The ‘free market’ was manipulated by the global north to extract wealth from the global south and we have been happy to take part. I wonder where the ideological belief in the free market has gone? We took the gain now its time for the pain.

We should use this event to change the system so its fair to all of us because if we dont conservatives and elites (neocons, irish banks etc) will implement their reforms, disaster capitalism- and these will not help us.

Maybe BL is actually a contributor to this blog….

Unfortunately Brian Linehan is in the game of politics. Politically, after making such a bold move last week he, and the rest of the governement, must sit tight and make like everything is “cool and the gang”. It would be political suicide to start tearing strips off the banks, at least in public. The other issue is, similar to the US, the kinds of exotic SIV’s the bankers can come up with to flog will be way ahead of anything our government and idiot regulator can comprehend. If they dont comprehend it they cannot regulate it.

The banks know this and they will use whatever exotic SIV’s they can come up with to offload this developer debt to anyone who will have a punt (many will because of the sovereign guarantee so it is a no lose punt which is a very rare animal) as quickly as possible.

The bankers are in charge again. The uber cue hoors.

Ger

I still think that the banks will dump the developers like a ton of bricks. (No pun intended).

The banks have two years to sort this mess out. The property market is f__ked. Nothing will bring that beast back to life. We are in a Japan Secenario with respect to property, at best. Also they dont know what is coming down the line in the line of extra regulation from the EU. If I was them and I wanted to get rid of my problems I would repackage all those developer loans, sell them on as “new debt” and land the developer mess on the governments lap. Slam dunk! They would re-capitalize in the process and survive. If they hold the developer debt there is good chance that one or more of the banks will go down even with the guarantee and those boys know this. If they turn it into “new debt” and sell it on they have offloaded their risk.

Bankers are inherently risk adverse. I know the morons running Irish Banks over the past few years lost that trait but that was a cultural thing. The entire culture of Ireland got caught up in the “property monster”. In fairness it was hard not to. It became the national form of mental illness. The management at the Irish Banks should have known better and I am sure that they have seen the light now having nearly lost it all last week. I think they will dump the builders and land the problem in the governement’s (taxpayers) laps thereby removing all risk from themselves.

The only people they are ultimately answerable to are the Bank Shareholders. That I why I do believe that the governement should really have take substantial stakes in each of these banks as part of this guarantee. I think that ultimately in years to come Cowen and Linehan will be judged as having f__ked up majorly by guaranteeing all “newly issued” debt as well without having board level power/influence to put a stop to these kind of shenanigans.

Ger

One thing that has happened in Banking culture in the last 10years has been the over focus on gropwth rates, 10% was bottom of the league stuff – being risk adverse was very passé. The new acne faced MBA types who thought they knew it all were going after bigger game. They did not care what loans they sold and for what security, growth rate was trhe holy grail. It is a culture that has overtaken the whole industry.

Lenihan needs to start bringing back the traditional practices and getting rid of the old nonsense. Integrity is the only coinage we have left for play.

“The particular risk that the Government now faces is that Irish banks will package toxic loans as asset-backed securities and sell them off with a Government guarantee, passing on their losses to the Irish taxpayer.

Suppose that you are a bank that has lent €100 million each to 10 developers who are having problems meeting their repayments. What you do is bundle the loans into one asset and sell it, with Brian Lenihan’s signature on the bottom, on financial markets for €1 billion. When the borrowers default, the taxpayer will be left taking up the tab.”

I didnt see that potential consequence.]

Now that’s a good idea-for the bankers that is!!
The MD of Anglo irish-”The developers bank” was on RTE television this morning saying rosaries for the Minister for Hardship’s dig-out.
He also said that the banks will not now be pressurizing developers to offload their ridiculously stock in a bad market,although their liquidity door has presumably been opened by the government guarantee.
So, we see the banks and the developers closing ranks already.
If all banks adopt a similar stance-expect a Japanese style “Mexican standoff” between potential buyers and the builders, in Ireland, for the next 10 years or more..
That will hardly kick start Brian Lenehan’s “blank cheque guarantee scheme”?.