Anglo Irish Bank is Ireland’s Enron, and those responsible for destroying shareholders’ assets should be pursued accordingly. It’s not just the shareholders: the system has also failed the people miserably. We are now in a position where nobody trusts us. The minute Anglo was nationalised, the risk on Irish government debt jumped significantly because this disaster will be paid for by all of us. Our national debt has just – effectively – doubled and dodgy banks are now contaminating everything associated with Ireland.
We will soon be downgraded. This means that, not only will we pay more for our debt, but we can forget about any infrastructural development paid for by public private partnerships. No one will touch us. And if we can’t structure our financing of railways and roads using private investment, how are we going to build stuff?
On a more personal level, to see pensioners’ funds wiped out is heartbreaking. What are these people going to do? Worse still, it is enraging to hear those responsible squirm and spoof while they cowardly stage-manage an egm – paid for by shareholders – to hide the truth from those very shareholders. Is this what we have come to?
Certainly, questions need to be answered, such as: why did you not see executives moving money around the balance sheets and why did you not act in the shareholders’ interests and sound the alarm bell? That is, after all, what an audit is supposed to reveal, is it not?
But it is not just the auditors. Make no mistake about it: it is a story of monumental failure in the banking system. Not one person in a position of responsibility did his or her job and now the taxpayers have to pick up the tab, the size of which no one seems to have any idea.
Let’s look at the players in turn. The Central Bank failed to oversee the system.
Every month, the Central Bank issued statements showing monetary growth in Ireland – which was exploding. This column pointed out time and again that this explosion of credit could only have its balance sheet counterpart in enormous foreign lending. Yet nothing was done. Think about it, banks are given licences to trade.
These should be treated like driving licences. If you drive dangerously, your licence is taken away. Likewise, if you trade dangerously in a manner that endangers the integrity of the entire system, you should have your licence taken away.
But what did the Central Bank – the guardian of the system – do? Nothing, despite all the information to hand. Did anyone resign? No, in fact the governor has just been given an extension!
The Financial Regulator clearly was ineffective, and its chief executive has now retired. The auditors? Well, we know what they did. The last thing they did was carry out a proper audit. Why might this be? Within the bank, things were worse. A sizeable number of the senior management of Anglo surely knew what the chairman was up to, moving personal loans around to avoid detection.
Did they raise this? No. What about those on the boards, these well-paid characters who are supposed to be representing shareholders, such as the pensioners, at the egm? What did they do? They did nothing.
The stockbrokers – who in many cases channelled their clients’ funds into the bank, arranging and dressing up Anglo’s unsecured loans and stuffing them into the hands of unsuspecting credit unions – did nothing. Did they raise any question about the darling of the financial sector? They did in their Swiss! They were making too much easy money.
Finally, there are all the regulators and – presumably – the Department of Finance and their role in the saga in which Sean Quinn invested heavily – and lost heavily – in Anglo through contracts for difference.
Should this CFD position have been let develop without being declared to the market? And was Quinn’s massive contract for difference position unwound and translated into an ordinary shareholding of 15 per cent?
The upshot of this tawdry tale is clear. Our financial system is populated by cronyism and incompetence. This assessment makes the likelihood of contagion all the more probable.
So who is next? Is it possible that one or two of the smaller banks – some with a ludicrous gap between their deposits and their loans – will suffer a withdrawal of funds? No one believes anyone any more, and the flight to allegedly better banks will be overwhelming. Just witness the massive market hit on Barclays Bank in London last Friday.
Faced with this scenario, there is only one thing the Irish government can do to retrieve the situation. It can quarantine large diseased chunks of the Irish loan book in Anglo. In effect, it can turn Anglo into a financial skip, throwing into the bank all the bad debts of the other banks.
Bank of Ireland and AIB, although they like to hold their noses and look down on Anglo, might actually have a worse bad debt position than the nationalised orphan. This is because, in an effort to catch up with Anglo, the big banks accelerated lending at the top of the market from 2005 to 2008. So they need the financial skip as much as anyone else.
It would be unwise to allow them to get off the hook by throwing all the bad debts into Anglo. Brian Lenihan should raise a huge bond on the international markets to finance the bad loans.
The profits of all the banks which have been bailed out should be directed to service the interest on this, and the money will be used to pay the bad debts. Over time, the debt will trade at a deep discount, but as the economy recovers, so too will these debt prices.
The idea is based on the Brady Bond solution to Latin American fiscal delinquency in the 1980s.Hard as it is to get our heads around now, Ireland in 2009 is more Brazil than either Boston or Berlin.
Excellent comments all around,a lot of food for thought,maybe a little lite relief,for lovers of the simpsons…… Sitting in his office mewly elected Don, fat donie[donal o connor] tells his secretary “get me briany the breif on the phone”"no not the fat one.the mature reflection guy” “”yo briany we gotta problem with this Homer paluca,he made a deal with seanie[fitz] tight lips and now he gotta make good,who’s on the payroll downtown”.”Leave it to me fat donie,ill get the guys at revenue ,cab,social to put the squeeze onn,your money’s good”,,,,,,,,,,”Whats the matter Homey, Marge I bought Mo’s with money from Seanie tight lips, Lenny and Carl told me to do it something about a property ladder and how we all get rich quick,with free beer for life.Ahhhh beeeeer.grrrrrrrrr……DOHH.
D Very Earnst & D Very Young – it would be interesting to know how litigious liabilities are shared within this partnership on a global basis ?
Light relief. Let’s play ‘Oligopoly: Fun Family Board Game for the post FIRE Economy Depression’
Eric Janszen and his band of seditionists recently put up a ‘spoof’ updated version of the original Monopoly game.
When I stopped laughing, i realised that there’s several people on this site who could do a good shot at the Irish version, A Cronyist’s Guide To Celtic Snakes and Ladders.
Please ensure you include the Bertie Bowl, the U2 Tower and any other ‘vision thing’ projects which you feel will add enjoyment. Ensure the Economic Rent Infrastructure and Gombeenism is clearly explained to any new comers to the game, the ‘New Irish’ who, perhaps, have had a little difficulty becoming acculturated to the norms and customs of the uniquely Irish protocols of banking and business. Especially as relates to property development.
Enjoy.
http://www.itulip.com/forums/showthread.php?p=70784#post70784
http://www.irishtimes.com/newspaper/breaking/2009/0119/breaking19.htm
This worries me. Even though I can think of a few legal reasons why such debtors have already signed their life and assets away to anglo, sometimes it’s better to overstate things and give them no legal room to maneuverer.
The words of the “dept of finance spokesman” could be paraphrased as “if this blows up in our face it’s the AG’s fault” :)
Hi David,
A good article. And hard to condense all that needs to be said at this juncture.
> Anglo Irish Bank is Ireland’s Enron, We are now in a position where nobody trusts us. The minute Anglo was nationalised, the risk on Irish government debt jumped significantly … and dodgy banks are now contaminating everything associated with Ireland.
I dont know if ANIB is all that similar to Enron, which was financial/accounting manipulation and essentially fraud. ANIB, and other “Irish” banks are more akin to any other bank caught up in a dropping assets/debts increasing squeeze. Denial may be something that is in common, but in many respects, ANIB is closer to Madoff than Enron! Mad. In fact, its like Lehman.
> We will soon be downgraded. This means that, not only will we pay more for our debt. And if we can’t structure our financing of railways and roads using private investment, how are we going to build stuff?
Our debt servicing cost measured in basis points has been increasing ever since we announced the guarantee. There are no free lunches. ANIB will only exacerbate it. The other question is, is there any point in building up a huge infrastructure in this country? The Japanese example from 1988 onwards demonstrates that infrastructure investments cant pull you out of an economic tailspin. An economic blip, yes, but not a tailspin. eg: Investing 300m in new schools is a waste of short-term money, its batty.
> On a more personal level, to see pensioners’ funds wiped out is heartbreaking. What are these people going to do?
All this can do is provide an educative example that shares can go down as well as – further down! The lowest a share price can be is zero! People should always be diversified in their ‘asset portfolio’, especially pensioners. You can make mistakes at 25, 45, 75. Share valuations are not ageist. Dividends are not guaranteed. Its all in the small print. Maybe small print and legalese should be banned but thats another problem to fix! Any pensioner that put in all their savings into ANIB shares have only themselves to blame. No-one else. As I’ve said before, and as people here and elsewhere know, there are thousands of problems to fix in this country.
> Certainly, questions need to be answered, such as: why did you not see executives moving money around the balance sheets. That is, after all, what an audit is supposed to reveal, is it not?
I think the auditors should resign on this.How any auditor of any repute can claim they did a proper audit yet “miss” 179 million of loans is crazy. The auditing and accounting profession in this country (and others) is culpable on many angles. I for one would have no qualms seeing Ernst & Young’s complete demise over this and no doubt the many 1000′s or other auditing ‘oversights’ that are going on on a daily basis. Auditing/Accounting is equally as bereft as the bankers have been. Another boil that needs to be lanced as auditors usually get too close to their businesses.
> it is a story of monumental failure in the banking system. The Central Bank failed to oversee the system. Think about it, banks are given licences to trade. These should be treated like driving licences. If you drive dangerously, your licence is taken away.
The Financial Regulator clearly was ineffective. The auditors? Well, we know what they did. The stockbrokers – who in many cases channelled their clients’ funds into the bank, arranging and dressing up Anglo’s unsecured loans and stuffing them into the hands of unsuspecting credit unions – did nothing. Did they raise any question about the darling of the financial sector? They did in their Swiss! the Department of Finance and their role in the saga in which Sean Quinn invested heavily – and lost heavily – The upshot of this tawdry tale is clear. Our financial system is populated by cronyism and incompetence. This assessment makes the likelihood of contagion all the more probable.
I like the “they did in their swiss”. I can sense your frustration, which is repeated up and down the country on TV, radio, newspapers, at each coffee dock in the office, in bus quese, in pubs, in taxis, etc, etc. You are right about the cronyism. But not only do we have it in financials, but its also in politics, its in law, its in the media (RTE anyone?), even newspapers (INM) and maybe even the SB post. Its endemic. In “parish Ireland” we are still very naive. There are few with backbone and those that had some get shot down, kicked aside as pariahs, not ‘part of the club’. Its cultural rather than anything to do with golf or wealth. You scratch my back, I’ll scratch yours. We may have been labelled the land of saints and scholars once (probably by ourselves!), but we are far from being a land of Mother Teresa’s and Mahatma Gandhi’s.
> So who is next? Is it possible that one or two of the smaller banks will suffer a withdrawal of funds? No one believes anyone any more, and the flight to allegedly better banks will be overwhelming. the Irish government can quarantine large diseased chunks of the Irish loan book in Anglo. In effect, it can turn Anglo into a financial skip. Bank of Ireland and AIB, although they like to hold their noses and look down on Anglo, might actually have a worse bad debt position than the nationalised orphan. It would be unwise to allow them to get off the hook by throwing all the bad debts into Anglo. Brian Lenihan should raise a huge bond on the international markets to finance the bad loans.
You are right, AIB and BOI have more leveraging than ANIB has in absolute terms. I fully agree that they should not be left off the hook, and your financial skip suggestion contadicts that as well. The financial skip model cant hide the toxic assets. They will have to be paid for one way or the other. Like a dirty floor, sweeping it all into one corner doesnt reduce the amount of dirt. And the lancing benefit effect will be lost if AIB, BOI and others are saved by the “Anglo Skip”. I agree with Brioan Lenihan on this, lets teat each bank on its own, it got into this mess that way, and needs to be treated as such.
Now, nationalising ANIB can be exectued in many ways. It can be managed ‘down’ as Northern Rock is being done (I think), with a long-term view of trying to get back to break-even at some point. Ruari Quinn and Richard Bruton I think advocate that. But its certainly not a case of business as usual. To be fair to the Brian’s, what they actually meant was that Irish Banking is working, Ireland is open for business, not that we (taxpayers) have saved ANIB to aid an abet their heretofore nefarious practices.
> Ireland in 2009 is more Brazil than either Boston or Berlin.
Brazil of old, yes, perhaps.
The key for any country that goes through the madness of a credit/asset bubble is the depth and extent of it. Swedens one with its 114 banks or wehatever it was, was not as bad of Japan’s in 1988. No two are the exact same. So no two solutions can be the exact same. And each country’s culture is different, which plays a part.
So, what to do …
Lets clean up and rectify our banking/financial system …
Lets clean up and rectify our political system …
Lets clean up and rectify our legal system …
Lets clean up and rectify our media …
Lets clean up and rectify our closed markets/professions/sectors …
Not much done, a hellofalot to do ….
MK1
ps: didnt read all comments yet, scanned most. Agree with you Deco.
Todays Irish Independent: the real reasonLenehan moved in to save a ruined bank ?
Carry on building boys!
“A circular posted to shareholders ahead of the abandoned AGM last week shows that the bank may have to honour up to €6.3bn in loans already approved to developers before the bank was nationalised. “
[...] different, but we all agree there is absolutely NOTHING positive about it. David wrote a nice post: Anglo fiasco is Ireland’s Enron on his [...]
The Fianna Fail flacks were out this morning beating the media bushes to intimidate the mice who might roar at the elephants of the triumvirate. Kill the messenger, kill the messenger this town crier was shouting to anyone who might give a toss about the blather from his legalistic lips, when the dogs in the streets were barking a storm about to blow away the frail and frightened rump of backbenchers trailing behind Cowen, Coughlan and Lenihan, tripping over lumps of dung expelled in terror. Meanwhile, in the Sunday Times, Declan Kiberd, is preparing the traditional antidote to civil servants, expulsion from the euro, devaluation of a new Irlandic currency followed by hyperinflation to protect Irish business, whoever is left after anyone with euro savings has fled the country.
The solution is to escape the country now, with whatever euro you can carry legally, 10000, go to Luxembourg where you can give them 100.000, no questions asked, and keep making the same trip until you are safe.
It is so obvious that FF are looking to help the developers, can nothing be done to stop this ?.
On another note, the D4 Gang are feeling the pressure too, I know of one, who has had to hand back his Aston Martin, House and Helicopter recently. I think he still has the trophy socialite girlfriend, but how long will that last, I am sure she is not dating him for his looks.
Goggin’s quit from BOI. Who’s next?
Morning all.
As I write, AIB is trading at 97c a share and BOI is 55c.
Like David said in his article, confidence in the Irish banking sector is a busted flush.
Is there now an argument for nationalising the entire banking sector?
I know we can’t afford it, but it is becoming hard to see a way out of this that we can afford.
If we are going to be bailed out by the IMF/EU (looking more likely each day) shouldn’t we at least try to get all our ducks in a line first?
If we nationalise everyone, when we go cap-in-hand looking for a bail out, at least we’ll know how much we’ll need. Instead of the US TARP tactic of just ‘picking a really big number’.
On the current government bond market, the globalised nature of the downturn is going make it next to impossible to raise funds in that market soon. Government Bonds are paid for by savers internationally, either petro-dollars or countries with large levels of domestic savings (Germany or China). The petro-dollars are rapidly drying up because of the low oil price and our overseas thrifty friends are having their own ‘rainy days’.
Our biggest enemy at the moment is denial. The stakes are way too high for wishful thinking and flat-footedness.
Morning Lorcan.
The big three are still tanking.
After the volte face on the 20m clause proved who’s actually in charge, no-one will believe the 2 B’s now.
As you rightly say, a busted flush. And a sad way to end 10 years that could have set up the next generation.
If Kenny demonstrated some statesmanship and stood aside for Richard Bruton and Bruton pulled together a fiscal team in waiting, we would have some alternative.
I can only see one way at the moment and that seems to be collapse.
I pulled my few bob out of the bank this morning. No trust left.
Lorcan: @ 12:30 AIB trading at 60c down 59%; BOI trading at 40c down 47% on day.
Is 19/1/09 the day the world as we knew it ended?
Sheehy was over in NYC shaking up interest in a new rights issue, to be underwritten by the Irish taxpayer courtesy of the triumvirate. Considering that the true nature of Irishy financial culture has revealed its dyed in the wool, pig in the poke, you scratch mine, I’ll scratch yours. sure aren’t we all men of principles and isn’t it legal, sure that’s good enough, and who you know, not what you know, needless to say, there were not alot of takers. Problem is, the most dangerous component in the whole damaged mess, is now the very man, who threatens and intimidates journalists, with the word, dangerous, as though everyone who matters doesn’t already know more than he does. The problem is the Irish culture, cute whoor scamming, quick buck, nod and a wink, gombeen money grabbing, flash and crash, and who’s your man, you say what you need to and whatever you say, say nothing.
Ireland’s independence is over. Cowen & Co are just administrating it for a foreign elite many of whose employees are based here in D4. I think Deco’s analysis of the EU and its tendency to attract with ease a host of corrupt elements is pertinent.
Also, If this was an Enron, Ernst and Young would be seeing legal action against them for the damage done to a whole country. It is unbelieveable that E&Y and any other auditor missed what was going on. Somehow, I figure that legal action may never gain traction due to the EU influence.
I think Germany has a country for nearly free and Ireland will be a slave state for the rest of powerhouse Europe. I was amazed to see the EU approve the government action on ANIB. We are moving from being a nation to being a vassel state to the EU. We are experiment No. 1. Question is, how will things evolve…
Well, all you Europhiles, let’s face it, every country in the EU having their own government, police, civil services etc etc and big airports and manufacturing capacity is really insane if you want a federal state. EU need to control Ireland and standardise it but limit its growth to what would be considered as sufficient for the rest of EU. So, tourism, farming, Green energy and golf courses etc is where it will get and no more.
So, i expect the buildings around leinster house to be initially housed by EU employees from Brussels busily transitioning in or out the civil servants and when the new contracts are cut, you’ll see a new service about 30% the size it originally was with the rest run remotely (not down the country mind you) but in Europe. Then the semistates will be similarly dealt with. ESB may be force merged to say EDF whoever and so on. The people will love it becasue the health service will be improved (which is easy for EU governments) as a means of keeping the peace. Trouble makers (sorry, I mean Entrepreneurs) will will rounded up. Michael O’Leary will have gone underground since a force sell of RyanAir to Alitalia.
I know I am being bit flippant and tongue in cheek with the above. But really, I cannot see how we will ever rid ourselves of the elitism, cronyism etc we have seen blatantly portrayed before our eyes over the last few weeks. It’s as though “they” know something the rest of us do not and really could not care less. As in the 19th Century and before, I feel we are being corralled into a landlord (mostly Irish elite) led scenario where the humble, educated, hardworking people will be forced to leave this country to work abroad becasue their local taxes (used to fund foreign coffers) will be too large to allow them make ends meet locally. And this time, it’s not the brits or any one nation – we are dealing with a multinational superelite.
Anyone got any idea if DMcW is on radio today??
Furrylugs,
The man is always on…..
AIB has had 40% wipped out this morning, and the short selling is allowed back on today ?
ALLIED IRISH BK ALBK.I 0.855 Share price has fallen. -0.595 Year low was 1.417
Are these boys the ENRON ?
The D4 and the socodu club.
Trying to track him down is the problem sheikh.
If this spiral keeps up, are we going to see a suspension after lunch?
when the pigs smell the blood in the abatoir they all squeal out loud and go frantic …..blood is now in the air now
as a nation we are now a disgrace our dreams are vanishing before our eyes and soon to be governed teutonic style by slavs goths visigoths and franks
as an atlantic nation we have nowhere to go so we must morph into dolphins those of us that are lucky to be able and swim away and maybe meet queen meibh who may cast her magic spell on us and bring us back to humankind again and if she does not have enough potion to do that then we change to Lepracauns ( da wu yu code )
IN ALL FAIRNESS!
Ireland is more Bangladesh than Brazil.Look @ the crazy price of land relative to our meagre population.Fingers Fingleton is keeping his head down, no prizes for guessing the next troublespot.This mess is irretrievable!.Ditch the Euro now.The Southern border counties are screwed.
“when the pigs smell the blood in the abatoir they all squeal out loud and go frantic …..blood is now in the air now”
On the money John.
http://www.businessworld.ie/bworld/rankednews2.htm?s=index.html;s2=rankednews2.htm;r=4;a=2347032
I agree with a lot of what you wrote Lorcan.
Lorcan> Is there now an argument for nationalising the entire banking sector? I know we can’t afford it.
You are right, we cant afford it. But here’s the rub. If the government know that AnIB is a case similar in structure but not in scale to the other 5 of ‘the six banks’, then the governments decision to nationalise AnIB was but one of the first of likely most or all. So nationalising AnIB may be just one part of what the intention is.
My reading between the lines is that AIB and BOI are still seen within Government as “our” good banks and the best prospects to come of this debacle intact. Thats why they want to re-capitalise them (= throw money at them to save them). They tried the same with AnIB but the market (depositers) voted with their feet and moved money out. Now, BOI and AIB are different beasts, deposit quality more diversified, strong transactional retail business which is profitable probably by 1 or 2 billion a year, although their balance sheets may be more ill than AnIB in terms of scale! Whether depositers will move out of them en masse remains to be seen. It is a risk though, thats for sure, a possibility, but not a sure bet. The flush hand may be busted but we may be left with a pair.
I think that with a nationalised AnIB, it all depends on HOW we run the bank at this point. Whether developers are saved and taxpayers lose their shirts or whether developers/loaners lose their shirts (the LANCING that I have been talking about) and taxpayers make a little even if small. Its still all to play for. Using a football metaphor, the only thing that has happened is that the manager on the sideline has been changed. Whats key now is how the team now play on the pitch and in which direction tactically, etc, the new manager will take them. The manager also has the option of getting out of the game completely and breaking even. Breaking even is what I would hope.
Nationalising the whole bunch at this point in time wouldnt help I dont think. Each bank has to be treated on a case by case basis, so it will depend if banks experience a ‘non-run’ on their bank or not. But the government could hold off on re-capitalising AIB and BOI and get them at a ‘better price’, if the 2 banks need us (taxpayers) of course. I hope we dont have a Sheehy dead body to deal with either – I dont expect anyone to hold up their principles that much.
MK1
ps: UK banks and county facing some of their ills today …..
Things are happening fast on what Shane Dempsey calls the “veneer”. I am just wondering what is happening behind the scenes – it must be utter panic !! Normally when there is a crisis we get all the reassurance statements – but now not even that is being rolled out :)))
Several new developments
1) The latest twist in the tail.
http://www.independent.ie/national-news/lenihan-to-back-down-over-anglo-irish-cash-1606258.html
This is a real headache for the new owners – ‘us’. Basically it will compell the taxpayer to stump up the deposit basis for ANIB – unless ANIB closes it’s doors at the direction of the new owners. But the fact that the Minister cannot hold down the deposits is a major problem. It also means he cannot prevent the developers who hold loans from ANIB from defaulting from their loans-and making off with money they made earlier. Basically this backs the taxpayer into a nasty corner.
2) Goggin stepping down from AIB.
http://www.rte.ie/news/2009/0119/banks2.html
Goggin mentioned the ‘proud’ word when describing his career. Well here we go again – as long as he is ‘proud’ we can assume he still has learned nothing – it also arouses my suspicion, that he has made a mess of it. The bad news is that Goggin will be in charge until June.
3) Rumours are abounding about the solvency of Sean Quinn. Quinn actually employs more workers in his factories than Dell. The government are concerned about this. The government in the North are even more concerned because he is the biggest industrial employer, the biggest taxpayer, and accounts for 10% of NI income. Quinn actually has enough assets to get clear of this – assets like the hotels and BUPA can be sold off. Harney would then have the BUPA headache again.
4) More directors of ANIB have resigned. http://www.rte.ie/news/2009/0119/banks.html
Let’s watch to see what their severance packages are. I am sure they hold directorships in other Irish companies – and therefore will not be eating beans and toast tomorrow morning.
5) Irish bank shares have floored this morning.
6) An American investor is trying to buy as much of BOI as possible and currently owns 9%. Maybe he might do the taxpayer a favour and buy up the rest of BOI as well. Mind you he might want to be prepared to wait a long time for it to mend itself !!
7) British banks are going through even more turmoil. Gordon Brown has evidently not saved the world. AndrewGMooney, you might not be too pleased. The British taxpayer has been asked to foot the bill again. It is now clear that Brown is making an absolute mess of British banking. So far, the Irish state has not had to drop any money into the banking system – but Brown has done this, and has seen the money invested disappear. We should be learning from this – though evidently our government is not learning from this.
8) The state might end up owning most of BOI, and almost half of AIB – both were to issue additional shares – and the government are to be the underwriter (?) of the shares. AIB are probably good value for money-they sold their corporate headquarters at the height of the boom to Sean Dunne – therefore we can assume that AIB seen this mess coming. But BOI behaved in exactly the opposite manner. Let’s hope the Chicago investor takes over BOI and deals with it.
If Lenihan’s attempted rescue of ANIB had the objective of ensuring that the share issues of AIB and BOI would suceed in raising more capital, then this strategy by Lenihan is now in complete tatters. Basically, this is the real conundrum that Lenihan faces – the market seems to double guess every move of the state. I would hazard a guess, that at this stage AIB are coming close to becomming a bargain. I am saying this based purely on the scale of the money they got out of us down the years through all their overcharging. But BOI still have enough ‘turkey’ potential in them to merit a cautious warning attached to them. At least until a new board of directors is appointed.
9) Any explanation why INBS have seen their debt rating reduced to slightly above junk status ? INBS seem to be staying out of the radar – but are they in the soup also ?? I
10) The government would be well advised to ask the staff on the newly rescued ANIB to take a pay cut before asking anybody else on the public payroll to do so. Purely on the basis of the facts that the staff in ANIB have been saved from redundancy. Also ANIB is going to have to cut costs dramatically to help it get out of this mess. And in addition ANIB staff are have received bonuses last year, which were not deserved.
11) It seems as if the fiscal fortunes of the Irish state for the next five years are now irreversibly dependent on the property market. And the property market is dependent on incomes. And that depends on our competitiveness. Brendan Keenan is right – it is all about our competitiveness !!!
There are two ways out of this crisis.
i) Isolate the banking/property crash and focus resources on the rest of the economy (the export sector/industrial base).
ii) upgrade competitiveness, allow deflation, and pay up all the bills.
Both involve pain – option i) concentrates the pain on foreign bankers and the speculator sector – and should be the preferred option.
The government has created option -which is doomed to failure.
iii) bailout everybody and hope for the best.
Comment by Deco, January 19th, 2009 at 12:56 pm
“7) British banks are going through even more turmoil. Gordon Brown has evidently not saved the world. AndrewGMooney, you might not be too pleased. The British taxpayer has been asked to foot the bill again. It is now clear that Brown is making an absolute mess of British banking.”
Hello Deco.
I always enjoy reading your comments. There’s certainly plenty of them!
As you mentioned me by name, I’ve examined this paragraph in detail rather than given it the usual cursory glance. But it is rather hard to decipher, even by your own standards.. However, I’ll try. Brown is making a mess….unlike Lenihan? What’s is the point of this silly comment? *smirks* *rollseyes*
Events have clearly moved on since you posted this rumination so I’ll just note that you said: “So far, the Irish state has not had to drop any money into the banking system – but Brown has done this, and has seen the money invested disappear. We should be learning from this – though evidently our government is not learning from this. “ For future reference. And referral.
You clearly do not read my posts as, presumably, you are already on to your next opus at breakneck speed. If you had read any of my posts you would have gathered that I sternly resist any simplistic labelling as ‘English’, ‘Irish’, ‘Labour’, ‘FF’etc. I’m rather more interested, interesting and interrogative that that. For you’re info: I’m ‘even better than the ‘real’ thing’. I’m a mutant hybrid of Anglo-Irish cultures. The ’disaporic convergence hypothesis’ and the ’virtual Eire community’ that David McWilliams has propounded is interesting, but unlikely to pan out. For reasons I won’t go into here. And now. Except to note publicly, once again, that I Am A Genius.
Please, do finally note that Ireland is:
‘Closer to Birmingham, than Berlin or Boston’.
And that fact will remain however much it upsets you or anyone else reading this forum. 800 years of oppression ended to be replaced by, ah yes, I see 80 years of FF &FG! Now, that‘s what I call progress.
Further, you need to take up your entirely pointless posturing with Morgan Kelly who states in today’s Irish Times:
‘As the private sector haemorrhages jobs it is hard to see how Irish national income will fall by less than 20 to 25 per cent in the next few years. Unemployment will easily reach 15 per cent by the end of the summer, and 20 per cent by next year, and will not start to fall until recovery in Britain and elsewhere permits mass emigration to resume. The economy will not begin to grow until real wages fall to competitive international levels, a process that will probably take a decade.’
If the uncontrolled debt-deflation implosion you seem to be willing to happen occurs there will be many Irish citizens hoping that the British economy provides some, at least temporary, release from despair. I don’t think there’ll be many Green Cards or Bondi Lifeguard escape routes available. Do you? Oh, I see they’ll all move to Berlin with a few Linguaphone cassettes. Good luck with that.
Please desist from your simplistic pseudo-nationalistic ‘economic’ rabble-rousing. Your thinking is chaotic, disorganised and contradictory. So is mine. The key difference is: I do it intentionally. You don’t. I’m a lyrical-satirical-surrealist-art-terrorist-genius. You are not. By a long stretch.
Now I switch channels to watch my friend Obama get the keys to the safe. Unlike you, Deco, he’s really got something worth listening to.
PS: When you say ‘We should be learning from this – though evidently our government is not learning from this.’ Who is this ’we’? Are you royalty? Or are you assuming to speak for and on behalf of all readers and contributors to this forum? In which case: You’re not speaking for me, matey.
“Irish Blood, English Heart: This I’m made of. There is no one on earth I’m afraid of”. Etc.
BOI down 58%
AIB down 49%
ILP down 35%
What are the odds an emergency meeting is taking place as we speak as a prelude to a share suspension this afternoon? Is this the hedge funds taking revenge now that the short selling ban has been lifted???
If this level of wealth destruction continues, there will certainly be queues of people withdrawing cash from all three of the above before the week is out. Madness.
Wealth destruction my arse.
“Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.” – JS Mill
What a funny day on the markets….Since the regulators allowed traders to ‘short’ bank stocks again on Friday things have taken a turn.
Today, BoI, AIB and Anglo have all lost at least HALF they’re value…. and they’re still dropping like a stone!!
This is quite serious considering the Irish government has agreed to use tax payers money to indemnify deposits in these three banks!!!
I hate to say it but it really looks like lights out now.
Actually Anglo were suspended after losing half on Friday but what the hell !! Same has just happened in UK – Barclays, RBS, HBOS all down by about 50% in just a few hours. They have just suspended trading in bank stocks in UK now ( but of course they haven’t gotten around to it yet in Ireland) !!!
All joking aside – go and buy some gold coins TODAY.
Yep best move….but that could start a run.
Go to the cash machine and take out as much as you can too methinks!!!
it was a hedgefund onslaught against icelandic currency and banks that precipitated the eventual demise of the Is Krona the date is fitting too 19 01 09 ( when you add the digets in binary you get 2 ) …Hark Hark Ireland is 2nd
Binary numbers are either 1 or 0. How can you “add the digets” and get 2? Stop this nonsense and get with the programme.
Looks like the market was expecting some big announcement at lunchtime, didn’t get it and they’re on the slalom again.
I think the only announcement we’re going to get will be something along the lines of “Trading in Irish financial shares is suspended”
Considering the levels of losses today, I’m surprised it hasn’t happened already.
Spot on Lorcan. (again)
I’ve just asked London whats the return on a spread that we’ll suspend at 2.00pm
Someone jumped in before 2.00 and bought 30000 AIB.
19-01-09
1+9 =10> 1+0 =1
0+1=1
0+9=9> 9+1=10>1+0=1
1+1=2
http://en.wikipedia.org/wiki/Binary_numeral_system
In a binary system there are only two numbers 1 and 0. There is no 9! Dumbass!
Are ye two married by any chance ?
http://www.independent.ie/breaking-news/national-news/business/ec-predicts-5-economic-contraction-in-ireland-this-year-1606904.html
This won’t do our sovereign rating any good either.
What a bloody mess.
How much closer to the cliff edge is possible without actually falling off?
ire_in_exile – there is no cliff edge – the whole cliff falls in, its the middle of the landmass that becomes the new cliff ( da wu yu code )
b ? where are you?
Is this the beginning of the end?
Or the end of the beginning Colin?
Moot point. If there was ever a day for a leader to make a Churchillian speech, this is it.
Furrylugs, I doubt we will get that speech!
now that smoking is banned how can we expect a Churchillian speech how about seeking fidels nomination to D Dawl
Might as well get an insight into the next Cabinet meeting.
http://ie.youtube.com/watch?v=ADbTCSuNSms
It would be interesting to hear what BOI’s uneconomist, the nefarious Doctor Dan McLaughlin has to say about today’s events.
Of course he will be swanning off in the Caribbean, laughing all the way from the bank.
If there is any justice in the world, Dr Dan will be kidnapped and re-educated starting with Mathematical Tables (Addition, Subtraction, Multiplication & Division). A remedial course in Civics should be thrown in too.
Come to mention it, I don’t remember receiving any classes in civics at school. Our principal was more concerned with the points race. No wonder we’ve ended up where we are now. Such a shame.
Not really a shame. They would probably have tried to brainwash us with up dev and such nonsense.
Seems we’re not alone from Robert Peston’s blog
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/01/collapse_of_confidence_in_bank.html
Makes our problems seem insignificant by comparison Peter. The sums are staggering.
Good point Malcolm.
We surely need two “skips”. One for the toxics and one for the people who caused the toxics in the first place?
It’s starting to look very dangerous – it could have all been so different if we had had an intelligent government and not a bunch of self serving amateurs – like children in a sweet shop. I avoided all this casino shit and focused on R&D, it’s a bitch to think that we could be wiped out, while we’re doing so well in Europe, recession and all. Maybe it’ll be a good thing, if Germany takes us over and knocks some discipline into us – we’re too immature to run the place on our own.
http://www.zen36049.zen.co.uk/clangnuts%202008/M-and-s-credit-crunch.jpg
I get that déjà vu feeling, it’s collapsing all over again.
They just don’t give up do they.
Dominique Strauss-Kahn said today Europe was in a bad way till at least 2010.
Europe says (Joaquin Almunia) the end of 2009.
Bull-shit, again it’s what they call looking on the bright side or whatever………(don’t be un-patriotic.)
Like I said the financial model Titanic has gone down, but I guess everybody hangs on till the bitter end. I guess there’s nothing else to do. Then it’s the army on the streets with no shortage of new recruits. They’re queuing up for tour duty in the states as unemployment grows; people get desperate there a whole lot quicker: ”no mun no fun” (life)
So now there’s two possibilities/SKIPS: BANK of IRELAND & AIB. Bertolt Brecht is turning in his grave.
($1 trillion in losses — but there is likely to be another $1.1 trillion yet to go)
“Ratings agency Moody’s has downgraded the long-term bank deposit rating and senior unsecured debt rating of Anglo Irish to ‘A2’ from ‘A1’ following the nationalisation of the bank last week.
In a statement Moody’s said the reason for the downgrade was an assumption that the Government ownership of the bank will be temporary and the ongoing exposure of Anglo Irish to the property and construction market.”
From http://www.irishtimes.com/newspaper/breaking/2009/0119/breaking19.htm
It makes me laugh when Moody’s downgrade rating after rating for the world’s financial institutions. Seriously, if they’d been a bit more circumspect in rating sub-prime derivatives then the world may not be in financial meltdown right now.
Hi All
Whats happening now is the first stage of a two part process
1. Financial and Economic Turmoil
=
2. Sovereignty for Bread
Here we go…
All,
I’m no economic whiz kid but I’ve just one niave question from some friends;
If the government is gauranteeing all deposits is there any need to withdraw our funds from the Banks?
If so please state why and explain as simply as possible.
Many thanks,
Josey, I’m not a banker but this is a very good and timely question. I’m not aware of any recent precedent for a government taking the steps necessary to honour their bank default guarantee. However, let’s think this scenario through.
You have a bank statement from last month describing the state of your balance. So have several hundred thousand other depositors. You need money to pay this week’s bills. Your salary has been paid by cheque into a bank that has just gone bust.
The banks computers have gone down. Its ATM machines no longer work. You try to make a Visa withdrawal instead. No can do, because Visa has automatically cut your line of credit.
You queue up outside Dept of Finance, demanding that government honours its guarantee. A leaflet eventually emerges saying that everything is under control and the ATMs will be working again next week.
Meanwhile you go to Lidl to buy nappys and baby’s formula, only to be told that Lidl doesn’t do tick.
By next week you are getting desperate. Friends and relatives are all in the same boat. No help there.
Government announces that further delays are being caused by discrepancies in the computer system. ie they don’t have a clue how much they owe anybody.
Final stage— a barter economy?
I did withdraw my few bob this morning Josey because I can’t take the risk they won’t screw it up totally. I couldn’t afford to wait for some blasted guarantee to kick in.
So there’s a hospital amount there paying off DD’s etc but the rest is parked up where I know I can get my hands on it.
But I’m not an economist either. I’ve only got a nose for looking after No 1.
I think Dodgy Derivatives are the next thing to come to the surface AiB and Boi like a boy in a classroom with a squishy poo in his pants hoping nobody will notice and mocking the class clown anglo to divert attention.
A serious run on the bank no advance warning dont mean to scaremonger but its just far too serious now.
Go to cash methinks and into dollars .
Comment please anyone,
Long or short trousers?
currency – the euro maybe in a free fall excepting the german mark
the dollar has its own problems too
gold is already bought up and to get more will cost u a premium
so? where can u go ?
The end is nigh, repent ye sinners, for judgement is upon you, your fathers and father’s fathers. So much for an Irish owned financial system. CJH has the last laugh on the crowd of chancers he disdained, and the sheep who bleated them into endless, contemptuous and arrogant power. The time is now for the Government to fall hard, and for FF to be banished to the wilderness of extinguished rights of way with the sheep stealers on reps. The decent people of Ireland has been sold a pig in a poke, and that pig is dining on its litter, us.
Dollars are still the currency of the world even the taliban will take them.
If you have money to be removed from the Irish banks, vote with your right to withdraw and remove it immediately, before you get snared into the inoperable guarantee plan for never never land.
Dollars and sterling are going to become confetti when they turbo print quantitative easement amounts to reflate the system with debased currency. Forget dollars and take euro cash in 50′s, stash them, and remove 10,000 on each trip to Luxembourg where you will no problem deposited 100.000 in an account opened with your passport. If you have cash to hold, move it out of Ireland immediately.
Most of the reserves of the Euro are US dollars – with 10% in UK Sterling. Anyway I think you know the joke about the Euro.
The USD is an ” I owe you – as long as you don’t ask”. UK Sterling is an “I owe you nothing”. And the Euro is an “who owes you nothing ? ” :))).