So what would you have done differently?

Einhard

There's an awful lot of (understandable) comment on how the last government messed up in their response to the economic and financial crisis, with criticism particularly focused on the bank guarantee, and the EU/IMF bailout programme. Much of the criticism is valid, but then hindsight is always 20/20. My question is two-fold. How would people have reacted to the emergency facing Lenihan in September 2008 and, assuming that decision still held, how would they now react with regards to the EU/IMF deal?

I'm looking for serious answers here, so I'd appreciate it if people could put a bit of thought into their responses, and not just yells of "Burn the banks/hang the bankers" etc.

beeftotheheels

Einhard wrote: »

There's an awful lot of (understandable) comment on how the last government messed up in their response to the economic and financial crisis, with criticism particularly focused on the bank guarantee, and the EU/IMF bailout programme. Much of the criticism is valid, but then hindsight is always 20/20. My question is two-fold. How would people have reacted to the emergency facing Lenihan in September 2008 and, assuming that decision still held, how would they now react with regards to the EU/IMF deal?

I'm looking for serious answers here, so I'd appreciate it if people could put a bit of thought into their responses, and not just yells of "Burn the banks/hang the bankers" etc.

It is tough. If you allowed us go further back then it is clearer, but by 2008 I kind of feel that the die was cast, hence the fact that I have issues around blaming Lenihan, but none around blaming McCreevey, Cowan and Ahern.

I genuinely believe that Lenihan was between a rock and a hard place, any decision made by then was likely to be disastrous.

With the benefit of 20;20 hindsight I'd like to say I'd let Anglo fail, but I don't have enough clarity on the impact that would have had on AIB, and I don't think I would have let AIB fail.

INBS was a basket case - they should have been flung to the wind.

The only thing I can say with any certainty, besides flinging INBS to the winds, is that he should have communicated better with us. A lot of pain was caused by us being kept in the dark. And while I understand that there are issues about public statements impacting on the markets, I think we could have been given a lot more clarity than we were on what decisions were made and why they were made.

jmayo

Einhard wrote: »

There's an awful lot of (understandable) comment on how the last government messed up in their response to the economic and financial crisis, with criticism particularly focused on the bank guarantee, and the EU/IMF bailout programme. Much of the criticism is valid, but then hindsight is always 20/20. My question is two-fold. How would people have reacted to the emergency facing Lenihan in September 2008 and, assuming that decision still held, how would they now react with regards to the EU/IMF deal?

I'm looking for serious answers here, so I'd appreciate it if people could put a bit of thought into their responses, and not just yells of "Burn the banks/hang the bankers" etc.

Ah FFS stop this sh**e about the emergency facing lenihan.
I hate the way this thing is somehow potrayed as appearing out of nowhere in September 2008.
The writing was on the wall from at least a year before as the property market was grinding to a halt.
Also the markets had been distancing themselves from Anglo in particular.
Look at share drops over the spring.
Yet nothing was done.
And it wasn't as if the government had not had personal contact with the people who were running Anglo.

Added to this the alarm bells should have been ringing in IFSRA and CB, and thus Dept of Finance once the golden ten had to be wheeled out to bail out sean "the gambler" quinn.

I remember hearing a radio interview of fitzpatrick from mid 2008 or some such time and he made claims about their loan book and how most of it ws commerical.
Now if it was fairly obvious to people like me, it should have been obvious to dept of finance officials and government advisors that the bank was very very exposed to property.

Anyway what I am saying is it should not have resulted in one night of tense negogiations and backs to wall decisions.
This should have been headed off months before.
Just like they should have cut spending in early 2008 when the property industry was beginning to really show freefall.

As regards IMF/EU/ECB deal it should not have been necessary in the first place if things were handled correctly.
And if it was, the government should have played the MAD card.
Hell I think the current government are going to have to resort to that at some stage.

Oh and I would agree with hanging the bankers as well.
Lamp posts around Stephens Green would be ideal locations.

Einhard

jmayo wrote: »

Ah FFS stop this sh**e about the emergency facing lenihan. I hate the way this thing is somehow potrayed as appearing out of nowhere in September 2008.

Since when has the word "emergency" been defined as somethng that comes out the blue? I never stated that the situation appeared out of nowhere.

hatrickpatrick

Allow the banks to fail. Allow the entire worldwide financial system to collapse into non existence and then rebuild something totally different from the ashes - something which is actually fit for purpose.

The human race should be in control of economics, an artificial concept which they created - not controlled by it as we are today. The system of always having more debt owed than money in circulation is batsh*t insane.

loldog

Exactly. I wish we had real leaders like FDR around today to stand up to the global banks and coporate powers:

https://www.youtube.com/watch?v=D9yoZHs6PsU

.

P. Breathnach

Einhard wrote: »

... I'm looking for serious answers here ...

To echo the radio advert: good luck with that.

My serious answer: I largely agree with Beef.

RichardAnd

The thing about this thread is that no one can respond without allowing hindsight to colour their opinion. It's very easy for us to sit here and say that back in September of 2008 we would have done X, Y or Z but all anyone could have done was make a decision based upon the information available at the time.

Thus, I'm not going to pass a comment on this one because I have no idea what I would have done if the decision had been mine. I might have let the banks sink or I might have done exactly what the two Brians did and bail them out. What I can say is that whatever I might have done would have been decided only after much careful though.

alchemist33

hatrickpatrick wrote: »

Allow the banks to fail. Allow the entire worldwide financial system to collapse into non existence and then rebuild something totally different from the ashes - something which is actually fit for purpose.

The human race should be in control of economics, an artificial concept which they created - not controlled by it as we are today. The system of always having more debt owed than money in circulation is batsh*t insane.

I agree totally with the second part. As for the first, there may be nobody left to rebuild.

beeftotheheels

hatrickpatrick wrote: »

Allow the banks to fail. Allow the entire worldwide financial system to collapse into non existence

Not Anglo, but AIB. If it were the case that allowing Anglo to fail would, as has been suggested by some, have led to AIB failing then think about the consequences.

I don't know the exact statistics, but I'm assuming that it would not be hugely off to assume AIB had a one third share of the domestic banking market.

We wake up one morning and one third of the Irish people have no cash. They can't buy groceries, they can't get paid, their savings have disappeared. We extrapolate this up to small businesses. They have no cash, they can't pay wages, they can't pay suppliers, their savings have disappeared. We step up again to large business who again can't pay wages, can't pay suppliers, their cash has disappeared. Don't know who the governmental departments bank with but assume some used AIB, and so again could not pay wages, or suppliers, their cash disappeared.

Some people cannot be paid because their bank account has disappeared. Other people still have bank accounts with BOI etc but can't be paid because their employers bank accounts have disappeared.

A huge chunk of the country cannot afford to buy groceries other than with whatever cash they happen to have in their wallets. The family who did their weekly shop the day before AIB failed can last a little longer than the family who were due to do their weekly shop the day after.

Us culchies with gardens etc might be okay for a little longer.

You seriously think that having people starving would have been a preferable alternative???

Even if the government then made a compulsory purchase order for all food created in Ireland and handed it out (I'm assuming we produce enough food to actually avoid a famine), why would people go to work if they couldn't get paid?

Even if someone like Kerry didn't bank with AIB, and so could continue to pay their staff (with cash if necessary) the compulsory purchase order would cripple them.

hatrickpatrick wrote: »

rebuild something totally different from the ashes - something which is actually fit for purpose.

The human race should be in control of economics, an artificial concept which they created - not controlled by it as we are today. The system of always having more debt owed than money in circulation is batsh*t insane.

I don't disagree with this. We need to learn the lessons of this crisis, we need to ensure that it doesn't happen again. I simply think that we need to keep the banking system ticking over while we overhaul it. I agree it needs to be overhauled.

The cost of allowing some banks, like AIB or BOI in Ireland, to fail is just too large.

Scofflaw

beeftotheheels wrote:

I don't know the exact statistics, but I'm assuming that it would not be hugely off to assume AIB had a one third share of the domestic banking market.

Last time I looked for a figure, the figure for AIB was roughly 35% of the transactions in the domestic economy, and the same again for BOI.

cordially,
Scofflaw

peasant

Einhard wrote: »

the emergency facing Lenihan in September 2008

That must have been the best flagged "emergency" in the history of emergencies

Seriously ...5 years earlier, the "ordinary man in the street" during the then usual property prices discussion over a pint was asking who they were building all these houses for, how the buyers were paying for them and where all the buyers were coming from.

Not to mention what the point was in building massive estates in the border regions where there was nothing else going on but building and why there was subsidies and tax boons for yet another overpriced hotel that wouldn't have guests.

There never would have been an "emergency" in 2008 with proper governance and proper governement.

beeftotheheels

peasant wrote: »

That must have been the best flagged "emergency" in the history of emergencies

Seriously ...5 years earlier, the "ordinary man in the street" during the then usual property prices discussion over a pint was asking who they were building all these houses for, how the buyers were paying for them and where all the buyers were coming from.

Not to mention what the point was in building massive estates in the border regions where there was nothing else going on but building and why there was subsidies and tax boons for yet another overpriced hotel that wouldn't have guests.

There never would have been an "emergency" in 2008 with proper governance and proper governement.

We had a bubble. We mismanaged the country, failed to use fiscal policy to rebalance low interest rates, failed to reign in public expenditure etc etc

No discussion on this.

But, on the 15th of September 2008 the rules changed.

I don't think we were ever in line for a soft landing, I think we could have had a softer landing but for a decision made many miles from our shore on that fateful day.

This thread is about what you would have done differently from September 2008.

P. Breathnach

peasant wrote: »

...
There never would have been an "emergency" in 2008 with proper governance and proper governement.

That's a given.

But Einhard's question was about what you think should have been done in 2008, not what you think should have been done in, say, 2002.

thebman

Well I wouldn't have started from here anyway :P

P. Breathnach

P. Breathnach wrote: »

My serious answer: I largely agree with Beef.

My public service background sometimes asserts itself, and I wonder what I would have advised if I had been in conclave with Lenihan on the night of the crisis. Of this much I am sure: I would have sought a way to buy time so that a proper assessment of the situation could be made. I would have looked for a way to lock down the banks' funding for about three months -- which, of course, would be legally and practically possible in the land of mindgames -- and used that interval to measure the problem and devise a response.

At the end of which process I might arrive at the same point that Beef set out in his initial response, and with which I have already agreed.

Permabear

This post has been deleted.

who the fug

Not join the Euro in order to raise interest rates to kill off the housing boom , and to be fair many peoples pointed out at the time that cheap money from the Euro was going to be a problem

ei.sdraob

Why is everyone buying the whole "OMG the banks would have collapsed overnight"

No they would have not they would have been instead backed by the central banks, as has been done for a year now!

All Lenny had to do (beside listening to advice given from likes of Meryl Lynch instead of ignoring it) was to lift the phone to the Central Bank and ECB and tell them that without their immediate emergency support "the irish banks would be fubared" and the euro would be put into serious risk! Followed by a call to the european partners calling for an immediate meeting so they are not presented with any "surprises" as they where.

We actually have had a bank run which still continues to this day, and the world did not end :rolleyes:

P. Breathnach

ei.sdraob wrote: »

Why is everyone buying the whole "OMG the banks would have collapsed overnight"

No they would have not they would have been instead backed by the central banks, as has been done for a year now!

All Lenny had to do (beside listening to advice given from likes of Meryl Lynch instead of ignoring it) was to lift the phone to the Central Bank and ECB and tell them that without their immediate emergency support "the irish banks would be fubared" and the euro would be put into serious risk! Followed by a call to the european partners calling for an immediate meeting so they are not presented with any "surprises" as they where.

We actually have had a bank run which still continues to this day, and the world did not end :rolleyes:

Two words: liquidity; solvency.

ei.sdraob

P. Breathnach wrote: »

Two words: liquidity; solvency.

Care to elaborate and participate in debate?

Or will you tow the FF party line of "the banks are well capitalised, its just a liquidity problem, we are in for soft landing" ?

P. Breathnach

ei.sdraob wrote: »

Care to elaborate and participate in debate? ...

Central banks are lenders of last resort. It is not their function to deal with capital deficiency.

ei.sdraob

P. Breathnach wrote: »

Central banks are lenders of last resort. It is not their function to deal with capital deficiency.

It was the Central Bank/Regulators (whatever they call themselves now) job to ensure the banks where "well capitalised" and regulate risk. They did not do their job!

It is the the ECBs job to maintain price stability and low inflation and maintain the euro currency.

Trichet wrote:

I will only say that we are responsible for ensuring price stability for 331 million people

ECB role with the euro wrote:

The euro is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the eurozone countries). As an independent central bank, the ECB has sole authority to set monetary policy. The Eurosystem participates in the printing, minting and distribution of notes and coins in all Member States, and the operation of the eurozone payment systems.

Now please tell us what would happen to the euro, the european banks and "price stability" in the eurozone if the banks really where about to go to the wall here and the ATMs where about to run out?
The ECB had to step in eventually and "grudgingly" provide support. While the Irish banks continue to loose deposits and bondholders are leaving after being paid off.

If the whole banking system was about to collapse as is "alleged" then the ECB are the "last resort", all the guarantee "masterstroke" ensured was that the amount that they need to lend in the end is even larger!

P. Breathnach

ei.sdraob wrote: »

It was the Central Bank/Regulators (whatever they call themselves now) job to ensure the banks where "well capitalised" and regulate risk. They did not do their job!

That is not the question Einhard posed. It was not open to Brian lenihan to change the past.

It is the the ECBs job to maintain price stability and low inflation and maintain the euro currency.

Who is saying otherwise? But the ECB's role is limited, and making up capital deficiencies in banks is beyond their limit.

Now please tell us what would happen to the euro, the european banks and "price stability" in the eurozone if the banks really where about to go to the wall here and the ATMs where about to run out?

Too much work, so I'll settle for the simple version (economics without even scribbling on the back of an envelope): we would have been totally fucked; the euro would probably have lost between 5 and 10% of its forex value; a number of Eurozone banks would have taken painful but survivable hits; some non-eurozone banks would have taken painful hits. But only we would have been fucked.

The ECB had to step in eventually and "grudgingly" provide support. While the Irish banks continue to loose deposits and bondholders are leaving after being paid off.

ECB support was given in our interest as well as the interest of the rest of the Eurozone. I think the greater interest was ours. But I have this now-unfashionable view that we are part of the European project, and part of the Euro project, so I don't start with the mindset that the ECB is a totally alien institution; it's ours, too.

If the whole banking system was about to collapse as is "alleged" then the ECB are the "last resort", all the guarantee "masterstroke" ensured was that the amount that they need to lend in the end is even larger!

Why?

femur61

I would have stayed in the UK.

hatrickpatrick

beeftotheheels wrote: »

Not Anglo, but AIB. If it were the case that allowing Anglo to fail would, as has been suggested by some, have led to AIB failing then think about the consequences.

I don't know the exact statistics, but I'm assuming that it would not be hugely off to assume AIB had a one third share of the domestic banking market.

We wake up one morning and one third of the Irish people have no cash. They can't buy groceries, they can't get paid, their savings have disappeared. We extrapolate this up to small businesses. They have no cash, they can't pay wages, they can't pay suppliers, their savings have disappeared. We step up again to large business who again can't pay wages, can't pay suppliers, their cash has disappeared. Don't know who the governmental departments bank with but assume some used AIB, and so again could not pay wages, or suppliers, their cash disappeared.

Some people cannot be paid because their bank account has disappeared. Other people still have bank accounts with BOI etc but can't be paid because their employers bank accounts have disappeared.

A huge chunk of the country cannot afford to buy groceries other than with whatever cash they happen to have in their wallets. The family who did their weekly shop the day before AIB failed can last a little longer than the family who were due to do their weekly shop the day after.

Us culchies with gardens etc might be okay for a little longer.

You seriously think that having people starving would have been a preferable alternative???

Even if the government then made a compulsory purchase order for all food created in Ireland and handed it out (I'm assuming we produce enough food to actually avoid a famine), why would people go to work if they couldn't get paid?

Even if someone like Kerry didn't bank with AIB, and so could continue to pay their staff (with cash if necessary) the compulsory purchase order would cripple them.



I don't disagree with this. We need to learn the lessons of this crisis, we need to ensure that it doesn't happen again. I simply think that we need to keep the banking system ticking over while we overhaul it. I agree it needs to be overhauled.

The cost of allowing some banks, like AIB or BOI in Ireland, to fail is just too large.

I am suggesting something far more radical. I'm suggesting that after the financial system is gone, banks as we know them today will no longer exist.

They have existed for centuries. Surely it's time for a change? The system doesn't work. It never really has. Why do we have to use this system? Why can't we get all of the nations to agree on a completely and utterly different form of trade which is not based on non existent credit? Why do we have to have banks at all?

The cost of allowing them to fail is too high under our present system of economics and money circulation. If we ditch the system altogether then no part of it actually matters anymore.

I'm not suggesting it would be easy, but there has to be an alternative to the madness we live with today. I'm suggesting we think outside the box. Don't talk of reforming the banking system - talk of demolishing it altogether and starting from scratch, and this time, don't allow the lunatics to take control of the asylum in the first place.

EDIT: Everyone who's talking about ECB consequences is missing my point. The ECB counts as a bank. It would disappear along with everything else. I am talking about a complete, 100%, total "reset" of our money system. NO more financial institutions. We are human beings, we are smart. We can come up with something better than this.

P. Breathnach

hatrickpatrick wrote: »

I am suggesting something far more radical. I'm suggesting that after the financial system is gone, banks as we know them today will no longer exist.

They have existed for centuries. Surely it's time for a change? The system doesn't work. It never really has. Why do we have to use this system? Why can't we get all of the nations to agree on a completely and utterly different form of trade which is not based on non existent credit? Why do we have to have banks at all?

The cost of allowing them to fail is too high under our present system of economics and money circulation. If we ditch the system altogether then no part of it actually matters anymore.

I'm not suggesting it would be easy, but there has to be an alternative to the madness we live with today. I'm suggesting we think outside the box. Don't talk of reforming the banking system - talk of demolishing it altogether and starting from scratch, and this time, don't allow the lunatics to take control of the asylum in the first place.

EDIT: Everyone who's talking about ECB consequences is missing my point. The ECB counts as a bank. It would disappear along with everything else. I am talking about a complete, 100%, total "reset" of our money system. NO more financial institutions. We are human beings, we are smart. We can come up with something better than this.

Do you propose also to abolish money? Because if you don't, then ordinary human interaction would lead to the creation of banks.

Have you even thought about transitional arrangements? I rather think you haven't.

beeftotheheels

P. Breathnach wrote: »

Do you propose also to abolish money? Because if you don't, then ordinary human interaction would lead to the creation of banks.

Have you even thought about transitional arrangements? I rather think you haven't.

Lets go back to the brehon system of bartering. Express the price of everything in cows. Legislate against having contracts representing cows (money was originally paper representing gold so that would be a slippery slope), actual cows.

I want to buy a car? Five cows and three quarters.

This poses two questions

1) How do I define a cow (friesan milker, angus suckler? Does it even have to be female or will any bovine do?)
2) How do I manage with 3/4 of a cow? Use a Dexter?

And we still have the issue that we live in a global economy, cattle will continue to have a fluctuating price outside Ireland, meaning that pressure could be created by exporters or importers of our cattle. So we need to ban exports. And imports (wouldn't want to import inflation would we).

If you live in a flat where do you keep your cows that you take physical delivery of? A communal field? It would need security, and grass for the cows to eat, and someone to milk them while they were there - they could sell the milk from all the communal cows which should pay for the security and the grass. A bit like a "cow bank".

Perhaps cows were the wrong example, perhaps spuds would be easier?

P. Breathnach

beeftotheheels wrote: »

Lets go back to the brehon system of bartering. Express the price of everything in cows...
How do I define a cow (friesan milker, angus suckler? Does it even have to be female or will any bovine do?)...

Take a good specimen, say a Mullingar heifer, and use that as the standard unit. Others can be rated against the standard (rather like the adjusted acre): that old Hereford with a poor milk yield might be rated at 0.47; that well-configured Angus bull is a 1.8.

[It is honourable to declare one's interests when advancing an argument. I look at your username, and I wonder.]

beeftotheheels

P. Breathnach wrote: »

Take a good specimen, say a Mullingar heifer, and use that as the standard unit. Others can be rated against the standard (rather like to adjusted acre): that old Hereford with a poor milk yield might be rated at 0.47; that well-configured Angus bull is a 1.8.

[It is honourable to declare one's interests when advancing an argument. I look at your username, and I wonder.]

Hey, I ended up concluding cows would be problematic because in reality

1. We would need to define cow, as you did above
2. Since most cows would not represent the standard cow we would probably, unavoidably end up with pieces of paper representing the standard cow
3. All the cows represented by a piece of paper would have to be in a field somewhere protected (Fort Bovine as it were)
4. The global market could cause cow prices to fluctuate like gold thus putting pressure on the currency
5. And we're back to where we are now with money :-)

I really only suggested cattle because they were used under the brehon system.

The above problems would apply equally to spuds, turf, gold, or anything else we tried to replace money with, and as you pointed out, if we have money we need a [reformed] banking system.

P. Breathnach

beeftotheheels wrote: »

Hey, I ended up concluding cows would be problematic because in reality

1. We would need to define cow, as you did above
2. Since most cows would not represent the standard cow we would probably, unavoidably end up with pieces of paper representing the standard cow
3. All the cows represented by a piece of paper would have to be in a field somewhere protected (Fort Bovine as it were)
4. The global market could cause cow prices to fluctuate like gold thus putting pressure on the currency
5. And we're back to where we are now with money :-)...

Not quite. If all else fails, you can eat cows.

beeftotheheels

P. Breathnach wrote: »

Not quite. If all else fails, you can eat cows.

LOL - loving the idea of the "run" on the cow bank with crowds armed with knives and bbqs trying to "withdraw" their sirloin

Sand

The government could have done literally anything else or nothing at all and it wouldnt have been as bad as what they did. They could have simply decided to do nothing. Lets look at what they knew back in 2008.

1 - They knew the banks were screaming for help.
2 - They knew bank securities were taking a hammering on the markets for the past 18 months or so - indicating the markets thought there was something seriously wrong in the Irish banks.
3 - They knew the banks were denying anything was wrong, and all they needed was a bit of a confidence booster. They knew the banks had an incentive to lie about their real position.
4 - They knew next to nothing about the banks balance sheets, their assets, their liabilities or their risk management.
5 - They knew Irish banking system as a whole was of a scale that was several multiples of Irelands GDP and that an irrevocable and total guarantee was going to be an incredibly dangerous decision and would adversely affect the Irish states ability to raise debt.
6 - They knew that Irelands fiscal position was already in serious trouble before any additional liabilities, contingent or otherwise were taken on.

Knowing all that, they could have simply said: "I wouldnt touch this with yours" or more politely: "Heres Mr Trichets number, give him a call and see what he thinks". Doing absolutely nothing until more was known was a very valid option when the risks were considered.

beeftotheheels

Sand wrote: »

The government could have done literally anything else or nothing at all and it wouldnt have been as bad as what they did. They could have simply decided to do nothing. Lets look at what they knew back in 2008.

1 - They knew the banks were screaming for help.
2 - They knew bank securities were taking a hammering on the markets for the past 18 months or so - indicating the markets thought there was something seriously wrong in the Irish banks.
3 - They knew the banks were denying anything was wrong, and all they needed was a bit of a confidence booster. They knew the banks had an incentive to lie about their real position.
4 - They knew next to nothing about the banks balance sheets, their assets, their liabilities or their risk management.
5 - They knew Irish banking system as a whole was of a scale that was several multiples of Irelands GDP and that an irrevocable and total guarantee was going to be an incredibly dangerous decision and would adversely affect the Irish states ability to raise debt.
6 - They knew that Irelands fiscal position was already in serious trouble before any additional liabilities, contingent or otherwise were taken on.

Knowing all that, they could have simply said: "I wouldnt touch this with yours" or more politely: "Heres Mr Trichets number, give him a call and see what he thinks". Doing absolutely nothing until more was known was a very valid option when the risks were considered.

Doing nothing would have constituted making a decision. And we wake up, and our cash points don't work, and we have no money, and no food, and there is looting, and rioting, and society breaks down, temporarily in any event.

We don't know what the worst case scenario was here, the above is an example of what has happened when banks fail so lets stop assuming that things could not have been a whole lot worse - they could! Doing nothing was not an option if AIB or BOI were going to go, and by then the whole world was trying to understand the catastrophic implications of the US allowing Lehman's to fail which had happened two weeks previously so the shock waves were very much being felt, the panic was very much being felt, yet there was no hindsight, no ability to separate the wood from the trees. Most leading commentators viewed it as a monumental error of judgement by Hank Paulson, no other politician was at all keen to repeat it.

People were seriously drawing analogies with 1929 when what started as a bank run and stock market tumble led to the great depression.

Sand

@beeftotheheels

Doing nothing would have constituted making a decision.

Yes, the best decision possible with the information available. Dont forget, the decision was greeted with fury by many of our EU partners and a lot of lack of interest in helping Ireland now is down to that anger - quite understandbly they think "Ha - your little solo run didnt quite work out for you. LAWL". Doing nothing would have ensured Ireland had a lot more friends in the EU than it currently does.

Its intriguing to me - if I recall correctly, youre usually in favour of Ireland doing nothing without direction from the EU/ECB, yet youre saying that Ireland was right to unilaterally and dangerously go on a solo run that deeply angered many of our EU partners who were themselves trying to find a solution for the wider EU banking problems. What happened to finding a larger, EU solution?

And we wake up, and our cash points don't work, and we have no money, and no food, and there is looting, and rioting, and society breaks down, temporarily in any event.

Yes, yes - cannibalism, human sacrifice to dark and uncaring entities from the blackness between the stars and nothing on TV except endless re-runs of DeValera speeches.

There was never any danger of the cash points not working. Thats just hysteria whipped up by the banks trying to terrorise the government. The ECB and the EU would never have permitted anything of the sort to occur within the euro banking system.

lets stop assuming that things could not have been a whole lot worse - they could!

But you want us to assume that the only alternative to the governments course of action was the cashpoints drying up....

Prakari

beeftotheheels wrote: »

Most leading commentators viewed it as a monumental error of judgement by Hank Paulson, no other politician was at all keen to repeat it.

People were seriously drawing analogies with 1929 when what started as a bank run and stock market tumble led to the great depression.

The greatest error of the U.S. government was to bail out the “Too Big To Fails”. It will ultimately result in the destruction of the value of the U.S. dollar and the steep reduction in the quality of life for U.S. citizens.

Depressions occur when banks greatly reduce their level of lending. This is because you always need new debt to be created to pay off existing debt (As new debt creates new money and there is never enough money in the system to pay off existing debts at any one time). So you can avoid a depression by keeping banks lending at an exponentially growing rate (will ultimately implode) or you could just create a money system where it’s possible to pay off debts without rely on bank lending.

beeftotheheels

Sand wrote: »

Its intriguing to me - if I recall correctly, youre usually in favour of Ireland doing nothing without direction from the EU/ECB, yet youre saying that Ireland was right to unilaterally and dangerously go on a solo run that deeply angered many of our EU partners who were themselves trying to find a solution for the wider EU banking problems. What happened to finding a larger, EU solution?

Sand wrote: »

But you want us to assume that the only alternative to the governments course of action was the cashpoints drying up....

I did not suggest that the guarantee was a good thing, I think we all agree in hindsight that it was a bad thing.

I simply pointed out that we all seem to be hell bent on assuming that this is as bad as it gets, whereas I think it could have been worse.

Sand wrote: »

There was never any danger of the cash points not working. Thats just hysteria whipped up by the banks trying to terrorise the government. The ECB and the EU would never have permitted anything of the sort to occur within the euro banking system.

Are you for real? The ECB is not empowered to take unilateral action to protect the banking system of one Member State even if they wanted to. The amount of liquidity they are currently providing to our banks is arguably ultra vires. And the EU (by which I can only assume you mean the EFSF and EFSB since the EU itself has no pot of money at the ready) is like a supertanker. It goes where it is going. It can be started, stopped and turned, but it takes a long time. Weeks if not months. We had 3 months to see the Greek bailout coming which the EU reacted to.

WE DIDN'T HAVE WEEKS, we had anything from a couple of days to ten days, Lenihan maintains the former.

Something had to be done, should Lenihan have consulted his European colleagues? Yes.

Am I convinced that there was anything he could have done at that time which would have been better? Possibly, but no more than 50/50. Certainly he could have done something which p!$$ed off our European brethren a little less, like calling them in advance, or asking for bilateral support.

Would doing nothing have been better? No, because there is no way the EU could have bailed us out in that time frame, even if they wanted to, too many ducks to get into rows, too many national governments to ratify any bailout.

Sand

I did not suggest that the guarantee was a good thing, I think we all agree in hindsight that it was a bad thing.

I simply pointed out that we all seem to be hell bent on assuming that this is as bad as it gets, whereas I think it could have been worse.

Clearly if things could have been worse, and the guarantee averted those "worse" things, then in hindsight the guarantee was a good thing - yet you admit it was a bad thing. Youve got a little circular argument going on there with yourself, so I wont get too involved with it. When you resolve it, let me know.

WE DIDN'T HAVE WEEKS, we had anything from a couple of days to ten days, Lenihan maintains the former.

We had months. The Anglo-Irish share price was decimated on March 17th 2008. Brian Cowen was phoned by Fitzpatrick in March as a direct result of this, and he met him again in July. The Financial regulator met the Anglo-Irish board in the Central Bank in March 21st 2008. There was a very clear and growing awareness of serious problems with the Irish banks going back months.

Even if you want to presume Brian Lenihan was appointed to the job on September 29th 2008 and had no previous knowledge at all they could have spent those "couple of days to ten days" by travelling to the ECB and the EU and underlining the critical situation and the need for support.

If the situation was as terrifying as you assume (civil war/armed gangs roaming the streets eating people for food) then the ECB/EU would have found a way - certainly, the spectre you propose would have triggered the various EU clauses on supporting a member state facing a national emergency/disaster...which was the route taken by the ECB/EU in the event.

beeftotheheels

Sand wrote: »

Clearly if things could have been worse, and the guarantee averted those "worse" things, then in hindsight the guarantee was a good thing - yet you admit it was a bad thing. Youve got a little circular argument going on there with yourself, so I wont get too involved with it. When you resolve it, let me know.

I don't like celery. I hate mushrooms more. My level of dislike for the mushrooms in no way negates my dislike for celery. The bank guarantee is celery. The bank run is mushrooms. Is it possible that there were other options out there like cabbage, parsnips, brussels sprouts (none of which I am mad keen on)? Yes, State takeover of Anglo, more limited guarantee, recap of all banks with taxpayers funds etc etc. Is it possible that somewhere there was a strawberry (which I love) out there? Yes although no idea what that might have been, but by 29 September 2008 I think we had a number of bad options, one appalling option, and no clear good option.

[QUOTE=Sand;7199353We had months. The Anglo-Irish share price was decimated on March 17th 2008. Brian Cowen was phoned by Fitzpatrick in March as a direct result of this, and he met him again in July. The Financial regulator met the Anglo-Irish board in the Central Bank in March 21st 2008. There was a very clear and growing awareness of serious problems with the Irish banks going back months.

Even if you want to presume Brian Lenihan was appointed to the job on September 29th 2008 and had no previous knowledge at all they could have spent those "couple of days to ten days" by travelling to the ECB and the EU and underlining the critical situation and the need for support.

If the situation was as terrifying as you assume (civil war/armed gangs roaming the streets eating people for food) then the ECB/EU would have found a way - certainly, the spectre you propose would have triggered the various EU clauses on supporting a member state facing a national emergency/disaster...which was the route taken by the ECB/EU in the event.[/QUOTE]

This thread is about decisions during and after September 2008. Its way too easy to say what you'd have done differently before that date!

What you seem to be failing to grasp is that the EU is neither an international organization, nor is it a State. It is somewhere in between but it cannot act using the funds of the Member States without getting the approval of those Member States - anything between all 27 and just the 15 Eurozone Members in the EFSF (excluding ourselves). All of which means that if they were really quick they might have ridden to our rescue before we started slaughtering the family pets for food, but our savings and banking system would have been gone.

I'm not disputing that we should have asked for their help and worked with them. I am disputing that they could have ridden in on a shining steed to prevent a run on our banks had we done nothing.

Sand

beeftotheheels wrote: »

Yes although no idea what that might have been, but by 29 September 2008 I think we had a number of bad options, one appalling option, and no clear good option.

Yes, and we picked the appalling option.

What you seem to be failing to grasp is that the EU is neither an international organization, nor is it a State. It is somewhere in between but it cannot act using the funds of the Member States without getting the approval of those Member States - anything between all 27 and just the 15 Eurozone Members in the EFSF (excluding ourselves). All of which means that if they were really quick they might have ridden to our rescue before we started slaughtering the family pets for food, but our savings and banking system would have been gone.

What youre not grasping is that throughtout the crisis the EU/ECB has found a way to exceed its responsibilities and support to try and keep the show on the road. Hence, telling me that the EU/ECB could or couldnt do X or Y, or has no responsibility for A or B doesnt mean all that much when theyve been making it up as they go along.

And you are still relying upon the EU/ECB to figure out some sort of patchwork solution even now, despite the ECB or EU having no role whatsoever in the treaties to find a solution.

I'm not disputing that we should have asked for their help and worked with them. I am disputing that they could have ridden in on a shining steed to prevent a run on our banks had we done nothing.

Look - lets say Lenny and Cowen go to Trichet on Monday morning, bringing the banks with them. They sit down and present the grim vista of cannibalism and looting, perhaps bringing some early trailers of The Road as a visual aid.

If the situation was as terrible and grim and immediate as you present do you think that the ECB wouldnt have found a way to offer liquidity support to those banks, thus preventing the cash points from running dry at all?

Or despite warning people not to assume that things couldnt get worse, you will continue to assume that a deal with the ECB for extraordinary support was simply impossible?

beeftotheheels

Sand wrote: »

What youre not grasping is that throughtout the crisis the EU/ECB has found a way to exceed its responsibilities and support to try and keep the show on the road. Hence, telling me that the EU/ECB could or couldnt do X or Y, or has no responsibility for A or B doesnt mean all that much when theyve been making it up as they go along.

And you are still relying upon the EU/ECB to figure out some sort of patchwork solution even now, despite the ECB or EU having no role whatsoever in the treaties to find a solution.

Look - lets say Lenny and Cowen go to Trichet on Monday morning, bringing the banks with them. They sit down and present the grim vista of cannibalism and looting, perhaps bringing some early trailers of The Road as a visual aid.

If the situation was as terrible and grim and immediate as you present do you think that the ECB wouldnt have found a way to offer liquidity support to those banks, thus preventing the cash points from running dry at all?

Or despite warning people not to assume that things couldnt get worse, you will continue to assume that a deal with the ECB for extraordinary support was simply impossible?

At that stage the ECB and EU could have requested that use the entire NPRF (which we had in those days) to recap our banks. Had we done so, the markets may have calmed down. Had we refused to do so, they would have had no further moral obligation to help us. We had other options.

Lenihan thought the guarantee was a way of protecting the banks without touching the NPRF, and he was wrong. Had he used the NPRF to recap the banks, and they then sailed off into the sunset everyone would now be shouting about the "stolen" NPRF.

I am simply trying to make the point that doing nothing was not an option, and asking someone else to fix our mess was not an option, because even if they had wanted to, there was not enough time and we as a State had other options.

You will note that the EFSF is not an EU institution, it is founded on a multilateral treaty whose signatories happen to be the eurozone Member States excluding Estonia. Precisely because the treaties didn't envisage this. The EU is playing catch up, and they are making a mess of things, and you think that in an alternative universe where we did nothing they'd have broken all the rules to save us despite the fact that at that moment in time it wasn't clear we as a nation needed saving? And have succeeded?

Sand

At that stage the ECB and EU could have requested that use the entire NPRF (which we had in those days) to recap our banks. Had we done so, the markets may have calmed down. Had we refused to do so, they would have had no further moral obligation to help us. We had other options.

They could, but they probably wouldnt have, and even if they had we could have:

A) Pointed out the NPRF was established to meet the states expected increased social welfare and pensions bill from 2025 onwards (not as a general rainy day fund), ring fenced by legislation from making any payments from the exchequer prior to 2025, and in terms of its investment policy.

Pointed out that European Commission and the various treaties of the EU ruled out state aid measures, and that in line with the European view on free markets and competition that the Irish state would not be pursuing a national, unilateral solution which would disadvantage our fellow EU partners. That Ireland was in favour of a wider, European solution.

C) Pointed out that if Ireland was forced to take a unilateral course of action, that we would introduce emergency legislation to resolve the banks ourselves and that we would wipe out the shareholders and bondholders before we would recapitalise the banks.

you think that in an alternative universe where we did nothing they'd have broken all the rules to save us despite the fact that at that moment in time it wasn't clear we as a nation needed saving? And have succeeded?

Two things - I dont agree that things were as close run as you imagine. Its a common tactic to harry and harrass people into making a bad decision, threatening that if they dont make the decision now that the world will end tommorrow. There is absolutely no evidence the banks would have shut down on Monday morning, and the events you project as a result are simple hysteria.

Second, yes, I believe if the EU/ECB were made aware of the nature of the situation and were as convinced of the dire threat you seem to think was self evident then they would have figured out some sort of short term patch up that would have kept liquidity flowing whilst they figured out a longer term solution. Even if they had to go outside the EU treaty network entirely.

"Doing something" might be satisfying in the short term, but "doing something" in this case alienated our EU partners (who were and remain furious at Ireland - even now, they remain unconvinced that what Ireland did was excusable) and anchored the Irish taxpayers with black hole of debt, destroyed the Irish states ability to raise funds (despite having only 25% debt/GDP ratio in 2008), removed credit from the Irish economy, led to a massive bank run, pushed Ireland into the ECBs "bailout" program and diminished any prospects for an Irish economic recovery for a decade or more.

Yes, being seen to "do something" is often attractive, but doing nothing is often the wisest course of action.

beeftotheheels

Sand wrote: »

They could, but they probably wouldnt have, and even if they had we could have:

A) Pointed out the NPRF was established to meet the states expected increased social welfare and pensions bill from 2025 onwards (not as a general rainy day fund), ring fenced by legislation from making any payments from the exchequer prior to 2025, and in terms of its investment policy.

Pointed out that European Commission and the various treaties of the EU ruled out state aid measures, and that in line with the European view on free markets and competition that the Irish state would not be pursuing a national, unilateral solution which would disadvantage our fellow EU partners. That Ireland was in favour of a wider, European solution.

C) Pointed out that if Ireland was forced to take a unilateral course of action, that we would introduce emergency legislation to resolve the banks ourselves and that we would wipe out the shareholders and bondholders before we would recapitalise the banks.

A) It was viewed by everyone else as a sovereign wealth fund, and as we have now proven it was available, it was available back then. Norway etc also call their sovereign wealth fund a pension fund but we all know it is a money box for a rainy day, the rainy day expected when it was set up was the looming pensions crisis, but it is still a money box.

Northern Rock had already been nationalised. State Aid rules are to protect the distortion of competition so it is acceptable to grant State Aids/ nationalize banks once you ensure that such action does not distort competition. A recap would have distorted competition less than the guarantee did, and the guarantee itself was a State Aid, we know that the guarantee, in the short term, led to deposit flight from UK to Irish banks.

C) At that point in time a significant amount of the share holders and bondholders were our own pension funds so talk about shooting yourself in the foot. Furthermore, had we done so we would have been sued!

Sand wrote: »

Two things - I dont agree that things were as close run as you imagine. Its a common tactic to harry and harrass people into making a bad decision, threatening that if they dont make the decision now that the world will end tommorrow. There is absolutely no evidence the banks would have shut down on Monday morning, and the events you project as a result are simple hysteria.

Hello? We are talking about the markets here and mass hysteria is what they do so well. What we have been told is that a creditor was about to appoint a receiver at Anglo because Anglo could not pay its debt. The belief was that had that happened the creditors of AIB would have panicked and reacted once the news was public, withdrawing all their deposits, with the general population of Ireland realising something was wrong would have withdrawn their deposits. Within a day the receivers would have been in AIB. Bank runs require mass hysteria or don't you get that?

You can't say to a bunch of hysterical investors that the only thing we have to fear is fear itself, they only thing they fear is losing their money.

Sand wrote: »

Second, yes, I believe if the EU/ECB were made aware of the nature of the situation and were as convinced of the dire threat you seem to think was self evident then they would have figured out some sort of short term patch up that would have kept liquidity flowing whilst they figured out a longer term solution. Even if they had to go outside the EU treaty network entirely.

"Doing something" might be satisfying in the short term, but "doing something" in this case alienated our EU partners (who were and remain furious at Ireland - even now, they remain unconvinced that what Ireland did was excusable) and anchored the Irish taxpayers with black hole of debt, destroyed the Irish states ability to raise funds (despite having only 25% debt/GDP ratio in 2008), removed credit from the Irish economy, led to a massive bank run, pushed Ireland into the ECBs "bailout" program and diminished any prospects for an Irish economic recovery for a decade or more.

Yes, being seen to "do something" is often attractive, but doing nothing is often the wisest course of action.

Read my previous posts. We had alternative solutions open to us including the NPRF. This was our problem, we handled it badly, end of.

jmayo

Einhard wrote: »

This post had been deleted.

According to Online Oxford Dictionary defintion of an emergency:

a serious, unexpected, and often dangerous situation requiring immediate action:

Acording to online Merriam-Webster Dictionary defintion of an emergency:

1 : an unforeseen combination of circumstances or the resulting state that calls for immediate action
2 : an urgent need for assistance or relief <the governor declared a state of emergency after the flood>

And to most of us an energency is something that happens unexpectedly.

peasant wrote: »

That must have been the best flagged "emergency" in the history of emergencies

Couldn't agree more.

Permabear wrote: »

I would have let the banks collapse, making it clear that the Irish taxpayer should never have to assume responsibility for the toxic debts of private institutions. I would have held an emergency budget to immediately deflate the public spending bubble. If we'd done these things, there would have been no need for an EU/IMF deal. After a short period of turmoil, our economy would have been well on the way to recovery.

I will admit I would have saved BOI and AIB.
The amount of business that goes through them and the amount of exposure ordinary people have to them is huge.
As for Anglo, INBS they should have been furthest from being saved.

I actually believe a budget with spending cuts should have been brought in late 2007 or very early 2008, long before the bank guarantee was brought in.
Instead gobsh***s lenihan and cowen waited until we had already seen drastic drops in tax revenue before moving. :mad:
Even worse AFAIK spending increased in 2007 and early 2008. :mad:

ei.sdraob

jmayo wrote: »

I will admit I would have saved BOI and AIB.

The problem @jmayo there is that the OP has framed the thread in a certain misleading manner and is being challenged by @Sand and myself earlier, with several assumptions which are highly questionable:


1. that there was threat of immediate collapse of the economy (doomsday) due to banks going under.

2. that the minister was well informed and the final decision (but not responsibility for the decisionmaking of course :P!) fell to him (and not the EU who got pissed of with us thanks to Brians decision)
but
the CB/Regulator who are responsible for the banks ending up where they did by not doing their job of regulating are not responsible for providing emergency support as lenders of last resort.

My approach lies somewhere between @Permabear's "let em fail" @Sand's "do nothing" and mine "Call the central banks and make em sort out the mess they helped create" (as they have partially done now anyways)
The worst part of it all is that 3 years later the economy and the banks are in a much worse position with no end in sight and a bank run still underway.

beeftotheheels

jmayo wrote: »

According to Online Oxford Dictionary defintion of an emergency:


Acording to online Merriam-Webster Dictionary defintion of an emergency:


And to most of us an energency is something that happens unexpectedly.



Couldn't agree more.

The problem here is context. From mid 2007 we all knew things were getting bad, we expected them to get worse. But business was going on, companies were trying to figure out ways to profit from the downturn. It wasn't business as usual, but it was business. Then Lehmans failed. I'm sure I'm not the only one who got "pens down" emails across the board.

Every thing stopped. The panic was huge. Cash got hoarded, banks refused to lend to other banks, the money markets froze. Market players refused to play. Regulators and central banks tried to ease the situation which refused to ease.

That we should have seen a bad end coming is not in dispute. That we should have foreseen the catastrophe which occurred the day Lehman's failed I think is. Hence, the panic of September 2008, given its sheer scale, was unforeseen.

jmayo

ei.sdraob wrote: »

The problem @jmayo there is that the OP has framed the thread in a certain misleading manner and is being challenged by @Sand and myself earlier, with several assumptions which are highly questionable:


1. that there was threat of immediate collapse of the economy (doomsday) due to banks going under.

2. that the minister was well informed and the final decision (but not responsibility for the decisionmaking of course :P!) fell to him (and not the EU who got pissed of with us thanks to Brians decision)
but
the CB/Regulator who are responsible for the banks ending up where they did by not doing their job of regulating are not responsible for providing emergency support as lenders of last resort.

My approach lies somewhere between @Permabear's "let em fail" @Sand's "do nothing" and mine "Call the central banks and make em sort out the mess they helped create" (as they have partially done now anyways)
The worst part of it all is that 3 years later the economy and the banks are in a much worse position with no end in sight and a bank run still underway.

Oh I agree.
I challenged the use of the word emergency in the original opening post.
The seeds of this mess were sown years before and even taking that into account there is no way in hell that the leading lights of government and financial regulatory authorities were not aware of the way Anglo was going.

What I am saying is that at some point the government would probably have to decide what to do with BOI and AIB.
And I would have poured in money in return for equity.
Saving AIB and BOI would still have cost us a lot, but nowhere near as much as including the truly toxic Anglo and INBS.
Dear God INBS a piddly building society has probably cost us between 10 and 20 billion and no one has ever been able to explain why it was included. :mad:

ei.sdraob

beeftotheheels wrote: »

The problem here is context. From mid 2007 we all knew things were getting bad, we expected them to get worse. But business was going on, companies were trying to figure out ways to profit from the downturn. It wasn't business as usual, but it was business. Then Lehmans failed. I'm sure I'm not the only one who got "pens down" emails across the board.

Every thing stopped. The panic was huge. Cash got hoarded, banks refused to lend to other banks, the money markets froze. Market players refused to play. Regulators and central banks tried to ease the situation which refused to ease.

That we should have seen a bad end coming is not in dispute. That we should have foreseen the catastrophe which occurred the day Lehman's failed I think is. Hence, the panic of September 2008, given its sheer scale, was unforeseen.

Unforseen?

I dont know the Irish banks where not involved in subprime and all sorts of exotic derivatives but classic bad lending on property.

Our own centralbank/regulator still has on its website documents from the time where they highlight that incredible overinvestment in property, yet have not acted on own publications.


In case of US the fear arose as no one knew which banks held which subprime ****, In case of Irish banks they where all deep in **** (and still are) and the regulator as per own publication was aware of the scale of the manure business but chose to ignore it,
3 years later no one knows how deep the rabbite hole goes and all this uncertainty and fear is now threatening to drag the state itself down which foolishly tied itself to the banks.

beeftotheheels

ei.sdraob wrote: »

Unforseen?

I dont know the Irish banks where not involved in subprime and all sorts of exotic derivatives but classic bad lending on property.

Our own centralbank/regulator still has on its website documents from the time where they highlight that incredible overinvestment in property, yet have not acted on own publications.


In case of US the fear arose as no one knew which banks held which subprime ****, In case of Irish banks they where all deep in **** (and still are) and the regulator as per own publication was aware of the scale of the manure business but chose to ignore it,
3 years later no one knows how deep the rabbite hole goes and all this uncertainty and fear is now threatening to drag the state itself down which foolishly tied itself to the banks.

I'm not disputing that our banks were a mess, I'm not disputing that the financial regulator and governor of the central bank should have been aware of it, that the government should have been aware of it and done something to correct it.

I am simply pointing out that if you are driving a beaten up old banger over the the garage you might make it (while having to stop to refill the water, oil etc), you might even need a tow. But that if that banger with dodgy steering and dodgy brakes hits a piece of black ice (which is the failure of Lehmans) then you are doomed.

It doesn't matter that the Irish banks were overexposed to an alternative questionable asset class, what happened the day Lehmans failed was that the interbank markets on which they were over reliant froze up. They froze up for every bank in the world.

On the 18th of September 2008 HBOS and Lloyds TSB partook in a shotgun wedding because of HBOS's mortgage book (not unlike Ireland).

RBS caused the hole in their balance sheet by buying ABN at the top of the market yet they required a government rescue by October 2008, and had been on BoE life support prior to that.

The problematic asset class is not the point, the panic and freezing of the inter-bank markets is.

The UK went down the recap route (while destroying Lloyds shareholder value into the mix), we went down the guarantee route. The immediate trigger for both was Lehmans.

The scale of the impact of Lehmans was unforeseen.

jmayo

beeftotheheels wrote: »

The problem here is context. From mid 2007 we all knew things were getting bad, we expected them to get worse. But business was going on, companies were trying to figure out ways to profit from the downturn. It wasn't business as usual, but it was business. Then Lehmans failed. I'm sure I'm not the only one who got "pens down" emails across the board.

Ah FFS you sound like a ffer blaming this on Lehmans.
Lehmans stock was plumetting throughout 2008 and it was obvious that it had a for sale sign on it.
They had huge losses and were selling assets.
It was dragging the Dow down.
Lehmans problems were shared by other US and European financial houses who had billions of crud toxic subprime related debts on their books.

As ei.sdraob points out our banks had never got into the subprime derivatives market.
Ok a few subsidaries in the IFSC had been players and one led to downfall of German parent Hypo Real Estate.

Our banks had just put all their eggs into a property bubble.
And the exposure to this bubble was huge.
And investors had spotted this and when the downturn came in property in 2007 they began to dump stock in the likes of Anglo.



That graph shows share price from 1 Aug 2007 upto Sept 15 2008 the day Lehmans filed for bankruptcy AFAIK.

The writing was on the wall for Anglo and the fact that they had to engage in extermly dodgy share support schemes, which in most countries would be deemed illegal, should have alarm bells ringing around Dept of Finance.
Instead we are led to believe the minister of finance had dinner with the board and played golf with the chairman, ex ceo and this was never discussed.
F**king fairytales. :rolleyes:

beeftotheheels

jmayo wrote: »

Ah FFS you sound like a ffer blaming this on Lehmans.

This thread is about what you would have done differently from September 2008, not prior to September 2008.

No one on this thread has disputed that there was writing on the wall by that date.

No one on this thread is disputing that huge errors of judgement were made prior to that date, by our government, by our banks, by our regulator and central banks, by the markets, and by the consumers.

So, cool down your anger at me staying on topic while you wander of left right and center. If you want to discuss the mistakes made prior to the failure of Lehmans then start a thread on that topic.