It's really the German banks that are getting this bailout, why aren't they paying?

gizmo555

It's often been talked about over the last few weeks, but a picture's worth a thousand words . . .



The real recipients of the bailout are the German banks, who lent recklessly to ours. Why aren't they taking any pain? David McWilliams's debt-for-equity swap proposal seems fair to me - let's pay them back in AIB and Bank of Ireland shares.

flynnlives

been saying this for days!!

Clowen and co are either idiots or obtuse.

Either way they arent listening!

Europe says jump! Clowen says how high!

Scofflaw

And the French banks, and the UK - even the US. Our banks are being bailed out because they were lent to by everybody during our bubble. The whole crisis has been about bailing out the banks, and unluckily the banks dwarf the states in terms of money - which means that the choice is between trying to socialise the costs of reckless banking as we're currently doing, or socialising the costs of reckless banking through allowing the banks to implode. Neither option is painless.

cordially,
Scofflaw

gizmo555

Scofflaw wrote: »

And the French banks, and the UK - even the US.

True, but it's the self-righteous tutting from the Germans that sticks in my craw, when they did more they anyone to inflate the Irish property/credit bubble, through low Eurozone interest rates mainly set to suit their economy, and reckless interbank lending.

Monty Burnz

Because Fianna Failure marched us into a huge elephant trap - and I'm not sure they even realise it yet. But hey, the public voted for corrupt morons, and corrupt morons is what they got. Turns out it was a bad choice - live with it folks.

But don't get fooled again.

jimmycrackcorm

It would seriously piss off the Germans, French, British but ironically the Euro is in much greater danger of being destroyed by the rolling attacks, first on Ireland, then Portugal and then Spain which cannot be saved. The equity for debt swap would spread the cost more fairly amongst the lenders who practiced badly especially those who over-lent to our banks.

Scofflaw

gizmo555 wrote: »

True, but it's the self-righteous tutting from the Germans that sticks in my craw, when they did more they anyone to inflate the Irish property/credit bubble, through low Eurozone interest rates mainly set to suit their economy, and reckless interbank lending.

The reason foreign banks lent to the Irish banks was because the Irish banks were good at getting that money farmed out to people willing to pay silly mortgages. In theory, our government was regulating the Irish banks so that the lending was kept within bounds, and the assets were reliable - but that was pure theory. In practice the government didn't bother the banks with that sort of thing as long as there was plenty of money rolling in, while with the other hand it made conditions yet more attractive for property-related borrowings with tax breaks and mortgage relief, and rather than trying to control business costs it dropped the CT rate from 32% to 12.5% to compensate.

There are a lot of failures here, and most of them point back to the Ahern governments.

cordially,
Scofflaw

fontanalis

gizmo555 wrote: »

True, but it's the self-righteous tutting from the Germans that sticks in my craw, when they did more they anyone to inflate the Irish property/credit bubble, through low Eurozone interest rates mainly set to suit their economy, and reckless interbank lending.

In fairness it's up to the people receiving the loans to behave maturely.
Back to the main point, is it a case of the Irish government being out of their depth or bending over to the Germans? All they had to do from the start was to say Ireland wasn't going to pay for other banks and the focus would have been shifted.

Sticky_Fingers

gizmo555 wrote: »

True, but it's the self-righteous tutting from the Germans that sticks in my craw, when they did more they anyone to inflate the Irish property/credit bubble, through low Eurozone interest rates mainly set to suit their economy, and reckless interbank lending.

The Euro was a Franco-German construct designed primarily for their benefit and that of the larger EU states. We went into it with our eyes open knowing this full well and then proceeded to gorge ourselves on the cheap credit that resulted for the Euro membership. The Euro could have been the making of this country if it was used wisely, instead we when mental buying shoebox apartments and Gucci handbags.

While German banks (not the German people) played a part we are primarily to blame for our own recklessness. The government effectively bought elections by inflating wages and social welfare and creating unsustainable jobs in the construction industry with generous tax breaks. The electorate are to blame because instead of thinking about where all this money was coming from and questioning the logic behind the Celtic Tiger actively cheerleaded the boom by continuing to voting these gangsters in time after time.

jeepers101

Sticky_Fingers wrote: »

The electorate are to blame because instead of thinking about where all this money was coming from and questioning the logic behind the Celtic Tiger actively cheerleaded the boom by continuing to voting these gangsters in time after time.

In fairness, the opposition weren't trumpeting anything different

jimmycrackcorm

Sticky_Fingers wrote: »

While German banks (not the German people) played a part we are primarily to blame for our own recklessness. The government effectively bought elections by inflating wages and social welfare and creating unsustainable jobs in the construction industry with generous tax breaks. The electorate are to blame because instead of thinking about where all this money was coming from and questioning the logic behind the Celtic Tiger actively cheerleaded the boom by continuing to voting these gangsters in time after time.

Well we cannot deny we are to blame for our own actions and now we are being made to pay for it. The Germans won't support the use of quantitative easing and debt for equity swaps to properly fix the problems because it might induce the inflation they fear so much and it rewards those countries that haven't played the fiscal game fairly. However the Germans should be reminded that after WW2 their economic failings ( caused by losing the war ) were rewarded by the Marshall plan. but I guess they never heard that old Irish phrase what is good for the goose is good for the gander....

Scofflaw

jimmycrackcorm wrote: »

Well we cannot deny we are to blame for our own actions and now we are being made to pay for it. The Germans won't support the use of quantitative easing and debt for equity swaps to properly fix the problems because it might induce the inflation they fear so much and it rewards those countries that haven't played the fiscal game fairly. However the Germans should be reminded that after WW2 their economic failings ( caused by losing the war ) were rewarded by the Marshall plan. but I guess they never heard that old Irish phrase what is good for the goose is good for the gander....

The German view of inflation seems to be heavily coloured by the series of events that led from the Weimar Republic through WW2 to having their country bombed flat and everybody raped by the Russians, with a lingering aftermath of shame because they didn't question their government too closely about its plans for ethnic minorities.

Which is a pity, because a good dose of inflation would make everybody's debt more manageable.

cordially,
Scofflaw

gizmo555

Sticky_Fingers wrote: »

While German banks (not the German people) played a part we are primarily to blame for our own recklessness.

No doubt, but the operative word above is "primarily". The German (and other) bankers who loaned massively to Irish banks are big boys and girls who are paid to understand the risks they take with their banks' money.

Look again at the caption on the above chart, which is taken from the website of German news magazine Der Spiegel. They understand that these loans from their banks to ours were an investment. The reason these loans pay a higher rate than government bonds is because they are higher risk. A very small risk, in ordinary circumstances, but not no risk. We should send them a few copies of Nassim Taleb's The Black Swan along with their new shares in AIB and Bank of Ireland if they have trouble with the concept.

gizmo555

Scofflaw wrote: »

Which is a pity, because a good dose of inflation would make everybody's debt more manageable.

A very facile comment in my view. It's a pity for governments and individual borrowers who have big debts they'd like to inflate away, but not for savers who would have effectively have their money stolen in the process or people like pensioners on fixed incomes which they have no scope to increase.

hinault

But our banks didn't have to borrow said money in the first place.


Remember folks the management of AIB/BOI/INBS/EBS etc made the decision to borrow money.
And then loan that borrowed money irresponsibly.


Bit like blaming the box of matches for the firre that burned down the house.
The person who struck the match, Irish banks, are to culpable.

gizmo555

hinault wrote: »

But our banks didn't have to borrow said money in the first place.


Remember folks the management of AIB/BOI/INBS/EBS etc made the decision to borrow money.
And then loan that borrowed money irresponsibly.


Bit like blaming the box of matches for the firre that burned down the house.
The person who struck the match, Irish banks, are to culpable.

And the European banks didn't have to keep lending to the Irish banks - they were equally irresponsible. A better analogy would be the German and other European banks in the role of a barman who keeps serving pints to a customer who's already blind drunk.

Bob_Latchford

They knew Ireland was drunk the yeilds on the bonds (cant find link) where high.

Dotsie~tmp

Pretty soon the only thing Ireland and Germany will agree with is a fondness for cabbage. What does everyone thing of Pat Rabbite on rumours that the ECB team is pushing for Irish state assets as collateral on this standover "contingency fund" that hopefully wont have to be drawn down. I was floored by this.

c montgomery

Scofflaw wrote: »

The German view of inflation seems to be heavily coloured by the series of events that led from the Weimar Republic through WW2 to having their country bombed flat and everybody raped by the Russians, with a lingering aftermath of shame because they didn't question their government too closely about its plans for ethnic minorities.

Which is a pity, because a good dose of inflation would make everybody's debt more manageable.

cordially,
Scofflaw

Really?
Do they not increase interest rates to combat inflation thus making our debts most costly to maintain?

pwd

Stupid people borrowed huge money from stupid Irish banks, which borrowed enormous money from stupid foreign banks.

First non-stupid people couldn't even consider buying a house of their own because of stupid people. Now non-stupid people are going to be impoverished (in a very genuine sense) by stupid people.

The funny thing is that the people who seem to be making the most noise about this are the ones who were stupid.

Not everyone who could afford a deposit rushed out to dump themselves into a lifetime of debt. It's not "everyone" who is to blame. People who did do so shouldn't shirk all responsibility, or decide that it's "everyone's" fault.

The IMF coming in is like some sort of horror story. They are going to ruin many many people's lives in this country. They are going to ruin many many people's lives who have done nothing to instigate this situation.

Considering so much of the Irish cultural identity celebrates rebellion, we are remarkably passive when it comes to authority sh!tting all over us in the here and now.

SkepticOne

pwd wrote: »

Stupid people borrowed huge money from stupid Irish banks, which borrowed enormous money from stupid foreign banks.

First non-stupid people couldn't even consider buying a house of their own because of stupid people. Now non-stupid people are going to be impoverished (in a very genuine sense) by stupid people.

The funny thing is that the people who seem to be making the most noise about this are the ones who were stupid.

Not everyone who could afford a deposit rushed out to dump themselves into a lifetime of debt. It's not "everyone" who is to blame. People who did do so shouldn't shirk all responsibility, or decide that it's "everyone's" fault.

And it is not even a sizable minority that are the problem (though that may change). Tens of billions were run up by about 50 developers who believed in the bubble long after most people knew it had burst and continued to build houses and commercial developments that no one wanted.

Sticky_Fingers

jeepers101 wrote: »

In fairness, the opposition weren't trumpeting anything different

True but as I stated in my post this is not the fault of Ze Germans but of our own stupid, mooing electorate who were more than willing to be bought and sold with vague platitudes and pie in the sky economics.
At any time over the last two years we as a nation could have stood up and said enough, we will not be chained to this bank debt because it is not ours to bear. We failed to do this as a people, many forget that while we elect officials to govern us it is the electorates responsibility to ensure that they are kept honest and in line, every person in a democracy is given this right to protest for this exact reason, if you don't protest it's your own fault for letting governments get away with whatever they want.

Do you want a new sort of government and institutional reform? Then I suggest that when the candidates come around to your door begging for your vote you keep those ideas in mind, there will be plenty of people whoring their democratic right to the person who promises to fix the pothole outside their driveway but if enough of us say we want a complete restructuring of the government and its procedures then they will take note and perhaps we will get some progress and positive change.

Uuuh Patsy

pwd wrote: »

Stupid people borrowed huge money from stupid Irish banks, which borrowed enormous money from stupid foreign banks.

First non-stupid people couldn't even consider buying a house of their own because of stupid people. Now non-stupid people are going to be impoverished (in a very genuine sense) by stupid people.

The funny thing is that the people who seem to be making the most noise about this are the ones who were stupid.

Not everyone who could afford a deposit rushed out to dump themselves into a lifetime of debt. It's not "everyone" who is to blame. People who did do so shouldn't shirk all responsibility, or decide that it's "everyone's" fault.

The IMF coming in is like some sort of horror story. They are going to ruin many many people's lives in this country. They are going to ruin many many people's lives who have done nothing to instigate this situation.

Considering so much of the Irish cultural identity celebrates rebellion, we are remarkably passive when it comes to authority sh!tting all over us in the here and now.

You are completely confused... The current problem with the banks does not involve the current mortgage holders. That has yet to come... The bailout isnt for the public. They wont get a bailout and will have to live with their "poor" decision to want a roof over their head...

The bailout is make sure the Germans and the British get their money back... We should tell them to take a run and jump. let the euro fall. go it alone. ireland wont starve. they will be a lot worse-off than us when the economic system collapses and I think they know it... ITS TIME TO CALL THEIR BLUFF... lets play them at their own game.. They (the banking elite) print money at will and change the rules to suit themselves. Let the people change the rules and Send them packing... It wont be long before the example we set will ensure the other poorer economies globally will do the same... The financial system is set up to ensure we all live indebted and know our place... Its a sham...

david75

Cowen&co have happily allowed capitalism and its machinery overtake actual democracy. To hear Lenihan repeatedly balther on about having the mandate from the Dail and the office theyve been given therefore having the mandate of the people is sickening. they got us into this mess and we're having to pay for it. We should just default on the loans, cover our own debts(as this budget, though harsh, would do, no matter who's in power) and let the germans and the foreign banks sing for their losses. it won't happen though sadly.

maninasia

No point blaming Cowen and Lenihan for the whole mess, they are the leaders the majority elected, nobody forced so many Irish to get into so much debt and take on multiple mortgages and the sense of entitlement was of many of our own making.
The electorate got the leaders they wanted, free spending, freewheeling, it'll be alright.

Then 2 years ago a bank guarantee was rushed in overnight, there was hardly a pipsqueak from anybody, yet it was obvious if you took 5 minutes to check the sums that Ireland could never cover such a debt. It was also abnormal compared to situations in other countries where bad banks were created and debt for equity swaps made, the electorate sleptwalked through this thing, no protests until it's shoved in their faces that they have pay for the whole thing!

pwd

Uuuh Patsy wrote: »

You are completely confused... The current problem with the banks does not involve the current mortgage holders. That has yet to come... The bailout isnt for the public. They wont get a bailout and will have to live with their "poor" decision to want a roof over their head...

I dont think I am confused. My point was that the problem stems from inflated house prices. These inflated house prices are a result of people borrowing ridiculous amounts of money to buy them.

It was a poor decision to do so. Most people would like to "put a roof over their heads", as you put it. However non-stupid people dont rush out to borrow huge amounts of money to do so. Personally, my mind boggled at the suggestion of willingly putting myself into that much debt - even before I talked to people who pointed out there was a bubble. Anyone who bought into the property market while it was in that state has to accept some sort of responsibility.

The bailout is make sure the Germans and the British get their money back... We should tell them to take a run and jump. let the euro fall. go it alone. ireland wont starve. they will be a lot worse-off than us when the economic system collapses and I think they know it... ITS TIME TO CALL THEIR BLUFF... lets play them at their own game.. They (the banking elite) print money at will and change the rules to suit themselves. Let the people change the rules and Send them packing... It wont be long before the example we set will ensure the other poorer economies globally will do the same... The financial system is set up to ensure we all live indebted and know our place... Its a sham...

I know the bailout is to repay foreign banks. [I thought that was clear from the last point I made in the post you quoted.] I completely agree that we shouldn't be accepting any of this. It's completely outrageous.

swampgas

Having read Fintan O'Toole's book Ship of Fools I would say that Ireland has been acting as a rogue state facilitating financial corruption by German and other banks with its tacit lack of regulation of banks and the IFSC. From a German perspective, maybe we deserve to be severely punished. We are certainly not blameless in this.

pwd

swampgas wrote: »

Having read Fintan O'Toole's book Ship of Fools I would say that Ireland has been acting as a rogue state facilitating financial corruption by German and other banks with its tacit lack of regulation of banks and the IFSC. From a German perspective, maybe we deserve to be severely punished. We are certainly not blameless in this.

One of the IMF's policies is to remove any state regulation on banks, as I understand it.

edit: The IMF insisted that Ecauador completely remove any state regulation on banks.

How is Ireland more at fault than Germany, for bad loans from German banks to Irish ones?

rumour

Scofflaw wrote: »

The reason foreignGERMAN banks lent to the Irish banks was because the Irish banks were good at getting that money farmed out to peopleIRISH BANKS willing to pay silly mortgagesfinance. In theory, ourthe GERMAN government was regulating the IrishGERMAN banks so that the lending was kept within bounds, and the assets were reliable - but that was pure theory. In practice the GERMAN government didn't bother the banks with that sort of thing as long as there was plenty of money rolling in, while with the other hand it made conditions yet more attractive for property-related borrowings with tax breaks and mortgage relief, and rather than trying to control business costs it dropped the CT rate from 32% to 12.5% to compensate. by insisting on low interest.

There are a lot of failures here, and most of them point back to the Ahern governments.
but no need to worry if your German we can just force the irsih citizens to pay.

I'm not excusing nor have I ever excused people borrowing beyond their means, however using another anology if your addicted to drugs, is it your fault? or the dealers fault? If your the dealer its the user, if your the user its the dealer.

Most independent arbitration of this scenario concludes that the policy to stop this problem is to cut it off at source. Where is the source, for example take cocaine its not 'the general' or some other media culprit its origins are columbia.

The markets will circle on the culprits eventually. One by one we'll go through the pigs until it becomes obvious that it is infact German and French banks who threw money irresponsibly to the periphery of europe.

This of course mirrors the Irish problem, just on a different scale.

nesf

pwd wrote: »

One of the IMF's policies is to remove any state regulation on banks, as I understand it.

Eh, not really. Completely something decided on a case by case basis. Removal of regulation could happen when the system is corrupt beyond saving but wouldn't be a first port of call in a developed country. Our regulatory system was incompetent rather than corrupt etc.

Dr Galen

david75 wrote: »

Cowen&co have happily allowed capitalism and its machinery overtake actual democracy.

I'm sorry but I have to take issue with this statement.

What Bertie, Cowen and their posse allowed was not true capitalism. They practically created their own system tbh, one of fcuked up monetary/financial policy, cronyism and nudge nudge wink wink nonsense. Their perversion of capitalism fanned the flames of the boom, did nothing to quell what was obviously an overheated situation.

I'm not near Donegalfella on the "let the markets rule" scale but I'd suggest that if Bertie and the Good Time Showband had kept their noses out of things and concentrated on providing proper regulation of banking activities, and ya know, like, been a proper government, allowing the capitialism that you appear to dislike run things as they should we'd be nowhere near this messy place we find ourselves in now.

deadduck

pwd wrote: »

How is Ireland more at fault than Germany, for bad loans from German banks to Irish ones?

I could be wrong here, but didn't some of said German banks set up shop in the IFSC for the very reason that is was known our banking regulation was minimal, and they'd be able to lend whatever they wanted to whoever they wanted because they were no longer subject to German regulation (at least not their Irish divisions)

Scofflaw

gizmo555 wrote: »

And the European banks didn't have to keep lending to the Irish banks - they were equally irresponsible. A better analogy would be the German and other European banks in the role of a barman who keeps serving pints to a customer who's already blind drunk.

Actually, a slightly more accurate analogy would be that Irish banks were in the position of the barman, with the foreign banks in the position of the bar's drink suppliers - except that not only were the customers drunk, but the barman was handing over drinks on credit. Our government was the purchasing agent who assured the drink suppliers that the bar's customers would be able to pay for plenty more drink and that their fundamentals were sound, because he made a commission on every order. So the drink suppliers kept sending in more drink, and the barman paid them in IOUs from his customers. The purchasing agent, who was also an alcoholic, spent most of his commission money in the bar, which meant that the drink suppliers got an occasional amount of cash rather than IOUs, even if it was largely their own cash.

Foreign banks (French, German, UK and US particularly) lent to Irish banks because Irish banks were good at lending out the money. In theory, the Irish banks were engaged in prudential lending, rather than pushing more drinks on blind drunk alcoholics in exchange for IOUs, which is where our bank regulation failures come in.

cordially,
Scofflaw

nesf

deadduck wrote: »

I could be wrong here, but didn't some of said German banks set up shop in the IFSC for the very reason that is was known our banking regulation was minimal, and they'd be able to lend whatever they wanted to whoever they wanted because they were no longer subject to German regulation (at least not their Irish divisions)

Regulation didn't play a huge rule for the IFSC I think, works in different markets and subject to regulation there. More Ireland's cushy tax regime that attracted them.

gizmo555

OK, well let's skip the analogies and get back to the point, which in my view is that professional bankers in Germany and elsewhere who are paid to understand the risks they are taking, knowingly took on a risk in lending to the Irish banks. The risk may have been slight, in their assessment, but it still existed. Now that the risk they knowingly took has gone against them, why should the state pick up the tab?

Even more importantly, how can the state pick up the tab?

We will reach the "can't pay, won't pay" point, of that there is no doubt in my mind.

nesf

gizmo555 wrote: »

OK, well let's skip the analogies and get back to the point, which in my view is that professional bankers in Germany and elsewhere who are paid to understand the risks they are taking, knowingly took on a risk in lending to the Irish banks.

Yeah, they assumed the Regulator was doing his job. :pac:

gizmo555

nesf wrote: »

Yeah, they assumed the Regulator was doing his job. :pac:

I would suggest if you are lending in excess of €110bn on behalf of your employers and shareholders, it behoves you to due some due diligence of your own, instead of outsourcing it.

nesf

gizmo555 wrote: »

I would suggest if you are lending in excess of €110bn on behalf of your employers and shareholders, it behoves you to due some due diligence of your own, instead of outsourcing it.

They can't. Foreign banks are almost completely reliant on the Regulator of the country of the bank they are lending to. Which makes cross border lending a bit dicey but very profitable. It's practically impossible for a German bank to know the quality of the loans being given out by an Irish bank.

gizmo555

nesf wrote: »

Which makes cross border lending a bit dicey but very profitable.

Precisely my point.

nesf wrote: »

It's practically impossible for a German bank to know the quality of the loans being given out by an Irish bank.

They may not have been willing or able to examine every individual loan, but it was perfectly possible for them to see the funds, in aggregate, were going mainly to fund an unsustainable property bubble which was bound to burst painfully at some point. This is not hindsight in any way, many people at the time were warning that this was what was happening.

Once again, these are not laymen - they are professional bankers with access to the best economic and financial advice money can buy. They do not have the excuse of ignorance.

norrie rugger

nesf wrote: »

It's practically impossible for a German bank to know the quality of the loans being given out by an Irish bank.

That's the risk they take though.

ardmacha

They can't. Foreign banks are almost completely reliant on the Regulator of the country of the bank they are lending to. Which makes cross border lending a bit dicey but very profitable. It's practically impossible for a German bank to know the quality of the loans being given out by an Irish bank.

While this is true up to a point, did the ECB not have some role in setting minimum standards for all banks in the Eurozone? It seems to me that this is at the core of the present problems in the Eurozone. The common currency area makes it easy for banks in core countries get better returns in the periphery, leading to banks on the periphery sourcing their funds on the interbank market rather than from depositors and increasing lending far beyond normal levels. But the ECB did not place any limits on this on have other counter balancing requirements. The ECB is not fit for purpose.

Lemming

gizmo555 wrote: »

It's often been talked about over the last few weeks, but a picture's worth a thousand words

Has nobody else picked up on this (I've highlighted the relevant bit) from the cited Der Speigel article?

On Monday, Merkel defended her position behind closed doors to the parliamentary group of her conservative Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU). According to sources who took part in the meeting, she said that aid for Ireland was necessary, but had to be tied to conditions. It was important to atone for the sins of the past, she apparently said.

With the figures being thrown about recently, the level of debt being assumed is staggering beyond words, and the country has already been consigned to debt-servitude for a couple of decades, with an entire generation soon to know nothing but the "good old" 1980s. In short, we're being punished already as a nation for our stupidity - be it the voters who kept putting that f*ckwit BEEEEEEEEEEEEEEEEEEEEEERTIE and his band of corrupt clowns in government repeatedly, or the banker/developer who lost sight of any sense of ... well ... sense. Who are the Germans to decide what "punishment" is suitable, when they set the ECB interest rates to suit themselves and their banks were guilty of trying to cream money by engaged in reckless lending practices?

I have no problem in saying that the country collectively behaved in stupid fashion and that we deserve to face the music. But there's a difference between taking your medicine (however bad it tastes) and offering yourself up for flagilation, which is what the Germans seem to want to make us do, judging by Merkel's apparent words and the general sentiment that seems to be emanating from Germany.

I have two words for every German who wants to act like judge, jury, & executioner here: Versailles. Marshall.

Memnoch

Dr Galen wrote: »

I'm sorry but I have to take issue with this statement.

What Bertie, Cowen and their posse allowed was not true capitalism. They practically created their own system tbh, one of fcuked up monetary/financial policy, cronyism and nudge nudge wink wink nonsense. Their perversion of capitalism fanned the flames of the boom, did nothing to quell what was obviously an overheated situation.

I'm not near Donegalfella on the "let the markets rule" scale but I'd suggest that if Bertie and the Good Time Showband had kept their noses out of things and concentrated on providing proper regulation of banking activities, and ya know, like, been a proper government, allowing the capitialism that you appear to dislike run things as they should we'd be nowhere near this messy place we find ourselves in now.

Actually you're mistaken. Pure capitalism is ultimately self defeating precisely for this reason. The goal of capitalism is a single minded pursuit of profit. If this can be better achieved by subverting the principles of capitalism itself by corruption and the dismantling of regulatory mechanisms then that is what will and HAS happened.

When corporations / private interests become this powerful and wealthy they discover that they can make more money by subverting the principles of capitalism rather than adhering to them, but in reality they are staying true to the underlying spirit of capitalism which is to make more money for themselves by any and every means necessary.

nesf

ardmacha wrote: »

While this is true up to a point, did the ECB not have some role in setting minimum standards for all banks in the Eurozone? It seems to me that this is at the core of the present problems in the Eurozone. The common currency area makes it easy for banks in core countries get better returns in the periphery, leading to banks on the periphery sourcing their funds on the interbank market rather than from depositors and increasing lending far beyond normal levels. But the ECB did not place any limits on this on have other counter balancing requirements. The ECB is not fit for purpose.

The minimum standards for banks comes from the BASEL agreements between the world's central banks. Additional controls are applied by the central banks of individual countries not the ECB. New regulations were/are being drawn up for the next set of BASEL requirements.

The main problem with your point is that the EU has as a basic tenet the free movement of capital between member states, so the ECB cannot require banks to stop lending to the periphery states.

gizmo555

nesf wrote: »

the ECB cannot require banks to stop lending to the periphery states.

We can, however, require them to take responsibility for the risks they voluntarily assumed.

Dublin_Gunner

Let the private banks go into administration.

Control where their profits go (paying off their debts) and remove the high paid execs from the boards.

Don't bail them out, don't buy them out, don't get ridiculous loans from from other governments/banks/ECB/IMF to bail us/the banks out when we cannot possibly pay it back.

The banks could still operate (albeit at a reduced capacity) until such a time as they're deemed to be in a position to take control of their own affairs again - or sold onto other banks at a vastly reduced costs, who can then take over their dealings.

The public being asked to pay for the cost of massive private debt is sickening.

Laois_Man

Sticky_Fingers wrote: »

If you don't protest it's your own fault for letting governments get away with whatever they want.

maninasia wrote: »

the electorate sleptwalked through this thing, no protests until it's shoved in their faces that they have pay for the whole thing!

How nieve!!
I've taken part in TWO protests since the collapse of Lehman Brothers in September 2008 and the shambolic guarantees that were put in place by the Irish Government a couple of weeks later. Would it have changed anything in the slightest if another 250,000 people, or a million, or 2 million people had showed up to these protests? Not on your nelly!!!

It's not protests that were required. It was an outright coup performed en masse!

Neddyusa

Scofflaw wrote: »

Actually, a slightly more accurate analogy would be that Irish banks were in the position of the barman, with the foreign banks in the position of the bar's drink suppliers - except that not only were the customers drunk, but the barman was handing over drinks on credit. Our government was the purchasing agent who assured the drink suppliers that the bar's customers would be able to pay for plenty more drink and that their fundamentals were sound, because he made a commission on every order. So the drink suppliers kept sending in more drink, and the barman paid them in IOUs from his customers. The purchasing agent, who was also an alcoholic, spent most of his commission money in the bar, which meant that the drink suppliers got an occasional amount of cash rather than IOUs, even if it was largely their own cash.

Foreign banks (French, German, UK and US particularly) lent to Irish banks because Irish banks were good at lending out the money. In theory, the Irish banks were engaged in prudential lending, rather than pushing more drinks on blind drunk alcoholics in exchange for IOUs, which is where our bank regulation failures come in.

cordially,
Scofflaw

So what do you make of the IMF/ECB proposal to 'cure' the 'blind drunk alcoholics' by putting pressure on them to accept €85,000,000,000 more beer on credit?

Over half of which is going straight into the black hole in the ground where the corpses of the barmen (the banks) are burried?

Is this the best cure for an alcoholic?

Dublin_Gunner

Neddyusa wrote: »

So what do you make of the IMF/ECB proposal to 'cure' the 'blind drunk alcoholics' by putting pressure on them to accept €85,000,000,000 more beer on credit?

Over half of which is going straight into the black hole in the ground where the corpses of the barmen (the banks) are burried?

Is this the best cure for an alcoholic?

Well, to keep the analogy going, it may work in a roundabout way. Get him to drink so much, and pay so much back that he will never go drinking again.

Lemming

Dublin_Gunner wrote: »

Well, to keep the analogy going, it may work in a roundabout way. Get him to drink so much, and pay so much back that he will never go drinking again.

Why? Because his liver exploded and he died? Wow, great analogy.

Dublin_Gunner

Lemming wrote: »

Why? Because his liver exploded and he died? Wow, great analogy.

Well the idea would be that they will never be stupid enough to get themselves into that situation again.

I wasn't actually being serious, just entertaining the idea.