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

[Declan]

Just to keep things in balance while everybody is crucifying Quinn:

Report reveals staggering cost of €33bn operation
By Emmet Oliver Deputy Business Editor
Wednesday April 07 2010
IRELAND'S banking crisis will be one of the most expensive in history, according to a report from Goodbody Stockbrokers.
Based on figures for the developed world since the 1970s, it is already the third most expensive, said the broker. Ireland's bank rescue will cost 20pc of GDP and this doesn't even include the cost of NAMA or the bank-guarantee scheme.
Only South Korea and Japan have had more expensive banking failures, according to figures included in the report by chief economist Dermot O'Leary.
Using the costs of capitalising the banks to date (€33bn), O'Leary said this was well above the "average cost" of banking crises internationally, which were usually about 11pc of GDP.
The Scandinavian banking crises of the 1990s were highly expensive and long-lasting, but their costs were nowhere near those of Ireland.
Mr O'Leary also pointed that since the Irish banking crisis began, the economy had shrunk by 12.3pc, which has magnified the impact.
He admitted that the cost of the crisis had been far higher than Goodbody had previously estimated.
"A large proportion of this stems from Anglo Irish Bank, which may cost the taxpayer €22bn," he said. However, attempts had been made to move beyond the problem with NAMA and the new stringent capital requirements laid down by the Financial Regulator, Matthew Elderfield.
"Banking crises tend to be costly affairs and the current Irish one is no exception," said Mr O'Leary.
His report said that Ireland was "not out of the woods" yet in relation to the Budget deficit, which is likely to stand at 11pc of GDP at the end of this year.
"The deficit would have been closer to 15pc of GDP this year, were it not for the changes that have taken place -- but at this level, the deficit is clearly too high," he commented.
Mr O'Leary also highlighted the economic and social problem of vacant housing. He said the vacancy rate across the country was 15pc, but there were major regional variations. Vacancies in the border area were running at 20pc, compared with just 11pc in Dublin.
"As a result, the housing market in the greater Dublin area will recover first and with an estimated 80pc of the price adjustment complete, this may not be too far off," he said.
Ireland's borrowing levels continue to rise, with debt-to-GDP due to hit 82pc by the end of next year. This does not include NAMA or all of the recent banking capitalisations.
Ireland's trade position and dependence on imports are also changing rapidly. At the end of 2009, Ireland had a 2.8pc current-account deficit, but this was forecast to be a 4.2pc surplus by the end of 2011.

And there's more good news:

AIB are one of the main lenders  to the # 1 biggest commercial real estate bust in history.

http://money.cnn.com/galleries/2010/real_estate/1004/gallery.commercial_real_estate/index.html
http://www.prlog.org/10504659-irish-business-news-allied-irish-bank-bites-off-more-than-it-can-chew-in-the-big-apple.html

[seafoid]

NAMA is appalling. It's the biggest wealth transfer from ordinary Irish people to the rich since Cromwell. At least Ollie had a work ethic and a strong sense of what was wrong and right. NAMA is immoral.

  There are 1.9 million people at work in the Irish economy. Their average earnings last year were €36,300. After tax, that's €29,500 each. From this, each one will stump up an average of €4,600 just to pay the interest on the money the State is borrowing to fund the bank bailout. 100406 progressive-economy.ie blog.

NAMA has not stopped the deflation of the property bubble 

Bank of Ireland has 199,000 of the 800,000-odd residential mortgages in the State and has estimated that 21.5% of its customers are in negative equity and that the average net debt of those in negative equity is €38,000. BoI's figures are in line with ESRI estimates of upto 200,000 being in negative equity by the end of 2010. namawinelake blog
That BoI figure of 21.5% compares to 10% in mid 2009. Things are going to get a lot worse before they get worse. 

Taxpayers take all of the downside. Who do the properties secured on NAMA's money belong to? Not the taxpayer. Who pays if the shit continues to hit the fan? Not the bondholders. It's an absolute disgrace.

[muppet]

Things are going to get a lot worse before they get worse.

That is the most pessimistic comment I've seen yet. 

[seafoid]

The banks won't lend because they are effectively bust. So where can first time buyers get a loan? Nowhere. So who is going to buy ? Nobody. so what is going to keep prices at current levels? Nathin

At least summer is on the way. Fianna Fail couldn't f**k that up 

[sammymaguire]

you would think with the tax payer bailing the banks out that there would be some kind of benefit for doing so, like you pay this extra and you with get double back in ten years like that scheme they ran a few years ago SSIA or something but oh no, not even that to sweaten this mess

[sammymaguire]

whatever happened to that SSIA anyway?? 

http://en.wikipedia.org/wiki/Special_Savings_Incentive_Account 

[muppet]

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/04/irish_lessons_for_the_uk.html

[muppet]

This (http://www.rte.ie/business/2010/0419/boi.html) Boucher pension to up unbelievable. Cowen as usual says he can do nothing. He is lying.

Here's what he can do.

He can introduce emergency legislation, like he did with the Bank Guarantee, like he did setting up NAMA, to create a new tax/levy. This tax/levy would only apply to highly paid bank staff and only to staff of those banks who benefited from either tax payers money or the guarantee. This could be done very quickly.

The tax/levy would cease to apply when a given bank had repaid the taxpayer in full.

[muppet]

http://www.nytimes.com/2010/04/30/world/europe/30europe.html?ref=todayspaper

[muppet]

I am beginning to feel economically that we all fell off a cliff a while ago. The thing is, because we haven't hit the bottom yet, people have only noticed it has got bit breezy.

http://www.businessweek.com/news/2010-05-05/capital-markets-face-worst-crisis-in-100-years-evolution-says.html

[heganboy]

muppet, not just national debt, but companies that are trongly affiliated with those countries and exposed in turn to their economies are feeling the pinch immediately on the equity pricing but also by the ratings agencies keen to brush u ptheir image wanteing to be aggressive in their valuations- we'll see a rush to downgrade...

[Bogball XV]

I am beginning to feel economically that we all fell off a cliff a while ago. The thing is, because we haven't hit the bottom yet, people have only noticed it has got bit breezy.

http://www.businessweek.com/news/2010-05-05/capital-markets-face-worst-crisis-in-100-years-evolution-says.html

brilliant!!
don't though worry muppet, i've been stockpiling the beans for over a year now, picking them up on the cheap every time there's been a special.  My fortune's secure, not accepting yoyo, dollar or sterling for them though - barrels of oil, that's the only acceptable currency in my store!! 

[Bogball XV]

 "That said, if we approach the brink, it may just be the only viable option left. Only the ECB can print euros to save the system."

Why do people think that this can be a solution??  I honestly don't get it, it's the same answer a kid would give.

[Zapatista]

"That said, if we approach the brink, it may just be the only viable option left. Only the ECB can print euros to save the system."

Why do people think that this can be a solution??  I honestly don't get it, it's the same answer a kid would give.

Raises comsumer confidence and makes small short term credit flow quicker which would be great for a broadbased tax system like Irelands but wouldn't suit the Frech or Germans so much. At a time when nobody owns anything of any value cash is king.

I read somewhere that it's prevented from happening in the Maastricht Treaty.

[Bogball XV]

"That said, if we approach the brink, it may just be the only viable option left. Only the ECB can print euros to save the system."

Why do people think that this can be a solution??  I honestly don't get it, it's the same answer a kid would give.

Raises comsumer confidence and makes small short term credit flow quicker which would be great for a broadbased tax system like Irelands but wouldn't suit the Frech or Germans so much. At a time when nobody owns anything of any value cash is king.

I read somewhere that it's prevented from happening in the Maastricht Treaty.

what it raises is inflation and rapidly and erodes lender confidence.