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

[ludermor]

Do you think they were making bottles there forever?

[Declan]

Gene Kerrigan: Banking witch hunt? Not on our watch

The Government says it wants answers, but it's doing its very best not to find them


Sunday January 31 2010

Here's an exclusive: the Soapbox Special Investigation Unit has managed to acquire a copy of the final report of the commission of investigation into the banking collapse. You might quibble that the bank inquiry has yet to begin its work -- oh, don't be so negative. Cutting-edge journalists never allow a technicality to get in the way of a good story.

In short, as is sometimes the case in the more funky branches of journalism, let's just make it up.

No need to wait six months or a year (or two years) while the important parts of the inquiry continue behind closed doors.

The chances are that the findings of the report of the commission of inquiry (Soapbox version) will be pretty close to the findings of the real one (except it will cost a lot less).

Let's cut to the chase. How, I hear you ask, does the commission of inquiry's report explain the systemic collapse of the banks?

We can reveal that the final report will say approximately the following: "Ah, you know, it's true that things got a little bit out of hand with the reckless lending, but everyone meant well, didn't they?"

And what will the commission conclude about the bankers? "Ah, sure there's nothing to be gained from playing the blame game, is there?"

Well done. Already, I can hear the reliable media glove puppets passing on the message that the glitches in the system have been identified and patched up. Move on, folks, nothing to see here.

What does the commission of inquiry have to say about renowned chancer Sean FitzPatrick, gobshite-in-chief at Anglo Irish Bank? The report's hard-hitting conclusion is blunt: "We might almost go so far as to say that Mr FitzPatrick's reach exceeded his grasp."

And the golden circle developers? "Misled by a mixture of entrepreneurial flair and a regrettable neglect of caution, they failed to appreciate the dangers."

What about the Financial Regulator, who seemed to fall asleep halfway up the collective backside of the bankers? Here, the commission of inquiry takes no prisoners: "Things might have gone slightly better," the report concludes, had the regulators "been even more diligent than they undoubtedly intended".

The first serious move for an inquiry came on December 15, when Prof Patrick Honohan suggested it was necessary. Honohan is an expert on banking crises, and he now heads the Central Bank. He seems genuinely puzzled by aspects of the crisis and wants an inquiry that will examine certain "processes" and "structures". He wants this carried out by those with "expertise and broad social scientific understanding", rather than mere "forensic skills".

In short, a highly technical inquiry aimed at patching up glitches in the system. Fine, as far as it goes. Prof Honohan is a banking technician -- he genuinely isn't interested in finger-pointing.

We're all in favour of something called "accountability".

We demand that people "accept responsibility" for their actions. But this concept has limited application.

If a supermarket checkout is short of money, the worker at the register is suspect until proven innocent. If a couple of electronics factory workers put a bulky parcel into the boot of their car the security people will search the car before it leaves the premises. If I'm on the dole and I buy a new Lexus someone will shop me to the Revenue.

In real life, these are known as checks and balances. Accountability. Transparency. All that good stuff. What is it called when applied to bankers, developers, politicians (and others paid stratospheric amounts of money to do their jobs)? It's called a "witch hunt". Also known as the "blame game". All that bad stuff.

Six days after Prof Honohan suggested a highly technical inquiry, another establishment heavyweight tweaked the proposal. Colm McCarthy, the Government's provider of a menu of savage cuts, said an inquiry was needed. Why? Tell us, Colm. "The absence of a factual public narrative on the banking collapse is damaging the credibility of the fiscal adjustment programme." Ah. Colm, what poetry! "Fiscal adjustment programme." It makes the heart sing. Let's translate. A "factual public narrative" is -- what? Well, a narrative is a story. So, we need a story, drawn from facts, that will satisfy public curiosity.

Why? Because the absence of a narrative undermines the "fiscal adjustment programme". What Colm sees as a "fiscal adjustment programme" includes what the rest of us see as savaged public services, attacks on the middle classes, the poorly paid, the weak, the disabled, the unemployed.

So, unless we get a story on why the banks collapsed, the skulls will get bolshie about having their jobs sacrificed and their wages slashed. They'll get angry about attacks on the blind. The "fiscal adjustment" will take three or four years, Colm says, "and it needs public acceptance".

Colm was concerned to maintain the focus of the inquiry: "The Department of Finance and the former finance ministers ought not be in the firing line," he urged (his emphasis).

So, the regulators, auditors and bank managements should be probed, but not the top civil servants at the Department of Finance or the politicians -- the people who set the policy.

Fianna Fail simply didn't want any inquiry. But to deny Honohan and McCarthy would be embarrassing and dangerous. The Greens huffed and puffed about transparency and were told to shut up and sit down.

The latest plan goes like this: get some credible but reliable folks to "scope" the banking scene and provide technical material from which a commission of inquiry can rustle up a report -- taking everything behind closed doors when necessary.

The very thought of a public inquiry made the Opposition parties salivate. Whoopee, a public grilling of Government politicians in the run-up to an election! When the public aspect was limited, they briefly threw a tantrum, as did the media, which saw juicy headlines being smothered.

The inquiry is now as much a part of the establishment's plan as, well, picking the pockets of the blind. Fix things up without changing them. Preserve the inequalities. Protect the core of the extremely high pay of politicians, bankers and senior civil servants, while screwing the vulnerable.

Extraordinary levels of wealth and income are to remain barely touched, while real, lasting, humiliating damage is done to the lives of those who weren't part of the gambling game.

Meanwhile, there will be a limited story prepared to palm off dissidents. "The expert independent inquiry has established . . ."

No inquiry into relationships within the golden circles, no inquiry into the funding of politicians (only about 10 per cent of the amount spent by the parties is accounted for). No curiosity, even, about the role the media played in inflating the credit bubble.

What about the law? What about the cops? Well, the trouble is, most of what happened was legal. Sneaky, greedy, ruthless, rapacious, immoral perhaps -- but legal. Because the laws were written by -- who?

Great little nation. Steady as she goes.

[muppet]

http://www.rte.ie/business/2010/0203/banks.html

NAMA making good progress - Lenihan
Wednesday, 3 February 2010 15:46
The National Asset Management Agency is making good progress with its work, Finance Minister Brian Lenihan said in the Dáil today.

'The NAMA process for the valuation and transfer of loans is well under way,' Mr Lenihan said in response to a question.

Media reports have said the scheme faced further delays as European Union approval was not expected until the end of February at the earliest.

Earlier, the finance spokespersons from the two main opposition parties criticised the decision for the delegation of some duties from the Department of Finance to the National Treasury Management Agency.

Today in the Dáil, Fine Gael's Richard Bruton said it was a 'bridge too far', while Labour's Joan Burton said most banking responsibilities will now fall into the NTMA.

Both pointed out that the agency is also out of the scope of Freedom of Information requests.

No transparency = no accountability

[Declan]

David McWilliams: We're all fools if we think recovery plan is patriotic

Wednesday February 03 2010

It's been nearly 18 months since the Government announced its bank guarantee. Anglo Irish Bank was nationalised over a year ago and it is coming up to a year since the Government first mooted the NAMA plan. Yet nothing has actually been done since then. Not a single loan has been transferred to NAMA. There has been lots of talk, lots of bluster and point scoring, but still credit in the economy contracts, house prices continue their slow strangling decline and, most significantly, the rest of the world has moved on.

Why the delay? One interpretation is that our government doesn't understand that speed is crucial. If we compare our stagnation with other countries that have been faced with national bankruptcy, we compare dreadfully.

Look at what the Swedes achieved in their crisis of 1993 when their property market collapsed along with their banks. In the four months between November 1993 and February 1994 Sweden issued a bank guarantee, set up and transferred all the bad loans to a bad bank, committed state money only after all the private money had been wiped out, let some weak banks go bust, nationalised some big ones and devalued their currency by 40pc!

Sweden took all these decisions quickly in order to save the economy. The financial markets saw that the country was serious about sorting itself out and money cascaded back into Sweden. In a short time the Swedish crisis was over and the casualties were those who caused the problem -- the banks and the big landowners. The devaluation allowed industry to recover quickly by becoming hyper-competitive.

So, is the reason for our inactivity the Government's failure to understand that speed and significant policy change are crucial to getting out of the mire quickly? Or is it that they understand this perfectly, but also cynically understand that if they can brazen it out for another two years they might just be able to run an election campaign on the fallacious myth of taking "hard" decisions?

By adopting the latter tactic, the Government can divide the country between the "insiders" and the "outsiders".

The insiders are those who have a stake in the society and, therefore, will support a government that is taking decisions that protect their dwindling stake. The insiders prefer the certainty of a tarnished status quo to risking the unknown of a rejuvenated country.

The outsiders are those with no stake in the society, who therefore have most interest in fundamental change. During the boom, some outsiders got inside the tent for a few years, but now they are back outside, in negative equity. They are likely to emigrate or go on the dole as they dutifully did in the crises of the 1950s and the 1980s.

The cynicism of the current approach is that it gives a political party, which is playing the percentages, a chance. On the other hand, it means the recession is longer than it should be. Credit dries up and the country is fixed in a holding position, which is sustainable as long as the Government can borrow abroad and the insiders are kept in a state of nervous anxiety rather than acute fear about their future. This allows the insiders to see the outsiders as, at best, a worrisome nuisance and, at worst, a threat to the insiders' standard of living. The outsiders quickly become the enemy.

Playing the insider/outsider game allows the ruling party to experiment with what could be described as "ground hurling". Ground hurling means you keep close to your marker, don't do anything dramatic and see how the ball breaks. Ground hurling allows a team that shouldn't have a hope in hell to eke out a win and rob the prize.

Think of this in political terms. We are now faced in Ireland with the pathetic spectacle of the Government protecting the rotten status quo based on the entirely mendacious strategy of political survival rather than national renewal. This starts with the banks. Forget patriotism, self-preservation is the name of the game.

The ongoing public sector versus private sector debate is also part of the bigger insider/ outsider tactic, as it creates false skirmishes. This new conflict is a by-product of the failed "a lot done, more to do" economics of this government. But expediently, this row actually helps the Government because it detracts from the real issue of who mismanaged the economy to such an extent that we ended up here. As smokescreens go, the public/private fight on radio and TV current affairs shows suits the Government.

The reality is that most Irish families are made up of workers who work in both private and public sector. Most families are made up of a small business person, a civil servant, a student, a pensioner, an employee of a private company and someone on the dole. There is no public/private divide.

It is entirely made up to detract from the real issue, which is that the present administration, their senior civil servants, who are supposed to run and regulate the country, and the insiders at the top of the banks and property companies destroyed this economy. This is the one and only issue. But that is not the issue the Government wants discussed so it sets up roadblocks, like the private versus public wage debate.

This is also what the NAMA strategy is based on. The Government argues that it is patriotic to save the banks and the bondholders of the banks because not to do so would undermine the "credibility" of Ireland. What do you think actually undermined the credibility of Ireland? Could it possibly be appalling management of the economy in the past five years?

It is not patriotic to lumber the next generation with the debts of the last. This is not patriotism, it is theft. But for a political power base desperately clinging to power, saving the banks and borrowing to do so is a strategy based on buying time and hoping something will turn up. If it works, Fianna Fail saves itself from obliteration at the cost of hundreds of thousands of extra outsiders being forced -- unnecessarily -- to go on the dole or emigrate. But they are outsiders, so who cares?

In Sweden of the 1990s, the government took a different approach. It fired those responsible. It nationalised the banks. It made sure all the stockholders' funds were wiped out before it put a penny of government money into the bankrupt banks. In so doing, Sweden learnt from the disaster. The main lesson is a simple one, which is that the "more of the same" approach is not good enough.

This country needs to be fixed, not patched up. We don't need tinkering about with the old model. We need to see through the present government strategy. It is not about renewal but is all about keeping its incompetent fingers on the levers of power until something turns up. In so doing, it is aided and abetted by the ECB, which will keep the Irish banks afloat because it is afraid of an embarrassment such as a default within the euro.

The only way it can achieve this is by allowing the banks to mortgage the next generation with more useless borrowing to keep land prices falsely underpinned using the new device called NAMA bonds.

That's the game -- and they dress it up as patriotism.

More fool us if we go along with it.

[fearbrags]

http://www.youtube.com/user/jbyeats&rclk=cti


this  man speaks  the  truth

[stephenite]

http://www.youtube.com/user/jbyeats&rclk=cti


this  man speaks  the  truth

No, he doesn't. New world order conspiracy theory shouted by an angry little man.

[no mo do yakamo]

http://www.youtube.com/user/jbyeats&rclk=cti


this  man speaks  the  truth

No, he doesn't. New world order conspiracy theory shouted by an angry little man.

Well how does economics work so?

[Declan]

Gene Kerrigan: O'Dea exit not part of the Master Plan
With all eyes on the Dail, a bank dodged paying back €280m it owed the taxpayer, writes Gene Kerrigan
Sunday February 21 2010

WOW, that was some big story of the week, wasn't it? You know what I'm talking about? Low standards in high places, and all that. (A reader has just emailed to say: "You mean the Willie O'Dea resignation, don't you?". Eh, no sir.)

No, the story of the week was far more important than that fleeting matter. Yesterday, we -- the people -- were due to be paid a small stipend from the Bank of Ireland. A mere €280 million or so, delivered to the exchequer. And guess what? The bank didn't pay up. Not to worry -- everything's going according to the Master Plan! We are, for whatever reason, remarkably calm about what's going on.

The ransacking of the economy; the transfer of huge wealth from the citizens to the bankers and their bondholders. The protection of the rich; and the placing of the burden on the poor, the disabled, the workers, the middle classes and credit-starved small businesses. But, hey, the banks are being looked after. And eventually, in some as-yet-unexplained way, this will "kickstart" the smart economy and before you know it we'll all be back buying five-grand handbags.

Oh, did I mention, apart from the €280 million that Bank of Ireland didn't pay, on May 13 there'll be another €280 million we're due that AIB won't be paying either? The total of €560 million was to be a small return on the seven billion we've donated to "recapitalise" AIB and Bank of Ireland. We were due our first €280 million dividend yesterday but the EU said they were still checking the fine print, so the payment couldn't go ahead. And, here's the bit I love -- Bank of Ireland says, instead of the €280 million, they'll give us shares in the bank. And yesterday nice Brian Lenihan said he was cool with that. (Frankly, if I had to choose between Bank of Ireland shares and a cheque from the Bank of Toytown . . . )

The media is upset -- because the State shareholding in the banks is increasing. And the banks are upset for the same reason (apparently it infringes the Eleventh Commandment -- Thou Shalt Not Nationalise, for fear of upsetting The Markets -- May God Be With Them). Not to worry. This creeping nationalisation is embarrassing for Lenihan, but otherwise the Master Plan is working. The two Brians are on the case. Meanwhile, the other wing of the Master Plan, the entity known as Nama, is soaring like a . . . like a . . . well, it's floundering.

Nama is way behind schedule in buying the first €19 billion of bad debt. Anglo, the freak "bank" that should have had a stake driven through its zombie heart, accounts for about €10 billion of that. Utter insanity, but part of the Master Plan. Meanwhile, Arthur Beesley of the Irish Times revealed the top 10 visionary entrepreneurs whose activities generated the bad debt -- the smartest lads to ever come out of Dublin, Cork or Galway. Liam Carroll, Bernard McNamara, Sean Mulryan, Derek Quinlan, Paddy McKillen, Treasury Holdings (Johnny Ronan and Richard Barrett), Michael O'Flynn, Joe O'Reilly, Gerry Gannon and Gerry Barrett.

These are the visionaries lionised for years in the media and in the country's business schools. They had the vision to, eh . . . borrow more than they could repay. They were bankrolled by the country's leading reckless gobshites -- the top bankers at Bank of Ireland, AIB and Anglo, along with some wannabe gobshites at Irish Nationwide and EBS. And where did the gobshites get this money? From an unidentified cabal of International Idiot Gamblers. Not to worry. The Master Plan is working.

Suddenly, Cowen and Lenihan began referring to "our banks". Now, politicians may legitimately refer to "our hospitals" and "our schools", but "our banks"? Imagine if Dunnes Stores became insolvent. Would we refer to "our supermarkets" and insist we must use State money to prop them up? No, they're a private outfit and they look after themselves. Suddenly, the banks became "ours". Because banks are different. There was no way we could do something radical -- set up or encourage an alternative banking infrastructure. That would be against market principles, May God Be With Them. Better by far to take billions from the pension funds and give them to dead banks in the hope that -- well, it'll all work out in the end.

"And so it will", said Brian. "Indeed it will", said the other Brian.

"Very courageous", said the man from the EU, with a small, satisfied smile on his highly polished face.

The Master Plan (thrown together in a panic, under the influence of stunned bankers) insists that above all else the zombie banks must be revived. The reckless gobshites and the International Idiot Gamblers are to be bailed out, while the low paid and the disabled get stiffed.

What about unemployment? Well, that too is going according to the Master Plan. Unable to devalue the currency, the Brians seek to increase competitiveness by making export goods cheaper. Method? Deflate wages by kicking the bottom out of the labour market. Mission just about accomplished.

The Master Plan was never formally launched. It has to be discerned through the cracks in the establishment's solidarity. We were given a cover story -- by reviving the insolvent banks we'll increase lending to business. This will kickstart the economy, leading to increased employment and prosperity for all. The sceptics said this was mad. Come on, we were told, don't be negative. Pull on the green jersey.

Well, perhaps you'll believe Eugene Sheehy, then head of AIB. Speaking in November 2008, Sheehy said: "Recapitalisation of the banks will not make credit more available." A year later, asked at an Oireachtas Committee to comment on Nama and credit, Sheehy said: "If people think that the day after Nama, that the country is going to be awash with money, that's not going to happen."

In between, Steven Seelig of the IMF, the two Brians' own appointee to the board of Nama, told the Government confidentially that Nama won't significantly increase lending. The cover story justified the insane economic strategy. The consequent deflation of the economy has thrown thousands more onto the dole.

Hold on a minute . . . I've just had a message, via carrier pigeon, from Willie O'Dea. "How dare you, in the second paragraph above, refer to this bank story as far more important than my resignation? By the way, are you still involved in the heroin trade? Heh-heh, only kidding." Willie -- a sly local politician -- was caught spreading calumny about a rival, behaviour that was on Wednesday evening deemed acceptable by every Fianna Fail and Green Party TD. Subsequent unease among rank-and-file Greens caused political panic, forcing Willie's resignation. In my books, that's a minor story. Politicians -- we've seen 'em come, we've seen 'em go. No big deal. On the other hand, the people of this country are stretched on the ground, in shock at the sudden collapse of the economy. Brian Cowen is sitting on our head, while John Gormley holds our legs down. And Brian Lenihan is rooting through our pockets. Whatever he finds, he gives to the banks.

That, compared with the resignation of a transient politician, is a story.

[Zapatista]

The State has been issued with 184 million shares in Bank of Ireland.

The development has the effect of diluting the existing shareholders in the bank and means that the State has a 15% stake in the bank worth €250m.

Last year the State invested €3.5 billion in the financial institution as part of its rescue of the banking system. In return, the bank was to pay an annual dividend of 8%, worth €0.25 billion.

But the EU blocked banks in receipt of State aid from making such payments.


http://www.rte.ie/news/2010/0222/boi.html

Can someone help me? If we can't get cash payments how can the bank repay the annual dividend of 8%? Will we get another 15% of the shares next year? Is this nationalisation by stealth? How do people who paid good money for shares feel about it?

[muppet]

http://www.theatlantic.com/doc/200905/imf-advice

[armaghniac]

How do people who paid good money for shares feel about it?

I expect they feel pissed off. But this is because the people they appointed to run the bank effectively lost all of their money, so whatever they paid the shares are largely worthless.

[Zapatista]

Did the finance minister not check that it would at least be legal for the bank to make a cash payment? They seem more interested in finding ways to keep ryanaair out of hangers6 than making the banks pay their way.

[muppet]

Did the finance minister not check that it would at least be legal for the bank to make a cash payment? They seem more interested in finding ways to keep ryanaair out of hangers6 than making the banks pay their way.

In a funny way the pandering to the banking & developing equivalents of Michael O'Leary is what caused the mess. They haven't learned from it either it is just that, for top civil servants, giving O'Leary 80-90% control of an entire sector scares the life out of them and anyone else with half a brain.

They offered O'Leary a new hanger all for himself but no, it must be Aer Lingus' hanger.

[Zapatista]

In a funny way the pandering to the banking & developing equivalents of Michael O'Leary is what caused the mess. They haven't learned from it either it is just that, for top civil servants, giving O'Leary 80-90% control of an entire sector scares the life out of them and anyone else with half a brain.

They offered O'Leary a new hanger all for himself but no, it must be Aer Lingus' hanger.

It was they who decided to sell aer lingus not o'leary. Did they think richard branson or rupert murdock was going to buy it?

The details on the hanger are well being discussed on another thread (ok I brought it up).

[muppet]

In a funny way the pandering to the banking & developing equivalents of Michael O'Leary is what caused the mess. They haven't learned from it either it is just that, for top civil servants, giving O'Leary 80-90% control of an entire sector scares the life out of them and anyone else with half a brain.

They offered O'Leary a new hanger all for himself but no, it must be Aer Lingus' hanger.

It was they who decided to sell aer lingus not o'leary. Did they think richard branson or rupert murdock was going to buy it?

The details on the hanger are well being discussed on another thread (ok I brought it up).

It was Minister Seamus Brennan who acted the legislation to sell Aer Lingus.

Here is what the Ryanair website had to say upon his passing: http://www.ryanair.com/en/news/mr-seamus-brennan-td-ryanair-statement

MR SEAMUS BRENNAN TD - RYANAIR STATEMENT



The people of Ryanair today (Wednesday, 9th July 2008) expressed their deep shock and sadness at the death of Mr Seamus Brennan TD.  He was a politician of great courage and foresight, who was pivotal to much of the transformation in the Irish economy over the past 20 years.  As a pioneering Minister for Transport in the early 1980's, Seamus Brennan developed the two airline strategy which laid the basis for 20 years of strong tourism growth in Ireland.

More recently he proposed the splitting up of the Aer Rianta airport monopoly into three competing airports (Dublin, Cork and Shannon) and while this plan remains unfinished, there can be no doubt that Cork and Shannon airports have enjoyed considerable success in recent years under the local autonomy that Seamus Brennan introduced.  Ireland will be a poorer place without Seamus Brennan's vision and leadership.

Ryanair's Michael O'Leary said today:

"All of us here in Ryanair will mourn Seamus Brennan's sudden and untimely passing.  He was without doubt the best, most courageous and most visionary Transport Minister that Ireland has ever had.  It is no exaggeration to say that without Seamus Brennan's  vision in the early 1980's, Ryanair would not exist today and the low fare air travel revolution which benefits so many millions of European citizens on a daily basis would have been strangled at birth.

"All of us send our sincere condolences to his family and wide circle of friends.  Both he and they are in our thoughts and prayers"