Any chance you could explicitly refute some of the statements Laura made? Particularly, why default on state guaranteed anglo bonds could impact on other state guaranteed bonds? Even this is untrue spinning by DoF mandarins, presumably this diktat comes from somewhere. Would be very curious as to what your view is on such a statement.

Promissory note call in sounds insane but equally, it is conceivable that the ECB have threatened the Irish state and by proxy, the Eurosystem, that if Ireland were to renege on promissory note scheduled payments, then they would call in all of the ELA immediately and discussions would have to begin as to how the Irish state in consultation with their partners in Europe proposed to pay back the ELA.

Re that Vincent Browne Show … earlier tonight …

& Laura’s Oscar TINA performance …. this level of either ignorance or propaganda is frightening …….. or maybe it’s the vichy_financial equivalent of stockholm syndrome ……… or the scarletti inheritance revisisted ?

……… spose Dinny O’B must have a few shares in a few other pillars ….

Sorry for the late posting, but only just saw your comment. Fannie Mae, Freddie Mac AIG, all were nationalised precisely because they were and remain systemically important. FDIC reports over 100 banks been allowed to go bust in US, presumably because they were not systemically important. Fortis was effectively nationalised before being broken up also.

Contrary to receieved wisdom here, the nternational custom has been to preserve institutions which are systemically important, and by nationalisation if needs be.

http://www.ft.com/cms/s/0/949eda6a-c299-11de-be3a-00144feab49a.html

“Analysts predict that the likes of Commerzbank, Allied Irish Banks and Bank of Ireland will lead the next wave of cash calls. “Sitting in Ireland or Germany, you should be encouraged by what has been going on in other European countries,” says Goldman’s Mr Westerman. But at JPMorgan, analyst Kian Abouhossein cautions: “It’s much more difficult for banks like these because of the high level of government involvement.” Commerzbank, for example, has €16.4bn alone in so-called silent participations from the state - a form of preference shares - dwarfing its market capitalisation of some €10bn.

Tougher still will be the fightback to normality for groups that were fully nationalised in the crisis - including the Icelandic banks, Ireland’s Anglo-Irish and Northern Rock in the UK. Even part-nationalised Lloyds and RBS have a slim chance of ditching their government money any time soon, despite their cash call plans.”

Perhaps the losses and recapitalisation requirements which appear to be coming down the line will be so vast as to make it expedient for the state not to own wholli the banx.

1. We were badly advised.
2. It was an unprecedented, emergency situation. We had to act quickly.
3. If we had known the full facts when we were making the original decision we would of course have acted differently.
4. The original decision was widely supported.

I would expect many references in the future to the public and the critics not realising the scale of the crisis.

You know who will probably say, “It was Nama or Iceland,” or even, “It was Nama or being unable to borrow. No pensions, No wages…”.

To sum up they didn’t nationalise because they were badly advised, were in a time of crisis, had only partial knowledge, and believed they were right because of the wide support they received.

That is more than enough to explain a large war, so it should certainly explain the decision not to nationalise the banks.

the reason why the 2 systemically important banks were not nationalised was three fold.
*In this crisis, international custome and practise is to maintain banks in the private sector if possible. The ECB in particular seems not to want banks in the public sector-read the opinion on NAMA
*they did not have to because liquidity conditions improved thanks to the ECB.
*asset quality may have begun to improve in the UK boxing off one particlar problem
Now the question of NAMA, overpayment, liquidity, reform of the managment and injecting more capital into the banks to get them to lend again is unresolved

Once the banks have a balance sheet full of NAMA/gov bonds, will they continue to buy the same proportion? (Will they buy more due to interest spread?)

you say “amateurish”, i say “fudge”! Or at least “deliberately basic”.

You say “amateurish” as if it cared what the result of NAMA will actually be. I say “fudge” in that all it cared was that it fit into the existing policy framework.

At the end it says “Eurostat reserves the right to reconsider its view” but i imagine if there was anything they are particularly concerned about (which may make it change its view) the CSO and DoF have been informed and would seek to amend or clarify.

I made this comment in another thread but it rather got swamped. The Eurostat initial view is incredibly amateurish. It states that it understands that the NPV of the SPV is €4.8Bn on the assumption property prices grow 10% in 10 years.

Oh so wrong.

1) The €4.8Bn requires far, far more than the asset acquisition/disposal break-even requirement of 10% growth, which is really an oft quoted irrelevance.

2) I hope sincerely that the CSO assertion that the expected return to the SPV equity will be 45% is correct and not Eurostat’s interpretation that the full €4.8bn will accrue to this meagre €0.1Bn equity.

I presume the CSO will correct the Eurostat misinterpretation as the view expressed has been caveated that they have been correctly informed.

@ Karl

You seem to have refuted MC’s assertion rather comprehensively.

i’ll admit, for around a minute after i saw the decision i was a bit “Eh…?”, but on reading into it i dont see it as that different or unusual. I suppose i’d just point out that there’s an awful lof of scooby dubiousness out there when it comes to these type of fudges, particularly in the EU.

i agree with you that nationalising the banks wouldn’t stop the ECB repo facility from being used. However, in that it is still allowed is a bit of a fudge really, and should surely make the Ecostat fudge on the NAMA SPV even less surprising and less of an issue in my opinion. The only thing i find surprising is that people are surprised!