Has anyone broken the news to finance minister Brian Lenihan that he owns the banks? So far, this fact appears to be unclear to the minister and his civil servants.
What did they think they were doing when they signed the guarantee? Lenihan not the washed-up boards of the banks is the boss. The buck stops with him, not the squirming chief executives who are in the unedifying and entirely self-absorbed business of holding onto their jobs. There are signs of discussions now under way, though it remains to be seen what emerges.
Given that the management of the banks is in self-preservation mode, any meaningful bid that comes in now will be hostile, not to the institutions, but to the individuals who ran these companies into the ground. Therefore, in the interests of the state, the minister has to act against the interests of the individuals who run the companies. Things couldn’t be clearer. If the minister wants any progress on the banks and, by extension, the economy, he will have simply to go over to the banks, put a friendly arm around the shoulders of the current bosses and usher them out the door. If not quite out the door, at least in the direction of the foyer, explaining firmly but sensitively that they are part of the problem.
If they play ball they might have a chance; if not, they are out. In short, Brian Lenihan is the don and he has to accept this. Any minister for finance who guarantees his banks is the last man. He makes the decisions. If this inconvenient truth hasn’t sunk in at the department, itmost certainly is clear to the financial markets. As far the rest of the world is concerned, ever since the guarantee was issued on October 1, the state more or less owns the banks to the extent that, if the banks collapse, the state picks up the tab.
If you doubt this, look at the simple chart below. This is a chart of what is called the credit default swaps for our country and our banks. A credit default swap measures the risk of default. It is the price you have to pay to insure against the bank or the country defaulting. Obviously, the higher that price is, the more likely the market believes that the institution or the state will default. Check out the chart. Before the guarantee, the market was progressively coming to the view that the Irish banks were moving into default territory. In contrast, during the summer months, despite the banks’ deterioration, no one was attaching any significance to the state defaulting. However, the minute the guarantee was signed, everything changed. The market moved immediately to the view that Lenihan was the boss and that he was responsible.
As you can see, in the past two months, the market’s perception of a sovereign default by Ireland has increased twenty-fold, while the banks individually have seen their default risk collapse. So, rather than the sovereign state bolstering the credibility of the banks, the banks have contaminated the creditworthiness of the sovereign! Had Lenihan moved quickly to recapitalise and had he swiftly fired the culpable, this might not have happened. Because we dithered, the market now sees that the guarantee was nothing more than an underwriting of bad bank behaviour and has reacted by transferring the liability of the banks onto the state.
Make no mistake about it; this trend is going to get worse, not better. If the minister prevaricates, he will simply undermine the ability of the state to borrow for hospitals, because he is trying to protect the banks’ boards and senior management most of whom are millionaires. The reason, I believe, that he is protecting the fat cats and not the small shareholders and pensioners who sadly trusted the banks with their pensions, is that the boards and the management have already destroyed the wealth of the shareholders. By presiding over a 90-95 per cent fall in their share prices, the bosses of the banks not Lenihan have torched the shareholders already.
When I hear the same individuals now pontificating as I did last week about their need to represent shareholders, it makes me feel sick. Worse still, when we see them trying to plunder their own pension funds our money to save their hides, Geldof’s angry ‘‘Banana Republic’’ rings in my ears. Someone needs to clean out this system of ours, because if the banks with new management and boards are not put up for sale at any price, the entire Irish financial system will not might implode.
With every passing day, this Armageddon gets closer. Someone had better tell Lenihan that, if he does not do something quickly, we will some day soon see Ireland’s Bear Stearns and once one goes, more will be threatened. By this, I mean that, one weekend, there will be a knock on the minister’s door and a group of well-dressed but desperate bankers will tell him it is all over.
They’ll do what hundreds of ordinary people will also do, they will hand back the keys and say to Lenihan: ‘‘Sorry Brian, it’s your problem now. We can’t cover our bad loans. We are out of capital. The world won’t lend to us at any price. Because we destroyed our investors’ funds last year and tried to bluff our way out, we have no credibility.” What is the minister going to do then? He’s going to have to write an enormous cheque to keep these places open but he doesn’t have the money. That’s when the financial markets start selling Irish sovereign bonds en masse.
The speculation will be that Ireland will not be able to pay its way and we will see the price we have to pay for credit explode. No one will want to touch us and we’ll move from Celtic to Septic tiger in the space of a year. This is now the most likely course of events. Just as 24 months ago, those who claimed house prices would collapse were smeared as being mavericks, the same applies today. You probably don’t believe the above scenario could happen. What if I were to tell you that it will happen unless the minister moves?
What can he do? He can tell the management of the banks at any price that they have a set time to sell their banks, otherwise they are out. If the buyer is right and by this I mean a large, solvent, Continental solvent bank they might have to think the unthinkable and practically give them away at this stage. If he doesn’t do this, he has potentially, not one, but six Bear Stearns on his hands.
Mark, I fear that the day of agressive bank lending is still very far off.
The €10billion bailout, (in whatever form it comes to pass) is, according to JPMorgan, probably €5billion short of the amount needed to achieve the now expected 8% Tier1 capital ratio for all six ‘covered institutions’.
Further to this are the continuing funding problems the banks are having with their tactic of financing long-term debt with short-term borrowing. The only way for the banks to reassure potential investors about their wholesale funding is cut their loan-to-deposit ratios from the current 150% ish levels. This can be done by either increasing deposits or cutting loans. With a state guarantee in place since Oct a further increase in deposits seems unlikely, so restricting the loan book is perhaps the only option open.
There probably will be some noise made about lending to support industry, but if the institutions are not in a position to provide the credit then all the dept of finance sabre rattling will have little effect.
Furry, you (rightly) found it very amusing that Mr. Hogg destroyed all the pigs, have you heard the one about Mr. Madoff who ‘made off’ with $30billion? It’s a cracker…
or Crackling
Mark Clifford. The liberal bank lending practices of the period 2003-2006 are simply unsustainable in the medium term. Government spending policies in the West are completely unsustainable in the long term. Even before the bailouts started. Brown is on a different wavelength to Sarko. The Gaullist solution involves infrastructure. The NewLabour solution involves retailing and confidence tricks. I think both will fail.
We are better to have a proper bout of deflation, get our costs down and get competitive. But that is completely unacceptable to large vested interests in the economy. And they are applying massive pressure on the state to prevent the deflation. We need more competition in protected sectors of the economy, less regulation in the productive sectors, more regulation in the financial sector, and a serious productivity drive in the public sector. Urgently. Otherwise we will be doing like the British, bailing out banks and jawboning the markets non-stop – with international investors running the other direction, everytime an official reassurance statement is published.
OK so it seems that I am still banned. John Allen can say whatever the hell they like but b cannot.
So basically what you’re all saying is the country is boloxed,my question is can anything be one about it?
There is no alternative goverment,Fine Gael are basically the same as the current shower,nobody has a clue what to do,DMW has very good ideas and comments but whats the use talking about it?
I would get he hell out of here if i knew where to go
Tony Blair knew in his heart,that in order to break the tories domininance of british politics he had to convince”the city” that his policies were far removed from what they called the looney left.He also knew that thatcher had broken the back of british industry and was faced with the prospect of delivering a “new deal” for labour to suceed,grow,and remain in power.He cut “the city” loose as the great wealth creators and sustainers of british growth.Banking and financial services grew from about 10% to 35% of employment.revenue etc.People in the industry became more creative in devising ever more elaborate financial products.Bonuses ,promotions,share options became more elaborate and inversly proportional to ethics,honesty.integrity.The concepts were picked up throughout the financial world added to and resold as something really worthwhile.Exponential growth accross the world and no tangible assets to back it up.Emerging economies ripe for investment,google earth,sat-nav,broadband to the broker,no worries,and a house in the F…..G HAMPTONS.
Jim,
You can’t blame Blair for what he did. His mandate when he became leader was to get Labour elected – period. He achieved that 3 times over. Tories would probably have stayed in power if Blair had not won the labour leadership. The Labour Party didn’t try to remove Blair as leader when he was was convincing “the city” before the general election.
Now, you can debate how different New Labour was to the Tories till the cows come home, but Blair did what was asked of him.
As far as I know, the South East was the only area of Britain that experienced a property boom. You’ll find quality of new homes built in Britain to be of a much higher quality than the ones thrown up back home recently. Also, infrastructure is there already in place.
No other people than the Irish would have tolerated the treatment dished out to first time buyers in Ireland. I know a guy who in 2002 put a deposit on a house (in suburban Ireland) that was only being started. He had to beginpaying for the mortgage a few months before he even got the keys, so at one stage, he was living with his inlaws while paying a mortgage for his new house. It was utterly crazy. He’s not stupid, he’s an engineer, but felt compelled to do what he did. It was seeing behaviour like this that emboldened the developers/ bankers/auctioneers etc…. If it was me I would have told them to stick their house where the sun don’t shine long before any deposit changed hands.
I suppose he also thought he was being a cute hoor by getting on the property ladder, and believed the mantra that house prices never go down.
Latest I heard now is that he’s worried about losing his job.
We’re now living in an era where the cute hoor is getting his cumuppence.
Hallelujah!
Colin: ‘As far as I know, the South East was the only area of Britain that experienced a property boom.’
Your perception must be unique in Ireland today. Tell that to all the Paddies off the boat (or yacht) who loaded up on buy-to-rent flats in the European Capital of Culture and Beatles heritage also known as boomtown East Dublin.
Then there’s the great and good of Dublin society who, on each fortnightly visit, purchased new Urban Splash flats future slums in the famous Irish inner-city boomtown of Manchester (so much to answer for!). With the same foresight, acumen and consideration they gave to purchasing pre-match drinks at Old Trafford. Belch.
When temporarily over-extended some of them even asked for a dig-out from their English developer friends in the city so they could eat it, smoke it, snort it, fcuk it, crank it to the max in the brothels and opium dens concealed within the city’s buy to rent lumpen postcodes. But most had the smarts to get their legal eagles to cover their tracks so as to avoid messy investigations and tribunals and all that democracy and accountability shite. There’s always a fall guy.
Finally, I’m sure there’s some contributors here who’ve hedged their Euro bets with ‘sterling lodgements’ by gorging on rental properties in The North. Good luck with those lads. And lassies.
I guess you could turn them into budget bed and breakfast pit stops for the locust hordes now descending on border shopping malls. The more upmarket investors could offer a Hip Hotel Apartment weekend of it now that Belfast’s Victoria Square is such value. The hotels in the city are booked solid. Wouldn’t you just love a place to have a shower and freshen up so you could shop 48 hours non-stop?
Regards.
colin,if we can park the property issue one side for a moment.The jist of my observations were mainly to do with the fact that Blair cut loose what was to become a monster i,e the city.Now history has shown us that the british empire was never completely honest and issues were usually decided in private clubs (old boys,old money)or the select 10% I referred to,mainly tory supporters.The influx of new players in the markets (sharp and hungry) pushed out the inbred gobshite sons and collected their wealth along the way and hooked up with fellow travellers on wall street,hong kong etc.De-regulation became the battle cry,and we will generate the wealth necessary to enable growth and a healty economy.People bought shares in this fantasy land and revived it after various boom and bust cycles.Billionaires became the new kings and custodions of wisdom.Democracy was a handy idea to keep civil servants,the media and general public amused,we could even fight wars over it and divide the profit and contracts among the winners.Now we have reached the crossroads again?
Cowen and Lenihan have choices to make,will it be Boston,Berlin,boom,bust or BALLS.The latter requires a comlete clearout of failed entities i.e old boys at the banks,inept regulators,civil servants who continue to run the country along the well established british empire doctrine for a colonised people.They have to stamp out unearned privilliges,corruption,waste,etc.They are the democratically elected guardians of the peoples hard earned money and trust.We dont want any more gamblers in Leinster House.We want leadership and an even distribution of the present pain and hopefully the future gain.They would do well to note that people will have plenty of time to reflect in 2009 AND if there is any strokes pulled in solving the present crisis summary judgement will be passed in the june elections,lisbon,and general elections.Mark my words.!!!
The time is now
http://www.zeitgeistmovie.com/main.htm
The Power of NOW – ‘the feeling of presence at this juncture of our financial history is one of before the celtic tiger arrived ; there was nothing .This period before the Irish Banks torched the Earth was before time as we know it .Before Time and throughout Time there has been a self existing being – eternal , infinite and omnipresent .This Irish Citizen cannot be named or phrased ,because human speech only applies to perceptible beings ‘Fat Cats ”.
We need to learn that – Money is about Time but Time is not about MONEY – this has been our Mistake in the Paradigm that has caused World Collapse of Economy .We have failed to recognise it’s importance and we in Ireland have lost our ways in that process . There are solutions and unlike what ‘pontifical clowns ‘ in the media claim ‘that this is an uncharted territory’ ,we have been there before and have coped and have found our new ways to build on success again .
The Irish have a secret weapon to solve this maelstrom of actifity that abounds us .The solution is in a finer word than our time warped senses can perceive now and understand and must be listened to carefully to return to Life as we once knew it to be. Our ancient culture abounds with expressions and bodies of law that have since disapeared or were displaced by the English language and Common Law .We need to retrace those steps again and open our minds once more to reactivate that process of ‘Restatement of Our Time’.
For many who are fluent in Irish these finer words are not on your vocabulary as we know it to be in ‘official gaelic’.They are words used hundred of years ago and may only be understood by a few on the western seabord.We must find those words and bring to life its experience that it once was and remake it to our needs of our today .
Thanks for the lack of fullstops john. I appreciate it
Can you give us some examples? Apart from time, how about how the Irish language described possession – is that relevant? And are you referring to the essence of activity and being in the present, or at least thinking about it in a different way? I think some of that wisdom might be found in some of the old Irish witty expressions? But I can’t think of any. Or I’ve forgotten them. Or, maybe the wisdom you are talking about could be gained by careful study of the grammar? Any examples? Good post.
Does anybody think all that we are doing is throwing the national pension fund into a bottomless pit ? Clearly the four largest political parties in the Dail would try to convince us that this is not the case.
But I think we should let banks 3, and 4 sink and be done with. Pay the depositors. And move on. It will be cheaper in the long run.
b – interestingly they decided not to kidnap Roche – they must have figured he was not worth holding. Who would put up the ransom. And in these tight economic times, the taxpayers would not want to see the taxpayer footing the bill. It would be a non-essential expenditure. I mean the country could function with one less government minister.
Or maybe the crims seen him on television talking rubbish-and figured that no sum of money could compensate for having to listen to him whining for anything more than five minutes.
I wonder, will we still get told that the media are exaggerating the scale of the crime problem.
“As far as I know, the South East was the only area of Britain that experienced a property boom. You’ll find quality of new homes built in Britain to be of a much higher quality than the ones thrown up back home recently. Also, infrastructure is there already in place.”
Colin,
I am always amazed at how easy it is to get around the Uk without a car, try doing the same in Ireland, and you are in for a tough time. You can fly into Stansted, and connect to anywhere in the UK from the train platform downstairs, try doing that in Dublin airport !. We should have been investing in our infrastructure 30 years ago, but we have parish pump politicians, who cannot see two years ahead, or even past their local church or pub. we are in deep sh*t, and they have not got a bogs how to get us out of it. Oh and this 10bn rip-off, it is not enough to save us, it is throwing good money after bad.
I see that we are moving to a consensus, we are ‘b*ll*xed.
Before we all go down the pan, could somebody estimate the present worth of the pension fund? A secondary question, have they any money in that Madoff fella’s scam?
Its amazing how greed blinds the so-called experts. There’s a fella doing time who was a porter in the Courthouse in Cork who had exactly the same scam, lots of solicitors, judges, etc., were conned.
Might as well discuss something like this, no point in discussing the banks…..
Here you go Barry, it is not the full list of victims though.
http://clusterstock.alleyinsider.com/2008/12/bernie-madoffs-victims
Hi again David,
What worries me about using 10b of or money to bailout the banks, is that it is essentially a movement of money from the less-well-off (on average) taxpayer to the more well-off (on average or on paper) loanee. In most cases the loans are for land/property, whether residential, commercial, etc. And this is all on the premise so that licensed quasi-monopoly institutions may, at their discretion and with whats left over, provide loans to business and individuals ?!?!?! Are we that blind? Its good money after bad – end of.
It can be seen that the bailout of Wall St in the US is now being questioned. Was it throwing good money after bad? It most likely was. I have no problems with a need for a banking function, but if Bank A, B or C in Ireland did go bust, banking functions still would be provided. It would NOT be the end of banking in Ireland. The country would not come to a standstill. The problem is that Banks A, B and C are sick, badly ill and valued at close to zero net. Did the UK or Hong Kong government bailout Barings Bank when Galway-based Nick Leeson brought it down with huge debts? Excuse mon francais but did they f&^%$ !?!?
It may be better to park the ill banks to one side, to let the market work out their nuances, and to use our 10 billion more wisely. As a country (government acting on our behalf) we are borrowing enough as it is. Cant we use some of the slush ‘pension’ fund money for that?
I still advocate – Lance The Boil !!
David, I want you (and other readers on here perhaps) to go through an exercise. What would happen if say Bank A went ‘bust’. What would happen and how would it pan out?
What would happen to the loans?
What would happen with the deposits?
What would happen to the bank’s fixed assets, other assets, etc?
What would happen with staff?
If you do this exercise, you will find that things may in fact get better!
Now, another approach, is not to wait until a bank hits the wall, ala Barings, but to selectivly lance them. Measure and metric them, and lance the poorest ones, and start tidying up the mess. Sure, there will be job losses, and heads will roll, but its what’s needed. And let non-ill banks provide the banking function in the meantime and fill the void? Let them come in quickly, and give them support. 100m to them may be far more beneficial than 10b to the sickos.
As for the point that someone made that 95% of staff are just ‘followers’ and led in the bank. I agree that its not everyone in the banks that may have (on purpose) stuck their head in the sand. The problems I believe were more systemic than individual people. There is a global element to it, we cant deny that, but its not all external, of course it isnt. But not all countries have the same level of depth, or indeed debt. Thats why I dont blame per se the individuals at the helm of these banks, it was much more than them alone. They of course participated, encouraged the system even, but lining them up now and culling them would be short-term gratification.
There is still a cultural problem in the banks, and giving them 10 billion is not going to fix that at all! It puts a stay on what may at the end of the huntg be inevitable.
MK1
MK1: you usually talk sense but not this time. In your list of concerns you omit the everyday concerns of most of us:
What would happen to last month’s salary or pension?
What would happen to the ATM machines?
You assume a nice, orderly, winding down of bank responsibilities, whereas upon failure the bank’s doors would be closed and sealed until the auditor’s completed their assessments, which could take months. Creditors would all want a slice of whatever remained and no potential saviour bank would be interested until they knew the liabilities.
MK1, perhaps you would talk us through how you see an orderly transition that took into account the inevitable domino effect on other banks?
John Allen – Please develop “Money is about Time but Time is not about MONEY”. I too believe we are a half functioning race without our language. Unfortunately I have a too limited set of narrative tools to crack open the essence of what you are describing. But I’ll have a go…
Money does facilitate the elimination of waiting. It is a compressor of time by quickly facilitating the aggregation of resources to any one point of need. Money eliminates the apparent negative aspects of time – i.e. impatience. Time on the otherhand, has positive qualities. It allows development and growth and more importantly, reflection – something which too much of money’s presence can negate.
Deco – This paragraph of yours says it all. Nicely Articulated. I am going to pickle it with John’s stuff (apologies to all)
“We are better to have a proper bout of deflation, get our costs down and get competitive (needs time). But that is completely unacceptable to large vested interests in the economy. And they are applying massive pressure on the state to prevent the deflation (impatience). We need more competition in protected sectors of the economy (need development), less regulation in the productive sectors (need growth), more regulation in the financial sector(patience needed), and a serious productivity drive in the public sector (development). Urgently. Otherwise we will be doing like the British (impatient), bailing out banks and jawboning the markets non-stop – with international investors running the other direction (impatient), everytime an official reassurance statement is published (impatient).”
I think Deco, this will happen – question is how painfully? and can we dodge the pain and wecome the consequences of the good that’ll come of it. But it needs a narrative behind it to make it happen and get people behind it. I think John’s slightly oblique approch to developing a narrative might help spark an idea or two.
Barry, So Ireland is bollixed is it? Actually, as we know it … it was for the last 6 years or more. It’s now obvious.
There is a lot about the world that has happened in the last few months. The crackpots are no longer as mad looking as they were once thought to be. We are seeing the damage wrought by the idiotic bahaviour of over consumption, gorging and impatience. I am looking forward to the likes of Altantic and Woodies going belly up and seeing the return of proper hardware stores where I can buy a bag of screws and charged by the weight rather than the bubble pack. I have looking forward to the demise of the range of rubbish on supermarket shelves all nearly boxes or plastic wrapped to be ingested later not knowing what God forsaken logistics supply chain it emerged from. And to this I see less computer games and other means of distraction that make children illiterate and stupid. People with less money will not buy that fleat screen telly no matter how cheap it gets…why? becasue the real value has been surmised…zero. And the cops will be on their bikes commanding more respect and awe among the gurriers. Cars will be kept longer – do you know it take 40 metric tonnes of CO2 to make a Hybrid?? – a refurbed 10 -15 year old diesel will pass an NCT every time with flying colours. Bollixed? Great!
Deco said:
“But I think we should let banks 3, and 4 sink and be done with. Pay the depositors. And move on. It will be cheaper in the long run.”
If this were to happen what would follow?
Are the big German banks etc. who are so heavily exposed covered by the state guarantee.? If so they state itself would go bankrupt.Perhaps they could agree to pay phased “reparations” over a number of years.(At least it would stop them wasting even more taxpayers money)
If the big lenders are not covered, do we have a scenario where they take over the half finished housing projects and land banks and sell them off for whatever they can get.?
Would placing thousands of apartments/houses plus building land on the market then totally destroy the asset values of all the other banks? This is a frightening spectre..
Are we preparing for trouble??
http://www.businessworld.ie/bworld/livenews.htm?a=2346279
No doubt, but it was a test by the engineers. In the reality they will not tell the engineers anything, the lads will all be on the gov jet, getting the hell out
Power of Now – when I wrote the book Da Wu Yu Code ( the code of before time and after time of acient man ) published in USA in 2006 I was writing about Time and Money in the context of Money is Time and Time is not Money and using factual and made up historical pictures of sentient Man ( 10,000 year ago ) in a greater Isle to the remaining two Isles we now inhabit ( uk and Ire ) .We did over those years create the finest bodies of Law that became known as The Brehon Laws that became dumped and replaced by Common Law and I believe we need to retract on those and learn from them what they can offer to us what we have now found we have lost today .Today we have built a Time that has only one function in life ie getting from A to B in other word ‘ the function of logic only ‘.Unfortunately we have denied ourselves the greatest benefits Time has to offer us and that includes more fun and real life as in living and being alive .
Iceland is much more nearer to us than you ever imagined both historically and in the ever changing ‘now’ that is changing around us .I have explained that in the book too .The original ancient culture in our Isle came from the Western Seaboard and still hold strong even today and is relevant to finding out who on this Isle we really are .All our Political and Business Leaders came from there or found their inspirations there .Its the Nations spiritual haeven of thought provoking process that makes that happen .Its simply magic .Time will always do more than Money can ever possibly do .
I cannot believe that you got a book (self) published with such poor grammer and hit and miss punctuation. Print this thread out and I am published too.
The woo wooo wooooooo code has nothing to offer us that can help people that will soon lose their jobs and businesses. All you have offered is constant reference to your own book tha is based on new-age claptrap and impractical and completely unworkable notions.
Study Brehon, Chinese, Vogon, Klingon laws all you like. We have a problem that is going to go absolutely bananas after Christmas and people are going to be really hurt and Ireland may go bankrupt. Dee you are not helping. Replacing the ENTIRE legal system durig a time of national crisis is to put it kindly crazy.
Apart from your “points” making no sense the following is wrong with your post;
1. Your brackets are too wide.
2. You Capitalise Words That Don’t Need To Be Capitalised.
3. Full stop after the last letter of the last word in the sentence.
4. Two spaces after a full stop and one after a comma. None before.
5. Your inverted commas are too far out.
6. Haeven should probably read haven.
7. Time should read time. Also Political, political and Business Leaders should be business leaders.
Direct debits are bouncing all over the place now. Utilities and the like are going to be hammered by bad debts and delinquiant customers. The trick of cancelling direct debits just before they are due is getting old now. Bad debts are going to drive many companies to the wall. Big companies that you wouldn’t expect to go either.
We are living way way way beyond our means and many people will get stung by being connected by no fault of their own to people, companies and services that are addicted to credit finding themselves cut off. You may keep your job but if your ISP or your TV company goes bust you are shafted.
We will all be affected bar those who caused it. The political class dunces in Fianna Fail and the Greens and the Developers and their live in lovers the banks.
They screwed us on the way up and they will screw us even harder on the way down.
In defence of John Allen and anyone who has self-published a book. I know many creative people who are writers and they are not always so pedantic about such details as punctuation!!! I think we take John’s point of view without criticizing his puntuation or grammar skills. Surely a writer can pay someone to proof read the finer details before printing so they can get on with the bigger picture stuff. If we were all as pedantic to notice and comment on an extra space before a bracket (ref 1. Your brackets are too wide.) the world would be one hell of a boring place. We’d have less of the creative people who actually write books. We don’t all need to behave as if we are legal secretaries that have to cross every ‘T’ or one of these new fangled document specialists who update technical documents. Try reading a bit of quantum physics every now and then to help realise see how minuscule your comments actually are.
OK, I’ve had to bone up a bit and found this -
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom/#page1
Hard work but worth it, written by the author of Liar’s Poker (remember that?), Michael Lewis.
Nine pages of dense stuff, persevere, on page 9 he says -
“From that moment, [making Salomon Bros a public corp.] though, the Wall Street firm became a black box. The shareholders who financed the risks had no real understanding of what the risk takers were doing, and as the risk-taking grew ever more complex, their understanding diminished. The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.”
Now that I understand! The conclusion for our times? Nationalise, at least for the short term, to get rid of the shareholder protection mentality, re-organise banking and then sell them, but NOT like the eirom fiasco.
Seeing as were getting all philosophical …Deflation is evil in the global economy. everything is predicted on growth, deflation where if you hold off buying you’ll get it cheaper is a nightmare for business, for tax revenue etc etc. although it’s good for consumers. Most business models are non runners with negative growth.
Sustainability (0 growth?) although its a buzzword particularly in green circles is a concept at odds with the human condition and certainly at odds with economists. I read Jareed Diamonds book Collapse, where he looked at societies that were stable and ones that collapsed. his definition of sustainability was to last for a minimum of 1000 years. The thing I was struck with was how boring all the stable societies were. Result: a society that lasted for ever and would certainly fell like forever for anyone living in them… they didnt really leave anything behind to marvel at…. Its a conundrum that is never addressed by those preaching sustainable solutions… Diamond gave one example where the civilization reached heights but managed to change to sustain itself… in Japan but I don’t think that form of government is ideal… The human impulses to go further, faster, quicker, better are the antithesis of sustainability but they are what makes it all worthwhile.
back to deflation, I can barely spell it but i cant see how we will have much of it given the amount of money being pumped into the various systems by various governments. Sooner or later the people getting these bailouts are going to try to convert them to cash… which has to lead to inflation… I don’t know? Does anyone know what the mid term effects of giving more than all the notes and coins currently in circulation to various entities ‘too big to fail’ is…. There has to be some effect and I’m far too cynical to believe it’ll make everything all OK again.
Ireland is Bollixed? Sure isn’t everyone else bollixed too? I hope so anyways, the worst case scenario for us is to be too far from the herd.
Eureka.
This is where they all learned to run an economy.
http://richard_wilding.tripod.com/monorules.htm
Garry, “Sustainability (0 growth?) although its a buzzword particularly in green circles is a concept at odds with the human condition and certainly at odds with economists.” has a flaw you righly question.
Sustainability = Growth with Foundation. So far we have growth on an overdraft. A rubblish basis for any business plan.
The Green approach is not about maintaining a cosy cuddly status quo of us all living in the woods acting like a bunch of smurfs. It’s about learning to clean up after us while we advance. This takes time and planning – something the finance world does not understand.
Point taken on the green approach.
What struck me Philip was the societies that survived didn’t advance, (with one exception) they stayed in stasis. Japan, the exception made a concious decision to conserve their resources (timber) and take what they needed from neighbouring countries via trade. Japan found a way to sustain their society by getting more inputs. The others all found a way where they either didn’t sufficiently impact their environment to matter or they managed their environment so tightly nothing was wasted and implemented very strict policies, cleaning up after themselves as you put it. But they all found a way that worked and didn’t change that for hundreds of years.
Sustained growth of any kind over the time frame Diamond talks (1000 years plus) about is practically impossible as even very small annual percentage growths result in the system doubling many times over in that period. Advancement is another matter but practically impossible also because every advancement has consequences, when any system is in steady state a new input will cause it to wobble before hopefully settling down to some new steady state again.
a break from the discussion on the banks.
wwwsoldiersofdestiny – we seem to be afraid to admit the scale of the problem. Bank C are the banker for developments and commercial property. There are too many developments, and ther is too much commercial property in the market. Bank D gave enormous loans for prime residential property. And the dogs on the street were saying it was unsustainable. Both business models are completely flawed. And we have seen no admission of this from either institution. They have not changed their business models. The market fundamentals in both cases predict ongoing disaster. And I cannot see that changing for the next five years. One Sunday newspaper even showed one Irish bank having a staff party in Dublin 4 over the weekend. These people have still not grasped the situation. Do they deserve a bailout/protection ?
Money does not grow on trees – and frankly there are far better purposes to which it could be put. Pouring billions into these two lemons, whilst our social services are being tightened down, is waste. We cannot carry on like the Ahern wing of FF, or the Labour Party, promising inifinite money to everybody. We will not be able to protect those who bought high from massive embarrasment. It should not be a policy aim of the Department of Finance.
I am convinced that the taxpayer will end up throwing a few billion every few months for the next few years. And when we are finished with these two small enough banks, we will have nothing to show for it. Will we then have resources to maintain our social services ? Will we then be in a 1987 scenario. We have to accept economic damage. The financial system is bunched. We have to bury that massive liability between the two ears called the pride.
Really it is beyond fixing now. To the German banks, all we can say is sorry. But you got caught by people who were lying to the whole world. A bit like Wall Street got you with the SIV products. This is the same as happened to you with regard to Lehman Brothers, Bear Stearns, etc.. And you didn’t tell the Americans to ‘pay reparations’. So don’t start bossing us around. This is business and stuff happens. What has happened to the concept of moral hazard ? We seem to have a two tier society with regard to responsibility. The plumber who gets stung without payment has to get on with plumbing the next day and make up for his lost time. And this is happening. And he pays his taxes. But the banking instutition gets a bailout from the entire taxpayer base. And they make no reparations. This idea of capitalism for the labour end of the economy, and socialism for those with capital, is a non-runner.
These two banks did incredibly stupid things. And they are not essential to the business of the country. They are a small share of the business loan market, and I doubt that they are essential to the key wealth generating export sector. Their customers will have their mortgages sold on to another bank. This is hapening in the US. We are a small economy, and we have to stop thinking like as if we can bail out everybody, because we will very quickly find out we can’t. We have to be prepared to see bad banks go the way of bad motor dealerships. It should not be some sort of forbidden rule.
As a taxpayer, paying PRSI every week, I have serious misgivings about seeing the pension reserve fund being allocated to dead banks walking. The state will not go bankrupt if we walked out of propping up these two turkeys. There would be a sharp shock to the economy. There would be a strong belt of deflation to the domestic non-traded sector of the economy. Property would be liquidated and prices would drop until buyers emerged and bought up the property. Current prices are still not clearing sales, so they are going to drop anyway. The auctioneers would be cut out of the deal because the bank solicitors would process the transactions. Housing would become affordable. Unemployment would rocket. But it is rocketting anyway. And there would probably be mayhem in the property market. The delusional mindset would drop. People would start to increase their workrate, and their savings. Massive numbers would get retrained, go back to college, or simply draw the dole. The labour market would become very flexible. Wage demands would drop and productivity would start to accelerate. All this would cause sharp deflation. And at some point the economy would pick up, as people started spending at lower price levels. Standards in the services sector would improve dramatically. The competitiveness of the entire economy would change dramatically. And then the jobs market outside of contruction and retailing would pick up. We would be in 1996. Low cost, expanding, and businesslike. Bank A and B would survive. Bank R would expand in the business sector. Bank E and F would be under state care, and eventually sold off, in total, in parts or wound out of existence. The multinationals would be satisfied, and investment would rebound.
But if we keep throwing money at these turkeys, like we threw tax money into the old P&T, CIE, ESB etc in the early 1980s, then we will end up in 1987 again. And the multinationals will get very worried. The property market is not the entire economy. It should not be allowed infect the entire economy.
I think we should examine the plausability of this option.
I don’t think it’s an option at all Deco. It’s a recovery plan and the economy by default and lack of action is well on the way to the scenario you describe. All across private sector world the hairshirt is well and truly on for the last year. People are downsizing offices, cutting out even minor excesses, laying off all but essential staff and generally speaking saving their cash. The only folk that haven’t started economising are those with access to other peoples money, whether banks, government departments or quangos.
None of them were accountable in the good times so they’ll try to hang on to what they’ve got at any cost to the State.
Look at the markets today. The old 10bn hasn’t convinced private sector land that anything has changed. We’re losing all credibility internationally and it’s down to a small self centered cabal that won’t fall on the sword.
Events will overtake them though. They might rule the roost here but Trichet, Merkel et al will step up the pressure come Spring.
Talking about Spring, the governor of the Bank of England has to write an open letter to the Treasury outlining a recovery strategy if certain market conditions prevail.
Are our new banking watchdogs issuing any sort of report for visibility?
More window dressing methinks.
roc – i tried to explain some words and introduced two letters never known before created by irish monks and were used in the first german bible now defunct in German but still used in Icelandic and used until recently in Norweigen and created two other words that form the name of a new tune with a short musical written by my daughter – and all in the book
What will a change of government do here?? are you that small minded or can you not remove your blue shirted glasses in the interest of the country. Sounds like Eddie Hobb with his top hat economics. I cant see Enda Kenny clapping his hands together with his ‘This wouldn’t happen in Mayo’ level of intellect coming up with anything other than new ways to blame people.
Well actually was talking to a UK friend of mine who lives in Mayo for part of the year who said that Mayo did not jump on the back of the Celtic tiger and as a result the slowdown won’t be as pronounced as in Dublin but then Mayo’s best export has always been its people.
MK1 – thank you -you have said what I wanted to say – but more efficiently. I agree with you concerning how we should approach the banks with the taxpayers money. We should be prepared to say to some banks – you will get none of it, because you are unsustainable, and in the context of the needs of all citizens, not an essential part of the society or the economy.
Let the market take the hit. Then bring down the costs of business, and get the economy competitive again. Drop the delusions of greatness that have been the source of all the overvaluation and debt binging. Start all over again, from a lower and more competitive cost base. And refocus the economy on sustainable growth.
To anybody who advocates following the British approach. (Including the two main opposition parties). It does not seem to be working. I picked the D-Telegraph, because they are the opposition party paper, and the oppostion paper never print ‘the official version of events’ :)))
http://www.telegraph.co.uk/finance/financetopics/recession/3793721/Bank-of-England-warns-more-need-to-rescue-UK-economy-as-bail-out-falters.html
Furrylugs – thanks for at least debating the option. You stated “ll across private sector world the hairshirt is well and truly on for the last year. ” However, it has not happened in Irish banking yet. The board of ANIB still seems to be earning multimillion euro sums. And there have been no layoffs in any of the banks, yet. No branch closures. There might have been belt-tightening, that has not been publicly disclosed. Though, as taxpayers, we should expect to have seen this.
Sure the AIB in Cork have just spent 10 grand on a staff party. These boys are having a laugh.The penny hasn’t dropped yet. They’re all in Christmas party mode. Hasn’t Lenihan told them to come back in the New Year with a few ideas but don’t strain yersels lads, the 10bn is there anyhow.
b dee shafted one – ur trucking arteries will burst a tyre and your michellan expressions will lose too much weight just learn to listen to yourself and maybe you will learn some day before its too late or there will be no Time for you
Furry – this is disgraceful. I seen photos of the ANIB bash in D4. Some citizen nearby was sufficiently outraged to send the photos to the newspapers. This nonsense has to stop. I suspect that the IBOA thinks that because of state involvement, the banks will be run in a union freindly manner like CIE. But bank business is down, because there are far less people getting loans, mortgages. The banks must be full of people doing much less than they are paid. This is a complete disgrace. This whole project is going down the tubes. And the taxpayer will be stuck with the bill.
I have another word for it Deco but our webmaster couldn’t allow printing it.
Their hubris at the top is astonishing. They really don’t give a toss.
I’d say the whole cookie crew just want to pretend it’s Christmas and come back next year with their hands out for the 10 bn.
I wonder which minister is spending the break at which villa?
But after Davids article above, whats the point of saying any more? They’re just going to tough it out with no retribution.
Pure mickey mouse.
This is a bit more optimistic.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_lynn&sid=aS98ereBggE8
We are in a crisis of unprecidented proportions. If it goes as wrong as some people predict we will have so much Time we won’t know what to do with it.
This Time is called unemployment.
You could take up fishing. Its relaxing, you’re in a healthy environment, and you bring home your catch which saves on food bills.
fumming – i have been to banks in last few days trying to cash rubber cheques the bouncing type but i am not in vain in my efforts ….i have a special pen that picks up the sudden gush of BO when the teller gets another fright afer another bouncing cheque and the sweat built up is traceable to the pen where she holds it and with this sample it is used to make a perfume extraordinaire that drives pests away from all gardens i wish it could work in this room sometimes
Moderator, Allen is at it again! “my efforts…, i”
Will we have a whip around for Allen so we can send him on a secretarial course?
For the record the photos of the ANIB staff partying, came courtesy of an English newspaper. The Irish media are still downplaying this sort of thing. And the IT even goes so far as to indicate that Irish banks being solid and reliable. D4 doesn’t admit to it’s errors. I am sure Ross O’Carroll Kelly would understand the high importance attached to preventing the plebs from finding the true story. We are still having selective accountability in this society. Irish society is rotten with deceit. The biggest losers are those who paid for the housing estates of the last ten years. And there is a massive effort being made to keep them completely clueless.
Deco,
Can you provide the link for the photo? I want to see their faces. Well done to the person who took the photo.
Its all very like the final chapter in George Orwell’s Animal Farm where the other farm animals look in the window of the house to see the pigs enjoying themselves with the best of food and drink.
For the first time in a long time I’m ashamed to be Irish.
Well, the Fed has just made the last role of the interest-rate dice, cutting rates to a ‘range’ of 0-0.25%. Which basically means free money.
They have also promised to use ‘all available tools’ to solve the crisis, a euphemism for printing lots of money.
These measures are intended to help the credit markets, and to ease the confidence issues in the market. I hope they work.
But the old chestnut ‘Act in haste, regret at your leisure’ could well ring true. If the interest rate cut doesn’t work then the Fed will have to turn to money creation, which might help in the short-term but could be sowing the seeds of future inflation.
There will be so much money in the system that once it starts to gain some velocity as the economy picks up, we could see inflation rising rapidly in the US.
Mr. Trichet seems unwilling to move on interest-rates for the moment, maybe by keeping his light under a bushel is the smartest move at the moment. At least he will still have some wriggle room when things start to go a little more pear-shaped next year.
Here’s the link to the Fed statement. Note that it includes that fantastic phrase from ‘management speak’ – “going forward”
http://www.federalreserve.gov/newsevents/press/monetary/20081216b.htm
Printing Monopoly money would seem an intellectually conservative strategy to this simple mind.
This confirms your assessment Lorcan,
http://www.marketwatch.com/news/story/fed-goes-defcon-1/story.aspx?guid=8DA1A356-2B0F-4C8A-9396-EFDFAC959357&dist=SecEditorsPicks
As JK Galbraith once said, “The only function of economic forecasting is to make astrology look respectable.”
As you say, it confirms my assessment, but it is only my assessment. I’m sure if Mr. Bernanke happened to be passing he’d argue me into a cocked hat!
Harry Truman once wished for a one armed economist, so he would not have to hear “on one hand….. or on the other hand….” again.
Lenihan
Web-master: I don’t want to be a party pooper but perhaps we need some direction here? Davids article is about Lenihan taking responsibility, and not about personal crusades, cost of housing in England, punctuation, etc., etc.
For example: David mentioned Lenihan 8 times in his piece but that name only occurs in 18 out of 140 responses up till now.
We are all concerned about the general health of the economy and this is a good place to let off steam, but out of respect for our host perhaps we should address our comments mainly to those issues raised by David twice a week in his columns. Rejoinders attached to individual comments would then amplify or contradict the specific points in those comments.
If this becomes an unfocussed free-for-all, it loses a lot of its interest for participants and its impact for the casual grazer.—Just a thought?
Malcom. Welcome to the internet. Tangets, flame wars crusades and all that comes with that are par for the course.
The internet or what is left of free speech is an unfocussed free for all pretty much like Mr Lenihans approach to the economy. The problem is not his response to the current crisis but his and his partys response to the credit free for all since 1997. You don’t see the fire brigade trying to work out how to put out fires in the middle of an inferno which is what is happening now.
The time to worry and do something is not now. What is happening now is a knee-jerk reaction to a situation that Mr Lenihan does not understand. If he loads a load of our money into the banks like he has and will have to do again it was because his hand was forced. Not by the crisis but by the utterly stupid and reckless policies and actions of him and his party over the past 10 years. Leaving the bank bosses in their jobs is adding insult to injury.
Money was made cheap. Money was loaned out and now the money has to return to its owners. Fianna Fails approach to the flooding of the market with money was to spray kerosene onto an already roaring fire. People were led to believe the good times would never ever end, that there was this utterly fictitious shortage of housing and that if you didn’t get on the ladder you were going to lose out. Tax breaks were given to developers to build houses and developments that weren’t needed on artificially inflated farmland.
The recession isn’t the problem. The recession is the return to reality from la la land where the banks and the Government were hiding for the past decade. And if you said anything different to what was accepted wisdom you were a nutter and in the words of our former Taoiseach should “go and commit suicide”. The recession is good news for the economy as reality returns.
Cheap credit wasn’t the solution. It was the problem.
What Mr Lenihan does is akin to what a doctor does in the ER. Do you give the patient drugs or do you wait and see if they pull out of it. Either way the patient is in the ER and has been brought there maybe because they have overdosed or had an accident. The steps that needed to be taken should have been taken before the accident by learning how to drive or to prevent an OD by teaching kids not to do drugs. And the doctor would possibly be versed in what to do when a patient presents. Lenihan hasn’t a clue and what is most sinister is he is being advised by Merrell Lynch as to how to proceed. Disaster capitalists at best.
My final point is that the actions of the Minister are too late, too little and ALL the warning signs over 10 years were discounted and derided. We deserve what we get for electing this muppet but in reality we don’t deserve the world of pain that is being unleashed due to the casino economics and naive and pollyannic actions of greedy little men.
What Lenihan does now is not what he wants to do. He has backed us into a corner, given the money away and still left the morons who drove us to this in charge. If you preside over a 95% secline in your companys share value you need to be asked to leave. Or be thrown.
What is happening now is urgent and necessicary in the same way that electric shocks and drugs are needed if you have a heart attack. The trick is not to get the heart attack in the first place. This is what Mr Lenihan and the Soldiers of Destiny messed up on. They gorged themselves and now we are living with the consequences.
b: Thanks for your welcome to the internet. It comes a bit late, since I first used email in 1984 and have been participating in blogs from my home computer since 1994. I fully support free speech and there are plenty of places on the web that accommodate an ‘outside the box’ approach. David’s articles are always well focussed and since this is his blog, I think our responses should maintain similar focus, although I can be persuaded otherwise by reasoned argument.
There is need for both diversity of approach and focus on solution in economic problems. In Ireland we have had a wide range of innovative contributions to our economy during the boom years, from growing mushrooms to making little blue pills. But when discussing national economic problems we need to consider one thing at a time. If David chooses banks as his subject, then we focus on banks.
This failure to focus on one thing at a time is a key factor in the current malaise of Irish government, banks, and industry. It was fine for Sean Quinn to diversify into all sorts of things during the boom years but now in recession, his empire is beginning to unravel, beginning with his stake in Anglo.
Let’s all hammer whatever David puts on the anvil, while its still hot.
Your point is to do things one thing at a time and distraction is the reason for the malaise. Incompetence has more to do with it. We are letting these halfwits away with being incompetent at best and corrupt at worst. Letting them continue when it obvious they are totally out of ideas is crazy. Would you let a random person fly you and 180 people to London in a storm. I think not. Why should the economy be different?
The country is screwed. We have no answers. Minister Lenihan is good at gravitas but it is patently obvious he is useless in a crisis. He would be useless in any situation that required a decision or facts.
The fact that the Dail are going on six weeks holidays at this time is a total farce. But maybe they can do less harm away.
I would disagree that we had innovation during the boom. The boom was 90% property and business and industry could to put it crudely F off. We are stuck in a Keynesian nightmare. My solution is to follow the Austrian model of economics. The fundamental problem with Minister Lenihan and Clueless Cowan is that they know a lot about local politics but have no grasp of the bigger picture.
Maybe Sean Fitzpatrick walking the plank might start them all at it.
Book your Ryanair one way tickets now.
This from AJC.Com;
“And as bad as it is, a revered, and feared, bank analyst, Oppenheimer’s Meredith Whitney, has now lobbed another bombshell: Credit card issuers will withdraw more than $2 trillion in available credit over the next 18 months.”
A credit card in the Eire Nua gan Tíogar will be the ultimate status symbol.
Book them how? With a credit card? :o)
Minister Lenihan already ‘owns’ 50% of one bank under the guarantee scheme with NO property loan book – Postbank the joint venture between An Post and Fortis (recapitilised by the Dutch and Belgian Governments)
Postbank is a “community based” bank which would be a good platform with ‘no baggage’ to quickly be recapitised to provide lending exclusively to productive compnaies providing products and servcies with an export orientation (or those with the potential to trade internationally) and supporting SME companies :”Innovation Credit Corporation”
Just recapitialisng the major banks – AIB, BOI, IL&P and Anglo who already have a major property exposure in their assets funded by international funds will just contract lending to SMEs as Banks try to ‘fix’ their balance sheets.
Chug Chug Chug.
The gravy train pulls in again.
http://www.timesonline.co.uk/tol/news/world/ireland/article5338159.ece
Now that’s rubbing our noses in it, not content with the highest pay in Europe they are making their own laws to rob more. Nobody will protest now but people here have long memories, it’ll be stored up. Something will happen to spark the whole thing off later in 2009, when the mood is really ugly.
Lenin Ham – I suggest the next time you are walking around, look at the faces of dogs with their owners then look at the faces of the owners and compare them .Seriously , do try . You should find amazing simillarity .
Now do the same with the Fat Cats and their banking cohorts and you should find the same.They all read from the same Hyme Sheet .
Malcolm McClure > MK1: you usually talk sense but not this time. In your list of concerns you omit the everyday concerns of most of us: What would happen to last month’s salary or pension? What would happen to the ATM machines? You assume a nice, orderly, winding down of bank responsibilities, whereas upon failure the bank’s doors would be closed and sealed until the auditor’s completed their assessments, which could take months. Creditors would all want a slice of whatever remained and no potential saviour bank would be interested until they knew the liabilities.
Letting a bank go, or more correctly, closing down a bank (due to reckless trading!) could pan out as follows:
Lets use some simple figures for way of demonstration: “Bust Irish Bank” (BIB)
deposits 20 b
loans out 150 b
interbank-loans 50 b
tier1 capital 10 b
1. Depositors move their deposits from “Bust Irish Bank” (BIB) to other banks, using whatever deposits are left in BIB with the State Guarantee kicking in and covering any ‘needed’ monies. Salary payments, etc, to switch to new bank accounts, ATM cards for new accounts, etc. Estimated cost to the State could be 0 or 1-5b depending on the actual amount of liquid cash and other marketable securities, tier 1 capital, etc. An overnight/weekend move on deposits would prevent a “run”. Orderly close-down are the watch words.
2. Loans to be sold on the open market to any bank/institution that wants them. Clearly at a rate less than a full euro for a euro, for example 75 euro cent (ie: 75%) on average. Loanee’s have their loan moved to another insitution and continue to pay as normal (whilst they can). The risks/bad debts are passed to other instututions, at a cost of course to BIB as the loan ‘assets’ lose value and are marked to actual market. The loan book is effectively chopped up. Cost could be as high as 7b, depending on whats left of capital set aside, liquidity of it, etc. Could be done in 1-3 months.
3. Interbank loans, bank/state could make a deal with counter-parties, and could pay less on each loan amount. Could take a while to work out, but cost could be limited, and no higher than 3-5b.
Overall, for BIB, its orderly close down may cost the State anything from 2-10 billion. However, what it could send out to the other banks would be a very very strong message indeed, just like when Lehman went, that there are NO sacred cows, that any of the other banks could be next. etc. And if the government actually supported other non-Irish banks in and gave them 100m to ramp up their operations here and compete, our cosy cartel would see that they either need to buck up NOW or the writing is on the wall.
You could see IBOA asking for pay cuts, to keep jobs. Staff queing up with suggestions to cancel xmas parties, to get rid of the cars on lease, to eliminate their own bonuses, to open the banks on w/e’s and in the evenings and have extended hours of operation, suggestion to cut banking charges, etc, etc – and people may actually do some effing work! Managers may reduce staff numbers but in an efficient eonomy thats what they should be doing!
Perhaps like some that blissfully went down with the Titanic, even such a ‘culling’ of a bank may not change the remaining banks – they may continue to metaphorically ‘quafff their cognac in the chandelier-laden lounge’ – sometimes it takes two bullets before people realise that the shooter is serious.
Okay, who’s first then?
MK1
MK1: That mostly sounds good to me, although i doubt whether it could be accomplished over a single weekend. It depends on the goodwill of the BIB staff, who’d be like turkeys walking up to the plucking machine before they’d received a humane chop.
Respectable Forecasting – is it possible ? I understand that Lenin Ham is a Gemini .That means his element is an Air Sign and mutual .What I read from this on the surface is the following :
he is definately a ‘prevaritique’ ie. procrastinator
he has two faces – I dont trust him at all
he is a manipulator of time and people
he is unable to call a spade a spade
he has No Leadership Skills
he is not transparent and honest
he blows his own air from anywhere to everywhere
he got where he is touching poison chalices
his weapon is a curved dagger that kills from behind so he does not look at you straight in the eye when doing so
he is very Dangerous when you depend on him
the only real Asset he has is that he is a Perfect Broker by that I mean he can bring parties to a meeting and get a deal done …….the problem is …at what Price ? And he would sell us down the tube without blinking
I have Absolutely No Hope in this Madness we have elected
Sorry MK1, I don’t know the business but that sounds like bollocks to me…
Point 3 looks very vague. If I was one of the creditors, I’d organise a united front and demand a repayment schedule on the full 50billion or else we will scream from the rooftops that this ‘guarantee’ is bollocks and nobody should under any circumstances ever deal with this outfit again. The sinking of the Titanic wasn’t orderly. Neither would the queue to get the money in this scenario.
No, Fire the directors and CEO’s first by demanding that as the price for a single penny of funds or the coverage from the guarantee…The new ones will be more compliant to our interests. If not fire them. Repeat until banks are strong enough and we no longer have leverage.
Logic is not infallible and suggestions made to sharpen focus on the newspaper topic is like funnelling the brain or following the light into the dark tunnel only to be hit by the mid day train from the Galway Camps – we all agree there is a National and International problem and we can only within that framework find a solution of our own that is only our own – in that context constraints do not help – we need to be original and be Empowered to do what we can do that we need to do .
We know that 1 + 2 = 3 and we also know that the 3 is not appearing eventhough we are putting the 1 with the 2 so what’s the problem…..it’s the ‘+’ . It has disapeared , became inert, lost its sex life maybe .The cause of that problem is from the Top of The Tops in our Nation and all those Topsy Turvy People must be Removed to restore our National Empowerment again to have some Hope again.Free expressions to the newspaper articles should always be welcomed and can be dismissed or taken up later on .We need inspiration and new ideas not old tricks .
David,
I agree that drastic action on the banks issue is now needed. The shareholders knew the potential risks (or at least they should have) when purchasing bank shares. The tragic thing is that members of the general public are also going to suffer badly because of the banks’ performance.
However, as you point out we do not have many options left now. It is time for the government to take some drastic decisions. Both Cowen and Lenihan need to step-up to the plate! The way things stand I have my doubts as to the ability of Lenihan to make the decisions and take the actions necessary to help us begin to address this mess. Indecision is the worst decision of all.
I think that it might be time to call back a former Minister of Finance who, in my view, is capable of making the decisions and taking the necessary action. I think it is time for Cowen to consider bringing McCreevy back from Brussels. He might be controversial and many people may think that he had a hand in causing some of the problems we are now facing. However, it has been over 4 years since he was Minister for Finance. He could have done a lot of things differently in that time to prevent what has now happened. It might not be in Cowen’s own personal interests to do this, however, the time for personal interests is over and it is high-time that the national interest takes priority.
I have heard that the current joke doing the rounds in the European Central Bank is this.
Question ” What is the difference between Iceland and Ireland? ”
Answer: ” One letter and six Months.”
Iceland – I have visited Iceland many times since I was 12 years old and yesterday I asked a friend of mine on the Westmann Islands south east of the country how things were ….he was so relaxed and removed from the news on the mainland and reykjavik I am beginning to think we Irish are in that removed state on mind now and is that dangerous for us ?
Garry > Sorry MK1, I don’t know the business but that sounds like bollocks to me…
> Point 3 looks very vague. If I was one of the creditors, I’d organise a united front and demand a repayment schedule on the full 50billion or else scream from the rooftops that this ‘guarantee’ is bollocks and nobody should under any circumstances ever deal with this outfit again.
Parts of the solution are vague because it depends on a few unknowns – for one, we dont know if the state guarantee on ALL the loans will actually be honoured. There is nothing to stop our government from negotiating less to be paid back on certain loans, especially if they are at uncompetitive rates, and they should do that rather than giving up and writing blank cheques. The more the pain is spread around, the better, and the interbank loans are to other banks which have in many cases state guarantees, so …..
Creditors must negotiate and take some pain in any orderly shut-down, be it less profits or even a small loss. That is normal and was a known risk when they took the business on, although perhaps according to the risk ratings agencies it wasnt correctly marked, but that’s another story. But incorrect risk rating (probability) is everywhere so it is not an Ireland only solution, not unique to ‘Irish’ banks.
Ireland’s banking sector is already not being touched by the markets due to the unknown long-term situation of debts, loans, etc. All we do know is that potentially, the losses could be substantial and are more than we as a country can afford and guarantee.
I still think the best solutions are:
1 – lance our banks (fix them)
2 – entice in other big EU banks (the healthy ones)
3 – promote as much as possible ANY type of job making activity (but not jobs that are solely paid for by the state)
MK1
MK1 You may be 100% correct but I have a very simple view of what the guarantee means… Lets take something I consider to be 2 similar situations…..
Mr Tom Murphy going guarantor on a mortgage for his daughter Mary. Mary misses repayments, what happens? Do the banks start a negotiation process with Tom and eventually settle for say 20 cents in the Euro? Or do they merely transfer the debt to Tom at 100 cents to the Euro?
The scenario you are talking about a is a shut down of the bank. Whereas in my view its the shut down of a bank which has legal guarantees from another entity;;;; similar to the shut down of a subsidiary whose debts are guaranteed by a parent company. I’d expect the creditors to chase the parent for the full amount.
Im not an expert but that’s my understanding of what the guarantee means… If that’s wrong, great
Not arguing with your points 1/2/3