Irish Banks May Need 50 Billion Euros: Dukes

20Cent

Forget your empty chairs and the Enda VB circus. Here is the real story:



Anglo Irish Bank Corp. Chairman Alan Dukes said the nation’s lenders may need about a further 50 billion euros ($68.2 billion) of capital, more than absorbing a bailout fund for the banks.
The Dublin-based government has already poured 46 billion euros into the banks, and can tap 35 billion euros of extra capital under a bailout agreed last year with the International Monetary Fund and European Union.
“A clean banking core will require something in the region of 50 billion euros,” Dukes, 65, a former finance minister, said in an e-mailed copy of a speech today. “A clean banking restructuring implies the acceptance of irrecoverable losses.”



http://www.bloomberg.com/news/2011-02-08/irish-banks-may-need-an-additional-68-billion-anglo-irish-s-dukes-says.html


If this is not the main story on the 6 O'Clock news I give up!!
Sinn Fein are sounding like the only party who have this right.

ei.sdraob

Filling that gap requires “long term 20 year to 30 year funding, on which there will be no return,” Dukes said.

For gods sake, this is getting ridiculous now, someone somewhere is laughing all the way to the bank quite literary

jammyhog

have'nt you heard we've turned the corner, there's green shoots everywhere, it's gonna be a soft landing and it'll be the cheapest bailout ever

Citizen_Cutback

jammyhog wrote: »

have'nt you heard we've turned the corner, there's green shoots everywhere, it's gonna be a soft landing and it'll be the cheapest bailout ever

Yes, we have turned another corner alright but now we have the ECB in our sights.

It had to happen. Somebody had to call it as it is: AN ECB/Euro crisis. FX Exchange markets don't seem to have reacted yet though!

jmayo

ei.sdraob wrote: »

For gods sake, this is getting ridiculous now, someone somewhere is laughing all the way to the bank quite literary

Yeah banks in Lichenstein, Austria and Switzerland.

Speaking of Austria I wonder who are the depositors in Anglo's old subsidiary ?

Citizen_Cutback wrote: »

Yes, we have turned another corner alright but now we have the ECB in our sights.

It had to happen. Somebody had to call it as it is: AN ECB/Euro crisis. FX Exchange markets don't seem to have reacted yet though!

Well then keep bloody quiet.
BTW what time are EI flights to Zurich and what are the baggage allowances for cash ?

jameshayes

euros:

euro:

20Cent

So is this it?
Game over?
Some default was inevitable this news makes it urgent.

megafan

20Cent wrote: »

Forget your empty chairs and the Enda VB circus. Here is the real story:



Anglo Irish Bank Corp. Chairman Alan Dukes said the nation’s lenders may need about a further 50 billion euros ($68.2 billion) of capital, more than absorbing a bailout fund for the banks.
The Dublin-based government has already poured 46 billion euros into the banks, and can tap 35 billion euros of extra capital under a bailout agreed last year with the International Monetary Fund and European Union.
“A clean banking core will require something in the region of 50 billion euros,” Dukes, 65, a former finance minister, said in an e-mailed copy of a speech today. “A clean banking restructuring implies the acceptance of irrecoverable losses.”




Is this election just helping to distract from really what's going on & still no word from guards or DDP re prosecutions for who is responsible or locate where all the billions have gone..... Meanwhile new FF lite are cleaning their act up but Micheal Martin is still going to keep his cash though! (He'll clean up later?)

ilovesleep

Its reported over in p.ie that if the ECB continues to lend to our banks it will bring down the Euro. So thats it. We're defaulting. May the balls drop off you Ahern, Cowen, Lenihan and everyone else that took ireland down.

Maj Malfunction

So on one hand we are being told another 35 billion is need and on the other 50 billion is needed. So really what we learning here is that the experts don't know exactly, and it is very difficult to predict.

If we go the Sinn Fein economic policy of burning senior bond holders or any bond holder for that matter. Would their supporters be happy if their savings that they have on deposit in a bank were to get burned because the bonder holders got burned, because they used your money on deposit and invested it in a bond to earn a return.

So now I hear them say but my savings are guaranteed! Yes they are, but only if the government/country can afford the guarantee! Last time I checked the IMF/EU were in town to bail out the country cause Ireland Inc. is broke.

Defaulting while an option will mean a significantly increased premium in the future as Ireland would be seen in the market a riskier investment when we do finally exit recession and need to borrow money again on the open market.

Sinn Fein is an excellent protest party and excel at making lots of noise and hot air, however they just don't get economics.

danbohan

ilovesleep wrote: »

Its reported over in p.ie that if the ECB continues to lend to our banks it will bring down the Euro. So thats it. We're defaulting. May the balls drop off you Ahern, Cowen, Lenihan and everyone else that took ireland down.[/QUOTE





your assuming they had any in first place !

jammyhog

Maj Malfunction wrote: »

So on one hand we are being told another 35 billion is need and on the other 50 billion is needed. So really what we learning here is that the experts don't know exactly, and it is very difficult to predict.

If we go the Sinn Fein economic policy of burning senior bond holders or any bond holder for that matter. Would their supporters be happy if their savings that they have on deposit in a bank were to get burned because the bonder holders got burned, because they used your money on deposit and invested it in a bond to earn a return.

So now I hear them say but my savings are guaranteed! Yes they are, but only if the government/country can afford the guarantee! Last time I checked the IMF/EU were in town to bail out the country cause Ireland Inc. is broke.

Defaulting while an option will mean a significantly increased premium in the future as Ireland would be seen in the market a riskier investment when we do finally exit recession and need to borrow money again on the open market.

Sinn Fein is an excellent protest party and excel at making lots of noise and hot air, however they just don't get economics.

i'd safely say that FF, FG and Labour just dont get economics...after all their bull we'll default anyway....why would the bond markets see a default as negative, we'd owe less money so we'd be in a better position to pay, bank debt and sovereign debt are not the same

th3 s1aught3r

jammyhog wrote: »

have'nt you heard we've turned the corner,

Straight into an oncoming truck it would seem

melekalikimaka

jumping the gun a tad lads...

Spudmonkey

Would this make it 96bn in total?

My head is starting to hurt...

tommy21

Jesus christ. This cannot be true?!

danbohan

tommy21 wrote: »

Jesus christ. This cannot be true?!

probably the only untrue part is that it will be higher that 50 billion!

th3 s1aught3r

Spudmonkey wrote: »

Would this make it 96bn in total?

My head is starting to hurt...

It doesnt matter at this stage. They told us we couldnt afford to let the banks fail, now it seems we cant afford to keep them open :rolleyes:

tommy21

danbohan wrote: »

probably the only untrue part is that it will be higher that 50 billion!

:eek:

Spudmonkey

th3 s1aught3r wrote: »

It doesnt matter at this stage. They told us we couldnt afford to let the banks fail, now it seems we cant afford to keep them open :rolleyes:

A billion used be lot of money before, now it's bandied about like your buying sweets.

Roll on the 25th.

My name is URL

ilovesleep wrote: »

Its reported over in p.ie that if the ECB continues to lend to our banks it will bring down the Euro. So thats it. We're defaulting. May the balls drop off you Ahern, Cowen, Lenihan and everyone else that took ireland down.

They could always just allow our own central bank to print the money required.. which they have already done recently

saywhatyousee

we need to get out of the deutschmark and print our own interest free money given out by the government its the only way a country can prosper

saywhatyousee

My name is URL wrote: »

They could always just allow our own central bank to print the money required.. which they have already done recently

ha ha thats is the funniest article i have read in my life america creates money out of fresh air aswell the irish central bank does the exact same as the fed does everyday the whole world is a joke at the minute.talk about making it up as they go along

later12

Wow, the award for most exaggerations in a single thread probably belongs here alright. Perhaps it wouldn't hurt to serve a reminder that this is Alan Dukes' professional opinion, it certainly hasn't been realised and it is unclear as to whether or not the incoming Government would entertain such requirements even if the issue did actually arise! Save your fury for reality, not this apparently rather vague contemplation.

Dannyboy83

I'll wait for Lenihan to comment.

If he says we don't need it, then we do.
If he says it will be 50bn maximum, then double it as a minimum.

Here's another little story nobody is addressing at the moment:

http://www.breakingnews.ie/ireland/lenihan-not-worried-about-potential-mortgage-meltdown-485618.html

Minister for Finance Brian Lenihan said today that he is confident there will not be a huge increase in mortgage defaulters, which could render the bank bailout fund inadequate.

Anglo Irish Bank boss Alan Dukes has said that the €35bn fund for the banks will not be enough.

http://www.breakingnews.ie/ireland/house-repossessions-set-to-soar-492464.html

A leading housing charity fears repossessions will soar this year unless urgent Government action is taken.

“Unless more is done to assist people, we could witness large scale repossessions in 2011 and 2012.”

Sir Oxman

I don't believe Ireland can ever repay the amounts being talked about - what is the big plan then?

aidan24326

gambiaman wrote: »

I don't believe Ireland can ever repay the amounts being talked about - what is the big plan then?

I don't think anybody really knows.

Sticky_Fingers

gambiaman wrote: »

I don't believe Ireland can ever repay the amounts being talked about - what is the big plan then?

There is no plan, they are all flapping around like headless chickens.
FG/Labour/Greens and FF are pinning their hopes on renegotiation with the ECB despite the fact that ECB head Jean-Claude Trichet said that was not an option and it is doubtful that they will be able to reduce the interest rate substantially anyway so we will still be screwed.

The Shinners and the United Left Alliance are talking about completely disowning the banking debt which means that the ECB will be on the hook for the billions upon billions it has already pumped into the Irish banks. If the hard left get their way we would be persona non grata in Brussels and we would have to try and either raise money ourselves on the international bond markets or slash government spending to balance the budget in order to pay for public services.

We are on the horns of a dilemma and are flushed no matter what we choose to do.

thebman

melekalikimaka wrote: »

jumping the gun a tad lads...

Well Alan Dukes is hardly saying this for a laugh at the same time ...

ArtSmart

thebman wrote: »

Well Alan Dukes is hardly saying this for a laugh at the same time ...

dukes seems to mean in the long term, ie un-recovered money, not money been pumped into the banks.

wish he's talk to himself only

thought the article below from goodbody interesting out tonight
http://www.rte.ie/news/2011/0208/economy-business.html

oppenheimer1

thebman wrote: »

Well Alan Dukes is hardly saying this for a laugh at the same time ...

He could be saying it to hurt FF, I doubt it though.

hinault

At a guess (and this is all this is), Dukes by saying that the Irish banks may need €50 billion in extra funding is admitting that now no one really knows the level of bank liabilities at this point and that what we've been told before is not now the case.

We were told that Anglo required €34 billion to address it's liabilities and that Anglo was the largest bank requiring a bailout of it's liabilities.
We were also told that a balance of approximately €25 billion would address the liabilities of other banks and lending institutions.

If a further €50 billion is required on top of all of this - then we're ****ed (excuse my french).:mad::mad::mad::mad::mad::mad:

Solair

This is really starting to get very frightening.

There appears to be absolutely no plan!

The Irish Government / Civil Service / Central bank seem to have no idea what they're up to.

The opposition parties aren't coming up with anything that sounds plausible other than defaulting.

The ECB and EU seem as clueless as our own lot. It's all bandaids and kicking the can down the road a bit further.

The banks seem to just constantly produce more and more shocking figures without any warning. It's like they're either doing optimistic accounting or, they really don't have a bloody clue what their exposure is, which is even more worrying as at least if they were just corrupt, you'd know they had a motivation to make money and a level of intellect and competence behind them, even if it was malevolent.

The way things are going they seem to be just grossly incompetent and breathtakingly stupid.

• Where does this end?
  
• We default?
  
• We leave the Euro?
  
• We get kicked out of the Euro?
  
• Will the IMF/ECB deal be withdrawn as we don't seem to be able to fix the banks thus we're breeching the conditions.

This situation is pretty much identical to Iceland, just without some of the economic/fiscal freedoms that Iceland has as its disposal.

It's nothing like Greece which was just simple overspending by the Government.

Although, I suspect Spain's going to join us and spin into a banking crisis before long.

The Boston Globe put it very well:
www.boston.com

Sir Oxman

Sticky_Fingers wrote: »

There is no plan, they are all flapping around like headless chickens.
FG/Labour/Greens and FF are pinning their hopes on renegotiation with the ECB despite the fact that ECB head Jean-Claude Trichet said that was not an option and it is doubtful that they will be able to reduce the interest rate substantially anyway so we will still be screwed.

The Shinners and the United Left Alliance are talking about completely disowning the banking debt which means that the ECB will be on the hook for the billions upon billions it has already pumped into the Irish banks. If the hard left get their way we would be persona non grata in Brussels and we would have to try and either raise money ourselves on the international bond markets or slash government spending to balance the budget in order to pay for public services.

We are on the horns of a dilemma and are flushed no matter what we choose to do.

IMO, the international analysts are correct - Ireland cannot possibly, even with the will, repay these vast sums of money without condemning the country and it's people to decades of zero growth and zero future.
It makes no sense to lumber a whole nation with the responsibility of keeping the Euro project, which is fundamentally flawed, on life support while we go under.

It simply is not possible.

hinault

As the Irish economy contracts, I would have expected the Irish banks loan books to have deteriorated and for their liabilities to have increased.

But €50 billion increase on the liability figures given by Lenihan defies disbelief.


Remember this is what Comical Lenihan said last September 2010.

http://www.independent.ie/national-news/final-bill-for-toxic-anglo-could-now-reach-euro34bn-2359006.html
THE cost of bailing out Anglo Irish Bank could hit â¬34bn, the Government admitted early today.

Hours after it scraped by on a Dail vote and got a modest boost in the latest opinion poll, the Government revealed that it now estimates the final bill for Anglo will range between â¬29bn and â¬34bn.

This is the "worst-case scenario", to be outlined by Central Bank governor Patrick Honohan and the Financial Regulator Matthew Elderfield this morning.

To date, the Government has committed â¬25bn to the bank. It will now have to inject another â¬4bn to â¬9bn.

The new estimates will mean the Government has less money to spend and will have to introduce an even tougher Budget in December.

And it will mean that every man, woman and child in the country could end up paying as much as â¬8,095 each to bail out the bank. Today's final bailout figure is almost eight times the original estimate.

When Finance Minister Brian Lenihan first proposed nationalising Anglo Irish Bank in January 2009, he estimated that it would cost â¬4.5bn.

The revelations followed a dramatic day. The return of the Dail after a 12-week summer break was marred by a cement truck being driven into the gates of Leinster House. Self-styled 'Anglo Avenger' Joe McNamara (41) was last night charged and is due to appear before the criminal courts of justice this morning in relation to the incident.

Taoiseach Brian Cowen meanwhile received a boost when an opinion poll showed Fianna Fail rising with marginal improvements in the satisfaction ratings for him and his Government. The Labour Party continued to surge ahead of its opponents in the poll.

Fine Gael leader Enda Kenny was hit by another huge setback as support for his party dropped in the Ipsos MRBI poll for the 'Irish Times'.

It now has dipped to the same level of support as Fianna Fail.

Finance Minister Brian Lenihan last night warned the State's financial stability would be "seriously jeopardised" if the Government did not renew the bank guarantee.

And the Government indicated it will continue to limp on with a narrow majority.

The coalition finally confirmed it would hold the three Dail by-elections next spring amidst claims that its "days were numbered".

Forced

The Government had originally planned to make the announcement of the final bill for Anglo after markets closed today, but this has been abandoned in favour of an announcement this morning, followed by a press conference in government buildings.

It was forced to come up with a definitive cost for Anglo Irish after the bondholders who lend money to the country became fearful that the eventual bill would bankrupt the country.

The â¬34bn figure is close to the â¬35bn estimate made by ratings agency Standard & Poor's earlier this month. This figure was rejected by both the Government and the Central Bank at the time.

The Government is now expected to cut a deal with holders of subordinated Anglo debt to keep a lid on the cost of propping up the bank, even though the savings involved are relatively small.

Subordinated debt pays the highest interest rate to lenders but is riskier than other kinds of debt.

Anglo will make a voluntary exchange offer to these bondholders, offering them a small premium to the market price of these bonds.

The difference between this price and the face value of the bonds will give Anglo a gain, meaning the total amount of money needed by the bank is reduced

Sticky_Fingers

gambiaman wrote: »

IMO, the international analysts are correct - Ireland cannot possibly, even with the will, repay these vast sums of money without condemning the country and it's people to decades of zero growth and zero future.
It makes no sense to lumber a whole nation with the responsibility of keeping the Euro project, which is fundamentally flawed, on life support while we go under.

It simply is not possible.

Oh I agree with you, many of us were bellowing from the rooftops that the bailout deal was completely ludicrous when it was announced and was not designed to help us in any way. The problem though is that if we want to keep the show on the round we need to fund it with someone elses money.

I honestly don't know what course of action we should take, swallow the bailout and choke on the debt burden a year and a half down the road or renege on the debt and face the ire of the ECB. The sad fact is that we need a bailout, the terms of the current one though strike me as pure punishment designed to send a message to the other PIGS, though it looks like Portugal will soon be following us into the arms of the ECB/IMF anyway.

We've been kicked in the teeth by our European partners because we are small and weak, we rolled over too easily to their demands and now we are trapped in a very deep hole, how we get out of it is anyones guess.

hinault

Sticky_Fingers wrote: »

.

We've been kicked in the teeth by our European partners because we are small and weak, we rolled over too easily to their demands and now we are trapped in a very deep hole, how we get out of it is anyones guess.

Just as a point of order.

The liability figure has moved from being "the cheapest bailout in the world" to being €8b, to €22b, to €60 billion.
Now Dukes is suggesting that the bailout could cost another €50 billion.

"Eh, Gunther we'd like to repay you what we borrowed from ye but could you give us some leeway because we thought we owed ye €8 billion but now Stephens Green (Anglo) tell me it's €16 billion, sorry make that €24 billion,
entschuldigen sie bitte, we don't know how much we owe ye Gunther......"

Scofflaw

Posted this on another thread, but it seems relevant here. Dukes is, I think, doing a bit of lobbying rather than anything else here. His figure for sorting out the 'black hole' as given in the article is actually roughly the size that's currently allowed for in the IMF programme:

The state has injected 29.3 billion euros into nationalized Anglo Irish. Dukes, appointed as chairman in June, said the remaining “black hole” in the Irish financial system may amount to between 20 billion euros and 40 billion euros.

I don't think anyone is actually aiming for a 'clean banking core'.

ArtSmart wrote: »

http://www.rte.ie/news/2011/0208/economy-business.html

goodbody's says burn em. - the ones we can

It's interesting to consider the Goodbody suggestion in light of the comments made by Alan Dukes:

Other options suggested by Goodbody are allowing the European Financial Stability Facility to directly recapitalise weak banking systems such as Ireland's or facilitate the sale of Irish banking assets through an EU-wide insurance scheme.

It seems unlikely that Dukes decided to lay out scary figures for the Irish banking system off the top of his head, and he repeats the same message as Goodbody:

In a speech today, Alan Dukes said that if the ECB continues to fund Irish lenders to the same extent, the banking crisis in Ireland could bring the whole system down.

Irish banks’ dependence on the central bank has increased dramatically in the past few months.

"It (the ECB) is performing a role for which it was not designed and for which it is arguably ill-equipped. To a very significant extent, the ECB is taking the place of capital markets," Dukes said.

"The euro zone must provide, in the immediate future, the supports that are needed to ensure that the Irish financial and banking crisis does not bring down the entire system."

In turn, we hear that bankers are lobbying the EU to permit the bailout funds to help banks directly:

FRENCH Finance Minister Christine Lagarde has warned bankers to stop lobbying the European Union to permit its bailout fund to buy back bonds of indebted members.

Speaking in Davos, Ms Lagarde said this was a job for finance ministers rather than bankers and advisers. Her comments follow those of European Central Bank president Jean-Claude Trichet who said it may be "useful" for the €440bn European Financial Stability Facility to buy government bonds to help ease tensions in financial markets. Deutsche Bank chief Josef Ackermann said that he also supports the idea.

"We are discussing it at the moment," Ms Lagarde said. "I don't think there is a general consensus yet, but it is one avenue for the stability fund to get involved in markets."

Finance ministers are also considering allowing the fund to re-capitalise distressed banks and may also increase the size of the aid mechanism. EU leaders are committed to making the fund more "efficient and flexible" and if it needed to be enlarged, "so be it", she said.

Essentially, then, it seems to me that Dukes is doing his bit of lobbying for the cause of bankers there in a nicely indirect way, by gently threatening the ECB with an Irish default if they don't come to some sort of arrangement that replaces the ad-hoc use of ECB liquidity support.

cordially,
Scofflaw

Sticky_Fingers

hinault wrote: »

Just as a point of order.

The liability figure has moved from being "the cheapest bailout in the world" to being €8b, to €22b, to €60 billion.
Now Dukes is suggesting that the bailout could cost another €50 billion.

"Eh, Gunther we'd like to repay you what we borrowed from ye but could you give us some leeway because we thought we owed ye €8 billion but now Stephens Green (Anglo) tell me it's €16 billion, sorry make that €24 billion,
entschuldigen sie bitte, we don't know how much we owe ye Gunther......"

Can you honestly say that the 5.7% blended interest rate attached to the bailout plus the requirement to plough the pension reserve in first is not a giant F you to the Irish people?

hinault

Sticky_Fingers wrote: »

Can you honestly say that the 5.7% blended interest rate attached to the bailout plus the requirement to plough the pension reserve in first is not a giant F you to the Irish people?

I can see both sides of the argument, Sticky.

We are locked out of the international markets where the spreads are at between 8-9% the last time that I looked.
That level of repayment is simply unsustainable even if we could borrow funds from them.

The European Financial Stability Facility/International Monetary Fund loan for
€67 billion is the only source of funding at present which this country can access.
The interest repayment at 5.7% does, we are told, contain a punitive element.

As a taxpayer in Ireland, I am pissed off with the loan/bailout but I am more pissed off with the events which have brought us to this sorry state and with the politicians who oversaw this banking/financial debacle.

take everything

My name is URL wrote: »

They could always just allow our own central bank to print the money required.. which they have already done recently

My understanding of economics isn't great but this seems very off.
This pumping of unbacked funny money into the system from the Irish Central Bank- does that mean the Irish euro is then worth less than the European Euro.
Is it kind of a prelude to leaving the Euro/conversion to a punt nua.
As i say, my understanding of economics is basic so can someone correct me on this?

Scofflaw

Sticky_Fingers wrote: »

Can you honestly say that the 5.7% blended interest rate attached to the bailout plus the requirement to plough the pension reserve in first is not a giant F you to the Irish people?

Rather like hinault, I'd have to say that it's not really a "giant F you to the Irish people". It's a business deal, and the 'requirement' to put the NPRF in is actually (a) separate from the external funding; (b) part of the pre-bailout 4-year Programme; and (c) a better idea than borrowing the money to do the same thing.

The IMF rate is what it is - calculated by formula. The EFSF fund is deliberately modelled on the IMF fund, as id the EFSM. All are intended to provide emergency finance without providing more attractive finance than normal market conditions. Having said that, it is pointless providing finance at a rate that makes it impossible for the borrower to pay it back, since the inevitable result would be default. Even close to the margin of repayability, a reduction in Irish GDP as a result of excessively high interest will result in increased EU payments to Ireland - we were supposed to become a net EU donor in 2013, but that's now very unlikely.

This is the bill our government has managed to stick us with - the bill for 10 years of unsustainable economic policies, for 10 years of 'light touch regulation', and for two years of inaction on the banks. It may not be our bill, but it sure as heck isn't anybody else's.

cordially,
Scofflaw

Scofflaw

take everything wrote: »

My understanding of economics isn't great but this seems very off.
This pumping of unbacked funny money into the system from the Irish Central Bank- does that mean the Irish euro is then worth less than the European Euro.
Is it kind of a prelude to leaving the Euro/conversion to a punt nua.
As i say, my understanding of economics is basic so can someone correct me on this?

In fact, it's kind of the opposite. The only reason our Central Bank can create €50bn out of thin air without causing galloping inflation is because the money is absorbed into the vast pool of euro, rather than being an enormous addition to the Punt.

cordially,
Scofflaw

maninasia

gambiaman wrote: »

IMO, the international analysts are correct - Ireland cannot possibly, even with the will, repay these vast sums of money without condemning the country and it's people to decades of zero growth and zero future.
It makes no sense to lumber a whole nation with the responsibility of keeping the Euro project, which is fundamentally flawed, on life support while we go under.

It simply is not possible.

Not only international analysts think that, anybody who can work through figures can see this is true. It is also nothing to do with willpower as repayment of the bailout DEPENDS on growth, but growth cannot occur if interest payments are too high. So the plan cannot work.

maninasia

Scofflaw wrote: »

In fact, it's kind of the opposite. The only reason our Central Bank can create €50bn out of thin air without causing galloping inflation is because the money is absorbed into the vast pool of euro, rather than being an enormous addition to the Punt.

cordially,
Scofflaw

The problem as I perceive it is different.

1) This is not free money (emergency liquidity short-term assistance fund of 50 billion that hardly anybody knows about but that is keeping our banks alive right now as depositors run for the hills), it needs to be paid back to the ECB (correct me if I'm wrong)
2) It creates a precedent, which undermines stability and confidence in the Eurozone. It is a problem that will be picked up on.

Sticky_Fingers

Scofflaw wrote: »

Rather like hinault, I'd have to say that it's not really a "giant F you to the Irish people". It's a business deal, and the 'requirement' to put the NPRF in is actually (a) separate from the external funding; (b) part of the pre-bailout 4-year Programme; and (c) a better idea than borrowing the money to do the same thing.

To address your points:

a: While I know the use of the pension reserve fund is separate from the external funding (it's our money after all) I was under the impression that....

b: The implementation of the 4 year plan was a precondition of the bailout agreement, no 4 year plan no bailout money. If this is the case then the use of our PRF has been imposed upon us by the ECB/IMF

c: I disagree that it is better then borrowing money because all we are doing is throwing it down the banking hole. We should NOT be borrowing anymore money for the banks, if the ECB wants to throw good money after bad by continuing to fund these basketcases so be it but it should not be placed on the shoulders of the Irish taxpayer to pay for the private debt of others.

Scofflaw wrote: »

The IMF rate is what it is - calculated by formula. The EFSF fund is deliberately modelled on the IMF fund, as id the EFSM. All are intended to provide emergency finance without providing more attractive finance than normal market conditions. Having said that, it is pointless providing finance at a rate that makes it impossible for the borrower to pay it back, since the inevitable result would be default. Even close to the margin of repayability, a reduction in Irish GDP as a result of excessively high interest will result in increased EU payments to Ireland - we were supposed to become a net EU donor in 2013, but that's now very unlikely.

While I agree that some form of punitive measure should be applied to the rate to wean countries off it as soon as possible the 5.7% rate attached to our loan (assuming we need to draw down the full amount) is ludicrous, it was based on projected economic growth figures that seem to have been plucked out of thin air and have little basis in reality. We simply cannot afford to pay it, IMO it makes Irish default a certainty. While it has been suggested that the ECB knows that debt restructuring has always been needed, it seems to me that we are being sacrificed to provide time for other countries to amass a war chest to help insulate themselves to this.

This is the bill our government has managed to stick us with - the bill for 10 years of unsustainable economic policies, for 10 years of 'light touch regulation', and for two years of inaction on the banks. It may not be our bill, but it sure as heck isn't anybody else's.

Erm yes it is. Where did our banks get all this credit from if not other foreign banks? What happened to the concept of due diligence when assessing someones ability to pay back a loan. Our institutions have a major part to play in all this but the people lending the banks the money also need to take some responsibility. I include the ECB in this as well, they pumped nearly 100 billion into our banking sector when it was clearly insolvent apparently without any thought to how this money was going to be repaid just to provide the veneer of functionality. This propping up of the Irish banking sector was just plain stupid on their part and they will likely have to swallow the loss.

We need to separate the banking debt away from our sovereign debt, I don't know if there is any legal mechanism that can rescind the banking guarantee but if there is any future government should give serious consideration to doing just that. While I don't know what would happen if we did this (just throwing the idea out there) perhaps the bond markets would react favorably and we could avoid even using the bailout (sweet Jesus, I am beginning to sound like Joe "loony" Higgins:eek:)

Sir Oxman

We need to separate the banking debt away from our sovereign debt, I don't know if there is any legal mechanism that can rescind the banking guarantee but if there is any future government should give serious consideration to doing just that. While I don't know what would happen if we did this (just throwing the idea out there) perhaps the bond markets would react favorably and we could avoid even using the bailout (sweet Jesus, I am beginning to sound like Joe "loony" Higgins)

This is why I don't completely dismiss SF and the ULA and others that call for 'default' or say this cannot be paid back.
They are basically saying this massive amount of crushing private debt is unsustainable. It cannot be repaid, it will ruin any prospect of recovery for Ireland.
Their policies in the aftermath may be cloud cuckoo stuff but is the basic premise they put forward correct? - they are the only political groupings saying this.

Are we being sold a lie by the three main parties under the guise of 'responsible' politics?

Is there anyone saying and believing that the current level of debt is sustainable (without projecting even further huge levels added to it) and also accomodating an economic recovery for Ireland and it's people?

Rubik.

hinault wrote: »

At a guess (and this is all this is), Dukes by saying that the Irish banks may need €50 billion in extra funding is admitting that now no one really knows the level of bank liabilities at this point and that what we've been told before is not now the case.

We were told that Anglo required €34 billion to address it's liabilities and that Anglo was the largest bank requiring a bailout of it's liabilities.
We were also told that a balance of approximately €25 billion would address the liabilities of other banks and lending institutions.

If a further €50 billion is required on top of all of this - then we're ****ed (excuse my french).:mad::mad::mad::mad::mad::mad:

It's 15 billion on top of the 35 billion already earmarked, bringing it to 50 billion in total.

danbohan

Rubik. wrote: »

It's 15 billion on top of the 35 billion already earmarked, bringing it to 50 billion in total.

phew , you had us all worried for a while there , thats grand so , would you prefer cash or cheque !

ilovesleep

Rubik. wrote: »

It's 15 billion on top of the 35 billion already earmarked, bringing it to 50 billion in total.

Whats going to happen when that 50 B wont be enough and we need more and more to keep the banks

K-9

ilovesleep wrote: »

Whats going to happen when that 50 B wont be enough and we need more and more to keep the banks

Anglo, INBS and a couple of others will have to be wound up.

What will be left of the Irish banking system, I don't know.