Some calm reflection on the Anglo saga

Always best to take time to consider developments and reading and listening to all the noise of the last couple of days a few things have begun to coalesce in my mind:

The performance of Lenihan on Prime Time last night convinced me that the Government knows they have 4%^&ed up their response to events from the first and are now paying the price. The key comment to me was when he claimed that the nationalisation of Anglo was needed in the interests of depositors. Now, I have as dim a view of Lenihan as any other Polly, he his just a self marketeer not someone who really understands anything over which he presides. However, by this time it is completely implausaible that he didn’t understand (thanks to explanation by advisors., the CB and Dept. of Finance) that depositors are completely protected under the generous Irish guarrantee scheme. Nationalisation really changes nothing on that score.

Now tie in in comments from Morgan Kelly yesterday. He was right on the money, suggesting that implications of the failure of Anglo should fall on those who lent the company its risk capital. That is, from Tier 1 down, shareholders then unsecurred then creditors securred creditors. Add on to that any insurers of this risk, the CDS issuers. But hang on. Who exactly own a big chunk of the CDSs for Anglo? You and me, John Q Taxpayer, curtousy of the government’s early and “world leading” laibilitiy guarrantee. This guarrantee extends for 2 years and we are on the hook

I am convinced that Lenihan is being completely genuine when he said they had no choice but to nationalise Anglo, but is being economical with the true reasons. The reason being that the taxpayer is now better off sinking money into a dud bank than coughing up on CDS obligations now. We get it in the nether regions either way, it is just a question of timing (plus I suspect a glimmer of irrational hope on the part of those naive chancers that Jury’s hotel might be worth €500m in the near future and we will claw our money back).

So take with a big grain of salt the comments that BoI and AIB will not be nationalised. The same problem holds with them.

The %^&*ing bank guarrantee scheme has left us with absolutely no room to manoeuvre. We will lucky if we don’t own all the banks on an unlimited liability basis by Summer.

I sincerely hope that AIB and BOI are nationalised.

I believe that the taxpayer will be called in to cover some of the losses on Anglo after shareholders equity is exhausted by bad debts.
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While this may be the case as well for AIB and BOI, over a five or seven year time scale they may begin to generate profits and might be sold to private investors to recoup prior losses.

The worst scenario is that we only nationalise Anglo.
We need any potential profit to government in the future from BOI and AIB nationalisation / resale to cross subsidise losses on Anglo.

I remember there was talk on the Pin that the guarantee scheme might have been developed following a phone call to DMcW back in September. (He had talked about a guarantee before it happened as I recall).

Anyone think that was likely?

Why can’t they just renege on the guarrantee? Our credibility is completely shot anyhow.

Coz attempting to call the bottom on our creditibility is about as useless as attempting to call the bottom on house prices. We can (and probably will) still go a lot lower. :frowning:

Absolutely right, IMO. As seagulls follow the trawlers…

Which also explains why the opposition were skirting around the issue to a degree in the Dail yesterday, they were trying to change the form of the oversight of the nationalisation and embarrass FF, but there were no serious calls for a change to the substance.

I’d say Summer is an optimistic bet… I’d say by the end of February but we’re on the hook anyway so it really doesn’t change anything…

Thanks Gekko, i was as much asking for same in the AIB thread.
Are we really any worse off than anywere else?
The UK/Spain/US/Greece/Latvia/ etc seems really buggered as well

I believe one of the reasons the Irish guarantee has been so reviled in Europe is that is sets a sort of precedent in the eurozone that no-one should take any losses (never mind just depositors). Every country, as this stage, has banks or a banking sector that are bigger than the country (i.e. the bank’s liabilities are larger than GDP). The brighter countries can see the dangers, it’s only the dim ones that think you can spoof your way through it.

Don’t know loads aobut Latvia, but I expect the holes in the Irish Bank balance sheets are bigger proportionally than elsewhere.

Moreover, as I have moaned about elsewhere, nobody has yet woken up to the fundamental flaws in Irish economic policy that have plagued this country since its inception.

As I noted elsewhere, Ivana Bacik brought up the possibility of rescinding the guarantee during the senate debate on the Anglo bill last night. She said that they had voted for the bill on the stated premise that the bankers were acting in good faith. Since then it is becoming apparent that the bankers haven’t been acting in good faith, and this may be grounds to undo the guarantee. She also called for a painting of worst case scenario with respect to the nationalisation of Anglo.

She said all this very rushed (in the last 10 seconds of a 2.5 minute speech), but she was definitely ignored by Lenihan in his reply.

typo

I’m too lazy to search all your posts :wink:

Please summarise for me and I will buy you a BD

1.Endemic corruption and cronyism, the effects of which are acidic on trust and belief in the irish economy. Its THE worst thing a government can have, lack of trust. Please take a bow, liam, charlie and Bertie. There actions are the biggest act of treason this state has ever seen.

2.Inabillity to be critical of all things either, personal, economic, or public.The attitude of Voting for FF because “the other shower is just as bad” is a cancer, as is the same pervasive attitude in aspect of self improvement or change. Complaining or striving for improvement is not begrudgery.

AIB & BOI are flat lining. Have been now for what 3 days.

Its a matter of hours or days before the Government announce something not next summer we’ll be dealing with other much worse shit.

or else how can this “standoff” between the Market and the Irish State?

Once Full Nationalisation happens the Government will either have to step down A) call an election or B) Step down for a National Government formed with them excluded.

One step closer to Socialism against “our” will :angry:

30 Sep was this country’s 9/11.

Except it was self-inflicted. And the daft conspiracy theories surrounding it are turning out be to true.

There will be no election. There will be no National Government.

These guys will go the full distance with the Greens pulling out at some politically expedient point, a few FFers may go overboard after the national elections but I’d say we’ll go right through limping all the way to the finish line…

agreed

see points A & B on previous post.

Weird, isn’t it? It’s like sitting down one evening with a bottle of whiskey and saying “what’s the most fucked up thing that could happen” and then waking up and seeing through bloodshot eyes that it has!

15 years of Fianna Fail in the boxseat… My conscience is clear, I never voted for the bastards…

Wooooo. Deja vu.

About 2 years ago I was suppin’ some whiskey (18 year old speyside single malt) with a brother in law. He goaded me towards my most bearish (Morgan Kelly) persona by spouting nonsense about the greeat Celtic Tiger, Richest Country in the World™, everyone else (especially the Brits) are just jealous, blah bah blah blah. I gave my summation as Ireland being completely and utterly %^&*ed economically.

And now I wake up.