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Indefinite Extension of the Bank Guarantee Scheme

  • 19-06-2009 4:50pm
    #1
    eamonnm79
    Closed Accounts Posts: 459 ✭✭


    The following was posted by Joan Burton TD on Irisheconomy.ie on Wednesday

    'Last Friday the Government published the Financial Measures (Miscellaneous Provisions) Bill 2009.

    It is due to be debated in the Dáil next week.

    Amongst other things, this Bill will allow for the extension of the bank guarantee indefinitely by ministerial order (i.e. without further recourse to the Dáil). The Minister for Finance had indicated in his most recent budget speech that the guarantee would be extended for up to 5 years on a limited basis.

    What do people think of this further widening of the original guarantee.'

    ovet proposal in Bill due before Dail next week to amend guarantee law to allow extension of guarantees beyong Sept 2010 by Ministerial Order. Would be interested in hearing reaction of website participants to this further widening of original guarantee.

    Given part of the FG solution seems centred on actions taken once the Guarantee lapses, I would be interested in opinions from them.


Comments

  • #2
    Économiste Monétaire
    Closed Accounts Posts: 2,208 ✭✭✭Économiste Monétaire


    The government are getting paid €500 million for the guarantee each year (?), that could be a reason :pac:.


  • #3
    eamonnm79
    Closed Accounts Posts: 459 ✭✭eamonnm79


    Économiste Monétaire wrote: »
    The government are getting paid €500 million for the guarantee each year (?), that could be a reason :pac:.

    500million to guarantee 400 billion per year works out that the government recons the chances of it being called in are less than 800/1.

    Dan O'Brien recons the chances of the guarantee being called in this year is 15% or around 7/1 or about 110 times more likey.

    So 500million is paultry compared to the risk they are insuring.


  • #4
    Économiste Monétaire
    Closed Accounts Posts: 2,208 ✭✭✭Économiste Monétaire


    It was meant as a facetious post rather than something serious :); government being so desperate for revenue, et cetera. Obviously you have to take out the cost of greater interest payemnts on a given level of government debt and the cost to the economy, overall, from rising long bond yields. I'm not sure where O'Brien is getting that implied point probability from, imputed via the raw difference in CDS pre- and post-guarantee :confused:. More likely it was just pulled out of his arse.


  • #5
    eamonnm79
    Closed Accounts Posts: 459 ✭✭eamonnm79


    Économiste Monétaire wrote: »
    It was meant as a facetious post rather than something serious :); government being so desperate for revenue, et cetera. Obviously you have to take out the cost of greater interest payemnts on a given level of government debt and the cost to the economy, overall, from rising long bond yields. I'm not sure where O'Brien is getting that implied point probability from, imputed via the raw difference in CDS pre- and post-guarantee :confused:. More likely it was just pulled out of his arse.

    55 % of statistics are made up on the spot! :D
    "Every one knows Economists make predictions just to make Weather men look good" -Rupert Murdock :D


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