Bondholders burnt but nothing on boards

Beau

Junior bondholders in Irish banks are being pretty much forced to take a massive hit on their initial investment today. Despite all the outcries for these type of events by the public nothing is mentioned on boards! Hopefully more steps like these will be taken.

http://www.rte.ie/news/2011/0531/banks-business.html

Taxi Drivers

It's a good step Beau, but this was announced two months ago. On the evening of the stress M Noonan said that he expected €5 billion of the €24 billion to come from haircuts to the €7 billion of junior bondholders still in the banks. That was a haircut of around 70%. Today's announcements were for haircuts of between 80% and 90%.

Also, note that today was only a voluntary offer to the junior bondholders. They do not have to accept it. If they don't it will take legal action to ensure a haircut. It's a good step, but not the final one.

Daegerty

Now the Senior ones need a burnin

pog it

We are still picking up the tab. What is there to celebrate or be glad about to start a thread about it going yippee, step in the right direction, hope there's more where that came from? Give me a break!

ain't going to happen mate. They are going to tax the hell out of us to pay for it. The state assets in one form or another are next!

thebman

Taxi Drivers wrote: »

It's a good step Beau, but this was announced two months ago. On the evening of the stress M Noonan said that he expected €5 billion of the €24 billion to come from haircuts to the €7 billion of junior bondholders still in the banks. That was a haircut of around 70%. Today's announcements were for haircuts of between 80% and 90%.

Also, note that today was only a voluntary offer to the junior bondholders. They do not have to accept it. If they don't it will take legal action to ensure a haircut. It's a good step, but not the final one.

They should make it clear that anyone that goes to legal action, the state will be looking for 100% haircuts to ensure that most take this deal.

Beau

They'll take it, the bonds are worth nothing.

Beau

Beau wrote: »

They'll take it, the bonds are worth nothing.

then paying them 10 to 20% is too much

Scofflaw

Taxi Drivers wrote: »

It's a good step Beau, but this was announced two months ago. On the evening of the stress M Noonan said that he expected €5 billion of the €24 billion to come from haircuts to the €7 billion of junior bondholders still in the banks. That was a haircut of around 70%. Today's announcements were for haircuts of between 80% and 90%.

Also, note that today was only a voluntary offer to the junior bondholders. They do not have to accept it. If they don't it will take legal action to ensure a haircut. It's a good step, but not the final one.

On the other hand, I think you'll find that the full €24bn (and more) is still being factored into calculations of eventual Irish debt by people like Morgan Kelly.

cordially,
Scofflaw

Taxi Drivers

Scofflaw wrote: »

On the other hand, I think you'll find that the full €24bn (and more) is still being factored into calculations of eventual Irish debt by people like Morgan Kelly.

cordially,
Scofflaw

Morgan Kelly is not factoring in anything to "calculations of eventual Irish debt". He didn't do any calculations; he just made it up!

Beau

Deleted User wrote: »

then paying them 10 to 20% is too much

ha! Good point but I meant that the discount offered is around where they are trading now. Not sure on the legalities of coming out and saying you are getting nothing. I guess we will see on Thurs when AIB is challenged.

Beau

Beau wrote: »

ha! Good point but I meant that the discount offered is around where they are trading now. Not sure on the legalities of coming out and saying you are getting nothing. I guess we will see on Thurs when AIB is challenged.

yeah i knew what you meant i was really just stating the obvious, but they could always be offered 1 cent each

Tora Bora

Scofflaw wrote: »

On the other hand, I think you'll find that the full €24bn (and more) is still being factored into calculations of eventual Irish debt by people like Morgan Kelly.

cordially,
Scofflaw

When MK, comes out in public, say on Prime Time, and faces cross examination on his logic, I will give him more credence. This cloak and dagger, appearing in the Irish Times, and then dissapearing to his study, for a few months, is the antics of an attention seeker, who gives the impression he does not want any attention. Flush him out, and let him defend the currency of his argument, in full public glare.

Liam Byrne

Can we ban the prejudicial "burn" phrasing ? It was coined by FF to make the act seem unreasonable.

The valid phrase is "the value of your investment may go down as well as up", and the bondholders' (both senior and junior) investment went down.

So it's not "burning" them......it's offering them the current market value or possibly even more.

later12

Liam Byrne wrote: »

Can we ban the prejudicial "burn" phrasing ? It was coined by FF to make the act seem unreasonable.

No it wasnt - phrases like burning investors, and yield burning are pretty standard textbook terms. I dont see why you would suggest that FF invented it.

The valid phrase is "the value of your investment may go down as well as up", and the bondholders'

Show me a senior indenture where that is written.

hinault

Taxi Drivers wrote: »

Morgan Kelly is not factoring in anything to "calculations of eventual Irish debt". He didn't do any calculations; he just made it up!

Morgan Kelly's numbers are not far off what other independent economists calculated the cost to be.
Guys like Gurdgiev say that Kelly's numbers are reasonably accurate.

later12

hinault wrote: »

Morgan Kelly's numbers are not far off what other independent economists calculated the cost to be.
Guys like Gurdgiev say that Kelly's numbers are reasonably accurate.

Will you put a figure on "reasonably accurate" there?

hinault

Tora Bora wrote: »

When MK, comes out in public, say on Prime Time, and faces cross examination on his logic, I will give him more credence. This cloak and dagger, appearing in the Irish Times, and then dissapearing to his study, for a few months, is the antics of an attention seeker, who gives the impression he does not want any attention. Flush him out, and let him defend the currency of his argument, in full public glare.

The scenario MK outlined in 2008 has come to pass, TB.

Other independent economists have produced similar statistics to that of MK.

You may not agree with the way in his which MK imparts his message but the fact of the matter is that the numbers which he has provided have been corroborated by other independent economists also.

hinault

later10 wrote: »

Will you put a figure on "reasonably accurate" there?

I don't have his figures to hand but I think Kelly suggested that the eventual bill will be €250 billion.

Gurdgiev suggested €210 billion.

later12

€40 billion! Ah, so €40 billion is a small or reasonable margin it it? Not that the margin could not be even wider, according to one of Gurdgievs colleagues.

Not to mention, also, the fact that nobody seems to know how Morgan Kellys arithmetic led him to the €250 billion figure.

hinault

later10 wrote: »

€40 billion! Ah, so €40 billion is a small or reasonable margin it it? Not that the margin could not be even wider, according to one of Gurdgievs colleagues.

Not to mention, also, the fact that nobody seems to know how Morgan Kellys arithmetic led him to the €250 billion figure.

The economic future of this country isn't dependent upon whether the final figure is €210 billion or €250 billion in all honesty.

The fact is that there is no economic future as things stand whether the cost is €210 billion or €250 billion.
That is the reality.

In respect of the figures listed, Gurdgiev stated on VB Tonight that MK's calculations were correct based on the assumptions that underpinned MK's calculation.
Gurdgiev stated this.

Kelly'ss article
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

later12

hinault wrote: »

The fact is that there is no economic future as things stand whether the cost is €210 billion or €250 billion.

Why not call it 300 billion then, or 1 trillion. Of course we can put a figure on the debt with far more accuracy than a margin of 40 billion.

In respect of the figures listed, Gurdgiev stated on VB Tonight that MK's calculations were correct based on the assumptions that underpinned MK's calculation.
Gurdgiev stated this.

What is your preoccupation with what Gurdgiev said - other economists have said differently, and unless you can substantiate the figures yourself (it is simple arithmetic based on known releases) I cannot understand your complete loyalty to Gurdgievian utterances.

hinault

later10 wrote: »

Why not call it 300 billion then, or 1 trillion. Of course we can put a figure on the debt with far more accuracy than a margin of 40 billion

You tell us what the cost is going to be so.

later10 wrote: »

What is your preoccupation with what Gurdgiev said - other economists have said differently, and unless you can substantiate the figures yourself (it is simple arithmetic based on known releases) I cannot understand your complete loyalty to Gurdgievian utterances.

Baloney.

MK suggests that it will €250 billion.
Namewinlake suggests that the figure will be €220 billion
Gurdgiev suggest that the figure will be €210 billion.

Please give the Board the benefit of your "simple arithmetic" to disclose your figure of what the eventual cost will be?

Scofflaw

hinault wrote: »

You tell us what the cost is going to be so.




Baloney.

MK suggests that it will €250 billion.
Namewinlake suggests that the figure will be €220 billion
Gurdgiev suggest that the figure will be €210 billion.

Please give the Board the benefit of your "simple arithmetic" to disclose your figure of what the eventual cost will be?

Actually, Gurdgiev has been a little more cavalier than that:

Constantin Gurdgiev: I don’t buy this. I looked at Morgan Kelly’s figures and I don’t care what the ESRI frankly says I look at the IMF and I look at their forecasts. IMF clearly forecast 2015 figure of €225 billion in terms of debt. That’s the government debt.

You toss into it €31 billion that the NAMA is issuing in terms of the bonds. That is debt as well. You can call it a Special Purpose Vehicle. You can call it whatever you want. Off balance sheet accountancy. I don’t care. It’s a taxpayer guaranteed debt which has been written by the government agency. So that is our debt as well.

We are €256 billion in. Bingo! Morgan Kelly is correct in terms of the figure. 2015 simple numbers. €225 billion in terms of the government debt. IMF forecast. NAMA €31 billion. €256 billion in total. That is €142,000 per each working person in this country as of today.

And that is indeed baloney - starting with the IMF's "€225bn", which is a figure the IMF actually says Ireland won't reach, adding in €31bn for NAMA bonds even though the actual NAMA debt figure won't be anything like that (about €3bn according to Namawinelake) - codswallop.

This kind of beermat pseudo-analysis is bedevilling the debate on the debt. If it doesn't make any difference what the figure really is, why bother with this kind of rubbishy arithmetic?

Of course, it does make a difference what the level of debt is - there's sustainable and unsustainable debt, and the difference is vital in terms of whether we play the default card or not. If our debt is genuinely unsustainable, then a default is not only inevitable, but rather more acceptable - we just can't do it. If it's sustainable, then however uncomfortable it is, default is neither acceptable nor inevitable - we could pay, but we'd be choosing not to.

The general view on where the limits of sustainability are seems to lie somewhere around €200bn in general government debt, as a borderland rather than a clear border. The pro-default camp typified by Gurdgiev regularly produce figures that are clearly a good deal north of this, but their arithmetic is also typified by the kind of rubbish produced by Gurdgiev above - their figures all appear rely on adding what is basically spurious debt while assiduously ignoring any balancing assets.

I've said it before - our real problem is that our debt is almost exactly around the limits of what we can sustain. It's not large enough to make default inevitable/acceptable, but it's as large as it can possibly be without doing so. Yes, a simplistic big bang "solution" like default would be nice, and all the nicer if it's not self-evidently a matter of choice - but it's also more than a little optimistic, and relies on poor arithmetic to make its case.

cordially,
Scofflaw

paddy0090

Taxi Drivers wrote: »

Morgan Kelly is not factoring in anything to "calculations of eventual Irish debt". He didn't do any calculations; he just made it up!

Kellys figures have proved far more accurate than anything the government or the banks brought to the public. Our government may gradually improve as they are no being supervised by the Germans(thank god).

The value of our investment in Nama may go up as well as down. Either way the Germans have insisted that we include it as part of our national debt. I think it will go down as the market will gradually be flooded with repossed homes.

The junior bondholders won't make enough of a difference in the general scheme of things but it's more useful than the 1% rate reduction for the bailout.

later12

hinault wrote: »

Of course we can put a figure on the debt with far more accuracy than a margin of 40 billion.

You tell us what the cost is going to be so.

Read the post - I cannot give you *the cost* but I said a figure can be arrived at which has a much smaller and more reasonable margin of error than 40 billion.

The Governments assets and liabilities are listed here - it really is a simple case of adding up the assets and liabilities, although we can manipulate them a little, e.g. in relation to NAMA. The figure, according to the NTMA, is likely to reach a little over 200 billion by 2015, although it is currently below that.
http://www.ntma.ie/Publications/2011/GG_debt_NTMA_info_note.pdf

Now tell me, why does Morgan Kelly account for bank recapitalisation twice, and explain, if you would, where he gets a figure of 250 billion.

Taxi Drivers

hinault wrote: »

In respect of the figures listed, Gurdgiev stated on VB Tonight that MK's calculations were correct based on the assumptions that underpinned MK's calculation.
Gurdgiev stated this.

I think you should read this analyis of Gurdgiev's performance that night.

http://economic-incentives.blogspot.com/2011/05/constantin-gurdgiev-on-irelands-public.html

Every one of Gurdgiev's assumptions are highly questionable. Some of them are plainly wrong. It is a fairly devasting critique.

pog it

Scofflaw wrote: »

On the other hand, I think you'll find that the full €24bn (and more) is still being factored into calculations of eventual Irish debt by people like Morgan Kelly.

cordially,
Scofflaw

I'd rather hear that from the man himself rather than a member on boards giving his opinion on what Morgan Kelly factored in.

Sincerely,
Pog it

hinault

Scofflaw wrote: »

Of course, it does make a difference what the level of debt is - there's sustainable and unsustainable debt, and the difference is vital in terms of whether we play the default card or not. If our debt is genuinely unsustainable, then a default is not only inevitable, but rather more acceptable - we just can't do it. If it's sustainable, then however uncomfortable it is, default is neither acceptable nor inevitable - we could pay, but we'd be choosing not to.

Given the fact that estimates for unemployment in 2011 appear to be revised upward compared to earlier estimates, and given that forecasts for economic growth for 2011 are being adjusted downward, the argument for sustainability in terms of the country's debt is opaque at best.
As a country we appear to be in a position where there are so many variables that it is impossible to definitively say whether or not the debt repayments can be sustained.
I would argue that the worst possible economic scenario will come to pass.

Scofflaw wrote: »

I've said it before - our real problem is that our debt is almost exactly around the limits of what we can sustain. It's not large enough to make default inevitable/acceptable, but it's as large as it can possibly be without doing so. Yes, a simplistic big bang "solution" like default would be nice, and all the nicer if it's not self-evidently a matter of choice - but it's also more than a little optimistic, and relies on poor arithmetic to make its case.

cordially,
Scofflaw

I take your point that if the limit is €200 billion then Ireland Inc is on the very brink of what is sustainable in terms of debt repayment.

Tipp Man

Scofflaw wrote: »

Actually, Gurdgiev has been a little more cavalier than that:



And that is indeed baloney - starting with the IMF's "€225bn", which is a figure the IMF actually says Ireland won't reach, adding in €31bn for NAMA bonds even though the actual NAMA debt figure won't be anything like that (about €3bn according to Namawinelake) - codswallop.

This kind of beermat pseudo-analysis is bedevilling the debate on the debt. If it doesn't make any difference what the figure really is, why bother with this kind of rubbishy arithmetic?

Of course, it does make a difference what the level of debt is - there's sustainable and unsustainable debt, and the difference is vital in terms of whether we play the default card or not. If our debt is genuinely unsustainable, then a default is not only inevitable, but rather more acceptable - we just can't do it. If it's sustainable, then however uncomfortable it is, default is neither acceptable nor inevitable - we could pay, but we'd be choosing not to.

The general view on where the limits of sustainability are seems to lie somewhere around €200bn in general government debt, as a borderland rather than a clear border. The pro-default camp typified by Gurdgiev regularly produce figures that are clearly a good deal north of this, but their arithmetic is also typified by the kind of rubbish produced by Gurdgiev above - their figures all appear rely on adding what is basically spurious debt while assiduously ignoring any balancing assets.

I've said it before - our real problem is that our debt is almost exactly around the limits of what we can sustain. It's not large enough to make default inevitable/acceptable, but it's as large as it can possibly be without doing so. Yes, a simplistic big bang "solution" like default would be nice, and all the nicer if it's not self-evidently a matter of choice - but it's also more than a little optimistic, and relies on poor arithmetic to make its case.

cordially,
Scofflaw

So the reason for the croke park agreement and a complete lack of public spending cuts (at the levels needed) is to continue borrowing which will bring us over the edge of the limit of what is acceptable debt and bring us to the level of what is acceptable for default??

Sly policy from the government(s)

hinault

later10 wrote: »

Read the post - I cannot give you *the cost* but I said a figure can be arrived at which has a much smaller and more reasonable margin of error than 40 billion.

The Governments assets and liabilities are listed here - it really is a simple case of adding up the assets and liabilities, although we can manipulate them a little, e.g. in relation to NAMA. The figure, according to the NTMA, is likely to reach a little over 200 billion by 2015, although it is currently below that.
http://www.ntma.ie/Publications/2011/GG_debt_NTMA_info_note.pdf

Now tell me, why does Morgan Kelly account for bank recapitalisation twice, and explain, if you would, where he gets a figure of 250 billion.

I directed you to the IT article in which MK provided his basis for calculating €250 billion figure.

"Irish insolvency is now less a matter of economics than of arithmetic.
If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP"
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

pog it

There was a lot of jealousy amongst other economists who rushed to question Kelly immediately.

Some people just feel better about themselves when they think they know better than Kelly

Taxi Drivers

hinault wrote: »

I directed you to the IT article in which MK provided his basis for calculating €250 billion figure.

"Irish insolvency is now less a matter of economics than of arithmetic.
If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP"
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

So many holes have been picked in this that it is hardly worth commenting on at this stage. The €190 billion already includes the bank recapitalisation (which will be €24 billion and not €35 billion). That is a huge double counting error. NAMA has spent €31 billion not €45 billion.

If we just correct one mistake from Kelly's piece - the double counting of €35 billion - his debt figure is €215 billion. Most everyone else (DoF, IMF, EC) are around €210 billion. If we correct the NAMA error Kelly's prediction is below that of the official bodies.

All hail Morgan Kelly the Optimist!!

Scofflaw

pog it wrote: »

I'd rather hear that from the man himself rather than a member on boards giving his opinion on what Morgan Kelly factored in.

Sincerely,
Pog it

See hinault's post:

"Irish insolvency is now less a matter of economics than of arithmetic.
If everything goes according to plan, as it always does, Ireland’s government debt will top €190 billion by 2014, with another €45 billion in Nama and €35 billion in bank recapitalisation, for a total of €270 billion, plus whatever losses the Irish Central Bank has made on its emergency lending. Subtracting off the likely value of the banks and Nama assets, Namawinelake (by far the best source on the Irish economy) reckons our final debt will be about €220 billion, and I think it will be closer to €250 billion, but these differences are immaterial: either way we are talking of a Government debt that is more than €120,000 per worker, or 60 per cent larger than GNP"

MK is explicitly adding in not just the full €24bn the stress tests showed, but the full €35bn available for recapitalisation in the EU/IMF facility.

cordially,
Scofflaw

pog it

Scofflaw wrote: »

See hinault's post:



MK is explicitly adding in not just the full €24bn the stress tests showed, but the full €35bn available for recapitalisation in the EU/IMF facility.

cordially,
Scofflaw

The "stress tests"? What makes you think the 24bn will be the end figure? What they've told you is it?

Owldshtok

hinault wrote: »

I would argue that the worst possible economic scenario will come to pass.

What would that be?

hinault

Owldshtok wrote: »

What would that be?

That the estimates for the cost of the financial crisis will be at the higher end of the scale.

The fact is that almost all recent forecasts for economic performance have been incorrect.

The size of the "haircuts" for the banks was incorrect.
The forecasts for economic growth for 2010 were too optimistic.
The forecast for 2011 economic growth have had to be downsized three times since quarter 4 2010.
The forecast for 2011 unemployment rate forecast in 2010 has already been
exceeded.
The business plans for NAMA have been amended twice because they claim that the banks lied to them.

If I go back to earlier predictions which stated that we would have the cheapest bank bailout in history and that we would have an economic soft landing............

later12

hinault wrote: »

That the estimates for the cost of the financial crisis will be at the higher end of the scale.

Still waiting for anything to back up Morgan Kellys figures there, hinault. Or feel free to provide your own arithmetic.

Lets not forget that Kelly is using these official figures that you decry. So what is the story? Discuss.

hinault

later10 wrote: »

Still waiting for anything to back up Morgan Kellys figures there, hinault. Or feel free to provide your own arithmetic.

Lets not forget that Kelly is using these official figures that you decry. So what is the story? Discuss.

And I await your "simple arithmetic" calculation informing the Board of what the cost of the financial crisis will be, my 24 year old friend:)

Prakari

The point of debt unsustainability in an economy occurs when the effect of new loans on generating economic activity declines rapidly due to debt saturation. You can’t just look at debt as a percentage of GDP but rather need to focus on the level of debt in the economy as a whole. We are in a far worse situation than in the 80s as the high private debt is impeding economic activity – money cannot circulate properly through the economy as the demand for using money as debt payment relative to spending is so high. In a debt saturated economy, new loans will only serve to increase the debt/GDP ratio as such loans are so impotent at generating economic activity.

Taxi Drivers

pog it wrote: »

The "stress tests"? What makes you think the 24bn will be the end figure? What they've told you is it?

The stress tests showed that the banks need €18 billion. We're putting in €24 billion as a buffer. Read the stress test document and this. We have no guarantee it will be the end but about €100 billion of losses have now been provided for in the banking system. I haven't heard many who think they will be higher. It might be but there is nothing to indicate that it will be.

hinault

Taxi Drivers wrote: »

The stress tests showed that the banks need €18 billion. We're putting in €24 billion as a buffer. Read the stress test document and this. We have no guarantee it will be the end but about €100 billion of losses have now been provided for in the banking system. I haven't heard many who think they will be higher. It might be but there is nothing to indicate that it will be.

The stress tests don't include Anglo.

noodler

Scofflaw wrote: »

On the other hand, I think you'll find that the full €24bn (and more) is still being factored into calculations of eventual Irish debt by people like Morgan Kelly.

cordially,
Scofflaw

plus another 35bn apparently not realising the debt projections for 2014 already included the net cost of the 24bn.

hinault wrote: »

Morgan Kelly's numbers are not far off what other independent economists calculated the cost to be.
Guys like Gurdgiev say that Kelly's numbers are reasonably accurate.

There are mountains of independent academic economists against Kelly (and in detail) this time.

hinault wrote: »

I don't have his figures to hand but I think Kelly suggested that the eventual bill will be €250 billion.

Gurdgiev suggested €210 billion.

Again, huge difference and Gurdgiev's figures have also been hammered.

pog it wrote: »

I'd rather hear that from the man himself rather than a member on boards giving his opinion on what Morgan Kelly factored in.

Sincerely,
Pog it

No.

pog it wrote: »

There was a lot of jealousy amongst other economists who rushed to question Kelly immediately.

Some people just feel better about themselves when they think they know better than Kelly

No.

hinault

noodler wrote: »

There are mountains of independent academic economists against Kelly (and in detail) this time.

If you can supply me with some links, I'd appreciate it.

noodler wrote: »

Again, huge difference and Gurdgiev's figures have also been hammered.

Again if you can supply some links t'would be great.

Taxi Drivers

hinault wrote: »

The stress tests don't include Anglo.

I suggest you read the addendum to the stress tests. I admit the Anglo analysis was not as thorough as it could have been. It was simply a check of the tests done last September. This allows for a €12 billion loss on the remaining €35 billion of loans in Anglo. About 50% of the remaining loans are in the UK and US which should perform better than those here.
Anglo has enough capital to absorb losses at this level.

hinault

Taxi Drivers wrote: »

I suggest you read the addendum to the stress tests. I admit the Anglo analysis was not as thorough as it could have been. It was simply a check of the tests done last September. This allows for a €12 billion loss on the remaining €35 billion of loans in Anglo. About 50% of the remaining loans are in the UK and US which should perform better than those here.
Anglo has enough capital to absorb losses at this level.

I will read the addendum.

However the comments made by Alan Dukes in February 2011 regarding further capital for Anglo Iirish Bank and further capital for the entire banking system spring to mind.

Taxi Drivers

hinault wrote: »

I will read the addendum.

However the comments made by Alan Dukes in February 2011 regarding further capital for Anglo Iirish Bank and further capital for the entire banking system spring to mind.

Are you aware what Dukes said about Anglo? Try here, especially the first paragraph. As for the rest of the banks, Dukes applied the same loss rates from Anglo to the other banks. Dukes only had access to the Anglo books so it was a reasonable assumption to make.

BlackRock had access to the books of the other banks and were able to make a fact-based forecast. It turns out that for AIB Dukes was pretty much correct and that is as much a zombie as Anglo is. For BOI and PTSB he was wrong and that is why his figure is wrong.

noodler

hinault wrote: »

If you can supply me with some links, I'd appreciate it.




Again if you can supply some links t'would be great.

http://economic-incentives.blogspot.com/2011/05/constantin-gurdgiev-on-irelands-public.html

BANG

http://www.thepost.ie/news-features/this-time-morgan-kelly-is-wrong-56298.html

BANG

http://www.irishtimes.com/newspaper/finance/2011/0520/1224297354882.html

BANG

Do your own google search next time.

Scofflaw

hinault wrote: »

I will read the addendum.

However the comments made by Alan Dukes in February 2011 regarding further capital for Anglo Iirish Bank and further capital for the entire banking system spring to mind.

I won't say (obviously) that there may not be worse in the pipeline, but I have to say that you're basing the claim that there definitely is on pretty flimsy foundations at this point. Dukes' informal figures have had time to be demonstrated if true, and have not been - why would you still favour them over the results of the more rigorous stress tests?

cordially,
Scofflaw

hinault

Scofflaw wrote: »

I won't say (obviously) that there may not be worse in the pipeline, but I have to say that you're basing the claim that there definitely is on pretty flimsy foundations at this point. Dukes' informal figures have had time to be demonstrated if true, and have not been - why would you still favour them over the results of the more rigorous stress tests?

cordially,
Scofflaw

Fair enough.

I did read the CB's Bank Stress Test PCAR Reports when it was published and the baseline/adverse scenarios therein.
And yes, I did read the extensive notes about how Balckrock's stress test methodology was analysed and reviewed by Boston Consulting Group.

Perhaps it's the sceptic in me but we've been given numbers before and told the numbers were definitive, only to be told at some later point that the numbers were not correct and that things were actually worse as a result.

I take the point that these stress tests have been conducted in a prudential fashion and while this is reassuring..............