who is actually to blame for the unconditional bank guarantee...

jimmycrackcorm

The unconditional guarantee given on 29/10/2008 was announced by Brian Lenihan to cover €485 billion in possibly liabilities. Given that BL nor anyone else in the cabinet has any qualifications in finance, how can it be possible that they thought this was a good idea; unless of course they got guidance from the civil service. Perhaps they got a menu of options to choose from, but my guess is that they got a recomendation and rationale from the dept. of finance mandarins and they accepted that. I think it is important that we understand how this fundamental decision was made, firstly because it was grossly incorrect, but also, I believe that an alternative government would have made the same decision. It's a reasonable assumption given if you put someone without an area of expertise in charge of that are then they simply don't have the competence to make decisions and instead rely on those beneath them to provide the solutions. We would not have had IMF intervention if we had not tied ourselves to the private banks so deeply. Without knowing how these decisions are arrived at, there is little point in electing an alternative government who also a collection of teachers, publicans, and barristers seemingly guided by blameless advisors.

yosemite_sam

jimmycrackcorm wrote: »

The unconditional guarantee given on 29/10/2008 was announced by Brian Lenihan to cover €485 billion in possibly liabilities. Given that BL nor anyone else in the cabinet has any qualifications in finance, how can it be possible that they thought this was a good idea; unless of course they got guidance from the civil service. Perhaps they got a menu of options to choose from, but my guess is that they got a recomendation and rationale from the dept. of finance mandarins and they accepted that. I think it is important that we understand how this fundamental decision was made, firstly because it was grossly incorrect, but also, I believe that an alternative government would have made the same decision. It's a reasonable assumption given if you put someone without an area of expertise in charge of that are then they simply don't have the competence to make decisions and instead rely on those beneath them to provide the solutions. We would not have had IMF intervention if we had not tied ourselves to the private banks so deeply. Without knowing how these decisions are arrived at, there is little point in electing an alternative government who also a collection of teachers, publicans, and barristers seemingly guided by blameless advisors.

Brian Lenihan, it is written all over his face but he won't admit it. He should have consulted with the IMF immediately when the chancers landed at his door 2 years ago, the IMF are experienced in dealing with such a mess.

Hayte

This is the 85 billion euro question. Its one thing to guarantee a bank when you push for full disclosure and transparency so you know exactly how much to write on the cheque.

Its a whole other matter to hand over a blank cheque.

Bob_Latchford

Hayte wrote: »

Its a whole other matter to hand over a blank cheque.

A blank cheque that he thought would never be cashed. Would give that to very very few people. He gave it to a bunch of gamblers and liars in Irish banks.

They must have thought christmas had come early.

Didnt Morgan Stanley (or some investment bank) advice against the blanket guarentee?

Hayte

yosemite_sam wrote: »

Brian Lenihan, it is written all over his face but he won't admit it. He should have consulted with the IMF immediately when the chancers landed at his door 2 years ago, the IMF are experienced in dealing with such a mess.

I wouldn't put a huge deal of faith in the IMF. They have a history of being wrong as often they are right which technically means that you could flip a coin on their decisions and you would just as much chance of success. It was the IMF who assessed that the hyperinflation of the Zimbabwe dollar warranted government wage restraint. I swear to god you couldn't make this up. We are talking wheelbarrows full of notes to pay for a loaf of bread. We are talking inflation so fecking huge that the number on their bank notes needed an extra 12 zeros added to it.

M cebee

out of interest-who was right all along?

how many of these economists?i feel like i know them all personally now:)
or are they making it up as they go along with the benefit of hindsight?


the labour party?didn't they vote against it

snubbleste

Well, we are to blame. We elected a parliament in 2007 which formed a government to make decisions on our collective behalf.

thebaldsoprano

jimmycrackcorm wrote: »

We would not have had IMF intervention if we had not tied ourselves to the private banks so deeply.

I wouldn't be so sure about that. The Government spent 19 billion more than its tax revenue last year, excluding bailout money. At that rate it wouldn't take long for the credit card to max out. I'm starting to think that we should have gone down Iceland's route - let mismanaged banks fail and get the IMF in to sort out our mismanaged Government. There would have been some pain, but we'd now be over the worst of it and we'd no longer have a scenario where the Government is being used to serve the interests of banks, developers and PS unions at taxpayers' expense.

jdivision

Morgan Kelly, Peter Matthews and Karl Whelan have been pretty much right all the way through. David McWilliams has latched on to things but was wrong so often in the past can't be taken seriously.

keithclancy

snubbleste wrote: »

Well, we are to blame. We elected a parliament in 2007 which formed a government to make decisions on our collective behalf.

Everone voted Fianna Fail becuase they thought they'd keep the party going.

M cebee

ya-peter matthews i know him from VB tonite

what about the rest of VBs crew and the great man:pac: himself

jdivision

jdivision wrote: »

Morgan Kelly, Peter Matthews and Karl Whelan have been pretty much right all the way through. David McWilliams has latched on to things but was wrong so often in the past can't be taken seriously.

no way man Mc Williams is so far ahead of the posse it seems he cant be taken seriously thats all that is!

He was warning about the property bubble when it was beginning and all the way though

he warned about the banks before it went wrong

he was on about leaving the euro and only now is it beginning to make sense to even some people

Bob_Latchford

Who was right and who was wrong is a bit of a red herring though. Investment should be proportionate to the risk involved.

The insolvancy of the Irish state should be so onerous that no risk should be attached to it. The guarentee should never have been unconditional

Lenihan was cavalier and reckless even if it turns out the banks were liars and frauds

irishh_bob

yosemite_sam wrote: »

Brian Lenihan, it is written all over his face but he won't admit it. He should have consulted with the IMF immediately when the chancers landed at his door 2 years ago, the IMF are experienced in dealing with such a mess.

its obvious that the EU were leaning heavily on lennehan to prevent any banks from failing for fear of contagion , unfortunatley for us , lennehan was more worried about what angela merkey and nicolas sarkozy thought than mr and mrs irish tax payer

thebaldsoprano

Deleted User wrote: »

no way man Mc Williams is so far ahead of the posse it seems he cant be taken seriously thats all that is!

Really?

In the days before the bank guarantee scheme he wrote the following in this article:

David McWilliams wrote:

The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system.

These creditors would have included bondholders. More recently, when the gurantee wasn't so popular any more he wrote:

David McWilliams wrote:

Without comprehensive debt renegotiation — both personal and institutional — Ireland will not get out of this hole. The idea is called ‘co-responsibility’, where the debtor and the lender are both responsible for the debts they have jointly created.

Oh, and I nearly forgot to mention - in the week after the guarantee he had this to say about Lenihan:

David McWilliams wrote:

In time, Brian Lenihan’s move yesterday will be seen as a masterstroke and a practical blueprint for the new financial architecture which will emerge from this global crisis.

It looks like - just like the government he's fond of criticising - he's making it all up as he goes along.

They didnt follow Mc Williams plan at all

Monty Burnz

jdivision wrote: »

Morgan Kelly, Peter Matthews and Karl Whelan have been pretty much right all the way through. David McWilliams has latched on to things but was wrong so often in the past can't be taken seriously.

So wrong about...?

(not to say that he was wrong about nothing, but I suspect he was right a lot more often)

Liam Byrne

keithclancy wrote: »

Everone voted Fianna Fail becuase they thought they'd keep the party going.

I'm so glad that you didn't actually manage to type the word "everyone" because it's saved me from pointing out how ridiculous that claim would have been.

It's bad enough that FF are rewriting history in terms of who got greedy, or who screwed us over, but claiming that everyone voted FF is a step too far into the twilight zone.

If you want to contribute factual posts that people might actually take seriously, might I suggest even some basic research ? Even Wikipedia will suffice given your starting point : http://en.wikipedia.org/wiki/Irish_general_election,_2007

hmmm

Merrill Lynch were paid millions to advise the government and their advice was not to implement a blanket guarantee. Advice that if taken would have saved us billions.
http://www.rte.ie/news/2010/0716/banks.html

Lenihan admitted on Prime Time that he couldn't be contacted by Trichet that weekend because he was at the races (whatever that means, hadn't mobile phones been invented then?). That doesn't suggest to me a government in control of a developing situation, burning the midnight oil to develop contingency plans.

later12

Deleted User wrote: »

They didnt follow Mc Williams plan at all

In what way? And why then did he predict that 'In time, Brian Lenihan’s move yesterday will be seen as a masterstroke'

People are too fond of jumping on the hype bandwagon recently every time some economist comes out and says something outrageous.

If David mcWilliams and morgan Kelly are such masterful economic gurus, what on earth is the former doing printing pop-culture airplane reads, and the latter teaching in an academic backwater at the Arts building in UCD?

People would be far better investing cheaply in a copy of the FT or another finance and economics publication, and informing themselves, not having these media whores doing it for them.

Leiva

I want to know who these faceless civil servants and advisors have been to FF during the boom & downfall of our country .

I always think of a pack of Gollums floating around wispering advice in the ears of FF ministers ..

"Yes master "

femur61

I thought Mc Williams thought it was a good idea at the time. Could be wrong about that.

But honestly we've elected a bunch of teachers to make important economic decisions on the country. Granted there a few other proffesions in there but they elected at such young age they never really practice at their given proffesion.

sollar

Yeah i like the peter matthews guy. He seems like a decent and trustworthy sort and they have been in short supply over this last 2 years.

Who is to blame.... well if its true that the top bankers came in that night and mislead lenihan and co then they all bear responsibility.
Also, someone must have minutes of that meeting, it should be poured over and if the bankers were found to have lied then they should be before the courts...... but unfortunately we don't prosecute this 'calibre' of people in ireland.

moorefield

Some say the ECB were involved - makes sense as the Central Bank would not have committed unless it involved its masters

Byron85

thebaldsoprano wrote: »

Really?

In the days before the bank guarantee scheme he wrote the following in this article:



These creditors would have included bondholders. More recently, when the gurantee wasn't so popular any more he wrote:



Oh, and I nearly forgot to mention - in the week after the guarantee he had this to say about Lenihan:

It looks like - just like the government he's fond of criticising - he's making it all up as he goes along.

I've posted this in a previous thread about the issue so i'll repost it here.

Byron85 wrote: »

There's more to that quote than you attribute. He was in favour of the blanket bank guarantee for a year or thereabouts so that the good could be separated from the bad as it buys you time, which was what McWilliams had suggested to Lenihan. Don't forget the EU approved of it too. There's nothing intrinsically wrong with that. McWilliams was as horrified as everyone else when the bank guarantee was extended again and the "bad guys" were mixed in with the "good guys".

Hoffmans

jimmycrackcorm wrote: »

The unconditional guarantee given on 29/10/2008 was announced by Brian Lenihan to cover €485 billion in possibly liabilities. Given that BL nor anyone else in the cabinet has any qualifications in finance, how can it be possible that they thought this was a good idea; unless of course they got guidance from the civil service. Perhaps they got a menu of options to choose from, but my guess is that they got a recomendation and rationale from the dept. of finance mandarins and they accepted that. I think it is important that we understand how this fundamental decision was made, firstly because it was grossly incorrect, but also, I believe that an alternative government would have made the same decision. It's a reasonable assumption given if you put someone without an area of expertise in charge of that are then they simply don't have the competence to make decisions and instead rely on those beneath them to provide the solutions. We would not have had IMF intervention if we had not tied ourselves to the private banks so deeply. Without knowing how these decisions are arrived at, there is little point in electing an alternative government who also a collection of teachers, publicans, and barristers seemingly guided by blameless advisors.

the whole scam was to provide outs for all the gamblers who lost their bets,passing on their losses to the ordinary citizens through austerity measures, theres no doubt they had advice and "guidence" from day one from their paymasters who visited in the weeks before the collapse living it up in the 4seasons penthouse and planning the demise of a state to global moneylenders...

hinault

later10 wrote: »

In what way? And why then did he predict that 'In time, Brian Lenihan’s move yesterday will be seen as a masterstroke'

People are too fond of jumping on the hype bandwagon recently every time some economist comes out and says something outrageous.

If David mcWilliams and morgan Kelly are such masterful economic gurus, what on earth is the former doing printing pop-culture airplane reads, and the latter teaching in an academic backwater at the Arts building in UCD?

People would be far better investing cheaply in a copy of the FT or another finance and economics publication, and informing themselves, not having these media whores doing it for them.

Ahem.

Morgan Kelly Primetime 30th September 2008.

http://www.youtube.com/watch?v=11CCxv2ueiQ

Contemporaneous critical analysis of Lenihan at the time of the guarantee.

thebaldsoprano

Byron85 wrote: »

There's more to that quote than you attribute. He was in favour of the blanket bank guarantee for a year or thereabouts so that the good could be separated from the bad as it buys you time, which was what McWilliams had suggested to Lenihan. Don't forget the EU approved of it too. There's nothing intrinsically wrong with that. McWilliams was as horrified as everyone else when the bank guarantee was extended again and the "bad guys" were mixed in with the "good guys".

Link?

Cavehill Red

snubbleste wrote: »

Well, we are to blame. We elected a parliament in 2007 which formed a government to make decisions on our collective behalf.

I forget where in the Fianna Fail manifesto of 2007 it said they would offer unlimited guarantees to ailing and corrupt financial institutions if elected. Could you perhaps direct me to the relevant section of their manifesto?

Because if it DIDN'T say that in their manifesto, they had no mandate from the people to do this, and therefore we the people are NOT to blame for this.

Byron85

thebaldsoprano wrote: »

Link?

The guarantee, of which I was a big supporter, was supposed to be introduced to give the banks time to find a solution to their problems. You give them time, there will be no run on deposits and then they come up with solutions, you force their hand, you are the boss. Instead, our Government allowed themselves to be run around by the banks that benefited from the guarantee — without extracting any concessions.

It's in his book too.

kaiser sauze

hmmm wrote: »

Merrill Lynch were paid millions to advise the government and their advice was not to implement a blanket guarantee. Advice that if taken would have saved us billions.
http://www.rte.ie/news/2010/0716/banks.html

Lenihan admitted on Prime Time that he couldn't be contacted by Trichet that weekend because he was at the races (whatever that means, hadn't mobile phones been invented then?). That doesn't suggest to me a government in control of a developing situation, burning the midnight oil to develop contingency plans.

Merrill's advice was overall ambiguous at best. They still took €4.5Mn for saying nothing.

keithclancy

Liam Byrne wrote: »

I'm so glad that you didn't actually manage to type the word "everyone" because it's saved me from pointing out how ridiculous that claim would have been.

It's bad enough that FF are rewriting history in terms of who got greedy, or who screwed us over, but claiming that everyone voted FF is a step too far into the twilight zone.

If you want to contribute factual posts that people might actually take seriously, might I suggest even some basic research ? Even Wikipedia will suffice given your starting point : http://en.wikipedia.org/wiki/Irish_general_election,_2007

Everyone got greedy, hence the property bubble.

Everyone is blaming, the Banks, Developers, the Government.

When in actual fact.
Banks - People were borrowing money hand over fist to pay for items they couldnt' afford.
Developers - Everyone had 'Need to buy a house, rent is dead money' lasered into their brain from birth.
The Government - We voted them in.

Now people are blaming the EU for bailing out a country that cannot pay its debts.

The People are to blame, Ireland was running like a dodgy Pyramid scheme for the last 10 years.

Oh and .. yes I do know there is a Coalition Government, with the Greens, who had no Interest in any soft of Fiscal plan, they were more concerned with Windfarms and New cars with low Co2 emissions.

Hopefully their party will disappear, waste of space imo.

Ireland is still 9.84% off the Kyoto 2012 emission targets.

I can see the political state of becoming very dangerous in the next few years, with less money protectionism will come into play. In the UK when this happened the BNP got more votes. Hopefully the country won't go the otherway and elect a load of right wing nuts.

Long term Ireland needs to invest in Nuclear Power and stop being a net energy importer, otherwise its at the mercy of imports which will wreck the economy.

thebaldsoprano

The guarantee, of which I was a big supporter, was supposed to be introduced to give the banks time to find a solution to their problems. You give them time, there will be no run on deposits and then they come up with solutions, you force their hand, you are the boss. Instead, our Government allowed themselves to be run around by the banks that benefited from the guarantee — without extracting any concessions.

That would be this article in April 2009, around the time NAMA was being set up and the guarantee was being seen for the scam that it was. That's funny because this is at odds with what he said at the time of the guarantee. From the article he wrote the day after the guarantee:

Longer term, we can expect foreign banks to move here, setting up offices in Ireland and creating a banking industry which will thrive. We have set the template. The upside greatly outweighs any possible downside. The system is the most important thing at this stage. A threat can now, with the right accompanying policies, be turned into an opportunity.

It looks very much like he had a long term plan for the guarantee here.

Byron85 wrote: »

It's in his book too.

And that would be Follow the Money published October 1st 2009, again after the guarantee. This all just adds to the case that he's making it up as he goes along.

Liam Byrne

keithclancy wrote: »

Everyone got greedy, hence the property bubble.

I've told the mods that I won't drag stuff off-topic by correcting people who spout this lie, so I'll just add one word : bull****.

swampgas

keithclancy wrote: »

Everyone got greedy, hence the property bubble.

I think that is a little unfair. Many/most people were just caught up in the "tiger economy" hysteria rather than being outright "greedy".

We're all a lot wiser now - with the benefit of hindsight.

keithclancy

Liam Byrne wrote: »

I've told the mods that I won't drag stuff off-topic by correcting people who spout this lie, so I'll just add one word : bull****.

Where have you been living ?
Irish Society has been destroyed by this Celtic Tiger bullsh*t, it turned into a mini United States of America over the past 10 years.

Regardless, I think the the Financial burden put on the country will be a good thing in the long run, the way people spend money in Ireland is unsustainable in the long term, hence the Government debt.

Irish People work in Banks
Irish People are in Government
Irish People buy and sell houses
Irish People are Property Developers

Labeling them as "The Banks" "The Developers" is just putting a nice face on it. Irish people caused the problem, now they need to fix it and that requires a change in the way people think and live.

Cavehill Red

Irish people DIDN'T cause the problem.

Irish banks caused the problem.

keithclancy

Cavehill Red wrote: »

Irish people DIDN'T cause the problem.

Irish banks caused the problem.

Cavehill Red

Keith, if you seriously think that we're in the sh!t we are because of some simplistic theory you have about Irish people being lazy and greedy and all speculating on housing, you need educating.

I'm waiting on my turn in the kitchen right now, so I can spare you 5 minutes.

Our deficit is based on overspending and under-income. The overspending is due to our ballooning health and social welfare systems. The under income is due to collapsing tax take, which itself is attributable to our preposterously low personal taxes which until recently were made up by construction and property taxes which have since collapsed, as well as the income tax contribution by the additional 300,000 unemployed.

On the other hand, we have guaranteed bank debt to an estimated potential total of some 785 billion euro. The banks increasingly cannot pay this back. We're on the hook for it thanks to Comical Lenny. As a result, our bond costs go up, making it harder to service our deficit.

So, to take all the causes in turn - one is due to over-expenditure by the government, one due to poor tax management by the government, and one due to the banks.

But while we could live and work with the other two, by reducing expenditure and increasing taxes to balance the budget, what we cannot do is magic 785 billion euro out of our arses to cover the total debts of the Irish banks, which appears to be growing by the day.

In short, it wasn't the Irish people, it was the banks.

keithclancy

Cavehill Red wrote: »

Keith, if you seriously think that we're in the sh!t we are because of some simplistic theory you have about Irish people being lazy and greedy and all speculating on housing, you need educating.

I'm waiting on my turn in the kitchen right now, so I can spare you 5 minutes.

Our deficit is based on overspending and under-income. The overspending is due to our ballooning health and social welfare systems. The under income is due to collapsing tax take, which itself is attributable to our preposterously low personal taxes which until recently were made up by construction and property taxes which have since collapsed, as well as the income tax contribution by the additional 300,000 unemployed.

On the other hand, we have guaranteed bank debt to an estimated potential total of some 785 billion euro. The banks increasingly cannot pay this back. We're on the hook for it thanks to Comical Lenny. As a result, our bond costs go up, making it harder to service our deficit.

So, to take all the causes in turn - one is due to over-expenditure by the government, one due to poor tax management by the government, and one due to the banks.

But while we could live and work with the other two, by reducing expenditure and increasing taxes to balance the budget, what we cannot do is magic 785 billion euro out of our arses to cover the total debts of the Irish banks, which appears to be growing by the day.

In short, it wasn't the Irish people, it was the banks.

I agree with your logic.

The Government should have Increased taxes when incomes increased to create a sustainable tax take and to cool spending on property investment.

Income tax in Ireland is extremely low and corporate tax the same.

You have to raise one of the other, but now the Public are very sensitive to anything that affects their net income due to high commital of their net income to Property that is in Negative Equity.

Its a catch 22, do you want to have a high income tax rate and commit loads of people to poverty or do you want a higher corporate tax rate and risk people losing their jobs.

However I still maintain that the Irish have developed an Americanized point of view towards credit and debt. If you live abroad and come back to visit one of the first things that strikes you is the amount of cars / house. its about 2 - 3 times more than anywhere else i've seen.

Cavehill Red

keithclancy wrote: »

I agree with your logic.

However I still maintain that the Irish have developed an Americanized point of view towards credit and debt. If you live abroad and come back to visit one of the first things that strikes you is the amount of cars / house. its about 2 - 3 times more than anywhere else i've seen.

Dunno where you live, Keith, but it ain't like that around where I hang out, Belfast or Dublin.
Are there more cars than there were 10 years ago? No doubt. Three times as many as elsewhere? Nowhere near it.
The attitude to debt did change, primarily because lending practices changed. As banks started offering 110%, or interest only, or liar loan mortgages, so people took them up.
As was a general trend in the Western world, people here started buying a lot more on the never-never. Credit card debt shot up at the same rate here as elsewhere (lower than Britain, though, to take one example.)
Yes, those chickens are now home roosting. People are now suffering from higher taxes and lower wages yet still have those outgoings in debt to pay, and it will get worse as unemployment and taxes and eventually interest rates all rise.
That's no reason why Ireland should have to sacrifice its sovereignty on the altar of bailing out billionaire bank bondholders, though. If it was, we should be seeing the whole of the EU on the same chopping block.

Byron85

thebaldsoprano wrote: »

That would be this article in April 2009, around the time NAMA was being set up and the guarantee was being seen for the scam that it was. That's funny because this is at odds with what he said at the time of the guarantee. From the article he wrote the day after the guarantee:

It looks very much like he had a long term plan for the guarantee here.



And that would be Follow the Money published October 1st 2009, again after the guarantee. This all just adds to the case that he's making it up as he goes along.

I disagree with the long term statement. He has said it himself in plenty of interviews that he was against guaranteeing all of the banks for everything and for such a long length of time.

In the national interest therefore, Mr Lenihan needs to see detail of the banks’ balance sheets to assess how quickly the crunch in the credit markets can be cleared. The best solution is obviously for both sides — the banks and the government — to work together, probably meeting half way on many issues.
This can be achieved the “hard way” or the “easy way”. The easy way is for a contrite banking system to “fess up” to bad loans, and possible corporate malfeasance. This way trust can be rebuilt and the system recover. However, if the banks refuse to play ball and forget we’ve propped them up with our guarantee, then Mr Lenihan has to play hard.

October 8th 2008

By inserting a clause which ties the fortunes of our biggest banks to those far more susceptible to financial ruin, the government has erred – with potentially catastrophic results.

There is a clause in the bank guarantee rescue plan that has the potential to complicate the scheme by placing the weaker banks in the state on a par with the stronger ones. In so doing, it threatens the integrity of the system. This column has maintained that the guarantee has to be the first phase of a three-phase programme, which would convert a banking threat into an economic opportunity.

Phase one was the guarantee, aimed at saving the system; phase two was a root-and-branch reform of the banks’ boards and senior management, which got us into this mess in the first place; and phase three was the orderly recapitalisation of the banks, to enable them to lend again and get the economy moving once more.

October 19th 2008

Given the toothless compromise that is being proposed by the Minister of Finance, the ‘Apprentice’ format would undoubtedly lead to a better outcome. Make no mistake about it: over the next few weeks, the decision made about the future of the Irish banks will be the most momentous financial decision in the history of this State. If we get it wrong, we face a depression rather than a mere recession. If we get it right, there will be light at the end of the tunnel.

Let us remind ourselves where we are. Lamentably, the clarity of the initial days following the guarantee (when the Government looked to be in control) has given way to six crucial weeks of indecision.

The guarantee — which was innovative but also risky — can only work if it is followed by two other initiatives. The risk that the Government’s guarantee would be called upon can be minimised by a successful recapitalisation. To make the recapitalisation successful, the State needs to know exactly what is going on inside the banks. In order to see clearly, the Government needs its own people in the banks. These representatives of the people must be single-minded and focused.

November 12th 2008

Brian Lenihan is the Marie Antoinette of Irish politics. He has just done a deal with the management of the Irish banks which even the bewigged last queen of France (bred into the regime, like Lenihan) would not have tried to get away with.

Not only should he lose his political head for it, the entire regime is likely to fall as a consequence. This recapitalisation is Fianna Fail's "let them eat cake" moment and the electorate will not allow them to survive it.

This botched recapitalisation is based on the economics of Noddyland. It is cronyism of the highest order and will plunge Ireland into a much longer recession than is necessary. Furthermore, the fact that the financial delinquents who run the banks have been rewarded for the economic vandalism that they instigated sends a signal to every foreign investor that Ireland is a banana republic.
The banks' top brass have engineered a deal whereby their multi-million euro salaries will be paid for by people on the minimum wage! Now, having established that you have been robbed blind, let's look at the pathetic economics of the deal. For a recapitalisation to be successful, bad debts have to be written down to zero immediately. This is costly and this is why the State needs to raise a lot of money rapidly to cover the mess. Equally, a "bad bank" needs to be set up like a financial skip, into which all those bad loans and rubbish on the "good" banks' balance sheets can be thrown. The cost of the skip should be paid for by the "good" banks, because they have been the ones given a reprieve.

December 24th 2008

Kiki10

snubbleste wrote: »

Well, we are to blame. We elected a parliament in 2007 which formed a government to make decisions on our collective behalf.

You mean your to blame then;), I never voted for then cause they have been a bunch of idiots since Jesus was a child. I wonder sometimes are the people who vote for Fianna Fail retarded cause they always, decade after decade, are complaining about they fools they elect. Thats why in 2-3 years they'll be welcomed back with open arms. God help us

Kiki10

keithclancy wrote: »

Instead of sand that picture should be some bankers bum! Thats were all the hero's of the last decade where living. Rushing into auctions to put the max they couldn't afford on houses the only wanted to sell again. But lack of Government regulation allowed it to happen, so yes it is the governments fault, they cant say we didn't pay any price for there advisor's to help them, they applied for the Job as governors and should be held responsible for the mess.

snubbleste

Kiki10 wrote: »

You mean your to blame then;), I never voted for then cause they have been a bunch of idiots since Jesus was a child. I wonder sometimes are the people who vote for Fianna Fail retarded cause they always, decade after decade, are complaining about they fools they elect. Thats why in 2-3 years they'll be welcomed back with open arms. God help us

I did'nt vote FF or Green at the last election, but we do live in a majority rule democracy. Bottom line is, people were aware in 2007 that Bertie lied to the tribunal, about planning irregularties, backhanders, nepotism, jobs for the boys etc.. Yet they were voted in again
Banks did not force anyone to take out a mortgage. I've yet to hear of a decision in the courts where a mortgagee was forced to sign a contract or borrow money for a deposit or buy an investment buy-to-let.

Ultimately the government represents the will of the people, the same government who signed an unconditional bank guarantee

thebaldsoprano

Byron85 wrote: »

I disagree with the long term statement. He has said it himself in plenty of interviews that he was against guaranteeing all of the banks for everything and for such a long length of time.

Clause 2.6 of the legislation covers the possibility of what might happen when a bank which has taken the state guarantee goes bust.

It says that, where the guarantee is called on and a payment is made, but the financial support cannot be recouped in full from the covered institution to which it was provided, it would be recouped in full from the covered institutions by the state over time, ‘‘in a manner consistent with their long-term viability and sustainability’’.

At first blush, it looks okay. It seems to protect us, the taxpayers, from the possibility of having to cough up for a bank which, despite the guarantee, might fail under the weight of the bad debts incurred during the boom.

Typically, in these desperate circumstances, such a bank would be unable to find a buyer at any price, the capital of the shareholders would be wiped out and the state would be compelled to nationalise the institution.

According to the legislation, any costs accruing to the state/taxpayer from such a bank failure would be recouped from the other banks. So far so good - we are insulated and at least the banks will pay for the sins of other bankers.

But let’s look at this another way. Let’s look at this from the perspective of cui bono. Who benefits from this clause? The people who stand to gain most are the management of the weakest banks because, by tying all the banks together, the government has linked the shareholders of the stronger banks to the balance sheets of the weakest.

Okay, he was against a technicality in the guarantee scheme I'll give you that, but come on - did he really think FF were going to clean up and reform the banks?

And this doesn't change the fact that having been a strong advocate of the scheme, even if it wasn't implemented quite how he would have liked, he later argued for burning the same bondholders it protects.

keithclancy

Cavehill Red wrote: »

Dunno where you live, Keith, but it ain't like that around where I hang out, Belfast or Dublin.
Are there more cars than there were 10 years ago? No doubt. Three times as many as elsewhere? Nowhere near it.
The attitude to debt did change, primarily because lending practices changed. As banks started offering 110%, or interest only, or liar loan mortgages, so people took them up.
As was a general trend in the Western world, people here started buying a lot more on the never-never. Credit card debt shot up at the same rate here as elsewhere (lower than Britain, though, to take one example.)
Yes, those chickens are now home roosting. People are now suffering from higher taxes and lower wages yet still have those outgoings in debt to pay, and it will get worse as unemployment and taxes and eventually interest rates all rise.
That's no reason why Ireland should have to sacrifice its sovereignty on the altar of bailing out billionaire bank bondholders, though. If it was, we should be seeing the whole of the EU on the same chopping block.

Lucan, Clonee, Palmerstown .. Driving into some of the estates it is unreal, the whole street full of cars, 2 parked outside and 2 - 4 cars in the drive way.

1 street was so packed I had to reverse all the way back out.

Live in the Netherlands at the moment, you'd have a maximum of 2 cars per household, usually 1 is a lease car and 1 is a personal car, but a large household generally wouldn't have more than 2 as its seen as a waste.

Then again I guess in the Netherlands you insure the car, not the person so anyone can use anyone elses car.

Cavehill Red

snubbleste wrote: »

Ultimately the government represents the will of the people, the same government who signed an unconditional bank guarantee

Everytime I see this nonsense, I have to ask, where in the 2007 Fianna Fail manifesto did they promise to bail out bankrupt banks from the exchequer?

Because if they didn't, and they didn't as far as I can tell, then they and not the public are to blame for the guarantee.

snubbleste

Cavehill Red wrote: »

Everytime I see this nonsense, I have to ask, where in the 2007 Fianna Fail manifesto did they promise to bail out bankrupt banks from the exchequer?
Because if they didn't, and they didn't as far as I can tell, then they and not the public are to blame for the guarantee.

No party had in their manifesto, neither did any party have the SSIAs earlier in the decade.
Like it or not they are our representatives. Says a lot really.

Cavehill Red

keithclancy wrote: »

Lucan, Clonee, Palmerstown .. Driving into some of the estates it is unreal, the whole street full of cars, 2 parked outside and 2 - 4 cars in the drive way.

At the height of the Tiger, I lived in a plush gated mature Southside development. Gaffs were going for 1.3 million each. (I was renting, needless to say.) There wasn't a single house with more than 2 cars in the whole estate.
I know Lucan a bit, Clonee and Palmerstown less so. But it would seem to me that anywhere in that area where there were more than two cars parked by each house would likely be a commuter car park, rather than residents owning all those jammers.

keithclancy wrote: »

1 street was so packed I had to reverse all the way back out.

Live in the Netherlands at the moment, you'd have a maximum of 2 cars per household, usually 1 is a lease car and 1 is a personal car, but a large household generally wouldn't have more than 2 as its seen as a waste.

Then again I guess in the Netherlands you insure the car, not the person so anyone can use anyone elses car.

Car prices are also quite high there too, even relative to here, I understand.

kaiser sauze

Cavehill Red wrote: »

Irish people DIDN'T cause the problem.

Irish banks caused the problem.

That's an over-simplification, and you know it.

Irish banks, with liquidity pumped into them from European sources, added fuel to the fire by extolling credit to those who would never normally qualify-unsecured and 125% in some cases.

Irish people, with dollar signs in their eyes greedily gobbled up the endless lines of credit and poured more fuel on the fire.

The government did nothing to quell this fire, lapped up all the consumption taxes that were a result and reduced personal taxes to unsustainable levels, while taking almost 50% of workers out of the tax net.

The media, seeing a way to make money, added even more to this fire by having property supplements half the size of the normal paper and people were slowly conditioned to think that property will never go down and that €475,000 was a reasonable price for a shoddily built two bedroomed apartment in Dublin.

I could go on with more who contributed, but the main culprits are the above, and to say that Joe Public is without any blame is truly, as Keith graphically showed, head in the sand stuff.