time for "the lucey plan" for Anglo?

clearly this bank is dead. down 40% today, new historic lows. And the markets are open next week and the week after and the week after and then the week the government come back from hols.
If the government lets it fail, thats dangerous. Equally, pouring cash into it to recapitalze to allow it to lend is folly.
Last few days a proposal has come forward as to how to savage some few shreds from the wreck - nationalize, freeze, quarantine and work down.
time for an alternative?

radioireland.ie/lastword/23122008-17.wmv (5pm slot)

Matt is talking to Jim Power and Chris Andrews and gives Andrews a bit of a hard time. He said “Anglo financed the builders and the builders finance FF”…

yep… tme for a new approach that doesnt involve ff…

Another minor FF TD that gets ripped a new arsehole on national radio or TV. Can’t be many of the buffoons left… The problem for the government, as I see it, is that the new savagery (relatively) of radio presenters, emboldened by the assertiveness of opinion pieces in the print media, is going to shift its way up the ranks. The current deference given to junior ministers will disappear and then ministers will also start getting the treatment. Without appearances on the airwaves, the government has no ‘message’.

I don’t understand why Lucey is saying to buy the shares in the market, you don’t have to do that to nationalise it at all.

This has been somewhat puzzling me too. Surely if you buy the shares, say Anglo for 250 million, you give 250 million to shareholders and then you still have to pay for the losses of the bad bank (because you’ve guaranteed everything and lots of the debt comes due in the next two years). Indeed, if you nationalise it, you become liable for all the debts, even after the guarantee. With the preference shares, sure you might piss the money away as Anglo collapses after the guarantee, but you don’t have to pony up for all the debts that come due after the guarantee.

I still haven’t seen an argument for buying the shares of Anglo other than bailing out Mr. Quinn (in giving him more than zero for his shares). Anyone who thinks buying common stock of a non-systemic bank is a good idea, please raise your hands and tell us why!

PS. If the government wants to set up a bad bank, all they have to do is bung some cash into a fund and get it to start buying assets from the banks at above market prices. Don’t forget, though, that a bad bank costs a ton of money, but hopes to get it back when asset prices improve. Its function is to give a dig-out to the other banks in the system and keep them going by:

  • setting a higher price for assets than the market clearing price, avoiding huge write-downs.
  • paying above the odds for bad assets so that the ‘survivors’ get some cash for assets (above what they’d get in the market)
  • clearing the balance sheets of the survivors so they can attract reasonably priced refinanace/rollover cash for their remaining ‘good’ (maybe better would be a more appropriate word) assets

These calls for a ‘bad’ bank beg the question - what’s going to fund it? They also seem to come from people who have the dimmest view on the price of Irish bank assets (i.e. they believe they are in a far worse state than even the most pessimistic estimate so far). So on the one hand you have people claiming that all the banks assets are toxic to the tune of high numbers of billion (which I happen to agree with) and then that the state should pay money to take over a bank to use as a wind-down vehicle for these assets. The likely results of this approach:

  • massive government borrowing over years to wind-down the debts/purchase the assets
  • the survivors becoming zombie banks beholden to the government
    a massive transfer of wealth from the taxpayer to the survivor banks
  • still no credit in the system

Anglo is indeed a Zombie Bank which the market knows is bankrupt. Just how much of tax payer’s money (Pension Reserve Fund money) will the Government squander in its mad cap Doctor Frankenstein attempt to keep it alive? (I was astounded to hear from the very mouth of our esteemed Minister for Finance that the Pension Reserve Fund is in fact not taxpayer’s money). Why are the Government engaging in such foolish and reckless behaviour with our money? Who are they trying to bail out? Who holds the €3 billion in preference share capital in Anglo (not covered by their guarantee)? I despair at such incompetence.

The actions of the Irish Government over the last 6 years are responsible for this mess. It was they that fueled the property pyramid scheme which shifted vast wealth from the young Irish people to the property developers. The whole thing reminds me of John Law and the Mississippi Bubble: 1718-1720 which eventually lead to the French Revolution. mshistory.k12.ms.us/articles/70/john-law-and-the-mississippi-bubble-1718-1720

I think its time for action less bitchin.

^^ email addresses - lets add media like newspapers and radio stations and tv to the list.
Emails AND phone numbers.

Maybe we can prevent Anglo being bailed. Ill hang on to hope. Id rather do somethin than nothin and this is comin from someone who was gonna leave Ireland in the good times - those of you who want to stay here or even want the option should take a stand. We have time for organisation and gettin people informed. We have the internet for spreading the word.
The dail is on holidays - they just gave us time to hit back.

I was thinking the same thing myself - mind you it must be as individuals and not “the pin” - does anyone have an email address in Europe by the way?? :angry: