Return of the floppy haired one.
first time ive ssen the 90bn bad debts figure in the press
f the guarantee is not rescinded as soon as the NAMA is set up the whole thing will be an oligarch’s bonanza because the taxpayer is on the hook for the €450bn in bank liabilities and the €90bn bad debts
Mac is right and sounding more like gene kerrigan every day. Gerald Celente made the point that in the US its not a case of the US taxpayer bailing out the banks rather the banks are slowñly taking over the US gov, particularly Goldman Sachs. The same is happening here with all sorts of cutbacks being introduced to keep our rotten banking system on life support. A financial coup detat if there ever was one. 
If it is 90 bn at a blended mix of say 4% on the government bonds (a wildly optimistic figure), the annual interest serving costs will be 3.6 bn or 10% of government income. This is assuming standard government treasuries. I’ve seen figures of 2 bn bandied about for how much NAMA will get in income from the property it takes over, so even with the best will in the world, the government will be gifting 1.6 bn to the banks every year.
D McW is correct. There can be no NAMA unless it is tied up with the withdrawal of the Guarantee. I am pretty sure the Dept and Minister appreciate this but for obvious reasons they will not announce it the NAMA plan is finalised including the exact process for the withdrawal of the Guarantee. We cannot send mixed messages to the market on the withdrawal of the Guarantee.
Surely the guarantee is pretty meaningless at this juncture…
INBS is systemic, Anglo is nationalised, even if withdrawn surely the implicit coverage remains… The only way out would be to let one fail or nationalise and consolidate the lot surely…
Always was. They never had the money to back it up in the first place.
You can carry a big gun and hope that you never have to use it.
Or
You can lie about having a big gun and hope that you never have to prove it.
Both can get your head blown off, but at least if you actually have a gun,
you have a fighting change.
-Rd
Yeah, we know that Rd, I was interested in Negative Covenant’s or indeed your interpretation of the fallout with this either / or idea.
Yup, moral hazard is set. At both the state and EU level.
The thing about the guarantee, though, is that it guarantees the level of loss (zero). Without it there would be the possibility of debt to equity conversion.
Forced consolidation/recapitalisation/state majority ownership/NAMA is a third option.
I was arguing about this over the weekend. I was trying to explain to people that because of the guarantee NAMA would be paying full whack for the bad loans and the banks would get off scott free. Am i right in this. If so, how come none of " the respected" economists have said anything about it?
Not really.
The guarantee is for creditors of the banks:
- depositors
- bond-holders
- subordinate debt
NAMA will be buying assets from the banks at a discount. Say they buy 90 bn at a 50% discount (just to make it easy). That’s a 45 bn cost. The banks are then short of capital, so the state ponies up another 35 bn to recapitalise them in exchange for ordinary shares in the banks. The state now owns 80% of the banks, but also owes the banks 80 bn (treasuries). The equity holders of the banks lose big because their share of ownership is hugely diluted. The bondholders and other creditors don’t lose anything at all because their debts are still carried at 100%.
That will just have to be changed either through the removal of the guarantee or some sort of equity of debt swap if we nationalize the banks.
re the headline of that article (I know, sub editors write those)
But this isn’t about whether or not the banks do or do not ‘deserve’ a bail out, clearly none of them do, nor was there ever any feeling that they did.
The argument for the bail out is that if we don’t protect the banks, if they collapse they’ll drag the economy down with them.
Now, we have staked the sovergnity of the nation and the economy and earnings of irish people for generations to come to ‘protect the banks’ and they’re going to collapse anyway.
The irish economy is already ruined, why not just revoke the guarantee, revoke the plan for NAMA, sack the government, declare the contracts void, that all parties to these ‘agreements’ were acting ultra vires, let the banks fall and start rebuilding our economy.
We can not save them, and our (useless) attempts to do so are causing much more damage than our gobshite leaders and talking heads could have imagined.
spot on EireClare
the banks should have been allowed fail from the start, we are now in the worst of all worlds. the worst possible scenario is coming to pass with the state picking up the tab ( 90bbn 
) for the excess of a few, u overpaid for your house and now u ar going to bail out the cronies who fleeced u
Yeah, I’d rather pay off the negative equity of the over-mortgaged and know that I am bailing out a few fools than bail out the banks and the developers, the shareholders and the bondholders. Still, I expect that is coming aswell. I feel such a fool. Why oh why didn’t I remortgage and build the extension and the swimming pool?
In other words - it’s all about confidence - and we are all out of that.
You’d be surprised about the amount of confidence around.
Other threads about EAs laughing at offers, buyers being outbid, and anecdotes about people planning extensions/ to buy a new car ‘at the end of the year’ are rife at the moment.
Was at home recently (Dublin) and am still gobsmacked at the shrugs and being cut down/across when a few fundamentals are pointed out.
Got told (ref a 3 bedder built in someones garden asking 450k) rather dismissively 'thats what people are paying for houses).
Also know of someone with 15% deposit offered an 800k mortgage.
Seen some payslips too. Cannot believe the pay people are getting in Ireland.
Salary for one (not very bright at all) admin staffer was in excess of €36k (about £33k). Similar jobs in UK pay between £15-25k max for similar positions.
Know of what used to be called navvies earning 1k per day!!!
They are now down to about €750 per day and think the recession is hitting 'em hard.
If this crash/recession/whatever is going to hit Ireland its gonna hit very,very hard.
Until then, confidence is yer ony man!
.
Ah come on now, Shirley you mean week!.. Don’t have any phone numbers do you by any chance? I think I’ll go get me one of those jobs ! 
Sticks and stones Brian. What does Dr. Ahearne think of DmcW?. Does he agree that your making a mess of it?
We all think so. ( The Country). Are we all wrong?
Be careful with your "we all"s, they’re not much different to the “no-one saw”.
I don’t think he’s particularly making a mess of it. The mess that is there isn’t easily fixable. That mess is almost entirely FFs. I would not vote for them. But I don’t think you can take it that everyone agrees that the actions of Mr. Lenihan are making it a worse mess.