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

[bcarrier]

Dead cat bounce 

[heganboy]

cup and handle

[muppet]

Just back from the beer I mentioned earlier.

Shouldn't have gone.

From what I hear Irish banking will not be the same by lunchtime today. Better stay in bed.

Beer on a Monday night is never a good thing unless you've just won the AI - In that instance, it's almost compulsory ! 

Good news for Irish banking ?

Will UK and other governments follow suit ?

I don't know the ins and outs of it yet, but it seems to be a massive piece of bluffing by lenno - if he were ever asked to pay up, he couldn't, i suppose it depends on how long it will be before the markets either test his promise or just decide to disbelieve him.  If he has to come up with the goods, it'll be a disaster for the taxpayer.  We're currently talking about the budget from hell coming up because tax revenues are short by 7bn on estimates (you have to wonder what idiot came up with the estimates), yet the minister finds it okay to guarantee over €400Bn of loans made by banks?  If 10% go bad (probably not an unreasonable assumption) that's €40 Bn, almost our total annual budget.
It would have been a better idea to force some mergers between the banks who appeared in serious bother yesterday and the ones who just appeared in bother.

Agreed. So far it is the greatest and probably the most stupid gamble in the history of the state. They should have nationalised one bank (or 2 if they could afford it) and let the others go. Now all it takes is another day or two in the markets like yesterday and we will have taxes like we have never seen before.

Bogball it seems that the experts are beginning to demand what we suggested last September.

Irish Times : 20 top economists demand that the Government nationalise the banks.

[Bogball XV]

Bogball it seems that the experts are beginning to demand what we suggested last September.

Irish Times : 20 top economists demand that the Government nationalise the banks.

It's unfortunate our govt are so arrogant that they can't admit their mistakes, although I think the guarantee effectively means that eventually nationalisation is inevitable.  I hear they're talking about taking the loans at a 15% discount as to take more would effectively bankrupt the banks - 15% is laughable really, sorry, absolutely ludicrous.  
The other massive problem is that for some reason they're presuming that toxic loans are only those loans given to developers, they seem to think that in general residential mortgages are not going to be a problem, the approach to residential loans seems to be that if we give people a repayment holiday for 1 or 2 years, they should be able to sort out their problems - it's a total failure to recognise the depth and scale of the current depression.  At least when the banks are nationalised we'll be able to work out some sort of mortgage forgiveness scheme too.
The whole thing would be a bit depressing if you were to think too much about it all, better to ignore what they're doing from here on in.

[tyronefan]

how will nationalising the banks help as opposed as to what is happening now,  will it release more money into the economy

[Bogball XV]

how will nationalising the banks help as opposed as to what is happening now,  will it release more money into the economy

nope, it's not a magic solution.  money will only be released into the irish economy if the ecb decide to follow uk and us and print money, not that their attempts are making much impact as the amounts they're pumping in are apparently miniscule as opposed to what has been removed from the economy (which if memory serves me correctly could be as high as 450 odd trillion dollars).  We're going to have to get used to living in a world where credit is not free and easily obtained for allcomers - you'll only be able to access credit when the banks are certain that your business is viable or that you won't default on the loan - in those circumstances it'd be better if govt was doing the lending anyway as they might advance loans using different criteria.

[bcarrier]

Be afraid ...

http://www.cnbc.com/id/30308959?slide=1

( click through the slides)

[nifan]

Be afraid ...

http://www.cnbc.com/id/30308959?slide=1

( click through the slides)

fook

[passedit]

http://www.irishtimes.com/newspaper/frontpage/2009/0422/1224245137788.html

IMF warns Ireland will pay highest price to secure banks

SIMON CARSWELL and DENIS STAUNTON

IRELAND WILL pay a higher price to stabilise its banks than any other developed country, the International Monetary Fund (IMF) has warned.

The Washington-based organisation estimated the cost of stabilising Irish banks will be the equivalent of about €24 billion, the highest government bailout as a proportion of economic output.

The IMF said yesterday that "financial stabilisation costs" would account for 13.9 per cent of Ireland's estimated €171 billion in annual gross domestic product (GDP), the value of all the goods and services produced in the State this year.

The cost of bailing out the banks in the UK and the US fell slightly behind that of Ireland as a share of the value of their economies, totalling 13.4 per cent and 12.1 per cent of GDP respectively, in a list of 19 developed economies.

"The United States, United Kingdom and Ireland face some of the largest potential costs of financial stabilisation (12 to 13 per cent of GDP) given the scale of mortgage defaults," the IMF said in its biannual Global Financial Stability report.

Worldwide losses on distressed loans and investment assets may reach $4.1 trillion ($4,100 billion) by the end of 2010, the IMF said in the report published ahead of its spring meeting. Losses on loans and related securities originating in Europe and Japan – which will total about $1.3 trillion – were included by the IMF for the first time.

The report estimates that banks face $2.5 trillion in losses between 2007 and 2010, insurers $300 billion and other financial institutions $1.3 trillion. US banks have taken more radical action, writing down about half of their anticipated losses, while euro-zone banks have only written down about 17 per cent and British banks about a third of theirs.

Ireland was named as one of a number of countries with large banking sectors relative to the size of its economies or with concentrated exposures to the property sector that could face substantial bank bailout costs as a result.

The report predicts the crisis is likely to be "deep and long lasting" and banks may have to make more write-downs and could require fresh equity.

It noted that government action throughout the world had helped to restore market confidence but warned against excessive optimism, adding that more action would be necessary.

"Continued decisive and effective action is needed to preserve and strengthen these first signs of improvement, and to help provide a more stable and resilient platform for sustained global growth," said José Vinals, director of the IMF's monetary and capital markets department.

The IMF says governments should consider temporarily nationalising financial institutions, a move the US government and some others have until now shied away from. "A government should aim to ensure that banks can return to private ownership as expeditiously as possible. Banks that are not viable should be resolved promptly," the fund says.

The IMF estimates that Irish government debt will increase by more than any other developed country over the three years from 2008 to 2010, rising by 41 percentage points. The expected amount of debt in issue guaranteed by the Government would total $641 billion (€495bn), amounting to 2,700 per cent of the average debt issued by the State between 2003 and 2007, it said.

US treasury secretary Timothy Geithner told a congressional committee yesterday that the Obama administration's financial rescue policies were showing signs of progress, including increases in the number of refinanced mortgages and signs that credit conditions have improved.

"Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators," the treasury secretary said.

This article appears in the print edition of the Irish Times

[Bogball XV]

The Washington-based organisation estimated the cost of stabilising Irish banks will be the equivalent of about €24 billion, the highest government bailout as a proportion of economic output.

I think they're well off the mark with that figure tbh - if we get off that lightly I might even credit Lenno with having done the right thing.

[Main Street]

[ludermor]

Be afraid ...

http://www.cnbc.com/id/30308959?slide=1

( click through the slides)

Can you explain in simple English how the likes of norway is on the list when they are held as an example of thriving stable economy with all their oil reserves ( which has been invested brilliantly apparently)

[Main Street]

Norway are regarded as thriving because they have a very healthy trade balance, exports twice as much as it imports and net assets are strong.
When a country exports so much, gets paid and the cash is banked in Norway, that means that there is plenty of foreign currency available for purchase for the local business/individuals. The CB doesn't have to borrow foreign currency in order for the external debt to be paid.
External debt is all debt owed to be paid back in foreign currency.
The major part of the rise in Norways external debt is short term debt.
I doubt  relatively speaking if it will be that much of a problem for Norway to handle its external debt.
The USA external debt is similar in proportion to GDP as Norways  but their situation is infinitely worse due to the the huge astronomical internal debt.

[FermGael]

The Budget in the UK announced today.
http://news.bbc.co.uk/1/hi/uk_politics/8011321.stm

KEY POINTS
50% tax rate for earnings over £150,000
Growth forecast revised down
Borrowing increased
£15bn 'efficiency savings'
Clawing back tax relief on top earners' pension
£2bn help for young unemployed
£1bn to boost housing market
Car scrapping scheme

The top earners have been hit twice but there is some amount of borrowing.

[muppet]

I was in a good mood until I looked at that slide show.