The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[seafoid]

http://www.irishtimes.com/indepth/how_we_spent_the_boom/index.pdf

Read them and weep

Most of the boom seems to have been spent on making the boom boomier.

[Bogball XV]

Presumably short term just means less than 2 years duration or such. It will be interesting to see the IPM update later this month to see how the ECB proportion has changed- slide 28
The problem with the banks is that they all went beyond their deposits in the race for market share and ended up borrowing on the money markets when money was flúirseach and then got stuck when the money dried up after Lehman. My understanding is that they are all rolling over their short term borrowing with the European Central Bank since nobody in the private sector will lend anything to them now given what is going on in the bond market.
Any sort of a recovery would need the banks to be able to stand independent of the ECB again but that seems way off.

Irish Life& Permanent  is worth €240m today. The embedded value of Irish Life Group in 1990 was £458m before privatisation. 

If short term money is less than 2 years then the 55bn paid in september will have effectively have taken all the guaranteed short term money out of the hands of everyone but the ECB.  What about medium term, has that been rolled over yet I wonder.  That'd represent the monies taken out about 06 just as the boom was boomiest.  Will that be due in 2011?  Could we just not bother renewing our guarantee in Dec and let the owners of that debt take a hit?

[seafoid]

Bogball

It is a national emergency so I think the govt would be entitled to but the EU are calling the shots and I think they wouldn't go for that sort of thing. 

[muppet]

Finished The Big Short - Michael Lewis

Subpime, Asset Backed Securities, Credit Default Swaps, Collateral Debt Obligations all explained for the lay-man.

All about the collapse of the financial system starting with its roots in subprime mortgages.

Starts off with a few wise people 'shorting' the subprime sector (using newly created Mortgage bond CDSs). Then more and more start shorting until the impending doom is so obvious even Goldman Sachs and the rest try dumping their long positions. AIG went bankrupt because they insured most of these CDSs up to 2006 but even they were trying to unravel their positions in late 2007.

Our inspired Government took the ultimate long position as late as september 2008. 

[seafoid]

Finished The Big Short - Michael Lewis

Subpime, Asset Backed Securities, Credit Default Swaps, Collateral Debt Obligations all explained for the lay-man.

All about the collapse of the financial system starting with its roots in subprime mortgages.

Starts off with a few wise people 'shorting' the subprime sector (using newly created Mortgage bond CDSs). Then more and more start shorting until the impending doom is so obvious even Goldman Sachs and the rest try dumping their long positions. AIG went bankrupt because they insured most of these CDSs up to 2006 but even they were trying to unravel their positions in late 2007.

Our inspired Government took the ultimate long position as late as september 2008. 

Muppet

I think it goes beyond subprime. That was the catalyst but if it wasn't that something else would have cause the collapse. If you want one word it is greed but what were the parameters that allowed this to happen? 

For me the problem is the financialisation of the economy. It is the structural flaws in the system itself.  I think it is explained well here

http://www.monthlyreview.org/101001foster.php
 

[seafoid]

Post over at irish economy which seems logical 

the game isn't up yet. Though only just. Basically buyers have called for an extended timeout until they know whats really happening here. We have 6 months or so of cash (end July is what is being suggested at a push), but we also have the NPRF if we really needed to. So basically we have that window to change the markets mind.
Getting the budget and fiscal adjustment plan out of the way is phase 1, then sorting out the political uncertainty which has become more obvious this month is next, so an early 2011 (jan/feb max) election is the next phase. Assuming that goes to plan, with a clear FG leadership role (however the govt is formed), March could be spent roadshowing (alongside EU/ECB cheerleading) to investors with a very clear portrait of Ireland in place - 4yrs of clear fiscal policy, 5 yrs of clear political leadership and a strong mandate, NAMA fully in place, and (hopefully) the banks fully recapitalised at that point. Thats a good story to sell into a big syndicated deal at end March 2011. That, i imagine, is what the NTMA is currently setting itself up for hopefully.

[seafoid]

"Loan losses at Irish lenders, including foreign-owned banks, come to no less than €85 billion, Central Bank governor Patrick Honohan said today."

Jesus.  That is around €17,000 per head.

[seafoid]

It looks like speculators are now targeting the Euro. Some bare knuckle rides ahead.

[muppet]

"Loan losses at Irish lenders, including foreign-owned banks, come to no less than €85 billion, Central Bank governor Patrick Honohan said today."

Jesus.  That is around €17,000 per head.

Here is why no one will lend to us:

Lenihan said in late 2008 it would cost €10 Billion.
In September 2010 he said it would be €50 Billion.
Now we are hearing €85 Billion. No one has a clue what the final figure will be.

Our problem is that the crisis is not over yet. The retail banks (never mind the economy) will be massacred after a €6 Billion budget (November's figure it was €3-4 Billion in September) and will need either more funding (borrowing) or will have to be shut down.

That €17,000 per person should read around €45,000 per worker (the 1,900,000 who still have jobs).

[seafoid]

http://www.ft.com/cms/s/0/5b1650c2-ecfd-11df-9912-00144feab49a.html#axzz14vAekjiu

"The dramatic sell-off in Irish bonds was driven by a fire sale of positions by market participants who were unable to meet collateral requirements enforced by LCH.Clearnet – one of Europe's biggest clearing houses – on Wednesday morning.
Ireland's banks were faced with an estimated $1bn cash-call from LCH.Clearnet as a result of its decision to require a deposit of 15 per cent against all Irish bond positions as an indemnity against default.  The margin will be cleared on Thursday and collected on Friday, a memo sent to LCH.Clearnet members said. Bank of Ireland alone must stump up as much as €250m ($344bn), the Financial Times has learnt. The bank is understood to be meeting the call by dipping into its cash reserves, rather than through selling down its €1.7bn holding of bonds. In order to avoid the call, many other banks and traders are dumping their bond positions, however."

in addition, there are loads of speculators who are happy to bring down the country if they can make enough money from it.   Bastards.

[Declan]

Right lads it's official Christmas has been cancelled

[Bogball XV]

in addition, there are loads of speculators who are happy to bring down the country if they can make enough money from it.   b**tards.

But sure they can speculate all they want, since we don't actually need any money for months (which is a lifetime away in these guys' outlook) does it matter.  They're just playing the market on something they've found a way to make profit on.  They'll have moved on in a few weeks time and maybe our yields will stabilise well below current levels?  I'd say the news about the increased margin requirements at least gives a solid reason for the yields spiking the other day and as soon as that has been absorbed by the market it should lead to further stabilisation - also, does it not mean that there's less likelhood that people will be buying them for short term profits?

[bcarrier]

That €17,000 per person should read around €45,000 per worker (the 1,900,000 who still have jobs).

stick that on the mortgage please.

[gerrykeegan]

Its not even that much, a fiver a day from everyone over the next 10 years and the 17k is paid off with a bit to spare to add another lane to the m50

[seafoid]

in addition, there are loads of speculators who are happy to bring down the country if they can make enough money from it.   b**tards.

But sure they can speculate all they want, since we don't actually need any money for months (which is a lifetime away in these guys' outlook) does it matter.  They're just playing the market on something they've found a way to make profit on.  They'll have moved on in a few weeks time and maybe our yields will stabilise well below current levels?  I'd say the news about the increased margin requirements at least gives a solid reason for the yields spiking the other day and as soon as that has been absorbed by the market it should lead to further stabilisation - also, does it not mean that there's less likelhood that people will be buying them for short term profits?

Hopefully, Bogball
Apparently Irish banks have to put up extra cash if they want to repo the bonds  and they don't have much cash. The whole thing is such a mess. I heard on RTE that the ECB is providing 110bn in funding for the Irish banks (since the private sector won't touch them). If government debt is trading at 8-9% and mortgages are based on  1% it seems like it will be a long time before the banks recover to anything like full health. They will presumably be dependent on the ECB for the next age.
I'd say a passed budget and a new government would help the current crisis  situation but the banks are another kettle of fish.