IMF’s damning verdict on Ireland



Um, three clear messages? What pipe is whoever it is smoking?

Message 1: we are not to blame for the crash.
Er, yes we are, unless you believe that bubbles never burst, that the structural deficit started under Mr. Cowen and that the Celtic Tiger only sickened in 2006…

Message 2: We may be taking the right steps to resolve the crisis.
Er, no we’re not. The IMF are as unequivocal as a report like this is ever likely to be in saying that the banks should be nationalised. They are telling us we will fail unless that step is taken.

Message 3: The moves to rectify the exchequer finances are a good start.
Er, no. My reading is that taxes have been front-loaded to heavily and that tax increases and spending cuts (in particular the removal of tax breaks for sacred cows) should go hand-in-hand.


Indeed, but the SBP can’t acknowledge it.


first time in a while i’ve disagreed with ya! but have to on this one.

the IMF have NOT said the banks need to be nationalised, there is only one paragraph out of the 50 odd page report that even mentions it, other than that the message is cut spending, sort out the public sector, cut welfare (certain elements) but do more to protect the vulnerable.

it goes on to say that NAMA is likely a good idea, the only issue is overpaying but that there are ways to share risk that are being explored, it says more taxation would be a bad idea, that from here it has to be done via spending cuts.

it does point out the structural deficit but in respect of our receipts being pro-cyclical.

All in all the IMF seem fairly impressed with the irish response, it is far from ‘damning’ or an ‘indictment’ which you see in lots of the reports.


20 - losses at banks likely to be more extensive than property development loans; the government have no idea how big the losses will be; the IMF are shocked by this
21 - more equity required following NAMA purchase
22 - NAMA price considerations - protect the taxpayer
23 - more loan types in NAMA
24 - more loan types in NAMA
25 - main nationalisation paragraph based on the above
26 - government preference to keep banks public

Um, the above are all the chapters on Bank Restructuring. The price NAMA pays for the assets, the range of assets (so the overall amount of recapitalisation), or outright nationalisation is mentioned in all of them. In the chapter on the government’s response, the IMF staffers even felt the need to disagree outright with the government. The use of the word “emphasized” is practically unheard of, but it has a limited meaning - there was a stand up row. Nationalisation or the reasons for it are mentioned in every chapter on Bank Restructuring.

Anyway, on to supporting measures:
28 - introduce legislation allowing you to nationalise failing institutions without the need for a debate
29 - fix your oversight
and so on.

Culminating in para 49:

(Bold in original)

So I don’t know what report you read, but that is as damning as you will get in an official report (and I have studied them over the years).

To take the last bit first, please show me where it says that “ways to share risk are being explored” as I must have missed it. All I can see is a recommendation from the IMF that these structures should be introduced.

The ‘only’ other issue is the lack of scope for other loans to be included.
The ‘only’ third issue is the immediacy of requirement for recapitalisation (hence temporary nationalisation allowing a more leisurely process).

It doesn’t say NAMA is a good idea, it says that it might work in restoring the banks to lending health:

Eh, wrong again:

As well, dear boy, as well…

No idea what you mean here. A structural deficit and pro-cyclical policies are entirely different things.

Are you sure you haven’t just read the Sindo condensed milk version? Sweetened for those who can’t take their medicine?

Disappointed of Tullamore… … r09195.pdf


Bank shareholder opposes logic of nationalisation shocker…

Inside on Page 3, Vultures like carcasses… :smiling_imp:


(I didn’t like to say…).


well… first things first. talking about nama is NOT talking about nationalisation

20 - losses at banks likely to be more extensive than property development loans; the government have no idea how big the losses will be; the IMF are shocked by this [this isn’t a call for nationalisation any more than it may note that banks will have to go to the market to raise capital via equity issuance etc., I don’t see how this is a ‘call for nationalisation’]
21 - more equity required following NAMA purchase [as above, the equity doesn’t HAVE to come from the state, as per the BOI loan agreement, if they can’t raise 1.5bn then the state can convert that into regular equity and existing shareholders are not likely to want to see that happen so it will be an incentive to stump up]
22 - NAMA price considerations - protect the taxpayer [has nothing to do with nationalisation, nama and nationalisation are distinct]
23 - more loan types in NAMA [has nothing to do with nationalisation, diversifying the assets that may need to be passed is specific to nama not who owns the banks]
24 - more loan types in NAMA [as above]
25 - main nationalisation paragraph based on the above [this is the ‘one’ ]
26 - government preference to keep banks public Staff emphasized nationalization would need to be accompanied by a clear commitment to operate the banks in a transparent manner on a
commercial basis. In particular, nationalized banks should be subject to the same capital
requirements and supervisory oversight as non-nationalized banks. And, a clear exit strategy
to return the banks to private operation would be needed. [that’s not a call to nationalise banks, merely a follow up statement saying that if we did that they would neen to be run a in a transparent manner etc.
28 - introduce legislation allowing you to nationalise failing institutions without the need for a debate [erm… that’s talking about ‘ongoing regulation’ and changes in how our regulation is set up and deployed so that if necessary we can, like the FDIC, go in and take over banks when required, that doesn’t mean we have to do it, they are saying we need a gun, not that we need to go out and shoot lots of people]
29 - fix your oversight [again, this doesn’t point towards nationalisation, oversight and a call to nationalise banks are not the same thing]
Culminating in para 49:

[which is the summary, and yes, banks that are critically insolvent will need to be nationalised as Anglo was -i’d rather see some of them close having said that- but again, it isn’t coming out and saying ‘nationalise now’, nor is there anybody who can say hand on heart that the banks are totally insolvent, if you can then publish your research]

in talking about how nama ‘might work’ that not a ‘damning indictment’, they have not said it ‘won’t work’

re: structural deficit and procyclicality - two separate things, yes, but one helped bring about the other, our finances looked fine when front loaded tax takes based on property transactions was funding it.

regarding the report: i read it, and condensed it - have it on my blog, it was posted on too

bank restructuring, the running of nama and the types of assets that it will apply to are not the same thing as nationalisation, they are all totally separate concepts, interlinked perhaps and relative to each other yes, but not the ‘same’ and therefore your argument that nationalisation is actually put forward as a cure left and right in the document is not accurate.

your entire response is hinged on what you interpret as repeated calls by the IMF to nationalise our banks, i’m sorry, but it just doesn’t say that and any allusion to it is your interpretation of the document rather than what it says in plain black and white


MB, you made a number of assertions about the report, I rebutted each on.

Nationalisation is mentioned in more than one paragraph.

NAMA will only be a good idea if it pays the right price, includes the right assets, and nationalises the banks where insolvent. These ‘suggestions’ are huge criticisms. This is civil servant language wrapped up in diplomatic language and still they say the government should nationalise the banks? It is astonishing stuff.


My research - may not run to 700 pages á la PWC report but easier to read because of that (yeah Brian, I’m looking at you!):

Bank = commercial, private, for-profit company.
Govt = taxpayer funded, not-for profit institution.

Govt guaranteeing all bank deposits and loans to €440 billion = Banks are not capable of meeting the demands of their creditors.

Govt. injecting €7 billion and counting into the two biggest banks = Banks are not capable of funding their day-today requirements.

Any commercial, private, for-profit company which is incapable of meeting the demands of its creditors and funding it’s day-to-day operations is insolvent.

Job done.

If you want any more detailed analysis - I’m afraid the government will block your attempts with claims of commercial confidentiality.

But as they say, if it looks like a duck, quacks like a duck and waddles like a duck… it definitely ain’t a swan!