Who Predicted This? Who Do We Blame?

Maj Malfunction

Back to the OP. We are all to blame, one house wasn't enough, we wanted holiday homes, buy to let properties, we wanted apartments in the Eastern Europe to rent out as absentee landlords, we wanted cars, we wanted bigger cars because our neighbour bought an X5 we had to have a BMW 7 series.

Not to mention massive credit card limits, which we were happy to spend going on holidays and other luxuries with money we didn't have in our current account because the massive bonus was going to pay for it all.

Some people could not help themselves, just because the bank gave you the money or extended your credit limit, does not absolve you from your responsibilities to only borrow what you can afford to realistically repay and to have the intelligence to know where that limit is and realise that the bubble cannot last forever.

K-9

later10 wrote: »

First of all can I say how remarkable it is that people have sought to pat the CBI and their prudential analysis on the back in this thread, given that their appendix and their former staff members in the FR, when it was created, are so lambasted.

Nevertheless, a warning is not a prediction; central banks have been warning about private indebtedness for decades and do so in every country in the world to this day. They are typically, by nature, cautious entities who tend to dislike inflation, debt and anything that resembles a faltering equilibrium. However, they didn't predict the banking crisis as an entity themselves, and any suggestion to the contrary deserves to be dismissed.

Indeed. I'd suggest you kindly be not so dismissive of the warnings too, how else do you think we got in this mess, other than ignoring warnings?

What do you think they issue warnings for? The craic? They warned about people borrowing deposits from Credit Unions and other sources, they warned about relaxing the affordability ratios, 100% mortgages, why exactly do you think they did this? Just for something to do? No Central Bank is going to directly come out and say, btw lads, a crash is going to happen next year.

later10 wrote:

The prevalence of sub prime debtors in a system is not measured by subsequent debt write downs or value revisioning, what connection are you trying to make? And where are you getting the 50% figure, or is it something that meandered lazily into your head?
. But that's what this thread is about, there are lots of other threads on this site to which you might also be interested in contributing on that basis. Nobody is asking you if it matters, and if you think it doesn't matter that's perfectly fine by me.

Anglo Irish had loans and advances of €77.3 Billion as of the 30/09/08, €33.9 Billion of that has been written down, 44% and more to come. Other Irish have had write downs of between 100% and 45% on NAMA destined loans. I suppose it isn't "subprime" al right.

Later10 wrote:

Personally I think it matters because none of the pop economists who are currently leading the herd, donkey like, managed to predict the current situation themselves and in my opinion, should be credited with far less 'prophetic' success than has been the case.

Tbh, wtf cares what some pop economist thinks? If they get it wrong or right, it doesn't cost €100's of Billions.

At least some of them checked a few figures, unlike our financial regulator and DoF staff, our politicians and highly paid advisers with nice pensions and lump sums and then hand us the bill for a generation.

later12

K-9 wrote: »

Indeed. I'd suggest you kindly be not so dismissive of the warnings too, how else do you think we got in this mess, other than ignoring warnings?

Warnings are not what this thread is about; the hint is in the title.. 'who predicted this?'. There have been warnings about indebtedness for as long as there has been debt for goodness sake.

Anglo Irish had loans and advances of €77.3 Billion as of the 30/09/08, €33.9 Billion of that has been written down, 44% and more to come. Other Irish have had write downs of between 100% and 45% on NAMA destined loans. I suppose it isn't "subprime" al right.

What are you getting at... I have already said that write downs on debt do not reflect the prevalence of sub prime activity following on from a financial and property collapse. I suggest you look up the meaning of sub prime mortgages or stop trying to alter the meaning.

For a third time, can I ask you where you got the 50% figure you presented?

Sesshoumaru

later10 wrote: »

Warnings are not what this thread is about; the hint is in the title.. 'who predicted this?'. There have been warnings about indebtedness for as long as there has been debt for goodness sake.

Who predicted this? Maybe you're asking the wrong question. After all when you ask the wrong questions, who cares about the answers?

I think a more pertinent question the people of Ireland should be asking is:

Who failed to predict this? Who do we blame?

I mean why ask who predicted this? Do we send them a hamper? As you've no doubt ably demonstrated, no one running the country predicted it. So how about we move on? Lets discuss who should have predicted this, but failed to.

K-9

later10 wrote: »

Warnings are not what this thread is about; the hint is in the title.. 'who predicted this?'. There have been warnings about indebtedness for as long as there has been debt for goodness sake.

What are you getting at... I have already said that write downs on debt do not reflect the prevalence of sub prime activity following on from a financial and property collapse. I suggest you look up the meaning of sub prime mortgages or stop trying to alter the meaning.

For a third time, can I ask you where you got the 50% figure you presented?

What? Predicting this would have been warning it? Yes, there have been warnings throughout history about bubbles and guess what, bubbles keep recurring. You'd think somebody would have the cop to actual heed them at this stage, not dismiss them like yourself.

You have been provided with evidence that people and organisations did warn about it. Unfortunately it doesn't fit with your "sure nobody could've foreseen this" line.

As for 50%, Good God man, arguing for the 50% or pointing out what sub prime means is "missing the wood for the trees". I was giving an example of the mess, Anglo and NAMA and the rest of it is far worse than any sub prime crisis we possibly could have had. Wtf cares about the definition, all property loans issued in this country in the last few years are worse than sub prime. Don't you get it?

Have a look round the country at the mess it is in and stop trying to absolve blame because nobody could've foreseen this. Why do we have some of the highest paid politicians, advisers and public servants? To offer up excuses about how nobody else could have foreseen it?

SkepticOne

What I'd like to ask later20 is what exactly is the point of the question?

Yes it is true nobody predicted exactly what would happen. Generally speaking things have worked out worse than what even the most pessimistic would have expected.

However, if they had predicted what was going to happen would it have mattered? Even relatively benign predictions of crashes in the property market were met with derision and in at least one case, court action by vested interests. If these were dismissed as irresponsible scaremongering what chance would the full calamity have had of being listened to?

Finally, I think you're being a little unreasonable in expecting such things to be predictable in detail. The banks could have done a lot to mitigate the effects of the crash if they had curbed lending early enough.

The lending policies of the banks would have been decided by a very small number of people at the top and the behaviour of small numbers of people is not predictable.

later12

K-9 wrote: »

What? Predicting this would have been warning it?

I'm not sure if that sentence is supposed to make sense or if it was just a random conglomeration; so I will just reiterate what I have said. Making general observations about indebtedness (as the CBI did in 1997 about 5 years before the bank led property bubble even began) does not amount to a prediction of the current crisis. Issuing a warning can mean there might be a broad spectrum of consequences from the superficial to the disastrous

If you don't like that, fine. Stop pretending that it is something it isn't. The banks were behaving perfectly acceptably in 1997 with regards to the property industry and this has been widely acknowledged.

Unfortunately it doesn't fit with your "sure nobody could've foreseen this" line.

I have not said nobody could have foreseen this, quite the opposite in fact. I'm asking why those who supposedly had their finger on the pulse of the nation's economy, and apparently still do, did not foresee it.

arguing for the 50%

If you give a figure, you should be able to back it up. Can you back it up or was it not just a figure you thought sounded good once plucked out of thin air?

pointing out what sub prime means is "missing the wood for the trees".

It's a basic fact. If you are going to post on here suggesting that Ireland had a big sub prime problem, don't be surprised when people correct you on that.

later12

SkepticOne wrote: »

What I'd like to ask later20 is what exactly is the point of the question?

Well there were two points to it.

Firstly, this country is spilling over with pop economists, politicians, pundits, journalists, Trinity arts graduates, internet posters and David McWilliams, all implying their own sort of wonderful economic sagacity. I simply want to know who of them predicted the banking crisis as it stands.

The second point was about property developers, but i think the issue of bankers has quite overwhelmed the thread and it's best not to complicate things.

However, if they had predicted what was going to happen would it have mattered?

No, but it might lend slightly more credibility to the current crop of pundits and advisors.

This is my point. At such a serious point in our economic history, Irish people ought to discern carefully what advice they consume and from whom, and how best they can work to promote Ireland's interest both through democracy and by other means such as work practices and public sector reform.

Because they tend to care little about economics, financial markets and trading, Irish people might tend to consume asymmetrically the advice of populists who can explain the situation in three simple bullet points over more considered and rational analyses which may be a good deal more complicated. This could have long term consequences in that it may become easier for political leaders to create policy that is simple and popular in the short term, but deleterious in the long term - a good example is unilaterally burning bondholders.

My advice to those people, for what little it is worth, would simply be that they look again at the people who offer them economic advice and ask questions of their track record. David McWilliams did not predict this crisis. Morgan Kelly did not predict this crisis. Rossa White did not preduct this crisis. Shane Ross did not predict this crisis (in fact, he had been heard to praise Anglo quite emphatically on a number of occasions. These are facts that should not go unrecognised.

Sand

@SkepticOne

What I'd like to ask later20 is what exactly is the point of the question?

Later10s thesis is simple: we didnt listen to any criticisms of the governments economic policy up until 2007 so we should continue to ignore criticism of government policy now. Stay the course people!

Doctor: Well, You're a little banged up but no serious injury's. Just keep off your feet for a few days.
Happy Gilmore: To Hell with that, I gotta finish up.
Doctor: Fine! Do whatever you like. What would I know, I'm just a Doctor.

K-9

later10 wrote: »

I'm not sure if that sentence is supposed to make sense or if it was just a random conglomeration; so I will just reiterate what I have said. Making general observations about indebtedness (as the CBI did in 1997 about 5 years before the bank led property bubble even began) does not amount to a prediction of the current crisis. Issuing a warning can mean there might be a broad spectrum of consequences from the superficial to the disastrous

If you don't like that, fine. Stop pretending that it is something it isn't. The banks were behaving perfectly acceptably in 1997 with regards to the property industry and this has been widely acknowledged.

I have not said nobody could have foreseen this, quite the opposite in fact. I'm asking why those who supposedly had their finger on the pulse of the nation's economy, and apparently still do, did not foresee it.

If you give a figure, you should be able to back it up. Can you back it up or was it not just a figure you thought sounded good once plucked out of thin air?

It's a basic fact. If you are going to post on here suggesting that Ireland had a big sub prime problem, don't be surprised when people correct you on that.

I gave you figures on Anglo and NAMA. What more do you want? It's far worse than a sub prime crisis, that's the whole point.

I think I'll just leave you with your bone.

later10 wrote: »

Well there were two points to it.

Firstly, this country is spilling over with pop economists, politicians, pundits, journalists, Trinity arts graduates, internet posters and David McWilliams, all implying their own sort of wonderful economic sagacity. I simply want to know who of them predicted the banking crisis as it stands.

The second point was about property developers, but i think the issue of bankers has quite overwhelmed the thread and it's best not to complicate things.
No, but it might lend slightly more credibility to the current crop of pundits and advisors.

This is my point. At such a serious point in our economic history, Irish people ought to discern carefully what advice they consume and from whom, and how best they can work to promote Ireland's interest both through democracy and by other means such as work practices and public sector reform.

Because they tend to care little about economics, financial markets and trading, Irish people might tend to consume asymmetrically the advice of populists who can explain the situation in three simple bullet points over more considered and rational analyses which may be a good deal more complicated. This could have long term consequences in that it may become easier for political leaders to create policy that is simple and popular in the short term, but deleterious in the long term - a good example is unilaterally burning bondholders.

My advice to those people, for what little it is worth, would simply be that they look again at the people who offer them economic advice and ask questions of their track record. David McWilliams did not predict this crisis. Morgan Kelly did not predict this crisis. Rossa White did not preduct this crisis. Shane Ross did not predict this crisis (in fact, he had been heard to praise Anglo quite emphatically on a number of occasions. These are facts that should not go unrecognised.

Oh I'd agree you with you that taking advice from McWilliams on the guarantee led to serious consequences indeed.

I think, even at this stage, some people and you seem to be one of them, are stuck back in 2007/early 08 wondering where did it all go wrong. Most people at this stage have accepted that's what happened. It's old news at this stage. The majority of people are looking at the responses to that crisis in the last 3 years and how nearly each and every single thing this Government has done in that time has been an utter failure.

Anyway, I'll leave you to your bone.

London Irish

later10 wrote:

My advice to those people, for what little it is worth, would simply be that they look again at the people who offer them economic advice and ask questions of their track record. David McWilliams did not predict this crisis. Morgan Kelly did not predict this crisis. Rossa White did not preduct this crisis. Shane Ross did not predict this crisis

From August 2005.

http://www.davidmcwilliams.ie/2005/08/03/how-secure-will-you-be-when-the-credit-runs-out

Quotes:

Irish banks are giving away money.

They are undercutting other banks and slashing margins aggressively to get business. So, in big deals of €50 million or more, the Irish banks are offering lower interest rates, longer repayment terms and less onerous covenant demands. This is �Irish pricing’. It is great news for the lender and for the bank that gets the business; it looks good on the balance sheet initially as it boosts the bank’s assets, its projected revenues and its market share.

But it also means that Irish banks are taking more risks than others. To generate the same return, they now have to do bigger deals and lend more money.

So to gain market share, they have to gamble a bit more than they did last year. They are running to stand still and, in the process, the quality of their loan book deteriorates. But when credit is ample, no-one bats an eyelid.

It was interesting last year to hear one of our most senior bankers musing aloud at a conference about the need for Irish banks to remain under Irish management. He made the distinction between ownership and management – which struck me as highly instructive.

He went on to explain why. He suggested that in the event of a property crash we would need a national plan to prevent a credit crunch. It would be the banking equivalent of the countrywide reaction to foot-and-mouth, where everyone would pull together.

In these circumstances, it would be critical that the government could sit down with the country’s main bankers and cut a deal. In the past, countries like New Zealand that allowed its banking system to be taken over by foreigners found that in its property crash of the early 1990s, the foreign owners simply cut lending limits, which had the effect of exacerbating the original downturn.

In the case where the management is Irish, there would be a much greater sense of the impending disaster, because all of us are tied up in the property game in one way or another, whether it is ourselves, our children or our close friends. Laudable and all as these sentiments are, how would such a plan work?

Think about it. In the event of a crash, Irish banks would see their loan books decimated. This would affect their ratings, their share prices, and ultimately their ability to raise new funds.

The only thing that we could do is let the state borrow enormously by issuing Irish banking bonds to international investors. This cash could then be given to the crippled banks in the form of a 30-year swap, on the condition that the increased liquidity be squeezed into the system, preventing a credit crunch from taking hold.

I think Kelly's work stands for itself. McWilliams is pretty clear above. So, wheres the problem?

SkepticOne

later10 wrote: »

My advice to those people, for what little it is worth, would simply be that they look again at the people who offer them economic advice and ask questions of their track record. David McWilliams did not predict this crisis. Morgan Kelly did not predict this crisis. Rossa White did not preduct this crisis. Shane Ross did not predict this crisis (in fact, he had been heard to praise Anglo quite emphatically on a number of occasions. These are facts that should not go unrecognised.

I'm still having trouble understanding your gripe. OK these pundits are being simplistic in their advice now and did not predict every aspect of the current crisis but at least some of them (I would tend to agree with you on Ross) got portions of it right (including the risk to the banking sector).

Two points here. The first is where is your anger that these pundits were completely ignored on the property bubble, from the current banking problem stems? If action had been taken in 2004 or 2005 or even as late a 2006 a lot of the banking crisis could have been averted.

Second, who should they listen to now? Isn't it better that we listen to McWilliams et al than Austin Hughes or some government hack who ridiculed warnings about the property market.

McWilliams, by the way as far as I can see isn't arguing for unilateral burning of the bond holders as far as I can see but a negotiated reduction in what they are due. Not sure about the others. I think even if the likes of McWilliams or Morgan Kelly were arguing for unilateral burnings your fear is misplaced. They weren't listened to by government during the boom so why would they be listened to now?

Perhaps you are simply at a stage where you are realising that the great mass of people don't have specialist knowledge of any single particular area and the bits of knowledge they do have are oversimplified and you find this frustrating. If so, I think you had better get used to it. Anger at the general mass of people is misplaced anger.

Far better to target those who are highly paid to either know about these matters (the financial regulator, governor of the central bank) with specific responsibility to protect the public but who did nothing despite warnings.

later12

K-9 wrote: »

I gave you figures on Anglo and NAMA. What more do you want? It's far worse than a sub prime crisis, that's the whole point.

That's not the whole point, nobody is arguing the 29 billion that went into NAMA or the 60% write downs or the distressed loan book. You made a statement about subprimes, apparently not aware of what they are, and I responded to it. I'm not defending Anglo, who are posting enormous losses both in credit and deposits; that isn't the issue.

I think, even at this stage, some people and you seem to be one of them, are stuck back in 2007/early 08 wondering where did it all go wrong. Most people at this stage have accepted that's what happened. It's old news at this stage.

It's old news but I don't think Irish people have learned anything from it and I don't think the banks have learned anything and I don't think political leadership has either.

People are concerned about jobs, but they're not asking what got us into this mess and why it wasn't predicted. They tend to think that because a housing bust was predicted, albeit one of varying magnitudes, that everyone must have been referring to a banking bust by default. Not so. If we don't ask these fundamental questions, and question those who appear to offer economic advice to the masses, then we risk to lose a lot more again.

SkepticOne wrote:

Two points here. The first is where is your anger that these pundits were completely ignored on the property bubble, from the current banking problem stems?

Oh there's no doubt that was a disastrous slight on many of these economists, and one for which the public are paying dearly, I just wonder if the same public are not now overcompensating by crediting these economists with having predicted more than was actually predicted (i.e. bank meltdown).

In any case, the reason I'm not going on about that is because hopefully the public correctly acknowledge the destruction that ignoring such warnings eventually caused, and presumably it is beyond question.

SkepticOne wrote:

Second, who should they listen to now? Isn't it better that we listen to McWilliams et al than Austin Hughes or some government hack who ridiculed warnings about the property market.

For one thing McWilliams was not always correct in his predictions, as the bank guarantee has shown. But that is not the point. Yes that's not a bad argument, but why must they listen to any one economist? Surely they should hear all of the arguments and inform themselves? I think you and I both know that this is not what tends to happen.
The typical scenario is that one economist goes on the radio or on Vincent Browne and spouts a whole load of hyperbole or claims that the state owes up to 250 billion in debt (this actually happened btw) and people just take their word for it. If you believed some of these people Ireland would be twenty thousand leagues under the sea right about now. Apart from being populist and being in danger of distorting government policy in that direction, their predictions can also give rise to such lack of confidence that they become self fulfilling prohecies. Perhaps if people informed themselves a bit further, that effect wouldn't occur.

swampgas

SkepticOne wrote: »

[...] the great mass of people don't have specialist knowledge of any single particular area and the bits of knowledge they do have are oversimplified [...]

Far better to target those who are highly paid to either know about these matters (the financial regulator, governor of the central bank) with specific responsibility to protect the public but who did nothing despite warnings.

+1

It is unworkable for the electorate to have specialist knowledgeable in every area. Right now the big issue is the economy, should we also be experts on medical care, communications, transport, taxation, defence, foreign affairs?

It seems to be almost impossible to get any accountability in this country. The government, the ministers, the regulator all failed in the most dramatic way, yet don't resign, or admit any responsibilty; instead they insist on keeping their massive handouts at the taxpayers expense.

To be honest I don't care whether the warnings were there or not. The government of the day had a duty of care to the nation, and if they cannot see just how badly they have failed in that duty they are beneath contempt.

later12

swampgas wrote: »

+1

It is unworkable for the electorate to have specialist knowledgeable in every area.

Knowing the difference between senior and junior debt, secured and unsecured bonds, and having a grasp of a rudimentary economic glossary does not require specialist training or knowledge. We live in an age of information, this should not be very difficult.

If people don't care and they just want to get on with their work and their lives, that's perfectly understandable. but otherwise, there is no real excuse for not accessing some pretty standard publicly available information.

K-9

later10 wrote: »

That's not the whole point, nobody is arguing the 29 billion that went into NAMA or the 60% write downs or the distressed loan book. You made a statement about subprimes, apparently not aware of what they are, and I responded to it. I'm not defending Anglo, who are posting enormous losses both in credit and deposits; that isn't the issue.

Okay, Anglo made reassurances to the Government that in 07/08 that we didn't have a sub prime risk. Yep, we didn't, ours was far worse, so no sub prime, just a normal, run of the mill property crash, that worked out far worse.

It's old news but I don't think Irish people have learned anything from it and I don't think the banks have learned anything and I don't think political leadership has either.

Some probably will never learn, but I'd say it will live long in many peoples minds. Banks haven't learned anything because they got bailed out, but we should have better regulation and checks now. Politicians are politicians.

People need to listen to dissenters in the future and look into it for themselves, not just smugly dismiss criticism.

Slick50

later10 wrote: »

If people don't care and they just want to get on with their work and their lives, that's perfectly understandable. but otherwise, there is no real excuse for not accessing some pretty standard publicly available information.

Why are you still at this? You say you are not an apologist for fianna fail, maybe not. But if not, it would appear that, that it is because as far are you are concerned, they have nothing to apologise for. They did nothing wrong, because nobody told them? Yet there is no excuse for the average man on the street for not accessing readily available information. You're flogging a dead horse. The government of the last twelve to thiirteen years are ultimately to blame, it was their watch.

If you take a look at the trend in the BOARDS.IE poll, I think it shows very clearly who the electorate blame. Even the fianna fail canvasers calling to the doors have the humility to recognise that.

swampgas

later10 wrote: »

Knowing the difference between senior and junior debt, secured and unsecured bonds, and having a grasp of a rudimentary economic glossary does not require specialist training or knowledge. We live in an age of information, this should not be very difficult.

If people don't care and they just want to get on with their work and their lives, that's perfectly understandable. but otherwise, there is no real excuse for not accessing some pretty standard publicly available information.

I agree that ideally voters should have some basic grasp of economics, so that they can better judge the policies of political parties.

The question right now is to what extent the issues facing the country can be explained using just the basic concepts. The explanations and solutions for complex issues are often counter-intuitive, for example raising taxes can reduce tax intake, to give a trivial example.

Consider the factors impacting on the Irish situation right now: the Irish banking crisis, the euro zone being a financial rather than political union, the growth of complex financial instruments (SPVs?), the fallout from the housing bubble in Ireland, the financial problems in other Eurozone countries such as Greece, Portugal and Spain, German and French domestic politics, tax policy in Ireland, CCTB proposals, the terms of bailout deal ... the list goes on and on.

Maybe some of these factors can be tackled in isolation, but many of them are linked, coming up with a sound strategy for the economy right now requires some understanding of all these factors, and more crucially, a deep understanding of how they interact.

Which makes it very confusing for people like myself who are not full-time economists .

Strata

later10 wrote: »

Knowing the difference between senior and junior debt, secured and unsecured bonds, and having a grasp of a rudimentary economic glossary does not require specialist training or knowledge. We live in an age of information, this should not be very difficult.

If people don't care and they just want to get on with their work and their lives, that's perfectly understandable. but otherwise, there is no real excuse for not accessing some pretty standard publicly available information.

What difference would it make though if the electorate had a "rudimentary economic glossary". Some people have no interest or understanding of economics. The banking crisis is complex and the reality is not everyone will understand the ins and outs of it.

The electorate have a right to expect that the Government is acting in the best interests of its people and that they'll appoint appropriate and relevantly qualified people to regulate in all areas where regulation is needed.

later12

K-9 wrote: »

Okay, Anglo made reassurances to the Government that in 07/08 that we didn't have a sub prime risk. Yep, we didn't, ours was far worse, so no sub prime, just a normal, run of the mill property crash, that worked out far worse.

Well I do not know why Anglo would make such reassurances, or even if they did why such reassurance would be entertained... Anglo by its nature had nothing to do with sub prime borrowers. By the traditional scoring techniques that all banks used, Anglo's debtors were undoubtedly some of the most credit worthy borrowers in Irish society by the standards of the day. However you do make a perfectly valid point in that our crisis ended up being much worse than a sub prime crisis.

Some probably will never learn, but I'd say it will live long in many peoples minds.

I hope that you are correct on that but I just wonder if the banks, by some miraculous intervention of Our Lady of The Eurozone, were to return to reckless lending policy, would not the public return to its own reckless borrowing policy? My guess is that house prices would slowly rise again, and the celtic tiger era would reignite until the next major bust. I don't think that Ireland has learned what actually happened.

swampgas wrote:

The question right now is to what extent the issues facing the country can be explained using just the basic concepts.

Everything, is the short answer.
Basic concepts are what has been lacking in Irish banking, bank regulation and political life over the past 10 to 12 years. Nobody (or hardly anybody) asked themselves the basic questions like what?, why?, and how much? in relation to the housing boom and the interconnectedness between the property and financial sectors. That's the whole basis of this thread.

Sometimes the best questions are the questions that a four year old would ask, and every four year old knows that all bubbles must burst.

Strata wrote:

What difference would it make though if the electorate had a "rudimentary economic glossary". Some people have no interest or understanding of economics. The banking crisis is complex and the reality is not everyone will understand the ins and outs of it.

Nonsense.

The banking crisis is not a complicated event. Understanding what happened, and what is happening, and what historical comparisons may exist with other insolvent nations does not require an MPhil in Economics. We all have egos, myself as much as anybody, but it would be quite daft to suggest that those who are familiar with the European and Irish financial crises abide on some higher intellectual plateau to the regular taxpaying public. There is a perception that economics and venture capital markets are the realm of those educated in that sphere, and many people in the industry are only too happy for that misconception to endure.

But here's the thing: they didn't teach this stuff in business college. Economics textbooks are being rewritten, literally. There are new rules. Many people in banking and in economics, and presumably in political life as well, are simply working on a day-by-day, basis and there is no reason in the world why those people whose business is in another sphere cannot manage to keep themselves informed on a similar basis.

later12

Slick50 wrote: »

Why are you still at this? You say you are not an apologist for fianna fail, maybe not. But if not, it would appear that, that it is because as far are you are concerned, they have nothing to apologise for.

I have repeatedly said that the fact that there was little to no publicly expressed warning does not absolve the Government from blame. Turning the Financial Regulator into a salesman, and the poacher cum gamekeeper system that they perpetuated is a portion of blame that they must recognise. However, as I have said, it would be foolish to stop there. Whatever low level warnings existed obviously went completely under the public radar and that of the economic and financial professional radar as well.

K-9

later10 wrote: »

Well I do not know why Anglo would make such reassurances, or even if they did why such reassurance would be entertained... Anglo by its nature had nothing to do with sub prime borrowers. By the traditional scoring techniques that all banks used, Anglo's debtors were undoubtedly some of the most credit worthy borrowers in Irish society by the standards of the day. However you do make a perfectly valid point in that our crisis ended up being much worse than a sub prime crisis.

The reason they made such assurances was to assure the Government of their credibility and viability to avail of the guarantee. Not enough regulation or checks existed and the warnings that were issued, ignored like you pointed out about warnings throughout history.

Later10 wrote:

I hope that you are correct on that but I just wonder if the banks, by some miraculous intervention of Our Lady of The Eurozone, were to return to reckless lending policy, would not the public return to its own reckless borrowing policy? My guess is that house prices would slowly rise again, and the celtic tiger era would reignite until the next major bust. I don't think that Ireland has learned what actually happened.

That's where tighter regulation and checks come in. And when they and the Central Bank issue warnings, people should take heed of them, not dismiss them.