"Reckless" lending

Whiskeyjack

I'm hearing this term thrown around around by the anti-europe crowd around here. Now my economic knowledge is scant at best but it strikes me as disingenuous to say the least to imply that the money was forced down our throats by Europeans during the boom in order to extort money out of us via interest. As another poster noted, just because the bar is open it doesn't mean you have to get drunk.

RichardAnd

It's the same as people here placing all the blame on banks for lending John and Jane normal a fortune. The banks should have known better but the general population should have known not to borrow such large sums.

SkepticOne

Whiskeyjack wrote: »

I'm hearing this term thrown around around by the anti-europe crowd around here. Now my economic knowledge is scant at best but it strikes me as disingenuous to say the least to imply that the money was forced down our throats by Europeans during the boom in order to extort money out of us via interest. As another poster noted, just because the bar is open it doesn't mean you have to get drunk.

Reckless lending is not the same as forcing money on people. Reckless lending is lending too much money for security offered (e.g. overvaluing properties against which the loans are made) or lending to the wrong people.

It doesn't let the borrower off the hook (I think this is where a lot of people get it wrong). The borrower is equally responsible and still owes the money.

Also I don't like the way that everyone who has a problem with rescuing the banks from their own stupidity is "anti-European".

ilovesleep

RichardAnd wrote: »

It's the same as people here placing all the blame on banks for lending John and Jane normal a fortune. The banks should have known better but the general population should have known not to borrow such large sums.

As far as I know, a lot of todays problems is due to greedy developers who were hoping on making a mint on people like john and jane. Those developers now not being able to pay off their loans. From what I was reading there is only a small percent of the general public who cant pay their mortgage and personal loans. Mortgage and personal loans defaulters galore are on the way.

Then there is government spending ie high social welfare and public sector pay. Last time I checked it wasn't my responsiblty to do the governments job of controlling pay. How were the general public supposed to know our government and banks would lead us down this path?

ilovesleep

Whiskeyjack wrote: »

I'm hearing this term thrown around around by the anti-europe crowd around here. Now my economic knowledge is scant at best but it strikes me as disingenuous to say the least to imply that the money was forced down our throats by Europeans during the boom in order to extort money out of us via interest. As another poster noted, just because the bar is open it doesn't mean you have to get drunk.

Unless if Ireland went to foreign banks for money with pitchforks and diggers demanding for money was it not the job of the banks to do their job, perhaps look at ireland who had a property boom, add up their sums and say NO. Nobody forced the banks to lend. As I see it there was reckless lending and reckless borrowing and its us being punished severely when banks are to blame as well.

RichardAnd

ilovesleep wrote: »

As far as I know, a lot of todays problems is due to greedy developers who were hoping on making a mint on people like john and jane not being able to pay off their loans. From what I was reading there is only a small percent of the general public who cant pay their mortgage and personal loans. Mortgage and personal loans defaulters galore are on the way.

Then there is government spending ie high social welfare and public sector pay. Last time I checked it wasn't my responsiblty to do the governments job of controlling pay. How were the general public supposed to know our government and banks would lead us down this path?

And why do you think FF didn't curb spending, rein in social welfare rated and generally enforce some sense into a nation gone mad? The answer is simple, they, and the majority of joe and jane normals didn't want that.

Of course, a proper government should sometimes do things that displease the great unwashed for the good of the state but in Ireland, we'll never have that kind of government because we are not that kind of people.

ilovesleep

Whiskeyjack wrote: »

just because the bar is open it doesn't mean you have to get drunk.

Bars, by law, have to stop servicing someone when he/she gets drunk and becomes a danger to himself/herself and other humans.

SkepticOne

The principle at work is very simple. Person A unwisely lends to person B (who unwisely borrowed).

No one forced any one to borrow (and nor is it implied by the term reckless lending). Nor was anyone forced to lend.

There is forcing going on though and that is that person C who had nothing to do with either reckless lending or reckless borrowing is being forced to compensate the reckless lender for their stupidity.

If you lend money to someone and they can't pay it back, that is between you and the person you stupidly lent to. You have no right to expect others to go without because you (and the person you lent to) made a mistake.

Seems fairly straightforward to me but try and point it out and you are labelled "anti-European". The only reason for this it seems to me is that some of the banks were very kindly assisting are based in Germany.

The Icelanders had the right idea. Look after your own people first.

Whiskeyjack

It's the idea that the foreign banks are to blame for our mess because they lent us too much is what irks me. They're looking after themselves and it's not their responsibility to decide when we're borrowing too much. Correct me if I'm wrong but that lies with our financial regulator, who answers to our government who in turn should answer to us.

The whole thing is symptomatic of a mentality in our society that refuses to acknowledge our own responsibility. Our complacency led us to re-elect FF and it's high time we stop acting like victims.

Whiskeyjack

SkepticOne wrote: »

Reckless lending is not the same as forcing money on people. Reckless lending is lending too much money for security offered (e.g. overvaluing properties against which the loans are made) or lending to the wrong people.

It doesn't let the borrower off the hook (I think this is where a lot of people get it wrong). The borrower is equally responsible and still owes the money.

Also I don't like the way that everyone who has a problem with rescuing the banks from their own stupidity is "anti-European".

I'm not saying you're ant-european if you have a problem with the bailout. I'm talking about the people posting stuff like "fcuk them" and taking cheap shots about world wars.

ei.sdraob

SkepticOne wrote: »

Also I don't like the way that everyone who has a problem with rescuing the banks from their own stupidity is "anti-European".

Spot on, I was already called anti european for questioning the stupidity of the banking responses, which is silly considering my strong stance during Lisbon 1+2

Whiskeyjack

ilovesleep wrote: »

Bars, by law, have to stop servicing someone when he/she gets drunk and becomes a danger to himself/herself and other humans.

Even supposing that part of the analogy is apt, who are we in it? The alcoholic. And we're the ones saying that the bar is to blame. Does that not strike you as pathetic?

Scofflaw

The argument rests on two things. First, that the debt built up by Irish banks was primarily lent by European banks, and second, that European banks should have known it was an unwise investment. The former is based largely on the Basel locational banking statistics, the latter is based on the idea that the German regulator, the ECB, or the European banks themselves were deficient in their risk analysis.

Points to consider:

1. lending money does not give you access to banks' books. Foreign banks had no way of knowing how much Irish banks had tied up in Irish property bar occasional and conflicting media reports. They had no way of knowing the reliability of the underlying securities, the overall levels of exposure, the details of the narrowing pyramid of Irish bank lending and securities, except through the standard market channels of regulatory authorities and market ratings agencies.

2. questionable banking practices are expected to be flagged either through national regulators, national central banks, or market ratings agencies. The failure of the first two to flag issues relating to Irish banks is the subject of regular discussion and several extensive post-mortem reports - while market ratings agencies gave debt in banks like Anglo high-grade investment status.

3. detection and publication of dangerous buildups of risk in the Irish banking sector were, likewise, the job of the Irish regulatory authorities. Again, the failures here are very well known.

4. that Ireland was running a property bubble is conveniently now "obvious" to absolutely everyone. At the time, there were very few analysts who were both consistently and authoritatively stating it to be the case, and a very large number busy proclaiming that the Irish economy had somehow changed the rules of the game.

5. finally, and perhaps most importantly, an analysis of the liabilities of Irish domestic banks from 2003 to 2010 shows absolutely no signs of a large buildup of either debt securities or deposits held by anyone in the eurozone. At the height of the boom, the amount of debt securities held by eurozone resident counterparties in Irish domestic banks only hit €17.9bn - compared to €30bn held by Irish counterparties, and €80bn held by international investors outside the eurozone. In terms of deposits in Irish domestic banks, the positions are even starker - a high point of €41.4bn from eurozone counterparties, compared to €291.8bn from Irish residents and €225bn from other non-eurozone countries.

If there was a 'wave' of 'reckless lending' to Irish domestic banks, its origin wasn't the eurozone, which was by a very long way the smallest part of the money flowing into Irish banks.

We now owe the ECB a lot of money - our domestic banks owed it €94.5bn at the end of 2010 - but all the growth in that has been post-bubble, because it is the ECB that has taken the strain of our government's guarantee of Irish domestic bank debt. Money from the ECB has been largely used to pay off debt held by international investors. Since the guarantee in September 2008, debt securities held in Irish domestic banks by non-eurozone international investors has fallen by €53.1bn from €118bn to €64bn, while that held by eurozone investors has fallen only €7.2bn from €17.3bn to €10.1bn. Deposits held in Irish domestic banks by non-eurozone international investors has fallen by €104.4bn from €225bn to €121bn, while that held by eurozone investors has fallen only €25.2bn from €41.4bn to €16.2bn. Again, the finger pointing at European banks is pointing the wrong way.

It sometimes seems to me, rather depressingly, that having been almost entirely uninformed and uninterested in Irish bank positions during the bubble, the Irish public has launched itself into an equally uninformed debate post-mortem.

cordially,
Scofflaw

SkepticOne

Whiskeyjack wrote: »

It's the idea that the foreign banks are to blame for our mess because they lent us too much is what irks me. They're looking after themselves and it's not their responsibility to decide when we're borrowing too much.

Of course it is the responsibility of the banks to make sure that those who they are lending to can pay it back just as it is the responsibility of borrowers to pay back the money.

Correct me if I'm wrong but that lies with our financial regulator, who answers to our government who in turn should answer to us.

The financial regulator failed to regulate the banks but that does not mean the country is in any way liable for losses made by other banks. The Gardaí are supposed to maintain law and order but if your house is broken into you can't sue the guards over it.

The whole thing is symptomatic of a mentality in our society that refuses to acknowledge our own responsibility. Our complacency led us to re-elect FF and it's high time we stop acting like victims.

We are certainly responsible as a people for our electoral decisions but we're not responsible for unwise lending (or borrowing) decisions.

The developer McNamara owes 2 billion to Irish banks but that is between McNamara and the banks themselves. Yes, he should not have borrowed the money but likewise the banks should not have lent it. As far as I'm concerned both parties have only themselves to blame. Similarly if an idiot German banker lends to a dodgy bank like Anglo (who in turn lent to the likes of McNamara) then that is between the German banker and Anglo and if Anglo goes under (as it should have done) then tough **** to those who lent Anglo money.

Why are people so keen to make sure that bankers and investors don't lose any money even when it means they themselves are going to be out of pocket? Personally I don't like to see anyone lose money but that is the nature of business. Sometimes you win and sometimes you lose.

SkepticOne

Scofflaw wrote: »

The argument rests on two things. First, that the debt built up by Irish banks was primarily lent by European banks, and second, that European banks should have known it was an unwise investment.

In fact the argument doesn't rest on those two things. Whether it's a German bank out of pocket or an Australian one is neither here nor there really. The principle is that private debts are a matter to be settled between the borrower and the lender. Neither party have the right ask a third party to bail them out if they make a poor decision.

The thing you believe the argument rests on is also incorrect. It is not whether the lender should have known but rather that it is the responsibility of the lender to assess the risks.

Irish banks failed to understand that a bubble existed in the housing market and lent accordingly. As it turned out they were wrong. It doesn't matter that many other people were wrong as well. That is not a valid excuse. Nor is it an excuse that the regulator wasn't doing his job. Tough ****.

Likewise it is up to those lending to Irish banks to assess risk correctly. This they failed to do. It is their responsibility and theirs alone to do this. It may be a very difficult task particularly when you have incompetent regulators, but that is the environment in which they operate. They have no right to expect compensation if they get it wrong.

The rest of your post is about how hard it was for foreign banks to realise how foolish it was for them to lend into the Irish market. Again, tough ****, imo. They should have kept out. The Irish public have no obligation to compensate them, yet we are doing so and paying the price in higher borrowing costs as a result.

Scofflaw

SkepticOne wrote: »

In fact the argument doesn't rest on those two things. Whether it's a German bank out of pocket or an Australian one is neither here nor there really. The principle is that private debts are a matter to be settled between the borrower and the lender. Neither party have the right ask a third party to bail them out if they make a poor decision.

The thing you believe the argument rests on is also incorrect. It is not whether the lender should have known but rather that it is the responsibility of the lender to assess the risks.

Irish banks failed to understand that a bubble existed in the housing market and lent accordingly. As it turned out they were wrong. It doesn't matter that many other people were wrong as well. That is not a valid excuse. Nor is it an excuse that the regulator wasn't doing his job. Tough ****.

Likewise it is up to those lending to Irish banks to assess risk correctly. This they failed to do. It is their responsibility and theirs alone to do this. It may be a very difficult task particularly when you have incompetent regulators, but that is the environment in which they operate. They have no right to expect compensation if they get it wrong.

The rest of your post is about how hard it was for foreign banks to realise how foolish it was for them to lend into the Irish market. Again, tough ****, imo. They should have kept out. The Irish public have no obligation to compensate them, yet we are doing so and paying the price in higher borrowing costs as a result.

Yes, but that's all irrelevant to the OP's point:

I'm hearing this term thrown around around by the anti-europe crowd around here. Now my economic knowledge is scant at best but it strikes me as disingenuous to say the least to imply that the money was forced down our throats by Europeans during the boom in order to extort money out of us via interest. As another poster noted, just because the bar is open it doesn't mean you have to get drunk

The OP is quite correct that our banking debt has been painted as primarily European in origin. The ins and outs of why exactly we wound up bailing out senior debt - and more mysteriously, why the identities of those involved has been kept so secret - is an entirely separate argument from the source of the debt in question.

cordially,
Scofflaw

Whiskeyjack

Neither I nor Scofflaw are referring to the bank bailout. My thread was addressing the idea that the original crisis should somehow be blamed on the "reckless lending" by European banks during the boom.

I'm not a bailout apologist, lets get that much straight. To be honest I've yet to be convinced by either side in that regard.

SkepticOne

OK, I have misinterpreted the OP.

I jumped to the conclusion that this was about the bailout because in the past many arguments justifying the bailout start out that way. However that is my mistake.

I have no problem with foreign banks lending to Irish banks or directly to Irish business ventures for the purposes of charging interest. That is, after all, what banks do. Once they are prepared to take their full share of their side of the risk, I've no problem with them.

My only problem is when we the public have to pick up the bill but that is not the topic here.

ilovesleep

Whiskeyjack wrote: »

Even supposing that part of the analogy is apt, who are we in it? The alcoholic. And we're the ones saying that the bar is to blame. Does that not strike you as pathetic?

Its very appropriate IMO.

A bar is supposed to stop serving one when he/she starts to show signs of intoxication so that he/she is not a danger to him/herself or others. We'll take for example paddy. He goes into his local, happy and sound and gets served. He has one too many and starts to slur his speech but the barman keeps serving him until he stumbles out the door at closing time. Walking home, he falls, receives a whack to his head, ends up in hospital and is now severly disabled. The bar/publican/barman is now liable for damages caused to paddy due to their irresponsible serving of drink. Paddys teenage kids are now faced with a future of caring for their vegetated father because paddys ex wife ran away with all his assets.

ilovesleep

In this case, paddy is ireland, his kids is the future generation, and the pubs are the banks.

Why did the pub not stop serving paddy when he started to show signs of intoxication? Is the publican supposed to have a breathalyser to calculate how drunk one is?

Why did the banks not stop lending to Ireland during the boom years? Or at least increase interest rates to discourage borrowing.

Permabear

This post has been deleted.

Scofflaw

ilovesleep wrote: »

In this case, paddy is ireland, his kids is the future generation, and the pubs are the banks.

Why did the pub not stop serving paddy when he started to show signs of intoxication? Is the publican supposed to have a breathalyser to calculate how drunk one is?

Following the analogy, yes, the publican is supposed to have access to fairly detailed up to the minute blood alcohol readings, and did. Unfortunately, the publican can allow their judgement on how Paddy is 'handling his drink' to override mere facts and figures, and did.

ilovesleep wrote: »

Why did the banks not stop lending to Ireland during the boom years? Or at least increase interest rates to discourage borrowing.

Largely because they hoped to make lots more money out of Paddy. Following your analogy, the local Garda (bank regulator), of course, is supposed to check that the publican isn't allowing his greed to get the better of him by serving more alcohol to the heavily inebriated - in our case, alas, he contented himself with phoning the publican every now and again to ask was everything OK.

cordially,
Scofflaw

Scofflaw

Permabear wrote: »

This post had been deleted.

Sure - I didn't mean to imply that negative voices didn't exist, only that they were shouted down.

cordially,
Scofflaw

Liam Byrne

ilovesleep wrote: »

In this case, paddy is ireland, his kids is the future generation, and the pubs are the banks. .

Incorrect. Paddy is not Ireland. Paddy is a subset of Ireland.

And the rest of us have to pay Paddy's bill.

maninasia

Scofflaw wrote: »

Following the analogy, yes, the publican is supposed to have access to fairly detailed up to the minute blood alcohol readings, and did. Unfortunately, the publican can allow their judgement on how Paddy is 'handling his drink' to override mere facts and figures, and did.



Largely because they hoped to make lots more money out of Paddy. Following your analogy, the local Garda (bank regulator), of course, is supposed to check that the publican isn't allowing his greed to get the better of him by serving more alcohol to the heavily inebriated - in our case, alas, he contented himself with phoning the publican every now and again to ask was everything OK.

cordially,
Scofflaw

The answer, they COULDN'T stop lending. To stop lending would have meant

a) The banks would perform poorly against their competitors and the boards would be under pressure and make less in bonuses. This is supposedly what happened with BOI and AIB when Anglo Irish started reporting record earnings.

b) The air would have gone from the bubble and they either knew this or sensed this, hence they wanted to make money when the sun still shone

c) They couldn't make as much by managing money or charging transactions fees. The major way (in theory) a bank can make money is to lend, if it doesn't lend it doesn't make money, it's hard (as the analogy above) to ask a publican to stop selling so many pints when he's making so much cash everyday and he's getting the beer for a no money down low interest loan from the brewery

d) The boards had no personal reason to be cautious. Banks are not run by wealthy individuals or families anymore, therefore the executives of the bank have no skin in the game, they don't fear bankruptcy and total loss. This is an inherent problem with many public companies.

maninasia

Scofflaw wrote: »

Sure - I didn't mean to imply that negative voices didn't exist, only that they were shouted down.

cordially,
Scofflaw

I remember visiting in the midsts of the boom. It seemed like a foreign company had replaced Ireland. Everybody was optimistic and all they talked about was how much their property had gone up in value or who bought where. I was very skeptical and yet after a while you doubted yourself because you thought...hmm..maybe I made a mistake leaving and they really found the fountain of money after I left. I mean look at all the foreigners that arrived on the island, the new buildings and shops, new cars everwhere. After all all my friends were living large and had better lifestyles than me. So although logically it didn't make that much sense (unending rapid growth) there were many things that could mislead you. Rapid immigration along with rapid credit growth and rapid job growth feeding on each other conspired to create an unreal feeling. Of course it suited the government and their property related cronies for this to happen, it wasn't purely accidental as you can see by the decision to let E.Europeans have the work visa before most of the EU (I've nothing against E.Europeans or immigrants whatsoever..but it was an odd decision to fully open so quickly....that along with very loose student work and refugree visas...I knew it would backfire in the end as none of it was regulated properly like Canada or Australia etc).

maninasia

SkepticOne wrote: »

OK, I have misinterpreted the OP.

I jumped to the conclusion that this was about the bailout because in the past many arguments justifying the bailout start out that way. However that is my mistake.

I have no problem with foreign banks lending to Irish banks or directly to Irish business ventures for the purposes of charging interest. That is, after all, what banks do. Once they are prepared to take their full share of their side of the risk, I've no problem with them.

My only problem is when we the public have to pick up the bill but that is not the topic here.

The problem was the FF government bank guarantee ALONG with a badly run economy and government, not the European Central Bank or European Banks or foreign banks.

The FF government didn't need to give a blanket guarantee but it did and there was hardly a peep out of the media or most financial types or joe public for two years. Meanwhile every six months or so another big batch of private held bonds was paid off by the government which then had to borrow from the ECB.

The public also deserves this as they woke up too late...the information was all out there in black and white. There were no mass protests, it was mostly ignored.

SkepticOne

maninasia wrote: »

The problem was the FF government bank guarantee ALONG with a badly run economy and government, not the European Central Bank or European Banks or foreign banks.

The FF government didn't need to give a blanket guarantee but it did and there was hardly a peep out of the media or most financial types or joe public for two years. Meanwhile every six months or so another big batch of private held bonds was paid off by the government which then had to borrow from the ECB.

The public also deserves this as they woke up too late...the information was all out there in black and white. There were no mass protests, it was mostly ignored.

I agree. The problem for us is that the government on our behalf made what should have been someone else's problem under normal circumstances and turned it into our problem. Under normal circumstances those lending to the likes of Anglo would have lost everything and I think most will agree rightly so. Why? Because under those circumstances the lender would have been responsible for its lending decisions. To the extent that we did not protest, we the people must also take some of the blame.

However the OP has pointed out that the thread is not about the bailout. It is about whether or not whether or not lenders were acting irresponsibly during the boom (regardless of whether or not the were later bailed out).

My view on this is that in any economy you are going to have businesses act in various ways making various assumptions about the reality of the market in which they are operating. It is not their role, in my view, to cater to the good of the country. Tesco's doesn't operate in Ireland for the good of Ireland but rather to make a profit. If we don't like how they operate then it is up to us create laws that curb whatever undesirable behaviour we feel appropriate.

Similarly with the housing boom. If we as a nation wanted curbs on the bubble we should have enforced lending rules, implemented the Bacon recommendations etc. Instead we did next to nothing. Whether the lenders were reckless or responsible is neither here nor there in that regard.

We must live with our decisions in this regard. What angers me, however is that not only did we not curb lending in Ireland to prevent the boom but more recently we've protected lenders (foreign and Irish) from the normal consequences of their lending practices. Again, however, the thread isn't about that.

RichardAnd

SkepticOne wrote: »

I agree. The problem for us is that the government on our behalf made what should have been someone else's problem under normal circumstances and turned it into our problem. Under normal circumstances those lending to the likes of Anglo would have lost everything and I think most will agree rightly so. Why? Because under those circumstances the lender would have been responsible for its lending decisions. To the extent that we did not protest, we the people must also take some of the blame.

However the OP has pointed out that the thread is not about the bailout. It is about whether or not whether or not lenders were acting irresponsibly during the boom (regardless of whether or not the were later bailed out).

My view on this is that in any economy you are going to have businesses act in various ways making various assumptions about the reality of the market in which they are operating. It is not their role, in my view, to cater to the good of the country. Tesco's doesn't operate in Ireland for the good of Ireland but rather to make a profit. If we don't like how they operate then it is up to us create laws that curb whatever undesirable behaviour we feel appropriate.

Similarly with the housing boom. If we as a nation wanted curbs on the bubble we should have enforced lending rules, implemented the Bacon recommendations etc. Instead we did next to nothing. Whether the lenders were reckless or responsible is neither here nor there in that regard.

We must live with our decisions in this regard. What angers me, however is that not only did we not curb lending in Ireland to prevent the boom but more recently we've protected lenders (foreign and Irish) from the normal consequences of their lending practices. Again, however, the thread isn't about that.

It's not the thread topic no but it is a very tragic and very poignant point that people miss. If anglo and the rest hadn't been bailed out then it really wouldn't have been Irish debt, rather bank debt that wasn't being paid back. However, by borrowing billions and giving to Anglo, AID, BoI etc we have made it out debt and that, whilst a horrid truth, is something people don't seem to grasp easily. In short, it's my opinion that defaulting at this stage could be a disaster greater than what have come already.

Whiskeyjack

ilovesleep wrote: »

In this case, paddy is ireland, his kids is the future generation, and the pubs are the banks.

Why did the pub not stop serving paddy when he started to show signs of intoxication? Is the publican supposed to have a breathalyser to calculate how drunk one is?

Why did the banks not stop lending to Ireland during the boom years? Or at least increase interest rates to discourage borrowing.

And now image paddy saying "it's all your fault, you let me get this drunk. It's not my responsibility to look after myself", and you get an idea of how sad this line of thinking is.

Also, please take a look at Scofflaws post on this.

SkepticOne

RichardAnd wrote: »

It's not the thread topic no but it is a very tragic and very poignant point that people miss. If anglo and the rest hadn't been bailed out then it really wouldn't have been Irish debt, rather bank debt that wasn't being paid back. However, by borrowing billions and giving to Anglo, AID, BoI etc we have made it out debt and that, whilst a horrid truth, is something people don't seem to grasp easily. In short, it's my opinion that defaulting at this stage could be a disaster greater than what have come already.

I think most people realise that at this stage it will be very difficult if not impossible to reverse those decisions. Doesn't mean we have to be happy with them though. Although there is very little that can be done now, it may be possible to prevent abuses such as this by governments in the future.

20Cent

Whiskeyjack wrote: »

I'm hearing this term thrown around around by the anti-europe crowd around here. Now my economic knowledge is scant at best but it strikes me as disingenuous to say the least to imply that the money was forced down our throats by Europeans during the boom in order to extort money out of us via interest. As another poster noted, just because the bar is open it doesn't mean you have to get drunk.

The whole Euro could collapse due to the lending to one of its smaller states. I'd call that pretty reckless.

kenrr

Scofflaw wrote: »

..........
5. finally, and perhaps most importantly, an analysis of the liabilities of Irish domestic banks from 2003 to 2010 shows absolutely no signs of a large buildup of either debt securities or deposits held by anyone in the eurozone. At the height of the boom, the amount of debt securities held by eurozone resident counterparties in Irish domestic banks only hit €17.9bn - compared to €30bn held by Irish counterparties, and €80bn held by international investors outside the eurozone. In terms of deposits in Irish domestic banks, the positions are even starker - a high point of €41.4bn from eurozone counterparties, compared to €291.8bn from Irish residents and €225bn from other non-eurozone countries.

If there was a 'wave' of 'reckless lending' to Irish domestic banks, its origin wasn't the eurozone, which was by a very long way the smallest part of the money flowing into Irish banks.

We now owe the ECB a lot of money - our domestic banks owed it €94.5bn at the end of 2010 - but all the growth in that has been post-bubble, because it is the ECB that has taken the strain of our government's guarantee of Irish domestic bank debt. Money from the ECB has been largely used to pay off debt held by international investors. Since the guarantee in September 2008, debt securities held in Irish domestic banks by non-eurozone international investors has fallen by €53.1bn from €118bn to €64bn, while that held by eurozone investors has fallen only €7.2bn from €17.3bn to €10.1bn. Deposits held in Irish domestic banks by non-eurozone international investors has fallen by €104.4bn from €225bn to €121bn, while that held by eurozone investors has fallen only €25.2bn from €41.4bn to €16.2bn. Again, the finger pointing at European banks is pointing the wrong way.

It sometimes seems to me, rather depressingly, that having been almost entirely uninformed and uninterested in Irish bank positions during the bubble, the Irish public has launched itself into an equally uninformed debate post-mortem.

cordially,
Scofflaw

Scofflaw, thank you for providing that information. Intuitively, the often expressed view that burning the evil French/German bondholders would immediately solve all our debt problems hasn't seemed correct to me. Your figures put that sort of populist view into perspective. May I ask whether you've obtained these figures as a result of your own analysis or whether there's an easily referenced analysis that can be linked to? Perhaps a Sticky referring to this sort of analysis would be helpful when topics like this are discussed?

Liam Byrne

Whiskeyjack wrote: »

And now image paddy saying "it's all your fault, you let me get this drunk. It's not my responsibility to look after myself", and you get an idea of how sad this line of thinking is.

Also, please take a look at Scofflaws post on this.

Paddy can go feck himself - he borrowed drank.

The issue is that the other customers in the bar - and even those who were nowhere near the bar - are saying "WTF?" (and rightly so) because they got Paddy's bill.

They're then being told that "the area needs a pub; we'll have no pubs if you don't pay the tab because the barman will go bust, and you might lose the €50 you put on the tab there last week and not get it back", and wondering - FFS, if that idiot barman couldn't run a pub, surely someone should let him go bust and get someone worthwhile to set up a properly-run pub.