Long article, for those who thought that Northern Rocks €100Bn + bailout was large you should read this bit of it
These ‘public banks’ in Germany are owned by states not by private shareholders, a landesbank is a state owned bank.
So they thought sub prime investments was the way to go
Now , as to whether the ECB has the heart for interest rate rises, lets look at what Mr Weber has been up to this past week.
Being German, they will probably engineer a way out. Being bankers they have yet to admit the scale of the mess that they themselves created
Obviously the executives from the German State owned banks were not in the inner sanctuary of International Bankers. It has being reported elsewhere on the Pin that US issuers of Sub Prime packages generally never sold to affiliates. This is the reason the EU ended up with so much of the rubbish.
I would imagine that there are additional dynamics at play here as well. It is well known that the German and other European government are scared stiff on how it will provide for a big percentage of their citizens who are in or soon entering into retirement. Most of the pensions are paid from State Funds. A vehicle that offered 25 years of sure dividends which was secured on tangible assets such as houses; with ever increasing house prices; and also backed by the earning capacity of a relatively young work force, which mortgage holders generally are; plus higher than usual returns was like manna from heaven.
Almost too good to be true.
This is not true for Germany. The current pensions are either paid for by the current workforce through their PAYE contributions (currently they contribute something like 19 or 20 per cent of gross salary for pensions alone), or directly by the state in the case of “Beamte” (state functionaries), such as teachers, police officers etc. The federal state agency BfA which is administrating normal (i.e. non state functionary) pensions is not allowed to invest or to hold more than a few months’ worth of pension payments at any given time.
EDIT: I should add that state functionaries in Germany never pay anything into a pension fund. Their pension is simply state-guaranteed and paid from the current state budget. This has led shortsighted politicians to use state functionaries for many tasks that could equally well be carried out by normal state employees, as there are no contributions to be made towards their pensions, thus delaying the costs to the moment of their retirement.
Morning Ireland quoted a German official as
“Saxon management were corrupted by loose Irish Financial Regulation”.
Do we have Financial Regualtion?
Brilliant! Sorry, I have to imagine it in a German accent for full effect
Indeed, I’ve robbed banks simply because there were no cops around.
The Gardai are in on the action.
That’s too funny. Who said the Germans have no sense of humour?
And presumably it was just the loose Polish border patrol that started that whole tiff back in the 1939.
Somehow I feel that any evidential material which could be used in a foreign court to damage the international reputation of the IFSC will be subjected to “loose regulation”.
too funny , I heard about this crowd a year ago I was chatting with someone who works there, they had some great stories about the place
Management in Dublin were corrupted to the degree that whilst investors were losing their shirts they were getting upfront bonuses to buy Masseratis (I dont even know how to spell it , but its an expensive fast car I believe). They also knew this investigation would eventually come, vital staff were offered huge bonuses to stay and ride thru the storm. Theres other stuff I was told about their practices but honestly I dont think people would believe that a) they did this b) they could do this c) it was so easy to do
Another triumph for deregulation and the free market
I’m just jealous