RTÉ: Prof Philip Lane to be next CBoI Governer


#41

@observer35

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:


#42

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%.


#43

This is all very interesting. You haven’t presented any evidence though.

See note 23. BoI had 577 m in deposits from monetary authorities in July, which is trivial in context of >100bn in liabilities. I have read through the liability side of its balance sheet. I cannot see where exactly the CBI or ECB could be stuffing large deposits.

If you can please let us know. Until then I call BS.


#44

I understand the concept. Now please quantify (with reference to evidence, via links) how much funding Irish banks have from the Eurosystem right now.


#45

Hold on a minute.

ECB repos (short term) are the bread and butter of the MRO.

The ECB doesnt actually do the repo, it’s decentralized i.e. it’s done at NCB level. That’s the (MRO) figures I quoted above which have fallen to just over 1bn per the last Irish Central Bank balance sheet.


#46

I find this argument over people management skills mystifying.

The Governor (CEO) should be a thought leader. Dealing with “human resources” or whatever is an operational issue for a COO or whatever the CB calls such a person.


#47

Yes, I agree. The Governor should be concerned with policy mostly and a bit with senior appointments. All the day to day stuff should be delegated.

Since when have senior public officials been running a business? If the department of public expenditure was really run like a business, Watt would have been fired long ago for missing his targets. This is not a reflection on him, it’s a zoo he’s trying to run, but it’s not a business. On top of that, there’s nothing quite as dysfunctional as academia, so I imagine Prof. Lane is well used to arguments…


#48

Howlin is making a good argument for sacking himself.


#49

I’d epect Watt to announce he’s off to some cushy, well paid job abroad within the next 12-18 months


#50

Damage control spinning from Noonan this morning (“Wyatt as Howlin’s man”).

If only they EXECUTED as well as they SPUN, we would be a great country.


#51

France appointed a banker, which was not to everyones taste including Thomas Picketty

euronews.com/business-newswi … les-echos/

ft.com/cms/s/0/179abc48-5bb6 … z3pCB0R1Je

Seems to me to be an egregious conflict of interest


#52

… yes they wouldn’t need to spin at all.


#53

Apparently newstalk reported that Watt was shot down by Europe?


#54

All hail our European overlords. Seriously though, is it any surprise they tried to appoint Watt first.


#55

It’s all gibberish. Observer35 has a long history of posting incoherent babble about the ECB sourced from crypto-economic conspiracy sites like Zerohedge. Note how no actual evidence has been forthcoming for any claim.

ECB weekly repos under the MRO have actually been falling sharply from a peak of EUR165bn on 25 Feb to EUR66bn today (total of course, not just Irish instruments). Source: ecb.europa.eu/mopo/implement/omo/html/top_history.en.html – filter by “Op” and date

Also there have been NO Irish 10y bond auctions in 2015, only 15y and 30y auctions, a 7y tap and a 30y syndication. Source: ntma.ie/business-areas/funding-and-debt-management/auction-results/

So no, the ECB isn’t funnelling mystery repo money to Irish banks to push down 10y yields.


#56

Ouch !

  1. I didn’t respond to past posts you made re how the ECB has flattened PIIG yields as: (1) you didn’t seem to have actual capital markets experience, and (2) i got tired trying to explain to you given your attitude (+confidence in it).

  2. Irish bond auctions have nothing to do with the ECB repo program. You don’t need a bond auction to run a repo program (hence my comment in 1(1) above - it is a very naive statement regarding the issue at hand).

You should speak to someone in the bond desk / wholesale funding desk of a main bank (they are the only bond players left in this crazy market). They may have more patience for your approach then I. Although your attitude may need to change.


#57

The ECB flattened PIIG yields, in part, by THREATENING a repo operation like the one described above. It was called the OMT programme. It was never implemented as the threat was enough.

en.wikipedia.org/wiki/Outright_ … ansactions

What is this secret sauce OMT operation called then Observer35??? Deep OMT ???


#58

This is not OMT (Euro version of POMO).

This is just normal CB repo activity (which Trichet was doing long before any LTRO etc.)

The only difference - which was material - was that they dramatically changed the conditions of it.

It is standard Central Banking, but done at massive scale (i.e. lower collateral accepted) - “whatever it takes”

Here is an example of one:

bloomberg.com/news/articles/2015-04-28/ecb-s-repo-plan-may-make-negative-bund-yields-a-matter-of-time-i9107a6d

This is not a mystery - anybody on a wholesale banking bond / funding desk, has been doing this for almost 3 years now.

They have bought almost every sovereign bond they can get their hands on.


#59

I disagree. Running a large public service organisation (1500 staff on CB) most definitely needs leadership and management skills. Of course day to day admin can be delegated but simply being an expert policy analyst does not a good CEO make. That doesn’t of course mean that Philip Lane doesn’t have the sort of skills required or won’t develop them, but its reasonable I think to question whether someone moving from being a professor in academia to running an complex organisation of 1500 (with the additional complexities that running a public service organisation entails) has the full complement of skills and experience necessary.


#60

Observer, you completely ignored my post above. You stated that Irish Bank’s have been heavily availing of ECB repo facilities to buy Irish govt debt to suppress the sovereigns yield.

Short term (weekly) repos are part of the ECB’s main refinancing operations.

MRO operations are not conducted centrally i.e. by the ECB in Frankfurt. They are conducted at the National Central Bank level. AS such they are recorded/reported on the NCB balance sheets.

As I quoted in my original post, Irish Central Bank MRO balances have fallen from a peak of €64bn in Dec 2010 to €1bn as of Sept 2015. $1bn represents less than 0.5% of Irelands national debt.

If you are claiming there is another short term repo facility the Irish Banks are availing of which they’re using to buy up Irish sovereign debt, please provide a link to it.