The argument for paying Anglo bond holders?

Boskowski

I don't get this discussion at all.

Money was borrowed at agreed terms and has to be paid pack at agreed terms. Formally nothing has happened between purchase and sale that changes the agreed terms in the contract. Something almost changed but our government tried everything to persist the status quo.

Why do some people think its OK not to pay back because we could do something better with the money? I could always do something better with my money than paying back my debt from a selfish point of view, but thats not really on is it? I would hardly be a trustworhty business partner if I paid back my debts or not depending how I feel like at the moment.

And this whole guaranteed or not question only comes into play if I actually become insolvent, bankrupt, liquidated, whatever you wanna call it.
Its not a distinction between 'oh these I really have to pay back and these only if I feel like it'.

Sudsy86

Scofflaw wrote: »

If you go into a bookies and ask for a losing bet back, the bookie will quite rightly laugh at you. If you loan the bookie money and ask for it back, he won't.

That's because one of those is a transaction in which you have no legal right to your money back, while the other is a legal transaction in which you certainly do.

No i get the point ok that the government took charge of the debt changing the guarantee...But if you lent money to a bookie and the bookie invested this money but adv you from the beginning that there was no guarantee then he would equally laugh at you for asking for your non guaranteed money back

Scofflaw wrote: »

Essentially, we took over the banks - or, rather the government did so on our behalf - and we haven't declared the banks bankrupt/insolvent, so the legal obligation to pay the debts of those companies is still there.

If we can find a decent legal excuse for getting out of them, great - but the problem is that we want the ECB to take the flak for it while we preserve our reputation as good debtors.

Its like any contract, when changes are being made to a contract then both parties need to agree to changes or the contract in null...The bond holders have this money to invest because they are not idiots...Our government on the other hands walked us into this issue...

Like any democracy its falls back to the persons who voted these ppl into power...If you hire finance advisor to invest your money for you and he loses it all, its ur fault for hiring a bad finance advisor not his fault that the market failed in the first place...These are the risks we take and this is the payback for our bad decision...

Is it morally wrong - Hell YA but like i said in the last post, there are no morals involved in money...

Sudsy86

Boskowski wrote: »

I don't get this discussion at all.

Money was borrowed at agreed terms and has to be paid pack at agreed terms. Formally nothing has happened between purchase and sale that changes the agreed terms in the contract. Something almost changed but our government tried everything to persist the status quo.'.

But something did change, the government decide to bail the banks out...They changed the agreement...They by stating they would bail the banks out agreed to pay the banks debts...This fact was the changing of the agreement and you can by bloody sure the bond holders agreed to this as the Government where guaranting to pay back there unguaranteed bonds...

Should they be paid: NO
Have they been paid: YES
Who is at fault: FF
Who voted FF into power: THE PPL
Who is to blame: WE ARE
Who will pay: WE WILL

Cubed

Scofflaw wrote: »

Nobody loans you several billion without a legal obligation to pay it back!

Well silly old me eh :rolleyes:

Scofflaw wrote: »

No, because they most recently were changing hands at 95%.

would you care to explain a bit further?

Boskowski

Sudsy86 wrote: »

If you hire finance advisor to invest your money for you and he loses it all, its ur fault for hiring a bad finance advisor not his fault that the market failed in the first place...These are the risks we take and this is the payback for our bad decision...

Only in our case he didnt actually lose it, well he did, but he found someone stupid enough to bail his losses out so that he can meet his obligations.

Scofflaw

Sudsy86 wrote: »

No i get the point ok that the government took charge of the debt changing the guarantee...But if you lent money to a bookie and the bookie invested this money but adv you from the beginning that there was no guarantee then he would equally laugh at you for asking for your non guaranteed money back

Its like any contract, when changes are being made to a contract then both parties need to agree to changes or the contract in null...The bond holders have this money to invest because they are not idiots...Our government on the other hands walked us into this issue...

Like any democracy its falls back to the persons who voted these ppl into power...If you hire finance advisor to invest your money for you and he loses it all, its ur fault for hiring a bad finance advisor not his fault that the market failed in the first place...These are the risks we take and this is the payback for our bad decision...

Is it morally wrong - Hell YA but like i said in the last post, there are no morals involved in money...

Unfortunately "I'm an idiot" doesn't constitute a valid reason for unilaterally changing the terms of a contract, or reneging on it. Well, not unless we can prove the genuine legal incapacity of the government by virtue of idiocy, and frankly I suspect that would cause rather more problems than it would solve!

All I can really do is point to Boskowski's post. As he says, nothing has changed - the legal obligation to pay back the debt is exactly as it was when the debt was first contracted.

cordially,
Scofflaw

Sudsy86

Scofflaw wrote: »

Unfortunately "I'm an idiot" doesn't constitute a valid reason for unilaterally changing the terms of a contract, or reneging on it. Well, not unless we can prove the genuine legal incapacity of the government by virtue of idiocy, and frankly I suspect that would cause rather more problems than it would solve!

With the current state of the country I doubt it would be hard to show there incapacity to run the country...Especially concedering the fact that after they made the decision to bail out the banks they where voted out of the government...But i do agree with you it would be frivilous(sorry if spelt wrong im tired)

Scofflaw wrote: »

All I can really do is point to Boskowski's post. As he says, nothing has changed - the legal obligation to pay back the debt is exactly as it was when the debt was first contracted.

If the original agreement was unsecured bonds, and the legal obligation was exactly the same as when first contracted then would this not mean that they shouldn't have paid the bonds?

Scofflaw

Sudsy86 wrote: »

With the current state of the country I doubt it would be hard to show there incapacity to run the country...Especially concedering the fact that after they made the decision to bail out the banks they where voted out of the government...But i do agree with you it would be frivilous(sorry if spelt wrong im tired)

If the original agreement was unsecured bonds, and the legal obligation was exactly the same as when first contracted then would this not mean that they shouldn't have paid the bonds?

No, the opposite, surely - 'unsecured' doesn't mean that the bonds aren't legally required to be paid back, it just means that the creditor has no automatic right to seize specific assets if it isn't, although they retain the right to a share of such assets as you might have.

The difference is:

1. secured: I lend you a million, and you sign an agreement that you'll pay back the money. The agreement also states that if you fail to pay, your house belongs to me.

2. unsecured: Joe lends you a million, and you sign an agreement that you'll pay back the money.

In both cases, if you fail to pay me back, I can go to court to have payment enforced against you. If you claim not to be able to pay, I can have you declared bankrupt, and am entitled to seize any assets you have in order to help meet the debts.

The only difference is that the secured creditor (1 above) has a specific right to your house over and above creditor 2. You won't get to keep your house, or any other assets, but creditor 1 gets your house before creditor 2.

cordially,
Scofflaw

CiaranC

Scofflaw wrote: »

If you go into a bookies and ask for a losing bet back, the bookie will quite rightly laugh at you. If you loan the bookie money and ask for it back, he won't.

Amusing that you should use the analogy of a bet. The people that did the gambling here lost but are still getting paid out.

But we mustn't upset the precious system so we'll pretend that the whole thing is fine and just prop up the pyramid with other peoples money.

Its laughable to argue that there are rules or ethics that are somehow sacrosanct involved in this.

Bannasidhe

CiaranC wrote: »

Amusing that you should use the analogy of a bet. The people that did the gambling here lost but are still getting paid out.

But we mustn't upset the precious system so we'll pretend that the whole thing is fine and just prop up the pyramid with other peoples money.

Its laughable to argue that there are rules or ethics that are somehow sacrosanct involved in this.

If Anglo had been allowed to fail - they would indeed have lost. But because the Irish government took on the debt, the liability was transferred to the State. So technically, they did not lose. In the same way as possession of the bonds could be transferred - so the debt was also transferred.

Just to give a very simplified example of what happened:

Peter lent Paul a tenner. Paul agreed to pay Peter 12 euro.

Paul was skint and couldn't pay so Siobhan agreed to become a guarantor for all Paul's debts - making Siobhán liable if Paul can't pay Peter.

Peter reckons Siobhán might not be able to pay, so he 'sells' the debt to Emer for 8 euro.

Siobhán now owes Emer 12 euro.

Corben Dallas

They should not be paid back, certainly not in full, High yields are quoted or expected>>>>.... because of high risk.

Or put simply the possibility that you might not get paid back. Paying out 100% on UNSECURED bonds *under the circumstances* is laughable.

Anyone with any realistic knowledge of how bonds markets work should come here and say with 100% certainly that Bonds always get paid, in full without exception so we can point and laugh.

Some ppl on this thread will make out that defaults somehow cant happen?

Ppl might say.... well that was the contract to be paid in full at completion of the term. etc.

But why isn’t the factor that Anglo was a commercial Bank, run recklessly without concern for its staff, shareholders and any concern for its deposit holders.
Why hasn’t discussion and debate of this not lead to us forcing them to at least take a hit/bath say payment of no more than 60% of bond value.
It has been said that a lot of the Bond Holders themselves were not expecting to be paid in full.

You might also say Anglo was run primarily to bankroll its 'Golden Circle' clients and their reckless property deals etc. This Bank is under investigation for lending money to individuals for the propose of buying its own shares, essentially artificially propping up its share price.

This should be more than enough grounds for Burning Anglo bond holders.

---

I think the main problem here is that the Irish Government no longer has a significant say in our own Economic affairs, it merely does what the IMF/ECB/EU tells it..... and if that’s the case the Irish Government should clearly state this to the People.

take everything

Scofflaw wrote: »

As to a legal obligation - of course there's a legal obligation. Nobody loans you several billion without a legal obligation to pay it back!

amazed,
Scofflaw

Sorry for what may seem an elementary question (i'm not as clued in as the rest of ye financial gurus ).

But what exactly does the higher interest rates attached to these bonds represent (risk-wise).
I assumed a higher interest rate would imply a higher risk.

Am i reading you right when you say that legally, there is an absolute legal obligation to pay back these (ie as much obligation as the secured (lower interest) bonds).
I presume you don't mean this
Could you reconcile this.

Just trying to understand this better.
Thanks.

Scofflaw

take everything wrote: »

Sorry for what may seem an elementary question (i'm not as clued in as the rest of ye financial gurus ).

But what exactly does the higher interest rates attached to these bonds represent (risk-wise).
I assumed a higher interest rate would imply a higher risk.

Am i reading you right when you say that legally, there is an absolute legal obligation to pay back these (ie as much obligation as the secured (lower interest) bonds).
I presume you don't mean this
Could you reconcile this.

Just trying to understand this better.
Thanks.

There's always a risk that someone won't pay back debt - that the company or bank or whatever will fold, or that a government will simply refuse to pay. Under most circumstances, though, that happens because the company has gone into insolvency or liquidation, in which case what's important is what claim the creditor has on the assets of the company.

A secured creditor has an advantage in seizing assets over an unsecured creditor in most circumstances where debt isn't repaid, and so in general the interest they charge is lower. That doesn't make an unsecured creditor some kind of non-creditor, though. Apart from those assets that secured creditors have a specific claim to, they're otherwise identical.

In this case, these are senior bonds, so they have priority over 'junior' and 'subordinated' debt. 'Senior' bonds are a low risk category, mostly owned by large funds - they're low-interest, low-risk safe havens for money, or are supposed to be, at least.

cordially,
Scofflaw

Scofflaw

CiaranC wrote: »

Amusing that you should use the analogy of a bet. The people that did the gambling here lost but are still getting paid out.

But we mustn't upset the precious system so we'll pretend that the whole thing is fine and just prop up the pyramid with other peoples money.

Its laughable to argue that there are rules or ethics that are somehow sacrosanct involved in this.

You don't regard doing what you've agreed to do or fulfilling obligations you've taken on as a moral issue?

Fair enough - I hope never to do business with you, though.

cordially,
Scofflaw

Bannasidhe

Bannasidhe wrote: »

If Anglo had been allowed to fail - they would indeed have lost. But because the Irish government took on the debt, the liability was transferred to the State. So technically, they did not lose. In the same way as possession of the bonds could be transferred - so the debt was also transferred.

Just to give a very simplified example of what happened:

Peter lent Paul a tenner. Paul agreed to pay Peter 12 euro.

Paul was skint and couldn't pay so Siobhan agreed to become a guarantor for all Paul's debts - making Siobhán liable if Paul can't pay Peter.

Peter reckons Siobhán might not be able to pay, so he 'sells' the debt to Emer for 8 euro.

Siobhán now owes Emer 12 euro.

To extend this simple parable a bit.

When Siobhán agreed to pay all Paul's debts he wasn't quite upfront with her about exactly how much he owed. So after Siobhán had announced she would pay, she found out that in addition to the 12 euro Paul owed Peter, he also owed George a tenner, Angela 20, Nicky 18 and Fred a fiver - making Paul's total debts not the 12 euro he had led Siobhán to believe but 65 euro.

Siobhán had foolishly not ascertained exactly how much Paul owed before she agreed to pay his debts.

So what does Siobhan do? She agreed to pay all of Paul's debts but does she now say sorry - it's more then I thought so I'm only paying 50% of what Paul borrowed?

People could say

a) 'ah well, it's good of Siobhán to pay anything at all - after all, she didn't borrow the money.'

or

b) 'hang on a minute, Siobhán agreed to pay all of Paul's debts and now she is trying to wriggle out of it. She's obviously not very trustworthy.'

or

c) 'Fair dues to Siobhán, she made a commitment and even though it cost her she's paid all of Paul's debts as she promised. We'll certainly do business with her again!'

The Government fears b and hopes for c.

So, do people think Siobhán should pay because she agreed to?
Siobhán should not pay as Paul lied to her?
Siobhán should pay some of the money but not all of the money?

Boskowski

Like Scofflaw explained senior and junior is just a ranking as to whoever gets served first in case of a default. Higher ranking means you get served first from the remaining assets. Therefore if youre down the pecking order there may be nothing left by the time it's your turn, hence the greater risk. But again that's in case of a default when the debitor gets wound down and asset stripped.
So these rankings anf theirvattached yield are all about the risk of a default not about 'lesser' debt.
Of course the state always has the option of a default but that's not really what we want since that has nasty implications.
Not paying those bonds is default no matter what you feel junior or subordinate means in your world. In the real world that is what it means.
So when you renegotiate or attempt to renegotiate realistically your argument, your lever, is the threat of default. You're basically saying give me a discount on what I have to pay you back or else I just declare bankruptcy and since you and me know you're down the pecking order you may end up getting nothing. If your creditor thinks you may be serious he might take your offer. But you are threatening with default and if you decide unilaterally you're going to pay back less or nothing then that's what it is, default.

It's really rather simple and the only reason why Alan Dukes doesn't say it like that on Newstalk is because he doesn't want to enrage the public with such an inconvenient fact

ianuss

It seems to me that if you're advocating defaulting on the Anglo debt, you may as well go ahead and default on all your debts. Your reputation is mud either way. I'm not sure I see how you can start to pick and choose which debts you repay.

I think we're just going to have to suck it up and pay the Anglo debt in the hope that the scraps we get thrown in the future outweigh the costs of paying said debts.

Good loser

Dirk Gently wrote: »

Greece can't pay because their citizens said they wont pay and frankly I applaud them for booting that proverbial can back up the road where it came from. Through sustained civil disobedience they've forced the bailout (debt) strategy to look itself in the mirror. Had Greek society accepted everything as Irish society has then I've no doubt Greece would still be viewed as being able to repay even though they clearly can't. It's time for the epic can journey to come to an end.

Personally I think Ireland is in the "we will pay even though we cant pay" camp. I view unsecured bondholders as being in the can take a hit but wont take a hit category.

From your first sentence you obviously don't know the difference between can't and won't.
From all the other sentences you have a poor grasp of realism, reason and power.

Cubed

Scofflaw wrote: »

2. unsecured: Joe lends you a million, and you sign an agreement that you'll pay back the money.

In both cases, if you fail to pay me back, I can go to court to have payment enforced against you. If you claim not to be able to pay, I can have you declared bankrupt, and am entitled to seize any assets you have in order to help meet the debts.

The only difference is that the secured creditor (1 above) has a specific right to your house over and above creditor 2. You won't get to keep your house, or any other assets, but creditor 1 gets your house before creditor 2.

cordially,
Scofflaw

I am still maybe a little confused on this... so if Anglo refuses to pay unsecured bondholders on the basis that it is unable to pay, the unsecured bondholders can then go ahead and incur massive legal costs to have Anglo declared bankrupt in court, have a liquidator appointed and ensure that secured bondholders get paid out ahead of themselves.. and if there are enough assets left (i dont know exact numbers but unlikely i would imagine) some may trickle down to themselves ?

Does the Bank guarantee not only run for a specific time-frame also..?

Scofflaw

Cubed wrote: »

I am still maybe a little confused on this... so if Anglo refuses to pay unsecured bondholders on the basis that it is unable to pay, the unsecured bondholders can then go ahead and incur massive legal costs to have Anglo declared bankrupt in court, have a liquidator appointed and ensure that secured bondholders get paid out ahead of themselves.. and if there are enough assets left (i dont know exact numbers but unlikely i would imagine) some may trickle down to themselves ?

Why would the legal costs be massive? They just ask for a judgement to be made on whether a credit event has occurred, and the ball starts rolling from there. Senior creditors, whether secured or unsecured, would probably get a decent payback out of the assets at this stage, and if the government were attempting to give them any kind of serious haircut, let alone not pay them at all as many would like, they've nothing to lose.

Cubed wrote: »

Does the Bank guarantee not only run for a specific time-frame also..?

The original one (CIFS) did - the current one (ELGS) instead guarantees specified debt up to maturity.

cordially,
Scofflaw

Cubed

Scofflaw wrote: »

Why would the legal costs be massive? They just ask for a judgement to be made on whether a credit event has occurred, and the ball starts rolling from there. Senior creditors, whether secured or unsecured, would probably get a decent payback out of the assets at this stage, and if the government were attempting to give them any kind of serious haircut, let alone not pay them at all as many would like, they've nothing to lose.



The original one (CIFS) did - the current one (ELGS) instead guarantees specified debt up to maturity.

cordially,
Scofflaw

if other creditors were to object to bankruptcy i would imagine a case would ensue..

I guess it all depends on the current value of assets and how much could end up flowing down the waterfall, maybe the market price of 52c at one point back in February may be an indication.. Unsecured bondholders that would reject a possible haircut offer from Anglo and in turn apply for bankruptcy could be just shooting themselves in the foot unless Secured & Unsecured bonds are cross held by the same funds... is it possible that if they were to apply for bankruptcy that they would also have to fund Anglo's day to day operations whilst it is ongoing..

Scofflaw wrote: »

The original one (CIFS) did - the current one (ELGS) instead guarantees specified debt up to maturity.

cordially,
Scofflaw

another lost opportunity possibly

Aidan1

In other words, we want to have our cake (a reputation for paying our debts) and eat it too (not actually pay them). Currently the ECB will not let us actually eat the cake - which is, of course, outrageous.

In the medium term, of course, the plan seems to be that the ECB will allow us have a good sized slice of cake back, through a re-negotiation of the terms of the loan they provided to pay for Anglo last year (longer term, reduced rate, or even a reduced amount). This wouldn't imply a sovereign default per se, and the markets shouldn't be spooked (the reverse if anything), but the effects on our debt could be very substantial in terms of making it more sustainable, and thus easing our entry back into capital markets.

On that basis, one of the reasons for paying back the Anglo bond at full face value would be that it keeps open the possibility of such a deal in the future. Not doing so would effectively be the same as cutting off your nose to spite your face.

Laminations

Bannasidhe wrote: »

If Anglo had been allowed to fail - they would indeed have lost. But because the Irish government took on the debt, the liability was transferred to the State. So technically, they did not lose. In the same way as possession of the bonds could be transferred - so the debt was also transferred.

Just to give a very simplified example of what happened:

Peter lent Paul a tenner. Paul agreed to pay Peter 12 euro.

Paul was skint and couldn't pay so Siobhan agreed to become a guarantor for all Paul's debts - making Siobhán liable if Paul can't pay Peter.

Peter reckons Siobhán might not be able to pay, so he 'sells' the debt to Emer for 8 euro.

Siobhán now owes Emer 12 euro.

The problem with analogies is that whoever is penning them can construct them to suit their own argument, leaving out inconvenient details. For example if Siobhan has gone guarantor for Paul how do we have unguaranteed loans - which is what these bonds were. Also if Peter would usually lend a tenner expecting 10.40c in return then you have to view his deal with Paul (or dodgy Paul as he is known) as getting a premium return because he recognises there is great risk involved in lending to this guy. When that 'risk' which was built into the deal and recognised by both parties becomes a reality then Peter gets what he expected. Siobhan may have agreed to help Paul pay some debts but when Peter is selling his debt off to Emer at a loss you can see he is expecting an even bigger loss. He is not expecting Siobhan to honour the full debt. Siobhan paying the full loan back plus interest (12 quid) is not expected, but it is a pleasant surprise for Emer.

Now if you think we should build and maintain reputations by giving people pleasant surprises then you may as well turn around flash your colleagues. They surely won't be expecting that (just like the bond holders weren't expecting to be paid back in full or maybe at all - hence they built in the premium interest rate to sweeten the deal). But if you think that the pleasant surprise of showing your chest will help your reputation you're as misguided as poor old Siobhan who is paying people she has no obligation to pay and damaging her reputation because she is seen as an idiot. I'd be less likely to lend to an idiot and I'd be less likely to respect an idiot just as I'd lose respect for a co-worker who gave out pleasant surprises.

Us paying back unguaranteed bond holders who invested knowing the risks (and who realised losses off their own bat when they sold the bonds on) won't make the bond markets respect us any more.

Your analogy would work if these were non risky low premium bonds that had actually been guaranteed by the state.

Bannasidhe

Laminations wrote: »

The problem with analogies is that whoever is penning them can construct them to suit their own argument, leaving out inconvenient details. For example if Siobhan has gone guarantor for Paul how do we have unguaranteed loans - which is what these bonds were. Also if Peter would usually lend a tenner expecting 10.40c in return then you have to view his deal with Paul (or dodgy Paul as he is known) as getting a premium return because he recognises there is great risk involved in lending to this guy. When that 'risk' which was built into the deal and recognised by both parties becomes a reality then Peter gets what he expected. Siobhan may have agreed to help Paul pay some debts but when Peter is selling his debt off to Emer at a loss you can see he is expecting an even bigger loss. He is not expecting Siobhan to honour the full debt. Siobhan paying the full loan back plus interest (12 quid) is not expected, but it is a pleasant surprise for Emer.

Now if you think we should build and maintain reputations by giving people pleasant surprises then you may as well turn around flash your colleagues. They surely won't be expecting that (just like the bond holders weren't expecting to be paid back in full or maybe at all - hence they built in the premium interest rate to sweeten the deal). But if you think that the pleasant surprise of showing your chest will help your reputation you're as misguided as poor old Siobhan who is paying people she has no obligation to pay and damaging her reputation because she is seen as an idiot. I'd be less likely to lend to an idiot and I'd be less likely to respect an idiot just as I'd lose respect for a co-worker who gave out pleasant surprises.

Us paying back unguaranteed bond holders who invested knowing the risks (and who realised losses off their own bat when they sold the bonds on) won't make the bond markets respect us any more.

Your analogy would work if these were non risky low premium bonds that had actually been guaranteed by the state.

A fair point except that I was not, personally, making an argument either way - my analogy was an attempt to explain how I perceive the government's position on this.

My personal opinion of the government's position was contained in the strongly worded email I sent to the Labour Party HQ along with my shredded LP membership card.

maninasia

Scofflaw wrote: »

I think it's morally right to do what you've agreed to do, because you've agreed to do it. A little Protestant of me, of course, but there we go.

cordially,
Scofflaw

Thank God people in the real world don't follow this logic. What we agreed to do at one time doesn't always make sense later on.

PLUS, who agreed to do this? Fianna Fail? Fianna Gael?

maninasia

Cubed wrote: »

I am still maybe a little confused on this... so if Anglo refuses to pay unsecured bondholders on the basis that it is unable to pay, the unsecured bondholders can then go ahead and incur massive legal costs to have Anglo declared bankrupt in court, have a liquidator appointed and ensure that secured bondholders get paid out ahead of themselves.. and if there are enough assets left (i dont know exact numbers but unlikely i would imagine) some may trickle down to themselves ?

Does the Bank guarantee not only run for a specific time-frame also..?

Obviously what the gubberment should have done was to go these Senior UNSECURED bondholders and tell them what was going to happen, take the path A) or . A) was to take some type of hit , maybe 20-30% of the price, some of them would have still made a nice profit. You take A) and you agree the terms and everybody walks away.

was to let them go for a seriously expensive legal battle that would take years to get paid if ever considering the whole Eurozone is in tatters and they might get sweet FA in the end. Remember a lot of these guys can't afford to wait years for their cash.

I think A) was a goer.

Duke Leonal Felmet

maninasia wrote: »

Scofflaw wrote: »

I think it's morally right to do what you've agreed to do, because you've agreed to do it. A little Protestant of me, of course, but there we go.

cordially,
Scofflaw

Thank God people in the real world don't follow this logic.

Clearly, they do. Perhaps it is time for you to reflect on what is the real world, and imaginary.

Scofflaw

maninasia wrote: »

Scofflaw wrote:

I think it's morally right to do what you've agreed to do, because you've agreed to do it. A little Protestant of me, of course, but there we go.

Thank God people in the real world don't follow this logic. What we agreed to do at one time doesn't always make sense later on.

I admit to being quite genuinely surprised that some people are so very clear that there's no moral issue in not doing things you've agreed to do - so clear that they're obviously a little boggled by the idea that anyone thinks differently.

How can you trust anyone who believes there's nothing wrong with not doing what they've agreed because it no longer suits them?

maninasia wrote: »

PLUS, who agreed to do this? Fianna Fail? Fianna Gael?

Again, I find this a bizarre attitude. The government agreed to it when they took over Anglo. What the government of Ireland does isn't some kind of personal arrangement.

surprised,
Scofflaw

CiaranC

Scofflaw wrote: »

I admit to being quite genuinely surprised that some people are so very clear that there's no moral issue in not doing things you've agreed to do - so clear that they're obviously a little boggled by the idea that anyone thinks differently.

I dont see these high risk, high yield bondholders refusing the free cash with which the idiots in Fianna Fail agreed to bail them out on the basis that it would be "immoral" and "not doing what they agreed to", do you?

As ever, the morality in your precious system only ever works one way.

Taxpayers and governments are somehow held to account morally and bound to support completely amoral financial systems.

Scofflaw

CiaranC wrote: »

I dont see these high risk, high yield bondholders refusing the free cash with which the idiots in Fianna Fail agreed to bail them out on the basis that it would be "immoral" and "not doing what they agreed to", do you?

As ever, the morality in your precious system only ever works one way.

Taxpayers and governments are somehow held to account morally and bound to support completely amoral financial systems.

What relevance does any of that have? I mean, I can point out that "high risk, high yield" is false, but that's beside the point.

Government and taxpayers aren't being "held to account morally", they're legally responsible, and whatever other arguments one might make I've no interest in encouraging the government to act illegally. When the government took over Anglo, it acquired those debts, and the legal obligation to pay them. It's not something that happened afterwards.

I can also point out that I don't support system, but I doubt that will even get through.

regards,
Scofflaw

CiaranC

So you agree its not a moral question after all then.

The system could be completely bastardised by socialising all this debt to remove all the risk for and to prop up gambers on the international markets when it was required, it can be changed again to prioritise millions of taxpayers interests ahead of these bondholders. Why is this point somehow a line in the sand? Seems simple enough to me.

Scofflaw

CiaranC wrote: »

So you agree its not a moral question after all then.

No, I didn't agree with what you said, which was that the reasons for paying back the debt are moral. They're legal - and the reason for following the law is both moral and practical.

CiaranC wrote: »

The system could be completely bastardised by socialising all this debt to remove all the risk for and to prop up gambers on the international markets when it was required, it can be changed again to prioritise millions of taxpayers interests ahead of these bondholders. Why is this point somehow a line in the sand? Seems simple enough to me.

The system wasn't changed to socialise the debts, though. The system didn't need changing to do that. It would need changing to avoid the debts, as long as Anglo hasn't been wound down, because those debts are legally Anglo's, and the government is legally Anglo's owner.

If the government changes the position by legislative fiat, then just as in other cases where that has been done - Washington Mutual and in Iceland - they will face the bondholders in court, with all the uncertainty that implies.

So the reason for paying back the debt is that it's legally acquired debt - whether one views that purely practically or morally is (apparently) a personal issue. Either way it cannot simply be set aside.

cordially,
Scofflaw

Shattered Dreamer

This whole unsecured bond holders issues is a major failure by the Irish Government, the last one & current one! The key feature of an unsecured bond investment is that your investment can go up, down or disappear. It actually doesn't make any sense at this stage why the unsecured bond holders haven't lost everything & it say to me something is or was doing something extremely illegal at the highest level of government.

ianuss

This thread is continually going around in circles.

Scofflaw

ianuss wrote: »

This thread is continually going around in circles.

I'm afraid that's likely to keep happening. The arguments for burning the bondholders are obvious and moral, the arguments against are equally obvious and legal. The legal argument doesn't counter the validity of the moral argument, and vice-versa.

What's silly, though, is to pretend there simply isn't an argument on the other side from the one someone has picked.

cordially,
Scofflaw

Bannasidhe

What amuses (and frustrates) me is while the banks did not behave ethically (e.g. failure to disclose full extent of debts), responsibly (e.g. disregard for proper risk assessment ), morally (took as much money as they could and ran) or possibly* illegally (Hello Seanie!).

Because of the bank guarantee the State has to pick up the tab - making the people of Ireland (who were given no say in the matter and elected a new government on the promise that bondholders would be burnt so we did express our will on that topic) legally and morally liable for the debt.

As conditions CURRENTLY exist - Were we to burn the bondholders the State (i.e. the people of Ireland) would have to act in a way not dissimilar in terms of lack of ethics to those very bankers we want to see jailed.

Do I think there should have been a blanket bank guarentee? Hell No!

Do I think the people should have been consulted via plebiscite - Hell Yes!

Do I think that was do-able - yes.

If time was of the essence as Linehan was led to believe then a temporary bank guarantee (say 3-6 months) could have been put in place while all the relevant info was gathered (you owe HOW MUCH :eek:) - and then the do we/don't we put to the people with the likely consequences of each decision clearly laid out.

The problem is this would have required a number of things successive Irish governments have proven themselves incapable of - effective communication with the electorate and regard for the will of the people out side of GEs being two.

So we have been presented with a fait accompli as far as the bank guarantee goes so much as I hate it (I really really hate it) but, personally, I would prefer my government upheld the deals made and acted ethically and morally. Just wish they could also act that way on every issue :mad:.




* Legal disclaimer: 'Possibly' only because no-one has been found guility of wrong doing in a court of law. Do I think there was illegality - you betcha!

Scofflaw

Bannasidhe wrote: »

What amuses (and frustrates) me is while the banks did not behave ethically (e.g. failure to disclose full extent of debts), responsibly (e.g. disregard for proper risk assessment ), morally (took as much money as they could and ran) or possibly* illegally (Hello Seanie!).

Because of the bank guarantee the State has to pick up the tab - making the people of Ireland (who were given no say in the matter and elected a new government on the promise that bondholders would be burnt so we did express our will on that topic) legally and morally liable for the debt.

As conditions CURRENTLY exist - Were we to burn the bondholders the State (i.e. the people of Ireland) would have to act in a way not dissimilar in terms of lack of ethics to those very bankers we want to see jailed.

Do I think there should have been a blanket bank guarentee? Hell No!

Do I think the people should have been consulted via plebiscite - Hell Yes!

Do I think that was do-able - yes.

If time was of the essence as Linehan was led to believe then a temporary bank guarantee (say 3-6 months) could have been put in place while all the relevant info was gathered (you own HOW MUCH :eek:) - and then the do we/don't we put to the people with the likely consequences of each decision clearly laid out.

The problem is this would have required a number of things successive Irish governments have proven themselves capable of - effective communication with the electorate and regard for the will of the people out side of GEs being two.

So we have been presented with a fait accompli as far as the bank guarantee goes so much as I hate it (I really really hate it) but, personally, I would prefer my government upheld the deals made and acted ethically and morally. Just wish they could aslo act that way on every issue :mad:.

* Legal disclaimer: 'Possibly' only because no-one has been found guility of wrong doing in a court of law. Do I think there was illegality - you betcha!

Complete agreement! How come you don't get painted as a villain the way I do?

cordially,
Scofflaw

Bannasidhe

Scofflaw wrote: »

Complete agreement! How come you don't get painted as a villain the way I do?

cordially,
Scofflaw

YET :eek:.