RTÉ: Prof Philip Lane to be next CBoI Governer

Just one clarification, was it a report issued by the ECB or some vested interest think tank :slight_smile:

I’ve sometimes thought that nobody should be allowed to self-govern. History constantly suggests that the people don’t need representatives as much as caretakers (or even zookeepers :laughing: ).

I suspect that good government requires a certain degree of disinterest and separation that people just can’t achieve if the government identify too closely with the governed, but then I think that rain is wet, so who am I to judge?

ECB - you would be surprised at how much understanding and analysis they have of Ireland’s economy.

Far better than many of the U.S. hedge funds currently operating in Ireland.

I assume this relates to (i) zoning decisions, (ii) land banks held by state agencies (including NAMA), (iii) no land/property taxes.

noonan is some idiot

This is why I love the Pin :smiley:

Great info @observer35

Thank you very much for your insight and demonstration of view from another angle.

I don’t believe in your inference that land tax is a good thing.
It’s just another tax to be abused by bad government. There is simply too much interference already in property with any more of it.
Take government out of land planning and zoning and control and the likelihood is much more freely available access to housing and good quality living. Government is generally failing.

bloomberg.com/news/articles/ … ntral-bank

Bloomberg report

Observer great stuff; - any chance you can get in touch with a journalist with your info? e.g. Joe Brennan at Bloomberg


jbrennan29 @] bloomberg.net

Right now there’s only a PPR tax & commercial rates.

There’s no tax on (i) undeveloped land nor (ii) farm land.
i - We need undeveloped land to be developed and
ii - I don’t like farmers

This is made-up nonsense.

The ECB plays no part in the selection of national central bank governors.

ECB liquidity to Irish banking sector is at its lowest since 2007.

This is made-up nonsense.

The ECB plays no part in the selection of national central bank governors.

ECB liquidity to Irish banking sector is at its lowest since 2007.

hard to understand then how the “dogs on the street” - got it so wrong - including bookies - unless someone somewhere had a different view ?

ECB “liquidity” is not the ECB “repo facility”.

That is the whole point of it.

Please source your claim that “ECB up to their eyes in Irish repos (rolling weekly loans at 0% for Irish banks to buy 10 year Irish Sov. Debt).”.

Latest Irish NCB balance sheet (Sept 25, 2015) shows
MRO assets down at 1bn - an all time low
LTRO assets of 8.9bn - also recent historic low

The balance sheet has shrank from 50% since Y/E 2012.

Nothing supporting Observers claim.

The dogs on the street believed the journalists who got it wrong :slight_smile:

And for the record I always thought our Whately Professor was in pole position once he threw his hat into the ring.

I take it neither of you (Skippy3, Andy) are familiar with how Central Banks (pioneered by Alan Greenspan) use rolling short-term repos to inject carry (I.e. cash) into the banking system (like QE but where the banks get the carry vs. the Central Bank).

It is the reason why so hard to float AIB as such a material amount of its earnings are coming from the ECB’s repo trade (I.e. hard to get through the disclosure process).

The examples you quote above have nothing to do with the ECB’s repo.

Trichet also allowed the repo but only for very high quality collateral (ruled out a lot of Irish banking assets). Draghi in Q3 2012 completely changed the rules and allowed PIIGS banks to do far bigger repos (hence collapse in long term sovereign yields since then).

When Greece went AWOL a few month ago, their repo was shut down immediately. Within a few days, Greek Sovereign yields went back to 2012 levels and, hey presto, Greek Banks disclosed that they were heavily invested in Greek Sovereign Debt (and insolvent).

That is why the ECB still maintains such a strong control over Irish banks.

Are you talking about ELA?

Perhaps if you clarify exactly what facility the banks are availing of it would be easier.

Brilliant stuff observer35. The lengths the politicians will go to appease vested interests are unreal.

It would be great if you could somehow give the heads up on your info to some journalist ( anonymous tweet?). Though the media are disastrous on this stuff.

No, this is not ELA.

ELA is the ECB placing a deposit (in crude terms) in an Irish bank (as other depositors have left).

An ECB repo trade is where say AIB produces 1bn of mortgages as an asset, in return for which the ECB lends AIB 1bn @ 0% (actually now less then 0% in cases) for 7 days. AIB takes that money an buys 10 year Irish Gov Debt. The ECB “implicitly” (but not explicitly / or legally) commits to “rolling over” the repo every 7 days, for 10 years if necessary. As long as the Irish Gov doesn’t default on its sovereign debt, then the AIB will make carry over the 10 years and the ECB gets its principle back. This is regardless of what happens to general market interest rates (i.e. it doesn’t matter how the market values the Sovereign bond).

The ‘sneeky’ part of Central Bank repos (as pioneered by Greenspan), is that their very short terms mean they don’t appear explicitly on bank balance sheets. They give the impression that the “market” is buying assets, when it was really the FED. Modern QE (Bernanke) is much more transparent. Greenspan used them from the early 1990s and made Wall St. very wealthy (as they pocketed the carry from FED repos) and created the era of the B.S.D on bond desks. Greenspan did this to pump asset prices (i.e. the wealth effect, the 1990s was the greatest proportional increase in U.S. personal leverage in U.S. history). As an “old fashioned” economist, Greenspan was paranoid about price inflation, and thus Wall St. became paranoid about the slightest increase in price inflation (as their gravy train would be suspended). Greenspan did so much repo via U.S. iBanks that by 2007 he had broken them (or they had broken themselves by buying almost anything they could get their hands on). Bernanke was forced to do more transparent QE (FED buys the assets and holds the carry).

Draghi did Bernanke QE first (LTRO) but its effect’s died as soon as it finished. In Q2 2012, he reverted to Greenspan’s QE (or the repo trade). Draghi’s “whatever it takes” was that he would (1) relax the requirements for repos and (2) roll them to maturity of the sovereign debt purchased. The repo trade still runs today.

It is why the ECB is effectively running 2 QE’s simultaneously today - the “Repo QE” financed the banks buying high yield sovereign debt to get carry, while the “QE2” finances the purchase off the bank of this sovereign debt now that its yield had collapsed so the bank can pocket the capital gain. This is why EURUSD has fallen so much (vs. when the U.S. was doing QEs).


I know something about central banking.

You are hinting that you know a bit more, but I don’t see any evidence. What CBI/Eurosystem exposure to Irish banks are you talking about?

For example here is BoI’s interim management statement from July. Page 11 shows under wholesale funding total* drawings from monetary authorities* a total of 1 bn, down from 4 bn at year-end 2014.

BoI appears to be selling government bonds, p 22:

from my post above, this is BOI booking the capital gain from selling the bond assets financed by “Repo QE” into “QE2”. Thus the trade is closed and the bank stops getting carry (it can do a new repo but yields are lower, hence the negative ECB rate to preserve some margin), but it can book the capital gain from having bought the 10 year bonds at 8% (via rolling repo) and selling at <1%.