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

[Bogball XV]

We need to tighten our belt more.

http://www.guardian.co.uk/business/2011/apr/15/irish-credit-rating-cut

The euro dropped against the dollar after credit ratings agency Moody's delivered another negative verdict on Ireland on Friday morning.

Moody's cut Ireland's rating by two notches to Baa3 and left the outlook negative. The agency said the country may need to take further austerity measures to meet its fiscal goals and that its financial position could suffer because of higher European Central Bank interest rates.

I won't say that the headline stating that the drop in the euro against the dollar is related to a report on ireland by moodys is absolute rubbish, but it most likely is.  Having been watching this market very closely for a while now (i've some large dollar payments to make) the current rate is pretty much what it's been trading at since last thursday and to be honest it has been remarkably steady in that time. 
In fact yesterday the rate hit 1.439 for a while, so the current rate of 1.445 is well up on that, although to be honest 0.5c either way is nothing in this volatile market and it'd be the rare day that it doesn't move by at least that amount, normally there's no real reason for it.

That said, we are going to have to have implement fairly stringent cuts and increase taxes further and soon.

[Declan]

On a separate note BBall - I'm looking to buy dollars in preparation for a trip later in the summer and was hanging on till it went a bit higher - Will it stay mid 40s do you reckon ?

[Bogball XV]

Impossible to know Declan, maybe buy some now just in case.  I'm planning to bite the bullet and pay a good portion of what I owe this evening, just as soon as america opens for business (west coast).
It could well go higher, it was 1.60 3yrs ago, but it has also hit 1.19 within the last year, it's at the upper end of its average over the past few years at the minute, so you takes your chances etc...

[orangeman]

Is this a signifcant ruling ?


Anglo Irish Bank Golden Circle deal 'improper' - judge A High Court judge in Belfast has said a controversial deal by Anglo Irish Bank appears to be "improper and unlawful".

Mr Justice Deeny was referring to the "Golden Circle" transaction where the bank loaned 10 of its clients 451m euros which they then used to buy shares in the bank.

The transaction was a share-support scheme, designed to prevent a large number of shares being sold on the open market which would have depressed the bank's value.

Anglo lent the money on a non-recourse basis, meaning that if the borrowers could not repay the bank, would simply take back the shares.

The judge made his remarks in the course of judgement concerning a dispute between Anglo and a firm controlled by Belfast businessman Peter Curistan.

Mr Curistan's firm, Marcus Ward Ltd, has been granted an injunction to prevent the bank winding up the company over an alleged £10m debt.

Marcus Ward leases two units in the Odyssey Pavillion in east Belfast.

Another of Mr Curistan's firms, Sheridan Millenium Ltd (SML), had a long lease on the whole of the Pavilion.

The case focused on Anglo's behaviour when attempts were being made to sell the Pavillion lease in 2009.

At that time SML owed Anglo around £80m and the lease was worth around £43m.

SML needed to find a buyer who would take on the Anglo debt.

It was Mr Curistan's case that the bank effectively acted as an agent in the sale process and thus owed his companies a duty of care.

The bank has admitted that it did introduce potential buyers from its customer base.

On this basis the judge concluded that there is "at least an arguable case" that the bank was under a duty of care.

Preferred bidder

The bank's preferred bidder was the Belfast firm PBN.

It is owned by Paddy Kearney and Neil Adair. Mr Adair is the former manager of Anglo's operation in Northern Ireland.

There was another bidder, referred to only as "Confidential Five".

The judge said this firm showed "persistent interest" in the deal even after they were initially told they were unsuccessful.

At one point "Confidential Five" was even offering slightly more than PBN.

"Confidential Five" was also offering that £15m of the Anglo loan would be on a recourse basis whereas the PBN bid was entirely non-recourse.

In effect that meant if PBN took over the Pavillion lease and the business failed Anglo would only take back the lease rather than pursuing the company for any of the loan.

Encouraged by the bank, Mr Curistan opted for the PBN bid. However, in November 2009 the bank decided not to go ahead with the PBN deal.

There is a dispute between the parties about why the bank took this course of action.

However, the judge referred to an internal Anglo email from December 2009.

In that email it was stated that the bank did not want to make a non-recourse loan to PBN and Paddy Kearney because it had become public that Mr Kearney was part of the "Golden Circle".

The judge refers to the Golden Circle transaction as "a prima facie improper and unlawful proceeding".

The judge agreed that there was "a clearly arguable case" that the exposure of the Golden Circle was the real reason for the deal falling through.

Mr Curistan's lawyer argued that Anglo had been in breach of a duty of care by not disclosing that Mr Kearney was "party to this improper arrangement."

He added that it was arguable that if Mr Curistan had known about Mr Kearney's part in the Golden Circle they would have taken the offer from "Confidential Five."

The judge granted Mr Curistan's company an injunction preventing a winding-up order on the basis that there is "a genuine and substantial dispute."

Those matters of dispute are now likely to be the subject of further legal proceedings.

[Bogball XV]

It's significant for Curistan, but I don't think there should be any repercussions beyone that.  They really were some shower though....

[muppet]

http://www.independent.ie/business/european/second-rise-likely-in-june-as-oil-costs-boost-inflation-2621432.html

Another interest rate rise on the way sooner than expected. Trichet is really going to stick the boot in.

[Bogball XV]

http://www.independent.ie/business/european/second-rise-likely-in-june-as-oil-costs-boost-inflation-2621432.html

Another interest rate rise on the way sooner than expected. Trichet is really going to stick the boot in.

wouldn't say it's sooner than expected, May was a possibility given the last comments and we have all known that these have been coming for a long time.  Most commentators expected at least 4 0.25% increases by year end.  That'll be the second.

[muppet]

Mr Justice Deeny was referring to the "Golden Circle" transaction where the bank loaned 10 of its clients 451m euros which they then used to buy shares in the bank.

I'm no lawyer so the usual caveats apply:

http://www.irishstatutebook.ie/1963/en/act/pub/0033/sec0060.html

60.—(1) Subject to subsections (2), (12) and (13), it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its holding company.

(Subsections (2), (12) & (13) are on the link above but imho refer to eceptions in the event of (2) a special resolution of the company, (12) dividends & (13) bone fide past present employee schemes or if the lending is part of the ordinary business of the company- Is this the get-out loop-hole?

[Canalman]

Hit the nail on the head there Bogball XV. NAMA's stock of property is p**s poor by and large. Poorly located and badly built where not poorly located. Alot of shoebox apartments which will not cut the mustard in today's market, flimsy walls, poor soundproofing, potential pyrite problems, poor management companies, no developer to give warranties etc etc. Not to mention being exposed to 3/4 winters.

Better off bulldozing alot of it imo.

[ludermor]

http://www.irishtimes.com/newspaper/breaking/2011/0418/breaking9.html?via=mr

This might be a good thing, there is serious money in scrap &  recycling these days.

[Evil Genius]

http://www.irishtimes.com/newspaper/breaking/2011/0418/breaking9.html?via=mr

This might be a good thing, there is serious money in scrap &  recycling these days.

Aye, but there's danger in that business, too:

http://www.youtube.com/watch?v=ftFfQh9HrOs

[muppet]

Hit the nail on the head there Bogball XV. NAMA's stock of property is p**s poor by and large. Poorly located and badly built where not poorly located. Alot of shoebox apartments which will not cut the mustard in today's market, flimsy walls, poor soundproofing, potential pyrite problems, poor management companies, no developer to give warranties etc etc. Not to mention being exposed to 3/4 winters.

Better off bulldozing alot of it imo.

Agreed. The Construction Industry Federation should be forced to live in some of the shite that they built. Particularly the pyrite properties.

[muppet]

ICTU (David Begg) wants Bank debt restructured:

http://www.rte.ie/news/2011/0417/economy.html

Moody's cuts all Irish banks to junk status:

http://www.rte.ie/news/2011/0418/rating-business.html

Those calling on the new Government to default might get their wish soon enough. There is no hope of anyone putting money into junk status banks. There is no hope of them making money in an economy that they themselves are strangling. They have to de-leverage by €500m a week until 2015. That is they have to reduce their loan book by that amount. To achieve that there is little chance of lending of any sort which means, for example, businesses that require overdraft facilities or other forms of credit to trade might find themselves losing access to finance. There will hardly be a rise in new mortgages, especially with interest rate rises, which will leave house prices falling. We are two years into NAMAs plan and there is no sign of anything other than more debt for the taxpayer.

The Government cannot announce that they are planning anything drastic or it all collapses immediately. But we should pray that behind the scenes they are playing some sort of hardball.

ICTU have some nerve though lecturing on the bank debt. Of the €85bn bailout, only (!) €35bn was for the wasters in the banks. The other €50bn (!!!) was to bailout public spending. Think about that. That is exactly what David Begg is distracting us from.

Begg blames the reckless banks for the mess and in the above article he now blames the ECB. That is a popular statement these days. However it takes some cheek considering he was a Director of the Irish Central Bank from 1995 (note the Irish Central Bank is a member of the ECB) and the head of the Central Bank risk committee is one Des Geraghty former head of SIPTU. ICTU has some nerve.

[Rossfan]

.

ICTU have some nerve though lecturing on the bank debt. Of the €85bn bailout, only (!) €35bn was for the wasters in the banks. The other €50bn (!!!) was to bailout public spending. Think about that..

It's to pay the pensioners, the sick , the unemployed ,the firemen , gardai , nurses , teachers etc etc etc etc for three years.
If you want another famine and the closure of the remaining businesses in the Country Muppet ... grand sure what matter once you can do a bit of Union bashing.

The €35Bn is on top of the €40bn NAMA  not to mention the €200Bn or so that ECB and Iriish Central Banks have put into the Irish Banks.

[muppet]

.

ICTU have some nerve though lecturing on the bank debt. Of the €85bn bailout, only (!) €35bn was for the wasters in the banks. The other €50bn (!!!) was to bailout public spending. Think about that..

It's to pay the pensioners, the sick , the unemployed ,the firemen , gardai , nurses , teachers etc etc etc etc for three years.
If you want another famine and the closure of the remaining businesses in the Country Muppet ... grand sure what matter once you can do a bit of Union bashing.

The €35Bn is on top of the €40bn NAMA  not to mention the €200Bn or so that ECB and Iriish Central Banks have put into the Irish Banks.

Rossfan I am pointing out the spectacular hypocrisy that's all.

If the banks started lecturing on the public debt I would feel the same way.