Stephen Donnelly, on how the ECB actually owes Ireland €64 billion!

Fratton Fred

Scioch wrote: »

Hang on you actually agree with the bank guarantee ??

Sweet jesus.

no, absolutely not. The bank guarantee, especially the one for Anglo, was the biggest **** up of the lot. Anglo should have been allowed to fail. the only reason it wan't was because of the golden circle and Fianna Fail. All this talk of the ECB ordering the bail out is bollocks and a complete distraction.

A corrupt and incompetant government guaranteed the banks to look after their mates.

letting AIB and BoI fail would have caused a lot of domestic problems, but anglo was largely a commercial bank and letting that fail wouldn't have hurt too many little people.

BUT, it was bailed out and it was an Irish government that did it. It is an irish issue that Ireland needs to sort out.

The best way to start sorting it out is a complete change to the political classes that run this country.

poeticseraphim

Fratton Fred wrote: »

Because it was (broadly speaking) Irish tax payers that pissed the money away.

No one pissed money away. Banks over lent based on faulty accounting due to a technical flaw in EU regulation.

Banks failed all over Europe even in Germany...but it was worse here because of the boom..everyone wanted a piece.and some fault of a poor Irish regulator true but not entirely.


And Irish banks had a rep for lending to people who were risky ..the ECB lent to people who were risky...

Fratton Fred

jd1983 wrote: »

Yes, other countries are having to endure austerity measures and if we did not have to re-pay bank debt we would still have to endure austerity measures like everyone else. However what's different between us and other countries is the size of our debt to GDP ratio. This is debt that is being lumped onto the next few generations of Irish people, who had absolutely nothing to with bank debt.
In fact Irish people are handling austerity measures much better that other countries, you only have to look at any news articles coming out of Spain/Greece over the last few years to realize this. So you're statement above just comes across as incredibly juvenile and bitter.

flippant, not juvenile and not bitter (although I have as much right to be bitter as the next person).

Jev/N

Scioch wrote: »

Hang on you actually agree with the bank guarantee ??

Sweet jesus.

So you'd disagree with guaranteeing personal deposits and accounts in the consumer banks?

Shryke

Fratton Fred wrote: »

Shryke wrote: »

There is no hope for this one.

sorry.

boo hoo, feel sorry for us, no one else in the world is going through what we are. we had nothing to do with it and the nasty europeans forced us to do it.

the amount of self pitying and outright refusal to man up and accept responsibilities in this thread is outstanding.:rolleyes:

You got all of that from my post? No? Just putting words in my mouth then, yes? I thought so. What's that? No i'm fine for tea thanks.

Fratton Fred

poeticseraphim wrote: »

No one pissed money away. Banks over lent based on faulty accounting due to a technical flaw in EU regulation.

Banks failed all over Europe even in Germany...but it was worse here because of the boom..everyone wanted a piece.and some fault of a poor Irish regulator true but not entirely.


And Irish banks had a rep for lending to people who were risky ..the ECB lent to people who were risky...

Pissed away may be a bit flippant, but lets face it, how many Land Rovers did people put on their mortgage? that's pretty close to pissing money away in my book.

but come on, banks were lending people €20m to buy a house in Ballsbridge that was being bought purely as a penis extension (yes Mr mcFeeley, I am looking at you). These people were like Harry Enfield characters

https://www.youtube.com/watch?v=AHo2pXO_XAI

And now these gaffs are being repossessed and are worth 10% of that so you and i are paying for it. but as far as i'm concerned, it's our mess and the buck stops with us.

My anger though is with these guys, not some pensioner in Munich

Scioch

Fratton Fred wrote: »

no, absolutely not. The bank guarantee, especially the one for Anglo, was the biggest **** up of the lot. Anglo should have been allowed to fail. the only reason it wan't was because of the golden circle and Fianna Fail. All this talk of the ECB ordering the bail out is bollocks and a complete distraction.

A corrupt and incompetant government guaranteed the banks to look after their mates.

letting AIB and BoI fail would have caused a lot of domestic problems, but anglo was largely a commercial bank and letting that fail wouldn't have hurt too many little people.

BUT, it was bailed out and it was an Irish government that did it. It is an irish issue that Ireland needs to sort out.

The best way to start sorting it out is a complete change to the political classes that run this country.

But the best way for the Irish government to have sorted it out would have been firstly to let the banks collapse (investors lose everything) or even now to inflict haircuts on the bondholders and make it as cheap as possible. Why are you so concerned about foreign investors who's investment went sour when they shouldnt ever have been paid back in full ?

You are arguing in this thread that its our debt, our problem and foreign bondholders shouldnt lose on their failed investment.

Scioch

Jev/N wrote: »

So you'd disagree with guaranteeing personal deposits and accounts in the consumer banks?

No. I disagree with he blanket guarantee and the continued repayment in full to bondholders.

Personal accounts upto a certain amount should have been guaranteed and the banks allowed to collapse.

poeticseraphim

Jev/N wrote: »

So you'd disagree with guaranteeing personal deposits and accounts in the consumer banks?

That is not what the bank garantee did at all.


And a garantee was not needed to protect those accounts.

The banks had been making bad loans and no recognising losses on their books all over Europe for years everywhere france germany included.

What should have happened was forcing the banks to recognise those losses then an immediate recapitalization and protection on some accounts.

The garantee it has been ascertained actually prolonged the crisis. As banks had no incentive to correct their accounting and more incentive to keep making dirty audits Europe wide and push money into Irish banks simply to protect credit ratings etc.

It is recognized that the garantee was the worst thing they could have done and in fact made the whole thing much worse.

It also made it much more difficult to recognize what the actualy problem was for months.

It was a fiasco...far beyond what it did to the Irish Situation...it actually encouraged foreign invstors to pour money into insolvent banks...which is very dangerous.

It was the dumbest fianancial plan they could have come up with.

Jev/N

poeticseraphim wrote: »

That is not what the bank garantee did at all.

I understand that. Obviously much of the guarantee, and the glaringly obvious Anglo, was a shambles from the outset. I was just seeing whether the poster agreed with some extent of a guarantee or protection, as an all out insolvency of the banks could have been carnage.

Linoge

https://www.youtube.com/watch?v=oBjxmsoIFKs

jmayo

suicide_circus wrote: »

for being the fall guys. you think it was just our banking system that was being poor regulated? we were the gangrenous limb hacked off to save the continent. except we're not a gangrenous limb - we're ****ing people, a nation, whose innocent children have been lumbered with billions in debt created by professional gamblers from all over the world, ie: bondholders.

You see it aint that simple.
Yes we took a hit and it was to stop the contagion spreading.
It eventually has spread to other countries, but it was much slower and the big guys managed to kick the can down the road.

But here is a little interesting thing to note.
Hypo Real Estate bank had to be bailed out to the tune of over 100 billion.
Hypo Real Estate bank was in trouble because it's Depfa subsidiary HQed in the IFSC had run up collosal debts.
Depfa was regulated by guess hwo the Irish Central Bank/Financial Regulator.
AFAIK the Germans had voiced their disaproval of how banks in the IFSC were not regulated.

Now should we have paid for the debts run up by Depfa or should the German taxpayers ?

BTW you are correct a lot of the world banks were very poorly regulated.
Iceland, the US, Uk, Spain, etc come to mind.
But ours were fooking especially bad.

Ghandee wrote: »

Which is exactly what lots of people (including myself) have been arguing about with the govts plans to introduce a property tax.

Just because 'they all have one' doesn't mean we need one.

As others have pointed out, bailout of not, we would have to find a more stable continous tax base and property is it.
BTW with or without a bailout we would have had to cut spending.
For some reason I don't think half the people forever sqawking about bondholders ever quiet get this salient point.

Fratton Fred wrote: »

German, British and French tax payers weren't given an option on the bank bail out, so why should they foot the bill.

The Irish property bubble made billions disappear. Someone, somewhere has to cough for it and I'm afraid we are guilty by association.

But the problem is the billions didn't really disappear ?
It may have disappeared from our banks debtors because the loans were securitised primarily on property which is now worth jack sh** in comparison to the loans, but there has been no write off of the loans that our banks took out.
The buck stops with the Irish taxpayers who have made good the debts of everyone else.

Scioch wrote: »

Exactly, we all knew what was happening. We all knew the state was unnecessarily paying out the bonds to prop up the European banking sector and nobody could do anything about it.

Do you know who held a lot of the bonds ?
I would guess a lot of the bonds owed were to non German or Euro zone banks or financial institutions.
Remember mr chelsea and his INBS bonds ?

Claiming we bailed out German banks by paying back their bonds is simplistic.
Our guarantee stopped the contagion of fear of bank collapse from spreading.
If the primary banks in a eurozone country had all collapsed, the euro would have gone down the swany.
I believe we helped save the euro, but the mess in our own banks is our own bloody fault, no one elses.
We as a state are not fooking blameless in all this mess.

Scioch wrote: »

Main reason being that Labour (who were elected to oppose the continued payment to bondholers) sold out their voters and bent knee to FG/FF policy on it to continue paying.

FG and Labour and FF before them bled the country dry to prop up Europe. And yet most people ignore this in favour of attacking welfare recipients as the problem.

Can you get this through your bloody head.
Even without paying a fooking penny or cent to bond holders, our fooking expenditure outweighted our revenue by 20 odd billion.
There was no way we could have continued borrowing to fund that and cuts would have to be made anyway.

The guarantee led to the bailout, because we had stuffed even more debt on top of the soverign debt and no one would lend to us.
The problem with the guarantee and subsequent bailout is that we have created a debt mountain we will probably not get out from under.
But it is fooking moronic to equate non payment of bondholders to no cuts necessary.

spank_inferno wrote: »

Fred fails to notice that it was largely German pension fund money that took a gamble on the Irish Banks & their associated property gambles.

Can you prove this statement please ?

jd1983 wrote: »

Why should Irish taxpayers take the hit for Germans investing their money with incompetent money managers that invested in toxic banks.

See first part of this post above.
The German taxpayers took a major hit for a bank that was operating out of our country under our regulators control.
Should we have paid for Depfa ?

This whole mess is not some simplistic us and them.

ArmaniJeanss

poeticseraphim wrote: »

What should have happened was forcing the banks to recognise those losses then an immediate recapitalization and protection on some accounts.

Would it have been legally possible to guarantee Mammy AJs €150K lifesavings, whilst telling other creditors (foreign institutions, bond holders etc) to gtfo?
It sounds good but my instinct would be that it wouldn't stand up to legal scrutiny.

Duggys Housemate

ArmaniJeanss wrote: »

Would it have been legally possible to guarantee Mammy AJs €150K lifesavings, whilst telling other creditors (foreign institutions, bond holders etc) to gtfo?
It sounds good but my instinct would be that it wouldn't stand up to legal scrutiny.

Yes, it would. Guarantee deposits up to a certain level, tell the bondholders they are taking a haircut.

Scioch

jmayo wrote: »

Claiming we bailed out German banks by paying back their bonds is simplistic.
Our guarantee stopped the contagion of fear of bank collapse from spreading.
If the primary banks in a eurozone country had all collapsed, the euro would have gone down the swany.
I believe we helped save the euro, but the mess in our own banks is our own bloody fault, no one elses.
We as a state are not fooking blameless in all this mess.

Simplistic ? The pressure from the ECB to pay back in full all bonds was to avoid contagion spreading throughout Europe. This is a fact. You agree that we prevented that and propped up the Euro. That is what I'm referring to by saying we bailed out other European banks because that is what we did.

OUR banks ? I didnt own any banks. Nobody I know owned any banks. The banks were private institutions which engaged in reckless lending. Those bondholders were also engaged in reckless lending. All european banks were engaged in this. The Irish people should not be liable for a problem created by a private banking industry. The Irish state has a responsibility to its people not to cover financial losses in the banking industry.

Can you get this through your bloody head.
Even without paying a fooking penny or cent to bond holders, our fooking expenditure outweighted our revenue by 20 odd billion.
There was no way we could have continued borrowing to fund that and cuts would have to be made anyway.

The guarantee led to the bailout, because we had stuffed even more debt on top of the soverign debt and no one would lend to us.
The problem with the guarantee and subsequent bailout is that we have created a debt mountain we will probably not get out from under.
But it is fooking moronic to equate non payment of bondholders to no cuts necessary.

And who's equating non payment of bondholders to no cuts necessary ??

Maybe you should try reading a post properly before making moronic statements. I mentioned nothing about cuts being unnecessary.

Fratton Fred

jmayo wrote: »

See first part of this post above.
The German taxpayers took a major hit for a bank that was operating out of our country under our regulators control.
Should we have paid for Depfa ?

This whole mess is not some simplistic us and them.

I believe ACCBank and Ulsterbank can be added to that list as well.

Fratton Fred

Scioch wrote: »

OUR banks ? I didnt own any banks. Nobody I know owned any banks. The banks were private institutions which engaged in reckless lending. Those bondholders were also engaged in reckless lending. All european banks were engaged in this. The Irish people should not be liable for a problem created by a private banking industry. The Irish state has a responsibility to its people not to cover financial losses in the banking industry.

That's the problem though, you do now own a bank. We all do thanks to the bail out.

And if you have a credit union account, or a pension, you are more than likely a bond holder as well.

jmayo

Scioch wrote: »

Simplistic ? The pressure from the ECB to pay back in full all bonds was to avoid contagion spreading throughout Europe. This is a fact. You agree that we prevented that and propped up the Euro.

It is not just bonds to other banks.
The banks also owed a lot of money to the ECB itself.

Oh and supposedly our best friend in all of this was the big bad dreadful IMF who had wanted to give a haircut to bondholders, but it wasn't just EU/ECB pressure, it appears the US treasury secretary demanded that bonds be paid in full.

Now why would he demand such a thing unless US entities had exposure to Irish bonds ????

True the EU/ECB looks like being the primary ones that demanded we save the banks and demanded we take a bailout when we did.

Scioch wrote: »

That is what I'm referring to by saying we bailed out other European banks because that is what we did.

OUR banks ? I didnt own any banks. Nobody I know owned any banks. The banks were private institutions which engaged in reckless lending. Those bondholders were also engaged in reckless lending. All european banks were engaged in this.

Ok when I said OUR in this case I meant this state's indigenous banks that were meant to be controlled by our so called government and the regulatory authorities of this state.
FFS it wasn't just European banks that were reckless and it wasn't all of them either.
Of course understanding that would mean you don't trott out the old tried and tested tiresome rhethoric.

Scioch wrote: »

The Irish people should not be liable for a problem created by a private banking industry. The Irish state has a responsibility to its people not to cover financial losses in the banking industry.

That should be the way, but sadly we were made responsible for it.
I don't see how you making Rolf, Mika and Hans now responsible for Irish bank debt is going to go down in Holland, Finland and Germany ?

Scioch wrote: »

And who's equating non payment of bondholders to no cuts necessary ??

That is the standard line.
Why should we cut child benefit, carers allowance, etc or bring in property tax when we are paying bondhodlers is the common cry heard both around here and indeed in the Dáil.

preddy

jmayo wrote: »

Even without paying a fooking penny or cent to bond holders, our fooking expenditure outweighted our revenue by 20 odd billion.

What was our over expenditure leading up to this "20 odd Billion" deficit ?

You can't say the banking crisis has had nothing to do with our revenue situation at all.

Duggys Housemate

Apologists for the bailout mention the deficit all the time. What causes alarm for lenders is a high deficit, not under control, and a debt ratio which is higher than 100%. Both. The deficit is coming down, were the bank bailout removed from the debt-GDP ratio we would have a lower debt than the UK, and a decelerating deficit. The UK can borrow, we cannot. the UK deficit is accelerating.

Ok when I said OUR in this case I meant this state's indigenous banks that were meant to be controlled by our so called government and the regulatory authorities of this state.
FFS it wasn't just European banks that were reckless and it wasn't all of them either.
Of course understanding that would mean you don't trott out the old tried and tested tiresome rhetoric.

Regulation in a currency union should stay at the top. Were the Fed to cause a boom in California by keeping interest too low - but perfect for the East Coast - most people would not blame the California Central Bank, in fact there would be little they could do with the tsunami of money flowing from the East looking for better returns.

jmayo

preddy wrote: »

What was our over expenditure leading up to this "20 odd Billion" deficit ?

Ehhh how about hugely increased public sector spending that jumped massively between late 90s and 2007 ?
All those extra public servants, all the benchmarking awards, all the extra quangoes did add up you know.

Or perhaps it might have something to do with the taxation cuts that were brought in from the mid 90s ?
Then again there is our very lavish social welfare system ?

Now if you don't get the fact that if we take in say 30 odd billion in taxes/revenues, but spend on day to day expenses 50 odd billion is bad in itself, then I am out of this discussion.

preddy wrote: »

You can't say the banking crisis has had nothing to do with our revenue situation at all.

The banking situation has a lot to with our current and more importantly future revenue situation.
The banking crisis has meant we had to take a bailout.
Some would say we would still have had to take a baiklout sooner or later if we did not address the current budget deficit.
We were borrowing 20 billion a year FFS.

The banking crisis has meant that there is no proper functioning banking system to lend into businesses that could help us out of the current situation.
It means that our capital reserves in the NTMA were eaten away and the rainy day fund is not there to invest in such things as infrastructure projects to help us out of our recesssion.

But, and I am tired saying this, we would still be facing harsh cuts without a penny ever going into banks or on bondholder bailouts.
Some people refuse to acknowledge this and it really pis*es me off.

Duggys Housemate wrote: »

Apologists for the bailout mention the deficit all the time.

If you care to check the number of times I have been infracted over on Politics for my opinion on bankers, regulators and politicans you would find I am no apologist for bank guarantee, NAMAs or bailouts of any kind. :mad:

Only two banks (AIB & BOI, maybe PTSB) should have been saved and that would have saved us anything in the order of 60 odd billion that has been wasted in the INBS and Anglo cesspits through either recapitlisation or investment through NAMA.

Duggys Housemate wrote: »

What causes alarm for lenders is a high deficit, not under control, and a debt ratio which is higher than 100%. Both. The deficit is coming down, were the bank bailout removed from the debt-GDP ratio we would have a lower debt than the UK, and a decelerating deficit. The UK can borrow, we cannot. the UK deficit is accelerating.

True the bank bailout did push us into a troika bailiout.
BTW the UK or the US are always a better bet to come out of recession so will always find it easier to attract money than us.

As someone said at time of the guarantee the government (with it's inept regulators, dept of finance), signed an open ended cheque for the banks, not knowing fully how bad the situation was, all in hope they could bluff the markets into thinking everything was hunky dory and eventually the tap of cheap credit bubble would be turned back on to enable the resultant property bubble to carry on.

Duggys Housemate wrote: »

Regulation in a currency union should stay at the top. Were the Fed to cause a boom in California by keeping interest too low - but perfect for the East Coast - most people would not blame the California Central Bank, in fact there would be little they could do with the tsunami of money flowing from the East looking for better returns.

I think you have hit on the big issue with the Eurozone.
The original and even the current system does not allow enough flexibility to cater for all the diverse countries within it's sphere of influence.

Ghandee

Just a quick update on this.

Stephen met with the troika yesterday.

Something that stood out from his meeting was this bit:

We also discussed the issues of bondholder payment. it was pointed out that it was the previous government and not the Troika that insisted on payments to unseen unguaranteed bondholders of the pillar banks.

Why do FG insist they have no choice in the matter though?

Some interesting points made, especially the claim that 'plan A may not be working' (no shiit Sherlock)

So I met the Troika yesterday. And it was a very interesting meeting. From their point of view the Government’s programme, which is predicated on economic growth, may need tweaking to reflect changing economic conditions. In short, they’re not sure Plan A is working and they are open to a plan B.

I was delighted to hear they were aware of the difficulties that the current approach to fiscal consolidation is causing. They felt that the growth projections for the country are broadly right but this year’s growth would be lower than expected. In response, I’ve called on the government to finally come up with policies that put citizens ahead of bankers’ balance sheets and conclusively address the household debt problem.

Troika representatives were conscious that cost of living in Ireland was too high, stressed the need for internal devaluation, and stated that the implementation of solutions to the mortgage crisis has been too slow in coming.

http://www.stephendonnelly.ie/featured/so-i-met-the-troika-yesterday/