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

[seafoid]

NAMA is a joke at this stage. It didn't do what it said on the tin.
It didn't stop the country form having to go to the IMF so what is the point of it now? Ireland is firmly in the grip of a debt deflation cycle that will end in a bond default  . NAMA was a FF white elephant.

Brian Lenihan should be in jail. Along with anyone who sat on the boards of the banks over the last 5 years. 

[muppet]

NAMA is a joke at this stage. It didn't do what it said on the tin.
It didn't stop the country form having to go to the IMF so what is the point of it now? Ireland is firmly in the grip of a debt deflation cycle that will end in a bond default  . NAMA was a FF white elephant.

Brian Lenihan should be in jail. Along with anyone who sat on the boards of the banks over the last 5 years.

NAMA happened because of the failure of the bank guarantee. The IMF is here because of the failure of NAMA.

When you look at it NAMA was nuts (although I accept smarter people than I still argue with me that it was the right thing to do)

This is my simple understanding of how NAMA worked. Imagine a bank had a toxic loan of say €100,000,000. NAMA (taxpayer) acquired this loan giving the bank a haircut of say 50% so it paid the bank €50,000,000 for the toxic loan. This loan is now in NAMA who are trying to figure out how to get the money back.

In the meantime the bank has had €50,000,000 taken off its balance sheet by the haircut. So the Government (taxpayer) has to recapitalise the bank to the tune of the €50 Million (give them the money).

As all of this money is ultimately funded by the taxpayer (via the ECB first then the EU/IMF) so in reality the taxpayer is picking up the tab for everything until NAMA can actually sell some property. But as we know some of the people responsible for the toxic loans in the first place are advising NAMA so we should not be surprised if they recover long before the taxpayer does.

[Bogball XV]

Paddy mc killen has won part of his case today. It just gets worse and worse for NAMA. This could change everything.

dunno, seems like a technicality and mckillen's argument was that as his loans were 'performing' to use bank speak, they shouldn't have been taken into nama in the first place.  There aren't too many of the big developers in that boat.

If it were to prove enough to undo NAMA, what would happen? I'm not sure that would be in any of our interests' anymore, given how far it has progressed? 

[muppet]

Paddy mc killen has won part of his case today. It just gets worse and worse for NAMA. This could change everything.

dunno, seems like a technicality and mckillen's argument was that as his loans were 'performing' to use bank speak, they shouldn't have been taken into nama in the first place.  There aren't too many of the big developers in that boat.

If it were to prove enough to undo NAMA, what would happen? I'm not sure that would be in any of our interests' anymore, given how far it has progressed?

The State is picking up the tab either way.

NAMA is exempt from the Freedom of Information Act afaik. That tells me all I need to know about Lenihan's intentions for NAMA. It was also an attempt to keep the debt 'off balance sheet' as in the National Debt. Don't think that is going to fool anyone anymore.

[Bogball XV]

Paddy mc killen has won part of his case today. It just gets worse and worse for NAMA. This could change everything.

dunno, seems like a technicality and mckillen's argument was that as his loans were 'performing' to use bank speak, they shouldn't have been taken into nama in the first place.  There aren't too many of the big developers in that boat.

If it were to prove enough to undo NAMA, what would happen? I'm not sure that would be in any of our interests' anymore, given how far it has progressed?

The State is picking up the tab either way.

NAMA is exempt from the Freedom of Information Act afaik. That tells me all I need to know about Lenihan's intentions for NAMA. It was also an attempt to keep the debt 'off balance sheet' as in the National Debt. Don't think that is going to fool anyone anymore.

I think most agencies have been lumping bank debt and state debt together for a while now - sure how coulc they do otherwise.

Whilst NAMA has this ridiculous long term economic value stipulation in it, i have been surprised by how they've went after some of their debtors and by just how big some of the more recent hair cuts have been.  They're still probably giving too much, but still, they don't seem to have been as influcenced by the govt as I thought they would. 

The problem with NAMA was that in a few years time there have been rumours that many of the current owners of NAMA loans would renegotiate better deals and discounts on their loans etc, it's just that they couldn't do that now, politically unpalatable etc...

And of course it was never going to work in getting the banks lending again, that was a really stupid suggestion.

Should anything be exempt from the FOI act? 

[muppet]

Paddy mc killen has won part of his case today. It just gets worse and worse for NAMA. This could change everything.

dunno, seems like a technicality and mckillen's argument was that as his loans were 'performing' to use bank speak, they shouldn't have been taken into nama in the first place.  There aren't too many of the big developers in that boat.

If it were to prove enough to undo NAMA, what would happen? I'm not sure that would be in any of our interests' anymore, given how far it has progressed?

The State is picking up the tab either way.

NAMA is exempt from the Freedom of Information Act afaik. That tells me all I need to know about Lenihan's intentions for NAMA. It was also an attempt to keep the debt 'off balance sheet' as in the National Debt. Don't think that is going to fool anyone anymore.

I think most agencies have been lumping bank debt and state debt together for a while now - sure how coulc they do otherwise.

Whilst NAMA has this ridiculous long term economic value stipulation in it, i have been surprised by how they've went after some of their debtors and by just how big some of the more recent hair cuts have been.  They're still probably giving too much, but still, they don't seem to have been as influcenced by the govt as I thought they would. 

The problem with NAMA was that in a few years time there have been rumours that many of the current owners of NAMA loans would renegotiate better deals and discounts on their loans etc, it's just that they couldn't do that now, politically unpalatable etc...

And of course it was never going to work in getting the banks lending again, that was a really stupid suggestion.

Should anything be exempt from the FOI act?

Nothing that costs €85 Billion.

[seafoid]

http://www.irishtimes.com/newspaper/opinion/2011/0204/1224288983224.html

"There is reason for hope on the economy"

There isn't.  It is f**ked as long as the banks stay as they are.
And that is what all the share prices are saying.   
I suppose the IT and RTE 's main job now is to prevent a bank run.

http://www.centralbank.ie/data/site/Commentary%20QFA%20ref%20Q3%202010%20january%2025.pdf

[muppet]

http://www.independent.ie/national-news/state-may-see-sharp-rise-in-interest-rate-for-eu-loans-2526657.html

The next tranche of the EU part of the Bailout may well have a higher interest rate.

IRELAND could have to pay as much as 6.5pc on the next tranche of EU money, based on current market rates.

As the terms of the EU/IMF bailout became the central issue in the General Election, one analyst said that while the cost of EU money was increasing, new proposals from the IMF could knock 1pc off the cost of its loans.

"I pointed out to an Oireachtas joint committee that EU money could go above 6pc," said Professor Karl Whelan of University College Dublin.

"The quoted 5.8pc average cost of the first EU loans was based on market rates last November, but rates have risen significantly since then."

There could be better news on the €25bn coming from the IMF. Proposals to double the amounts that member countries contribute to the IMF could mean lower rates on future drawdowns over the next four years.

"This could take a year. But if it goes through, it could knock around one percentage point off the IMF rate, bringing it below 5pc," Dr Whelan said.

[gerrykeegan]

http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103
More from Vanity Fair

[seafoid]

This is very good

http://newleftreview.org/?view=2876&utm_source=newsletter&utm_medium=email&utm_campaign=nlr67

especially about Norn Irn and the Shinners

[muppet]

http://www.tribune.ie/business/news/article/2011/jan/30/blanket-bank-guarantee-was-to-avoid-ecb-and-market/

Blanket bank guarantee was to avoid ECB and market scrutiny

Report: 'It is in the interests of the public that the situation is solved before it enters the public domain'
Jon Ihle

The banking guarantee, which has cost the taxpayer €46bn so far, was originally intended to allow the Central Bank to provide emergency funding to the collapsing financial sector without it being noticed by the ECB or the markets, according to documents recently released by the Department of Finance.

Legal and strategic advice contained in a confidential 'scoping paper' from January 2008 states repeatedly that a "comprehensive guarantee would be necessary" for the Central Bank to step in with emergency liquidity assistance (ELA) to help Ireland's ailing banks.

"If there is any concern that a financial institution seeking ELA is insolvent, the [Central Bank] would not be in a position to provide liquidity support without the question of some guarantee arising from the Exchequer," the paper said.

The documents also show the department was committed to a policy of "constructive ambiguity" early in the financial crisis to keep capital markets and the Irish public in the dark about its strategy.

"It is in the interests of the public that the situation is solved before it enters the public domain in order to prevent contagion," one briefing note stated.

Officials considered being transparent about the government's preparations to "help support public confidence" in the banks, but feared openness could jeopardise financial stability.

According to the documents, officials were searching for a way to give the Minister for Finance and the Central Bank latitude to intervene in the market together to help failing banks without violating either Irish or European law or signalling to the markets and public that Irish banks were failing.

"If an insolvent bank sought ELA, the [Central Bank] would be legally prohibited from extending it. However, if the bank was systemically important and the government agreed to extend a guarantee to its liabilities, then this would turn it from an insolvent bank into an illiquid but solvent one... so that the [Central Bank] could inject liquidity to prevent contagion."

The papers indicate that Central Bank officials wanted recourse to the public purse before providing help, as the European Central Bank could have prohibited emergency funding if it was "deemed to interfere with monetary policy".

Central Bank statistics from 2008 showed total ELA increased fourfold to more than €12bn in the year leading up to the guarantee. The latest figures show the Central Bank has lent €51bn in ELA money to Irish banks.

The January 2008 scoping paper also noted the "preferred outcome" for an insolvent bank was "failure and subsequent orderly wind-down" to prevent the costs of the insolvency transferring to the state.

That followed principles adopted by European finance ministers in October 2007 and referenced in the Department of Finance documents, which said creditors and uninsured depositors "should expect to face losses" in a bank failure.

The Ecofin Council agreement also said EU member states should share the fiscal burden when a failed bank had significant cross-border activities.

To my simple mind the above represents Lenihan's department apparently intentionally misleading the State, the markets and possibly the ECB. If that is the case then he should be investigated for fraud, as should everyone else involved or aware of the strategy. Of course that could include other cabinet members.

So far no one has explained how this €51 Billion in ELAs will be paid for.

[muppet]

http://www.independent.ie/business/irish/banks-pay-less-than-3pc-interest-on-euro51bn-of-emergency-funding-2529378.html

The Irish Independent understands there is an "explicit" government guarantee surrounding all ELA lending, so if the banks can't repay the cash, the State will have to.

News of Ireland's €51bn ELA operations sent shockwaves around the globe, with some speculating that the manoeuvres could threaten the solvency of our Central Bank.

http://www.independent.ie/business/irish/boi-abandons-plan-to-raise-euro22bn-by-capital-deadline-2529385.html

BANK of Ireland has abandoned all hope of raising private cash to meet its latest capital target, after it was told in no uncertain terms the deadline would not be pushed out beyond February 28.

The bank is now focusing all its energies on getting a temporary injection of €1.4bn from the State which would be repaid before the end of 2011.

The Irish Independent also understands that any deal is likely to see the bank pay a "premium" to the Government for the bridging loan, though the details of this have yet to be worked out.

[muppet]

http://www.rte.ie/news/2011/0208/anglo-business.html

The High Court has directed that an auction of the deposits and corresponding assets of Anglo Irish Bank and Irish Nationwide Building Society can take place immediately.

News At One: First step in wind down of Anglo and Irish Nationwide

The High Court has directed that an auction of the deposits and corresponding assets of Anglo Irish Bank and Irish Nationwide Building Society can take place immediately.
The move follows an application by the Minister for Finance to the court and is the first step in the winding down of the two institutions.
The winding down of the institutions and the transfer of their deposits is required as part of the agreement between the State and the EU and IMF.
Meanwhile, Anglo Irish Bank expects to report a €17.6 billion loss for last year.
Read the Department of Finance's explanation of the move here
Many of the financial details involved in today's court application were kept confidential on the basis that they are commercially sensitive. The fact that this application was being made could not be reported until Mr Justice Brian McGovern had made his order. This was to prevent the application from triggering default clauses in certain bonds.
The court was told that the transfer of parts of the business of the banks might be said to be a cessation of business under the terms of the bonds but the judge's order overrides that possibility. Lawyers for RTE and the Irish Times were in court.
Senior Counsel Bryan Murray for the Minister said the application was to enable the re-organisation of the institutions and was essential to ensure their stability. It was also required as a condition of the EU and IMF programme of support, he said.
He said the external financial authorities were pressing very heavily for this transfer to take place as quickly as possible. He said Anglo and Irish Nationwide were continuing to act as destabilising forces in the financial system. Mr Murray said it was very important this was dealt with as quickly as possible.
The auction of deposits was an attempt to preserve the financial position of the institutions by minimising losses in the future. He said plans were in place to mitigate possible risks with this auction raised by the Governor of the Central Bank. These risks were not disclosed in court.
The agreement with the EU and IMF also involves Anglo formulating a detailed plan for the rationalisation, including the possible closure ,of Anglo's offices in the UK and its branches in Vienna, Dusseldorf and Jersey and giving it to the NTMA no later than March 31.
The court was told that both Anglo and Irish Nationwide were consenting to the directions order. It was intended to combine both institutions into a single bank which would be 100% Government owned, and this auction of deposits and assets at book value had to take place before such a merger.
The judge made the order and said that because this was a matter of exceptional public importance, redacted versions of the sworn documents and order should be made available to the media as soon as possible.
The Department of Finance said no action needed to be taken by depositors following the court's action, adding that depositors in both institutions remained 'fully secure'.
Anglo set for €17.6 billion 2010 loss
Anglo Irish Bank says it is expecting to report a loss of €17.6 billion for 2010. In a trading update, the bank said this would include a loss of €11.5 billion on assets transferred to the National Asset Management Agency and €7.8 billion set aside to cover other loan losses.
The 2010 loss would set a new record for an Irish company, beating the €12.7 billion Anglo recorded for 2009.
The bank also said deposits had dropped from €27.2 billion at the end of 2009 to just over €11 billion at the end of last year. Borrowing from the ECB and Irish Central Bank almost doubled to €45 billion.
The nationalised bank expects to transfer another €1.1 billion of loans to NAMA. It said it had received State support of €29.3 billion over the past two years.
Anglo said it employed just under 1,300 people at the end of 2010, down 16% from a year earlier.
When the loan losses are excluded, the nationalised bank made an operating profit of €1.8 billion, mainly due to a buyback of some of its subordinated bonds.

[muppet]

http://t2.gstatic.com/images?q=tbn:ANd9GcR7fPCCLzULlO27_PMV6-g0_O2A0QU895vGdz2Gm91TNM1KTyQ

Another extract from that long Vanity Fair article by Michael Lewis.

Michael Lewis: This Merill Lynch Analyst (And Zoologist) Saw The Irish Collapse Coming And Was Gagged When He Sent Out A Warning

When Michael Lewis went to Ireland to investigate who and what brought the Irish economy to its knees for Vanity Fair, he discovered a man called Philip Ingram.
At the height of the financial crisis, Ingram was an analyst for Merrill Lynch.
Ingram -- spare a few online mentions for reports he wrote back in the day -- isn't a major online presence.
We know from Lewis' article though that he's a "quirky" 20-something, who had studied zoology at Cambridge, and who tried to warn the Irish finance ministry that the economy was about to collapse because of bad lending practices.
After which, he was basically gagged.
See, back in September 2008, Irish finance minister Brian Lenihan got into a bit of a state. He drove 45 minutes outside Dublin to visit his buddy David McWilliams, a journalist and former economist with UBS, to ask what he should do about the banks, Lewis writes.
A week after that crisis meeting, the finance department hired Merrill Lynch to advise it on the bank dilemma.
And that's when Philip Ingram, "the bank analyst who had been most prescient and interesting about the Irish banks," stepped into the picture.
According to Vanity Fair,
Ingram had done something original and useful: he'd shined a new light on the way Irish banks lent against commercial real estate. Ingram was skeptical of the Irish banks... To Ingram's eyes, there undoubtedly appeared to be a vast difference between what the Irish banks were saying and what was really happening.
So he set out to find out what the real story was, and on March 13, 2008, published his findings. It was an incriminating account of the noxious methods banks were using to lend to commercial real estate, and according to Lewis, most of the report quoted word-for-word what British market insiders had told him.
According to the report, "the Irish banks were making far riskier loans in Ireland than they were in Britain, but even in Britain... they were the nuttiest lenders around." (Apparently Anglo Irish, Bank of Ireland, and A.I.B. were the worst of all).
When Ingram released his report, it was apparently the "hottest read in the London financial markets."
Well, it was for about two hours, because Merrill Lynch retracted it.
Merrill had been an underwriter of Anglo Irish's bonds, as well as a broker to A.I.B. Obviously when they (Anglo and/or AIB - my edit - Muppet) saw Ingram's report, they lost it and slammed Merrill with threats that they'd be on their merry way unless something was done.
"Ingram's superiors at Merrill Lynch hauled him into meetings with in-house lawyers, who toned down the report's pointed language and purged it of its damning quotes from market insiders, including its many references to Irish banks.
And from that moment everything Ingram wrote about Irish banks was edited, and bowdlerized by Merrill Lynch's lawyers."
Finally, at the end of 2008, he was fired. Though at least now with Lewis' piece, his efforts will be remembered.


Read more: http://www.businessinsider.com/merill-lynch-analyst-and-zoologist-saw-the-irish-collapse-coming-michael-lewis-vanity-fair-2011-2#ixzz1DQLj4Zqp

Very interesting timing there. 4 days after the report was released the Anglo share price fell dramatically and this led to the Golden 10 who were going to teach the markets a lesson.

http://www.irishtimes.com/newspaper/ireland/2011/0110/1224287157384.html

Seán Fitzpatrick's own words:

Brian Cowen : On March 17th, 2008, the Anglo share price fell by 15 per cent and the board was concerned there might be a run on deposits. Director Fintan Drury, a friend of Brian Cowen, suggested to FitzPatrick that he call the then minister for finance, who was in Kuala Lumpur.
FitzPatrick and Cowen spoke "about the whole issue of rumours going round about the bank that were unfounded. He just said yeah. He was just taking it all in."

"I told him that [Seán] Quinn had through CFDs, I think. I am not sure. What I said was, what was really happening was that pressure was coming on from the shorters, these guys, the hedge funds, trying to get Quinn."

On the same day a spokesman for Mr Cowen issued a statement saying the fall in the price of Anglo and other bank shares was an international development as opposed to a local one.

Brian Cowen attended a dinner in Anglo's Heritage House on St Stephen's Green, Dublin, on April 24th, 2008. Director Fintan Drury introduced the then Minister for Finance to the other directors and executives. FitzPatrick says he didn't discuss the Quinn situation with Cowen.

[seafoid]

Muppet

This is a very good analysis of the FUBR state of the banks 

http://www.irisheconomy.ie/Notes/IrishEconomyNote13.pdf

This failure has many fathers. lLnihan, the managements, the DoF, the ECB, The EU