FF giving away money

compaqlaptop1

It seems FF, on their way out, are now literally giving away FREE money. Not to you or I of course, but to our pals the bondholders. Watch this clip from tonight's VB of Mary Hanafin 'explaining' why the government paid €750 million to bondholders in the last two weeks, bondholders that were not covered by the guarantee and who we were under no obligation to pay.

http://www.youtube.com/watch?v=qtL06DVaZ00&feature=player_embedded

Scofflaw

I don't think I've ever seen anyone wriggle so much, to so little effect.

amused,
Scofflaw

Nehaxak

VB tore apart yer man from the Green Party too tonight, actually felt sorry for the guy a little, he was that bad at giving answers, almost felt he was at the point of walking off the show not due to VB but due to his own ineptitude at answering the questions asked. Needed to be done though, VB on the ball again.

Liam Byrne

My head hurts....and not from trying to understand the idiot, but from banging it off the desk.

"We had obligations, we guaranteed it two years ago"

I only wish Mary owned the company that made my microwave.....I'd have gotten a new one from her when it packed up last month two years after the guarantee had expired.

There's thick, and then there's the stuff in that video.

Roll on Friday....that's all I'll say.

Kev_ps3

But sher they are one of us, a middle class party, leave em off.
:rolleyes:

dynamick

She didn't know the answer.

In case anyone cares, the reason that the 750m of unguaranteed senior maturing bonds was repaid is because the IMF/EU loan required that all senior bondholders of Irish banks be repaid in full at their maturity dates. (the aim being to preserve confidence amongst buyers of senior debt in banks throughout the Eurozone, and thus to keep the European banking system afloat)

First action of the new FG/Labour administration will be to put another 10bn of capital into the Irish banks. I think Noonan will be better able to answer why than Hanafin.
http://www.irishtimes.com/newspaper/frontpage/2011/0210/1224289432277.html

When you're broke and you reach the last person standing willing to lend you money, you have to do what they say. If it looks in future to the IMF/EU as if Ireland cannot physically meet its side of the bailout deal, then the deal will be restructured. It seems clear at this stage that the IMF is arguing for some senior bondholders to be cut, whilst the EU is offering a drop in the interest rate.

Liam Byrne

It's not a certainty that the first action of the new government will be to throw away more money.

dynamick

lol

Boskowski

dynamick wrote: »

She didn't know the answer.

In case anyone cares, the reason that the 750m of unguaranteed senior maturing bonds was repaid is because the IMF/EU loan required that all senior bondholders of Irish banks be repaid in full at their maturity dates. (the aim being to preserve confidence amongst buyers of senior debt in banks throughout the Eurozone, and thus to keep the European banking system afloat)

Hold on, the guarantee encompasses all senior bondholders. If these bonds aren't guaranteed then they are not senior. You're wriggling just like Hanafin did.

Liam Byrne

dynamick wrote: »

In case anyone cares, the reason that the 750m of unguaranteed senior maturing bonds was repaid is because the IMF/EU loan required that all senior bondholders of Irish banks be repaid in full at their maturity dates.

So what you're saying is that FF made yet another secret deal with our money and didn't bother telling us (and possibly that the massive debate over the interest rate was smoke and mirrors so that this little fact hopefully went unnoticed).

Do you have a source for the above ?

All I can say is that there has to be a reason for this - covering up something worse - because I can't imagine anyone making a fool of themselves as Hanafin did last night by openly lying about what a commitments expired guarantees involved.

Anyone who has a real life and has ever had an applicance or purchase act up a few weeks after the guarantee expired would know that she was lying through her teeth, and that is not on.

Stupid she may be, but she can't be that stupid.

Scofflaw

dynamick wrote: »

She didn't know the answer.

In case anyone cares, the reason that the 750m of unguaranteed senior maturing bonds was repaid is because the IMF/EU loan required that all senior bondholders of Irish banks be repaid in full at their maturity dates. (the aim being to preserve confidence amongst buyers of senior debt in banks throughout the Eurozone, and thus to keep the European banking system afloat)

First action of the new FG/Labour administration will be to put another 10bn of capital into the Irish banks. I think Noonan will be better able to answer why than Hanafin.
http://www.irishtimes.com/newspaper/frontpage/2011/0210/1224289432277.html

When you're broke and you reach the last person standing willing to lend you money, you have to do what they say. If it looks in future to the IMF/EU as if Ireland cannot physically meet its side of the bailout deal, then the deal will be restructured. It seems clear at this stage that the IMF is arguing for some senior bondholders to be cut, whilst the EU is offering a drop in the interest rate.

Interestingly, the Memo of Understanding contains no mention at all of any requirements in respect of senior bondholders, although the IMF and ECB have expressed their opinions strongly enough.

cordially,
Scofflaw

Scofflaw

Boskowski wrote: »

Hold on, the guarantee encompasses all senior bondholders. If these bonds aren't guaranteed then they are not senior. You're wriggling just like Hanafin did.

The original guarantee did, but not the current guarantee. It was indeed senior unsecured unguaranteed debt.

cordially,
Scofflaw

Monty Burnz

This is absolutely astonishing stuff. Courtesy of Broadsheet.ie, a transcript of what Hanafin was saying on Vincent Browne last night...

Last night’s Tonight with Vincent Browne -- with a panel that included Joan Burton, Dr James Reilly and Trevor Sargent -- was a classic. And the highlight was an exchange between the host and Fianna Fail deputy leader Mary Hanafin.
It concerned the €750 million payout earlier this month to bondholders who were not covered by the bank guarantee. Why was the money paid when it wasn’t necessary? To put this into context the amount of money saved by social service cuts in November’s budget was around €800 million.
The obvious question now is who got the money? Best not ask Mary, though.

Mary Hanafin: “What happened in Anglo was appalling. It is absolutely disgraceful and I think we would all agree on that.”
Vincent Browne: “Mary, can I just ask you one question? Can I just ask you one question? Why did your government, of which you are a member, two weeks ago pay €750m to bondholders in Anglo Irish Bank who were no longer covered by the guarantee? Why did it do that?”
Hanafin: “Because that was the agreement that was reached.”
Browne: “That is not part of the, that is not part… I’m sorry, Mary. That is not part of the agreement entered into with the EU and IMF.”
Hanafin: “Yeah, no, but it was part of the guarantee that was given.”
Browne: “I’m very sorry, Mary. It was out of guarantee. Now why did you pay €750m to bondholders in Anglo Irish Bank who were not covered by the guarantee? Why did you do that?”
Hanafin: “Because the bondholders around, the senior bondholders around the banks, are people who were given a guarantee at the time two years ago. Those bondholders also include pension funds, they include credit unions, they include ordinary Irish people and their money, and that money had to be protected.”
Browne: “Mary…”
Hanafin: “And the reason we gave that guarantee at the time – and this is important because people are saying we shouldn’t have done it.”
Browne: “We’re not talking about the guarantee.”
Hanafin: “The governor of the Central Bank even says it is a systemic bank and should be guaranteed.”
Browne: “Mary, this is nothing to do with it. Nothing to do with it. I’ll ask the question again.”
Hanafin: “Yeah.”

...and on and on it goes, with Hanafin refusing to answer a straight question. This moron will probably be voted back in tomorrow. :mad:

http://www.broadsheet.ie/2011/02/24/mary-hanafin-why-we-gave-away-e750-million-when-we-didnt-have-to/

Monty Burnz

ah...already under discussion here in the 'FF gives away money' thread.

dynamick

Scofflaw wrote: »

Interestingly, the Memo of Understanding contains no mention at all of any requirements in respect of senior bondholders, although the IMF and ECB have expressed their opinions strongly enough.

cordially,
Scofflaw

The MOU's first item under 'Financial Sector Reforms' states:

The measures proposed for the recapitalisation of Irish banks in the government statement of 30 September 2010 will be implemented, taking into account any changes in strategy for the future of the banking sector agreed under the programme....The Irish authorites will ensure that AIB, BOI and EBS are recapitalised ... by making available EUR 10 billion in the system...

and the govt statement of 30/sep/2010 reads:

The Central Bank has, therefore, determined and advised the Bank that in the central - or expected loss case - an additional €6.4bn in total capital will be needed for the Recovery Bank and Funding Bank structure to continue to meet the minimum capital requirements in the coming years consistent with Basel rules.

A total of €22.9bn has already been provided by the State since the bank was nationalised early in 2009. This additional capital requirement brings the projected total gross cost of the restructuring of Anglo Irish Bank to €29.3bn.

This additional capital will be provided by increasing the Promissory Note issued by the State and by appropriate burden-sharing exclusively by holders of Anglo subordinated debt instruments as outlined below.

The Central Bank has carried out a detailed analysis of potential losses in the bank in the coming years. The examination has drawn on comprehensive information and analysis of Anglo’s non-NAMA loan book carried out both by the Bank and its advisers and independent consultants in preparing the Bank’s Restructuring Plan for the European Commission. Information has also been made available by NAMA from a review of assets securing the loans in Anglo’s remaining NAMA tranches. This review has enabled NAMA to determine and advise the Central Bank of the expected discount of 67% on the remaining €19bn. of the bank’s loans that are due to be transferred.

Rehn goes on to make it clear that Senior debt is not on the table yet: http://www.ft.com/cms/s/0/106795aa-3dec-11e0-99ac-00144feabdc0.html

Meanwhile, the IMF recommends that burden-sharing with senior debt holders be re-evaluated. http://www.imf.org/external/pubs/ft/scr/2011/cr1147.pdf

I believe there is EUR 17.5bn of senior unguaranteed debt at stake.

Scofflaw

dynamick wrote: »

The MOU's first item under 'Financial Sector Reforms' states:


and the govt statement of 30/sep/2010 reads:

Ah - that would be why I couldn't find it in the memo. A weak commitment, but a commitment nonetheless. I stand corrected. Mind you, it appears that courtesy of your correction I now know more than either Mary Hanafin or Vincent Browne, which is disturbing.

dynamick wrote: »

Rehn goes on to make it clear that Senior debt is not on the table yet: http://www.ft.com/cms/s/0/106795aa-3dec-11e0-99ac-00144feabdc0.html

Meanwhile, the IMF recommends that burden-sharing with senior debt holders be re-evaluated. http://www.imf.org/external/pubs/ft/scr/2011/cr1147.pdf

I believe there is EUR 17.5bn of senior unguaranteed debt at stake.

The figure I've seen (source:FT) is €15.4bn of senior unsecured and unguaranteed - €5.85bn in AIB, €5.252bn in BOI, €3.146 in Anglo, rest in EBS and INBS.

By the way, I can't see any reference in the IMF report to burden-sharing for senior bondholders. Is that the right link?

cordially,
Scofflaw

Lefticus Loonaticus

Ahh, I always think of the Icelandic premier on the night before he was supposed to save the bondholders.

In the end he didnt do it because there was a very small group of people who protested outside his house with candles. He said that he just couldnt do it to his people.

That really says somthing about the scummy bunch of bastards we have running the show here eh?

raymon

This IS shocking

dynamick

Scofflaw wrote: »

it appears that courtesy of your correction I now know more than either Mary Hanafin or Vincent Browne, which is disturbing.

Yes it is disturbing. Although not so much VB who is bonkers and not in charge of anything.

The figure I've seen (source:FT) is €15.4bn of senior unsecured and unguaranteed - €5.85bn in AIB, €5.252bn in BOI, €3.146 in Anglo, rest in EBS and INBS.

I'm not sure what it's at now. It was assessed by Philip Lane in December at 20bn. http://www.philiplane.org/EC4100/EC4100deal.pdf
FT reported Goodbody as saying there was 15.4bn http://ftalphaville.ft.com/blog/2011/02/09/483261/
FT then rereported the same figure as 21.5bn http://www.ft.com/cms/s/0/2414c858-3deb-11e0-99ac-00144feabdc0.html#axzz1Et9ChASI
(I think they added in sub debt by accident)

By the way, I can't see any reference in the IMF report to burden-sharing for senior bondholders. Is that the right link?

The quote is in a section about the political viability of the programme:

The public response to the program has remained favorable, but a lingering domestic perception of inequitable burden sharing persists

Chopra made it clear in December that he was supporting the EU in disallowing any bondholder haircuts but that this position could change on consultation with Europe.

QUESTIONER: Is there anything that might affect senior bondholders?
MR. CHOPRA: On this, Minister Lenihan has clearly stated, and I quote, "There is simply no way that this country [Ireland] whose banks are so dependent on international investors can unilaterally renege on senior bondholders against the wishes of the ECB." So far the view of European partners has been that the systemic impact of reneging on senior bondholders would be too great. In light of this, any decision on senior bondholders will need to be taken in consultation with the European partners.
QUESTIONER: Is that the IMF's view that the impact of reneging on senior bondholders would be too great?
MR. CHOPRA: This is a common view at this point, yes.
QUESTIONER: So that this is a view that the IMF shares?
MR. CHOPRA: It's a view that in consultation with our European partners we have adopted.
QUESTIONER: Thank you.
QUESTIONER: This is not my question but it's the logical follow-up. Do you agree with that position on the senior debt?
MR. CHOPRA: Yes.
QUESTIONER: Yes full stop?
MR. CHOPRA: Yes, full stop.

http://www.imf.org/external/np/tr/2010/tr121710.htm

Scofflaw

dynamick wrote: »

Yes it is disturbing. Although not so much VB who is bonkers and not in charge of anything.

...but is one of our foremost political interviewers.

dynamick wrote: »

I'm not sure what it's at now. It was assessed by Philip Lane in December at 20bn. http://www.philiplane.org/EC4100/EC4100deal.pdf
FT reported Goodbody as saying there was 15.4bn http://ftalphaville.ft.com/blog/2011/02/09/483261/
FT then rereported the same figure as 21.5bn http://www.ft.com/cms/s/0/2414c858-3deb-11e0-99ac-00144feabdc0.html#axzz1Et9ChASI
(I think they added in sub debt by accident)

Likely - adding sub debt would give you €21.5bn.

dynamick wrote: »

The quote is in a section about the political viability of the programme:

I thought that might be the bit you were referencing, but I wouldn't in any way have chosen to describe that as "the IMF recommends that burden-sharing with senior debt holders be re-evaluated". They're simply noting that people feel it's unfair.

dynamick wrote: »

Chopra made it clear in December that he was supporting the EU in disallowing any bondholder haircuts but that this position could change on consultation with Europe.
http://www.imf.org/external/np/tr/2010/tr121710.htm

Yes - he seems pretty definite on his personal view, but there's an obvious possibility for change there.

cordially,
Scofflaw

dynamick

Scofflaw wrote: »

.I thought that might be the bit you were referencing, but I wouldn't in any way have chosen to describe that as "the IMF recommends that burden-sharing with senior debt holders be re-evaluated". They're simply noting that people feel it's unfair.

Fair enough, I am reading into it.

Political viability is a key factor for IMF programmes. If the people and their representatives won't buy in, the programme can't work. As noted by F O'Toole, this election provides a popular mandate for the IMF programme.

Ireland is in receivership until the country can be refloated as a going concern. Really the Irish politicians won't have much say for the next few years beyond rhetoric. I imagine there will be someone from Europe watching the till next time we are let run ourselves in a few years time.

dynamick

Take the time to read the IMF programme yourself
http://www.merrionstreet.ie/wp-content/uploads/2010/12/EUIMFmemo.pdf

It's the next four years of government actions: budgets, taxes,cuts, bank restructuring, capital investment....

http://www.merrionstreet.ie/wp-content/uploads/2010/12/EUIMFmemo.pdf

whiteonion

What does this say about the Irish people who INSISTED on voting in these clowns?

jimmycrackcorm

whiteonion wrote: »

What does this say about the Irish people who INSISTED on voting in these clowns?

That hindsight is a wonderful thing?

Shea O'Meara

Mary is just taking a leaf from the other Mary's, (Harney) book.
When called on the state of something or a particularly insane move in your own department, just agree as stongly as possible, "What happened in Anglo was appalling." It worked for Harney for years.

I can only hope good decent folk who support FFail, out of tradition or the local fellah being sound, will take note.

Lefticus Loonaticus

whiteonion wrote: »

What does this say about the Irish people who INSISTED on voting in these clowns?

Fine Labour are going to do the same damn thing and they are gonna get an overall majority over the next few days.

Liam Byrne

Bottom line is this, folks. No-one would go on national TV and make themselves look that much of an idiot unless what they were covering up was astonishingly bad.

My thoughts on it are as follows : misdirection.

The furore over the interest rate and Cowen's dissolving the Dáil the day after this money was flushed away took most people's eye off the ball, meaning that the EU got to maintain the bondholders' faith that they'd get paid.

In return for that, the IMF/EU will - now that that's been handled - lower the "crippling" interest rate once the new government comes in, and then it will look like we've improved matters by getting a "lower interest rate", thereby totally ignoring the fact that a required €50 billion at a higher interest rate would have been far less repayments than an unrequired (by us) €100 billion at a lower interest rate.

That - I would guess - is also why the €10 billion was delayed, because that too will improve the response to the new lower interest rate and help hide the fact that even with the lower rate the actual amount of interest is way higher than it should be.

Am I doting or losing it ? Come back to me in 2 or 3 months and let me know if the above pans out as I predict.

Scofflaw

Liam Byrne wrote:

Bottom line is this, folks. No-one would go on national TV and make themselves look that much of an idiot unless what they were covering up was astonishingly bad.

Or they were that much of an idiot, of course. Hanafin blustered, which means that she probably didn't know the answer. Had I been up against Vincent there, I wouldn't have known it either - as dynamick pointed out, I didn't know that the IMF/EU Memorandum contains a reference to a government statement, which in turn includes a commitment to protecting senior debt. Had Hanafin known that, she could have corrected Browne - obviously she didn't know that, wasn't sure whether it was in the Memo, and opted for bluffing rather than getting a drubbing for not knowing something most people would consider rather important. After all, she knew the government had committed under the programme to protecting senior debt, she just didn't know how exactly that had been done.

It's worth remembering that our politicians are just people - and people people at that, rather than policy wonks. The right kind of person probably would have been able to chapter and verse the answer, but that sort of person doesn't generally get elected here.

cordially,
Scofflaw

paul71

Scofflaw wrote: »

The right kind of person probably would have been able to chapter and verse the answer, but that sort of person doesn't generally get elected here.

cordially,
Scofflaw

That sort of person doesn't even enter politics here Scofflaw, you would almost require autistic savant abilities to recall details of that level during the course of an election.

Monty Burnz

paul71 wrote: »

That sort of person doesn't even enter politics here Scofflaw, you would almost require autistic savant abilities to recall details of that level during the course of an election.

Yeah, it's not like it's important or anything...:eek:

Fentdog84

Under no obligation to pay? Thats like going down to your bank about your loan and saying you are not obliged to pay them their money back. Not sure you quite understand what bonds are. its where people lend us THEIR money. Of course we have to pay them.The only case in which we shouldnt is if we default. And thats got SERIOUS implications..such as..Nobody lending to us ever again!!

Liam Byrne

Fentdog84 wrote: »

Under no obligation to pay? Thats like going down to your bank about your loan and saying you are not obliged to pay them their money back. Not sure you quite understand what bonds are. its where people lend us THEIR money. Of course we have to pay them.The only case in which we shouldnt is if we default. And thats got SERIOUS implications..such as..Nobody lending to us ever again!!

It's not OUR loan. We offered to guarantee it for a while. The guarantee expired.

K-9

Liam Byrne wrote: »

It's not OUR loan. We offered to guarantee it for a while. The guarantee expired.

YEP, but "we" paid out €50 Billion odd to bondholders under the guarantee.

Liam Byrne

K-9 wrote: »

YEP, but "we" paid out €50 Billion odd to bondholders under the guarantee.

Which I obviously object to. But it's not the point.

The point is that said guarantee had expired, so we were no longer liable for the debts.

gimme5minutes

Fentdog84 wrote: »

Under no obligation to pay? Thats like going down to your bank about your loan and saying you are not obliged to pay them their money back. Not sure you quite understand what bonds are. its where people lend us THEIR money. Of course we have to pay them.The only case in which we shouldnt is if we default. And thats got SERIOUS implications..such as..Nobody lending to us ever again!!

They didn't lend 'us' their money. They lent the banks, which are private companies, the money. And when the banks blew it we have to pick up the tab.

dynamick

Liam Byrne wrote: »

It's not a certainty that the first action of the new government will be to throw away more money.

You were right.

The agreement with the external authorities provided that the State would provide €17.5 billion of funding towards the programme of support for Ireland. It is proposed therefore that the NPRF will provide an additional €10billion and that the state will fund a further €7 billion from cash resources.

They put in 17.5 billion - not 10 billion.

http://www.finance.gov.ie/viewdoc.asp?DocID=6765

Monty Burnz

dynamick wrote: »

They put in 17.5 billion - not 10 billion.

http://www.finance.gov.ie/viewdoc.asp?DocID=6765

How much more will it cost us to clear up Fianna Failure's mess? :mad:

Scofflaw

Monty Burnz wrote: »

How much more will it cost us to clear up Fianna Failure's mess? :mad:

The likely overall cost of the banking crisis seems to be finally coming into view. It's estimated by one economist as €105bn all told, broken down as follows:

1. The State - €63 billion (actual)
2. Bondholders - €15 billion (actual)
3. Shareholders - €20 billion (guess)
4. The Banks - €5 billion (guess)

The reason that the State's share there is less than the €70bn resulting from the €46bn already put in plus the €24bn indicated by the stress tests, is that there's about €7bn of recoverable assets plus burnable subordinated debt holders still in the banks.

The losses of shareholders is a guess - the peak market value of the Irish banks was €55bn, and that's almost entirely gone, but you'd need to know how much the shareholder holding the share at the time of the wipeout actually bought it for.

Some of that €63bn is recoverable - the banks are still making an operating profit of over a billion a year, and with the heavy over-capitalisation of the banks that the €24bn represents, the prospect of selling them back to private shareholders creeps slowly back into view.

cordially,
Scofflaw

Monty Burnz

Scofflaw wrote: »

Some of that €63bn is recoverable - the banks are still making an operating profit of over a billion a year, and with the heavy over-capitalisation of the banks that the €24bn represents, the prospect of selling them back to private shareholders creeps slowly back into view.

cordially,
Scofflaw

Of course, there is a real likelihood that the 'worst case scenario' will be realised, which will presumably require further capital injections into our new 'pillar' banks...

Scofflaw

Monty Burnz wrote: »

Of course, there is a real likelihood that the 'worst case scenario' will be realised, which will presumably require further capital injections into our new 'pillar' banks...

Not really - the "worst case scenario", even if realised, would still find the banks over-capitalised.

cordially,
Scofflaw

caseyann

Will the referendum come on bail out.
I only got a glimpse of the news with an independent TD saying he will call for it as will others.

dynamick

Scofflaw wrote: »

The losses of shareholders is a guess - the peak market value of the Irish banks was €55bn, and that's almost entirely gone, but you'd need to know how much the shareholder holding the share at the time of the wipeout actually bought it for.

I disagree with your logic. 55bn of shareholder equity was lost in the banks.

Also have you counted the corporate profits of the banks over the past few years that have been used for asset writedowns? Maybe that's what you mean by item 4 'The banks'

Scofflaw

dynamick wrote: »

I disagree with your logic. 55bn of shareholder equity was lost in the banks.

I'd say that the face value of the shares at their high point is pretty unlikely to represent the actual cumulative amount paid for those shares, so while what you say is correct, the total face value of equity destroyed doesn't represent the actual losses to shareholders. For a simple cartoon version, imagine that all the bank shares had changed hands the previous day for a grand total of €50bn, and their face value had then risen to €55bn - the equity value destroyed is certainly €55bn, but the shareholders' actual losses are only the €50bn they paid in total for the shares.

Similarly, say you bought a painting you thought was a copy for €2,000, which turned out, however, to be an original worth €10,000 - if the painting is stolen (uninsured), what have you lost? The €2,000 you paid, or the €10,000 it was worth?

dynamick wrote: »

Also have you counted the corporate profits of the banks over the past few years that have been used for asset writedowns? Maybe that's what you mean by item 4 'The banks'

That and the losses on sales of good assets.

cordially,
Scofflaw