Make your voice heard: Response needed from ECB on Anglo Irish Debt Burden

Scofflaw

makeorbrake wrote: »

Ok ...so when McWilliams says that new investors will come in - is he just playing to the gallery?

It's how he makes his living, so it's generally a safe assumption.

makeorbrake wrote: »

What of Iceland as a case study?

Good points and bad. But do you mean a real case study/analysis, or some kind of glib and partial comparison?

makeorbrake wrote: »

Lastly, why can we not be privy to the knowledge of precisely who these bondholders are?

That's a tough one - I would very much like to know who they were, and my glee if I found a reliable rundown of them would be very great (and rapidly shared).

I suspect, though, that what would get cited is "commercial confidentiality", because if the markets knew a good chunk of someone's assets were tied up in IBRC bonds, that someone would probably suffer commercial consequences.

I know that Declan Ganley published a list of bondholders fairly recently - and what looked like an unredacted list - but withdrew it almost immediately. So the information is out there, but it seems likely that it comes with some kind of potential penalty. And, of course, it was a list of the institutions that held bonds - but a lot of those institutions would presumably be holding them as part of funds they're managing for other people, so it doesn't necessarily tell you that much about who would lose if there were haircuts. I would presume that if a bond suffered a haircut, the fund manager passes that loss onto the investors in their fund.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

It's how he makes his living, so it's generally a safe assumption.

So does Nobel prize winning economist, Joseph Stiglitz also have a vested interest in saying the repayment of bondholders is simply "unconscionable" ??


LINK


What's his vested interest in such an analysis?

Scofflaw wrote: »

Good points and bad. But do you mean a real case study/analysis, or some kind of glib and partial comparison?

The inference seems to be that most of us who have commented on this thread would go for the 'glib and partial comparison'. However, let's not assume that (it's certainly not what I'm looking for). By all means, share your wisdom on the Iceland situation. Is it not true that they faced the most extreme of situations and whilst there were NO easy answers, they took the right option (when looking at their scenario in a global sense)?

I'm no economist - but where were all the economists warning that entering into the euro would mean that we would become totally uncompetitive? Whether we like it or not, we are all getting a lesson in economics these days. However, some things simply remain to be explained away satisfactorily when challenged.

makeorbrake

johnnyskeleton wrote: »

The question makes no sense. Either it was for the benefit of the French and german banks and he therefore answered his own question or else it wasn't and the premise of the question is flawed.

Did he answer "It's for the benefit of the French & German banks"? The question is'nt flawed - it's simply a question. Surely an educated mandarin of the ECB has the intellect to answer said question?

johnnyskeleton wrote: »

As to why the Irish people should pay, it's because our government committed us to pay and then blamed Europe and the lazy electorate agreed with this.

Hang on a second...back up the bus. If your government (past or present) sold you into slavery, you would bemoan it but accept it? A nonsensical example (although some might describe the current scenario as economic servitude) - but it makes the point. How untenable does a position have to be before we can accept that we must roll back? Clearly the last administration took an untenable position. The current administration was elected with a clear mandate to renegotiate - or in effect, roll back from the untenable position that was taken. We're still waiting....

Scofflaw

makeorbrake wrote: »

So does Nobel prize winning economist, Joseph Stiglitz also have a vested interest in saying the repayment of bondholders is simply "unconscionable" ??


LINK


What's his vested interest in such an analysis?

No, I certainly wouldn't consider Stiglitz the same way I would consider McWilliams. I'm not simply trying to discredit the source in McWilliam's case because I don't like his message - McWilliams is a discreditable source whether I like his message or not.

And there's nothing really I would retort against Stiglitz - it is unconscionable, but it was also agreed, and has been turned into a measure of Ireland's reliability. Stupid, unconscionable, agreed - but neither intellectual nor moral outrage changes the picture.

makeorbrake wrote: »

The inference seems to be that most of us who have commented on this thread would go for the 'glib and partial comparison'. However, let's not assume that (it's certainly not what I'm looking for). By all means, share your wisdom on the Iceland situation. Is it not true that they faced the most extreme of situations and whilst there were NO easy answers, they took the right option (when looking at their scenario in a global sense)?

I don't know - I think "took the right option" can only truly be judged on the basis of whether Iceland is in a better position than had it taken one of the other options, and it's not really possible to make that judgement, because they didn't. Further, there's a good argument that they took the only possible option - their banks were more than ten times the size of their economy, ours were about three and a half times the size of ours. So they didn't ever have a lot of options - their banking sector could have sucked the state down behind it, and there wasn't ever the possibility they could have saved them.

We hear a lot about how Iceland is doing from commentators arguing one or other course for Ireland - to read them, one might think that Iceland was enjoying a boom, whereas Icelandic commentators appear rather more downbeat. And certainly some of the comparisons that are offered are ludicrous in their simplicity. It's facile to compare Iceland's unemployment rate and say "look, 8%, half of ours", because our structural unemployment rate is higher - we had unemployment of 4% during the boom, they had unemployment of less than 1% - so one could equally well say that their unemployment rate is 8+ times their structural rate, while ours is only 4 times ours.

And, of course, the fat lady hasn't sung. The only way one can be really sure whether Iceland took the right decision is to look at their course over the next 20 years or so - or, of course, there's blind faith.

makeorbrake wrote: »

I'm no economist - but where were all the economists warning that entering into the euro would mean that we would become totally uncompetitive? Whether we like it or not, we are all getting a lesson in economics these days. However, some things simply remain to be explained away satisfactorily when challenged.

I think there may be a correlation/causation issue there. We had an economic boom on a very limited infrastructural and human resource base - it's rather hard to avoid a loss in competitiveness under those circumstances, and we didn't really even try very hard, what with benchmarking and decentralisation. If the euro was responsible for our loss of competitiveness, it's hard to see how we could possibly be regaining it at the moment.

The best explanation seems to me that had we treated euro membership in the same rather steady and disciplined manner as we prepared for it during the Nineties, we would now be sitting at the eurozone table comfortably tut-tutting at the Greeks' profligacy and bemoaning the cash call for the latest round of their bailout.

But, as a cousin of my wife's put it, when looking back on the fact that he, as the owner of a small building company, was bidding over a million euro at auction for a field in Carlow, we lost the run of ourselves. We weren't greedy, so much as just carried away.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

I don't know - I think "took the right option" can only truly be judged on the basis of whether Iceland is in a better position than had it taken one of the other options, and it's not really possible to make that judgement, because they didn't. Further, there's a good argument that they took the only possible option - their banks were more than ten times the size of their economy, ours were about three and a half times the size of ours. So they didn't ever have a lot of options - their banking sector could have sucked the state down behind it, and there wasn't ever the possibility they could have saved them.

We hear a lot about how Iceland is doing from commentators arguing one or other course for Ireland - to read them, one might think that Iceland was enjoying a boom, whereas Icelandic commentators appear rather more downbeat. And certainly some of the comparisons that are offered are ludicrous in their simplicity. It's facile to compare Iceland's unemployment rate and say "look, 8%, half of ours", because our structural unemployment rate is higher - we had unemployment of 4% during the boom, they had unemployment of less than 1% - so one could equally well say that their unemployment rate is 8+ times their structural rate, while ours is only 4 times ours.

And, of course, the fat lady hasn't sung. The only way one can be really sure whether Iceland took the right decision is to look at their course over the next 20 years or so - or, of course, there's blind faith.

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

Godge

makeorbrake wrote: »

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

and still two notches below Ireland, tell me did anyone ever get a response to the mass email?

Scofflaw

makeorbrake wrote: »

I concur - re. the fullness of time and all that. In the meantime, as of today, the rating agency Moody's have upgraded Iceland one notch to a 'safe to invest' rating. Make of that what you will.

I guess I'd probably follow the advice handed out by their Finance Minister:

Iceland is warning Greece and Ireland not to copy its recovery model even though the Atlantic island managed a return to international debt markets less than three years after letting its banks default on $85 billion.

“People should be careful when it comes to drawing comparisons between Iceland on the one hand, and Greece, Portugal, Spain and Ireland on the other,” Finance Minister Steingrimur J. Sigfusson said in an interview in Reykjavik. “Iceland didn’t have the ability to save the banks. Trying to rewrite the events that led to that eventuality as some sort of an export product is irresponsible.”

And would add to that that they were out of the markets from 2006 until late last year. We have, thus far, been out of them less than 18 months.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

I guess I'd probably follow the advice handed out by their Finance Minister.......and would add to that that they were out of the markets from 2006 until late last year. We have, thus far, been out of them less than 18 months.

According to chief emerging markets economist with Danske..: “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

Source


"Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium."

Farmer Pudsey

I tried to use link but it is down anybody have e-mail address and copy of mail

Also this is all acdaemic about if we need to pay it as we will will not meet out targets this year. Extra tax on fuel is not meeting targets as people doing less car trips higher vat rate will not meed target pubs and shops empty for second month. Resistance to septic tank charge and household tax charge is mounting and a lot of people will not register. Mortgage default problem continues Banks not lending unless the trioka wake up we will follow Greese in default in the next 6-12 months. Remember old saying you cannot get blood out of a turnip and we are now the turnip.

Even if we cut Civil Service wage bill by another 10-15% reduce dole by 30% and delete extra to pensioners we cannot recover we need growth and it will not happen for the next 3-5 years if we continue as we are doing. We now have an effective top rate of tax at 53% Vat is at 23% for a country with no public transport we have expensive fuel ( I know France ,Germany GB etc are more exensive) but we depend on out cars more and as much tax as we can put on drink and cigs

Even if the household charge gets off the blocks and at present I cannot see it suceeding or if it get going it will be at a low rate for a long time the reality is that if you take 100 euro out of a worker's pocket at present he will cut back other expenditure by that amount

Scofflaw

makeorbrake wrote: »

According to chief emerging markets economist with Danske..: “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

Source


"Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium."

Hmm...if I have to choose between an analyst who says a country followed a textbook example, and the Finance Minister of said country, who says people should not use their decisions as a textbook, I think I'm forced to go with the latter.

Because, after all, the analyst is only analysing the decisions of the Minister. And from a perspective where he doesn't have to make those decisions, or live with the consequences.

cordially,
Scofflaw

makeorbrake

Farmer Pudsey wrote: »

I tried to use link but it is down anybody have e-mail address and copy of mail

See post no.48 above.

Farmer Pudsey wrote: »

Even if we cut Civil Service wage bill by another 10-15% reduce dole by 30% and delete extra to pensioners we cannot recover we need growth and it will not happen for the next 3-5 years if we continue as we are doing.

These are issues in their own right - the first one of which is the most obvious but also, it's the elephant in the room - and no administration (neither past nor present) really has the moral fibre to tackle it.

Farmer Pudsey wrote: »

reduce dole by 30% and delete extra to pensioners

Doesn't sit as well with me - but I guess dole will have to be cut - BUT - despite the recession, this remains a very expensive country to live in. For the same rationale, I am even more reluctant to see pensioners being hit.

makeorbrake

Scofflaw wrote: »

Hmm...if I have to choose between an analyst who says a country followed a textbook example, and the Finance Minister of said country, who says people should not use their decisions as a textbook, I think I'm forced to go with the latter.

Because, after all, the analyst is only analysing the decisions of the Minister. And from a perspective where he doesn't have to make those decisions, or live with the consequences.

cordially,
Scofflaw

You raise an interesting point - and one that can be drawn upon when taking the Bloomberg synopsis of the situation into consideration. I am referring specifically to the 'people vs. markets' section of that article. Please also be aware that it wasn't just people vs. markets - but people vs. the political establishment - as if memory serves me correctly, the people went against the advise/recommendations of their political leaders in not one but two refernda.

In considering this element of the Icelandic crisis in the context of our own situation, we elected 2 parties - both of whom campaigned strongly on re-negotiation ("Berlins way or Labours way" - anyone recall that little soundbite?....and then there was Enda's choreographed trip to Berlin pre-election), then swiftly turned round to the electorate and said they couldn't renegotiate something that had already been agreed. IF they believed this, then it was totally unethical and disingenuous to get themselves elected on a mandate to do exact that!

K-9

Farmer Pudsey wrote: »

Even if we cut Civil Service wage bill by another 10-15% reduce dole by 30% and delete extra to pensioners we cannot recover we need growth and it will not happen for the next 3-5 years if we continue as we are doing.

For every 1% of Government spending taken out of an economy, growth is cut by .5/.6%. I can't see any alternative to little or no growth in the next few years and what growth we have will be exports, that don't create much jobs, this isn't the 80's and early 90's anymore.

.We now have an effective top rate of tax at 53% Vat is at 23% for a country with no public transport we have expensive fuel ( I know France ,Germany GB etc are more exensive) but we depend on out cars more and as much tax as we can put on drink and cigs

I'd agree with that, we are getting close to 80's levels of taxation which everybody knows failed. Highly paid Public Servants are paying over 60% marginal tax, PRSI etc., not good.

Even if the household charge gets off the blocks and at present I cannot see it suceeding or if it get going it will be at a low rate for a long time the reality is that if you take 100 euro out of a worker's pocket at present he will cut back other expenditure by that amount

He/she will, as will a SW recipient, PS payroll staff etc.because they know more cuts are coming.

Scofflaw

makeorbrake wrote: »

You raise an interesting point - and one that can be drawn upon when taking the Bloomberg synopsis of the situation into consideration. I am referring specifically to the 'people vs. markets' section of that article. Please also be aware that it wasn't just people vs. markets - but people vs. the political establishment - as if memory serves me correctly, the people went against the advise/recommendations of their political leaders in not one but two refernda.

To be fair, this:

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.

isn't actually "people versus markets". I'm speaking as someone with friends who would have lost their life savings in Icesave had the UK government not stepped in.

It's "people versus other people". I can understand Iceland acting to save the money of their own citizens at the expense of those of other countries, but I wouldn't regard calling it "people versus markets" as anything but incorrectly glorifying a nationally selfish decision.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

To be fair, this isn't actually "people versus markets". ......I can understand Iceland acting to save the money of their own citizens at the expense of those of other countries, but I wouldn't regard calling it "people versus markets" as anything but incorrectly glorifying a nationally selfish decision.

Depends on how you look at it. You deem it to be a "nationally selfish decision". I would be of a mind to consider it people acting in the national interest - and yes, that is their interest - and there's nothing selfish about that given what was at stake for them.

Scofflaw

makeorbrake wrote: »

Depends on how you look at it. You deem it to be a "nationally selfish decision". I would be of a mind to consider it people acting in the national interest - and yes, that is their interest - and there's nothing selfish about that given what was at stake for them.

Had the activities of the Icelandic banks been of no value to the Icelandic economy - and thereby to the Icelandic people - and had their decision to let foreign depositors of those banks go hang had no adverse consequences for those people, I might agree.

As it is, it's as I said - this was a selfish decision which is being lauded as some kind of David and Goliath battle, but whose effects would have been to destroy the life savings of ordinary people who put them in Icelandic banks in good faith.

One can agree with the decision or not on that basis, but celebrating it without any reference to its effects on others is setting up a false idol.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

One can agree with the decision or not on that basis, but celebrating it without any reference to its effects on others is setting up a false idol.

Yes, I appreciate that this debacle involved ordinary decent people in the UK. However, lets relate this back to Anglo - which is essentially what this thread is concerned with. Are Irish people of a mind that they benefited from the upswing at Anglo in the same way the Icelandic people benefited from the upswing (for the purposes of relating this back to the original subject, I won't dispute this with you...despite the fact that I would imagine there would no doubt be a proportion of Icelanders who wouldn't agree with you on this) of their banks? Furthermore, following the banks demise, are they of a mind that they should pick up the tab for anonymous bondholders who knowingly speculated at their own risk?



A referendum on this would have given you - in no uncertain terms - an emphatic answer.

Liam Byrne

Scofflaw wrote: »

makeorbrake wrote: »

You raise an interesting point - and one that can be drawn upon when taking the Bloomberg synopsis of the situation into consideration. I am referring specifically to the 'people vs. markets' section of that article. Please also be aware that it wasn't just people vs. markets - but people vs. the political establishment - as if memory serves me correctly, the people went against the advise/recommendations of their political leaders in not one but two refernda.

To be fair, this:

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.

isn't actually "people versus markets". I'm speaking as someone with friends who would have lost their life savings in Icesave had the UK government not stepped in.

It's "people versus other people". I can understand Iceland acting to save the money of their own citizens at the expense of those of other countries, but I wouldn't regard calling it "people versus markets" as anything but incorrectly glorifying a nationally selfish decision.

cordially,
Scofflaw

The problem is that it's not about "saving" the money - it's about getting others to pay it back in, and in general those are people who don't have it to share.

If the FF & Green decisions had "saved" money, there would have been little objection.

It's the fact that they forced the rest of us to pay for losses incurred - particularly in a cesspit bank that no-one dealt with - that sickens people.

Scofflaw

makeorbrake wrote: »

Yes, I appreciate that this debacle involved ordinary decent people in the UK. However, lets relate this back to Anglo - which is essentially what this thread is concerned with. Are Irish people of a mind that they benefited from the upswing at Anglo in the same way the Icelandic people benefited from the upswing (for the purposes of relating this back to the original subject, I won't dispute this with you...despite the fact that I would imagine there would no doubt be a proportion of Icelanders who wouldn't agree with you on this) of their banks? Furthermore, following the banks demise, are they of a mind that they should pick up the tab for anonymous bondholders who knowingly speculated at their own risk?

And that, in turn, is another reason why drawing parallels between Ireland and Iceland doesn't necessarily work. Anglo had neither small Irish depositors to protect, nor small foreign depositors to harm.

makeorbrake wrote: »

A referendum on this would have given you - in no uncertain terms - an emphatic answer.

I'm sure it would - but as the Icelandic referendums could be said to show, the result would be about the benefit of those voting.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

And that, in turn, is another reason why drawing parallels between Ireland and Iceland doesn't necessarily work. Anglo had neither small Irish depositors to protect, nor small foreign depositors to harm.

Sure - but in looking at that aspect of it, does that not make it even clearer - the action that should have been taken? i.e. burn the bondholders!

Scofflaw wrote: »

I'm sure it [a referendum] would - but as the Icelandic referendums could be said to show, the result would be about the benefit of those voting.

I agree completely that the result would be about the benefit of those voting! Isn't that what government is supposed to do - represent the people, and more specifically, act on the clear mandate the people have given them? You seem to feel that there would be something wrong in the Irish people acting in their interests - that this is somehow selfish? I don't see it in any way as selfishness.

Scofflaw

makeorbrake wrote: »

Sure - but in looking at that aspect of it, does that not make it even clearer - the action that should have been taken? i.e. burn the bondholders!

Sure, my only objection to that route has been based on practical consequences. Had Anglo been immediately separated from the other banks and clearly been slated for a resolution process, then we could probably have achieved senior bondholder haircuts here with Icelandic levels of consequences. Unfortunately, the government didn't have the necessary knowledge of either Anglo's position or the extent and duration of the crisis to make such a call at the necessary time.

makeorbrake wrote: »

I agree completely that the result would be about the benefit of those voting! Isn't that what government is supposed to do - represent the people, and more specifically, act on the clear mandate the people have given them? You seem to feel that there would be something wrong in the Irish people acting in their interests - that this is somehow selfish? I don't see it in any way as selfishness.

I can see you don't, but foreigners are people too - and that's not something it should be necessary to say, but it appears it is.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

Unfortunately, the government didn't have the necessary knowledge of either Anglo's position or the extent and duration of the crisis to make such a call at the necessary time.

When this current administration took over, they had that knowledge - and they were elected on a mandate to roll back from that position. As I eluded to in an earlier post, they played heavily on this in both of their respective election campaigns.

Scofflaw wrote: »

I can see you don't, but foreigners are people too

'Foreigners' have nothing as such to do with it. Large european institutions who clearly engaged in highly speculative risk have everything to do with it.

Scofflaw wrote: »

foreigners are people too - and that's not something it should be necessary to say, but it appears it is.

Once again, looking after our national interests is positive - and not some sordid act or deed taken against the citizens of another european country. Furthermore, it's naive in the extreme to think that other member states would act in such an altruistic fashion - at the expense of their respective national interests.

Scofflaw

makeorbrake wrote: »

When this current administration took over, they had that knowledge - and they were elected on a mandate to roll back from that position. As I eluded to in an earlier post, they played heavily on this in both of their respective election campaigns.

Eh, election promises.

makeorbrake wrote: »

'Foreigners' have nothing as such to do with it. Large european institutions who clearly engaged in highly speculative risk has everything to do with it.

To do with Icesave depositors in the UK and Holland being stiffed? I don't think so.

But then, if you're claiming that's what was at stake in respect of Irish banks, I'd be very interested to see the evidence for what you're saying, because I've done a lot of research on the topic and any major role for "large European institutions" in Irish banks remains without evidence.

makeorbrake wrote: »

Once again, looking after our national interests is positive - and not some sordid act or deed taken against the citizens of another european country. Furthermore, it's naive in the extreme to think that other member states would act in such an altruistic fashion - at the expense of their respective national interests.

Apart from little things like lending billions of euro at less than market rates, of course.

cordially,
Scofflaw

makeorbrake

Scofflaw wrote: »

Eh, election promises.

Sure - election promises. So you except that they were given said mandate by the people and simply chose to ignore it? Given that you have aluded to a 'sense of fairness' as regards Ireland Inc honouring its commitments (regardless of affordability), maybe you can focus it on this aspect. Why should it be acceptable that the current administration can simply ignore the electorate in relation to a key and principal issue which led to their election?

Scofflaw wrote: »

To do with Icesave depositors in the UK and Holland being stiffed? I don't think so.

Ok, your returning to the Iceland scenario...thats fine. You have highlighted that 'foreigners are people too'. On that basis, please place yourself in the position of an Icelandic national - at the time they were faced with this decision. I don't disregard the effect that this could have had on ordinary UK/Dutch deposit holders. However, does that mean that as an Icelandic national, you would agree to do the honourable thing regardless of affordability and the direct consequences??

Scofflaw wrote: »

But then, if you're claiming that's what was at stake in respect of Irish banks, I'd be very interested to see the evidence for what you're saying, because I've done a lot of research on the topic and any major role for "large European institutions" in Irish banks remains without evidence.

Fair enough - so I guess the first step here is disclosure, right?

Scofflaw wrote: »

Apart from little things like lending billions of euro at less than market rates, of course.

Less than market rates? And has anything discussed here contributed to said market rates? Furthermore, has anything discussed here contributed to the need to borrow?

View

makeorbrake wrote: »

Once again, looking after our national interests is positive

I suspect that members of our democratically elected Oireachtas probably believe that they are "looking after our national interests".

Obviously your opinion of what this entails would seem to differ from (a democratic majority of) theirs.

makeorbrake

View wrote: »

I suspect that members of our democratically elected Oireachtas probably believe that they are "looking after our national interests".

Obviously your opinion of what this entails would seem to differ from (a democratic majority of) theirs.

Can I per-chance draw your attention to the irony in this? The current administration chose to carry out an immediate u-turn on not just something they were passively in favour of (i.e. renegotiation) - but something that they actively campaigned for. They were elected on the back of it. You draw particular emphasis to them being 'democratically elected' - and perhaps you think that I believe otherwise? That is not the case - I completely agree with you here - in fact, I emphasise it - as it makes the point - the point being - they were elected on the back of that mandate (to renegotiate) and the moment they were elected, they said they wouldn't.

K-9

makeorbrake wrote: »

Can I per-chance draw your attention to the irony in this? The current administration chose to carry out an immediate u-turn on not just something they were passively in favour of (i.e. renegotiation) - but something that they actively campaigned for. They were elected on the back of it. You draw particular emphasis to them being 'democratically elected' - and perhaps you think that I believe otherwise? That is not the case - I completely agree with you here - in fact, I emphasise it - as it makes the point - the point being - they were elected on the back of that mandate (to renegotiate) and the moment they were elected, they said they wouldn't.

When challenged on it by FF and others they admitted any settlements would have to be within an agreed European approach.

Scofflaw

makeorbrake wrote: »

Sure - election promises. So you except that they were given said mandate by the people and simply chose to ignore it? Given that you have aluded to a 'sense of fairness' as regards Ireland Inc honouring its commitments (regardless of affordability), maybe you can focus it on this aspect. Why should it be acceptable that the current administration can simply ignore the electorate in relation to a key and principal issue which led to their election?

No, I'd point out that they were clear it would only happen as part of an agreed Europe-wide strategy, and that they'd be paying back the outstanding bondholders because the amounts involved were (relatively speaking) too small to make it worth undoing any good paying back the previous 95% of bonds had achieved.

makeorbrake wrote: »

Ok, your returning to the Iceland scenario...thats fine. You have highlighted that 'foreigners are people too'. On that basis, please place yourself in the position of an Icelandic national - at the time they were faced with this decision. I don't disregard the effect that this could have had on ordinary UK/Dutch deposit holders. However, does that mean that as an Icelandic national, you would agree to do the honourable thing regardless of affordability and the direct consequences??

I'd find it pretty hard to look my British friends in the eye afterwards if I didn't.

makeorbrake wrote: »

Fair enough - so I guess the first step here is disclosure, right?

Most of the information necessary is already available. You won't get names, but you can get locations.

makeorbrake wrote: »

Less than market rates?

Average of 3.7% last time I looked, on bonds with a 7.5 year average maturity. Not sure our rates have ever been that low.

makeorbrake wrote: »

And has anything discussed here contributed to said market rates? Furthermore, has anything discussed here contributed to the need to borrow?

The banks, obviously, although far less than is usually made out - but what has that to do with those lending us the money at less than market rates?

cordially,
Scofflaw

makeorbrake

K-9 wrote: »

When challenged on it by FF and others they admitted any settlements would have to be within an agreed European approach.

scofflaw wrote:

No, I'd point out that they were clear it would only happen as part of an agreed Europe-wide strategy...

From the Fine Gael election manifesto.

scofflaw wrote:

I'd find it pretty hard to look my British friends in the eye afterwards if I didn't.

I'm sorry but you and I will have to agree to differ on this one. If it was a burden that could be easily carried, then fine - but what was being asked of Icelandic nationals was outrageous. Depositors have gotten stung before and they will again. It's regulation that needs to be looked at (as we know to our own cost) as indebting a generation of ordinary decent people is not an acceptable solution. I accept that ordinary decent savers being burned is equally unacceptable - but joe public cannot be saddled with the burden - that's not an acceptable fix.

scofflaw wrote:

Most of the information necessary is already available. You won't get names, but you can get locations.

You have any links?

scofflaw wrote:

The banks, obviously, although far less than is usually made out - but what has that to do with those lending us the money at less than market rates?

Perhaps it would negate the extent to which we needed funding in the first place?

View

makeorbrake wrote: »

Can I per-chance draw your attention to the irony in this? The current administration chose to carry out an immediate u-turn on not just something they were passively in favour of (i.e. renegotiation)

It is up to the government to decide what constitutes a "renegotiation" - not you or I. It is also up to them to decide both if and when they should seek to engage in any renegotiation. You seem to have a view of what the government "must" do that is at variance with what is specified in the constitution.

makeorbrake wrote: »

- but something that they actively campaigned for. They were elected on the back of it. You draw particular emphasis to them being 'democratically elected' - and perhaps you think that I believe otherwise? That is not the case - I completely agree with you here - in fact, I emphasise it - as it makes the point - the point being - they were elected on the back of that mandate (to renegotiate) and the moment they were elected, they said they wouldn't.

When exactly did they state "they wouldn't" (i.e. rule out completely the option of a renegotiation)?

You do realise that a renegotiation is not a unilateral procedure and that all parties have to agree to any new terms, such as interest rate reductions etc. (which have happened I believe)?

Were the government to find that - for instance, France - has set as a negotiation condition that Ireland must raise its corporation tax rate to, let's say, 30%, what are you suggesting the government do? Immediately call a general election in order to get a new mandate (i.e. not to renegotiate) or go "Well, the electorate instructed us to renegotiate so we'll just have to raise the corporation tax rate, I guess" because it "must" secure a renegotiate agreement even if it thinks it is not something they should accept?

Scofflaw

makeorbrake wrote: »

From the Fine Gael election manifesto.
I'm sorry but you and I will have to agree to differ on this one. If it was a burden that could be easily carried, then fine - but what was being asked of Icelandic nationals was outrageous. Depositors have gotten stung before and they will again. It's regulation that needs to be looked at (as we know to our own cost) as indebting a generation of ordinary decent people is not an acceptable solution. I accept that ordinary decent savers being burned is equally unacceptable - but joe public cannot be saddled with the burden - that's not an acceptable fix.

Except when it happens to other people, apparently.

makeorbrake wrote: »

You have any links?

Central Bank: http://www.centralbank.ie/polstats/stats/cmab/Pages/Money%20and%20Banking.aspx

Table A.4.2 is the aggregated balance sheets of the bailed out banks.

makeorbrake wrote: »

Perhaps it would negate the extent to which we needed funding in the first place?

Not by very much. For some reason people look at borrowing €24bn to put into the banks, and see it as higher than an annual deficit of €20bn, without stopping to recall that one is a once-off cost while the other is recurring, and has now been happening for 3 years.

If we had never had any problems with our banks, I imagine we would have had an easy ride in the markets, but the solution to that involves a time machine rather than default.

cordially,
Scofflaw

K-9

makeorbrake wrote: »

From the Fine Gael election manifesto.

Its a manifesto!

Its why we have political debates and other parties to pick holes in them, FF picked holes in the FG manifesto relating to bondholders.

I keep having to point this out on threads to posters who keep treating manifesto's as gospel!

makeorbrake

K-9 wrote: »

Its a manifesto! I keep having to point this out on threads to posters who keep treating manifesto's as gospel!

Manifesto: A written statement declaring publicly the intentions, motives or views of it's issuer.

scofflaw wrote:

Except when it happens to other people, apparently.

Referring specifically to what? Based on assumption or fact?

scofflaw wrote:

Not by very much.

I understand and appreciate that the running deficit is the bigger problem by a country mile. That said, I don't think we should treat €24Billion as chump change.

antoobrien

makeorbrake wrote: »

Manifesto: A written statement declaring publicly the intentions, motives or views of it's issuer.
Referring specifically to what? Based on assumption or fact?

It's nice to see somebody use Intentions rather than pledges or promises regarding the elections because that's what happens at elections: parties specify what they intend to do based on their current knowledge (which is incomplete in opposition).

When the "knowledge" that the original intention was made based on changes, the intentions can (and should) be reviewed.

I've no doubt that the government believed before the election that what they intended doing was practical, but that quickly changed when they got the objective facts of the matter.

I'd rather see this happening that a government blindly keeping to something they know to be impractical. Burning the (senior, unsecured) bondholders is far more trouble than it's worth.

K-9

makeorbrake wrote: »

Manifesto: A written statement declaring publicly the intentions, motives or views of it's issuer.

In a country with coalitions, rather redundant!

makeorbrake

K-9 wrote: »

In a country with coalitions, rather redundant!

so....if the intimation is that Labour weren't up for this, what did E.G. mean by 'Labours way - not Berlins Way'?
They both held this as a cornerstone of their proposition for government.

K-9

makeorbrake wrote: »

so....if the intimation is that Labour weren't up for this, what did E.G. mean by 'Labours way - not Berlins Way'?
They both held this as a cornerstone of their proposition for government.

But again when challenged on it by FF mostly, they admitted it would have to be in a European context. This is why people should watch debates, so opponents uncover any bull.

View

Perhaps we could adopt the following article from the French Constitution:

Article 27.

No Member shall be elected with any binding mandate.

It's clear cut and should reduce any confusion.

later12

As much as I disagree with Fine Gael and Labour's acquiescence in relation to Ireland's perceived responsibility in honouring some banking debt obligations, this matter is something we really need to move away from.

There is a far more serious and far more pressing issue which ought to be on the agenda concerning the Irish Government and the ECB, and that is the issue of how best to deal with ELA and the promissory notes going into Anglo/IBRC.

The next (second) such payment of €3.1 billion is due, I think, on March 31st and as a bilateral amendment to its terms and the terms surrounding our ELA obligations can in no conceivable way be said to directly threaten Ireland's sovereign standing, its immediate renegotiation is something that we ought all be pressing for, since it affects the debt sustainability of the Irish state in a way that renders the payment of remaining unsecured senior bondholders in all of the Irish banks relatively insignificant.

makeorbrake

Scofflaw wrote: »

There isn't anything the ECB can threaten to do to Ireland that doesn't hurt the ECB and the rest of the eurozone much much worse than it hurts Ireland.

There was though, wasn't there....

Scofflaw

makeorbrake wrote: »

There was though, wasn't there....

Not really - McCarthy is repeating the same rumour as before, with the same rather strange claim that the ECB had somehow threatened the government with destruction of the Irish banking sector in order to prevent the possible contagion caused by not repaying unguaranteed senior bonds in full. The supposed evidence is a letter from the ECB to Lenihan which, conveniently, will not be released by either the Dept of Finance or the ECB.

Like so many of the "threats" that Ireland is supposed to have held over the ECB/EU or the ECB/EU over Ireland, it makes no sense. Restricting the liquidity available to the Irish banks would have made them insolvent, causing them to implode, taking the Irish State with them courtesy of the guarantee. It would have produced another Greece, with all the massive instability that implies - and the ECB is supposed to have threatened to create this massive instability in order to force the government to pay off debt to prevent possible instability.

There are two possibilities, then, as far as I can see - either the ECB never said anything of the sort, or they weren't threatening the government with it, but pointing out a legal chain of consequences which the government found persuasive.

Either way, it's rather hard to be sure, since as far as we know Colm McCarthy has no more seen the contents of this letter than anyone else.

And that's actually quite unusual, because most things that it would be politically convenient for the Irish political class - and particularly Fianna Fáil - to have 'leaked', get leaked. Given the enormous unpopularity of the bailouts, and the convenience of blaming it on the ECB, a game Lenihan was quite happy to play, it's a little surprising the letter hasn't been leaked, if it contains evidence of force majeure by the ECB against the Irish government. If it doesn't, then it's rather less surprising.

Either way, as I said, we don't know, because we don't know what's in the letter, and neither does Colm McCarthy. So I'm afraid he's repeating rumour, and you're repeating his repetition of a rumour, neither of which really adds any weight to the rumour.

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

Not really - McCarthy is repeating the same rumour as before, with the same rather strange claim that the ECB had somehow threatened the government with destruction of the Irish banking sector in order to prevent the possible contagion caused by not repaying unguaranteed senior bonds in full. The supposed evidence is a letter from the ECB to Lenihan which, conveniently, will not be released by either the Dept of Finance or the ECB.

Like so many of the "threats" that Ireland is supposed to have held over the ECB/EU or the ECB/EU over Ireland, it makes no sense. Restricting the liquidity available to the Irish banks would have made them insolvent, causing them to implode, taking the Irish State with them courtesy of the guarantee. It would have produced another Greece, with all the massive instability that implies - and the ECB is supposed to have threatened to create this massive instability in order to force the government to pay off debt to prevent possible instability.

There are two possibilities, then, as far as I can see - either the ECB never said anything of the sort, or they weren't threatening the government with it, but pointing out a legal chain of consequences which the government found persuasive.

Either way, it's rather hard to be sure, since as far as we know Colm McCarthy has no more seen the contents of this letter than anyone else.

And that's actually quite unusual, because most things that it would be politically convenient for the Irish political class - and particularly Fianna Fáil - to have 'leaked', get leaked. Given the enormous unpopularity of the bailouts, and the convenience of blaming it on the ECB, a game Lenihan was quite happy to play, it's a little surprising the letter hasn't been leaked, if it contains evidence of force majeure by the ECB against the Irish government. If it doesn't, then it's rather less surprising.

Either way, as I said, we don't know, because we don't know what's in the letter, and neither does Colm McCarthy. So I'm afraid he's repeating rumour, and you're repeating his repetition of a rumour, neither of which really adds any weight to the rumour.

cordially,
Scofflaw

Have to disagree. Makes perfect sense to me that they would (and should) have threatened to collapse our banks if our Government didn't stand over them.

Look at the numbers, our banks had become a systemic risk to the ECB balance sheet through ELA, and if our Government didn't stand over our banks is there any chance that Spanish national debt would look as it does right now?

If Ireland allowed a chaotic bank default Spain was next in line, yes the Spanish Central Bank imposed higher capital ratios than the CBI but despite having a bubble of comparable proportions, Spanish banks have written off a hell of a lot less. 10% tier one capital or 20% tier one capital matters not one iota when your banking system's assets fall by 50% plus.

Then again, I suppose some people still subscribe to the notion that property has an intrinsic value divorced entirely from the "perceived" strength of the banking system.

Our gripe is with Spain, entirely with Spain. But the ECB cannot say that without turning the spotlight on Spain. What definition of logic suggests that the ECB should risk putting in play either the EU's 4th largest economy, or the banking sector of that 4th largest economy (and hence that economy) at the expense of the much more manageable "Ireland"? Oh, logic dictates that our issue is with Spain, entirely with Spain (check out Caja fundraising targets when we had to pay out on the last lot of IBRC notes) but does our world actually get any better if we help sink the Spanish economy? I don't think so, the domino effect would be horrific.

Scofflaw

beeftotheheels wrote: »

Have to disagree. Makes perfect sense to me that they would (and should) have threatened to collapse our banks if our Government didn't stand over them.

Look at the numbers, our banks had become a systemic risk to the ECB balance sheet through ELA, and if our Government didn't stand over our banks is there any chance that Spanish national debt would look as it does right now?

If Ireland allowed a chaotic bank default Spain was next in line, yes the Spanish Central Bank imposed higher capital ratios than the CBI but despite having a bubble of comparable proportions, Spanish banks have written off a hell of a lot less. 10% tier one capital or 20% tier one capital matters not one iota when your banking system's assets fall by 50% plus.

Then again, I suppose some people still subscribe to the notion that property has an intrinsic value divorced entirely from the "perceived" strength of the banking system.

Our gripe is with Spain, entirely with Spain. But the ECB cannot say that without turning the spotlight on Spain. What definition of logic suggests that the ECB should risk putting in play either the EU's 4th largest economy, or the banking sector of that 4th largest economy (and hence that economy) at the expense of the much more manageable "Ireland"? Oh, logic dictates that our issue is with Spain, entirely with Spain (check out Caja fundraising targets when we had to pay out on the last lot of IBRC notes) but does our world actually get any better if we help sink the Spanish economy? I don't think so, the domino effect would be horrific.

Possibly I'm not reading that right, but it seems to me that it has exactly the same problem already outlined - the ECB's "threat" was to collapse the Irish banking system a lot, in order to prevent the government collapsing it a little?

confused,
Scofflaw

beeftotheheels

Scofflaw wrote: »

Possibly I'm not reading that right, but it seems to me that it has exactly the same problem already outlined - the ECB's "threat" was to collapse the Irish banking system a lot, in order to prevent the government collapsing it a little?

confused,
Scofflaw

Yup, that's about the sum of it which makes perfect sense commercially and given the role defined in the treaties.

Our Government was always going to blink first, because on a banking level the ECB could feasibly have argued that by throwing us to the wind (Euro exit etc), they were better protecting the whole (and no one was looking at Spain at that point in time regardless of whether they should have been or not), whereas our Government wanted to keep us in the club so they had to blink.

Interaction of TEU with TFEU should be considered and as to whether the ECB breached the former, but the notion that they put a gun to our heads makes perfect sense, is entirely logical, I'd have done the same in their boots.

Scofflaw

beeftotheheels wrote: »

Yup, that's about the sum of it which makes perfect sense commercially and given the role defined in the treaties.

Our Government was always going to blink first, because on a banking level the ECB could feasibly have argued that by throwing us to the wind (Euro exit etc), they were better protecting the whole (and no one was looking at Spain at that point in time regardless of whether they should have been or not), whereas our Government wanted to keep us in the club so they had to blink.

Interaction of TEU with TFEU should be considered and as to whether the ECB breached the former, but the notion that they put a gun to our heads makes perfect sense, is entirely logical, I'd have done the same in their boots.

I don't have a particular problem with the idea that the ECB held a gun to Ireland's head, given the circumstances, but I have difficulties with the specific threat suggested. How would the ECB carrying out its threat not have led to greater instability? And that being the case, what made the threat credible?

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

I don't have a particular problem with the idea that the ECB held a gun to Ireland's head, given the circumstances, but I have difficulties with the specific threat suggested. How would the ECB carrying out its threat not have led to greater instability? And that being the case, what made the threat credible?

cordially,
Scofflaw

You can't measure instability like that, there was instability and potentially collapsing a banking system and booting a country out of the euro could have led to greater instability, but one could similarly argue (one letter and six months) that basket case islands off the west coast of Europe with banking systems out of control should be left to fend for themselves.

Remember back then that we all knew that the US and UK banks were in trouble in 08, and the Irish and Icelandic banks not too long after that.

But back then the Spanish banks were considered to be a paradigm of virtue, German Landesbanken were crackers but the rest of the mainland banking system was sound. So the threat to allow our banking system collapse to protect the rest should have been credible. Clearly an argument could have been made that Irish banks were distinguishable from other European banks so letting us do an Iceland would have been okay.

In addition to that they had their very strict mandate on their side. At that point in time we owned Anglo and Anglo was most of the problem. If we didn't promise to stand over Anglo's ELA then the CBI would have been engaged in illegal State Financing so the ECB would have had no choice but to pull the plug.

Now we know that the whole European banking system has issues (in fact the crisis has actually created those issues in some cases) so in that light it clearly would be bonkers for the ECB to collapse a banking system, or even to threaten it.

Whether they'd have done it or not is moot, I think they could have made a very credible threat, not least that legally they'd have had no alternative given the prohibition of State Financing.

Scofflaw

beeftotheheels wrote: »

You can't measure instability like that, there was instability and potentially collapsing a banking system and booting a country out of the euro could have led to greater instability, but one could similarly argue (one letter and six months) that basket case islands off the west coast of Europe with banking systems out of control should be left to fend for themselves.

Remember back then that we all knew that the US and UK banks were in trouble in 08, and the Irish and Icelandic banks not too long after that.

But back then the Spanish banks were considered to be a paradigm of virtue, German Landesbanken were crackers but the rest of the mainland banking system was sound. So the threat to allow our banking system collapse to protect the rest should have been credible. Clearly an argument could have been made that Irish banks were distinguishable from other European banks so letting us do an Iceland would have been okay.

That argument, though, goes both ways - if allowing Ireland to do an Iceland was OK because "Irish banks were distinguishable from other European banks" then the same argument applies to the smaller case of allowing Ireland to write down unguaranteed senior debt.

beeftotheheels wrote: »

In addition to that they had their very strict mandate on their side. At that point in time we owned Anglo and Anglo was most of the problem. If we didn't promise to stand over Anglo's ELA then the CBI would have been engaged in illegal State Financing so the ECB would have had no choice but to pull the plug.

Now we know that the whole European banking system has issues (in fact the crisis has actually created those issues in some cases) so in that light it clearly would be bonkers for the ECB to collapse a banking system, or even to threaten it.

Whether they'd have done it or not is moot, I think they could have made a very credible threat, not least that legally they'd have had no alternative given the prohibition of State Financing.

That appealed, I admit, but having thought about that, I don't see how it works, because the same argument should apply to providing ELA and writing down junior bonds, and that was done. The ELA is reduced in line with the savings from the bond haircuts, no?

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

That argument, though, goes both ways - if allowing Ireland to do an Iceland was OK because "Irish banks were distinguishable from other European banks" then the same argument applies to the smaller case of allowing Ireland to write down unguaranteed senior debt.

I didn't say I believed it, I just said that it was an argument which could have been used against the Irish Government at the time, but then again I worry about contagion. Anglo unguaranteed senior only makes sense in the context of the European banking sector have access to markets, makes zero sense on a stand alone basis unless it could trigger a cross default on the sovereign and I'm sure we could burn it and prevent that from happening.

Scofflaw wrote: »

That appealed, I admit, but having thought about that, I don't see how it works, because the same argument should apply to providing ELA and writing down junior bonds, and that was done. The ELA is reduced in line with the savings from the bond haircuts, no?

cordially,
Scofflaw

Nope, fraid not. We've promised to stand over the ELA (hence the pro note issue and god are there a lot of people on the Irish Economy site who really don't understand them) which is why it is legal. We've promised to repay it. Had we not promised to repay it, a bank owned by one State would have defaulted on debts owed to the ECB. That would result in an infringement of either Arts 123 or 125 of the TFEU (had we not nationalised Anglo by that point in time we'd have been in a much better position since those arts couldn't have been invoked, there would have been no risk of State Financing and thus the ECB couldn't have had any basis for making a credible threat based on its mandate).

My take on the crisis is that at each step we've done what the ECB wanted us to do to contain the crisis, each of which might have worked but for the politicians elsewhere running around and doing the exact opposite. So now we're in a worse position than if we'd disobeyed the ECB but at the time we might have been right to obey them.

And we are getting something back through LTRO cash which our banks have gorged on, and the pro notes should be capable of being restructured to allow us some cash flow room and accounting benefits in terms of timing of recognition of costs.

But there is no obvious way for the ECB to relieve us of much of the cost of the banking crisis absent we take them to Court and seek to recover details of their internal discussions to determine if their concern was not about Ireland and then argue that any threats made were not proportional, didn't result in all Member States being treated equally etc in accordance with the TEU. Which would make us a whole load of pals in Germany.

makeorbrake

So we all think we should still keep paying this unjust debt?

Just one link to one of the many articles in the past week - ten days outlining that we simply can't carry the debt burden that we have been shouldering;

LINK

makeorbrake

makeorbrake wrote: »

So we all think we should still keep paying this unjust debt?

Just one link to one of the many articles in the past week - ten days outlining that we simply can't carry the debt burden that we have been shouldering;

LINK

What I get from that article is that talks are ongoing and we probably wont see a conclusion until after the German elections. Sounds fair enough to me. The Irish government can hardly come out and say this publicly - They also can't be seen to be doing nothing in regards to the debt by the Irish electorate - and what we see in these negotiations is the result of everyone saving face.

My own position is that I cannot see the government being forced to pay in the long term, it simply makes no sense in regards to the greater European good (for example, Germany would love for us to be buying more Merc's and 'Beamers, etc).