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

[Declan]

Declan

Where did you get that article from?

Todays Indo Gerry - http://www.independent.ie/national-news/courts/top-club-operated-under-form-of-thieving--judge-2012904.html

[ludermor]

There seems to be very mixed views from Iceland as to whether the President done the right thing or not. If they go for a referendum they are relying on lay people to make a very important economic decision, I'm not sure if i would be happy with that. I know its the basis of all referendums that the people vote but rightly or wrongly i would prefer the experts to make that decision ( i know i know... they got us into this mess etc etc)

You prefer the experts to make the decisions to impose the burden of a bank failure on the citizens?
That sounds fair
At the very least, there should be a general election on this most serious issue.

There is no if about it, the Icelanders are going to referendum.
The ref. question is, do you agree to reject the parliamentary bill or not. Some 60% now agree to reject.

As simply as I can explain.
The significant point missed by everyone, is that there is already a bill passed into law where the Iceland state has agreed to pay what is known as the Icesave debt.
The Brits and Dutch rejected 2 of the terms contained in that bill and that's why there was another amended bill put before parliament, hotly debated for months before being passed and subsequently not signed  by the President (meaning it's sent for referendum).
The original bill is still law. The amended bill contains two clauses, imposed by the Brits and the Dutch, are regarded as particularly pernicious.

There is a significant difference to this Icesave debt and for example Nama. The Icesave debt relates to deposit accounts in an Iceland bank, operating in the UK and Holland. Such liquid assets generated by that  bank were used to acquire and invest in things like High Street businesses, also West Ham fc
That bank collapsed and the EEA (European Economic Area) posthumously interpret a vaguely worded rule that the  Iceland state is responsible for the first 20k of each deposit account. That amounts to Eur 5.5bn,  about 60% of the Iceland GDP.
That Icesave debt comes on top of a domestic currency/economic collapse, not too dissimilar in nature to Ireland.

The President participated with those Iceland bankers, travelling in their private jet to England and gave sponsored after dinner talks to promote this bank.
He now says he was wrong, he admits that he was led up the garden path by these bankers. The referendum is seen by some as his attempt to restore his cred. He is an old socialist, has an enormous ego and an excellent command of Oxford English. He was interviewed by Paxman on the BBC the other day and managed to 'out ego' Paxman and talk him down.

I dont know if its fair but what are the consequences of a no vote for them? Do the people who are voting know of this? If they are like ireland where lots of people are pissed off of course they will vote No, no matter what the consequences

[Declan]

State faces Catch 22 situation if Quinn seeks more taxpayers' money

By Matt Cooper

Friday, January 15, 2010

SEÁN QUINN has a brass neck. The businessman would be central to any public investigation into the banking crisis that has crippled the country, yet he regularly opines publicly on what government and citizens need to do to rescue the country from a situation which he was involved in creating.

Quinn's actions were a major contributor to the disaster at Anglo-Irish Bank. The circumstances in which his shareholding in the bank was reduced from 25% to 15% are the subject of an ongoing investigation by the Office of the Director of Corporate Enforcement and the gardaí (and have created hundreds of millions in euro of losses for the state because the 10 buyers of those shares borrowed the money from Anglo to buy them and cannot repay their debts to the now state-owned bank).

The manner in which Quinn secretly accrued the original shareholding – by gambling through a device called "contracts for difference" to avoid public scrutiny and apparently without the relevant permission from the Financial Regulator – created not only a major loss estimated at about €1 billion for him but contributed to the destabilising of the Anglo share price. Loans that his business empire received from Anglo at the same time as he was trying to arrange payment for those shares must also face legal independent scrutiny.

Quinn was the subject of the biggest ever fine levied by the financial regulator – €200,000 personally and €3.25m for his company – for the inappropriate way he used funds belonging to Quinn Insurance for the gambling on Anglo shares.

Quinn took a loan from Quinn Insurance reserves to use for gambling on Anglo shares. The money was later repaid, but it was a highly risky transaction undertaken without the relevant authorisation from the regulator. He was required by the authorities to step down as a director of the insurance company as part of his negotiated admonishment.

It is a long list of dreadful and calamitous mistakes, yet Quinn is indulged by sections of the media whenever he wants to hold forth. In the summer of 2008 he was part of an extraordinary series of first-person pieces published on the opinion pages of the Irish Times that told the Government how to solve the unfolding crisis. Quinn made reference to "losses" on the stock market as if they were significant to nobody but himself. The full reality of his situation – and the details of his censure by the Financial Regulator – emerged only later, but it was worth remembering that in that missive he lectured government on how to make Ireland more competitive. He was at it again last weekend when the Sunday Independent carried another personal missive from Quinn. There was little incorrect, per se, with what he said: few would disagree that the level of unemployment now, particularly in the under-25 age bracket, is deeply worrying. "It should be a priority at national level to develop plans and initiatives that can stem this draining of the future lifeblood of our economy and our society," he said.

But it is difficult for the state to take the actions Quinn suggests when it has to invest billions in the rescue of the banks, particularly the self-same Anglo in which Quinn was a major player.

Quinn never misses an opportunity to champion the achievements of his company and its 5,500-strong Irish workforce and it would be churlish not to acknowledge that he has built something big, international and profitable.

Still, you have to be a little suspicious when, having lauded the benefits to Ireland of multinational investment, Quinn advises that "we must, however, become more successful in encouraging home-grown entrepreneurs to develop local manufacturing businesses and support local employment ... Policymakers should focus on investment for the creation of sustainable jobs and mechanisms need to be found to provide capital and support to budding entrepreneurs".

I wonder if that is code for Quinn seeking some form of financial assistance for his own plans in the Republic?

Quinn has received massive grant assistance for the construction of major manufacturing facilities in England and Germany in recent years. Publicity about his losses at Anglo must have been noticed by other international banks. Maybe Quinn is looking to Ireland for his next phase of investment, but can he raise the required finance?

Any offers to invest in Ireland – particularly in the green technology he promoted in the article – are likely to attract government interest. But should Quinn get more state money, either by way of grants or more loans from the state-owned Anglo Irish Bank to which he already owes so much?

The state is in something of a Catch 22 position. It wouldn't surprise me if the state decided it needed to help him in the hope that he can create a few jobs or felt it had to assist him in earning more profits to repay his debts.

In late 2008, just weeks after the introduction of the government guarantee to rescue the banks and the revelation of the fines against Quinn and his company, the hapless Minister for Trade, Enterprise and Employment, Mary Coughlan, travelled to Cork where Quinn Direct was opening a new office. She congratulated Quinn Direct for its "continued success and, most importantly, for their investment in Ireland in these difficult times". She would have been better advised to stay at home. Even if she was unconcerned or ignorant about Quinn's deep involvement in the Anglo debacle – which even at that stage she should have known because most of it was in the public domain – she should have been briefed, for example, about Quinn's closure of the Barlo radiator plant in Clonmel shortly after he had bought it and the transfer of production to Wales.

IT is a very different picture from those TV advertisements extolling the self-proclaimed virtues of the Quinn group that regularly appear on television. Quinn is spending a lot on its image these days, including its sponsorship of the Late Late Show.

Yet the state does not want Quinn to fail. It employs too many people in Ireland, particularly in border regions where replacement jobs would be hard to provide. The state needs Quinn to prosper so it can earn the money to make the repayments on its loans to Anglo. The state, as owner of Anglo, holds a mortgage over practically all of Quinn's businesses, but does it really want to own them?

Before Christmas it was revealed that Seán Quinn's five children shared a €200 million payment from the main Quinn holding group in 2008. A spokesman for the company at the time said the payment to Colette, Seán Jr, Ciara, Aoife and Brenda was made "to facilitate the development of their independent wealth portfolios". Lucky them. At least some young people are not going to have to worry too much about the scourge of unemployment.

But this raises questions as to why Quinn did not repay some of its borrowings to the state instead of moving its money out of the group to Quinn's children. I'd imagine Quinn is fairly confident nobody in authority is going to press too hard for answers to that.

Read more: http://www.examiner.ie/opinion/columnists/matt-cooper/state-faces-catch-22-situation-if-quinn-seeks-more-taxpayers-money-109689.html#ixzz0cfq3tNFk

[boojangles]

Matt doesn't explain too well exactly what wrong Sean Quinn is supposed to have done in relation to Anglo. Surely a man of his wealth can pay back whatever is owed to Anglo Irish?? Did he not take most of the hit himself in losing 1 Billion? Again it begs the question,why the f**k was or is Anglo Irish being allowed to survive?
I get it hard to say a bad word about Sean Quinn considering what he has done for employment in Cavan town and the border region.I have met the man a few times and he was always a down to earth man who seemed to stay true to where he came from. Maybe I am wrong but I sincerely doubt that Sean Quinn will be looking for money of the Irish taxpayer.If he is then I feel we are all fucked.

[muppet]

Matt doesn't explain too well exactly what wrong Sean Quinn is supposed to have done in relation to Anglo. Surely a man of his wealth can pay back whatever is owed to Anglo Irish?? Did he not take most of the hit himself in losing 1 Billion? Again it begs the question,why the f**k was or is Anglo Irish being allowed to survive?
I get it hard to say a bad word about Sean Quinn considering what he has done for employment in Cavan town and the border region.I have met the man a few times and he was always a down to earth man who seemed to stay true to where he came from. Maybe I am wrong but I sincerely doubt that Sean Quinn will be looking for money of the Irish taxpayer.If he is then I feel we are all fucked.

Boojangles, Quinns Contract For Difference on 25% of Anglo is possibly the greatest single calamity in the Irish Banking collapse. The taxpayer has had to pick up almost all of the tab for the Golden 10 who bought the 10% when he switched the CFD for 25% to take shares amounting to 15%. This event undoubted accelerated Anglo's demise from being a stable bank, which we now know was something of an illusion but at the time all seemed ok (otherwise Quinn wouldn't have touched it).

There is no suggestion that Quinn has done anything legally wrong in the above transaction so he won't be sweating on the investigation, unlike some of the Anglo executives, but while he may just have been one single domino in the Irish Banks collapse, it was the 1st big one.

[armaghniac]

Maybe I am wrong but I sincerely doubt that Sean Quinn will be looking for money of the Irish taxpayer.

He won't be looking for money from the Irish taxpayer. But neither will the taxpayer be looking for money from him, although his speculations have contributed greatly to the ruin of the State.

[Declan]

Inquiry must look at role of politics

An independent banking inquiry must examine the links between bankers, developers and Fianna Fáil, writes FINTAN O'TOOLE

PARANOIA IS generally the most sane response to anything our rulers do. So, after all the leaks about the Government's intentions to hold a banking inquiry in secret, my immediate reaction is to demand a public parliamentary inquiry. Thinking more coldly about it, however, I reluctantly concluded that such an inquiry would be essentially useless.

Before deciding what form an inquiry should take, we must define what exactly we need to know. The known unknown in this case is not really what the banks did or why. We know that they threw money around with more abandon than a fleetful of intoxicated mariners. The bonus culture incentivised executives to think only about apparent end-of-year profits. They got away with this internally because of a complete absence of ethical qualms and because of the cronyism that is so well described in Shane Ross's book, The Bankers. It would be interesting to have more detail on how all of this unfolded but I can't imagine an inquiry substantially altering these broad conclusions.

What really needs to be investigated, therefore, is not the banks themselves. It is the triangular relationship between the banks, the property developers and Fianna Fáil. This is the Bermuda Triangle into which the Irish economic miracle disappeared without trace. It is this set of relationships that accounts for the nature, not merely of the crash, but of the continuing political response to it.

We know the consequences of this toxic nexus of mutual aggrandisement well enough, since we are living with them every day. But we don't know nearly enough about the ways in which it operated and continues to operate. A blow-by-blow account of the connections, the lobbying, the blind eyes, the nods and the winks would be immensely valuable. It would answer questions that go to the heart of the culture that both created the disaster in the first place and is likely to recreate it through Nama.

How much money, for example, did builders, developers and bankers give Fianna Fáil? Elaine Byrne's very valuable study showed that 40 per cent of disclosed donations to Fianna Fáil between 1997 and 2007 came from the construction and development sector. But most donations are not disclosed. The Standards in Public Office Commission has pointed out that it cannot account for €10 million of the €11 million parties spent on the last general election. An inquiry with the power to reveal the details of donations made by builders, property developers and banks would thus serve a very useful function.

The inquiry should also look at the history of lobbying, both formal and informal. Why, for example, did Brian Cowen as minister for finance override proposals by the Revenue to tax contracts for difference, a measure that would have curbed casino capitalism and in particular Sean Quinn's disastrous adventures in Anglo Irish Bank, for which the public is currently paying?

A full and detailed account of lobbying by developers and bankers and the responses of ministers would be well worth having.

And what precisely was the relationship between government and the financial regulator on the one side and between the regulator and the banks on the other? Why did the Department of Finance, again under Brian Cowen, do nothing at all about the explosion of major international frauds emanating from the International Financial Services Centre in Dublin? What was the effect of the merry-go-round in which retired regulators moved on to bank boards? Why was there virtual impunity for high-level financial crimes?

And what, exactly, was the nature of the relationship between developers and bankers? The developer Mick Wallace, for example, has spoken publicly of being told by a bank that he would get a loan for a project only if he used a particular builder favoured by the bank. Other developers, particularly those with nothing left to lose, may have interesting stories to tell.

These are the kinds of questions that really need to be answered if we are to understand – and ultimately to receive accountability for – what is happening to us. And we'd be as well off asking Jedward to conduct this inquiry as giving the task to a Dáil committee. The reason for this is simple – the issues are utterly and inescapably political. What we need is not the political system sitting in judgment on the bankers but an independent body scrutinising the central role of the political system itself. A Dáil committee cannot do this. Even the rightly lauded Dirt inquiry report, which is very good on the banks, is very weak on the political aspect of that scandal.

An independent inquiry could be chaired, for example, by Justin O'Brien, professor of corporate governance in Queensland, who has international standing, knows Irish banking intimately and called the crisis before it happened. Bo Lundgren, who handled the Swedish banking crisis of the 1990s and Elaine Byrne would complete a team with a real chance of telling us the truth.

[muppet]

Inquiry must look at role of politics

An independent banking inquiry must examine the links between bankers, developers and Fianna Fáil, writes FINTAN O'TOOLE

PARANOIA IS generally the most sane response to anything our rulers do. So, after all the leaks about the Government's intentions to hold a banking inquiry in secret, my immediate reaction is to demand a public parliamentary inquiry. Thinking more coldly about it, however, I reluctantly concluded that such an inquiry would be essentially useless.

Before deciding what form an inquiry should take, we must define what exactly we need to know. The known unknown in this case is not really what the banks did or why. We know that they threw money around with more abandon than a fleetful of intoxicated mariners. The bonus culture incentivised executives to think only about apparent end-of-year profits. They got away with this internally because of a complete absence of ethical qualms and because of the cronyism that is so well described in Shane Ross's book, The Bankers. It would be interesting to have more detail on how all of this unfolded but I can't imagine an inquiry substantially altering these broad conclusions.

What really needs to be investigated, therefore, is not the banks themselves. It is the triangular relationship between the banks, the property developers and Fianna Fáil. This is the Bermuda Triangle into which the Irish economic miracle disappeared without trace. It is this set of relationships that accounts for the nature, not merely of the crash, but of the continuing political response to it.

We know the consequences of this toxic nexus of mutual aggrandisement well enough, since we are living with them every day. But we don't know nearly enough about the ways in which it operated and continues to operate. A blow-by-blow account of the connections, the lobbying, the blind eyes, the nods and the winks would be immensely valuable. It would answer questions that go to the heart of the culture that both created the disaster in the first place and is likely to recreate it through Nama.

How much money, for example, did builders, developers and bankers give Fianna Fáil? Elaine Byrne's very valuable study showed that 40 per cent of disclosed donations to Fianna Fáil between 1997 and 2007 came from the construction and development sector. But most donations are not disclosed. The Standards in Public Office Commission has pointed out that it cannot account for €10 million of the €11 million parties spent on the last general election. An inquiry with the power to reveal the details of donations made by builders, property developers and banks would thus serve a very useful function.

The inquiry should also look at the history of lobbying, both formal and informal. Why, for example, did Brian Cowen as minister for finance override proposals by the Revenue to tax contracts for difference, a measure that would have curbed casino capitalism and in particular Sean Quinn's disastrous adventures in Anglo Irish Bank, for which the public is currently paying?

A full and detailed account of lobbying by developers and bankers and the responses of ministers would be well worth having.

And what precisely was the relationship between government and the financial regulator on the one side and between the regulator and the banks on the other? Why did the Department of Finance, again under Brian Cowen, do nothing at all about the explosion of major international frauds emanating from the International Financial Services Centre in Dublin? What was the effect of the merry-go-round in which retired regulators moved on to bank boards? Why was there virtual impunity for high-level financial crimes?

And what, exactly, was the nature of the relationship between developers and bankers? The developer Mick Wallace, for example, has spoken publicly of being told by a bank that he would get a loan for a project only if he used a particular builder favoured by the bank. Other developers, particularly those with nothing left to lose, may have interesting stories to tell.

These are the kinds of questions that really need to be answered if we are to understand – and ultimately to receive accountability for – what is happening to us. And we'd be as well off asking Jedward to conduct this inquiry as giving the task to a Dáil committee. The reason for this is simple – the issues are utterly and inescapably political. What we need is not the political system sitting in judgment on the bankers but an independent body scrutinising the central role of the political system itself. A Dáil committee cannot do this. Even the rightly lauded Dirt inquiry report, which is very good on the banks, is very weak on the political aspect of that scandal.

An independent inquiry could be chaired, for example, by Justin O'Brien, professor of corporate governance in Queensland, who has international standing, knows Irish banking intimately and called the crisis before it happened. Bo Lundgren, who handled the Swedish banking crisis of the 1990s and Elaine Byrne would complete a team with a real chance of telling us the truth.

While he is absolutely correct the reality is the same Jedwards govern. 

[Rossfan]

Cowen has announced a secret enquiry .
Another kick in the teeth for the Greens as Gormless/Ryan and Sargent serve out the required time  to qualify for Ministerial Pensions.

[thejuice]

Irish glass bottle site bought for € 420m - worth €60m today.

I guess they haven't built those appartments on it yet? They submitted planning for that around 2004-2005. I was doing a bit of coursework around there and was looking at the EIA for that development.

[ludermor]

Irish glass bottle site bought for € 420m - worth €60m today.

I guess they haven't built those appartments on it yet? They submitted planning for that around 2004-2005. I was doing a bit of coursework around there and was looking at the EIA for that development.

The site is seriously contaminated and would cost as least 10million to remediate it. I am working on a job pretty close to it and it a fortune to ship off the excavated soil to germany. Apparently they didnt think it was as bad but the fact the DDDA were involved makes that highly unlikey. They are the biggest shower of crooks about the place (saying something i know!!)

[Declan]

Developers' tax rate cost Exchequer €800m
listen Friday, 22 January 2010 10:25

Figures reveal a special lower rate of tax available to property developers cost the Exchequer €800m.

The tax rate was introduced to free up land for development in 2000 and was scrapped in January 2009.

When land is sold for development purposes it is liable for income tax, but not capital gains tax.
Advertisement

Figures from the Revenue Commissioners show the tax was used in 10,000 cases between 2000 and 2007.

Accountancy experts estimate the cost to the Exchequer was €800m over that period.

The so-called 'Special Incentive Tax Rate' was introduced to encourage the release of land for residential development.

The special incentive rate was 20%, as opposed to the higher rate of tax of 42% which was later reduced to 41%.

The incentive meant that money from the sale of land was not liable to the health levy or PRSI.

The amount of revenue forgone by the Exchequer is significant considering urban and rural renewal tax incentives, which attracted considerable criticism, cost the taxman €2bn.

[lynchbhoy]

while that is a loss in tax revenue, the reason why this measure was brought in was because of spiralling land costs and the eventual impasse on selling/purchasing when people were crying out for development land (mostly Dublin I gather).
While 800m may have been lost, there was over 5 billion raised in taxes from these sales.
If this as I have been told, then I would look at the loss as a 'discount' to kick start business.
therefore I dont see a problem with the 800m loss.
I'd be more inclined o look for money from the banks for the pleasure of the guarantee....say 500 million a year...
(between them)

[Main Street]

I dont know if its fair but what are the consequences of a no vote for them? Do the people who are voting know of this? If they are like ireland where lots of people are pissed off of course they will vote No, no matter what the consequences

About the referendum in Iceland

what are the consequences of a no vote for them?


Voting to reject the bill,
means it will be back to the discussion board to negotiate  with the UK and the Dutch the remaining 2 sticking points.
Also means that all IMF and other loans will be shelved until an agreement is agreed between the UK, Netherlands and Iceland.
Failure to reach such an agreement means sovereign default in weeks or months.


"Do the people who are voting know of this?"

I'd imagine the debate of the issues is in the public domain.
Whether a voter at any time has a minimum rational grasp of the issues  to make an educated guess at the polling booth, in spite of an avalanche of agenda driven uninformed and biased comment, is another discussion.

" If they are like ireland where lots of people are pissed off of course they will vote No, no matter what the consequences"

I'd imagine the people have good reasons to be pissed off at this stage,  the massive debts of a bank, which collapsed  on foreign soil, that debt imposed on top of a bankrupt economy & currency and then to be well and truly buggered by the terms of that bank debt settlement. All of this supported by the ideologues and politicians who got the country in to the mess in the first place and who now ask the voter to be very aware of the consequences of rejecting the bill.

There is nothing more to lose by rejecting the bill and renogiationing the two punitive terms,
1. gaining  access to the full amount of the assets of the collapsed Bank would reduce Iceland's liability by about Eur2bn
2. relates to extra punitive interest, adding Eur 1.5bn on top of the Eur 5bn

Sovereign default in 5 years time is inevitable should they vote to accept the bill as it stands now.

[Premier Emperor]

Irish glass bottle site bought for € 420m - worth €60m today.

I guess they haven't built those appartments on it yet? They submitted planning for that around 2004-2005. I was doing a bit of coursework around there and was looking at the EIA for that development.

The site is seriously contaminated and would cost as least 10million to remediate it.

How does making bottles contaminate a site?