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

[muppet]

It is strange times when the extreme right wing government, in the home of the free market, are proposing to effectively nationalise a huge part of the financial industry.

This proposal will attempt to fix the problem from the top down (save the wealthy bankers) rather than from the bottom up (buy out those who have lost their homes) , but that would be asking too much from the Republicans.

If this plan doesn't go through there are experts who think the dollar will go like some Latin American currencies have done. That would mean hyper inflation and rocketing interest rates. This could be only a matter of weeks away.

The danger of Iran or some one else (Putin will feel like slapping Bush after Georgia) trading their oil in Euros is not being mentioned much as the consequences for the US economy (and our own) are to disastrous to even think about.

What no one is contemplating is what happens if the Big Bailout doesn't work?

Any update on the opening post Muppet?

That was really about the US Bank Bailout. That appears to have worked (at the moment) while the EU one hasn't.

The difference seems to be that the States did it all in one go, ignoring the egos in the way and force feeding medicine to institutions it decided needed it. Compare that with first AIB and BOI claiming they didn't need funding, then Greece and Ireland denying they needed assistance. Now Portugal and Spain are in the same boat.

The banks in the Euro should have been put under ECB control. They could decide who sank or swam, or to bail them all out in one go, like the Fed did. Ironically the Fed did socialism better than the EU.

Instead we have the EU standing waiting beside the next domino, waiting to see if it will fall, then trying to catch it before it sets off the next one. It isn't working.



Somewhere on this thread the question was asked (which the media never seem to ask): what if the Bank Guarantee doesn't work?

The answer was NAMA.

Same question: (anyone seen it in the media?) What if NAMA doesn't work?

Answer: IMF/EU bailout and serious austerity measure.

And now we are at the same question again: What if...............?

As usual we have Lenihan berating people who raise the issue of default in any way. We never learn.

[lynchbhoy]

, but the next and only measure in order to reduce costs for Ireland inc. is to cut pubic sector wages and jobs.........

And all the public service workers who lose their jobs under the Lynchboy Recovery plan  will obviously all vanish into thin air and not need any unemployment benefits or hospitals or schools for their kids.
They will also abandon their houses and mortgagaes as they vanish into the Lynchboysphere.
Meanwhile the schools , hospitals, fire stations, Dole offices,  etc etc will be closed.

Stop borrowing mony to pay the private debts of private banks .... that will save the State € 45,000,000,000 in further borrowings while they can offer the NAMA lands and assets as payment for the €55,000,000,000 already borrowed as a result of the Banks reckless greedy stupid pyramid scheme property bubble borrowings.

Time for the Capitalist word to come up with some new innoivative ideas instead of trying to patch up the failed Reaganthatcherist neo liberal globalisation nonsense we've had to endure since 1980.

yes they might be on the dole, but then again there are plenty of jobs out there in certain sectors in this country (IT for example).
its more likely that these public sector people posess an education and are employable - unlike the construction guys - hey will remain unemployed !!
I have seen first hand civilservice and public sector people- not working and not having to work.
Even if it means they are on the dole by being made redundant, does it make it right that these people are employed to do the square root of f**k all?
The only case that can be made for them is that be being employed, they will keep money circulating in the local economy.
Still there should be a cull and people put on notice that they have 12 months to find an alternative job.
Not just the lower ranks - and I said 'maybe' earlier when saying that they might not be over paid, but there are def way too many on or around €100k that do fcuk all for a job.
Thats from first hand experience !!

[Rossfan]

Reducing the number of people employed in the Public Service, thereby reducing the number at work and increasing the number unemployed WILL NOT solve the problems the Irish State has got itself into due to the BertieCharlieHarneyBuilderBanker let it rip Economic style of the 1997 to 2007 era.

If Lynchboy can get Hospital Consultants for less than €100,000 ... 

[lynchbhoy]

Reducing the number of people employed in the Public Service, thereby reducing the number at work and increasing the number unemployed WILL NOT solve the problems the Irish State has got itself into due to the BertieCharlieHarneyBuilderBanker let it rip Economic style of the 1997 to 2007 era.

If Lynchboy can get Hospital Consultants for less than €100,000 ... 

it might not cure the whole problem, but no one measure will !!!!

it is going to take a lot of root and branch review of all public sector by some impartial third party (someone decent not the elongation merchants like pwc who go in, take as long as they can , bring in as many colleagues as they can and in the end write a report that just sits on the fence) who if they are allowed will point out the elephants in the room and problems with overstaffing, double jobbing, skewed 'benchmarking' in salaries and point out what realistic salaray range these guys SHOULD be on etc etc
Pensions of the public sector should also be turned from Defined benefit to PRSA or Defined contribution.

Th eprice of hospital consultants is also not the problem, its when these guys are paid the big salary by state and they also have a private practice. There has to be regulation that they can only be one or the other and that each hospital has to appoint these rather than the rush for consultants to share practisces in hospitals clinics etc as well as being part time consultants for hosptials -which they are supposed to be full time and is another reason why waiting lists are too long as the hoors dedicate more time to lucrative private practice.This we can understand this greed, legislation should dictate they will have to do one or the other.But its not the consultants that are the biggest cost. its the plethora of pen pushers that have never been culled with the merger of health boards etc. Too many people for half the amount of jobs.

With proper cost controls at all levels and areas in public sector, Proper housekeeping, policies, procedures and efficient staff and the correct number of staff with defined roled and job specs - the public sector will be streamlined, efficient and do what its meant to.

We can cull these jobs gradually. As I said before there are plenty of jobs out there for various educated or trained people. There shouldnt be too much of an increase on the unemployment figures, but if there is so what. The cole costs us less than a large salaried pen pusher that is doing the same job as possibly two others !!

[lynchbhoy]

Reducing the number of people employed in the Public Service, thereby reducing the number at work and increasing the number unemployed WILL NOT solve the problems the Irish State has got itself into due to the BertieCharlieHarneyBuilderBanker let it rip Economic style of the 1997 to 2007 era.

If Lynchboy can get Hospital Consultants for less than €100,000 ... 

the bank thing has to be attacked and I am not sure of the best way to do this...
...sell them off inc their debt ?

[Bogball XV]

If Lynchboy can get Hospital Consultants for less than €100,000 ... 

In the UK hospital consultants earn between Stg 76K and 95K.  In Germany, I think the number is around the €70K mark, Italian consultants earn approx €60K.  Not sure on the rest, but I am pretty certain that their job does not allow them to spend a maximum of 30% of their paid time seeing private patients.

But as I've said a pile of times on here, don't get rid of the public servants, slash their wages to sustainable levels and allocate them to areas where they can contribute to society in general.

[Bogball XV]

It's a good argument for a federal Europe.

I think there are quite a few good arguments for a federal europe, it seems that the euro bond collective borrowing will happen in 2011, there's not a lot of going back after that?
Most of the good legislation in this country has come via europe and would never have been implemented if our govt had been given a choice (nor even thought of by those clowns runnig round the dail getting passports sorted out for constituents).  I remember my boss kicking up a fuss when the 20 day statutory minimum holiday regulations came into play and I'm sure there are many similar examples.
My (allbeit limited) experience of european living leads me to believe that they enjoy a higher quality of life, although they have less income. 
On the negative side, the Germans seem to be getting restless again.......

[Bogball XV]

I think there is so much more to the building and the cohesion of a nation than lumping us all together in profit or debt and hoping we stick. I think it would eventually lead to ruin.

I think our record as a nation would point to ruin being the end destination when we are left in charge of our own destiny?

[seafoid]

5 notch downgrade from Moody's.

http://www.guardian.co.uk/business/2010/dec/17/ireland-credit-rating-slashed-moodys

[whiskeysteve]

European Commission press release - detailing emergency funding for Irish banks

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/1765&format=HTML&aged=0&language=EN&guiLanguage=en

Summary of funding measures for each bank at the bottom.

How about AIB receiving "€3.7 billion of new capital, which will ensure that the bank will meet its minimum capital requirements. This will be funded by the Irish authorities through the National Pension Reserve Fund and independently of the Programme for Support."

it was announced this was on the way but still a fcukin sickener and of course Anglo is just a never ending disaster

Anglo Irish Bank

Following the statement of the Irish Minister for Finance on 30 September 2010, Anglo Irish Bank will receive a recapitalisation of € 4.946 billion which will cover the capital needs of the bank until 31 December 2010. This is the fourth capital injection for Anglo Irish Bank since the beginning of the financial crisis. It has become necessary because impairments and losses on Anglo Irish Bank's entire commercial loan book have continued to increase due to the poor quality of the book caused by the risky lending practices in the past and the drop in prices on the commercial property market combined with the ongoing crisis on financial markets.

Anglo Irish Bank will furthermore receive a guarantee covering certain off-balance sheet liabilities (derivatives, clearing transactions and transactional arrangements) that will ensure that Anglo Irish Bank can continue its daily activities as a going concern.

To date, the Commission has already approved three emergency capital injections for Anglo Irish Bank (€4 billion in 2009 - see IP/09/1045; €10.44 billion in March 2010, of which €10.3 billion were effectively granted – see IP/10/400 and up to €10.054 in August 2010, of which €8.851 billion have effectively been granted, while the balance will be injected by the end of the year – see IP/10/1046). Therefore, Anglo Irish Bank is expected to be recapitalised for an amount of €29.3 billion. Anglo Irish Bank furthermore benefits from a guarantee on its liabilities (Eligible Liabilities Guarantee scheme - see IP/09/1787) as prolonged by the Commission on 28 June 2010 (IP/10/854) and an impaired asset measure through the transfer of its commercial property loans to the National Asset Management Agency (NAMA), an impaired asset relief scheme (see IP/10/198).

Irish Nationwide Building Society

Irish Nationwide Building Society (INBS) will receive a recapitalisation of €2.7 billion, which follows from the 30 September 2010 announcement and will cover the capital needs of the building society until 31 December 2010. As for Anglo Irish Bank, the recapitalisation is necessary in order to deal with losses on the commercial loan book.

INBS has already received a recapitalisation of € 2.7 billion in March 2010 (IP/10/400). INBS furthermore benefits from the Eligible Liabilities Guarantee scheme and the transfer of its commercial property loans to NAMA.

Allied Irish Bank

Allied Irish Bank will receive a net recapitalisation of up to €9.8 billion which consists of two measures. Firstly, Allied Irish Bank will receive €3.7 billion of new capital, which will ensure that the bank will meet its minimum capital requirements. This will be funded by the Irish authorities through the National Pension Reserve Fund and independently of the Programme for Support. Furthermore, the Irish authorities will convert the government's preference shares received in the context of Allied Irish Bank's recapitalisation in May 2009 (IP/09/744). Secondly, Allied Irish Bank will receive a recapitalisation up to €6.1 billion to deal with the 12% Core Tier 1 capital requirement that is part of the Programme for Support.

Apart from the recapitalisation, Allied Irish Bank benefits from the Eligible Liabilities Guarantee scheme and transferred commercial property loans to NAMA.

[lawnseed]

whats the connection with aib and fianna fail? theres something not right here. why haven't they cut this bank lose

[seafoid]

whats the connection with aib and fianna fail? theres something not right here. why haven't they cut this bank lose

I was talking to an economist at work today. The effects of a bank collapse on the wider Euro economy is feared by the authorities more than rising suicides in Ireland.  It is easier to shaft the Irish taxpayer who won't say anything rather than tell rich pension funds their investment are now worth less than what they bought them for.     

[seafoid]

http://www.irishtimes.com/newspaper/breaking/2010/1223/breaking5.html

AIB to be nationalised

19.1.2009
AIB chief executive's message to staff
Dear Colleague,

The past few days have again seen the banking sector, both at home and internationally, go through an extremely volatile time.
The Irish Government's decision to nationalise Anglo Irish Bank, together with a variety of other developments here, in the US, the UK and in other parts of the Eurozone, have all had a knock-on effect on share prices and have led to renewed uncertainty and speculation as to what is going to happen next. I can understand that seeing our share price drop severely is worrying and that you may wonder whether some of the speculation might be true.

Share prices continually rise and fall as a result of many factors and the present extreme volatility in the financial sector serves to exacerbate and exaggerate that process. AIB continues to be a strong, sound, internationally diversified organisation which serves a huge range of personal and business customers across a wide variety of sectors. We have the depth and strength required to manage our way through this period of uncertainty as an independent organisation and I believe we will do so.  Everyone in AIB Group has a role to play in dealing with these difficult times and I can assure you that the Chairman, myself, my colleagues on the Group Executive Committee and the Board are all focussed on ensuring that AIB remains well equipped to tackle whatever challenges this environment may present.

I know I can, as always, rely on all of you to play your part too. Whether you are working in RoI, Northern Ireland, Britain, Poland, the US or in any of our other locations throughout the world, I would just ask two things of you:-

Firstly, don't become sidetracked by rumour and speculation. At times like this there is always, understandably, a surfeit of both.

Secondly, and most importantly, maintain your focus on the day to day business of doing your job and looking after your customers. I cannot over emphasise how important that is as AIB has a key part to play in the revival of the economies in which we operate.

Thank you all, once again, for your continued commitment.

Eugene Sheehy
Group Chief Executive (19/01/2009)

3.3.09
AIB reported a 62 per cent fall in pretax profits for the overall group, which includes its operations in the UK and Poland, and its capital markets division. The group's pretax profits fell to €1 billion in 2008 from €2.5 billion a year earlier as loan losses surged to €1.8 billion from just €106 million a year earlier. Eugene Sheehy, chief executive of AIB, described the results as "disappointing". He said he would not be stepping down, and that he had not offered his resignation to the bank, nor had he considered it. "I have plans to run the bank and lead the bank through this crisis," said Mr Sheehy. He said the bank had received €3.5 billion from the Government in the recapitalisation deal, under which the bank will pay 8 per cent interest a year and could give up a 25 per cent stake in the group to the taxpayer. "This could be a very good deal for the taxpayer. . . and I want to be leading the bank to make sure that happens," he said.
Mr Sheehy said that there was "no need" to nationalise AIB as even in its stress test the bank was "still adequately capitalised". Describing the revelations emerging from Anglo Irish Bank as "very troubling", Mr Sheehy said they had led to "an erosion of morale" within Irish banking.
He said it had been "a very trying task" explaining developments to international investors.

[Bogball XV]

http://www.irishtimes.com/newspaper/breaking/2010/1223/breaking5.html

AIB to be nationalised

19.1.2009
AIB chief executive's message to staff
Dear Colleague,

The past few days have again seen the banking sector, both at home and internationally, go through an extremely volatile time.
The Irish Government's decision to nationalise Anglo Irish Bank, together with a variety of other developments here, in the US, the UK and in other parts of the Eurozone, have all had a knock-on effect on share prices and have led to renewed uncertainty and speculation as to what is going to happen next. I can understand that seeing our share price drop severely is worrying and that you may wonder whether some of the speculation might be true.

Share prices continually rise and fall as a result of many factors and the present extreme volatility in the financial sector serves to exacerbate and exaggerate that process. AIB continues to be a strong, sound, internationally diversified organisation which serves a huge range of personal and business customers across a wide variety of sectors. We have the depth and strength required to manage our way through this period of uncertainty as an independent organisation and I believe we will do so.  Everyone in AIB Group has a role to play in dealing with these difficult times and I can assure you that the Chairman, myself, my colleagues on the Group Executive Committee and the Board are all focussed on ensuring that AIB remains well equipped to tackle whatever challenges this environment may present.

I know I can, as always, rely on all of you to play your part too. Whether you are working in RoI, Northern Ireland, Britain, Poland, the US or in any of our other locations throughout the world, I would just ask two things of you:-

Firstly, don't become sidetracked by rumour and speculation. At times like this there is always, understandably, a surfeit of both.

Secondly, and most importantly, maintain your focus on the day to day business of doing your job and looking after your customers. I cannot over emphasise how important that is as AIB has a key part to play in the revival of the economies in which we operate.

Thank you all, once again, for your continued commitment.

Eugene Sheehy
Group Chief Executive (19/01/2009)

3.3.09
AIB reported a 62 per cent fall in pretax profits for the overall group, which includes its operations in the UK and Poland, and its capital markets division. The group's pretax profits fell to €1 billion in 2008 from €2.5 billion a year earlier as loan losses surged to €1.8 billion from just €106 million a year earlier. Eugene Sheehy, chief executive of AIB, described the results as "disappointing". He said he would not be stepping down, and that he had not offered his resignation to the bank, nor had he considered it. "I have plans to run the bank and lead the bank through this crisis," said Mr Sheehy. He said the bank had received €3.5 billion from the Government in the recapitalisation deal, under which the bank will pay 8 per cent interest a year and could give up a 25 per cent stake in the group to the taxpayer. "This could be a very good deal for the taxpayer. . . and I want to be leading the bank to make sure that happens," he said.
Mr Sheehy said that there was "no need" to nationalise AIB as even in its stress test the bank was "still adequately capitalised". Describing the revelations emerging from Anglo Irish Bank as "very troubling", Mr Sheehy said they had led to "an erosion of morale" within Irish banking.
He said it had been "a very trying task" explaining developments to international investors.

hearing was in-camera, media present were kicked out prior to commencement - quite worrying and utterly disgraceful - not be long now until the military junta take control!

[seafoid]

Madam, – I note in your report (Front page, December 23rd) that Minister for Finance Brian Lenihan will pump €3.4 billion into AIB, effectively nationalising the bank, from the funds of the National Pension Reserve Fund (NPRF).
However, on the NPRF website, it states that "No money can be drawn down before 2025" and that its statutory investment policy requires "the Fund be invested so as to secure the optimal total financial return provided the level of risk is acceptable to the Commission".
First, how does the Minister have powers to override the fund's statutory policy and second, after receiving a total bailout from the IMF/EU of €85 billion, the Minister could hardly describe using the fund as securing "optimal financial return".
Please Minister: leave office and stop contributing to the ruination of our country. – Yours, etc,
GARETH CLIFFORD,
Coppinger Glade,
Blackrock,
Co Dublin.
Madam, – Let me see if I can get this straight. Minister for Finance, Brian Lenihan, having already "injected" €3.5 billion into Allied Irish Banks, now intends to "inject" a further €3.7 billion into it. From the State pension fund, of course! And furthermore, the "EU Commission" (which no one ever voted for) has approved a further "injection" into AIB of €6.1 billion by the end of February.
This is an amount very similar to that, which the taxpayers must pony up to the EU within the coming fiscal year under the "agreement", whereby the EU/IMF is supposed to "bail out" the entire Irish State, and with similar amounts supposed to come for the next four years.
And all of this to keep a bank afloat, which is worth no more than €4.32 million (and going south very rapidly) on the open market. Not even Alice ever encountered Hatters as mad as these. – Yours, etc,
DAVID IRBY,
An Grobh,
An Daingean,
Co Chiarraí.