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

[Bogball XV]

AIB are close to the limit now too, they're trading at 32c, BOI are at 33c.

[armaghniac]

Not that it is much better in London

Lloyds Banking Group became the latest casualty of the bank sector sell-off today as its shares plunged as much as 47%.

Royal Bank of Scotland steadied a little after yesterday's mammoth 67% fall, but doubts over the Government's second bank bail-out and renewed fears for the sector's health dragged its rivals lower.

Lloyds, created only yesterday from the merger of HBOS and Lloyds TSB, was the worst hit, followed by Barclays down nearly 20%.

[the Deel Rover]

AIB are close to the limit now too, they're trading at 32c, BOI are at 33c.

Holy fcuk who posted a while ago that the only difference between Iceland and Ireland was 1 Letter and 6 months

[Bogball XV]

AIB are close to the limit now too, they're trading at 32c, BOI are at 33c.

Holy fcuk who posted a while ago that the only difference between Iceland and Ireland was 1 Letter and 6 months

dunno, but they were well off the mark with that ridiculously optimistic prediction of 6 months

[the Deel Rover]

yeah tis oly about 4 BB 

[Declan]

In comparison to some our own very astute posters this is what the great Bertie had to say in September last year:

Mr Ahern added: "Bank of Ireland shares are € 3.80 today. Now if I meet you here next year, or the year after, do you seriously think Bank of Ireland shares will be € 3.80? I'd go out and buy Bank of Ireland shares . . . that's what I'd do."

Wonder did he take his own advice???

The irony of it all is that we are commemorating the 90th anniversary of the first Dail today - wonder what those brave men and women make of their successors

[the Deel Rover]

In comparison to some our own very astute posters this is what the great Bertie had to say in September last year:

Mr Ahern added: "Bank of Ireland shares are € 3.80 today. Now if I meet you here next year, or the year after, do you seriously think Bank of Ireland shares will be € 3.80? I'd go out and buy Bank of Ireland shares . . . that's what I'd do."

Wonder did he take his own advice???

The irony of it all is that we are commemorating the 90th anniversary of the first Dail today - wonder what those brave men and women make of their successors

it twas easy for Bertie to say that sure wouldn't he be buying the shares with paddy the plasterers money , we don't all have friends like Bertie

[GalwayBayBoy]

Do you want the bad news first....

Piling Anglo losses on to national debt risks bankrupting the State

ANALYSIS: Anglo Irish is poisoning the banking system and is of no systemic importance. It must not be nationalised; it must be allowed to collapse and with it the developers at the heart of the problem, writes Morgan Kelly

YESTERDAY'S CATASTROPHIC collapse of Irish bank shares stems directly from the Government's proposal to nationalise Anglo Irish Bank. With the Government's finances already buckling under the collapse of our bubble economy, financial markets began to fear that with the added burden of Anglo's debt, the Irish State cannot afford to finance itself, let alone support the remaining national banks.

Facing the imminent collapse of the national financial system, the Government needs to perform a ruthless triage. The worthwhile banks need to be maintained by any means necessary, including nationalisation, while Anglo Irish and Irish Nationwide must be allowed to collapse.

What began as farce has turned swiftly to catastrophe. Last September the Government casually decided to give a small dig-out to some developer pals by guaranteeing the liabilities of Anglo Irish Bank. This spiralled into a proposed nationalisation that would saddle Irish taxpayers with Anglo's bad debts, which could easily exceed €20,000 per household, and starve the other, worthwhile, banks of the capital they need to survive.

At the original crisis meeting on September 29th, Brian Cowen claimed that the blanket guarantee to all six banks was given "on the basis of the advice from those who are competent to so advise the Government".

That does not appear to have been the case.

According to a source of mine very familiar with what happened at the meeting, extending the liability guarantee to Anglo Irish and Irish Nationwide was strongly opposed by representatives of the Central Bank and the Department of Finance (who reportedly came into the meeting with a draft Bill to rescue only four institutions). However, I am told they were overruled by the Taoiseach and the Minister for Finance, who were supported by the Financial Regulator and the Governor of the Central Bank on the grounds that a sudden liquidation of Anglo's assets would not be in the national interest.

It is still worth asking what would have happened if Brian Cowen had listened to the Department of Finance and allowed Anglo Irish to sink? The answer is: very little.

Developers would have gone bust and commercial property would have become more or less worthless, but that is going to happen anyway, with or without Anglo Irish. Depositors of Anglo Irish would have been paid off in full, and the hit would have been taken by the international financial institutions that hold around €22 billion of its bonds.

These bondholders are professional institutional investors who signed up for higher returns on Anglo debt in the knowledge that they were facing higher risks. They are, moreover, insured against their losses through insurance contracts called Credit Default Swaps.

This is the central point about the bailout of Anglo Irish, and one that has not received any attention: the only effect of a bailout is that the Irish taxpayer will make up the losses of Anglo Irish's bondholders instead of the insurers who had already been paid to underwrite the risk.

Why it is necessary to transfer Anglo's losses from the writers of Credit Default Swaps to the Irish taxpayer is something that the Government has not thought to justify.

Indeed, what has been disturbing about the entire Anglo affair is that at no stage has the Government felt it necessary to explain why any bailout was needed, beyond inchoate mutterings about the "systemic importance" of Anglo Irish.

The reality is that Anglo has no importance in the Irish financial system. It existed purely as a vehicle for a few politically connected individuals to place reckless bets on the commercial property market. These property speculators may be of systemic importance to the finances of Fianna Fáil, but their significance ends there.

In ordinary times, piling €30 billion of Anglo Irish losses on to the national debt would be painful and pointless but not impossible. These however are not ordinary times. International debt markets are flooded with governments trying to borrow. The other Irish banks are dangerously short of capital. Most importantly, the Irish economy and government finances are collapsing.

Ireland's growth during the last decade was largely illusory, generated by a property bubble fuelled by reckless bank lending. In 2007 an incredible 20 per cent of our national income and employment came from building houses and commercial property. Next year, the percentage will be approximately zero.

The only industrialised economy that has endured a property and banking crash remotely comparable to what we are beginning to experience was Finland in 1991, where national income fell in total by 15 per cent and unemployment rose by 12 percentage points. As the private sector haemorrhages jobs it is hard to see how Irish national income will fall by less than 20 to 25 per cent in the next few years. Unemployment will easily reach 15 per cent by the end of the summer, and 20 per cent by next year, and will not start to fall until recovery in Britain and elsewhere permits mass emigration to resume. The economy will not begin to grow until real wages fall to competitive international levels, a process that will probably take a decade.

In other words, the Irish economy is facing a decade of stagnation and mass unemployment of the same magnitude as the 1980s, with the difference that the unemployed now have mortgages, car loans and maxed-out credit cards. Faced with an irreversible contraction on this scale, the Government will have grave difficulty borrowing to fund its ordinary expenditure, even after draconian cuts in spending and increases in taxation. In the view of international investors, piling Anglo Irish's gambling losses on top of a spiralling national debt could easily suffice to sink the Irish State into bankruptcy.

In this national crisis, what should be done? The answer is simple. The State must do everything to rescue AIB, Bank of Ireland and Permanent TSB, and let Anglo Irish and Irish Nationwide sink.

The Government must continue to guarantee all deposits at Anglo Irish while announcing that, in the light of continuing revelations of misconduct in the bank and shortcomings in its auditing procedures, it will enter into negotiations with senior and unsecured bondholders.

The proposed Anglo nationalisation marks a decisive watershed in Irish democracy. With it, an Irish government has coolly looked its citizens in the eye and said: "Sorry, but your priorities are not ours."

It is to be hoped that the collapse of other bank shares will serve as a warning to deter the Government from this catastrophic course. I would therefore urge any TDs and Senators who still believe that the Irish State exists to act in the interests of its people to vote against the nationalisation of Anglo Irish and do everything to protect the other banks.

[GalwayBayBoy]

Or the good...

Irish economy 'will lead Europe within a decade'
US economist thinks growth rates will eventually outstrip main rivals

    * Henry McDonald
    * The Observer, Sunday 11 January 2009
    * Article history

Ireland's economy will bounce back from the credit crunch and start to outperform its major European rivals over the next 10 years, one of the United States' leading economists has predicted.

After a week of job losses and warnings yesterday of major cuts in the Republic's public sector, a former adviser to the US government has given a surprisingly upbeat assessment of Ireland's economic prospects for the rest of the decade.

Within the next 10 years Ireland's growth rates will be higher than the economies of main competitors such as Germany and France according to Dr Robert E Kennedy, head of business administration at the University of Michigan.

In a new book on outsourcing in the global economy, Kennedy urges Ireland to accept that "assembly-line manufacturing" would leave the country for eastern Europe and beyond.

Last week US computer giant Dell announced it would axe 1,900 jobs at its Limerick plant and shift its manufacturing to Poland. The job losses at Dell came just 48 hours after 800 jobs at Waterford Crystal were put in jeopardy after the glass maker's parent company, Waterford Wedgwood, went into administration.

Kennedy predicted more jobs would be lost from Ireland's manufacturing base. "Ireland has very high labour costs compared to central and eastern Europe. The average wage, if you divide GDP by population in Ireland, is around $50,000 (€37,000) whereas in Poland, it is $11,000. So in terms of low-skilled jobs involving physically assembling computer parts, in the end Ireland can't compete.

"However, where Ireland has an edge is in its highly skilled, educated workforce. What was interesting about the Dell decision was that it was its manufacturing arm being shifted to Poland. Dell is keeping most of its service and administrative base in Ireland."

The central thesis of Kennedy's book is that advanced economies must shift their activities from manufacturing to services and specialist fields such as financial expertise, biotechnology, innovation and design.

"What is happening to the Irish economy at present, if we leave out the credit crunch, also happened to the United States quite a while ago," he said. "Today in the private sector service and specialist industry makes up about 72 per cent of economic activity, whereas only 16 per cent is manufacturing.

"Ireland is going through the same process. Your success from the mid-1990s was based on attracting big names in manufacturing from the United States. Now they are leaving as your wage levels rise and these companies look eastwards. The next phase the Irish economy will go through is an evolution towards services where you will grow in niche areas of expertise. You have the edge over others in the EU because you have an Anglophone, highly educated workforce as well as a free and open economy. Leaving aside the current global crisis, Ireland still has an excellent business environment."

Dr Kennedy said that within a decade Ireland would be enjoying annual growth rates of 3 per cent, far higher than the EU average. "Economies like Germany and France are not as flexible as the Irish economy. There are far more restrictions and regulations in these larger economies than there are in Ireland. If you asked me what will the picture be like in 10 years' time I would put big money on a bet that Ireland will outperform these larger countries."

[whiskeysteve]

If the economy is to follow that optimistic path there needs to be a concerted effort to move towards much more esoteric services like the biotechnology as mentioned. The rest of the world is catching up fast in their capabilities, particularly in the information technology sector where we can't compete with foreign wages. It is absolutely vital to evolve ahead of the game in the next decade and not to plough more money into many of our current sectors whose days will be numbered. And I don't just mean manufacturing. Computers with high speed internet connections are booming in terms of availability in the developing world and we won't be long in getting squeezed in terms of service and administration skills

[Declan]

Had a chuckle at this

http://sites.google.com/site/thestenner/

Also
NEW STOCK MARKET TERMS

BULL MARKET—A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET—A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING—The art of buying low and selling lower.

P/E RATIO—The percentage of investors wetting their pants as the market keeps crashing.

BROKER—What my broker has made me.

STANDARD & POOR—Your life in a nutshell.

STOCK ANALYST—Idiot who just downgraded your stock.

STOCK SPLIT—When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER—A guy whose phone has been disconnected.

MARKET CORRECTION—The day after you buy stocks.

CASH FLOW-- The movement your money makes as it disappears down the toilet.

YAHOO—What you yell after selling it to some poor sucker for $240 per share.

WINDOWS—What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR—Past year investor who's now locked up in a nuthouse.

PROFIT—An archaic word no longer in use.

What's the definition of optimism?
An Investment Banker ironing five shirts on a Sunday evening.

What can you buy on eBay for $1.
An Icelandic bank but they'll get you on the shipping costs.

[give her dixie]

Well, at least the banks havn't got much more to loose in their Capitalisation.

Febuary 2007 total market capitalisation 59.44 billion euro.
January 2009 total market capitalisation 1.65 billion euro.

One more month should see the figure near to zero.

[armaghniac]

After all their sponsorship over the years perhaps the GAA should sponsor a bank.

[comethekingdom]

Letter from today's Indo - How true!

Tuesday January 20 2009

Bertie got us into this awful mess

IT'S time the finger was pointed at the real culprit of the mess in which we find ourselves -- Bertie.

His tent at the Galway races. His developer mates, selling tenement rooms to young couples for a half million euro, no control over the amount of sub-standard houses built by imported labour.

Estates built around the country in the middle of nowhere, not even a corner shop within miles.

The lies and deceit of Bertie and his ministers. Thousands of euro wasted on make-up alone for this clown; and he's still been driven around like he was Lord Muck. When will the Irish people wake up to this dosser and his mates?

Time for the people to demand the democratic republic we deserve instead of the corrupt one we have.

[Rossfan]

Unfortunately the majority of Irish( 26 cos) voters knocked each other down to return that arsehole and his mates  to office in 2002 and 2007.
Sure we all thought the gravy train would never end as we went on pretending we had the best economy in the world just because the FFBuilders were selling houses for about 3 times their real value based on the economy that they were part of.
We foolishly borrowed orselves silly and nobody ever stopped and thought -- how can this last?
The emptiest country in the EU(apart from the mainly uninhabitable Sweded/Finland) with the dearest houses ...did we think it could keep on going till  the average house would cost around €1m by 2013 or so. Did we ever think that the day would come when nobody could afford to buy a house?
I presume BuilderFF's answer now will be slavish drooling around the White house on St Patrick's day looking for loads of visas so as we can all emigrate instead of trying to do something for ourselves.