Why are left-wing parties opposed to the EU/IMF deal?

20Cent

If homeowners who invested and are now in difficulty have to take a hit then why shouldn't bondholders? Regulators etc assured the Irish public to invest in homes when it went tits up the Gov didn't guarantee anything.

Bondholders knew Ireland was the wild west of investment. Now that they lost then tough luck suck it up like the homeowners are.

OhNoYouDidn't

Permabear wrote: »

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Will do. But thats an aside.

I'm still intrigued by why a libertarian like you is absolving the investors of blame and shielding them of the consequences for making a bad call.

Het-Field

Permabear wrote: »

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Anglo Irish was established in the 1960s. Thus, I would be interested to know, especially of ONYD, how the managed to last so long if it was always "junk" i.e. since the 1960s. The difficulties created by Anglo sprang up after 2004. That is widely acknowledged, as Anglo acted as the main agent in fuelling the property bubble. One of the most noteworthy transactions, was the decision to provide a loan of nearly 1/4 Million Euros to Bernand McNamara for the Glass Bottle Site. That occurred in 2006, nearly 40 years after Anglo was established.

Further, the ratings agencies never said mcuh about Anglo until after the fact. Thus, this un-corroborated assertion of ONYD is baseless.

Permabear

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K-9

Well the ratings agencies should be sued for negligence then!

Funny everybody gives out stink about the regulator here and the lack of action. When it's private sector rating agencies, nobody raises an eyebrow.

20Cent

Permabear wrote: »

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You make an investment if it works out well done if it doesn't then tough. Its called capitalism. The taxpayer should not pick up the tap for either.

Permabear

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Permabear

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Het-Field

Permabear wrote: »

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Essentially, what he is is saying is that negligently dangerous practices (in bond investment) were ongoing. However, to state this with credibility, he requires the logical leap that investors were purchasing Anglo Bonds deemed to be "junk". As you have articulated in your link, and as most understand, Anglo was seen by the ratings agencies as a sound banking entity. Clearly, that was not the case. However, this does not mean that ONYD isnt talking rubbish in order to prove his point. If these bonds were labelled "junk", then investors would have run a mile. The continued usage of Anglo into 2008 also occurred against the backdrop of the collapse of Northern Rock. I dont believe for one second that ratings agencies were decrying Anglo's practices, or questioning their stability. Further, the "dogs on the street" were equally unaware of the instability which the institution was on the cusp of leaking on us.

K-9

Permabear wrote: »

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I was aware of that.

I just wonder what repercussions do they face. They still are hugely important and played a part in sovereign defaults.

It's a bit like some hedge fund owners saying they are the watchdog of Governments and if they are reckless, they'll make them pay.

I just wonder who makes the bondholders pay if they don't do enough research. If you make an investment, which this is to all intents and purposes, you lose money if it wasn't wise. Anglo wasn't wise, so who is paying? Seems to just be the taxpayer.

PS. I'd include deposit holders in that. Where's the "social hazard"?

K-9

Het-Field wrote: »

Essentially, what he is is saying is that negligently dangerous practices (in bond investment) were ongoing. However, to state this with credibility, he requires the logical leap that investors were purchasing Anglo Bonds deemed to be "junk". As you have articulated in your link, and as most understand, Anglo was seen by the ratings agencies as a sound banking entity. Clearly, that was not the case. However, this does not mean that ONYD isnt talking rubbish in order to prove his point. If these bonds were labelled "junk", then investors would have run a mile. The continued usage of Anglo into 2008 also occurred against the backdrop of the collapse of Northern Rock. I dont believe for one second that ratings agencies were decrying Anglo's practices, or questioning their stability. Further, the "dogs on the street" were equally unaware of the instability which the institution was on the cusp of leaking on us.

Point is, they should have seen it.

I remember wondering about property here and seeing threads on here and other sites about it. I seen the Anglo results and record profits in 07 and thought, wow, then I seen that 90% of it's business was in property. The penny dropped!

These guys are supposed to know this stuff, unlike a layman like me.

Het-Field

K-9 wrote: »

Point is, they should have seen it.

I remember wondering about property here and seeing threads on here and other sites about it. I seen the Anglo results and record profits in 07 and thought, wow, then I seen that 90% of it's business was in property. The penny dropped!

These guys are supposed to know this stuff, unlike a layman like me.

I cant disagree with that at all.

Northern Rock should have been the trigger in any event.

I disagree with other posters on this forum misrepresenting the true position.

Lockstep

OhNoYouDidn't wrote: »

Yes.

Are you arguing that investors should not check the S&P or Moodys rating of a bond before they buy? That they shouldn't look at the balance sheet of the issuer? That they shouldn't ask why they were offering rewards far higher than any other business in the industry?

You seem to be under the assumption that bond ratings never, ever change. Which just isn't the case. Otherwise, people would find it very easy to sell on their Anglo bonds and shares right now.

Permabear

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Permabear

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Monty Burnz

Permabear wrote: »

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I've no idea how their bonds were rated during the last 10 years, but it's entirely possible the were paying a higher coupon than other banks. Those who bought them would have done so knowing that the odds of default were perhaps higher than more conservatively managed banks/companies, but they felt the level of reward was sufficient to cover the extra risk.

K-9

Monty Burnz wrote: »

I've no idea how their bonds were rated during the last 10 years, but it's entirely possible the were paying a higher coupon than other banks. Those who bought them would have done so knowing that the odds of default were perhaps higher than more conservatively managed banks/companies, but they felt the level of reward was sufficient to cover the extra risk.

It was known that one reason for the high profits was a high lending rate because their clients had often been turned down elsewhere.

Scofflaw

Monty Burnz wrote: »

I've no idea how their bonds were rated during the last 10 years, but it's entirely possible the were paying a higher coupon than other banks. Those who bought them would have done so knowing that the odds of default were perhaps higher than more conservatively managed banks/companies, but they felt the level of reward was sufficient to cover the extra risk.

On the contrary, I'm afraid - they had a good rating:

Fitch Upgrades Anglo Irish Bank to ‘A+’ Rating

Anglo Irish Bank has today (1st September 2006) announced that Fitch Ratings has upgraded the Bank’s long term rating to ‘A+’ from ‘A’. The other ratings are affirmed at Short-term ‘F1’, Individual ‘B’ and Support ‘3’. The Outlook remains Stable.

Announcing the upgrade, the rating agency commented:

“The upgrade reflects consistent growth in the bank’s operating profit and prospects for continued growth for at least the next two to three years, a larger capital base and greater diversification of assets and funding. The Individual rating also reflects very good asset quality, an extremely low cost/income ratio and above-average margins. The bank continues to benefit from the buoyant Irish and stable UK economies, while diversifying into the US through offices in Boston and New York and into Europe. Profitability should continue to improve in 2006 and beyond as the bank expands its core lending business across all its markets. Strong profitability growth should put the bank in a better position to manage successfully any credit-related shocks, although Fitch is not expecting any significant asset quality deterioration in the medium term”

David Drumm, Group Chief Executive of Anglo Irish Bank added, “This is another significant development for the Bank. The upgrade highlights the key strengths of our business model which focuses on producing long term sustainable profitability on the basis of robust asset quality, supported by a diversified funding mix and a strong and growing capital base.”

1 September 2006

Source: http://www.angloirishbank.com/Media-Centre/Press_Release_Archive/Fitch_Upgrades_Anglo_Irish_Bank_to_%E2%80%98A+%E2%80%99_Rating.html

A Fitch A+ rating is the top of the upper medium grade investment status: http://en.wikipedia.org/wiki/Bond_credit_rating

cordially,
Scofflaw

K-9

The blind leading the blind then!