Anglo Fail

bluecatmorgana

I'm not very good at economics so was wondering if anyone could tell me what would have happened if Anglo Irish Bank had failed* 2 years ago? Do you think since they owe the EU so much money that the EU would have insisted the government do something?

I just want to know what would be the worst thing that would happen if we didnt bail out Anglo.





*By failed I think I mean defaulted on their loans to the EU and the like.

digme

(we(ordinary folk)) wouldn't have to pay 50+billion for the banks poker games.

johnnyskeleton

bluecatmorgana wrote: »

I'm not very good at economics so was wondering if anyone could tell me what would have happened if Anglo Irish Bank had failed* 2 years ago? Do you think since they owe the EU so much money that the EU would have insisted the government do something?

I just want to know what would be the worst thing that would happen if we didnt bail out Anglo.

*By failed I think I mean defaulted on their loans to the EU and the like.

Very little money was owed to the ECB (European Central Bank) and unless there was some bizzare reason for the EU itself to set up a deposit account there, you can assume that none was directly owed to the EU.

Mostly the money was owed to customers (often held on deposit in respect of loans recently drawn down) and other banks. Generally money is not borrowed directly from the ECB unless no one else will lend.

If it failed it would have been wound up, the assets sold at whatever value the market would place on them (possibly higher than nama valuations) and the other banks would suffer as, we are told, would "Ireland's reputational value". However, any damage to our reputation would be long since gone because a bank defaulting during a massive world crisis is no big thing.

The other thing that would have happened is that there would have been some transparency as to what exactly Anglo were up to, and all their dodgy loans would be out on the street.

Liam Byrne

There is SOME case to be made that SOME of the deposits could have been important, and even though the Credit Unions have denied government claims that they had anything to do with Anglo, I can imagine that some badly-managed pensions, etc, might have been in there.

So writing those off might have opened a can of worms for someone, and trying to give preference to key depositors (while abandoning others) might have caused legal issues with anti-competitiveness and preferential treatment (since I would assume that all bank clients and creditors would have to be treated equally).

However the fact remains that at the time Anglo had approximately €6bn in deposits, and we have paid at least 4 times that amount to keep it solvent which makes absolutely no sense.

Another solution SHOULD have been found.

There is no logical, fair and transparent reason why this cesspit was given unconditional life support.

Scofflaw

Probably the most irritating feature of the whole thing is that we don't know. As Liam says, there were almost certainly some worms in the can, but probably not enough worms to justify the approach taken - but that's about as good as it gets in terms of precision.

Even if we had let Anglo go bust, there's no guarantee (sorry!) we'd have known - apart from a few obvious cases - what bits of our disaster would have been attributable to Anglo's collapse. That would have involved a massive exercise in forensic accountancy, comparable at the very least to our longer-running tribunals, and about as useful.

The only way in which I can see Anglo as having been systemic is if its demise would have practically killed off our entire developer and banking class - I appreciate that not everybody would see that as a systemic issue, or a bad thing, but a huge chunk of our economy was dependent in turn on that class, and the whole NAMA game of unwinding our banks' bad debt position slowly and opaquely over the next 10-20 years probably required Anglo as a linchpin. Again, I can see that not everybody would see that as a bad thing either, but we do have a day to day need for a solvent domestic banking sector - the economy genuinely won't function without it.

The thing is, though, that that's guesswork too.

cordially,
Scofflaw

Liam Byrne

Scofflaw wrote: »

The thing is, though, that that's guesswork too.

The biggest problem I see is that guesswork is all we have to rely on, since the whole process is so secretive.

Again, that's partially understandable, since if - say - the Government came out and said "well, lads, we actually had all of the future pensions of the country in Anglo" there would be a nightmare scenario of confusion.

However that still doesn't wash when Lenihan & Co come out and say that Anglo had deposits from Credit Unions and the Credit Unions contradict this.

Again, is that Lenihan lying to save his ass, or the Credit Unions lying to maintain confidence ? We don't know.

But someone, somewhere had better start being honest before everyone starts second-guessing everything.

As it is, Lenihan has zero credibility.

And that, combined with the secrecy and lack of accountability, is undermining any chance of peace of mind, while the ridiculous and unjustifiable sums involved are causing anger.

As stated before, this government have made a dire situation a billion times worse because of their choices.

Scofflaw

Liam Byrne wrote:

As stated before, this government have made a dire situation a billion times worse because of their choices

So that would be just 40 quid for Anglo, then, under a different government!? Not totally sure about that...

I suppose it's theoretically possible, though, that dire as the situation seems to be, it's actually worse, and the government are doing a very good job of keeping that information from the markets (and us). Maybe that was why we stumped up the cash for Greece - payment for training sessions.

Again, though, realistically, nobody in a modern economy can actually say where all the tendrils of connection go from a bank into the economy. At a push you could trace it in a small town, but at the national level it's not even remotely conceivable. So while there's a level of secrecy and opacity on top of the limits of knowledge here, the knowledge itself is really quite limited too. No real answer to the OP's question is truly possible - the best even the most knowledgeable can do is going to be at least partly guesswork.

cordially,
Scofflaw

Liam Byrne

Scofflaw wrote: »

So that would be just 40 quid for Anglo, then, under a different government!? Not totally sure about that...

Ah now, I thought I was the master of semantics!!!

In monetary terms, touché.

In terms of the combined damage done by the monetary factor combined with mistrust, anger, unfairness and despair, though, I think I might still be close enough to the truth.

SkepticOne

Winding up Anglo would have involved a process of selling the developer loans on the open market. Whatever money raised would have been used to part pay depositors and bond holders. The subordinated bond holders would have been wiped out but depositors and senior bond holders would have got whatever was raised from the sale of assets. Then the government would have stepped in to compensate retail depositors.

Liam Byrne has pointed out that there was about 6 billion in retail deposits so that would be the maximum exposure to the tax payer in this scenario.

But you have to remember that tat that time the government was pretending to Ireland, the rest of the world and, most importantly, itself that everything was allright with the banking system in Ireland apart from some minor liquidity issues. Therefore allowing something that might cost billions was not politically acceptable.

We went from something small but knowable to something very large but unknowable and this is why we're being punished in the bond markets. When you think about it, it is very similar to the NAMA process.

SkepticOne

Scofflaw wrote: »

Again, though, realistically, nobody in a modern economy can actually say where all the tendrils of connection go from a bank into the economy. At a push you could trace it in a small town, but at the national level it's not even remotely conceivable. So while there's a level of secrecy and opacity on top of the limits of knowledge here, the knowledge itself is really quite limited too. No real answer to the OP's question is truly possible - the best even the most knowledgeable can do is going to be at least partly guesswork.

But every business collapse (and there have been tens of thousands in the last few years) has tendrils that extend in ways that can't be fully known. What we do know is that, the bond market being as it is, in the case of Anglo it was largely risk takers outside the country that have been saved at the expense of the Irish economy. That is why it was most likely for political reasons, either that or simply lack of judgement that led to the rescue of Anglo.

johnnyskeleton

SkepticOne wrote: »

But you have to remember that tat that time the government was pretending to Ireland, the rest of the world and, most importantly, itself that everything was allright with the banking system in Ireland apart from some minor liquidity issues. Therefore allowing something that might cost billions was not politically acceptable.

And of course, while it is not pleasant for most people to think about it, the reactive nature of Irish politics means that if they had let Anglo fail and there were even the slightest repercussions, FG would be hounding them for letting it fail and FF would probably be less popular than they are now.

So FF took the politically soft option on an issue that, at the time, the majority of people were not prepared to even begin to understand. Of course, had FF done a better job previously or even informed people about the dire state of the banks that would have changed matters...

Saadyst

I think it basically came down to saving the bond holders who are mostly external to Ireland. Anglo lent out so much money, that it had to get the money from somewhere to finance all these new developments around the country. So they sought cash from outside the country... and ended up not being able to pay it back.


The thinking is, if the people who invested all this cash into Anglo were not paid back, it would increase the interest on money the government or companies here would pay if they had to borrow money - and/or significantly reduce the potential ability for Ireland to borrow in the future.


And Ireland borrows a lot of money I believe, and has quite a substantial foreign debt.

dan_d

If the money was within the country (ie not from foreign investors/large proportions of it not foreign investment), I wonder would it have been more likely to be let fail.
Course that begs the question - would we have been able to borrow that much money without foreign investors?
I'm guessing the answer is no.

recedite

Saadyst wrote: »

The thinking is, if the people who invested all this cash into Anglo were not paid back, it would increase the interest on money the government or companies here would pay if they had to borrow money

Thats Lenihan's big lie. The idea that a private bank default equates to a sovereign debt default, in its effect on our reputation. The fact that yields on government bonds went up instead of down proves it.

Even if all our pensions were in the bank, does that justify wrecking the economy, borrowing at over 6%, and possibly emptying the national pension reserve fund?
We would have been better off putting the money into a new compensatory pension fund.

Imhof Tank

If Anglo had been allowed to fail on the morning of 29 September the stock markets would have been shorting AIB and BOI within about 5 minutes, prompting a run on AIB and BOI's cash reserves, a refusal by the interbank market to fund their liquidity requirements and the ATMs would have run out of cash within a day or two.

The government would have to have set up some form of national emergency bank overnight and done a deal with ECB for emergency funding (at who knows what financial and policitcal cost) to distribute to the bank's depositors. While they were organising that the looting of the supermarkets would get going.

BingoMingo

Liam Byrne wrote: »

However the fact remains that at the time Anglo had approximately €6bn in deposits, and we have paid at least 4 times that amount to keep it solvent which makes absolutely no sense.

Extract from the audited accounts of Anglo Irish Bank as at 30th Sept 2008

Deposits from Banks - 20.453 Billion
Deposits from Customers - 51.499 Billion

Where does your 6 billion come from ?


Page 33
http://www.wholesaleireland.com/news/wp-content/uploads/2010/03/Anglo-Irish-Bank-2008-accounts.pdf

eden_my_ass

BingoMingo wrote: »

Extract from the audited accounts of Anglo Irish Bank as at 30th Sept 2008

Deposits from Banks - 20.453 Billion
Deposits from Customers - 51.499 Billion

Where does your 6 billion come from ?


Page 33
http://www.wholesaleireland.com/news/wp-content/uploads/2010/03/Anglo-Irish-Bank-2008-accounts.pdf

Do you actually believe any of these figures anymore though? Audited my arse...we've seen what that means in Celtic Tiger Ireland!

BingoMingo

eden_my_ass wrote: »

Do you actually believe any of these figures anymore though? Audited my arse...we've seen what that means in Celtic Tiger Ireland!

Yet you belive the figure of 6 billion then?

Or do you believe what you want to believe cos it suits the argument you are making ?

Without facts people come to the wrong conclusions - simple

eden_my_ass

BingoMingo wrote: »

Yet you belive the figure of 6 billion then?

Or do you believe what you want to believe cos it suits the argument you are making ?

Without facts people come to the wrong conclusions - simple

Um, that was my first comment on the thread so I'm not justifying any argument of my own I meant all figures, the "audited accounts" and the 6 billion...hard to believe anything anymore unless you could sit down and count the beans yourself !

recedite

Imhof Tank wrote: »

If Anglo had been allowed to fail on the morning of 29 September the stock markets would have been shorting AIB and BOI within about 5 minutes, prompting a run on AIB and BOI's cash reserves........

Cash reserves? You mean the inadequate cash reserves? They would have needed a (relatively cheap) government guarantee to cover retail deposits, and that would have forestalled all the other melodramatic stuff.

BingoMingo

You have a point. It is tough to believe anything about this whole saga.
The accounts I show in the link are all we have. Clearly they were flawed as they report a profit of 600 Milion or so which we all know was rubbish.
It is nevertheless reasonable to assume that the amounts stated in the balance sheet for deposits are correct.

Common sense will tell you that 6bn is absurdly low.

My point is this. The poster I quoted said:

"However the fact remains that at the time Anglo had approximately €6bn in deposits, and we have paid at least 4 times that amount to keep it solvent which makes absolutely no sense."

The FACT is that the figure of 6 bn is completely incorrect. Does not just render his argument invalid. It makes a case for why the bailout was a GOOD idea.

In my view this is not the case. In fact I don't know. Here is the truth as I know it:

Lehman Bros was allowed to fail. This caused a snowball effect in the States and othe banks went bust (Morgan Stanley, AIG etc). The US Goverment lost it's nerve and decided to save these. Afterwards Hank Poulson - Treasury Secretary said letting Lehman's fail was a serious error.

All this went on in Sept 2008.

In Ireland the gurus in the Dept of Finance etc., decided that we had to support the banks. At the time the belief was that letting any Irish Bank
fail would cause a run on the banks. No one knew at the time what an unholy mess Anglo really was. The decision was made to give the "blanket Guarantee".

Once this was given the Goverments hands were tied. They effectively owned all the banks. The subsequent nonsense that went on over NAMA,
Bond Holders etc., was total rethoric. Opportunists stirring it up using hindsight and assumptions that they knew would never be tested.

Personally I think the Goverment had no choice but to give the guarantee
in Sept 2008. (virtually every Goverment in the world were propping their banks up).From then on they have been over a barrell and have had no real options but to keep Anglo and the others afloat.

The real issue is. Why did they let us get into this position in the first place ????

They have allowed a situation to develop where an out of control banking system and an out of control property market has enslaved us in debt and destroyed our economy.

Attack them for this because they have no defence.

Argue nonsense about Bond Holders, paying over the odds for NAMA assets,was the guarantee too broad etc., and you cloud the issues. They can argue hypothetical scenarios all day long and leave confusion everywhere. Worse still, make arguments using false data and you give credibilty to their incompetence.

It's fine to say " WE ARE WHERE ARE."

I want to know

"WHY ARE WE HERE?"

wiseguy

PrimeTime mentioned that only 20% of Anglo's deposits are from Irish citizens.
Whatever the value the taxpayers of this country and the country itself are being put on hook for someone else's savings.

Imhof Tank

recedite wrote: »

Cash reserves? You mean the inadequate cash reserves? They would have needed a (relatively cheap) government guarantee to cover retail deposits, and that would have forestalled all the other melodramatic stuff.

Except the scenario is that Anglo would have very dramatically "failed" that very day and the stock market would have been going into meltdown on the other Irish banks - do you really think retail depositors would have been happy with words or fancy talk of limited guarantees from the government against that backdrop? No way - the people would have queing outside the bank branches with wheelbarrows looking for their cash

Bits_n_Bobs

I think in all probability there would of been a run on AIB and BOI had they let Anglo fail, so in a sense it was of systemic importance. Course there might not of been a run on them, but it would of been a massive bet to make, so they probably took what appeared at the time to be a cautious decision.

wiseguy

Imhof Tank wrote: »

Except the scenario is that Anglo would have very dramatically "failed" that very day and the stock market would have been going into meltdown on the other Irish banks - do you really think retail depositors would have been happy with words or fancy talk of limited guarantees from the government against that backdrop? No way - the people would have queing outside the bank branches with wheelbarrows looking for their cash

Now the whole country is on a course to failing :rolleyes:

If Anglo failed following your reasonining, then the EU/ECB would have had to step in to prevent the whole euro system from collapsing {as illustrated in Greece}, as they will have to anyways, just a matter of time.

Imhof Tank

wiseguy wrote: »

Now the whole country is on a course to failing :rolleyes:

If Anglo failed following your reasonining, then the EU/ECB would have had to step in to prevent the whole euro system from collapsing {as illustrated in Greece}, as they will have to anyways, just a matter of time.

Exactly - thats why letting it fail in September 08 wasnt an option.

This was at a time when the collapse of the euro project would have been unthinakable.

2 years later, with the benefit of hindsight, after Greece and us, if the same situation presented itself nothing would be ruled out including ditching the euro.

toxicity234

If Anglo fails, it would have destroyed AIB and BOI.
On the Night in Question 3 important thing happened

1. Anglo Lie through there teeth to get Help. (This cannot be forgotten).

2. AIB and BOI were in this meeting as well. They had to have know Anglo problems and how deep they were, but they knew if they open there month Anglo would have sunk them as well.
(If one Irish bank fails, No Irish bank gets money from the markets)

3. The government were in an impossible position, If they did bail Anglo out. They have bail everyone out or have to explain it in court. If they didn't bail Anglo out and it fails them no banks in the country get money from the market of a couple of years and worse still the Euro collapse.

Did The Government Do the right thing? Jesus No.

Could it have being Worse? Yes, We could have sparked a collapse Europe wide.

Could it have being Better? Yes Anglo could have told the truth and any plan would have being better worked out. But I have yet to see a plan that would have being any thing other than a major blood letting.

Who was to blame? Anglo they cause this by giving out loans that would bring down the country, the other bank followed like sheep in a heap. There like a golfer who went around 18 hole arrives back and there scorecard said they got 18 hole in one. The regulation that the experts say should have being done in the banks before the bust is not done in any country in the world. No Business in there right mind would let you do the things that experts say need to be done to make sure the bank were solvent. (at the time now the state owns the bank it can do whatever it wants)

Is there a case for Fraud against the banks. Should be, the bank mostly Anglo Lie to get the Help they need to stay open.

How do we get out of this? The same way you get out of any thing one step at a time. High taxes better and more target spending.

Can the country afford to get out of this hole were in. Yes. But Its going to be a return to the bad day for a while.

I leave you with this. I’m a BOI customer 4 years ago I found a house I wanted to buy it was 357000. I applied for a mortgage no problem I got it. After I got it the estate agent told me that someone have bid 420000 on the house. I knew the repayments would be affordable for me at that moment but just. So I ask the bank and it took 20 mins to get it approved.
I went away for 24 hour and though to myself that if anything happen to my job I be in trouble. I with due my offer and told the bank I didn’t want the loan.
Last week I was out of the country for a few weeks my BOI account went overdrawn by 55 euro for 12 days, I was charged 44 euros for being overdrawn.
I know what I think of that bank. I have closed my account and move to my local Credit Union.

Liam Byrne

Bits_n_Bobs wrote: »

I think in all probability there would of been a run on AIB and BOI had they let Anglo fail

Why ?

If Bord Gais Energy goes bust in the morning, people switch to ESB or Airtricity.

Most people in Ireland had nothing to do with Anglo, so why would an Anglo fail have caused a run ?

Re the €6 billion - it's been mentioned a few times in various reports and interviews, so I took it as at least being representative. That said, when it comes to the shady dealings of Anglo, I guess you can't believe a word you hear.

The bottom line is that the secrecy of who has money where is part of the problem; if we knew who we were bailing out and why (and how much, exactly) then we could choose, instead of having shady, lying vested interests decide where our hard-earned cash goes.

BingoMingo

Liam Byrne wrote: »

Re the €6 billion - it's been mentioned a few times in various reports and interviews, so I took it as at least being representative. That said, when it comes to the shady dealings of Anglo, I guess you can't believe a word you hear.

Agreed - I would'nt be surprised if you heard it from any or some of these:

Pat Kenny, Miriam O'Callaghan, Vincent Brown, Joe Duffy,David McWilliams,
Joan Burton, Richard Bruton, Eamon Gilmore.

To name but a few.

Scofflaw

Liam Byrne wrote: »

Why ?

If Bord Gais Energy goes bust in the morning, people switch to ESB or Airtricity.

Most people in Ireland had nothing to do with Anglo, so why would an Anglo fail have caused a run ?

Confidence in the banks, both by the markets and by people in general. Hearing that one bank collapsed is enough to start a panic - that's without those who've failed to distinguish between AIB and Anglo. More importantly, perhaps, holdings by other Irish banks in Anglo.

Liam Byrne wrote: »

Re the €6 billion - it's been mentioned a few times in various reports and interviews, so I took it as at least being representative. That said, when it comes to the shady dealings of Anglo, I guess you can't believe a word you hear.

The bottom line is that the secrecy of who has money where is part of the problem; if we knew who we were bailing out and why (and how much, exactly) then we could choose, instead of having shady, lying vested interests decide where our hard-earned cash goes.

Don't know whether you've seen this: http://thestory.ie/2010/04/20/anglo-bondholders/

cordially,
Scofflaw

hobochris

Would a better solution not have been, put a state guarantee over BOI and AIB, set up an assistance fund(like the EU did for dell) and let Anglo go to the wall.

Anyone who loses out from Anglo going to the wall can apply to the Anglo assistance fund, with bondholder applications being refused as they made a bet and lost, but deposits being taken out of the fund.

BingoMingo

Liam Byrne wrote: »

Most people in Ireland had nothing to do with Anglo, so why would an Anglo fail have caused a run ?

Liam - There is a point that no one ever raises about the bank guarantee.

Before it was given the Irish Government had already guaranteed all depositors to a max of €100,000 per deposit.!

If Anglo had been let fail the depositors - ALL 50,000,000,000 euros worth of them would have come knocking on Lenehan's door looking for their money.

At the time estimates suggested that the vast bulk of this 50bn was in accounts with a balance of 100K or less. I don't know if this is true but you can bet that the cost to the Irish Exchequer would have been enormous.

The blanket guarantee was given in many ways simply to ensure that the already existing guarantees would not get called in!

This means that even if depositors in other banks did not panic (a ludicrous assumption anyway) - the effect would have still been a massive cost to the Irish Taxpayer.

Let me tell you that I had a deposit in BOI (my life savings) at the time and on the day the global bank guarantee was given I had a meeting planned with Barclays in Belfast to transfer all my deposit out of this country.

Have no doubt - I was panicing and so was everyone else.

Imhof Tank

Liam Byrne wrote: »

Why ?

If Bord Gais Energy goes bust in the morning, people switch to ESB or Airtricity.

Most people in Ireland had nothing to do with Anglo, so why would an Anglo fail have caused a run ?

Re the €6 billion - it's been mentioned a few times in various reports and interviews, so I took it as at least being representative. That said, when it comes to the shady dealings of Anglo, I guess you can't believe a word you hear.

The bottom line is that the secrecy of who has money where is part of the problem; if we knew who we were bailing out and why (and how much, exactly) then we could choose, instead of having shady, lying vested interests decide where our hard-earned cash goes.

An anglo fail would have caused international stock market speculators to take short positions on the other irish banks, reducing their share prices to 0.1 cent, making it impossible for them to borrow money or refinance their existing borrowings on the inter bank market. People would have (correctly) feared the possibility of AIB and BOI running out of money and a run would have followed very quickly.

Sure the Joe Duffy crowd were withdrawing savings weeks before 28 September. People dont have money being minded by Bord Gais or EBS or Airtricity, theres a completely different psychology at play. There would have been sheer panic on the streets.

Imhof Tank

hobochris wrote: »

Would a better solution not have been, put a state guarantee over BOI and AIB, set up an assistance fund(like the EU did for dell) and let Anglo go to the wall.

Anyone who loses out from Anglo going to the wall can apply to the Anglo assistance fund, with bondholder applications being refused as they made a bet and lost, but deposits being taken out of the fund.

For the sake of the other Irish banks, something big had to be done that night - a spectacular if you will - and while with the benfit of hindsight however your plan sounds good there is no way of knowing whether the markets/ depositors would have been satisfied with that form of state guarantee.

Whether or not a guarantee which did not include the anglo bondholders would have stopped a run on AIB/BOI, there is also the fact that Europe didnt want a eurozone bank failing because of the effects they felt it would have on the euro currency system, so that meant Anglo and its bondholders had to be included

wiseguy

BingoMingo wrote: »

Liam - There is a point that no one ever raises about the bank guarantee.

Before it was given the Irish Government had already guaranteed all depositors to a max of €100,000 per deposit.!

If Anglo had been let fail the depositors - ALL 50,000,000,000 euros worth of them would have come knocking on Lenehan's door looking for their money.

At the time estimates suggested that the vast bulk of this 50bn was in accounts with a balance of 100K or less. I don't know if this is true but you can bet that the cost to the Irish Exchequer would have been enormous.

The blanket guarantee was given in many ways simply to ensure that the already existing guarantees would not get called in!

This means that even if depositors in other banks did not panic (a ludicrous assumption anyway) - the effect would have still been a massive cost to the Irish Taxpayer.

Let me tell you that I had a deposit in BOI (my life savings) at the time and on the day the global bank guarantee was given I had a meeting planned with Barclays in Belfast to transfer all my deposit out of this country.

Have no doubt - I was panicing and so was everyone else.

1. How much of this 50 billion was dud? this is the same Anglo moving billions about to make itself appear good :rolleyes:

2. We are spending 29-34 billion directly (this number keeps increasing BTW) on Anglo and another 30 billion indirectly via NAMA, thats more than 50 billion

3. I went to great length in a parallel thread to argue that if Anglo triggered a bank run the EUrozone/ECB would have had to step in with a guarantee and eurozone wide deposit insurance scheme (similar to FDIC in US) in order to prevent a run

4. If Anglo was allowed to fail then all its assets would have been sold and liquidated, since NAMA claims it can make recover a good chunk of the asset value even afted discounts, thats still few dozen billion that could have been used in a liquidation to pay depositors

5. Government could have force moved accounts and instituted tight controls as last measure


Whats ironic is that 2 years later, there is more chances of bank run as public is completely loosing faith in this govt and banks, and of course we have a 1 in 3 chance of default in next 5 years.
There is no way on earth anyone can justify not letting Anglo fail, they were not a systematic bank in any sense and their failure would not have been the end of our economy, I am so bloody sick of scaremongering.

BingoMingo

wiseguy wrote: »

I am so bloody sick of scaremongering.

I am sick of people coming up with solutions that assume we can just ignore the laws that prevail in this country. That assume the rights of creditors, depositors bond holders etc., can be totally ignored just because they themselves are not a creditor, bond holder or depositor.
Guarantees by goverments can be reneged on at the drop of a hat.


Look at the guy challenging the NAMA thing in the High Court. Why don't the Goverment tell him to sod off?. "We can do what we like"

Reason is he has rights and (in a civilized democracy) you cannot ignore peoples right to recourse to the law. Yet we are supposed to believe we can
"burn the bond holders" and they will just shuffle away quietly and say "oh well, better luck next time".

A massive run on the banks would have occurred if Anglo failed - It would have cost more than this state could afford.

Anyone who fails to understand this lives in a cookoo land that resembles the good old Celtic Tiger years!

wiseguy

BingoMingo wrote: »

I am sick of people coming up with solutions that assume we can just ignore the laws that prevail in this country. That assume the rights of creditors, depositors bond holders etc., can be totally ignored just because they themselves are not a creditor, bond holder or depositor.
Guarantees by goverments can be reneged on at the drop of a hat.


Look at the guy challenging the NAMA thing in the High Court. Why don't the Goverment tell him to sod off?. "We can do what we like"

Reason is he has rights and (in a civilized democracy) you cannot ignore peoples right to recourse to the law. Yet we are supposed to believe we can
"burn the bond holders" and they will just shuffle away quietly and say "oh well, better luck next time".

A massive run on the banks would have occurred if Anglo failed - It would have cost more than this state could afford.

Anyone who fails to understand this lives in a cookoo land that resembles the good old Celtic Tiger years!

I've been thru' this already today

BingoMingo

wiseguy wrote: »

1. How much of this 50 billion was dud? this is the same Anglo moving billions about to make itself appear good :rolleyes:

2. We are spending 29-34 billion directly (this number keeps increasing BTW) on Anglo and another 30 billion indirectly via NAMA, thats more than 50 billion

3. I went to great length in a parallel thread to argue that if Anglo triggered a bank run the EUrozone/ECB would have had to step in with a guarantee and eurozone wide deposit insurance scheme (similar to FDIC in US) in order to prevent a run

4. If Anglo was allowed to fail then all its assets would have been sold and liquidated, since NAMA claims it can make recover a good chunk of the asset value even afted discounts, thats still few dozen billion that could have been used in a liquidation to pay depositors

5. Government could have force moved accounts and instituted tight controls as last measure


Whats ironic is that 2 years later, there is more chances of bank run as public is completely loosing faith in this govt and banks, and of course we have a 1 in 3 chance of default in next 5 years.
There is no way on earth anyone can justify not letting Anglo fail, they were not a systematic bank in any sense and their failure would not have been the end of our economy, I am so bloody sick of scaremongering.

1. How much of this 50 billion was dud? this is the same Anglo moving billions about to make itself appear good .

After 2 years the only bit of this that was exposed as being dodgey was 1.4bn from ILP but regardless - The Govt had to work with the figures they had. Remember too - 50bn was just Anglo the other 2 had another
200bn of deposits between them.

2. We are spending 29-34 billion directly (this number keeps increasing BTW) on Anglo and another 30 billion indirectly via NAMA, thats more than 50 billion.

29bn-34bn Is mostly down the toilet. The NAMA money will be recovered by sale of the assets and/or the levy. It is wrong to add the 2 numbers together as one is wasted money and the other is buying an asset. Leave it to Prime Time to do dodgey accounting.

3. I went to great length in a parallel thread to argue that if Anglo triggered a bank run the EUrozone/ECB would have had to step in with a guarantee and eurozone wide deposit insurance scheme (similar to FDIC in US) in order to prevent a run

Sure your thread was wonderful. It is all hindsight. We are were we are.
There were a million ways of doing things. I'm sure the govt would have
done some things differently if they knew how bad things were in Anglo.
If your point is that the Goverment are muppets then you get no argument from me.

4. If Anglo was allowed to fail then all its assets would have been sold and liquidated, since NAMA claims it can make recover a good chunk of the asset value even afted discounts, thats still few dozen billion that could have been used in a liquidation to pay depositors

Now you are claiming that the Nama assets have value. Why write the cost off in point 2?

5. Government could have force moved accounts and instituted tight controls as last measure.

Don't get this at all.


Whats ironic is that 2 years later, there is more chances of bank run as public is completely loosing faith in this govt and banks, and of course we have a 1 in 3 chance of default in next 5 years.
There is no way on earth anyone can justify not letting Anglo fail, they were not a systematic bank in any sense and their failure would not have been the end of our economy, I am so bloody sick of scaremongering.

You reckon the chances of a bank run have increased.
You feel we have a 1 in 3 chance of sovereign default in 5 years.
You are sick of Scaremongering.

Is this an oxymoron?

Sadly I happen to agree with you.

Liam Byrne

BingoMingo wrote: »

I am sick of people coming up with solutions that assume we can just ignore the laws that prevail in this country. That assume the rights of creditors, depositors bond holders etc.

I'm sick of it too. A bankrupt company, proven to engage in dodgy and illegal practices.......the rights of creditors, depositors and bond-holders should be the same as any other dodgy and bankrupt outfit.

There is no obligation on me or anyone else in this country to pay for their corruption and incompetence.

As for your earlier claim re the earlier bank guarantee forcing the blanket one, well that's just living proof that the Government didn't do their job on EITHER.

This government is lurching from one monumental cock-up to the next, each one making life worse for ordinary people.

Liam Byrne

Scofflaw wrote: »

Confidence in the banks,

There is no confidence in the banks......definitely not in Anglo, and the other two don't seem particularly worthy of confidence either.

Of course, Lenihan wants to "return AIB to its former glory", whatever the hell that was......probably around the time they wrote off Haughey's debt and caused us to pay an insurance levy.

BingoMingo

Liam Byrne wrote: »

I'm sick of it too. A bankrupt company, proven to engage in dodgy and illegal practices.......the rights of creditors, depositors and bond-holders should be the same as any other dodgy and bankrupt outfit.

There is no obligation on me or anyone else in this country to pay for their corruption and incompetence.

As for your earlier claim re the earlier bank guarantee forcing the blanket one, well that's just living proof that the Government didn't do their job on EITHER.

This government is lurching from one monumental cock-up to the next, each one making life worse for ordinary people.

Fully Agree - and it is so true that we don't need to make false arguments to support our case.

If we do so it makes us look as dodgey as them. To me the biggest injustices that have occured in this whole saga are:

1. No one is in Jail
2. The Goverment are still in power

Everything else is just BS. And the more we subscribe to it the more we play their little game. Has anyone noticed how the opposition have cooled off on
the Bond Holders issue. - Suudenly it has dawned on them - The world is watching you! - Soon it might be you who has to do the things you are saying you
will do.

In the case of point 2 I know the other muppets are no better but that's not the point. We need to change our political system radically. A Nation gets the politicians it deserves. We have shown them that we are prepared to accept incompetent morons running our country. Self serving corrupt individuals who can BS their way out of any corner.

I saw decades where every election the highest poll went to Charles Haughey. When he died he got a state funeral. Tony Gregory died around the same time and his death was just a footnote.


Here is a link to the first part of "Freefall" which covers this saga (I think) quite impartialy. To hell with Peig. This should be put on the Leaving Cert
curriculum for the next 50 years.

http://www.youtube.com/watch?v=bdru9kVDvag&playnext=1&videos=fbBPsAdqXDk&feature=mfu_in_order

Yitzhak Rabin

Given that no one has ever revealed who the infamous bondholders are, and the credit unions have denied they were bondholders... I wonder who they were, that made Anglo so 'systemic'.

My guess is, given the closeness between the government and Seanie Fitz and Fingers et al, isn't it likely, at some point, perhaps at one of the Galway tent piss ups, that the government were convinced to invest the pension reserve fund with Anglo. At the time Anglo were offering phenomenal rates, and given the levels of delusions in government, it would have seemed like a great thing to do back in say, 2003. It would also explain why Bertie and his pack of clowns were desperately trying to keep talking up the property bubble.

Because if the bondholders, are just international investors, then we are in a crazy situation, whereby, we are paying international investors 6-7% for cash, in order to inject it into Anglo, so we can in turn give it back to, very likely, the same people.

BingoMingo

yekahs wrote: »

Given that no one has ever revealed who the infamous bondholders are, and the credit unions have denied they were bondholders... I wonder who they were, that made Anglo so 'systemic'.

My guess is, given the closeness between the government and Seanie Fitz and Fingers et al, isn't it likely, at some point, perhaps at one of the Galway tent piss ups, that the government were convinced to invest the pension reserve fund with Anglo. At the time Anglo were offering phenomenal rates, and given the levels of delusions in government, it would have seemed like a great thing to do back in say, 2003. It would also explain why Bertie and his pack of clowns were desperately trying to keep talking up the property bubble.

Because if the bondholders, are just international investors, then we are in a crazy situation, whereby, we are paying international investors 6-7% for cash, in order to inject it into Anglo, so we can in turn give it back to, very likely, the same people.

Conspiracy Theory - Watch my LIPS

Bail Out Essential cos we are trapped in a corner by Guarantees
Nothing more complicated about it. Which part of the word Guarantee do you have difficulty in understanding?

I don't care how many babies Fianna Fail had with Seannie

I want one of em out of office and the other in jail

Scarab80

yekahs wrote: »

Given that no one has ever revealed who the infamous bondholders are, and the credit unions have denied they were bondholders... I wonder who they were, that made Anglo so 'systemic'

As BingoMingo has pointed out Anglo was a systemic bank not because of it's importance to the economy but because of the effect an Anglo bankruptcy would have had on the other irish banks.

From the Honohan Banking Report, much demanded but seemingly never read....

A question frequently raised is whether it was correct to consider Anglo Irish Bank to be a systemically important bank. If not, it could be argued that its bankruptcy should be tolerated, even if losses were imposed on uninsured depositors and other claimants. To be sure, this bank was the third largest Irish-controlled bank in terms of its total balance sheet, and for a time in 2008 even became the largest bank by market capitalisation on the Irish Stock Exchange. But it was far from being a household name, had a branch presence in only six cities in Ireland and measured by employment and number of borrowers, was outstripped by several other institutions. Inasmuch as it had grown twentyfold in a decade, the Irish economy had prospered without much overall contribution from it in the 1990s. It was not central to the payments system or involved in a large range of complex money market transactions with other financial market participants. Nevertheless, as a recent paper prepared for the G20 clearly ecognises, a judgment about systemic importance ―is time-varying depending on the economic environment... It must also be conditioned by its purpose—whether it will be used for example, to define the regulatory perimeter, for calibrating prudential tools including the intensity of oversight, or to guide decisions in a crisis.‖ (IMF et al., 2009) It is the final aspect that is most important for the current discussion.

Three criteria are generally considered according to which a financial institution can be viewed as systemically important, namely: size, inter-connectedness, and substitutability. The preceding discussion suggests that Anglo Irish Bank would be unlikely to satisfy the substitutability criterion (i.e. is there another institution that could perform the same functions) and might not even satisfy the size criterion, even at its peak. But its interconnectedness vis-a-vis the Irish banking system changes the story. Given what was happening in the US and European banking markets around that time, the survival of even long-established and relatively highly rated banks (such as RBS, HBOS, Lloyds, Bradford and Bingley, Washington Mutual, Fortis, Dexia and others) was clearly in question and rescue packages of one sort or another had to be put in place to protect their depositors. Under these circumstances a default by a €100 billion bank such as Anglo Irish Bank would undoubtedly have put funding pressure on the other main Irish banks via contagion, given the broad similarities in the type and geography of their property-related lending, their common implicit reliance on the backing of the Irish State, and even name confusion. In this sense, the systemic importance of Anglo Irish Bank at that time cannot seriously be disputed.

BingoMingo

Scarab80 - In Other words -

When Dr Honahan says

"In this sense, the systemic importance of Anglo Irish Bank at that time cannot seriously be disputed"

he is essentially in agreement with me when I say

"A massive run on the banks would have occurred if Anglo failed - It would have cost more than this state could afford.
Anyone who fails to understand this lives in a cookoo land that resembles the good old Celtic Tiger years!"

Can I be Govenor of the Central Bank Then ?

Scarab80

BingoMingo wrote: »

Can I be Govenor of the Central Bank Then ?

Would you want to be?

BingoMingo

Scarab80 wrote: »

Would you want to be?

I am interested in the Truth and wherever that leads me. Arguments
based on lies are doomed to fail. So Far, No one has come back at me with a single - verifiable FACT!

If they do I will willingly admit it " Yes I am Wrong! - Thank you for making it clearer for me"

Here is DR. Honahan explaining to Vincent Browne why it is a good idea to
tell the international media one thing and the local media another thing.
In other word let's all BS at little bit more and hope we can worm our way out cos the rest of the world are GOBSHI*es!

http://www.youtube.com/watch?v=TMN3VqpJ5jk

I Have Got News for you!.

They are not GOBSHI*es.

However, They know full well that we ARE the GOBSHI*es.

We need to convince them.

"Yes we were GOBSHI*es. We have behaved like GOBSHI*es.
If you provide continued financial support we promise to stop being GOBSHI*es."

Watching this video I would not trust Honahan to make a cup of coffee for me!
It tells me that our leaders have learned nothing from this crisis.

Thank you for your support but my ideas do not need the endorsement of
people who say things that they think the people need to hear.

Frankly I Woudn't trust that prick to wash the car.

The truth has no need
of propoganda and maybe you should get off their wagon. Wake up and smell the real coffee.
Stop revering these guys cos they say something that is moderately intellegent. Think for Yourself.

"given the broad similarities in the type and geography of their property-related lending, their common implicit reliance on the backing of the Irish State, and even name confusion."

This Means, People of Ireland, you are all so stupid you can't tell the difference between AIB and Anglo. We had to bail Anglo out in case you got confused and thought we were talking about AIB. !!

4FS.- It Means "We had to spend 29Bn cos our country is populated by idiots who can't spell".

This is,(according to Vincent Browne) Ireland's most powerful man talking. God Help Us.

Sorry Scarab80 but you picked the wrong muppet there!! He is definitely on my No Fly List.

Scofflaw

Liam Byrne wrote: »

There is no confidence in the banks......definitely not in Anglo, and the other two don't seem particularly worthy of confidence either.

Of course, Lenihan wants to "return AIB to its former glory", whatever the hell that was......probably around the time they wrote off Haughey's debt and caused us to pay an insurance levy.

There's lack of confidence, and there's lack of confidence - or, to put it another way, there's "I'm not sure they're a very well run business" and there's "OMG I'd better grab my money right now!". The former causes a share price fall, the latter causes something else.

cordially,
Scofflaw

Liam Byrne

Scofflaw wrote: »

There's lack of confidence, and there's lack of confidence - or, to put it another way, there's "I'm not sure they're a very well run business" and there's "OMG I'd better grab my money right now!". The former causes a share price fall, the latter causes something else.

Well you've hit on an interesting point.

Ordinary people would be expected to grab their money now, for two reasons : firstly, it's THEIR money, entrusted to a bank to look after it properly, and secondly because they're not expert investors.

Expert investors take calculated risks and have come across badly-run (I love the way you soften the truth yet again by phrasing it as "not very well run", given what we've heard) businesses before, and have had to deal with it as part of their chosen professional occupation.

Thirdly, the ordinary people's money is all they have, as distinct from any reasonably competent investor who spread their risk.

Unfortunately it's the expert investors who are being looked after, while those whose money is at unwarranted risk are having to pay more money to ensure that they might at some stage get their original money back.....not only that, but they didn't choose to do this, and gave no-one the authority to act unilaterally on their behalf.

ei.sdraob

Speaking of lack of confidence

I have no confidence left in the government and the banking system (ah sure they the same now anyways as far as anyone is concerned). As seen from comments on this site this is quite a common occurrence among most posters.

Funny how measures to save own skin "increase confidence" are doing the opposite in the last 2 years

* The confidence in this country (the banks and the country are now seen as one) by outside investors is at all time low as seen by our record bond interest rates and the fall of a cliff in foreign investment
* The confidence of the government by its people is at all time low as seen by all the polls
* The confidence in the banks is very shakey, I never heard so many people worry and talk about their savings in Irish banks, definite fear out there in the last month. Each month brings more bad news making the previous worst case scenarios seem wildly optimistic. No one knows how deep the rabbit hole goes.

I do not claim to speak for everyone but thats how I feel from things are going.

Scofflaw

tommol wrote: »

can anyone supply the addresses of the following scum of the earth. apparently the govt cant get the assets of their wives but maybe somebody can!
Seamus Ross, of Menolly Homes
Gerry Gannon
Joe O'Reilly of Dundrum Shopping Centre
Liam Carroll

The answer is no. You are permabanned, and anyone who answers that question will likewise be permabanned. Incitement to crime is not acceptable, and I have no idea why you thought it was.

moderately,
Scofflaw