Rehn Spokesperson on Bank Senior Debt

On Morning Ireland a few hours ago, Amadeu Altfaj Tardio, Spokesman for the European Commissioner Olli Rehn, was asked by RTE’s Rachael English (about 5.08 minutes in) whether the EU would countenance senior bond holders sharing the burden as part of the Irish bailout.

Possibly Amadeu didn’t quite understand the question (though he was asked it twice in pretty clear terms.) Anyway, my understanding of his response was that he could countenance this type of burden sharing. He said the issue “was under discussion” though it seems as though he meant this in the sense of a general Euro-area policy in this area was being discussed, rather than that he knew that this issue was being discussed in the current Irish bailout negotiations.

Further clarifications on this issue should probably be sought.

92 replies on “Rehn Spokesperson on Bank Senior Debt”

Yep, heard him on 11.0c news. No doubt that he said those big boys who took risks should share the burden.

That was always going to be fine if enacted at EU level, it was never going to make sense for Ireland to burn seniors unilaterally.

How about a debt for equity swap by the government into Nama?

That’s what the money was for at the root of it all… fraudulent property speculation.




Btw, the text of that final question:

Q: “so i take it then that you can countenance senior bondholders having to share the burden?”

A: “Well this is something that is currently under discussion, but indeed the aim is that the burden is shared and it is not just the citizens who pay the price of the mismanagement and excessive taking of risk”

If they don’t get their story straight soon, they’re going to Merkelise the market for bank bonds.

Still think its just a big stick to beat down prices to make liability management more successful in terms of capital raising. But could they even throw the Anglo stuff to the wolves in the hope that it teaches a lesson on the “excessive taking of risk”? Suggests someone’s taking a tougher line though, whether IMF, Govt, or even just comments from the likes of Noonnan and the realisation that the bailiut may not work with current facts and figures the way they are.

Yes! we are going to get government that is going to have a difficult phone call with Lord Senior Bond.

Thank god for small mercies the days of bend over Lenny are drawing to a close.

The EU shouldn’t discuss this stuff in public.

When the Ottomans took over Cairo in the 1500s they invited all of the defeated Mamluk nobles to a big dinner and gave them all a big haircut. The EU should consider a similar approach for bank bondholders.

Maybe Lenihan can explain to the seniors that “we all partied” like he said on Primetime.

They are working through the logic and reaching interesting conclusions. The rubicon of recognising actual and threatened (depending on which country you are looking at) has been crossed. Insolvency means debt will not be repaid. Retsructuring will be orderly or not. Somebody has to write a cheque. More accurately, several entities will have to write several cheques. We could get one written directly or, my likely indirectly. The latter will happen when German banks have to raise capital after they fail to get their money back.
By the way, ‘German Banks’ could also include the ECB: what if that august institution ends up needing to be recapitalised? Only Germany could write that particular cheque.
Contemplating those outcomes means that a solution will be reverse engineered. And it ends up with large cheques being written. The only details left to solve are means to share the burden across those most able to bear it. Bondholders can take some but by no means all of the pain, given the skinny capital positions of German & French banks.

We may be getting ahead of ourselves on this issue.

Dow Jones Newswires says the European Commission hasn’t taken a position on whether the senior bondholders of Irish banks should be forced to absorb losses as part of the bailout package for Ireland, a commission spokesman said Thursday.

“At this point in time we have no positon” on the issue, said spokesman Amadeu Altafaj Tardio.

Responding to reports that the IMF is pushing for senior bondholders to absorb losses despite opposition from the commission, the EU’s executive arm, Altafaj Tardio said: “We are discussing with the Irish authorities as a team … there is a very, very close coordination as you can imagine.”

Given the implications of this issue for several countries, even Rehn’s own opinion never mind his press officer, wouldn’t have much weight when it’s very much an issue for politial leaders.


Im afraid your right no signiifcant movement on Bank of Scotland Shares this week. Even the short sellers havn’t smelt any blood.

Reuters reports Germany will press for a strong euro which is why tough budget savings must be made, Chancellor Angela Merkel said on Thursday.

Merkel added that she saw no euro zone country in danger of insolvency.

Private sector investors would only be affected by any changes to the euro zone crisis mechanism from 2013, she said.

Strong letter from Damian Chunilal of Ocean Capital Management in the FT today. He says there is a risk of another Lehmans type event if there is a default on senior debt in Irish Banks. The bondholder has spoken!

@ Michael Hennigan

“Merkel added that she saw no euro zone country in danger of insolvency”

Well she would want to wake up and smell the coffee.

BTW Micheal Martin on Morning Ireland this morning again stated that the ECB’s Policy was that no European bank would be allowed to fail.
He did not use the word “systemic”.

@ zhou
“Strong letter from Damian Chunilal of Ocean Capital Management in the FT today. He says there is a risk of another Lehmans type event if there is a default on senior debt in Irish Banks. The bondholder has spoken!”

Paddy Power is offering short odds that Peter Sutherland will be on the 6one news this evening 🙂

Bloomberg is carrying a major story on Ireland that contains the following ‘Ireland’s ability to take on a large recapitalization alone is doubtful since bank liabilities represent more than 10 times the nation’s GDP. ‘


was just looking at something ESCRM, to replace EFSF talking about first pilar , second pilar and 30- 50% default. is that old news or just out

@ ceteris paribus

This is bs.

I wish the central bank would impress on the Bank for International Settlements to include a note on its table of bank borrowing data for Ireland to highlight the IFSC portion.

The FT had a big graphic this week on the banking exposures to Ireland and again it was based on the BIS data, which is misleading as the IFSC lending is tt units of foreign banks.

@ Ceteris

“assets in the Irish banking system amount to €1.7 trillion (a remarkable 1,060% of GDP), 70% are owned by foreign banks with branches in Ireland or banks that are registered in Ireland but conduct the bulk of their business abroad. ”

came from the Goldman Sachs handbook

“Irish depositors must be protected, but they fund less than half of the €776bn domestic banking balance sheet. ”
No Irish Lazarus
Published: September 12 2010 19:44 FT

@ Eamonn Moran

Of course if I was in Martin’s shoes I would not want to take responsibility for the bank guarantee either.

This issue is the equivalent of Ernest Blythe’s shilling cut in the old age pension.

All I ask for is some credible evidence other than hearsay of self-interested parties and Vincent Browne – – it’s interesting how how ‘facts’ take hold..

If as Martin suggested that they were acting in accordance with ECB policy, there must be some confirmation of a governing council decision; besides Trichet has a Q&A with journalists every month.

I would love to win the Lotto and get lots of prezzies for Christmas but at this point unless Spain goes under, it’s unlikely in the short-term that there will be mass restructuring.

@ Michael Hennigan

“it’s unlikely in the short-term that there will be mass restructuring.”

It sounds to me like that is just what is happening although obviously I could be wrong.

That misinformation from bloomberg helps us right now the more broke we look the better.

If thats the case it is down to negotiation on the size of the default. Its a hand you can only play once and we need to default as much as possible i.e. let the seniors take the biggest share possible.

So now I am concerned about who is negotiating for us.

@Eamonn Moran – “Paddy Power is offering short odds that Peter Sutherland will be on the 6one news this evening ”

What? Is he going to take a break from scoffing roast pheasant and claret to come out and tell us proles to tighten our belts and take one for the bondholders… erm, I mean Ireland?

con t’d – “So now I am concerned about who is negotiating for us.”

Didn’t the Greens Ryan answer that question in the Dail this morning? Honohan, Elderfield and that guy who runs the NTMA whose name I can never remember, backed up by some highly capable civil servant types is I think what he said.

No FF politicians at all then?

@MH and Seafoid
It is a damaging but accurate statement that requires clarification. The author is based in London.
@Eamon Moran
‘So now I am concerned about who is negotiating for us’

that is the scary part considering performance over 2 years.

@ Eamonn Moran

If thats the case it is down to negotiation on the size of the default.

If this is on senior debt, it’s surely putting the cart before the horse to think that a deal will be done in Dublin and then hope that other Eurozone members will not look for the same.

@ Joseph
Suds is celebrating Thanksgiving today (for the big fat GS bonus about to be received)

@ CP

There seems to be a lot of misinformed comment including over the political risk of passing the budget.

I think the timing of this is quite significant. If the Irish banks haircut or go into administration, there will be knock-on effects. Other banks might need the same treatment.

It probably makes sense for the politcos to organise a bit of co-ordinated haircutting on bank and sovereign bonds in the peripherals for specific core EZ country banks and raise funds to recapitalise them. It eases the burden on the peripherals, probably is a better use of additional fund raising than applying it to a bailout fund that looks unlikely to work, strikes a more equitable balance across the board between bondholder and taxpayers, might restore some political primacy over finance – and these banks need to be sorted in any event. Wouldn’t be surprised if there is a lot of furious activity behind the scenes.

Surely the NTMA monitor this stuff. Bloomberg helpfully include emaill address in each article.
The IT are as bad when quoting bond/yield prices. At variance with ISE constantly. Where do they get their info.

Is this article suggesting that German banks actually have very little exposure to Irish debt or just that they aren’t prepared to tell us?

“Chancellor Angela Merkel’s spokesman Steffen Seibert said in Berlin earlier this week that Deutsche Bank was especially exposed to Ireland as he tried to explain to German voters why they will be paying for Ireland’s bailout.

The comment provoked Deutsche Bank spokesman Christian Streckert to describe the statement as “defamatory” and insist that the bank was owed less than €400m by Irish banks.

Other big banks, including Commerzbank, BayernLB and WestLB, have also called their exposure to Ireland relatively minor. ”

I guess 400m is petty cash to DB but why do we keep reading that UK, French and German banks are owed billions upon billions? Who’s spoofing who here?

Are these the first comments directly attributable to an EU official (albeit a spokeperson rather than a Commissioner)? If the EU decides that Ireland cannot, or should not, default/haircut seniors, then surely it starts to become an EU issue/problem, rather than just an Irish one?


“There seems to be a lot of misinformed comment including over the political risk of passing the budget.”

Can you say more about this?
–What’s the perceived political risk?
–What’s the actual situation in your opinion?


Thank you for the “Brady plan” link.

Do you think this is under active consideration?

If not, why is it not being considered?
How high are the barriers?


It has been an EU issue/problem for some time, but it became one formally when the cavalry rode into town last Thursday. Prior to that the ECB was only providing liquidity, DG COMP was looking at state-aid issues in capital transfers to the banks and DG ECFin was looking at any progress towards adherence to the G&SP. We’re now in a different frame of reference and different legal and politcial instruments may be applied.

@ Karlos

just got a very thorough Deutsche Bank piece on the EFSF funding cost – they reckon the overcollaterlisation part will be dropped for political reasons, ie no need to multiply by the 120%. They also reckon that the 120% collateralisation is only required once the fund gets tapped beyond a certain amount (the sum of the triple-A guarantees underlying it), although they admit this requires further disclosure from the EFSF itself (whcih they expect once/if Ireland taps it).

This reduces funding back to simple 3mth Euribor+300bps(+50bps fee annualised) = 4.85% on a 3yr. Might be the quid pro quo for not haircutting seniors.

“The EFSF Framework Agreement states in its Preamble that the non-binding benchmark for EFSF lending would be 3M Euribor+300bp for floating rate loans up to three years, plus an upfront fee of 50bp. If loans longer than three years are granted, an additional 100bp are added to the loan rate, and fixed rate loans are based on the relevant Euribor swap rate plus the applicable spread. These are the same terms as for the EUR 80bn EU bilateral aid package for Greece.

To us, the Greek pricing benchmark is extremely important because politically it will be very difficult for the EFSF to charge a significantly different amount to other borrowers. If the EFSF were to charge a higher rate, it could send the signal that it is good to get into trouble early and be helped at preferential rates. If the EFSF were to charge a significantly lower rate, Greece could at least in theory apply for EFSF funds, which we note is undesirable, especially now that the rating company requirements have lowered the potential lending amount from the EFSF.
We therefore assume that the Greek pricing benchmark will be used by the EFSF.”

@ noguru

This was based on one presentation but I imagine it is not isolated.

Perception seemed to me to be that there was a significant possibility that the budget might not get passed. I thought this was ridiculous. FG are going to support it no matter what. I have been watching my RTÉ player consistently and I don’t believe that the view expressed is credible.

This was an internal company session. The opinion was also given that restructuring of Irish and Greek debt was inevitable.

I wonder what traders in London and elsewhere understand about the political dimension. Probably not a lot.

It is perhaps tied in to government credibility levels which are trading at 4 cents in the Euro.

the bondholder view

From Mr Damian Chunilal.

Sir, The suggestion that Irish bank senior creditors should be strong armed into taking haircuts (Editorial, November 23) is another example of a failure to learn the lessons that the Lehman Brothers debacle taught us. While this view has political attractions, forcing senior creditors to take losses at this time would have potentially catastrophic consequences for eurozone financial stability and the single currency.

Castigate failure of euro states – Nov-25Taxpayers can’t afford bail-outs – Nov-25EU has more options than a fiscal union – Nov-25Brian Lenihan: Ireland’s four-year plan – Nov-24Martin Wolf: Ireland refutes the German perspective – Nov-23Financial institutions are different from corporations. They are interconnected and rely on investor confidence and funding to perform their core function. A failure of any systemically important institution creates significant negative externalities across the financial system and the broader economy. These externalities are greatly magnified at times when overall confidence is lacking.

As we have seen from the Lehman failure, when confidence in a single systemically important financial institution is lost, it can spread very rapidly, endangering the whole system. The consequences of allowing Lehman to fail and allowing bondholders to take losses was a freezing of global credit markets and a much deeper economic downturn and ultimate cost to the taxpayer than would have otherwise been the case had the bondholders not been allowed to “burn”.

It is clear that a decisive restructuring of the Irish banking system is required. Further nationalisation will be appropriate in specific cases. It has taken far too long to get to this point. However, burning the senior creditors of a major Irish bank at this time would risk an immediate and very severe market reaction across the eurozone and beyond. Rightly or wrongly, such action would lead to a wholly rational fear among financial market participants that all senior bank bondholders and potentially even depositors across the eurozone periphery would be similarly at risk.

Whether investors should have discounted such risks is for another discussion. But the reality is that fuelling such fear at this time would be a “game changer” and would risk an immediate “run on the bank” in all eurozone countries where sovereign and bank funding concerns have come to the fore.

The damage of doing this would be greatest in eurozone countries that have more limited domestic capital markets and are thus more reliant on non-domestic investors for sovereign and bank financing. The risk of another financial market shut down would be increased.

We should learn the lessons of the Lehman debacle. We should debate the appropriate future burden-sharing regime in calmer times. But the priority now must be to contain the current crisis. And this requires decisive and immediate action.

Debating burden sharing among senior creditors at this time will simply add fuel to the fire and will significantly magnify the current difficulties of the eurozone and the ultimate cost of resolving them.

Damian Chunilal,

Managing Director,

Ocean Capital Management,

Hong Kong

@ceteris paribus

Bloomberg is carrying a major story on Ireland that contains the following ‘Ireland’s ability to take on a large recapitalization alone is doubtful since bank liabilities represent more than 10 times the nation’s GDP. ‘ Wrong?

The link is here:

Perhaps the author was confusing Ireland with Iceland – the latter’s banking system’s liabilities did indeed exceed the country’s GDP by over 1000% in 2007.
Irish bank liabilities are almost 4 times GDP, much the same as the Netherlands and less than those of the UK. It’s the banks’ assets, of course, that are worthless.

Reference (scroll down to histogram):

It does not matter what they are saying or who is saying it. The situation is fluid and changing daily. Decisions made around the parish pump do not take into account the EU as a whole or the world as represented by the IMF. The rest of the PIIGS have to be fed. In similar circumstances around gthe world over long periods of time preferred creditors salvaged 30 to 35%. If they get more they should count themselves lucky and if they get less then we are all in serious trouble.

I think the debtholders issue is like that game rock-paper-scissors.

Capital beats government and government beats taxpayers usually but voters beat capital in this case when they are taxpayers.

‘LCH demanded for the third time this month that clients place a larger deposit to trade Irish bonds, increasing the margin requirement to 45 percent from 30 percent.’

These guys are pricing in a high probability of default.

Mr Chunilal says “Whether investors should have discounted such risks is for another discussion.”

I’m sorry. Investors who can’t price risk deserve all they get. An unnecesary economic burden (with varying degrees of severity across society) as a direct and indirect result of the asinine behaviour of some of the institutions in which some of these investors have chosen to place their funds. Those who have lost jobs, who will lose jobs or who can’t find jobs have had no say in this one-sided burden-sharing. “IMF has broken ranks with EU/ECB/IRL Gov over the balance of the Irish government’s policies. It said the government had quietly prolonged the blanket bank guarantee for another five years, continues to rule out participation of bond holders, and places the total adjustment burden on the taxpayer. While that approach is supported by the EU, the IMF is sceptical whether this might work”

Simon Johnson has a good piece in the NY Times
Interestingly he sets out some of the main exposures

‘German banks are owed $139 billion, which is 4.2 percent of German G.D.P. British banks are owed $131 billion, or about 5 percent of Great Britain’s G.D.P. French banks are owed $43.5 billion, which is approaching 2 percent of French G.D.P.

But the eye-catching numbers are for Belgium, which is owed $29 billion. In the relatively small Belgian economy, this accounts for around 5 percent of G.D.P.’

@ CP

i think some of that is inter-company related, ie for Belgium, it’s probably mainly KBC Ireland/IIB Ireland, and maybe Dexia. Ditto for Depfa/Hypo for Germany, Ulster Bank/BOSI for UK. French stuff looks a bit more ‘naked’.


Statement from the Elders of the Goths

……………………………(in a few fields somwhere outside Frankfurt)

With our Hibernian_Irish, Iberian, Roman, and Greek legions within The Peripheral Alliance we confirm our allegiance to the founding principles of the EeeZeeFederation; we are on the march simply to confirm our intention to resist the impossibly ludicrous and savagely penal terms from the Ferengi invaders – it is in all our interests that a speedy resolution is found, and strongly led from the Centre of the Federation. If not, we will have no option but unilateral action from the Alliance.

Who wants dat?

I’d say the French stuff is also IFSC. Don’t SocGen have a big investment operation there?

So the liabilities of these operations are being counted, but not the assets. I saw somewhere that Ulster Bank accounted for 52 billion of the UK exposure. That’s the size of their loan book! Even assuming they’ve a whack of losses (some of which have already been taken) it is ridiculous to say that all 52 billion is on the line.

@ Paul hunt

Agree totally. Bank bondholders will have to be sacrificed in the name of greater stability. Otherwise it is sov bond haircuts all round.

Social welfare is going to be cut by €30 a week, I understand. That is a far worse haircut in living standards than anything Mr Chunilal will face.

I thought this was a good letter in today’s IT.

Madam, – I am currently in southern Africa where there is some incredulity at the current state of Irish affairs. Having been told for so long that export competitiveness is the key to economic salvation people here wonder how a country where exports continue to at twice the level of imports can be in such trouble.

This incredulity is reinforced when I tell them the real Irish economy is growing despite the best efforts of the Government to close it down and that the debt to GDP ratio was as low as 25 per cent as recently as 2007. How can Ireland now be on the brink of bankruptcy and close to having its sovereignty removed by EU/ECB/IMF diktat? I tell them it is because the Government has stolen circa €70 billion of the public’s money (almost 50 per cent of Ireland’s GNP!) and given it to foreign investors in bankrupt banks.

When they ask what these bank investors have done to deserve such largesse, I tell them that they fuelled an unsustainable property bubble which made it almost impossible for our young people to join even the bottom rung of the property ladder and which threatened to make the whole Irish economy uncompetitive.

“Surely”, they wonder, “investors in such banks do not deserve to be rewarded for such irresponsible and destructive behaviour particularly when it is their victims who must now pay the price – home owners in negative equity, the sick seeking health care, the aged and those made unemployed seeking social welfare? Did many of those those now unemployed not lose their jobs because of the irresponsible behaviour of the banks and their investors in the first place?”

At this point, I admit to being stuck for an answer. Perhaps your readers can help me out and explain why it is that the victims of this crime must pay the perpetrators with money they don’t have and must now borrow from many of these same “investors” at increasingly ruinous interest rates and why the Government is actively colluding in this process?

Would the proper process not have been what is known in business as a “debt equity swap” and which would have made those foreign investors shareholders in the banks they had so seriously misled in the first place?

Sorting out the banks would then, very properly, have been their problem and Irish citizens, who had no hand, act or part in the running of those banks could have looked elsewhere within the EU for their banking services if they so desired or required? Why do bank profits belong to their investors and bank losses to the public?

The Irish Constitution (Article 40.3.2) guarantees the right to property and Article 43 acknowledges that these rights ought to be regulated by the principles of social justice and the common good. By what principle of social justice are those with no ownership of the banks made liable for the losses of those who do? Has the Government not acted unconstitutionally in this case? – Yours, etc,


Red Lane,

Blessington, Co Wicklow.

He qualifies the above by saying that these numbers may be overstated given the prevalence of offshore banking in Ireland.
Article is worth reading.

Another interesting point is

‘At least 20 percent of Ireland’s G.D.P. is from “ghost corporations” that have little or no real activity in Ireland. Corporate taxes are set at 12.5 percent, but leading global corporations are able to construct complicated schemes involving other offshore tax havens that reduce their effective tax rates to the low single digits.’

So if we mess with corporation tax we could lose 30b+ of GDP.

@Bond Eoin Bond

‘ “IMF has broken ranks with EU/ECB/IRL Gov over the balance of the Irish government’s policies. It said the government had quietly prolonged the blanket bank guarantee for another five years, continues to rule out participation of bond holders, and places the total adjustment burden on the taxpayer. While that approach is supported by the EU, the IMF is sceptical whether this might work”

Realist Pragmatism from IMF – most welcome. Respect has been shown to the Irish serfs – this is appreciated.

This Irish Administration has NO LEGITIMACY to sign anything of any substance whatsoever …. and the principle of moral reversability, I believe, is a Kantian construct. Ironic!

@ DE

ill be honest, i dont know. There definitely WILL be large and potentially disasterous contagion from cutting seniors off at the legs, especially with Spain and Portugal looking so weak right now. But so too will there be mass contagion from any eventual Ireland restructure, especially if the bailout plan is structured in such a way as too make it inevitable. I think right now no one knows how to fix this. A hearty dose of QE would do the trick, but the German politics wont allow it. At the very least, some long term workout vehicles/warehousing via ECB funding might go some way to easing the near-term pressure.

As Paul Hunt has suggested, we need some sort of EU/ECB restructuring mechanism that can sort all of this out for everyone at once, rather than the bit by bit destruction that we are seeing right now. But i have no idea how they can pull that off.

Also, seperately, does this guy live on another planet?


Paul de Grauwe makes some interesting points here:

He draws some parallels with the old ERM. I would go further: MS Merkel, by enshrining sovereign default in the next Treaty, has reconsituted the ERM. Markets can now safely go after sovereign bonds whenvever there are competitiveness and/or fiscal questions in exactly the same way they used to repeatedly go after exchange rates in the old ERM.

Looks like a unified bond market has got to be part of the solution


I think Herr Weber wants everyone to minimise their exposure to the bond market – irrespective of the cost in terms of growth forgone. He must know some haircutting – co-ordinated or haphazarded – is on the way.

I believe the stark reality is that the world needs many more Lehmans. And it will probably be getting some before all that long, willy-nilly.

It looks like Mr Trichet is being outmaneuvered by Herr Weber. The signals coming out show that they are at loggerheads. No wonder the bond markets are volatile. Not an iota of positive news.


“Also, seperately, does this guy live on another planet?


Yes. Germany.


Perhaps now is the time for senior debt-holders to show that they are willing and able to participate. If they don’t come to the table, and their legs are cut off as you say, then they will suffer in the ensuing carnage. The vigilantes might feel the need to fight for what is right. Better to make an example of debt sharing here and now rather than killing them with kindness which leads to massive political problems and possibly worse default later. They should have a word with the Dublin Taxi Drivers about how getting your own way isn’t necessarily to your benefit if it isn’t sustainable.

It is important to distinguish between sovereign bond buyers and bank bond buyers. I don’t believe these are the same beasts. The sovereign bond buyers are, I believe, getting nervous about bank risk. The sovereigns are also as a result.

Imagine having to pay a 1-2% risk premium on every sovereign bond depending on the size of your banking system? Regardless of whether it went bust or not, how much would that cost over years?


‘The comments came from Mohamed El-Erian, chief executive of Pimco, which holds investments worth $1.3 trillion.

“It is unreasonable to expect the Irish taxpayer… to bear all the costs,” he told the BBC World Service.

Now if a major player in the bond market accepts the need for restructuring isn’t it about time that the EU/ECB did likewise.

‘He believes crises should be dealt with over three stages. First is recognising the problem, then comes calming the markets and finally there is dealing with the underlying issue.

In his view, the Irish Republic is at stage two, as is Greece, which accepted an EU-led rescue six months ago. But he claims there is an important difference between the two nations.

As Mr El-Erian sees it: “Greece’s bail-out hasn’t worked”.

Stage 2 = calming the markets? Have we?

Hold on. Who owns Pimco. I think Allianz and if I’m not mistaken they are owned by Deutsche Bank.


As welcome as Mr. El-Erian’s support over the past several days has been, surely he must surely be making some kind of trade against Irish bank debt?

That partying comment by Lenihan is vintage. This is obviously what he’s been telling the Europeans.
Seanie partied. I spent the boom trying to pay down an exhorbitant mortgage and inflated crèche fees.
With this glimpse into his psyche you can see why the Europeans have a mind to punish us.
A truly strange man

If banks become insolvent and senior bond holders do not take a loss then it makes mugs of all the other market participants who received a lower yield by buying less risky sovereign bonds.

It would be another example of the people who got it right being disadvantaged in favour of those who were less competent. Moral hazard in the jargon, or corruption if you like.

At this point, the damage caused by taking one the team may exceed the net economic benefits we have otherwise gained from being in the European Union since we joined. There’s a lot to be said for refocusing on the narrow national interest, and pursuing an independent policy on senior bank debt. If the rest of the EU wants to bail out the EU banking system, they should do it themselves. it’s nuts to allow them to pile debt onto us, so as to do it for them.

I very much hope this is the direction in which the main opposition parties are heading.

@eoin bond
Thanks for U-Tube link-Jim Corr
Am forsaking golf on Sat and heading for Woodquay as a result of viewing!

Better late than never but is it too late? All the pips are squeking now “we will lock you out of the market” and “we will withdraw liquidity from banks” and “this will increase funding costs for sovereigns”. That would be awful wouldnt it…

1) The senior bondholders are equal (pari passu) to deposit holders.
2) The senior bondholders are held by any in the world.
3) The depositors are held by Irish (voters).
4) Any loss for senior bondholders without a loss for depositors is injustice and prejudice by the Irish government by illegally changing the rules in favour for their citizens. Will reach European courts if so.
5) Sen. bondholders should be paid in full at any cost with the exception of a full bankruptcy respecting the rules of a bankruptcy as they are.
6) Note that senior bondholders are held by pensionfunds, other banks who also hold deposits.
7) Note that even the hint of a solution outside the contract as now is the case will directly lead to more expensive lending add to the crisis we are already in.
We all gonna pay for this crisis, the only thing is how much and by who?
Some solutions look like they dont hurt, but they will back fire. If you dont want tax money in it, ok how about out of a job, or more inflation, or less pension, or paying more for morgages? Avoidance of pain increased only the total pain. Its like going to the dentist.
Solution: Print money give it to the good countries, force them to bail out the bad countries by lending it to them, impose strict regulation and priority, against a managable interest rate, the interest compensates the good countries to cope with inflation due to money printing. If paid back the money is destroyed as it was created.

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