The bank bailout, was it necessary?

CommuterIE

In my view, yes... the banks would've collasped over night... the public would've been unable to take out cash one morning... economy obliterated. Anglo Irish should have been allowed to fail though. As big as it was, it could've been sold overnight

thebman

Depends what you mean by bailout at this stage.

So much money in so many stages and the guarantee and NAMA.

I think its impossible to say without all the facts and we have been refused all the facts.

I think Anglo probably shouldn't have been part of the guarantee. Impossible to say without access to the figures but with regard to Anglo, I work on a it should have been out until the government show us why it was included given it ultimately lead us to the IMF and as part of our IMF/EU bailout package, they insisted Anglo be closed.

Sand

In my view, yes... the banks would've collasped over night... the public would've been unable to take out cash one morning... economy obliterated.

Wow, we dodged a bullet there. Thank god the governments wise decision saved our economy from obliteration.

CommuterIE

Sand wrote: »

Wow, we dodged a bullet there. Thank god the governments wise decision saved our economy from obliteration.

Indeed

z0oT

Was there any reason that the government couldn't have just let all the banks collapse and set up say two state banks from their husks and transfer the deposits to the new banks? ie. what the Icelandic did.

I've always thought that yes, we need a banking system, but we don't need the banks to specifically be AIB, BoI etc.

beeftotheheels

z0oT wrote: »

Was there any reason that the government couldn't have just let all the banks collapse and set up say two state banks from their husks and transfer the deposits to the new banks? ie. what the Icelandic did.

I've always thought that yes, we need a banking system, but we don't need the banks to specifically be AIB, BoI etc.

Despite what some economists might have us believe I wouldn't be looking to Iceland for guidance any time soon.

They made different decisions to us, which appeared to give them a benefit to us. But as a consequence of the decisions that they made they are now being sued, by other sovereign states (UK & Netherlands), and likely by their bondholders who they treated differently to domestic depositors. They are not yet out of the woods, they may end up on the hook for a lot of the liabilities they tried to avoid.

Delancey

AIB and BOI are '' banks of systemic importance '' and without the guarantee we would, as the OP has said , have woken up one morning to empty ATM's.
I struggle to see how Anglo could be classed in the same way , I don't believe the guarantee should have covered them too.

z0oT

beeftotheheels wrote: »

Despite what some economists might have us believe I wouldn't be looking to Iceland for guidance any time soon.

They made different decisions to us, which appeared to give them a benefit to us. But as a consequence of the decisions that they made they are now being sued, by other sovereign states (UK & Netherlands), and likely by their bondholders who they treated differently to domestic depositors. They are not yet out of the woods, they may end up on the hook for a lot of the liabilities they tried to avoid.

That is indeed true, with the way the current situation is conspiring it shows signs of dragging through the courts for a while and being quite costly to them in the end.

Is there any way the government could have set up new banks and moved the deposits to them without ever buying a stake in any of them or putting the state on the hook for all losses? Or could the guarantee not have been reneged upon when Anglo turned into the huge black hole it turned out to be?

ei.sdraob

Wow so many people still buying the "systemic" and "no liquidity not insolvent" memes :rolleyes:

Look the banks would not have ran out have the CB and ECB provided support, as they have been doing for last few months anyways as the banks have been loosing money in a real life slow motion bank run on deposits (100 billion from covered banks alone since last august!) and foreign bondholders exiting the country after being paid out.

Anglo a bank dealing with mostly construction sector was in no way systemic to the economy, yes it was systemic to FF and their construction buddies but thats about it :rolleyes:


Ironically we now have a bank run in progress for months and the banks are trully worthless and without "grudging" ECB support insolvent as well as bankrupt.






images from this article here > Deposits in the Covered Banks continue to fall

CommuterIE

ei.sdraob wrote: »

Wow so many people still buying the "systemic" and "no liquidity not insolvent" memes :rolleyes:

Look the banks would not have ran out have the CB and ECB provided support, as they have been doing for last few months anyways as the banks have been loosing money in a real life slow motion bank run on deposits (100 billion from covered banks alone since last august!) and foreign bondholders exiting the country after being paid out.

Anglo a bank dealing with mostly construction sector was in no way systemic to the economy, yes it was systemic to FF and their construction buddies but thats about it :rolleyes:


Ironically we now have a bank run in progress for months and the banks are trully worthless and without "grudging" ECB support insolvent as well as bankrupt.






images from this article here > Deposits in the Covered Banks continue to fall

I fail to see why you are basing this on deposits alone What about the loan books??

Voltex

Jean Claude Trichet and Christine Legrade had warned Ireland against letting an Irish Bank go following Lehmans.
As david McWilliams stated...there was as about as much chance of the Irish banks running dry as the bankc in Texas being let run out of cash by the FED.
The effects on the Euro would have been a total meltdown!
TBH..I think the blanket bailout was wrong...in hindsight...but based on the info we had at the time..there was nothing else we could do.

amacachi

ei.sdraob wrote: »

Wow so many people still buying the "systemic" and "no liquidity not insolvent" memes :rolleyes:

Look the banks would not have ran out have the CB and ECB provided support, as they have been doing for last few months anyways as the banks have been loosing money in a real life slow motion bank run on deposits (100 billion from covered banks alone since last august!) and foreign bondholders exiting the country after being paid out.

Anglo a bank dealing with mostly construction sector was in no way systemic to the economy, yes it was systemic to FF and their construction buddies but thats about it :rolleyes:


Ironically we now have a bank run in progress for months and the banks are trully worthless and without "grudging" ECB support insolvent as well as bankrupt.






images from this article here > Deposits in the Covered Banks continue to fall

Do you think the ECB would still have provided funds once we lelt their pensioners etc. lose billions in deposits?

ei.sdraob

amacachi wrote: »

Do you think the ECB would still have provided funds once we lelt their pensioners etc. lose billions in deposits?

The ECB and our CB have no choice
1. its their job (ironically we wouldnt be here in first place if our centralbank/regulator actually did some regulating!)
2. not providing support would bring the whole currency down, then everyone looses out

Wheelie King

1. There would have been no cash in the ATM's
2. How would we pay the doctors and nurses
3. Will someone think of the children.
:rolleyes:

Hayte

ei.sdraob wrote: »

Anglo a bank dealing with mostly construction sector was in no way systemic to the economy, yes it was systemic to FF and their construction buddies but thats about it :rolleyes:

The more I educate myself about economics the more I feel it isn't a real science and the more I believe that economics is increasingly just theoretical framework used to justify policy or make bad policy palatable in some half logical way.

The theory is used to support an already existing narrative that is politically convenient for the ruling party and financially convenient for its backers. It looks like it makes sense but is too esoteric for laymen to understand.

I don't even think its a question of being impossible to model human behaviour. Anyone involved in advertising or social engineering knows that group behaviour can be highly maleable and predictable. I just don't think modern economics and economic advisors are interested in fundamental truths about group behaviour. Since the political narrative hasn't changed, the theory doesn't change, the economics doesn't change and therefore business doesn't change.

The more I read about it, the more I get the impression that this is an education thing. Even Larry Summers referred to several hundred year old economic theories that address precisely what is happening now but are not politically convenient to entertain.

Was the bank bailout necessary? Yeah for the situation created by the political narrative. Lots of people look at the political narrative and ask why its so f**ked up - anti bank regulation, union busting, pro lobbying, pro privatization of public services that should never be controlled by private interests, mass aversion to taxation in support of good public service in favour of funding cuts which make good public service into bad public service, which fuels the aversion to make up the funding gap with taxes and feeds back into the union busting narrative etc. But nobody ever does anything about the narrative.

At this point I'm not even sure you can. Individual citizens can't anyway. That much I do know.

amacachi

ei.sdraob wrote: »

The ECB and our CB have no choice
1. its their job (ironically we wouldnt be here in first place if our centralbank/regulator actually did some regulating!)
2. not providing support would bring the whole currency down, then everyone looses out

Can you think of any reason then other than a Doctor Evil type reason why they went down that road then? Because I'm sure as hell not going to believe it was stupidity.

patsyboy

beeftotheheels wrote: »

Despite what some economists might have us believe I wouldn't be looking to Iceland for guidance any time soon.

They made different decisions to us, which appeared to give them a benefit to us. But as a consequence of the decisions that they made they are now being sued, by other sovereign states (UK & Netherlands), and likely by their bondholders who they treated differently to domestic depositors. They are not yet out of the woods, they may end up on the hook for a lot of the liabilities they tried to avoid.

Good point. Sued in international courts. So what. They saved the day for their country by what they did.

djmcr

patsyboy wrote: »

Good point. Sued in international courts. So what. They saved the day for their country by what they did.

And their citizens got two referendums on the matter, what say have we got, we voted Fine Gael for change and they are following the policies of the previous administration

skelliser

Wheelie King wrote: »

1. There would have been no cash in the ATM's

This is a myth and bare faced scaremongering.

It didnt happen in Iceland our in any other country which suffered a bank collapse.

thebman

skelliser wrote: »

This is a myth and bare faced scaremongering.

It didnt happen in Iceland our in any other country which suffered a bank collapse.

Iceland isn't in the Euro.

skelliser

thebman wrote: »

Iceland isn't in the Euro.

Even more of a reason that the ATM's wouldnt run dry.

If a bank collapse would happen here the central bank and therefore the ECB would step in to ensure the ATM's would continue to work.

Tea drinker

Should have refused to hobour any debts in the banks and only honour 50% of the deposits up to 50K.
This would have been cheaper to me in the long run, and probably most people with actual credit and not debt in the banks.
Instead we have years of taxes, levies and no growth, 10's of billion upon 10's of billions poured into the banks.

RATM

I think there was a need for a bailout but only a selective one which excluded Anglo and Irish Nationwide.

But it became preety obvious before the last election that that didn't happen because Biffo Cowen was too pallsy with Seanie Fitzpatrick down at the golf course in Mount Juliet. It was around that time that Fitzpatrick was lying through his teeth to all and sundry saying his bank was solvent. Cowen didn't dare question him and was completely duped.