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

[Tankie]

Basically because the Government did nothing until Anglo was in the final phase of collapsing, no investor has any faith in our banks.

Will our other banks last the week?Tune in to The Muppet Show next week to find out.

less than 6 months ago, someone on here suggested that at least one of the banks was in deep shit, but that suggestion was laughed off as being ridiculous - now with Anglo effectively gone under, who is next ?

Well anyone who follows the stock markets and reads the business news knew that it was Anglo that was in shite! But what is happening to BOI and AIB is very worrying, alot of this has to do with the governments in decision, investors are starting to lose confidence in Ireland at this stage as the government is re-activy to everything and not pro-active.

Its a bad sign whe a government say 1 month ago that all the banks are sound only then to take 75% of the bank that everyone knew was focked and then 3 weeks later to come out and nationalize it.

[FermGael]

Bailout number 2 the UK is not having the desired effect.

The big banks are suffering losses on the stockmarket today.

RBS have lost 65% in one day(12p a share)
LloydTSB have lost 25%
HSBC down 12%
Barclays down 10%

I think that RBS could be nationalised before the week or even today is out.

Things are not looking good.
The throw money at the banks approach and get them to lend, is not working.
Even if they were lending, people would be very wary of taking on debt in the current economic climate.
Re inflating the housing bubble is not the answer either.

[Maiden1]

Bailout number 2 the UK is not having the desired effect.

The big banks are suffering losses on the stockmarket today.

RBS have lost 65% in one day(12p a share)
LloydTSB have lost 25%
HSBC down 12%
Barclays down 10%

I think that RBS could be nationalised before the week or even today is out.

Things are not looking good.
The throw money at the banks approach and get them to lend, is not working.
Even if they were lending, people would be very wary of taking on debt in the current economic climate.
Re inflating the housing bubble is not the answer either.

The banks have to start lending again somehow.  I know it's easier said than done but the banks are looking between 25 and 40% deposit to buy a house now, there are virtually no first time buyers under 40 who would have 40k+ sitting in the bank.  It doesn't matter how low interest rates go or how cheap houses get if no one can get a mortgage then the building industry will never start moving again.

[Gnevin]

Basically because the Government did nothing until Anglo was in the final phase of collapsing, no investor has any faith in our banks.

Will our other banks last the week?Tune in to The Muppet Show next week to find out.

less than 6 months ago, someone on here suggested that at least one of the banks was in deep shit, but that suggestion was laughed off as being ridiculous - now with Anglo effectively gone under, who is next ?

Well anyone who follows the stock markets and reads the business news knew that it was Anglo that was in shite! But what is happening to BOI and AIB is very worrying, alot of this has to do with the governments in decision, investors are starting to lose confidence in Ireland at this stage as the government is re-activy to everything and not pro-active.

Its a bad sign whe a government say 1 month ago that all the banks are sound only then to take 75% of the bank that everyone knew was focked and then 3 weeks later to come out and nationalize it.

In fairness to the governement(s) around the world no one really know what to do here . The brits have be throwing money at like it was going out of fashion and that hasn't helped. The yanks are fucked , the rest of Europe is on a knife edge.

[muppet]

Its all very well saying the banks should lend but to whom and how much?

Businesses on the brink?
Give mortgages secured against rapidly falling houses prices?

Now that they are assessing risk again only personal loans would be safe from their point of view.

The property market is the key. Find the bottom to that and the recovery begins. Unfortunately finding that bottom involves the banks finally declaring all their toxic debt which may put them out of business. Catch 22.

[Maiden1]

Its all very well saying the banks should lend but to whom and how much?

Businesses on the brink?
Give mortgages secured against rapidly falling houses prices?

Now that they are assessing risk again only personal loans would be safe from their point of view.

The property market is the key. Find the bottom to that and the recovery begins. Unfortunately finding that bottom involves the banks finally declaring all their toxic debt which may put them out of business. Catch 22.

The US has trillion dollar rescue packages now for the big banks/insurance companies/car companies etc, it is kind of like they are just making up numbers now.  Is there ever a number that it gets to where the government says we don't actually have any more money?

[lynchbhoy]

maybe I am not getting he full picture, but banks imo are shooting themselves in the foot (slitting themselves in the throat more apt maybe) by stopping conducting business.

There may be a number of businesses out there that are risks and should not be lent to, but this clamming up and lending to nobody is not going to help. It will make things worse.

Imo by not lending, a reasonably secure business coul dhit the rocks, the employees lose jobs, they cant pay the mortgage- it hits the bank full pelt in the stomach there !

While people are paying mortgages, even those in negative equity, as long as they keeppaying the equity will become positive, the money circulates and the banks, businesses etc all get paid - as long as the banks open some bit for business again.


I disagree with what that ucd 'economist ' says as well.
While he is correct in his opinion that most building workers dont have an education (and are as thick as feck) , the gov could as they are hinting at, start/continue to build new schools, railways, roads etc and a lot of these unemployed builders can be re-employed in this.

Also I have mentioned prev that there could be a lot more jobs created in eco industry, but alas I fear its too soon for that technology to create many jobs as yet.

to overcome this problem , clamming up and hoping it will go away wont work.
We need to trade out recession away. Stopping doing business will destroy any amount of money being thrown around thats supposed to help.

[Rois]

Doing an independent business review for a bank at the moment - this is the small-scale dilemma that they're facing but I'm sure it can be multiplied to give an idea of one of the problems facing them.

Bank lent a property developer millions to acquire various sites.  Work started but lack of cash flow meant the planned development can't take place, and there's no point anyway as there's no market for the built-out properties.
Property developer owes payments to different banks to cover interest but is having trouble making them.  He has asked the bank for more money which he says is to put the sites into a proper mothball position.  However, we think he's just trying to spread the cash among the different loans.

The bank can refuse to forward more money and foreclose on the developer, forcing the various companies into administration.  The bank is then left with a number of property assets that they really don't want and that aren't worth the money they advanced anyway. 

It's been mentioned earlier, but it's really Catch 22 for the bank.  Unless they lend more money, they could end up losing more than it would cost to mothball the site.  But this guy is fighting to keep a roof over his family and will no doubt do whatever it takes to make that happen, which could include using the cash to satisfy other banks instead of securing the sites. 

[muppet]

Would it be better giving us all €100,000 each and let us decide what to do with it, instead of giving it all to the Banks and having them decide? (I know its a stupid idea but as the days go on it seems giving it to the banks is a worse one)

[Rois]

Would it be better giving us all €100,000 each and let us decide what to do with it, instead of giving it all to the Banks and having them decide? (I know its a stupid idea but as the days go on it seems giving it to the banks is a worse one)

Wouldn't that be great - I'd give mine straight back to First Trust/AIB and get myself out of negative equity.  It's win-win.  Bank gets the cash, I feel a bit better and start spending money again. 

[Canalman]

Banks are actually giving out mges, but using the "old " criteria.........10% savings needed, discounting bonuses/ overtime on salaries, etc etc. About 6 years too late imo. The fact of the matter is that people are not applying for mges as they reckon that property has still alot more to fall and they are worried about losing their jobs.

Certainly the house prices here in Dublin are in freefall at the moment. If the economy is to be jumpstsarted I feel that the Govt will have to tell the banks to discount all mges by say 1/3d in order to reinject some money back into the economy. The people suffering at the moment are by and large in their 20s/30s and they should be spending/investing/saving their money as opposed to paying off crippling mges.
Afaik there is alot of debt out there amongst banks that will never be repaid and alot of it is intrabank debt that can be  written off easily enough.

[carribbear]

Just print more bank notes and don't tell anyone.

[FermGael]

The banks have to start lending again somehow.  I know it's easier said than done but the banks are looking between 25 and 40% deposit to buy a house now, there are virtually no first time buyers under 40 who would have 40k+ sitting in the bank.  It doesn't matter how low interest rates go or how cheap houses get if no one can get a mortgage then the building industry will never start moving again.

Maiden it was not that long ago that a 20% deposit for a house was the norm.
The banks lent people money based on there salaries x 5.  Madness.
The other problem maiden is that sellers are still in denial.
I have been trying to buy a house for the last 6 months.
They are massively overvalued.  I am not being cheeky but any offer i make for a property now will have to take into account further falls that will happen over the next year.

maybe I am not getting he full picture, but banks IMO are shooting themselves in the foot (slitting themselves in the throat more apt maybe) by stopping conducting business.

There may be a number of businesses out there that are risks and should not be lent to, but this clamming up and lending to nobody is not going to help. It will make things worse.

Imo by not lending, a reasonably secure business coul dhit the rocks, the employees lose jobs, they cant pay the mortgage- it hits the bank full pelt in the stomach there !

While people are paying mortgages, even those in negative equity, as long as they keeppaying the equity will become positive, the money circulates and the banks, businesses etc all get paid - as long as the banks open some bit for business again.


I disagree with what that ucd 'economist ' says as well.
While he is correct in his opinion that most building workers dont have an education (and are as thick as feck) , the gov could as they are hinting at, start/continue to build new schools, railways, roads etc and a lot of these unemployed builders can be re-employed in this.

Also I have mentioned prev that there could be a lot more jobs created in eco industry, but alas I fear its too soon for that technology to create many jobs as yet.

to overcome this problem , clamming up and hoping it will go away wont work.
We need to trade out recession away. Stopping doing business will destroy any amount of money being thrown around thats supposed to help.

Lynchboy,  property was massively overvalued.  We have seen in the last 10 years(take out the last 18 months), the biggest rise in house prices here yet wages did not keep pace.  The fall in property prices has to be as big as the fall IMO.  Add to this more and more people becoming unemployed , it may take an awful long time for people to clear negative equity.  Whats the point of repaying an interest only mortgage where you're house is worth £70000 less than the mortgage.
I would just give back the keys.
And that is the problem for the banks.  They do not just have the toxic assets of the mega rich, they also have a huge portfolio of First time buyers who the lent out interest only mortgages to.  These are just as toxic.

[armaghniac]

Certainly the house prices here in Dublin are in freefall at the moment.

Houses need to fall until you can buy one with a mortgage of no more than the traditional 3 times your salary or so, or 2.5 times a couple's salary. You can't have prices of €500,000 on this basis, so there is more to come, but people are very reluctant to cut prices. Banks should not lend a large proportion of current prices as these will be 20% less this time next year.

[Main Street]

Doing an independent business review for a bank at the moment - this is the small-scale dilemma that they're facing but I'm sure it can be multiplied to give an idea of one of the problems facing them.

Bank lent a property developer millions to acquire various sites.  Work started but lack of cash flow meant the planned development can't take place, and there's no point anyway as there's no market for the built-out properties.
Property developer owes payments to different banks to cover interest but is having trouble making them.  He has asked the bank for more money which he says is to put the sites into a proper mothball position.  However, we think he's just trying to spread the cash among the different loans.

The bank can refuse to forward more money and foreclose on the developer, forcing the various companies into administration.  The bank is then left with a number of property assets that they really don't want and that aren't worth the money they advanced anyway. 

It's been mentioned earlier, but it's really Catch 22 for the bank.  Unless they lend more money, they could end up losing more than it would cost to mothball the site.  But this guy is fighting to keep a roof over his family and will no doubt do whatever it takes to make that happen, which could include using the cash to satisfy other banks instead of securing the sites. 

Does a Bank, who is approached to lend that developer some funds, not know exactly what the developer has borrowed elsewhere (using the sites as collateral).