According to the Department of Finance an error has been found whereby the national debt is €3.6 Billion less than we thought because of an accounting error. Apparently, a transfer of money from the NTMA to the Housing Finance Agency was treated as a liability by both organisations.
I’m not versed in the wonders of double-entry bookkeeping, but I was taught in school that when you add -3.6Bn to -3.6Bn, as seems to have been done in this case, you get -7.2Bn and when you correct that and do the transaction as it should have been done by adding -3.6Bn to one organisation’s balance sheet and +3.6Bn to the other’s you get zero. In other words, the books of the state (which owns both organisations) were mistakenly debited by €7.2Bn when the actual effect should have been zero. Therefore, we’re €7.2Bn, not €3.6Bn less badly off than we thought we were.
What am I missing?
Now, just let me make this clear.
That money was just resting in me account................
(http://img.rasset.ie/000487d2-314.jpg)
Are we trying to pull a Greece here? :D
How do you make an "error" like this ? Somebody on TV3 picked it up apparently.
Who is to say what Ireland really owes ??
Quote from: orangeman on November 01, 2011, 02:56:25 PM
How do you make an "error" like this ? Somebody on TV3 picked it up apparently.
Who is to say what Ireland really owes ??
fair play David Brady
Didn't both agencies treat it as a liability? If one should not have, then that agency is 3.6B less in the hole, as is the state, so it goes from 7.2 to 3.6. One agency now owes X whereas before it thought it owed X + 3.6B.
Quote from: orangeman on November 01, 2011, 02:56:25 PM
How do you make an "error" like this ?
Who is to say what Ireland really owes ??
I'm resisting the temptation to be jumpin round the garden, firstly because I don't know whether to be doing 3.6Bn or 7.2Bn worth of leppin and secondly because I'm wondering what's the chance we won't be told next week about another error, but this time in the wrong direction? And the week after that?
Quote from: J70 on November 01, 2011, 02:58:55 PM
Didn't both agencies treat it as a liability? If one should not have, then that agency is 3.6B less in the hole, as is the state, so it goes from 7.2 to 3.6. One agency now owes X whereas before it thought it owed X + 3.6B.
I don't think so. The agency that shouldn't have treated it as a liability should have treated it as an asset. So that agency's books don't go from -3.2Bn to zero. They go to +3.6Bn - a difference of 7.2Bn.
But that's only maths. Anglo Irish taught us that maths don't really matter much. At the end of the day, like.
Quote from: Hardy on November 01, 2011, 03:03:25 PM
Quote from: J70 on November 01, 2011, 02:58:55 PM
Didn't both agencies treat it as a liability? If one should not have, then that agency is 3.6B less in the hole, as is the state, so it goes from 7.2 to 3.6. One agency now owes X whereas before it thought it owed X + 3.6B.
I don't think so. The agency that shouldn't have treated it as a liability should have treated it as an asset. So that agency's books don't go from -3.2Bn to zero. They go to +3.6Bn - a difference of 7.2Bn.
But that's only maths. Anglo Irish taught us that maths don't really matter much. At the end of the day, like.
Are you sure it should be treated as an asset? Was it not borrowed money in the first place and thus a state liability?
My understanding is that everything on a balance sheet has to be an asset or a liability. Nothing is neutral.
I presume it was an asset of NTMA, a liability of HFA and, since both organisations are part of the state, this balances to a zero sum for the state (by comparison to the situation pre the transfer when this may have been borrowed money, but is neither here nor there as regards the incremental effect that was mis-accounted in the transfer).
I've no idea. I only know what you posted. My interpretation is as follows:
If I borrow 100 euro from you and then give it to my mate, we don't owe 100 each to you, which appears was the mistake here. I transfered the debt, so only my mate owes 100. That doesn't leave me 100 in the black however.
Quote from: Hardy on November 01, 2011, 02:59:15 PM
Quote from: orangeman on November 01, 2011, 02:56:25 PM
How do you make an "error" like this ?
Who is to say what Ireland really owes ??
I'm resisting the temptation to be jumpin round the garden, firstly because I don't know whether to be doing 3.6Bn or 7.2Bn worth of leppin and secondly because I'm wondering what's the chance we won't be told next week about another error, but this time in the wrong direction? And the week after that?
Fianna Fail in their time in office started of with low debt figures - I think 10billion was the figure first mentioned that we needed - then it went to 15billion - then 30billion, then 40 billion, all in a matters of weeks - and in the middle of that they denied that they even needed a bail out.
Maybe Fine Gael / Labour are doing the complete opposite by giving us bad news and then giving us a bit of good news every few weeks to lift the gloom ?? Good thinking if true !!
Quote from: Hardy on November 01, 2011, 03:15:56 PM
My understanding is that everything on a balance sheet has to be an asset or a liability. Nothing is neutral.
I presume it was an asset of NTMA, a liability of HFA and, since both organisations are part of the state, this balances to a zero sum for the state (by comparison to the situation pre the transfer when this may have been borrowed money, but is neither here nor there as regards the incremental effect that was mis-accounted in the transfer).
Hardy
There iare 1 billion dollars of real money leaving the State tomorrow to pay off in full unsecured Anglo bondholders who bought their bonds in the market at knock down prices. The accounting shenanigan is a nice distraction.
Quote from: J70 on November 01, 2011, 03:20:03 PM
I've no idea. I only know what you posted. My interpretation is as follows:
If I borrow 100 euro from you and then give it to my mate, we don't owe 100 each to you, which appears was the mistake here. I transfered the debt, so only my mate owes 100. That doesn't leave me 100 in the black however.
I'm struggling, too. the maths are clear, but accounting is a bit of a mystery. Here's how I see it. (Remember, we're only discussing whether the state is 3.6Bn or 7.2Bn better off than it
thought it was):
To continue your personal loan analogy, take a family situation and replace the state, NTMA and HFA with my family.
Let's say my family's total assets are made up of -3,000 of mine, +1,500 of the wife's and +250 owned by each of the two lads. That adds up to -1,000 as the sum total of all the family's assets. We're 1,000 in the red.
Now my eldest son lends 100 to the other lad. He enters this in his accounts as a debit and the other lad enters it in his accounts as a debit also. So now the books show that they now own 150 each. We do the accounts and we now find that I still have -3,000, herself still has +1,500 and the lads now have 150 each. That's a total of -1,200 now owned by the family. We're now 1,200 in the red, or so we think.
Then we get Shamrock Shore in to do the accounts and he sees the mistake. The accounts should read: Me, -3,000, her, +1,500 Son A, 350, Son B, 150, making a total of -1,000.
The family as a whole is 200 better off than we thought we were, not 100.
[Edit - the difference between this and your loans to your mate is that the assets of both these organisations belong to the state (I think).]
Quote from: seafoid on November 01, 2011, 03:51:22 PM
Quote from: Hardy on November 01, 2011, 03:15:56 PM
My understanding is that everything on a balance sheet has to be an asset or a liability. Nothing is neutral.
I presume it was an asset of NTMA, a liability of HFA and, since both organisations are part of the state, this balances to a zero sum for the state (by comparison to the situation pre the transfer when this may have been borrowed money, but is neither here nor there as regards the incremental effect that was mis-accounted in the transfer).
Hardy
There iare 1 billion dollars of real money leaving the State tomorrow to pay off in full unsecured Anglo bondholders who bought their bonds in the market at knock down prices. The accounting shenanigan is a nice distraction.
Don't be trying to confuse me.
H3ad Ma$H this thead!! :-[
Opened this thread thinking it was about the worlds population and someone at the UN had miscounted/cocked up the figures! :D
Quote from: Hardy on November 01, 2011, 02:48:24 PM
According to the Department of Finance an error has been found whereby the national debt is €3.6 Billion less than we thought because of an accounting error. Apparently, a transfer of money from the NTMA to the Housing Finance Agency was treated as a liability by both organisations.
I'm not versed in the wonders of double-entry bookkeeping, but I was taught in school that when you add -3.6Bn to -3.6Bn, as seems to have been done in this case, you get -7.2Bn and when you correct that and do the transaction as it should have been done by adding -3.6Bn to one organisation's balance sheet and +3.6Bn to the other's you get zero. In other words, the books of the state (which owns both organisations) were mistakenly debited by €7.2Bn when the actual effect should have been zero. Therefore, we're €7.2Bn, not €3.6Bn less badly off than we thought we were.
What am I missing?
I cannot see for the life of me how this could have happened. For every debit, there must be a credit...
Quote from: Hardy on November 01, 2011, 03:52:44 PM
Quote from: J70 on November 01, 2011, 03:20:03 PM
I've no idea. I only know what you posted. My interpretation is as follows:
If I borrow 100 euro from you and then give it to my mate, we don't owe 100 each to you, which appears was the mistake here. I transfered the debt, so only my mate owes 100. That doesn't leave me 100 in the black however.
I'm struggling, too. the maths are clear, but accounting is a bit of a mystery. Here's how I see it. (Remember, we're only discussing whether the state is 3.6Bn or 7.2Bn better off than it thought it was):
To continue your personal loan analogy, take a family situation and replace the state, NTMA and HFA with my family.
Let's say my family's total assets are made up of -3,000 of mine, +1,500 of the wife's and +250 owned by each of the two lads. That adds up to -1,000 as the sum total of all the family's assets. We're 1,000 in the red.
Now my eldest son lends 100 to the other lad. He enters this in his accounts as a debit and the other lad enters it in his accounts as a debit also. So now the books show that they now own 150 each. We do the accounts and we now find that I still have -3,000, herself still has +1,500 and the lads now have 150 each. That's a total of -1,200 now owned by the family. We're now 1,200 in the red, or so we think.
Then we get Shamrock Shore in to do the accounts and he sees the mistake. The accounts should read: Me, -3,000, her, +1,500 Son A, 350, Son B, 150, making a total of -1,000.
The family as a whole is 200 better off than we thought we were, not 100.
[Edit - the difference between this and your loans to your mate is that the assets of both these organisations belong to the state (I think).]
Two accounting mistakes here Hardy, both your cubs should enter this transaction as a debit
and a credit. After the €100 is lent by Hardyín, his account should read +€250 as he has cash/bank of €150 and a debtor of €100. When Hardyínín gets the €100 his account should read +€250 as he has cash/bank of €350 and a creditor of €100. Simples...which is why I can't work out why the NMTA and the HFA didn't treat their transaction, in the words of ABBA, in quite a simliar way ???
Quote from: orangeman on November 01, 2011, 02:56:25 PM
How do you make an "error" like this ? Somebody on TV3 picked it up apparently.
Who is to say what Ireland really owes ??
Ya I heard we actually bought Alaska & Bavaria and the Department of Finance forgot.
Quote from: AQMP on November 01, 2011, 04:27:34 PMQuote from: Hardy on November 01, 2011, 03:52:44 PMQuote from: J70 on November 01, 2011, 03:20:03 PMI've no idea. I only know what you posted. My interpretation is as follows:
If I borrow 100 euro from you and then give it to my mate, we don't owe 100 each to you, which appears was the mistake here. I transfered the debt, so only my mate owes 100. That doesn't leave me 100 in the black however.
I'm struggling, too. the maths are clear, but accounting is a bit of a mystery. Here's how I see it. (Remember, we're only discussing whether the state is 3.6Bn or 7.2Bn better off than it thought it was):
To continue your personal loan analogy, take a family situation and replace the state, NTMA and HFA with my family.
Let's say my family's total assets are made up of -3,000 of mine, +1,500 of the wife's and +250 owned by each of the two lads. That adds up to -1,000 as the sum total of all the family's assets. We're 1,000 in the red.
Now my eldest son lends 100 to the other lad. He enters this in his accounts as a debit and the other lad enters it in his accounts as a debit also. So now the books show that they now own 150 each. We do the accounts and we now find that I still have -3,000, herself still has +1,500 and the lads now have 150 each. That's a total of -1,200 now owned by the family. We're now 1,200 in the red, or so we think.
Then we get Shamrock Shore in to do the accounts and he sees the mistake. The accounts should read: Me, -3,000, her, +1,500 Son A, 350, Son B, 150, making a total of -1,000.
The family as a whole is 200 better off than we thought we were, not 100. [Edit - the difference between this and your loans to your mate is that the assets of both these organisations belong to the state (I think).]
Two accounting mistakes here Hardy, both your cubs should enter this transaction as a debit and a credit. After the €100 is lent by Hardyín, his account should read +€250 as he has cash/bank of €150 and a debtor of €100. When Hardyínín gets the €100 his account should read +€250 as he has cash/bank of €350 and a creditor of €100. Simples...which is why I can't work out why the NMTA and the HFA didn't treat their transaction, in the words of ABBA, in quite a simliar way ???
That's more correct than mine.
Correction. It's correct. Mine was incorrect.
But the outcome is the same - I think the state is €7.2Bn better off than it thought it was, not €3.6Bn (if both organisations' finances are on the state's balance sheet).
Quote from: Hardy on November 01, 2011, 04:41:39 PM
Quote from: mayogodhelpus@gmail.com on November 01, 2011, 04:33:17 PM
Quote from: orangeman on November 01, 2011, 02:56:25 PM
How do you make an "error" like this ? Somebody on TV3 picked it up apparently.
Who is to say what Ireland really owes ??
Ya I heard we actually bought Alaska & Bavaria and the Department of Finance forgot.
That's more correct than mine.
Correction. It's correct. Mine was incorrect.
But the outcome is the same - I think the state is €7.2Bn better off than it thought it was, not €3.6Bn (if both organisations' finances are on the state's balance sheet).
H, if both organisations made an accounting error in the treatment of this transaction (as the two boys did in your example, sheesh what
do they teach in schools these days!) then I would guess the state is €7.2bln better off. If only one error was made the state should be €3.6bln better off...I think!
Sorry - I made a bags of the above post by quoting MGHU instead of AQMP. Fixed now.
Meant to add if an error(s) of this nature was made the in-house accountants should get a straight red and 48 weeks!
DRS and CRS here ....http://namawinelake.wordpress.com/
and apres match knew ..the man forgot :P
http://www.youtube.com/watch?v=WHTNTptUEe8&noredirect=1
Quote from: Hardy on November 01, 2011, 03:52:44 PM
Quote from: J70 on November 01, 2011, 03:20:03 PM
I've no idea. I only know what you posted. My interpretation is as follows:
If I borrow 100 euro from you and then give it to my mate, we don't owe 100 each to you, which appears was the mistake here. I transfered the debt, so only my mate owes 100. That doesn't leave me 100 in the black however.
I'm struggling, too. the maths are clear, but accounting is a bit of a mystery. Here's how I see it. (Remember, we're only discussing whether the state is 3.6Bn or 7.2Bn better off than it thought it was):
To continue your personal loan analogy, take a family situation and replace the state, NTMA and HFA with my family.
Let's say my family's total assets are made up of -3,000 of mine, +1,500 of the wife's and +250 owned by each of the two lads. That adds up to -1,000 as the sum total of all the family's assets. We're 1,000 in the red.
Now my eldest son lends 100 to the other lad. He enters this in his accounts as a debit and the other lad enters it in his accounts as a debit also. So now the books show that they now own 150 each. We do the accounts and we now find that I still have -3,000, herself still has +1,500 and the lads now have 150 each. That's a total of -1,200 now owned by the family. We're now 1,200 in the red, or so we think.
Then we get Shamrock Shore in to do the accounts and he sees the mistake. The accounts should read: Me, -3,000, her, +1,500 Son A, 350, Son B, 150, making a total of -1,000.
The family as a whole is 200 better off than we thought we were, not 100.
[Edit - the difference between this and your loans to your mate is that the assets of both these organisations belong to the state (I think).]
Any pics of the wife?
Quote from: Hardy on November 01, 2011, 02:48:24 PM
According to the Department of Finance an error has been found whereby the national debt is €3.6 Billion less than we thought because of an accounting error. Apparently, a transfer of money from the NTMA to the Housing Finance Agency was treated as a liability by both organisations.
I'm not versed in the wonders of double-entry bookkeeping, but I was taught in school that when you add -3.6Bn to -3.6Bn, as seems to have been done in this case, you get -7.2Bn and when you correct that and do the transaction as it should have been done by adding -3.6Bn to one organisation's balance sheet and +3.6Bn to the other's you get zero. In other words, the books of the state (which owns both organisations) were mistakenly debited by €7.2Bn when the actual effect should have been zero. Therefore, we're €7.2Bn, not €3.6Bn less badly off than we thought we were.
What am I missing?
What are you missing?
You are misinterpreting the information and making presumptions based on that. The 3.6bn debt was recorded twice when it should only have been recorded once, by one agency.
Therefore Ireland ink is only 3.6bn less in debt.
Sorry. Can you make it simpler for me? Where am wrong in the family analogy?
Quote from: Hardy on November 01, 2011, 04:51:44 PM
Sorry - I made a bags of the above post by quoting MGHU instead of AQMP. Fixed now.
Are you don't work for the Department of Finance :D
Quote from: Hardy on November 01, 2011, 06:06:02 PM
Sorry. Can you make it simpler for me? Where am wrong in the family analogy?
I didn't say you were wrong in your family analogy, just that you misinterpreted the information about the 3,6bn bookkeeping error.
I didn't read your family analogy nor did I quote it.
WTF? I'm not trying to be confrontational. I'm just being a nerd. I thought you might be able to help. I wanted to find out how I'm misinterpreting the information. I'm not challenging your manhood, only asking you to help.
Sure is Ireland not a nation that had a former minister of finance who did not have a bank account?
the south is run by gombeen's, gangsters and scumbags............................. a bit like the north really.
Nothing surprises me about Ireland anymore.
Quote from: Hardy on November 01, 2011, 06:29:48 PM
WTF? I'm not trying to be confrontational. I'm just being a nerd. I thought you might be able to help. I wanted to find out how I'm misinterpreting the information. I'm not challenging your manhood, only asking you to help.
I didn't at all think you were being confrontational. I just replied matter of factly, after all this is an accounting question, how sexy can an answer be :)
I won't be reading your analogy because I have enough problems interpreting the accounting information as it is presented without trying to figure out where you go awry.
The 2 agencies use to have the one book, one agency NTMA loaned the other (HFA) 3.6bn and entered it both as a loan given out and a loan liable to be repaid. But the other agency (HFA) was now a separate agency with its own book and entered the loan as a debt to be paid.
The correct bookkeeping procedure should have been, NTMA enters ONLY that it gives out a loan of 3.6bn and the HFA enters that is has to pay back 3.6bn.
All imho.
Quote from: Main Street on November 01, 2011, 06:46:54 PM
Quote from: Hardy on November 01, 2011, 06:29:48 PM
WTF? I'm not trying to be confrontational. I'm just being a nerd. I thought you might be able to help. I wanted to find out how I'm misinterpreting the information. I'm not challenging your manhood, only asking you to help.
I didn't at all think you were being confrontational. I just replied matter of factly, after all this is an accounting question, how sexy can an answer be :)
I won't be reading your analogy because I have enough problems interpreting the accounting information as it is presented without trying to figure out where you go awry.
OK, understood.
Quote
The 2 agencies use to have the one book ... But the other agency (HFA) was now a separate agency with its own book and entered the loan as a debt to be paid.
Ah. That's it. I didn't know that bit.
Thanks.
Quote from: Hardy on November 01, 2011, 07:10:23 PM
Quote from: Main Street on November 01, 2011, 06:46:54 PM
Quote from: Hardy on November 01, 2011, 06:29:48 PM
WTF? I'm not trying to be confrontational. I'm just being a nerd. I thought you might be able to help. I wanted to find out how I'm misinterpreting the information. I'm not challenging your manhood, only asking you to help.
I didn't at all think you were being confrontational. I just replied matter of factly, after all this is an accounting question, how sexy can an answer be :)
I won't be reading your analogy because I have enough problems interpreting the accounting
information as it is presented without trying to figure out where you go awry.
OK, understood.
Quote
The 2 agencies use to have the one book ... But the other agency (HFA) was now a separate agency with its own book and entered the loan as a debt to be paid.
Ah. That's it. I didn't know that bit.
Thanks.
Http://www.thejournal.ie/state-no-better-or-worse-off-as-result-of-e3-6bn-accounting-error-says-cso-269157-Nov2011/
Read this. We are not better off at all it seems. They just reported the wrong numbers to Eurostat who calculate the govt/debt ratio
I thought this was simple til I opened this thread. ???
Quote from: haze on November 01, 2011, 07:22:13 PM
Http://www.thejournal.ie/state-no-better-or-worse-off-as-result-of-e3-6bn-accounting-error-says-cso-269157-Nov2011/
Read this. We are not better off at all it seems. They just reported the wrong numbers to Eurostat who calculate the govt/debt ratio
We are no better off, we just thought we were worse off.
I tried to explain this to my accountant, that there are 2 worlds, the accounting world and the real world. But he would just take offense.
In the accounting world we were more in debt. In the real world we were just in debt - the fantasy debt of 3.6bn would not have been paid.
'
Quote from: Main Street on November 01, 2011, 07:53:28 PM
Quote from: haze on November 01, 2011, 07:22:13 PM
Http://www.thejournal.ie/state-no-better-or-worse-off-as-result-of-e3-6bn-accounting-error-says-cso-269157-Nov2011/
Read this. We are not better off at all it seems. They just reported the wrong numbers to Eurostat who calculate the govt/debt ratio
We are no better off, we just thought we were worse off.
I tried to explain this to my accountant, that there are 2 worlds, the accounting world and the real world. But he would just take offense.
In the accounting world we were more in debt. In the real world we were just in debt - the fantasy debt of 3.6bn would not have been paid.
'
We are better off than we thought we were though.
However this again highlights a real weakness in our system of Government. The administration of public service seems to be a completely chaotic dysfunctional shambles.
From Aertel 104.
Debt is €3.6bn lower than thought 01 NOV 2011 19:22
The Department of Finance has confirmed that Ireland's debt is €3.6bn lower than previously thought due to an accounting error.
-
Broadcaster TV3 earlier reported on the error, which saw a payment between State agencies being counted twice.
-
A Department spokesman said that as a result of a "re-classification", the country's debt to GDP ratio would be 2.3% lower.
-
It is understood the development occurred as result of double-counting.
-
The Department said the NTMA recently made both the Dept and the CSO aware that there was a change in their relationship with the Housing Finance Agency (HFA) that has an impact on the accounts of the two entities.
-
It said that previously the NTMA had acted as agents for the HFA.
-
Since late 2010 the NTMA have loaned directly to the HFA and these loans appear as assets in the NTMA accounts and liabilities in the HFA accounts.
-
"The liabilities of the HFA are included in general Government debt; the corresponding assets of the NTMA have been included in the 'liquid assets' of the NTMA, which are also part general Government debt - effectively a double count,'' the statement added.
-
"Removing the impact of this double count reduces the estimate of 2010 general Government debt by €3.6bn or 2.3% of GDP," the statement concludes.
Quote from: seafoid on November 01, 2011, 03:51:22 PM
Quote from: Hardy on November 01, 2011, 03:15:56 PM
My understanding is that everything on a balance sheet has to be an asset or a liability. Nothing is neutral.
I presume it was an asset of NTMA, a liability of HFA and, since both organisations are part of the state, this balances to a zero sum for the state (by comparison to the situation pre the transfer when this may have been borrowed money, but is neither here nor there as regards the incremental effect that was mis-accounted in the transfer).
Hardy
There iare 1 billion dollars of real money leaving the State tomorrow to pay off in full unsecured Anglo bondholders who bought their bonds in the market at knock down prices. The accounting shenanigan is a nice distraction.
Why are the State paying anything back on
unsecured bonds. Surely the fact that they were unsecured meant they were riskier but with a higher return if times were good but if things went tits up it was gone? Am I missing part of the puzzle or does it appear that investors were able to either make a killing or get their money back on unsecured loans?
Why isn't Enda telling them to f**k off?!
Quote from: Tony Baloney on November 01, 2011, 09:53:56 PM
Quote from: seafoid on November 01, 2011, 03:51:22 PM
Quote from: Hardy on November 01, 2011, 03:15:56 PM
My understanding is that everything on a balance sheet has to be an asset or a liability. Nothing is neutral.
I presume it was an asset of NTMA, a liability of HFA and, since both organisations are part of the state, this balances to a zero sum for the state (by comparison to the situation pre the transfer when this may have been borrowed money, but is neither here nor there as regards the incremental effect that was mis-accounted in the transfer).
Hardy
There iare 1 billion dollars of real money leaving the State tomorrow to pay off in full unsecured Anglo bondholders who bought their bonds in the market at knock down prices. The accounting shenanigan is a nice distraction.
Why are the State paying anything back on unsecured bonds. Surely the fact that they were unsecured meant they were riskier but with a higher return if times were good but if things went tits up it was gone? Am I missing part of the puzzle or does it appear that investors were able to either make a killing or get their money back on unsecured loans?
Why isn't Enda telling them to f**k off?!
Payment is a term of the EU-IMF deal. Europe said "dance, monkey" and Kenny obliged.
QuoteIf he doesn't dance he has no money to run the country!
Bolliix - Just like the lie if we increase taxes there'll be a run on capital shite that was spouted in the late 80s - and we slag the yanks for not understanding getting the fact that they are being ridden by the 1% ??? ???
Payment is a term of the EU-IMF deal. Europe said "dance, monkey" and Kenny obliged.apparently not ...
http://businessetc.thejournal.ie/readme/column-3-reasons-why-we-shouldnt-pay-the-anglo-billion-dollar-bond/
QuoteTODAY, Wednesday, 2 November, our Government is due to oversee the payment of a billion-dollar bond by the Bank Formerly Known as Anglo.*
There are three reasons not to pay this bond:
As Michael Noonan once argued – this is not our debt.
It is not required by the EU/IMF agreement.
The markets will punish us for making the payment, not reward us.
1. As Michael Noonan once argued – this is not our debt:
The billion-dollar bond due today is not our debt – it is debt from a bust bank to private bondholders, who knew the risks.
This is not an original argument – in fact, it was well made by Michael Noonan, in the Dáil, last December. This is what he said:
What legal or moral compulsion is on Ireland, however, to honour in full debt incurred by Irish banks when there was no State involvement in the arrangements? These loans were entered into freely by willing lenders and borrowers with absolutely no State participation. ... It is obscene that liability for these loans is now being transferred to the Irish taxpayer, in many respects to the poorest of the Irish taxpayers.
In the budget the Minister for Finance reduced social welfare payments, punished the blind, disabled, widows, carers and the unemployed and he taxed the poorest at work, and for what? It was so that the taxpayer can take on liability for debts the country never incurred and arose from private arrangements between private institutions. What a disaster and an obscenity.
The latest available bank data shows that Irish guaranteed bank debt has been sold on at a discount to hedge funds in the USA, the UK and Luxembourg, as well as to smaller speculative investors... The position has now become indefensible that the Irish taxpayer, even the poorest taxpayers, should be required to underpin the speculation of hedge fund investors. There must be transparent, open, negotiated burden sharing of bank debt.
All I can say is that I wholeheartedly agree.
2. It is not required by the EU/IMF agreement:
Although the requirements of the EU/IMF programme are onerous, and are imposing painful austerity on our economy, and on many people, protecting the Anglo bondholders is not amongst these requirements. There is no explicit deal under which we have committed to protect those bondholders.
According to the Minister for Finance, Michael Noonan (speaking earlier this year on RTE, and transcribed by the Nama Wine Lake blog), there has been no threat from the ECB to withdraw funding to Ireland if we burn bondholders.
However Michael Noonan did say of the ECB, "a nod is as good as a wink to a blind horse so we know what their negotiating position is."
Is this an adequate basis on which to decide to pay a billion-dollar bond?
3. The markets will punish us for making the payment, not reward us:
The markets believe we are heading for default. They believe our debt is unsustainable. The reason they won't lend to us is because they believe we can't possibly pay our present debts, let alone any new ones. They think our promise to pay back the banks' bondholders in full is unrealistic. Instead of gaining credit for paying back our debts, our efforts to do so make us less credible and more risky.
We have to set market expectations for burden sharing. It is regular business practice for senior bondholders to take haircuts when the bank they invest in goes bust. In the US in the last three years, 322 banks were wound up. In the vast majority of these cases, holders of senior debt in these banks took significant writedowns. Our problem is that we have set market expectations for a full repayment. Greece, on the other hand, set expectations for a default, and that encouraged the bondholders to come to the table and agree a haircut.
The Irish Government needs to start setting expectations that bondholders will not be repaid in full, and they need to start doing this tomorrow, by announcing that they are pausing the payment of this billion-dollar bond, pending negotiations with bondholders.
So what should the government do?
Announce that they are "pausing" the payment of this bond.
Invite bondholders to enter negotiations.
When the ECB/Eurozone governments object, hold them to the letter of the agreements they signed.
In negotiations with bondholders, seek a substantial "voluntary" haircut for this and future unsecured Anglo bonds.
Proceed with other aspects of the EU/IMF programme to continue to tackle the deficit.
* Technically, Anglo on longer exists. Anglo Irish Bank Corporation Limited is now known as Irish Bank Resolution Corporation Limited.
Quote from: Tony Baloney on November 01, 2011, 09:53:56 PMWhy are the State paying anything back on unsecured bonds. Surely the fact that they were unsecured meant they were riskier but with a higher return if times were good but if things went tits up it was gone? Am I missing part of the puzzle or does it appear that investors were able to either make a killing or get their money back on unsecured loans?
Why isn't Enda telling them to f**k off?!
The bit you're missing is that these bonds became part of the sovereign debt the day they nationalised Anglo. That was the outrage that should never have been perpetrated, just as including Anglo's bond holders in the bank guarantee should never have happened on that September night in 2008. Anglo should have been told to shut its doors and f**k off - nothing to do with us.
We could still renege on these bonds, but that would now be defaulting on sovereign debt.
The law in ireland gives equal priority to bondholders and depositors.
Fine Gael actually knew full well in January 2011, before they were elected, that as the laws stand, this debt would have to be paid or face a cast iron legal challenge. Yet that did not stop them making false election promises of forcing junior bondholders (owners of preference shares, sub-ordinated debt and similar instruments) to share in the cost of recapitalising troubled financial institutions.
'Fine Gael in Government is committed to forcing certain classes of bond-holders share in the cost of recapitalising troubled financial institutions. this can be done unilaterally for the most junior bondholders (owners of preference shares, sub-ordinated debt and similar instruments), but should be extended – ideally as part of a european-wide framework – for senior debt for institutions like Anglo irish and irish Nationwide that no longer have any systemic economic importance. Fears about the implications of bank debt restructuring for financial instability are over-cooked. A large proportion of the €25 billion in unsecured junior and senior irish bank debts have already been sold on – at significant haircuts – to private clients and hedge funds in London and elsewhere, which hope the irish state can be pressed into honouring these bank debts in full.'
http://namawinelake.wordpress.com/2011/11/01/ireland%E2%80%99s-e3-6bn-error-in-its-national-debt-i-can%E2%80%99t-wait-to-hear-the-full-explanation/ (http://namawinelake.wordpress.com/2011/11/01/ireland%E2%80%99s-e3-6bn-error-in-its-national-debt-i-can%E2%80%99t-wait-to-hear-the-full-explanation/)
I love this bit - We can but hope for a full explanation from Minister for Finance, Michael Noonan, of what appears to be a royal c**k-up. The €228,466 a year Secretary General at the Department of Finance, Kevin Cardiff who took up the position in January 2010, will be moving to a new 6-year contract at the European Court of Auditors in February 2012.
Some boyos