Honohan Interview on IMF\EU Loans to Ireland

Patrick Honohan has given an interview to Morning Ireland (audio available here) that provides some more clarity as to what is going on in relation to Ireland borrowing from the IMF and EU.

Update: For those without access to audio, here‘s an almost-accurate transcript from the Guardian’s new Irish business blog (I doubt somehow if Ireland will be borrowing in the form of FDRs. Different kinds of dead presidents are likely to be involved.)

86 replies on “Honohan Interview on IMF\EU Loans to Ireland”

Honohan actually quite openly stated in this interview that there was a run on Irish banks. Big pensions funds and companies are taking their money out by the truckload.

I really should have cashed in my BoI savings account last week. I expect it’s too late now. There’s probably already people queuing up this morning after this interview. Civil Servants and Government Ministers first.

Brian Cowen is in a postion of considerable power – I wonder does he realise that he can game the central banks matrix given their overextension in this fiefdom.

Why would people be taking there money out? Am i not right in saying there is aguarantee for private savings of up to €100,000? (or something like that)

Ha ha, the Irish Rugby team have more chance of beating the All Blacks this weekend than avoiding a cataclysmic financial disaster. The EU loan will just prolong the waiting for the end…….

BTW, the Irish have never beaten the All Blacks.

I am planning a trip to the UK in 2012 as my wife is English. I plan to see my relatives near Mallow, Cork as well. I bet I will be trading in the Punt, not Euro.

I hope all ends well in Ireland & the EU as a whole but I cannot see how this can happen.

The Governor must have been under severe pressure from the ECB. I note that it was stated later on Morning Ireland that the recent deposits from the Irish Central Bank to the Irish Banks were made with the approval of the ECB. Having to seek such approval must have been like having a gun to one’s head.

The other gun to the Governor’s head was the continued outflow of deposits from our banks. This outflow was unlikely to abate in the absence of a clear signal that a deal would be done with the ECB/IMF which would stabilise our banks. One suspects this problem was becoming critical. In those circumstances, the Governor had to give a strong signal. It is noted that he made his comments “personally”.

Whilst the public might have clarity that we will have to take what we are offered the terms of the loan will be critical to our future and may damn us to hell altogether. In those circumstances, whilst the Governor’s utterances may put pressure on the Government, they may not prove as decisive as one might expect.

@OMF

I think you could show a little responsibility even under your aynominity. The Governor made it clear that the outflows are wholesale deposits, and also clear that the central bank stood behind the banks as lender of last resort. The ECB and ICB will not allow ordinary depositors to bear losses.

A simple question: do we have any idea if this is a stand-by credit facility (which may or may not be drawn down) or is there the expectation that substantial chinks of funding will be drawn down fairly promptly? The Governor’s comments could be interpreted either way. My sense is that a big chunk of money will be injected which will require appropriate collateral.

@OMF

Stop it.

In theory there is a risk that they might not remain 100%, but in reality not unless there is a total, monumental international econopolitical cock-up of such proportions that would put a question over the whole European project.

It is very very unlikely even given some of the idiots involved.

Quote of the week:

‘We in the federal government are absolutely convinced it is necessary that creditors contribute to the cost in any future – and I underline ‘future’ three times so that the markets understand – mechanism,’ said Merkel

So it’s clear.

A loan in €10’s of billions (€60 to €80?) to support the banks.

Institutional run has already taken place.

Try as he might I was not convinced by the Governor’s argument that this had anything to do with the budget deficit.

It is the banks that have crippled the State’s ability to borrow.

@ Kiwi Peter,

You’re wrong on all counts, including that the Irish have never beaten the All Blacks. Munster beat them 12-0 at Thomond Park in 1978 and almost repeated that feat two years ago, going down 18-16 at the end. I hope you enjoy your visit to Ireland in due course but perhaps it might be best to be sensitive about what you say about Irish rugby and the All Blacks in the depths of Munster country in Mallow?

@Richard,

There is no shortage of people able to provide the quality and integrity of public service that Governor Honohan provides – though perhaps lacking his exceptional credentials. (The MoF appointed him and Mr. Elderfield in extremis when the reputational damage to Ireland of the usual “Buggin’s turn” was exposed.) The system prevents them serving as they would and many resign themselves to ‘going with the flow’, or seek out alternative opportunities, or are spat out of the system via emigration.

Contingency fund.

Has the contingency not already occurred?

Institutions will not be back until credit ratings improve. Will the inter-bank market all of a sudden open to Irish banks?

I’d say that a large part of the fund will be drawn down in short order and the ECB and Central Bank of Ireland will get (some) of their money back.

If the contingency fund has lower interest costs than other financing sources, then it will surely be used. 300 basis point differential here and 400 basis point differential there and pretty soon you’re talking about real money.

It’s also clear as other comments above indicate that the Baghdad Brians should just keep quiet for the next week and let Honohan do the public remarks.

@Richard,

Not in the least ambiguous. I think we both recognise that the system of politcial governance is such that, in normal circumstances, those who advance to positions of responsibility are those who unquestioningly elaborate, advance and implement the party-line of the governing faction. In more extreme circumstances, such as now, there is a very limited recognition that some competence and honesty might be required. But there is a pressing desire to get through this abnormal period so that business as usual may be resumed.

Lenny has more or less admitted that he had to keep the full truth hidden from the public “in the national interest”. That is exactly how it should be. Unfortunately the corollary is that you can’t believe any assurances. Of course it is not a corollary that the assurances are all, or even any, a deceit. It is just that we have a classic Uncertainty Principle – we just don’t know.

@Richard Tol

jog your memory back a few weeks. Honohan thought Irish bonds were a great buy. He sounded like a second hand car sales man. Sorry, he is,nt much better than the crew in Dail Eireann.

@ Conor

I wouldn’t think that the 100K guarantee is any stronger than the ELG which covers all deposits of under 5 year term.

However, I agree with grumpy and others that the chances of a default on retail depositors are extremely remote. We are in the euro. We are tiny. The major euro countries have weathered the financial crisis. We will be bailed out come what may IMHO.

@ David Burke

Good point. I support the general consensus that PH is a man of integrity and competence but unfortunately he does fall under the “in the national interest” syndrome whereby he cannot speak of armageddons even if that was what he believed.

Some suggestions that Governnor Honohan may be in trouble with the Government. By conceding the inevitable, he’s probably scuppered the Govt.’s desire to secure a politically face-saving form of words from the Troika. An T press conference at 1:30.

Well done Patrick Honohan. We need to prevent Brian Cowen from plaing a game of poker (Batt O’Keeffe’s term) with the Irish banking system as his stake.

But I agree with more general criticisms of Honohan. Is it not jaw-dropping, for instance, that the only bank CEO left in place since 2007 is Tony Grimes, the Central Bank’s DG?

Lest we forget, it is the CB which has stautory responsibility for “financial stability”. Until Nov 2008 they used publish an annual “Financial Stability Report” updating us on thier progress. One sign that the bottom is in will be when they start publishing it again!

“(I doubt somehow if Ireland will be borrowing in the form of FDR. Different kinds of dead presidents are likely to be involved.)”

That sure would be a lot of dimes!!!!!

@ Paul Hunt

Lenny mentioned a few times that “he was in charge” and *LENIHAN: DECISION RESTS WITH GOVERMENT, NOT CB GOVERNOR

Dont think as much that the Guv’nor is in ‘trouble’ as much as Lenny just bringing him back and not wanting him to go to far, ie if we seem to eager to accept, terms get more difficult etc etc…

@ Keith Cunneen

Brian Cowen is in a postion of considerable power – I wonder does he realise that he can game the central banks matrix given their overextension in this fiefdom.

Hopefully, some of his high paid advisers including a UCD economics professor, are not playing the role of Comical Ali.

Cowen is in a position like General Custer at Little Bighorn.

He is simply [expletive deleted].

@ zhou_enlai

Whilst the public might have clarity that we will have to take what we are offered the terms of the loan will be critical to our future and may damn us to hell altogether. In those circumstances, whilst the Governor’s utterances may put pressure on the Government, they may not prove as decisive as one might expect.

Not sure what this means?

@ Paul Hunt

Paul,

Ireland could do with some of those $2.5trn in reserves!

As chairborne experts say, all we need is a teeny-weeny piece of their market to be in clover.

Looks like the Taoiseach is creating a moat between the executive and the CB – wether this muddy water will become clear blue in future is open to question –
Note to Brian Lucy – there is a difference between the Goverment and bank debt even though they have been fornicating for as long as I can remember.
They both need to be sterilized as their offspring so far are seriously defective

I have great sympathy for Honohan, caught as he is between truth and blather.

I heard Cowen state that as Governor of the CB he was entitled to his opinion just as he Cowen was entitled to his opinion as Taoiseach – even though they are contradictory. Whose opinion does the citizen believe, the Governor’s or the Taoiseach’s? What a mess to play out in the media.

It’s reassuring to witness the economic crisis being whirled around dervish-like in a revolving door of dissembling. No facts you understand, just opinion. That’s how every election campaign is run.

@Micheal Hennigan
I agree , Cowen has made catastrophic mistakes during his career – However,

Custer had no option but to fight as he knew that if he surrendered he would be butchered anyhow.
Its best to go down with whatever honour you can muster – a comfortable life on a state pension would be unbearable if he just stood aside and let the Hyenas have their bounty.

I heard mention on Newstalk at Lunchtime of something called “Coco Bonds”! These are what are going to be issued to save us !!!!! I had to check that the date was NOT the 1st April!!! Does anyone know what these things are ?!?

@Brian J

I agree the man and the administration are foolish rednecks – believing that if they were the best boys in the class they could keep their precious corporate tax – however the world does not work like the classroom.
Their lack of understanding of power dynamics has been breathtaking – opening up the state to unlimited capital and labour flows without the slightest oversight from the state has been catastrophic

Maybe a critical mass of Muinteoirs withen the cabinet has caused the death of the nation.

Basically if a certain metric (usually a minimum capital ratio) is triggered (ie the contingency), then the CoCo bond suffers a loss or a change in its terms – could be haircut, could be loss of coupon, could be converted to equity etc. But the holder of the bond has no recourse (ie compulsory), and its is not a default. They are seen as the way forward to ensure that bondholders suffer losses (still legally very difficult to enforce losses, as we have seen with Anglo), but difficult to price and value correctly.

@Eoin,

That’s fair enough. I can see where you’re coming from and, though I expect the big picture has been hammered out, some detail will remain. But, being the cynic I am, I think the Govt’s focus is on securing a form of words to describe the arrangement in the least sovereignty-damaging terms that may be inserted into the heads of those (by surgery or otherwise) who will be canvassing on the doorsteps in Donegal SW and in the eventual general election to ensure the core FF vote holds up as much as possible.

And another thing, which I raised previously, any views on where the kind of arrangement being considered would leave the NTMA? Will all be sweetness and light in a couple of months or will it be out of the market for the duration?

@Paul Hunt

I think the by-election in Donegal is the last thing on anyones minds. The budget will be passed no matter what the result. The Government won’t last much longer no matter what the result.

@ Paul Hunt

reckon NTMA will try to tap domestic market in Q1 after change in pension fund discounting rules and as domestic Irish banks buy more Irish govvies. Roadshow in early March, and End Q1/start Q2 they’ll look to do something bigger and external, but anyone’s guess if they’ll be able to do it. They should be able to do some T-bills as long as things have stabilised at least somewhat.

Question then is whether we tap the NPRF instead, and see if situation stabilises further. I reckon 40% chance they can get back into external market by April, but 5 months is a lifetime away. Greece has barely even been in the EFSF 5 months, yet it seems like such a long time ago. november next year, and our 4.3bn redemption is probably the ultimate point when they have to hit the EFSF or not.

@Eoin

Do you think the EU/IMF would allow us not to tap the pile of cash sitting in the NPRF? Can’t imagine the German taxpayer will be too happy handing over a couple of billion knowing we are sitting on a sovereign wealth fund.

@ Richard Tol

Sorry for being ambiguous. I meant that we need more Honohans at the top. There are plenty of good people at the lower ranks of the civil service.

What happens them as they climb up the pyramid?

Cowen disclosed last month that he has six advisers who are paid €820,000 annually + pension costs and expenses.

Programme manager Joe Lennon, who was paid €222,000 in 2008 an this fell to €200,000 after a voluntary 10 per cent contribution was made to the Exchequer.

Cowen’s economic adviser Prof. Peter Clinch was paid €205,000 in 2008, while his long-time special adviser Gerry Steadman received €132,000 in the same year.

Speechwriter Brian Murphy – who previously penned Bertie Ahern’s speeches – was also paid €132,000 in 2008, while Padraig Slyne was paid €97,000 for his work advising the Government Chief Whip.

The most recent appointment to Cowen’s inner circle is former nurse Deirdre Gillane, who replaced special adviser Declan Ryan last May. Ryan was on a salary of €95,000.

Cowen has about 9 constituency helpers.

I wonder what keeps Prof. Clinch busy every day?

One think PH got right in his interview that lots of the media and comentators keep getting wrong, is that this is not a bailout.
We are going to be given a loan. We will have to pay it back with interest.
We will probobly use some of this loan to pay other interest we already owe. This is not a bailout. We are being bailed in.

Paul Sommerville is correct. There is only one way this will end and that is debt forgiveness.

I have said it for 2 years. The numbers dont add up. We cannot pay back all the money that the country the banks and the citizens owe. The number is just too big! Regardless of how much we cut and tax.

What we are about to witness is, along with Greece, the biggest can kicking exersize in in the history if the Eurozone.

Without making the Bondholders take losses this is a waste of time.

These are the people we are impoverishing our citzens to save.

http://golemxiv-credo.blogspot.com/2010/10/who-are-bond-holders-we-are-bailing-out.html

The Media are missing the big story here.

I think you could show a little responsibility even under your aynominity.

Anonymous?! I’m probably the least anonymous commenter here without a hyperlink in my name! And as for responsibility: I’m Irish; apparently, We don’t _do_ responsibility. Anyway, I stand by my statement on the run and the proper response to it.

The Governor made it clear that the outflows are wholesale deposits…

A bank run; that’s what I said.

…and also clear that the central bank stood behind the banks as lender of last resort.

The Irish central bank? That does not exactly fill me with confidence, nor should it reassure anyone. The central bank is also run by the same shower of grey-haired wasters that have run every other institution in the state into the ground.

The ECB and ICB will not allow ordinary depositors to bear losses.

On what basis do you believe that the German taxpayers is going to fork over their savings to pay for pension and pints for the Irish? Prevention of systemic bondholder incontinence? Didn’t you listen to Merkel’s speech?

In theory there is a risk that they might not remain 100%, but in reality not unless there is a total, monumental international econopolitical cock-up of such proportions that would put a question over the whole European project.

Then what do you call what we’ve experienced up to this point? Minor turbulence? The Fianna Fail-boat has sailed the seven seas of spin and has finally come to a grinding halt on the reefs of reality, and we are all going down with it—some of their own volition seemingly.

Believers in the capability of Irish State Institutions and the people who run them can go back to reading the Irish Times, and watching the RTE 9 O’Clock news. People in touch with reality should withdraw what little money they have left before it’s all siphoned off to pay for Government and banker super-pensions before the German’s lock the whole thing down entirely. (By the way, I personally think we’ll be a lot better off being run by competent people from Berlin and Brussels.)

The 100k guarantee was a political expediency given by political opportunists. Your only guarantee will come from the ECB and IMF and while I believe that they will prove trust worthy, prudence dictates that it would be wise to spread ones eggs around. By around I do not mean different institutions within Ireland but geographic such as 20% in each of Germany, France, Australia, Canada with not more than 20% in god’s green isle. Sweden, Norway, Poland, Netherlands could also be given serious consideration. The big danger is that Ireland in a fit of political pique will pull out of the Euro Zone overnight, the odds are not high but they are not negligible either. Carefully examine past gov’t decisions and if you are satisfied that good judgement was exhibited then you have little to worry about.

@David Burke
re: Honohan
‘jog your memory back a few weeks’.

I’ve just browsed thru the Irish Time archives but the only ‘dirt’ I could find on Honohan so far was his assertion on 17 August that “the total cost of bailouts of all Ireland’s banks and financial institutions would be around 20 per cent of GDP” and that “plans to recapitalise the bank were well on track and had little impact on the Government’s overall deficit plans.”

Apart from that, he seems to have a pretty good record for honesty and integrity.

@Eamonn Moran
You may be right, but that list doesn’t represent the beneficial owners of the bonds, merely the companies that are managing the bonds.

Goldman Sachs, the world’s favourite villains, are on the list but we have to remember that they also manage money for little old ladies, for churches, for pension funds, college funds, etc. If you decide not to pay Goldman then you’re also deciding not to pay some little old lady somewhere.

@MH

I meant the Governor made statements because he had to because of pressure from the ECB and from depositors. However, if the Government cannot negotiate a package that gives the country a chance of survival then they may yet dig their heels in.

@
carolus galvinesis

I,m not having a pop at honohan, not getting personal here. He said it alright, irish bonds at 6% are a great buy. It made laugh at the time because its all we have heard for the last decade regarding house prices. Sure at this stage,who cares.

Let us poor Bank of Ireland shareholders hope that Honohan and Elderfield’s famous stress tests hold up and that they were not lying to us as well.
This current crisis better be a liquidity not a solvency problem or those two much praised gentlemen will be joining Ahern, McCreevy, Cowen, Lenihan, Neary and whatever non-entity was CB Governor in the stocks with Fitzpatrick and Fingleton.

@all

A Hedge Fund Republic?

http://www.nytimes.com/2010/11/18/opinion/18kristof.html?src=ISMR_AP_LO_MST_FB

‘What kind of a country do we aspire to be? Would we really want to be the kind of plutocracy where the richest 1 percent possesses more net worth than the bottom 90 percent? Oops! That’s already us. The top 1 percent of Americans owns 34 percent of America’s private net worth, according to figures compiled by the Economic Policy Institute in Washington. The bottom 90 percent owns just 29 percent. That also means that the top 10 percent controls more than 70 percent of Americans’ total net worth.’

What kind of a country do WE aspire to be? A Hedge School Republic? More socialization of Financial System debt … and enhanced austerity.

@ Hugh Sheehy

“Goldman Sachs, the world’s favourite villains, are on the list but we have to remember that they also manage money for little old ladies, for churches, for pension funds, college funds, etc. If you decide not to pay Goldman then you’re also deciding not to pay some little old lady somewhere.”

What percentage of money managed by GS belongs to little old ladies?

That is the biggest straw man in all of this.
BTW it would not be fair to blame you as loads of people use it.

Look at the detail of the link.

The % of little old ladies pension funs is tiny.
And even if it even represented a 5% stake, defaulting on the Bond holders would not cause a fraction of the damage to her pension fund that the Stock price collapse in 2008 caused.
It would however make it a lot more likely the government could continue to pay her old age pension.
The real story here lies in the Power yielded by the private sectors money
and what they can do when losses are even threatened by politicians. ie Angela Merkels comments.

@ Mickey Hickey

I always wondered about the “spread it around” diversification argument. It seems to me that if you spread among say 5 countries all you have done is swap a possibility of a big loss for 5 times that possibility of a 1/5th that loss. In other words your chances of loss are greatly increased but you have limited the impact.

http://ftalphaville.ft.com/blog/2010/11/18/409326/the-price-of-an-irish-promise/?updatedcontent=1

Update: 16:33 (GMT). Unsurprisingly, Fitch has put Ireland’s rating under review.

RTRS-FITCH SAYS “EVIDENT” THAT ACTIONS TAKEN IN SEPTEMBER HAVE NOT RESTORED CONFIDENCE IN IRISH BANKING SECTOR

RTRS-FITCH SAYS THERE IS “CONSIDERABLE UNCERTAINTY” OVER POTENTIAL FOR FURTHER BANK LOSSES IN IRELAND

RTRS-FITCH SAYS TO REVIEW IRELAND RATINGS IN LIGHT OF ANY PACKAGE AGREED WITH THE IMF AND EU

Irish Times site has a nice picture of Ajai Chopra walking past the old Anglo Irish bank HQ on St. Stephens Green.

Presumably he was walking from the Merrion Hotel to the CB HQ and not being chauffeured in a super-sized limo.

Government ministers please copy

@Maurice O’Leary

Personally, I won’t make any bets yet. After tomorrow (a settlement day), I would be surprised if next week isn’t turbulent. For a start, I believe, it will be very hard to justify incinerating even more cash in the banks without full state ownership of affected institutions. It is equally clear that ‘the banks’ have been disguising losses for a long time and how losses can be stemmed in current phase of decrepitude is beyond me. If Morgan Kelly’s figures are correct, how can the banks remain in even partial public private ownership?

Note: I am a BoI shareholder

Honohan seems honest just way out of his depth. He doesn’t understand financial markets. Here he is misleading though – we already have promised to support the banks, and we have access to the ECB for liqudity, and yet we had a bank run. The bank run came because people see that the state cannot afford to bail out the banks. So, we are now going to get MORE loans from the EFSF/IMF/EU at 5% per year. That makes our solvency worse not better, since we pay just 1% to the ECB for their funds. We are getting expensive loans to pay off cheap loans. This is all going to crash further – our bond yields will go up to Greek levels, we’ll draw down this loan, and then we will have too much debt so we will eventually get our debt restructured and written down. That’s probably a year or two off. Patrick can’t say that but I think he has absolutely no idea that this is the most likely scenario.

@David O’Donnell

I doubt that most people know what a hedge school is these days. They probably think it’s somewhere you go to learn about trading instruments.

I must say Honohan’s indulgence in Clintonesque semantic games over bailouts and loans didn’t fill me with confidence that he has not ‘gone native’ in the job…

@The Alchemist
I’m only now catching up with events overnight and I am inclined to agree with you. However, this crisis is not playing out like others. I note the banks are all up and the ISEQ up 2.5%. Strange. The talk above about runs is dangerous.

@Paul

right on the money IMO this is about EU ensuring the losses are dumped on the state. Sovreign debt crises next year I’d say

Turning to current ECB policy, Trichet said the bank was keeping all options open on potential exit strategies from exceptional stimulus measures designed to shore up the struggling euro zone economy during the global crisis.

‘We consider that we are not bound to unwind non-standard measures before considering interest rate increases; we could do one or the other or both,’ Trichet said.

It seems that a battle within the ECB appearsto be ongoing. An excellent article on Bloomberg last night suggested that Weber was gaining support for his stance on bond buying and liquidity measures.
To be fair to our guys it seems we are caught in a larger battle of wits.

@Paul

I think you can be failly confident that Patrick Honohan can do the maths but he can only work with options that are available.

Having said that I recall my sense of disbelief back in the Autumn seeing an RTE interview with an academic at, I think TCD, urging the govermnent with an air of remarkable confidence that, as the country was “fully “funded” to “call the bond market’s bluff” by refusing to participate in any further bond auctions.

No idea whether he had market experience of exposing his backside to the potential of having it bitten off, but it didn’t look like it.

@Eoin et al.

Given that the banks and sovereign are so tightly interlinked (e.g. deposits leave banks because of doubts about sovereign backstop & sovereign funding difficult because of doubts about extent of bank losses) does anyone really think a bank-funding-only solution is on the cards, with NTMA still going out next year end-Q1/Q2 to start raising the €20bn they need for the year? As much as the IMF/EU team are enjoying our hospitality I don’t think they will want to be back again in 4-6 months time going over the same numbers with different faces around the table. I suspect they want to get it over with for a couple of years anyway, and then start booking their flights to Portugal.

@ Paul

”Patrick can’t say that but i think he has absolutely no idea”

Oxymoron? Or just no oxy-? Sorry folks, gloves are off for the next few days, we’re reaching the end game, i’m willing to fight a bit more than our twittering-media-whores are (who are basking in this btw).

JtO – cancel everything til Monday.

@Eamonn Moran
“What percentage of money managed by GS belongs to little old ladies?”

Goldman are slippery customers – and will always be betting on both sides – as in the US subprime crisis – while they were marketing the fraudulently triple Ad CDOs to their unwitting clients they were at the same time backing them to fail via CDSs. This almost blew up in their faces with the imminent collapse oF AIG who were massively exposed. But with so many insiders working for the Government and Fed they were able to ensure that AIG were bailed out and thus pocket $12-5 billion from AIG.

The CDS tsunami which would be triggered in the event of a default is the real threat in the Irish/European banking, because it will involve astronomical sums. This I suspect is the main reason why Ireland or any of the GIPS will not be allowed default. The consequences would be immediate and catastrophic. I have no idea who are the big losers in that event (Germans?) – but guess who will emerge unscathed and smiling from the ruins!

@Paul

You write:

We are getting expensive loans to pay off cheap loans. This is all going to crash further – our bond yields will go up to Greek levels, we’ll draw down this loan, and then we will have too much debt so we will eventually get our debt restructured and written down.

I think that sums it up. It also Mish’s view at Global Economic Analysis:

Bailout “help” will do nothing but overburden Ireland while making its problems worse down the road. Resentment will build up and hopefully Irish voters will do the same thing Icelandic voters did: throw the bums out and tear up the agreement.

Meanwhile, Spain is waiting in the on-deck circle. The proverbial s* hits the fan when Spain comes up to bat.

http://globaleconomicanalysis.blogspot.com/

AMcGrath

“The CDS tsunami which would be triggered in the event of a default is the real threat in the Irish/European banking, because it will involve astronomical sums. This I suspect is the main reason why Ireland or any of the GIPS will not be allowed default. The consequences would be immediate and catastrophic.”

Oh no. People are beginning to believe in the Derivatives Death Star.

The real reason bonds are sacroscant.

http://nirahlee.com/iswwr/evidence/DeathStar1.jpg

This is where we’re headed.

After the long war.

http://scrapetv.com/News/News%20Pages/Entertainment/images-4/death-star.jpg

MacroEconomics has nothing to do with this.

Bond. Eoin Bond

“Sorry folks, gloves are off for the next few days, we’re reaching the end game, i’m willing to fight a bit more than our twittering-media-whores are (who are basking in this btw).

JtO – cancel everything til Monday.”

irisheconomy.ie would have put me on the naughty step for that.

I don’t think JTO can help you out here Eoin. Banking is not his area of exxpertise.

Of course it’s never stopped me. 😆

@Paul

The Governor is one of the very few academics who finds empirical support for their previous research work in the day-job 24/7 …. every day – every hour. Considering his argument in 2002 that – ‘blanket bank guarantee’ is the WORST option – and that the presence of the IMF/EC/ECB in Dublin today adds yet further empirical support – one wonders how he might explain this to his colleagues in Frankfurt – or maybe (more probably) he did – and the ECB Acted in the interests of the present EZ empire.

Bad enough for Fianna Fall to bring us down – but to bring down the Empire!_WOW – how far they have travelled since 1926.

Paul

“…. “Honohan seems honest just way out of his depth”

I think you do the man a disservice…. ”

He knows exactly what he is doing.

He is bailing out Deutsche Bank.

That’s his job. He work’s for the ECB not us.

Some elementary sums:

€110 billion Greek bailout ÷ c. 11 million pop. of Greece ≈ €10,000 per capita
c. €100 billion Irish bailout ÷ c. 4.5 million pop. of Rep. Ireland ≈ €22,000 per capita
€750 billion “in” EFSF – c. €100 billion Irish bailout ≈ €650 billion EFSF residue
€650 EFSF residue ÷ (45.5 million pop. of Greece + 10.5 million pop. of Portugal) ≈ €11,500 per capita

Cutting it a bit fine?

AMcGrath

“Close – but where is Llyod Blankfein in the aftermath pic”

In the escape pod.

Sorry. I was using a Japanese camera.

The Chinese will make a better one soon.

Better luck next time what?

As I see it our gov’t is trying to ring fence the state by turning responsibility for the failed or about to fail banks over to ECB/IMF. On the other side the European Commission acting through the ECB/IMF is adamant that the Irish gov’t take direct responsibility for our banks. All bail out funds would then flow through the Irish gov’t to the banks that are answerable to the Irish gov’t. This of course means the Irish gov’t is in charge and can be held accountable for the success or failure of the banks. For the foregoing reasons I see room for failure of the talks now underway between the Irish Gov’t and the ECB/IMF. A lot of babble about sovereignty but when it is being imposed the gov’t shies away.

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