Banks & Bailouts

PopeBuckfastXVI

Can someone explain it like I'm 5 the current situation with Irish Banks & Irish Government Debt, namely:

• Are there transfers from the Irish Government into any banks ongoing?
• I hear a lot of people calling for negotiation on 'bank debt', cf. Libertas posters, is 'bank debt' easily identified, and to whom is it owed?
• What is the current state of play with Anglo, is it costing us money, making us money, and what are the problems, if any, with cutting it loose?

I've found it hard to keep up with what's going on, so I'd love to get a good summary of the overall situation.

liammur

PopeBuckfastXVI wrote: »

Can someone explain it like I'm 5 the current situation with Irish Banks & Irish Government Debt, namely:

• Are there transfers from the Irish Government into any banks ongoing?
• I hear a lot of people calling for negotiation on 'bank debt', cf. Libertas posters, is 'bank debt' easily identified, and to whom is it owed?
• What is the current state of play with Anglo, is it costing us money, making us money, and what are the problems, if any, with cutting it loose?

I've found it hard to keep up with what's going on, so I'd love to get a good summary of the overall situation.

To be honest, the bank debt is our debt. It was a policy of the previous government to have free and cheap money in circulation. We placed a bet, and lost. Now we want to give the losing docket back to the bookie.

PopeBuckfastXVI

liammur wrote: »

To be honest, the bank debt is our debt. It was a policy of the previous government to have free and cheap money in circulation. We placed a bet, and lost. Now we want to give the losing docket back to the bookie.

I know that the Brians decision in September 2010 put us on the hook for Anglo and the smaller banks that really should have been let go to the wall.

I'm talking about the situation now, the likes of SF and Ganley are saying that we can 'negotiate' on the 'bank debt'. I'd like to know if that is even possible, if 'bank debt' can be hived away from Government Debt?

I have a vague impression that the 'bondholders' don't really exist, or at least not in an identifiable form in terms of bondholders related to banks, as a separate entity to holders of Irish government bonds. Is it possible to say your bond relates to funding of Bank of Ireland, for instance, where my bond relates to funding of Crumlin Childrens hospital, so you should be burnt while I should be paid?

When Ganley talks of negotations with our Euro partners on 'debt deals' does he mean that our sovereign debt which is held by those goverments (if it exists) should be forgiven, i.e. we should just receive a direct transfer from the German taxpayer, for instance?

So many people are talking about 'burning bondholders' and that we are 'bailing out the bankers', and even that we are 'bailing out German banks', I'd like to cut through the slogans and get to the real situation, they never say how they can implement their plans to burn and cease bailing out, or even who the bondholders and German banks are, or how we are bailing them out by borrowing money?

I know that FF put us on the hook. I have an idea that that money is gone, and that what we are borrowing now is to fund the country, and that it's impossible to say who can actually, justifiably be 'burned', but I'd love to know for sure either way.

AlmightyCushion

By renegotiate the bank debt, I believe they are referring to the Anglo Promissory note. The government bailed out Anglo but instead of giving them a big bag of cash at the time, they gave them a glorified IOU, this promissory note is the IOU. The state is then giving Anglo about €3b a year for the next x amount of years.

Scofflaw

PopeBuckfastXVI wrote: »

Can someone explain it like I'm 5 the current situation with Irish Banks & Irish Government Debt, namely:

• Are there transfers from the Irish Government into any banks ongoing?
• I hear a lot of people calling for negotiation on 'bank debt', cf. Libertas posters, is 'bank debt' easily identified, and to whom is it owed?
• What is the current state of play with Anglo, is it costing us money, making us money, and what are the problems, if any, with cutting it loose?

I've found it hard to keep up with what's going on, so I'd love to get a good summary of the overall situation.

This came up on another thread...the answers seem to be:

1. "Ongoing transfers": the only ongoing transfer is the promissory notes, €3.1bn March 31st every year. The bank recapitalisations identified last year in the PCAR stress tests were completed last year - €24bn was identified as being needed, the final cost was €16.5bn by virtue of burning some bondholders. There has been a suggestion that the banks may at some point need another €4bn if their provisions for mortgage defaults prove to be insufficient.

2. "Bank debt": apart from the promissory notes, "bank debt" is now sovereign debt. Strictly speaking, a lot of what was paid into the banks wasn't "bank debt" anyway, but recapitalisation. The government hasn't simply paid off the bank debt - instead, the government has put money into the banks to keep the banks capital ratios above agreed limits (thus keeping the banks solvent) while the banks have paid maturing bonds and withdrawing deposits by borrowing from the ECB.

So the real answer is that the "bank debt" is in the banks as capital, owed to the government. The only way to get it back to the government is for the banks to replace that capital with money from other sources - market investment would be the obvious source, but the only bank managing any of that so far is BOI. If the ESM were to allow for direct bank recapitalisation, then in theory the taxpayers of Europe, via the ESM, could take over the capital jointly.

3. "Anglo": Anglo, or IBRC, is now a wind-up vehicle (!) wholly owned by the State. In terms of costs, what it costs us are the amounts due on the promissory notes every year. Again, these aren't straightforward - they were a chunk of capital in the form of government IOUs that IBRC could borrow from the ECB against - but in order for them to be real capital, the IOUs have to be converted into cash at specific intervals, unless Anglo can come up with money itself, in which case it can hand back promissory notes to the same value.

The last question, as to what happens if you "cut Anglo loose" - that is, presumably, just let it fail - needs a bit more digging, I think. Unfortunately, it's not actually an option for the government to simply say "well, it's going down the tubes. we won't honour the notes", because the notes are now an asset of the bank against which the bank's creditors would have full legal claim. So I think the answer is that doing that would mean all the capital put into Anglo, whether cash or promissory notes, is definitely 100% lost - whereas winding it down slowly leaves the possibility of recovery in Anglo's other assets and some potential recovery.

cordially,
Scofflaw

later12

[QUOTE=PopeBuckfastXVI;78809745

• Are there transfers from the Irish Government into any banks ongoing?
  [/QUOTE]Not from the Government exactly, but from the Irish state in the form of the Central Bank of Ireland. The CBI extends Emergency Liquidity Assistance to the domestic (covered) banks in return for collateral of questionable value. As of the end of last year, this came to about €42 billion, and is mainly a liability of IBRC (Anglo) which the state also owns.
  
  The other major cash transfer that the state makes is the interest payable on Anglo's Promissory notes.
  

  I hear a lot of people calling for negotiation on 'bank debt', cf. Libertas posters, is 'bank debt' easily identified, and to whom is it owed?

  Libertas are likely to be referring to
  
  Promissory Notes held by Anglo Irish Bank (IBRC Limited) against the Irish Government, which the Irish Government will 'pay down' over time. These notes allow Anglo Irish Bank (IBRC Limited) to access liquidity funding (cash) from the CBI.
  

• What is the current state of play with Anglo, is it costing us money, making us money, and what are the problems, if any, with cutting it loose?One problem cited with cutting Anglo loose is that the €42 billion it owes to the state (CBI) would never be realized; or rather, we would have to realize a larger loss on that money than anticipated.
  
  There is also thought to be a threat to the Irish and/ or European Financial System.

PopeBuckfastXVI

later12 wrote: »

Not from the Government exactly, but from the Irish state in the form of the Central Bank of Ireland. The CBI extends Emergency Liquidity Assistance to the domestic (covered) banks in return for collateral of questionable value. As of the end of last year, this came to about €42 billion, and is mainly a liability of IBRC (Anglo) which the state also owns.

The other major cash transfer that the state makes is the interest payable on Anglo's Promissory notes.

Libertas are likely to be referring to

Promissory Notes held by Anglo Irish Bank (IBRC Limited) against the Irish Government, which the Irish Government will 'pay down' over time. These notes allow Anglo Irish Bank (IBRC Limited) to access liquidity funding (cash) from the CBI.

One problem cited with cutting Anglo loose is that the €42 billion it owes to the state (CBI) would never be realized; or rather, we would have to realize a larger loss on that money than anticipated.

There is also thought to be a threat to the Irish and/ or European Financial System.

So between which parties would 'negotiations' on e.g. Anglo Promissory Notes take place?

later12

PopeBuckfastXVI wrote: »

So between which parties would 'negotiations' on e.g. Anglo Promissory Notes take place?

In theory between Ireland, the ECB and the European Council (the latter since funding would have to be facilitated by the ESM for which the heads of state must agree).

This would involve the EU Commission and the IMF as well, but they are probably of lesser importance as usual.

PopeBuckfastXVI

later12 wrote: »

In theory between Ireland, the ECB and the European Council (the latter since funding would have to be facilitated by the ESM for which the heads of state must agree).

This would involve the EU Commission and the IMF as well, but they are probably of lesser importance as usual.

This is where my disconnect kicks in.

Are you saying that we would try to seek a non repayable transfer from either/all of the ECB, the European Council or the ESM in order to pay the promissory notes, effectively shifting responsibility for them from us to them?

Or is it the case that the money we are putting into Ango on the basis of the promissory notes is actually going to the ECB, the European Council and the ESM, and we are asking to be 'let off' that obligation?

Scofflaw

PopeBuckfastXVI wrote: »

This is where my disconnect kicks in.

Are you saying that we would try to seek a non repayable transfer from either/all of the ECB, the European Council or the ESM in order to pay the promissory notes, effectively shifting responsibility for them from us to them?

Or is it the case that the money we are putting into Ango on the basis of the promissory notes is actually going to the ECB, the European Council and the ESM, and we are asking to be 'let off' that obligation?

More the former than the latter - or at least the latter certainly isn't the case.

The government gave Anglo €30bn in IOUs out of thin air - the money was simply created by fiat. Each year, real money has to be transmitted from the State to Anglo, from Anglo to the Irish Central Bank, and from the ICB back into thin air.

What we want is either to have longer to remove the €30bn from the system, or...well, I'm not sure. For the money not to be destroyed means that it winds up in the ICB, which would mean that Ireland had been allowed to create €30bn out of nothing, and then keep it. For the government not to have to pay the money to Anglo means the promissory notes are without value.

As they say, it's complicated.

cordially,
Scofflaw

later12

PopeBuckfastXVI wrote: »

Are you saying that we would try to seek a non repayable transfer from either/all of the ECB, the European Council or the ESM in order to pay the promissory notes, effectively shifting responsibility for them from us to them?

In an ideal world, the ECB would just agree that the CBI would extend the terms of the Irish Promissory Notes and pay it back years down the line, but allow inflation take care of it in the mean time.

That isn't likely to happen.

What appears more likely is that the Anglo Promissory Notes will be repaid under the existing arrangement, using ESM funding. This would change the nature of the debt (i.e. increase its ranking) but it might allow for a certain degree of flexibility that is not likely to become available from the ECB.

PopeBuckfastXVI

Scofflaw wrote: »

More the former than the latter - or at least the latter certainly isn't the case.

The government gave Anglo €30bn in IOUs out of thin air - the money was simply created by fiat. Each year, real money has to be transmitted from the State to Anglo, from Anglo to the Irish Central Bank, and from the ICB back into thin air.

What we want is either to have longer to remove the €30bn from the system, or...well, I'm not sure. For the money not to be destroyed means that it winds up in the ICB, which would mean that Ireland had been allowed to create €30bn out of nothing, and then keep it. For the government not to have to pay the money to Anglo means the promissory notes are without value.

As they say, it's complicated.

cordially,
Scofflaw

I get the impression there's no identifiable strategy to extricate ourselves from it?

I wish those selling such a destination would be pushed to reveal the map to get there, I would dearly like to know if there actually is a way out of the mess that FF left.

I don't understand the flow of money into and out of Anglo and the ICB though, every year we give 3bn in actual factual euro to Anglo? What happens to it?

PopeBuckfastXVI

later12 wrote: »

In an ideal world, the ECB would just agree that the CBI would extend the terms of the Irish Promissory Notes and pay it back years down the line, but allow inflation take care of it in the mean time.

That isn't likely to happen.

What appears more likely is that the Anglo Promissory Notes will be repaid under the existing arrangement, using ESM funding. This would change the nature of the debt (i.e. increase its ranking) but it might allow for a certain degree of flexibility that is not likely to become available from the ECB.

I'm feeling very thick, I'm not sure I understand how the promissory note system works?

I also get the impression that this mess is of our own making, and pushing any 'pain' to external parties would be morally questionable?

later12

PopeBuckfastXVI wrote: »

every year we give 3bn in actual factual euro to Anglo? What happens to it?

Someone presses the delete button in an office in the CBI. It just disappears. Poof.

Laura Noonan (Indo) has suggested that not all of the ELA is magic money (i.e. some has come from other CBs in the Eurosystem, but we don't know this for sure. The ECB won't discuss it.

itzme

Could I just say thanks to scofflaw and later12 for trying to explain this without any spin or (seemingly) political bias. The ins and outs of the bank debt is not something I've dug into too much and in general what I have seen has been very politically motivated, but from reading here, it is a lot clearer.

PopeBuckfastXVI

later12 wrote: »

Someone presses the delete button in an office in the CBI. It just disappears. Poof.

Laura Noonan (Indo) has suggested that not all of the ELA is magic money (i.e. some has come from other CBs in the Eurosystem, but we don't know this for sure. The ECB won't discuss it.

To what end though?

I feel like I went out to the bathroom and missed a critical scene in the movie!

later12

How do you mean? The ELA is just a temporary insertion of money into the Irish banking system which is conjured up, as if by magic, at the Central Bank.

If magic brought this money into the world, then magic must take it out again.

If any portion of the ELA was taken from the Eurosystem, as Laura Noonan has suggested, then that money must return to the Eurosystem.

PopeBuckfastXVI

later12 wrote: »

How do you mean? The ELA is just a temporary insertion of money into the Irish banking system which is conjured up, as if by magic, at the Central Bank.

If magic brought this money into the world, then magic must take it out again.

If any portion of the ELA was taken from the Eurosystem, as Laura Noonan has suggested, then that money must return to the Eurosystem.

Sorry for not getting this easier, what's the ELA?

And to what end is the money inserted?

As I understand it, and please, please correct me if I'm wrong...

1. We guaranteed the liabilities of Anglo?
2. There was a flight of capital from Anglo, or it's assets dropped somehow?
3. We injected money + non-existent money into Anglo
4. ???
5. We now have to provide the non-existent money to Anglo every year, out of real money
6. Anglo takes the real money, and makes it non-existent.

later12

PopeBuckfastXVI wrote: »

Sorry for not getting this easier, what's the ELA?

And to what end is the money inserted?

My mistake, I think i skipped the ELA bit.

ELA= Emergency Liquidity Assistance.

For the purpose of this discussion, it's the money that the Irish Central Bank gave to Anglo Irish Bank when investors and customers took fright, and Anglo lost deposits and security. It needed this emergency cash to stay in business.

But it wasn't a personal gift from Patrick Honohan and his team. The Irish Government have to pay for it. They are paying for it using promissory notes - just over €3bn in annual instalments.

When it is paid for, it will just disappear; just as it came from nowhere, it will go back to nowhere.

If it is not paid for, Anglo will be technically insolvent. At that point, it can access no more funding from the Central Bank, and the Central Bank has to accept whatever losses it ends up with.

PopeBuckfastXVI

later12 wrote: »

My mistake, I think i skipped the ELA bit.

ELA= Emergency Liquidity Assistance.

For the purpose of this discussion, it's the money that the Irish Central Bank gave to Anglo Irish Bank when investors and customers took fright, and Anglo lost deposits and security. It needed this emergency cash to stay in business.

But it wasn't a personal gift from Patrick Honohan and his team. The Irish Government have to pay for it. They are paying for it using promissory notes - just over €3bn in annual instalments.

When it is paid for, it will just disappear; just as it came from nowhere, it will go back to nowhere.

If it is not paid for, Anglo will be technically insolvent. At that point, it can access no more funding from the Central Bank, and the Central Bank has to accept whatever losses it ends up with.

So a potential way out, as above, is to stop making the money disappear, and just keep it instead. Which is against the rules of the ECB, as you've magic'd money out of the air, which is an inflationary practice?

Now a question, which comes down to the moralities involved, when Anglo got the 30bn from the money tree - they did what exactly with it? Is this where the French/German banks we hear about come in, were they given that money instead of taking losses on investments in Anglo (were Anglo allowed to go under), and was any external pressure brought to bear on the FF government to keep Anglo afloat, or was it of their own volition?

AlmightyCushion

PopeBuckfastXVI wrote: »

So a potential way out, as above, is to stop making the money disappear, and just keep it instead. Which is against the rules of the ECB, as you've magic'd money out of the air, which is an inflationary practice?

Now a question, which comes down to the moralities involved, when Anglo got the 30bn from the money tree - they did what exactly with it? Is this where the French/German banks we hear about come in, were they given that money instead of taking losses on investments in Anglo (were Anglo allowed to go under), and was any external pressure brought to bear on the FF government to keep Anglo afloat, or was it of their own volition?

My understanding is that Anglo haven't done anything with it. It's just a €30b piece of paper and as the state transfers money to Anglo that's on their books as an asset to stop them being consider insolvent and let them continue as a business.

later12

PopeBuckfastXVI wrote: »

So a potential way out, as above, is to stop making the money disappear, and just keep it instead. Which is against the rules of the ECB, as you've magic'd money out of the air, which is an inflationary practice?

Well no, the bit about keeping the money and not paying for the promissory notes is the problem. It causes (not insurmountable) trouble for our Central Bank, but means Anglo has to go under as well.

Magic money is not against the rules of the ECB in some specific circumstances, which the CBI and the Irish authorities are complying with. Furthermore, the money in Anglo represents a tiny amount of the m3 money in the Eurosystem, and as such is not a threat to price stability.

Now a question, which comes down to the moralities involved, when Anglo got the 30bn from the money tree - they did what exactly with it?

They met their obligations to depositors and bondholders. In the case of bondholders, it is very difficult to tell who the beneficial holders of these bonds are, or where they are resident.

was any external pressure brought to bear on the FF government to keep Anglo afloat, or was it of their own volition?

That's a question of some contention. In terms of the 2008 bank guarantee, it looks likely to have been a domestic decision.

However, Alan Ahearne (economic advisor to Brian Lenihan), Ajay Chopra (I.M.F) and Brian Lenihan himself said that the ECB was against the idea of imposing losses on Anglo at the time of the Irish bailout, presumably because of fears about contagion effects as opposed to any concerns about losses on European banks in their own right. The latter, by themselves, are small fish. Financial contagion, both within Ireland and the Eurosystem, would more likely have been the fear.

PopeBuckfastXVI

Thanks for all your help understanding!

So 'burning the bondholders' appears to be more or less useless rhetoric, from what I can see? And a 'deal on bank debt' appears to be a request for free money from our partners?

Scofflaw

PopeBuckfastXVI wrote: »

So a potential way out, as above, is to stop making the money disappear, and just keep it instead. Which is against the rules of the ECB, as you've magic'd money out of the air, which is an inflationary practice?

Basically so, because that gets us a free gift of €30bn. If it were just the €30bn, that's clearly a drop in the eurozone bucket. However, if Ireland can magic €30bn out of the air and keep it, why can't Portugal...and Greece...and why can't Spain magic €300bn...and Italy...and so on.

PopeBuckfastXVI wrote: »

Now a question, which comes down to the moralities involved, when Anglo got the 30bn from the money tree - they did what exactly with it?

They use it as collateral to borrow from the Irish Central Bank, and they use that liquidity to keep their loans rolling over.

PopeBuckfastXVI wrote: »

Is this where the French/German banks we hear about come in, were they given that money instead of taking losses on investments in Anglo (were Anglo allowed to go under),

Unlikely, given the small scale of eurozone bondholdings and deposits in all the covered banks. Nor would Anglo have given anyone the money directly - what happens instead is that Anglo will have used the notes as collateral to borrow from the central bank, and used that borrowed money to pay off their bondholders, who appear, on the available evidence, to have most likely been US and UK based. That shouldn't be a surprise, given that's where Anglo's connections were.

PopeBuckfastXVI wrote: »

and was any external pressure brought to bear on the FF government to keep Anglo afloat, or was it of their own volition?

Heh. That depends on what you want to believe, I think. Trichet is supposed to have "instructed" Lenihan to "save your banks"...but the "instruction" was, apparently, an answerphone message that Trichet left when Lenihan was at a rugby match, and Lenihan apparently didn't even bother calling back for clarification. The ECB was certainly opposed to burning bondholders at the time of the bailout, but that's two years later and applies to only a remaining 5-10% of bondholders.

Alternatively, one can point to a number of meetings with bank personnel in the days preceding the guarantee, which has led to suggestions that Anglo put pressure on Lenihan to save Anglo. However, Anglo's David Drumm claims that AIB and BOI were the ones who were scared, and used Anglo as an excuse.

I have heard it said that the decision to save the banks went into Cabinet without Anglo included, and came out with Anglo included, and certainly the Department of Finance leaked some papers in the aftermath that backs up that position.

However, the official reason given was that it was all the banks or none, and couldn't be the latter. I'm not sure that's particularly unreasonable - the Irish government, like all governments, prefers to save banks.

cordially,
Scofflaw

later12

Scofflaw wrote: »

Trichet is supposed to have "instructed" Lenihan to "save your banks"...but the "instruction" was, apparently, an answerphone message that Trichet left when Lenihan was at a rugby match, and Lenihan apparently didn't even bother calling back for clarification. The ECB was certainly opposed to burning bondholders at the time of the bailout, but that's two years later and applies to only a remaining 5-10% of bondholders.

Alternatively, one can point to a number of meetings with bank personnel in the days preceding the guarantee, which has led to suggestions that Anglo put pressure on Lenihan to save Anglo. However, Anglo's David Drumm claims that AIB and BOI were the ones who were scared, and used Anglo as an excuse.

I have heard it said that the decision to save the banks went into Cabinet without Anglo included, and came out with Anglo included, and certainly the Department of Finance leaked some papers in the aftermath that backs up that position.

In fairness, all of the above is little more than post office queue gossip. I think the Lenihan comment is particularly irrelevant; not sure what the point of it is.

Scofflaw

later12 wrote: »

In fairness, all of the above is little more than post office queue gossip.

True - hence the "depends on what you want to believe". Mind you, Drumm's claim is as stated, although it may only apply in a universe in which Anglo didn't really have anything but liquidity problems.

later12 wrote: »

I think the Lenihan comment is particularly irrelevant; not sure what the point of it is.

It allows those who are prepared to treat it uncritically to believe that the guarantee itself was the fault of the ECB rather than a decision of Fianna Fáil's, which is apparently of some comfort to some people.

cordially,
Scofflaw

Dan_Solo

AlmightyCushion wrote: »

By renegotiate the bank debt, I believe they are referring to the Anglo Promissory note. The government bailed out Anglo but instead of giving them a big bag of cash at the time, they gave them a glorified IOU, this promissory note is the IOU. The state is then giving Anglo about €3b a year for the next x amount of years.

I thought under the new financial regulations that brought about NAMA etc that these sort of agreements could be torn up by the Government at will.
Why are they still being paid?

later12

Scofflaw wrote: »

It allows those who are prepared to treat it uncritically to believe that the guarantee itself was the fault of the ECB rather than a decision of Fianna Fáil's, which is apparently of some comfort to some people.

It's a cheap shot at Lenihan, with the insinuation that he wasn't bothered to call Trichet to clarify the ECB's position on a matter of major financial policy; is there any evidence this actually happened?

The issue of the bank guarantee and the onset of the Irish bailout is complex enough without people adding their own favourite whisperings.

Dan_Solo

later12 wrote: »

It's a cheap shot at Lenihan, with the insinuation that he wasn't bothered to call Trichet to clarify the ECB's position on a matter of major financial policy; is there any evidence this actually happened?

I think back then when we were operating as a sovereign state Lenihan might have phoned to ask, but the ECB couldn't really do much to stop him destroying the Irish economy if he so wished.
Cheap shots are what he and Cowen deserve.

later12

You can't just write history based on what people 'deserve' to have said about them. By all means look at the various claims, but they deserve to be at least corroborated with evidence or offer some element of credibility.

Suggesting that Lenihan was unable to be stirred out of watching a game of rugby to clarify the wishes of the European authorities is neither verifiable nor possible to refute, and is of little value apart from deliberately seeking to denigrate someone's reputation - a reputation which hardly needs prattle to diminish it, in fairness.

Scofflaw

later12 wrote: »

It's a cheap shot at Lenihan, with the insinuation that he wasn't bothered to call Trichet to clarify the ECB's position on a matter of major financial policy; is there any evidence this actually happened?

Lenihan claimed it himself, and it has since been used as a way of foisting the blame for the guarantee onto the ECB.

later12 wrote: »

The issue of the bank guarantee and the onset of the Irish bailout is complex enough without people adding their own favourite whisperings.

I'd agree, and my own view is that the guarantee was essentially a rational and domestically chosen response to inadequate information (see, for example, here), but it's nevertheless the case that there are several different public narratives which are both simplistic and popular, from the McWilliams narrative of a maverick economist's late night meeting with a troubled Lenihan through the golf-game 'crony capitalism' explanation to the "ECB made us do it" narrative of the eurosceptics and Fianna Fáil party faithful.

People tend to prefer simplistic narratives with strong individual actors to complex analyses of institutional biases and information failures - they want to know who to blame, not what happened and how to prevent it happening again

cordially,
Scofflaw

sean2012

what where the french and german debts that anglo irish bank took on
where there assets from these debts and why dont they go after them for there money back

Scofflaw

sean2012 wrote: »

what where the french and german debts that anglo irish bank took on
where there assets from these debts and why dont they go after them for there money back

Nobody knows, because nobody's ever even shown them to have existed. What we do have in the way of evidence - the banks' balance sheets, the stress tests - don't show very much "French or German" money in our banks ever.

cordially,
Scofflaw

sean2012

it was reported that anglo had bad french and german loans

in my opinion enda kenny and all of the fine gale party are as much to blame
as fainna fail for the state the country is in, enda and his party where all in government in the last 10 to 20 years and what did they deliver or do for there huge incomes, i don't support either most of them don't even have a education

Scofflaw

sean2012 wrote: »

it was reported that anglo had bad french and german loans

It's also been reported that Elvis is alive. Nobody has ever shown that these supposed debts existed - so it's not really possible to say anything more about them.

The "French and German money" that's usually reported in the media was in the IFSC banks, not the ones we bailed out.

cordially,
Scofflaw

sean2012

how do you know there wasent, i dont know what money was passing throw anglo
saying "so it's not really possible to say anything more about them"
is like saying we the irish people dont care about being **** up the ass by some corrupt bankers or politician these people should be given jail sentences not bonuses

Scofflaw

sean2012 wrote: »

how do you know there wasent, i dont know what money was passing throw anglo

Because the Central Bank publishes combined balance sheets for all the banks, and breaks the money from abroad into "eurozone" and "rest of world". If there had been a lot of French and German money in the banks it should show up there, and it doesn't.

sean2012 wrote: »

saying "so it's not really possible to say anything more about them"
is like saying we the irish people dont care about being **** up the ass by some corrupt bankers or politician these people should be given jail sentences not bonuses

It's more like pointing out that what everybody believes to be true because some journalist says it is often complete rubbish.

cordially,
Scofflaw

sean2012

i dont know way your defending them you must be working for them,
obviously all the transactions where hidden

check out wiki
http://en.wikipedia.org/wiki/Anglo_Irish_Bank

Since the nationalization of Anglo Irish Bank a number of controversies have arisen over certain business practises & loans, including loans to directors, and loans to people associated with Brendan Murtagh, EMPG and the QUINN group.

Scofflaw

sean2012 wrote: »

i dont know way your defending them you must be working for them,
obviously all the transactions where hidden

check out wiki
http://en.wikipedia.org/wiki/Anglo_Irish_Bank

Since the nationalization of Anglo Irish Bank a number of controversies have arisen over certain business practises & loans, including loans to directors, and loans to people associated with Brendan Murtagh, EMPG and the QUINN group.

If the transactions were hidden, how did anyone know about them in the first place?

regards,
Scofflaw

sean2012

i dont think it would have been published in every paper in the country if it wasn't true, you'll have to ask the gardai if you want more info

later12

Scofflaw wrote: »

Because the Central Bank publishes combined balance sheets for all the banks, and breaks the money from abroad into "eurozone" and "rest of world". If there had been a lot of French and German money in the banks it should show up there, and it doesn't.

While I think the symbolic meaning of an Irish financial collapse is likely to be more relevant than any amount of German money that may or may not be in the Irish banks, it must be pointed out that those CB figures are not really evidence of anything either. One would have to say it is quite likely that given the amount of treasury operations there are domiciled in the IFSC, you would expect a lot of non-Irish ownership to appear as Irish on paper in the eyes of the Central Bank of Ireland.

It would be wrong to say there is evidence of dramatic amounts of French and German funds in the Irish covered institutions, but it is also wrong to suggest that if there were such investment, it should show up on the CBI's aggregate balance sheet for the covered institutions.

PopeBuckfastXVI

sean2012 wrote: »

i dont think it would have been published in every paper in the country if it wasn't true, you'll have to ask the gardai if you want more info

Hi Sean,

I asked the question about external money myself earlier in this thread, can you point me at a couple of newspaper articles that detail the foreign money that the Anglo bailout saved, so I can read up on it please?

Scofflaw

sean2012 wrote: »

i dont think it would have been published in every paper in the country if it wasn't true, you'll have to ask the gardai if you want more info

Unfortunately that's not even remotely the case - things are regularly published in every newspaper in the country which bear no relation to the facts.

It seems strange to believe everything you believe in the papers, given your apparent suspicion of everything else.

regards,
Scofflaw

sean2012

as i said, ask the guys that are investigating, as regards to the newspapers it wouldn't be published if it wasn't true.


saying "which bear no relation to the facts" means its not related to the topic not true or false

Scofflaw

later12 wrote: »

While I think the symbolic meaning of an Irish financial collapse is likely to be more relevant than any amount of German money that may or may not be in the Irish banks, it must be pointed out that those CB figures are not really evidence of anything either. One would have to say it is quite likely that given the amount of treasury operations there are domiciled in the IFSC, you would expect a lot of non-Irish ownership to appear as Irish on paper in the eyes of the Central Bank of Ireland.

If the IFSC banks had major dealings with the domestic banks, that would be the case - however, they didn't. And indeed if they did, they would then be classed as "domestic" banks by virtue of having extensive dealings with domestic financial institutions.

later12 wrote: »

It would be wrong to say there is evidence of dramatic amounts of French and German funds in the Irish covered institutions, but it is also wrong to suggest that if there were such investment, it should show up on the CBI's aggregate balance sheet for the covered institutions.

One can happily cross-check the results of the stress tests, the BIS statistics, the Central Bank's aggregate balance sheets, and the published records of the banks themselves and find not a jot of evidence for the claim. The best anyone has been able to do is to claim, as you have here, that it might be the case that the origin recorded in the aggregate balance sheets conceals the supposedly massive quantities of money from French and German banks - but when absolutely none of the available evidence shows it, then one might begin to suspect the reason for the lack of evidence is a lack of the thing in question.

And one might go on to question why anyone asserts confidently something that completely lacks evidence in the first place, or believes that someone who contradicts that assertion should be the one required to provide proof that the evidence-free claim is not true.

cordially,
Scofflaw

Scofflaw

sean2012 wrote: »

as i said, ask the guys that are investigating, as regards to the newspapers it wouldn't be published if it wasn't true.


saying "which bear no relation to the facts" means its not related to the topic not true or false

No, it means that the newspapers will, for example, carry a claim that Ireland has "at least €500bn in offshore oil and gas",when in fact Ireland has known reserves of approximately €10bn.

Or that our domestic banks owed tens of billions to German and French banks, when that statistic applies to something else entirely.

The only reason newspapers are at all scrupulous about facts is if someone is likely to sue them for their inaccuracy, which isn't the case with the made-up numbers they regularly put out. Nobody will sue them over a claim that there's more oil and gas than is actually known, or over a claim that Irish banks owe money in any particular direction, so the papers have no reason to be careful about using whatever figures their journalists happen to get hold of.

regards,
Scofflaw

sean2012

ireland has a lot more than 500bn in offsore oil it just hasent been drilled and broght offshore and thats a different subject

later12

Scofflaw wrote: »

If the IFSC banks had major dealings with the domestic banks, that would be the case - however, they didn't. And indeed if they did, they would then be classed as "domestic" banks by virtue of having extensive dealings with domestic financial institutions.

No, they are classed as domestic if their assets and liabilities resting with Irish households and non financial corporations incorporated in Ireland are significant. Their relationships with their colleagues in the 'domestic financial institutions' group is another matter which as far as I am aware is not taken into account when deciding whether a financial institution is a domestic or merely Irish resident institution.

One can happily cross-check the results of the stress tests, the BIS statistics, the Central Bank's aggregate balance sheets, and the published records of the banks themselves and find not a jot of evidence for the claim.

Again, i'm not saying there is actually evidence for what is claimed. I think I have regularly expressed scepticism about it on these boards. I'm saying that if there were such evidence, it wouldn't be expected to shine through the data where you suggested it should be found - i.e. the CB's aggregate balance sheet for the domestics.

And one might go on to question why anyone asserts confidently something that completely lacks evidence in the first place, or believes that someone who contradicts that assertion should be the one required to provide proof that the evidence-free claim is not true.

Who is doing that?

My response was not suggesting that there is evidence, I was responding to the following (my emboldening)

Originally Posted by Scofflaw
Because the Central Bank publishes combined balance sheets for all the banks, and breaks the money from abroad into "eurozone" and "rest of world". If there had been a lot of French and German money in the banks it should show up there, and it doesn't.

meglome

sean2012 wrote: »

ireland has a lot more than 500bn in offsore oil it just hasent been drilled and broght offshore and thats a different subject

The problem is it's in everyone's interest to 'big' up the numbers on the oil. The government gets to sell the licences, the stock in the oil companies who hold the licences go up and the newspapers sell their newspapers. What is more telling is in the last round of licences issued by the government no major oil company took one. And what's even more telling is we've basically landed 0 oil so far.

So we all hope this huge figures are true but right they they are complete and utter fantasy.

Scofflaw

later12 wrote: »

No, they are classed as domestic if their assets and liabilities resting with Irish households and non financial corporations incorporated in Ireland are significant. Their relationships with their colleagues in the 'domestic financial institutions' group is another matter which as far as I am aware is not taken into account when deciding whether a financial institution is a domestic or merely Irish resident institution.

You're correct there, of course - mea culpa!

However, one can determine the amount of Irish bank bonds held by the Irish-based non-domestic banks by subtracting those held by the domestic banks from those held by all the Irish-resident banks, and the figure is only €3.498bn at the time of the guarantee.

later12 wrote: »

Again, i'm not saying there is actually evidence for what is claimed. I think I have regularly expressed scepticism about it on these boards. I'm saying that if there were such evidence, it wouldn't be expected to shine through the data where you suggested it should be found - i.e. the CB's aggregate balance sheet for the domestics.
Who is doing that?

Everyone who asserts that the German and French banks were the major source of money in our collapsed banks - you surely cannot be unaware that this is something regularly claimed? sean2012 is correct in saying that it's reported in "every newspaper" - because every newspaper lazily uses the BIS locational banking statistics, which are of no value in determining the amount of domestic Irish bank bonds held by other countries, but are used simply because they are the only statistics that have a country by country breakdown.

I had an exchange with Karl Whelan last summer on the subject, because he made exactly this assertion. While he also pointed out that the statistics from the Central Bank cannot be regarded as definitive for similar reasons to yours, he did not put forward any evidence supporting the assertion.

later12 wrote: »

My response was not suggesting that there is evidence, I was responding to the following (my emboldening)

I should of course be slightly more circumspect in that claim, but I think I can say that there is no reason not to expect it to show up there, and its absence requires explaining away if the popular myth is to be upheld.

Most of the easy explanations - such as that the bonds were held by German and French banks resident here - can also be quite quickly shown not to hold up.

cordially,
Scofflaw

Scofflaw

sean2012 wrote: »

ireland has a lot more than 500bn in offsore oil it just hasent been drilled and broght offshore and thats a different subject

The willingness of the newspapers to report an unsubstantiated estimate of Ireland's oil and gas as if it were fact is obviously the same subject.

cordially,
Scofflaw