400 Billion Euros to Bankers?

rexusdiablos

Will somebody please tell me why the Irish Government has conceded to paying a 400 Billion Euro bailout for National Bankers?

Whilst I was irrevocably fixated on the American Congress’ malevolent response to an alleged’ economic crises I had become blindsided to the immediate illicit governance of my own homeland.

How can such an action be condoned, let alone implemented without consulting the taxpayer? Is nationalism just around the corner?

Can somebody explain how imminent and critical this is on a scale of one to ten. One being ‘:) It’s just a coincidence, Ireland is safe.’ and ten being‘:mad: Let rally, bare arms, form a militia and engage in strategic guerrilla warfare.’

Apparently all this was in the paper...

Time Magazine

It's not to bankers. They've guaranteed ordinary citizens' deposits in banks for two years. This means if you have €10 in AIB, even if AIB collapse, you'll get your money. It's not to bankers because if AIB were to collapse, it'd be you that loses the €10. The €400bn figure is total amount of savings in these banks. Realistically if AIB were to go broke, they could still sell their branches etc. and recover, say, €8 of your €10. Suddenly the €400bn becomes €80bn. And that's if a bank collapses, which is quite unlikely, for reasons you'll find on other fora on this site. And if a bank collapses, it'd most likely be one of the smaller ones, not AIB or Bank of Ireland who have about 80% of the market between them.

I was at a lecture about this last night. The figure given of the cost of this was about 3% of GDP. So on a scale of 1-10, you're talking about a 2.

rexusdiablos

David McWilliams wrote: »

It's not to bankers. They've guaranteed ordinary citizens' deposits in banks for two years. This means if you have €10 in AIB, even if AIB collapse, you'll get your money. It's not to bankers because if AIB were to collapse, it'd be you that loses the €10. The €400bn figure is total amount of savings in these banks. Realistically if AIB were to go broke, they could still sell their branches etc. and recover, say, €8 of your €10. Suddenly the €400bn becomes €80bn. And that's if a bank collapses, which is quite unlikely, for reasons you'll find on other fora on this site. And if a bank collapses, it'd most likely be one of the smaller ones, not AIB or Bank of Ireland who have about 80% of the market between them.

I was at a lecture about this last night. The figure given of the cost of this was about 3% of GDP. So on a scale of 1-10, you're talking about a 2.

Ah well. :pac:

Run_to_da_hills

David McWilliams wrote: »

It's not to bankers. They've guaranteed ordinary citizens' deposits in banks for two years.

There is a serious risk element here on the people of Ireland. As what is happening now there is currently a flow of depositors into the these banks since the state went guarantor.

If the bank decided to do something foolish with these deposits, i.e. gambled it on some investment project or hand it out to customers that go belly up it is us the tax payer that will suffer.

I cannot see any of this money being lodged into a safe for the next two years. The banks will have to get this capital working and it will be up to the Government too see that it is not messed around with.

Time Magazine

Run_to_da_hills wrote: »

If the bank decided to do something foolish with these deposits, i.e. gambled it on some investment project or hand it out to customers that go belly up it is us the tax payer that will suffer.

You're right, but that's not "400 billion euros to bankers".

Run_to_da_hills

David McWilliams wrote: »

You're right, but that's not "400 billion euros to bankers".

In the worst scenario the state will have to cough up every penny of all deposit that was lodged into these establishments. I just hope to God they watch over these guys like hawks. I can see no more 95% loans.

The state could also possibly have an interest in our own credit rating if we intend to apply for a personal loan as it could be the taxpayers money at risk should we default.

If my old man goes guarantor on a loan for me he will want to know what I want the money for and also want to know how I will be able to pay it back, likewise the state will want to know the same because they are the banks guarantor.

Time Magazine

That's an economic debate. I know better than to have one of those over here, it inevitably turns into a NWO/September 11th/whatever whinge.

ttm

Funiest thing about this whole thing is the way the UK is reacting to it

If you listen to UK Radio (Radio 4 for example) you will hear them complaining that UK investors are moving their money over to Ireland where it is safer.

Another intersting point is the Bushes 600 Billion bank bailout amounts to less than 0.6% of US GDP where as if Ireland has to pay out to all the banks then the promise amounts to 300% of Irelands GDP - please feel free to correct me if I got the figures wrong.

edit> I'll correct that myself as I found http://www.gata.org/node/6700 quoting that Irelands promise is twice its GNP.

Currently UK investors are only garanteed the first 35,000 pounds of savings (dues to go up to 50k) so if you have more than that whats the obvious thing to do to be safe ;-)

Time Magazine

ttm wrote: »

Funiest thing about this whole thing is the way the UK is reacting to it

If you listen to UK Radio (Radio 4 for example) you will hear them complaining that UK investors are moving their money over to Ireland where it is safer.

I don't see much humour in that.

Another intersting point is the Bushes 600 Billion bank bailout amounts to less than 0.6% of US GDP

You're out by about 800%. It's about 5% of America's product I think.

where as if Ireland has to pay out to all the banks then the promise amounts to 300% of Irelands GDP - please feel free to correct me if I got the figures wrong.

They're entirely different plans. Ireland is guaranteeing deposits worth €400bn, the vast majority of which are safe. The US is an asset purchase scheme.

Kama

It's not to bankers.

No, it's not just to the bankers, I'd agree with that.

But to say it's not to the bankers seems patently false.

It's not just deposits iirc, it also includes guarantees for loans made by the banks, at a level of opacity that makes the Paulson Plan look like a clear glass window. The likes of Morgan Kelly argued that this includes toxic property debt that cannot be repaid, relics of our property bubble sitting vacant all the way to Leitrim, our own little overleveraged careless lending and 'failiures of risk analysis'...

Essentially (as I understand it, and I'm not an economist, mind) these liabilities may now be transferred to our sovereign debt, as has been reflected in default-swap trading on the Irish debt jumping up, while default swaps for the banks dropped. Which to me indicates where the risk has moved, if you accept the market as collective intelligence...

I was also at a lecture recently on the costs of the crisis; the lecturer (Honohan) made it clear that we are still in the early stages of this, so taking what we've spent already as the 'cost' seems a naive assumption. If this was a liquidity crisis, maybe. If it's partially or mostly solvency, not a hope.

DubTony

David McWilliams wrote: »

It's not to bankers. They've guaranteed ordinary citizens' deposits in banks for two years. This means if you have €10 in AIB, even if AIB collapse, you'll get your money. It's not to bankers because if AIB were to collapse, it'd be you that loses the €10. The €400bn figure is total amount of savings in these banks. Realistically if AIB were to go broke, they could still sell their branches etc. and recover, say, €8 of your €10. Suddenly the €400bn becomes €80bn. And that's if a bank collapses, which is quite unlikely, for reasons you'll find on other fora on this site. And if a bank collapses, it'd most likely be one of the smaller ones, not AIB or Bank of Ireland who have about 80% of the market between them.

I was at a lecture about this last night. The figure given of the cost of this was about 3% of GDP. So on a scale of 1-10, you're talking about a 2.

eh, do we have a situation here where the (so called) expert from the Economics forum is dumbing it down just a little?
Are we, as a nation of taxpayers, not guaranteeing the borrowings of the banks? This is obviously a whole different kettle than all the banks deposits.
I'd go onto the economics forum to ask the question but I'm afraid you might make up a rule that would prohibit me from thinking that I might have the audacity to ask it.

BTW, your 400 billion figure for bank deposits is approx. €90K for every man woman and child in the country. WOW, didn't we do well.

edit: Anyway, hasn't this got more to do with protecting the banks from a hostile takeover by a foreign bank, e.g. Banco Santander? By guaranteeing the banks in this way the government is helping to keep the banks' share prices "up" and so less likely to be bought by some unruly (ha! imagine using that word to describe a bank) foreigner.

Time Magazine

DubTony wrote: »

I'd go onto the economics forum to ask the question but I'm afraid you might make up a rule that would prohibit me from thinking that I might have the audacity to ask it.

Lol, someone didn't understand what was going on, left without acknowledging a response, and is now trying to get some digs in. Good man. I'll tell you what, I might reply to your post properly when you reply to mine.

Nick_oliveri

DubTony, i see you feel the need to talk about Economics in the particular forum. Dont be afraid to ask questions there. Read Davids reply in the Economics forum. It isnt a question, it is more clarification on the "rules".

DubTony

David McWilliams wrote:

Lol, someone didn't understand what was going on, left without acknowledging a response, and is now trying to get some digs in. Good man. I'll tell you what, I might reply to your post properly when you reply to mine.

I don't care if you reply to my post or not. And as I haven't gone back to your own elite little corner of the internet I won't be replying to yours.

Nick_oliveri wrote: »

DubTony, i see you feel the need to talk about Economics in the particular forum. Dont be afraid to ask questions there. Read Davids reply in the Economics forum. It isnt a question, it is more clarification on the "rules".

Not any more Nick. No need for me to talk about or ask questions about economics on the boards.ie economics forum.

Posters like David McWilliams would prefer if he could have it all to himself and people who agree with him. It wouldn't do to have people who didn't know what they were talking about asking dumb questions. There are, thankfully, plenty of other places on the internet where people like me can ask questions.
Having said all that, his reply to this thread seems to show that he's not really all that.

the_syco

DubTony wrote: »

BTW, your 400 billion figure for bank deposits is approx. €90K for every man woman and child in the country. WOW, didn't we do well.

Look up how much a small business makes. Now look at what a big one makes. Now think how much Aer Lingus puts into the bank. WOW, isn't Aer Lingus doing well? Ah, well, actually, that's just what they have in the kitty. Ya see, SHOCK, HORROR, businesses also put money into banks...

=-=

Or 10,000 people with €400,000 mortgages... that's what? €4,000,000,000 ?

There's probably at least that many new houses built in the last 8 years.