Ireland mulls 'patriot bond' to kick-start the economy

Hearty guffaws to this gem on my trading floor today. Honestly it’s like we try to make ourselves look like thick paddies.

Would someone post an ISE scary chart showing its collapse in the last 12 months there for me please , id like a guffaw myself .
Traders putting the slide back in landslide.

maybe your David Begg… are you David Begg yogamahew…
when you look in the mirror do you see a garden gnome who has lost his hat and doesnt know where to find it.

I have a recurring problem that when I walk into public toilets there’s always a wizened old wino with mad eyes staring at me. Then I realise it’s a mirror… (apologies to Sean Hughes circa 1995).

I couldn’t give a rats ass if the market goes higher or lower. Why would I? I can be short or long. What makes you think traders care what the ISE does. All I’m pointing out is that everyday there’s a crazier story out of Ireland which makes it looks worse and worse. A year ago we did loads of institutional business in Irish stocks with overseas clients, no nobody cares. Why would they, a banana republic. Why are you hitting out at me?

Can you clarify whats so funy about this idea or any of the responses posters have made?
I really dont see whats been funny about anybodys posts other than the David Begg instigator item. Certainly they didnt merit ‘the hearty guffawing on the trading floor’ response.

Could you ask some of your fellow guffawing experts on the trading floor for some advice for me.
I only made 9.5% on my pension last year, after fees (embarrassing I know :blush: , Id switched the whole thing to indexed EU long bonds late 2007)
Indexed cos I have no faith in the ability of investment managers or traders and prefered to put my faith in the IT guy who writes the system to manage the automated fund allocations.
Wondering if its time to move out of fixed income, now that the unit price on equities is low, or I may hold off another 6 months.
So if theres anybody on your trading floor who has beaten 9% on their portfolio in the last 12 months could you ask them what I should do.
By the way how much did your trading floor lose for its clients last year?

Theres noone hitting on anybody.

The idea is ridiculous, why not just ask for charity donations if you want people to give you money below the market rate. I’m an Irish expat. If I wanted to support the country I could just buy regular Irish bonds. They don’t need to invent new ones.

Good work. You’re really arguing with the wrong guy here, read my posts anywhere, I’ve no faith in fund managers. I see what they do every day, I see their entry point in stocks every day. I don’t think people should put their money with them either.

I’m waiting personally.

It’s a great market for traders, the volatility is what we look for. Every single trader on my floor had a great 2008 and are having a great 2009. The portfolio managers we execute orders for might have had a bad year but not us.

I don’t think you understand what traders do. I don’t make or lose any money for clients. I make markets, provide liquidity and execute orders for clients. What our clients choose to do is a complete irrelevance to us. In terms of clients, most of our long-only funds would be down quite a bit, the hedge funds we work with much better performance. Of course I only see their equity flow. I’ve no idea what the allocations these funds are in cash/fixed income etc.

Evidently the idea of a Patriot bond is so ridiculous that the Obama administration is proposing this self same idea, albeit calling it a Bailout bond… go figure.

All this does for me is highlight the fact there are so many different approaches, theories, historical examples available as tools for the irish govt to get us out of this. Are they availing of any, no its what ever approach eases the pain for those who got us into this mess.
Why the rush ? Bankers and traders are rushing the govt and they are following suit, but this is creating bad deals for Irish citizens…
nothing creative in our approach, nothing that instills confidence , nothing that … oh hang on I will stop there, its FF , ffs what else would you expect.

My view for what its worth, is that any of these so called patriot bonds could end up like the govt bonds sold during the 2nd world war… For some inexplicable reason my grandmother was advised by her accountant in early 1940 to invest in the bonds at the time as they paid a 3.5%rate but more importantly they were going to the war effort… There never was a closing date on them and to this day the British Govt, just pays the interest on them…Inflation has done it’s work and “my inheritance” pays me £5.83 every 6 months!!

I cannot help but feel that she could have made a better investment decision than that… so beware terms and conditions!

Yeah, on anonymous internet chatrooms. Not exactly ICTU’s style. They’re in the problem-solving business, not the flame war business.

Oh don’t be so ridiculous. Many, many people, including, I believe Mr. McWilliams, discussed the idea long before ICTU picked it up and dusted it off.

The problem with any bond remains - the money has to come from somewhere. What do you do with the institution that the money has come out of?

The problem in the Irish economy isn’t one of liquidity, it is one of solvency. Borrowing from Peter isn’t going to stop Paul from going bust.

You siphon off the money in carefully-managed chunks, so that the bank can adjust to the lowered deposits without collapsing.

(The consensus among non-government people who are paid to know these things is that collapse is inevitable in any event, btw.)

Can you please tell me why that wouldn’t work?

How do you propose to siphon off the money? Either the rate will be good and there will be a rush to it, or the rate will not be good and no-one will take it up.

If the rate is good or there are many patriots, just the existence of the upcoming bonds will induce people to move from long-term deposits to short-term ones, causing funding instability for the banks.

The problem is a shortage of money, not that it is not allocated to the right things. Reallocating the short amount of money from deposits (where it is already levered up 10-1 to be lent (in fact more like 20-1 as the Irish banks have a low loan:deposit ratio)) to bonds that will not be levered will reduce the amount of credit available in the economy by at least a factor of 10. Government bonds are not high-powered.

In any event, the NAMA funding model has made the situation somewhat moot - the government is being permitted by the EU/ECB to quantitatively ease its way out of the banking crisis.

The consensus among non-gov people is one I accept, indeed, I have long been saying that the banks are dealing with solvency issues not liquidity ones (based on the logic of what I’ve been reading for the last two years). But the same people are saying that the banks are essential to the proper functioning of the economy, to getting credit flowing (whatever that means) and to the recovery. I don’t happen to agree with that, since it doesn’t follow from the first point and seems to me to mean “bailout the banks at all costs” which I don’t accept. But we are where we are.

You are way too intelligent to be confused by what I said. My proposal is to slowly, carefully, and with no sudden shocks, transfer the sums from institution to bond. Banks are very good at managing things provided they are slow and steady.

If you do it slow and steady, you know very well that the institutions will be able to manage it, and their position won’t depreciate appreciably as a direct result of the patriot bond.

So what you’re proposing is to freeze savings accounts and then convert drip feed like into bonds… Yeah, can’t see any problems there… :smiling_imp:

Tongue firmly planted in cheek I hope? :laughing:

'Xactly TUG, there is no way of managing this, short of expropriating the deposits. And even then, then banks will be left undercapitalised. So what will replace the deposits. Holes. There are holes everywhere. We don’t have a banking system anymore, we have a tower of collanders precariously piled on top of each other.

Besides, as I said, government bonds are not high-powered. Each euro of deposit is worth nine euros of lending (albeit somewhere in the eurozone). Each euro of government bonds is worth a fraction of that as it leaks away or is buried into the ground (actually, the leakage is the good bit, IMO, as that is usually leaking back into the economy, it’s the burying of the money in infrastructure that we can’t do at the moment).

No, you just made that up. If you’re going to be inventing stuff, why not make it interesting, and involve space Nazis and stuff?

Nope, quite literal. You may have noticed that very few banks have collapsed worldwide compared to the last depression. The few that have gone were uniformly the victim of sudden, unmanageable shocks. Self-inflicted shocks, to be sure.

But the point is that the banks have so far managed to survive provided the harm is doled out in slow chunks rather than all at once.

Lord God Almighty, then please clearly set out your plan for:

How does this work, dealing with both the ownership of the account and the problems with the capitalisation of the banks as noted by YM.

Anything else well, has less credibility than space nazis… :laughing:

You’re just wasting your brain kidding yourself that I said anything about expropriation.

Either you accept for argument’s sake that some people will willingly put their money into a patriot bond or you won’t. If you won’t try the mind experiment, there’s no point in your posting on the thread.

The whole thread is based on the premise that the bond has the permission of the people with the money. If they don’t have the permission, it’s just a form of tax and not a bond at all.

I know there are many people I know who will happily put money into a patriot bond. You are unfortunate enough not to know such people. Or maybe you do know them, but are unaware of how unselfish people can be in a crisis.

Your argument is also based on the notion that all the money held by Irish people is resting in insolvent Irish banks.

“News” for ya: there are dozens of billions in solvent, non-Irish investments and deposits.

Moving money from those places makes no difference to the Irish banks, and you know it.

If the transfer has the permission of the owner, then it isn’t expropriation or freezing.

Ah finally! No, it won’t work… People will keep there solvent billions offshore and convert the riskier stuff first, i.e. the stuff already in Irish banks, the only way this won’t happen is with a spectacular inducement, what’s your pitch rocker? :laughing: