maybe if people who borrowed to put a roof over their heads weren't paying so much in extra taxes and USC's etc etc to pay the banks debts they'd have enough money to pay their own.

Raising taxes to pay bank debt would not be necessary if the defaulters did not default. So the defaulters only have themselves to blame. Meanwhile, the non indebted, also have to pay higher taxes for the decisions of the S.G.I.s. That is to say, the Stupid, the Greedy and the Incompetent.

Indeed, chief among these S.G.I.s are the politicians and judges. After all, if mass evictions of the 300,000 mortgage defaulters had gone ahead, many of those politicians and judges would have lost their houses and been forced to resign due to bankruptcy. Therefore, public policy and judicial decisions in this country are made by, and in the interests of, the stupid, the greedy and the incompetent.

That said, you are correct, the banks should have been allowed to fail when they could not pay their debts - irrespective of the consequences. In other words, if Ireland had to fail for not bailing out the banks, then it should have been allowed to fail.

hfallada · 02-01-2015 12:09pm

realitykeeper wrote: »

Wrong on all counts. The Irish central bank was far from clueless. They knew what was going on as did the financial regulator, the politicians and a sizable chunk of the general public. I was cleaning toilets during the celtic tiger years and it was obvious to me and many ordinary people I knew that the housing bubble would pop and the banks would have a tidal wave of defaulters to deal with. Everyone knew, they were just too greedy to restrain themselves while the house prices were growing.

Furthermore, it is entirely wrong to expect Herr und Frau Shmitt in Dusseldorf to have known about the madness that was going on here. Even German bankers could not reasonably have been expected to have known that the Irish and the other pigs were lying through their teeth to the rating agencies.

Property prices always go and down. Its impossible to predict when Irish property was going to go down. I know any excellent economics lecturer who predicted the property collapse in 2002. They continued to rise for another 5/6 years. So no one could predict it accurately.

Well the ECB bank is in charge of the monetary policy of the eurozone. You would think they would be alarmed if Germany was sending billions abroad to weak economies like Greece, Portugal, Spain. But its only now the EU has decided excessive trade surpluses like Germany had were unfair to other countries. Germany must reduce its trade surplus soon. If they reduce their trade surplus, they have less money to send abroad. So only after the European recession has the EU acknowledged Germanys, trade surpluses were unfair as they caused massive trade deficits in other countries.

You must have never read about rating agencies before. They allowed US banks to sell some financial products as AAA. The safest investment possible. But often these AAA products were some good investments loans and often a ton of subprime mortgages. The same mortgages that caused the financial melt down in the US. The rating agencies were/still useless to access risk

realitykeeper · 03-01-2015 4:01am

hfallada wrote: »

Property prices always go and down. Its impossible to predict when Irish property was going to go down. I know any excellent economics lecturer who predicted the property collapse in 2002. They continued to rise for another 5/6 years. So no one could predict it accurately.

Well the ECB bank is in charge of the monetary policy of the eurozone. You would think they would be alarmed if Germany was sending billions abroad to weak economies like Greece, Portugal, Spain. But its only now the EU has decided excessive trade surpluses like Germany had were unfair to other countries. Germany must reduce its trade surplus soon. If they reduce their trade surplus, they have less money to send abroad. So only after the European recession has the EU acknowledged Germanys, trade surpluses were unfair as they caused massive trade deficits in other countries.

You must have never read about rating agencies before. They allowed US banks to sell some financial products as AAA. The safest investment possible. But often these AAA products were some good investments loans and often a ton of subprime mortgages. The same mortgages that caused the financial melt down in the US. The rating agencies were/still useless to access risk

It is impossible to predict when property prices are going to go down which is why it is wise to be prudent and not gamble. The Irish choose to be stupid and they should pay for their stupidity. If a gambler is on a winning streak and then losses everything, it is his fault and nobody else`s.

German trade surpluses are not unfair to other countries but rather the deficits of other countries are unfair to Germany. They should slash their spending and compete. The ECB president is an Italian and lest we forget, Italy is one of the pigs. The pigs would love money printing and QE because they have debt but the Germans have hard earned money and they do not want it to deflate.

If the ECB overrides German concerns and starts real QE,, there will be a flight of capital from Europe and it will be replaced by newly created currency which will increase the risk of hyperinflation.

Apart from the rating agencies, the pig governments were misrepresenting the true state of their finances. The lender is never at fault for their good deed. The borrower is always at fault if they fail to repay, in full, on time, as agreed.

Mr. teddywinkles · 03-01-2015 4:18am

realitykeeper wrote: »

It is impossible to predict when property prices are going to go down which is why it is wise to be prudent and not gamble. The Irish choose to be stupid and they should pay for their stupidity. If a gambler is on a winning streak and then losses everything, it is his fault and nobody else`s.

German trade surpluses are not unfair to other countries but rather the deficits of other countries are unfair to Germany. They should slash their spending and compete. The ECB president is an Italian and lest we forget, Italy is one of the pigs. The pigs would love money printing and QE because they have debt but the Germans have hard earned money and they do not want it to deflate.

If the ECB overrides German concerns and starts real QE,, there will be a flight of capital from Europe and it will be replaced by newly created currency which will increase the risk of hyperinflation.

Apart from the rating agencies, the pig governments were misrepresenting the true state of their finances. The lender is never at fault for their good deed. The borrower is always at fault if they fail to repay, in full, on time, as agreed.

Sry but I don't trust zee germans wotsoever

dlouth15 · 03-01-2015 10:02am

Worth reading back on this thread from 2012. Here's one of the very few posts that fully understood the situation unlike our government.

Sand wrote: »

Its good to see that some realism is emerging this week after the puzzling reaction to the European summit last week. Despite all the talk of "seismic shifts" no one was able to explain who had paid off Ireland's debt. The reason being because no one had agreed to do so. That would have been a "seismic shift".

Merkel, painted as being a defeated figure last week, has had the last laugh as the self declared victors begin to realize she didn't promise any concrete game-changer and didn't increase Germany's liability for their debts in the slightest - directly or indirectly via EU institutions. Instead the other states re-affirmed their adherence to Merkel's short term pet project of the fiscal pact and ECB banking control in exchange for a long term promise that when an institution that doesn't exist yet is set up, it might,once a eurozone banking regulatory system is agreed and implemented, and if Germany agrees, do something under a mechanism that no one has agreed yet. Maybe.

It might be said the best victories are when the other side think they've won.

The ESM has a limited budget, which hasn't been increased. Ireland's banks have already been recapitalized, at state expense so a commitment to in the future directly capitalize banks is a fine solution to a problem we had 4 years ago and have already solved. Even if the ESM does buy into Irish banks, it will be at market value - crystallising huge losses for the Irish government. The best that can be said is that it might in the long term reduce small sovereign funding risks - but that's in the long term.

The Finnish and Dutch have already announced their resistance to the ESM being used to buy bonds in secondary markets - they probably dont need to worry, the ESM simply doesn't have the firepower to meet all the jobs its being given. Meanwhile, the ECB have shut down their bond buying exercise which was at best grudgingly endured by factions within the ECB.

All in all, Merkels position hasn't shifted at all - she's always said that the other Eurozone states must comply with Germany's conditions first, and then they'll talk about aid. Maybe.

Its just ironic that the Irish political set, so long the masters of avoiding difficult decisions by agreeing to setup an inquiry to produce a report to file in the archives didn't recognize what Merkel has done to them.

I wonder would those who believed the "seismic shift" line and posted on this thread care to comment now on why they believed it.

opiniated · 09-01-2015 3:58pm

dlouth15 wrote: »

Worth reading back on this thread from 2012. Here's one of the very few posts that fully understood the situation unlike our government.

I wonder would those who believed the "seismic shift" line and posted on this thread care to comment now on why they believed it.

I have to admit, I've been wondering why all those who assured us the EU would do a quiet deal to pat us on the back for being compliant little souls haven't been as quick to point out they were wrong.

The Irish Government were wrong to guarantee the banks - but I'd love an explanation as to how Ireland is "a special case" - unless they meant we're "special" because we were regarded as gullible fools.

Sand · 10-01-2015 12:11am

opiniated wrote: »

I have to admit, I've been wondering why all those who assured us the EU would do a quiet deal to pat us on the back for being compliant little souls haven't been as quick to point out they were wrong.

They're fairly busy trying to point out everyone else was wrong, apparently on the basis that somebody* claimed Ireland would never experience statistically measurable economic growth ever again.

Whereas recent statistics have proven statistically that Ireland has experienced statistically measurable economic growth. So there!

*If you find this person, please alert the authorities. They are considered imaginary, possibly made of straw and dangerous.

opiniated · 10-01-2015 11:34am

I think they're hoping no-one will remember all the assurances that Europe would look after us - quietly - if we were good boys and girls.
The other tactic is, of course, deflection.

"Someone" made a ridiculous claim, therefore, everyone who disagreed with us was wrong, and we were right.
It's an, er, interesting way of thinking. Not very honest, mind you, but interesting, nevertheless.

golfwallah · 10-01-2015 1:09pm

dlouth15 wrote: »

Might be referring to this.
The Taoiseach has hinted that Ireland may not take up a European deal on its banking debts.

Finance Minister Michael Noonan has said for some time that Ireland could make more money by selling its shares in AIB to a private investor, instead of going straight to the Europe.

Enda Kenny says it will be very difficult to convince 27 other countries to give us a deal - and it might make more sense to sell the bank shares instead.

Ireland is now able to make an official application for a deal to get some of its money back for the bailout of AIB and Bank of Ireland.

But the Taoiseach says the final decision will depend on whether Ireland can make money from selling AIB

BoJack Horseman wrote: »

Why can't they both lobby the other 27 for debt relief and sell AIB when the time is right.

When you think about it, Enda and Michael Noonan are probably right, it could be better to sell our stakes in the banks rather than look for a "deal" from Europe, either bank by bank or for the lot.

Irish Life has already been sold to Canada Life for €1.3b. I've set estimates for sale of the remaining banks against bailout costs for each on the attached spreadsheet and netted off reported net receipts of €4.5b received between 2008 - 2012. OK, it's an estimate based on news reports and material available on-line, but this scenario could bring the net cost of the bank bailout down from €64.1b to about €29.7b, depending on what could be realised from a straight forward sale.

Any deal from Europe would have to be better than that to make it worth pursuing.

Any views?

golfwallah · 13-01-2015 12:06am

If Michael Noonan is able to deliver on his announcement today that he is confident we will recover all public monies invested in AIB, BOI and PTSB, that would further reduce the net cost of the bailout from €64.1b to €17.3b. Taking into account another €2b in interest and charges accruing to the state for 2013 & 4 would bring the cost down to €15.3b.

After that, there is the prospect of further debt relief following a likely deal for Greece after their general election.

So things are looking quite a bit better - the only downside being the Quantitative Easing required to pay some of the costs involved (i.e. inflation)!

http://www.rte.ie/news/2015/0112/671895-state-banks-aib-boi-ptsb/

smcgiff · 13-01-2015 3:39pm

golfwallah wrote: »

If Michael Noonan is able to deliver on his announcement today that he is confident we will recover all public monies invested in AIB, BOI and PTSB, that would further reduce the net cost of the bailout from €64.1b to €17.3b.

I think Michael Noonan is including the €4.5B payments from the banks as part of the breaking even calculation, so they shouldn't be taken off again to get to €17.3B.

But it is a lot more positive for sure. I also hope NAMA will outperform their estimate.

golfwallah · 13-01-2015 9:30pm

Well spotted, sir!

That brings the estimated net cost of the bailout back to around €23.8b (€17.3b + €6.5b) - unless they can get more for NAMA.

Geuze · 14-01-2015 12:44am

golfwallah wrote: »

If Michael Noonan is able to deliver on his announcement today that he is confident we will recover all public monies invested in AIB, BOI and PTSB, that would further reduce the net cost of the bailout from €64.1b to €17.3b. Taking into account another €2b in interest and charges accruing to the state for 2013 & 4 would bring the cost down to €15.3b.

Since Anglo/INBS cost us 35bn approx of the 64bn approx, I don't see how the net cost could ever be 15.3bn..................

everdead.ie · 14-01-2015 11:48am

Geuze wrote: »

Since Anglo/INBS cost us 35bn approx of the 64bn approx, I don't see how the net cost could ever be 15.3bn..................

I assume part of the liquidation of Anglo would see some of the money returned.

Also I think he mentioned it would actually be 23.8B after a correction to the figures.

golfwallah · 14-01-2015 11:56am

Aah, yes, pluses, minuses, roundings, billions, netting off interest & charges received by the state, etc. ... all gets very confusing!

But in summary (and without discounting for present value of money and other costs), the situation after clarification that the interest & charges are included in Michael Noonan's break-even figures for selling AIB/BOI/PTSB can be summarised as follows:

Initial bail-out costs = €64.1b
Less AIB/BOI/PTSB = €29.4b
Cost of Anglo / INBS = €34.7b
Less IBRC estd. sale = €12.9b*
Net cost undiscounted= €21.8b

*http://businessetc.thejournal.ie/ibrc-repayment-12-9-billion-1432713-Apr2014/

smcgiff · 14-01-2015 2:04pm

Geuze wrote: »

Since Anglo/INBS cost us 35bn approx of the 64bn approx, I don't see how the net cost could ever be 15.3bn..................

We got the assets that went into NAMA, for example the Dundrum Shopping Centre loan is due to be sold for a Billion, up from 750m at the time the last estimate for the monies due to be recouped were released.

There's also ongoing loan repayments for some loans.

opiniated · 15-01-2015 1:30pm

According to an article in todays Irish Times, Professor Patrick Honohan estimates that the Bank Guarantee will cost €40 Billion.

I would imagine that he has the figures available to make that estimation.

Surely, at the end of the day, the ultimate cost is what counts, not political spin?

Rezident · 15-01-2015 2:31pm

Fair play to Honohan. He said the Anglo bailout was a mistake and that Anglo should have been allowed to fail, as many of us knew in 2008. He added that the decision by the Fianna Fáil-Green Party government to guarantee subordinated debt linked to the banks in 2008 was a massive mistake and he is telling the truth. In public! How can we make this man Taoiseach?

antoobrien · 15-01-2015 2:47pm

Rezident wrote: »

Fair play to Honohan. He said the Anglo bailout was a mistake and that Anglo should have been allowed to fail, as many of us knew in 2008. He added that the decision by the Fianna Fáil-Green Party government to guarantee subordinated debt linked to the banks in 2008 was a massive mistake and he is telling the truth. In public! How can we make this man Taoiseach?

He's telling the truth, but he's also stating that he's telling it with hindsight.

http://www.independent.ie/business/irish/banking-inquiry/banking-inquiry-brian-lenihan-overruled-on-night-of-bank-guarantee-patrick-honohan-30909836.html

Prof Honohan added that with the benefit of hindsight, had authorities known that heavy losses could have been involved, he said liquidating Anglo Irish Bank on the night of September 29 2008 should have been considered.

But he did add that there was no guarantee that the European Central Bank would have stood by and allowed a wind down of Anglo.

He was asked by Fine Gael TD Kieran O'Donnell whether he felt Anglo was of systemic importance in 2008.

Prof Honohan said Anglo Irish Bank was a bank Ireland could have done without but said at the time of the guarantee it was of systemic importance.

There are a number of statements in there that appear to be contradictory. I'll wait for a transcript of what he said rather than believing what the papers print.

DeJa VooDoo · 15-01-2015 3:08pm

Isn't it great to see enda's mate, the one granted immunity regarding his dodgy time as chief financial officer in Anglo, getting a handy little number with PwC.

PwC the great auditors of Anglo Banglo!

http://www.independent.ie/business/irish/exanglo-finance-boss-moran-lands-job-with-pwc-in-luxembourg-30876771.html

Sand · 18-01-2015 2:08pm

I thought Honohan's comments were interesting on a number of levels. Firstly, he's acknowledging that leaving the failed banks to burn was the correct course of action. This is important, because you'll still have the Green Jersey Brigade try to defend the overall strategy and just give ground on its scale or scope. If you start from the principle that failed banks ought to be left to burn, then you approach the problem from the correct angle: what are the interests of the Irish citizen?

All through the past few years the angle has been, what are the interests of the Irish banks, their staff, their management, their shareholders, their creditors and their investors.

Secondly, he made a very clear and important point - leaving Anglo-Irish to burn would have annoyed and enraged our European "partners", but that did not make it the incorrect course of action. Again, that's a critically important point for the Green Jersey brigade to absorb. Many times over the past few years, the strategy has been justified on the grounds of Ireland needing to ingratiate itself with our European "friends", needing to be a team player, of deserving a bad deal as punishment for past sins, and most bizarrely on grounds of morality.

Its important that its recognised that the correct strategy is usually not the one which irritates the fewest people. Again, its the one that serves the interests of the Irish citizens best.

coolshannagh28 · 18-01-2015 6:09pm

Honohan sounds good with the benefit of hindsight but it is important to remember he at all times has operated with his ECB hat on, in most instances to our detriment and IMO continues to do so

FreudianSlippers · 20-01-2015 11:03am

Sand wrote: »

I thought Honohan's comments were interesting on a number of levels. Firstly, he's acknowledging that leaving the failed banks to burn was the correct course of action. This is important, because you'll still have the Green Jersey Brigade try to defend the overall strategy and just give ground on its scale or scope. If you start from the principle that failed banks ought to be left to burn, then you approach the problem from the correct angle: what are the interests of the Irish citizen?

All through the past few years the angle has been, what are the interests of the Irish banks, their staff, their management, their shareholders, their creditors and their investors.

Secondly, he made a very clear and important point - leaving Anglo-Irish to burn would have annoyed and enraged our European "partners", but that did not make it the incorrect course of action. Again, that's a critically important point for the Green Jersey brigade to absorb. Many times over the past few years, the strategy has been justified on the grounds of Ireland needing to ingratiate itself with our European "friends", needing to be a team player, of deserving a bad deal as punishment for past sins, and most bizarrely on grounds of morality.

Its important that its recognised that the correct strategy is usually not the one which irritates the fewest people. Again, its the one that serves the interests of the Irish citizens best.

It sounds as though he still agreed in hindsight to give a guarantee to banks like AIB and BoI in order to mitigate the "contagion" argument. I just wonder how the Irish people would have reacted to letting Anglo burn vis-a-vis the potential damage to other "healthier" banks like AIB/BoI.

K-9 · 20-01-2015 1:05pm

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

antoobrien · 20-01-2015 1:21pm

K-9 wrote: »

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

It was but they didn't realise it. The Irish League of Credit unions had a total exposure of ~€28m, which was written down by 75%-80%.

Sand · 20-01-2015 10:17pm

FreudianSlippers wrote: »

It sounds as though he still agreed in hindsight to give a guarantee to banks like AIB and BoI in order to mitigate the "contagion" argument. I just wonder how the Irish people would have reacted to letting Anglo burn vis-a-vis the potential damage to other "healthier" banks like AIB/BoI.

"Contagion" is ultimately the ECBs problem if it is anyone's. Certainly Ireland has little or no interest in what happens to a German bank or a French bank as a result of decisions made in Ireland. That has been the message clear and loud from Germany in particular and France as well - bank problems are purely the problem of the national government.

The only odd point about Honohan's testimony was that letting Anglo fail would have caused Eurozone wide anger with Ireland - I believe he equated it with Lehman's collapse. Given many people will tell you the rest of the Eurozone had practically no exposure to Irish banks in general, let alone a specific Irish bank, that's an odd statement to make. My understanding given the above is that the rest of the Eurozone would not have even noticed the failure of Anglo Irish.

I actually don't disagree with the state going into AIB or BoI but it should only have been on terms of actually preserving banking systems and functions. Not a "no bondholder left behind" strategy for creditors ( long term credit - pointless if it really is just a liquidity issue, self defeating otherwise, short term credit - irrelevant if ELA is available, which it was and heavily used as Honohan pointed out). The starting point for any sensible strategy was the much sneered at "Burn the bondholders" view.

My complaint is that the strategy that was followed started from far stupider mantras about soft landing, there is no alternative, shure we all partied, etc, etc. I still remember an otherwise intelligent poster telling me 2 or 3 years ago that Irish people would never default on a mortgage - just didn't happen in Ireland apparently.

Sand · 20-01-2015 10:19pm

K-9 wrote: »

Interesting he agrees that Anglo was systemic, something that many couldn't grasp at the time. It wasn't important to the ordinary man on the street, but the trickle down effect on other banks was systemic.

People will still tell you today that Anglo Irish was not and is not systemic.

coolshannagh28 · 20-01-2015 11:28pm

Honohan very much represents the interests of the ECB his 20% rule is indicative of this ,its very apparent in the last few days that we are subservient to Europe and good Europeans through and through . does this apply to Germany or France would they put European interest before their own and does the German representative at the ECB dictate ECB policy to Germany or vice versa.
What is happening in Ireland is a microcosm of Europe ,the centre Dublin is favoured and protected the rest, the regions are neglected ,as with Europe, Germany, France and the Benelux countries are prioritised, the rest beg.

"Seismic shift" in EU policy following latest summit, & a better deal for Ireland

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