Down with this sort of thing

Various commentators, both domestic and foreign, have been arguing that Ireland’s adjustment process is difficult enough as it is, without needlessly saddling ordinary citizens with other peoples’ debts.

Brian Lenihan has had enough, calling “for an end to discussions about Ireland defaulting on its debt, saying the debate has done “huge damage” to the country.”

People should not be surprised that there’s a huge erosion of trust in the Irish banking system when we’ve an endless debate on whether we should be defaulting on the payment of our obligations,” he said.

I hope the FT and the rest of them are listening. You may think you are speaking up on behalf of Irish (and EU) taxpayer interests, but you’re actually doing great damage. (Exactly why deposits started to leave the Irish banking system months before this debate began is unclear to me, especially since no-one has suggested burning the depositors, but that is another issue.)

Careful now.

77 replies on “Down with this sort of thing”

Patricia the Sovereign_in_Exile says to the Vichy_Bank Minister:

Tut, tut, Brian! Where does this OUR obligations’ gain its Democratic Legitimacy? Why am I in exile?

FYI – BOI tendering for exchange of subordinated debt at roughly 45-50% discount, exchange into 1yr ELG. Total buyback will amount to 1.5bn, but will be liquidity neutral, and will raise 700-750mio in equity capital. This would get them a third of the way there in terms of required equity raising to get T1 capital to 13%+.

Listened to the interview in which Brian L said that if only they had shut up, the country would have been fine.

Then listened to the interview in which Brian C said he was proud of his achievements in office while being sorry for the state the country is in.

It would be funny if the joke were not so very expensive.

Isn’t there a clause in the constitution that delusion is ground for impeachment?

“I have great regrets about how the bank [Anglo-Irish] was let grow to the size it grew.” Ah, the passive voice, how often it comes to be used in such cases. Mistakes were made.

@Eoin

‘TIME’ is in a strange ol state at the mo …. and every Angstrom of Rope_Debt taken from the necks of the Irish serfs is most welcome …. still enough senior to well and truly hang the hempen_proletariat of course …. gotta keep reducing the length of that rope …. before someone pulls the lever on the Sovereign …. TIME again …

@Richard Tol

Bit of topic:

Can you fill us in on how the far right of Geert Willders pulled its usual vote in Den Hague and why the social democrats stepped in (denk u well, bedankt etc) to vote through the so called ‘Irish bail-out’ ….. and just how damaging to cordial Irish-Dutch relations since the gloriously silent entente between Paul ‘the genius’ McGrath and Ruud ‘another genius’ Gullit ?

I love the statement on ciggies and alcohol…it’s a manifesto in favour of tax competition across the EU if ever I saw one.

“Defending his decision not to increase tax on “old reliables” such as alcohol and cigarettes, Mr Lenihan said that to have done so would have stimulated cross-Border trade and thereby damage the retail sector.”

The frightening thing is he seems to belive this nonsence.

He looked awfully worne out on prime time last night, Michael Noonan ran rings around him.

Brian Lenihan also said:

“A small country like Ireland cannot default without the support of a central bank because you have to have the bank loaded with cash while you’re engaged in such a default and it’s not feasible for us to do this.”

If this is the case (and if forcing a haircut on bondholders is deemed equivalent to default) then the government’s acceptance of the Memorandum of Understanding can be justified. The only sound argument against it is that the cost of default will be greater the longer the date of default is postponed. But this holds only if Ireland’s current debt is less than the maximum the country can ever reasonably be expected to repay.

If the country’s debt is equal to or greater than the maximum ever repayable, it makes sense for Ireland to accept any credit, at any rate of interest, which is still available to it. Thus it is arguable that the Irish government has behaved like a rational debtor who has nothing left to lose.

That’s ‘believe’ and ‘nonsense’. I think I require a ‘try before you post’ button.

The ironic thing is that nobody in here suggested that Ireland default on it’s debt – but of course now by committing to pay off someone else’s debt we will almost certainly be forced to default on our own – and that decision is BLTDs.
Even more ironic is that the debt we will default on will be the senior bondholders and not the ECB/IMF/Others since they are first in the queue to get their money back in a default situation (as clearly spelled out in Daiel Gros article linked by Richard the other day.

So the Germans Brits and Swedes are borrowing at ≈2% to lend to us at ≈6% so that we can bail out their banks via ours, thereby not only saving themselves the cost, but actually making a nice profit.
All this and and at the same time they make us go down on our hands and knees and beg for this “largesse”. You cannot make stuff like this up – it’s just too surreal.

Whatever Lenihan says we will continue to be closely scrutinized-from NYT

‘At Bank of Ireland, Santa Comes Early

For a brief, giddy moment, it seemed like the era of free money wasn’t over.

Bank of Ireland A.T.M.’s at various locations were dispensing more money to customers than they actually had in their accounts, on the very evening that the Irish Parliament was presented with the steepest budget cuts in living memory.’

Sure aren’t all our problems due to ‘talking down’ and ‘confidence’.

He seems to have some Futuristic notions of vitalism. He is displaying the same flaws of character as General Cadorna (Italy’s Chief of Staff during WW1). Fortunately though he is throwing millions of euro at the problem again, and again, and again, and again, rather than human lives.

How can he learn from his mistakes when he can’t accept he made mistakes. Instead of accepting responsibility he blames others for their speech and thoughts (a major character flaw in my view). Spreading defeatism no less.

Lenihan does not portray confidence, he portrays arrogance. The difference is simply one of success. He has failed.

In the past I thought he was probably a decent person, but his recent speech shows him to be a petty individual, lacking pride enough to accept his responsibility.

History will show him to be a coward, afraid of himself.

The debate about default on bank debt is a debate that transcends Ireland and our national politics. There is good reason, but little benefit, for the damage done to the status of bank debts worldwide. Personally I blame the people at the head of the banks, the central banks and the financial regulatory system.

It is probably true that defaulting on the small bit of unguaranteed senior debt still in the banks would do more harm than good at this stage. However, the problem is that the banks have not been put on a sound enough footing to convince the markets that they are in good health. If our banks are so healthy, then why was there such a flight of money out of the banks prior to the expiry of the guarantee. If our banks are so healthy, then why did the Minister admit that, in the end, the rescue of the Irish banking system was something Ireland could not handle alone?

The continued instability is a problem that affects the entire of the EU. The EU and the Eurozone are not convincing the markets. In a parallel failure, the EU and the Eurozone are failing to convince the European electorate. Talking about bank default may not be helping the situation, but it isn’t the root cause behind our problems. This isn’t exactly a Mary Poppins scenario.

Trichet’s qualified answer to an RTE’s interviewer’s direct question as to whether the ECB stood behind deposits in Irish Banks in the aftermath of the IMF deal being agreed didn’t exactly help matters either. The comment that caused the most damage was probably Batt O’Keefe making a point of saying at the end of Prime Time (unrelated to what had been discussed) that deposits in Irish Banks were safe. The public and commentariat are there to be persuaded and reassured, but those are only succeeding at freaking them out.

In the meantime, our best bank’s ATMs suffer technological melt-down (presumably because senior bankers are stupidly pursuing the BP-esque false economy of cutting IT budgets). I kept my tinder dry plenty of times in relation to talk of bank default but I think the cat has well and truly left the bag at this stage.

Now that the IMF/EFSF deal has been signed, I am confident that deposits are safe. However, I did close my deposit account in BoI because they thought they could drop me down to 0.5% interest and then tried to give me investment advice when I told them I was sick of them. Maybe if they hadn’t been such a**holes in the way they treated less savvy but stickier depositors they would be more successful in hanging on to them.

@Richard,

There is no need for recourse to impeachment; the voters will pass their judgement in the spring. Indeed you will find that, apart from election results and court judgements to which no leave of appeal is granted, most Irish people have an almost infinite capacity to suspend judgement. And you may find, now that the sentence is inevitable, that voters will exhibit the forbearnace to allow the current government to depart with some dignity. It might even shore their share of the vote. “Ah shure, they were right eejits, but they had it very tough for the last couple of years and they did their best for the country. And they had to put up with an awful lot of abuse from those smart-alec university types – and there was even some foreigners among them.”

@Zhou
I fully agree with you. In failing to give timely assurance to the depositors that the guarantee would be extended Lenihan and his department precipitated the run crisis as early as August. The left it until the last moment to announce the extension when people had to make decisions on funds maturing during August and September.
As for the banks, they are continuously trying to squeeze the retail depositors by lowering rates. They have not learned lessons and still have sky high ratios. How will they fare under the new stress tests that include liquidity. They will obviously fail them come February Then the proverbial will hit the fan, again.

@ Paul Hunt

The corollary of paternalism is infantilisation. What binds FF and the Greens is a deep conservative assumption that ordinary people – unlike themselves – are incapable of grasping their true interests.

I’m paraphrasing an author. My writing style isn’t as good 🙂

@Rory
I thought that assumption was one of the the key ideas behind socialism!

Milton Friedman would, for instance, assert very strongly that individuals and families were the ones who could grasp and best look after their own interests.

@ Hugh

I thought Milton didn’t consider himself a conservative but a libertarian? Maybe it was Hayek.

Anyway, democratic control of enterprise…

I reckon we should give the bond holders butter vouchers – they can trade it on the secondary market if they wish or merely convert it into calories.

Cork can again become the Butter capital of the world.
I can’t wait for all those new skyscrapers built on the udders of Friesians.

@Rory…too true, Milton considered himself a radical of sorts, but his kind of views are often called right-wing, or conservative, so you’ll have to excuse my miscategorization. I suppose I was making the lazy assumption that when you said “conservative” you meant the opposite of socialist, and he was very anti socialist.

Anyway, on the other point we’ll have to disagree. No democratic control of enterprise any more than we should have democratic control of the outcome of a football match between Ireland and France.

Democratic control of the rules, the same rules for everyone, and as few rules as possible.

Liberty, equality, and the other one. That’s a pretty radical view these days, which is depressing.

@zhou_enlai
“Now that the IMF/EFSF deal has been signed, I am confident that deposits are safe.”
I wish I was as confident. Much of the debate on this blog had been about the “pari passu” nature of senior debt to depositors. The fact is that when push comes to shove the ordinary depositors will be trampled underfoot – not having the same legal clout as the big boys. This is why depositors are moving – they are not all stupid and can see that the way things are going – they will be last in the queue – so better safe than sorry.

@ Hugh

Funny you mention sport. The GAA is my favourite example of community ownership. I consider it generally better run than Irish soccer, and given the size of our country, up their with the best run sporting organisations in the world. But that’s a bit beside the point.
The government simply don’t trust the people, and I consider that fundamentally undemocratic.

The same self serving claptrap that got us where we are. Taking away Haughey’s punch bowl. The Construction/Housing bubble. Backstopping the banks. All schemes so delicate that a whisper of dissent would cause them to implode. At this stage of the game people should be hardened enough to recognise a crock of dung when they smell it. If seasoned politicians are talking like this it means that there are suckers aplenty out there.

MORE OF THE SAME FROM LENIHEN & CO, —IF YOU DON’T’ LIKE THE CONTENT -ARGUE IT DAMGAGES THE NATIONAL INTEREST – DON’T LET NUMERICAL ANALYSIS GET IN THE WAY, PERHAPS FRAU MERKEL & CO DO’T SEE IT IN QUIET THE SAME ‘SPIN OREINETED WAY’, THE PROBLEM NOW IS IRISH GOVT. CANT SEE THE SPIN FROM THE REALITY (OR THE WOOD FROM THE TREES). BUT PERHAPS THE WOOD IS STARTING TO CRACK UNDER THE INFLUENCE OF THE EVIL FOREIGN WEATHER COMING FROM THOSE NORTHERN EUROPEAN MALCONTENTS WHO ARE A LITTLE FED UP OF BAILING OUT THE ‘SMART ECONOMY’ IRISH.

That is so naive.

“People should not be surprised that there’s a huge erosion of trust in the Irish banking system when we’ve an endless debate on whether we should be defaulting on the payment of our obligations,” he said.”

What does he think professional investment managers are paid to do? Not think, evidently. Apparently they sit around all day looking at the cricket score on Bloomberg and the idea that repayment of bank debt might not happen in full wouldn’t occur to any of them if Irish people pretended it hadn’t occured to them. You see, the Irish are much more savvy about all this financial stuff than foreigners.

The bank guarantee aside, there is a substantial amount of money (€15bn accoridng to FT, €6bn according to Leo Veradkar) held on Senior bank bonds not covered by guarantee, which the government proposes to use our money to honour. All public payments must be legally authorised, either by mandate or by permission. There is obviously no legal obligation on the government to pay this money when the bonds mature. There is a question then if it is legal to appropriate public funds to pay them. I am not aware of any such enabling legislation to provide for such payments. If it is illegal then the officals and members of government who authorise the payments could be personally liable to us the people for the money. How about we ask them for personal guarantees to cover our claims for the repayment of the money?

I just wonder how long the 85bn overdraft will last before the banks burn through it.

BLTD reminds me of the joke about the useless junior C hurling corner back who gets a call from the sideline from his manager .

“We’re taking you off, Tom”
“But we only have 12 players”
“Come off anyway”.

@Zhou.
re: Now that the IMF/EFSF deal has been signed, I am confident that deposits are safe.

Unusually for you, I think your comment above is seriously questioned in your own contribution. I am specifically referring to your inclusion of Trichet’s response to the RTE journalist in your contribution.

“Trichet’s qualified answer to an RTE’s interviewer’s direct question as to whether the ECB stood behind deposits in Irish Banks in the aftermath of the IMF deal being agreed didn’t exactly help matters either”.

The fact remains that if there is a deposit flight from any bank, no matter how big, in any country, whether a private or State owned, the bank cannot remain open due to lack of liquidity. This does not necessarily mean that deposits are lost forever.

I did not hear Trichets remarks but our negotiators must be 100% stupid or 100% reckless if they have committed the State to use the last of the NPRF without a written private note that the ECB will fund liquidity in the Irish banks up to and beyond the collapse of the euro.

As for the main theme of wearing the green muzzle, I recall the last devaluation. Mr Bertie, No Bank Account, Aherne was throwing the country’s kitchen sink at saving the punt. He had no house himself at the time and therefore did not have his own kitchen sink to thrown into the fray. The Punt devalued and suddenly money flowed back in from all those well known, very well connected Irish companies that had sniffed the wind, and asked a birdie what would happen.

Forget the green muzzle, we are now wearing euro-blue chains forged with German steel, with the Saxons in the background urging us break the blue chains and to wear their updated 21st century red white and blue bracelets.

Its all a bit confusing even for an old stager like me.
Is this another Irish Diarmaid McMorrough moment?
“At the creek of Baginbun, Ireland was lost and won”

How about
In a cold Decemebr frost-Ireland was won and lost.
or
God save you, mother Ireland,
You bore a bastard breed.

@Seafoid.
Enjoyed that joke. Now thats culture. Worth holding on to.
Our sideline men don’t even know which goals were playing into.

Lenihan has promised to cap semi-state salaries at €250k, and despite contractual difficulties he will force this through.

This brave stance by the government must be welcome especially down in AIB which has to pony up €40 million in bonuses.

It is just fantastic news all the way for the taxpayer (and shareholders). And when all the tribunals’ costs come in, the IMF will surely throw a thankful party for the billion or two soaked up by legal eagles.

especially since no-one has suggested burning the depositors

Nobody except two-bit Fianna Fáil ministers, that is.

(JohnTheOptimist still in hiding?)

@Joseph Ryan
‘I did not hear Trichets remarks but our negotiators must be 100% stupid or 100% reckless if they have committed the State to use the last of the NPRF without a written private note that the ECB will fund liquidity in the Irish banks up to and beyond the collapse of the euro.’

No such guarantees exist. Liquidity is assured today by one of the Council (forget his name) up to end of first quarter.

Its front loaded. we use our money first and the 67b or so is first in line for repayment.

@ JR

It must have been a tough place to be negotiating on behalf of a state that mighnt have allowed one the nuke options.
Messenger more than negotiator?

AIB is a disgrace. Do none of the capital markets wallahs screwing the taxpayer for another 40m have a conscience ?
What sort of capital markets business does AIB do today ?

How much are the top photocopiers in AIB on these days as a reward for their vital work in driving the bank into the ground ?

http://www.guardian.co.uk/business/2010/dec/08/allied-irish-banks-pay-bonuses-despite-bailout

I watched this shocker of a documentary on Limerick deprivation and AIB are making sure there’s plenty more of it to come elsewhere around the country.

http://www.rte.ie/player/#v=1086460

I felt sick tonight watching David McWilliams saying we have to sever the link between the State and the banks. He, more than anyone, was instrumental in lobbying the Government to adopt the banking guarantee. Now, after massive investments have made us the principal owners of the banks, he wants to screw them. He (and his handler Louis Walsh) are a big factor in the consistently terrible economic decisions of the last 6 years.

@Ceteris
re No such guarantees exist. Liquidity is assured today by one of the Council (forget his name) up to end of first quarter.

So we have given away the NPRF to bust banks on a promise of one person on the ECB Council that the ECB will provide bank liquidity until next March?

Its just as well we were running out of money so or we might have made right amadains of ourselves altogether!!!

@Ger
I didn’t used to think he advocated a blanket guarantee – I thought only depositors – but I now accept it was the case. But still, if David McWilliams came to you in your workplace and asked you to take on potentially €400 Bn of liabilities would you do so mainly, let alone solely, on his recommendation? You would surely consult widely, and, if he was the only one advocating it, wouldn’t do so. But if you did take these 400 Bn of liabilities on to your company, solely on McWilliams’ recommendation, who would you say was to blame, him or you? You would say yourself of course, because unlike FF/PDs/GP/Ind you have a sense of responsibility and honesty. Always try to measure FF actions against an individual in an equivalent situation. You will always find that if FF were individuals they would be utterly contemptible, and so they are.
McWilliams/Trichet/The Bankers made me do it is just FF spin.
FF/PDs/GP/Inds DID IT.

It’s possible to fluke your way to a title once. A true champion requires consistent achievement. With this in mind, I wish to congratulate Mr Lenihan on retaining the FT award of worst eu finance minister. In the face of intense competition, he proved a worthy winner.

@Oliver

If economics were a science in the same sense as (say) medicine, David McWilliams would have been struck off the register for his mistaken advice.

Imagine the headlines if DMW hadn/t been consulted by Lenihan.

“Bungling minister failed to consult leading expert, report reveals” …

Since talk of default on senior bank debt has been so very damaging to this country, I am sure Minister Lenihan is keen to find out who it was who briefed the Irish Times that the Government itself had requested haircuts on bank seniors in its talks with the EU and IMF.

Your first point is arguable but finance & economics are not a science. Completely disagree on the second. EVERYONE was shocked when they heard he had been consulted by Lenihan. It’s not the way things are done. Lenihan angrily downplayed it probably because it seemed so extraordinary. BTW I admire many of McWilliams, stances since the guarantee.

@Anonym
“I am sure Minister Lenihan is keen to find out who it was who briefed the Irish Times that the Government itself had requested haircuts on bank seniors in its talks with the EU and IMF.”
He’s incorrigible.

Very reliable politics.ie poster:

“Yes. Lenihan and Cowen had a vicious row last night – in which Lenihan told him bluntly to quit.

That is why Cowen is all over the media today. He is trying to appeal to the TDs and say “I’m not giving up. I’ll fight.”

http://www.irishtimes.com/blogs/politics/2010/12/08/anonymously-yours-ff-style/

There may be heave tomorrow but backbenchers sound unenthusiastic. Lenihan is too ill to take over even if elected, so I expect Hanafin or probably Martin to win.

Eamon O Cuiv told VB tonight the old 100k deposits gurantee would have cost the state 82bn to pay out on had not the blanket guarantee been announced.

If no accounts had less than 100k in them that would be 820,000 accounts. If the median account size was a fraction of that – likely – that implies the state ws already guaranteeing in the region of 10 million deposit accounts.

He knows this to be true ‘cos the MOF told him recently.

Clearly then, the blanket guarante has indeed, effectively cost nothing!

@Rory O’Farrell

“He seems to have some Futuristic notions of vitalism. He is displaying the same flaws of character as General Cadorna (Italy’s Chief of Staff during WW1). Fortunately though he is throwing millions of euro at the problem again, and again, and again, and again, rather than human lives.

How can he learn from his mistakes when he can’t accept he made mistakes. Instead of accepting responsibility he blames others for their speech and thoughts (a major character flaw in my view). Spreading defeatism no less.”

And yet in Ireland, and Ireland alone, Lenihan is still treated as a credible politician and a figure worthy of respect.

What saps we are for the majesty of the lawyer.

@All
How can we verify the O’Cuiv statement from VB tonight? I was doing the same arithmetic as grumpy and being surprised by the answers I was getting, although if we include all the banks (and assume that all assets were zeroed out) I guess it’s plausible. Anyone got a source in the DoF?

As for Dave McW’s proposal for the guarantee, there’s one key point. Perhaps it was an idea he supported or even advocated, but he was not responsible for it and he neither had, nor had the responsibility to have, all the information required to decide on it.

@Rory O’
Ha ha. One of the wonderful things in a free society is that people can organise in various ways. One of them is clubs, another is private non-profits, another is for-profits etc.

Since you’re familiar with – for instance – Friedman and since we’ve had discussion of orgs like Mondragon before on this board I’m forced to rank the GAA remark of yours as a cheap debating shot, below you. I’m honestly disappointed, and I think the GAA is a world leading organisation too.

@Carolus
The Austrians like Hayek are a tad rigid for me. They’re principled, but often inflexible. It’s handy to be able to bend the rules every now and then, in extreme circumstances. The problem they point out is that rule-bending and money fiddling has become business as usual, which is bad, but never being able to bend the rules can be bad too.

@Oliver Vandt/Ger
# AMcGrath Says:
December 9th, 2010 at 12:14 am

@Eamon Moran
The SBP article is actually contradictory – early on he makes this comment:
“The only option is to guarantee 100 per cent of all depositors/creditors in the Irish banking system. This guarantee does not extend to shareholders who will have to live with the losses they have suffered. However, it applies to everyone else.”

Later he mentions only depositors and actually never specifically refers to bondholders.
Towards the end of the article he says:

“‘‘The Irish government wants to protect the whole financial system, secure its stability and ensure that all deposits in Irish financial institutions are safe.”

The key here is ‘‘all deposits’’. If an Irish institution went bust, would depositors with more than €100,000 have the right to hold the government to its ‘‘all deposits’’ description in this press release?

If the crisis leads to any loss of deposits, you can bet the courts will be full of cases against the state.

The minister should simply state explicitly that the deposits are guaranteed and clear up any confusion.

Unfortunately, he is being advised by merchant bankers on the one hand, who are just interested in fees and don’t give a fiddlers about Ireland, and civil servants on the other, who can’t see that nationalising a bank is the biggest policy reversal since TK Whitaker.

He needs to be brave and visionary and see through the limitations of his advisers. Equally, the careers of everyone around that cabinet table will be blighted if the banks go under as a result of any nationalisation plans.”

Personally I think the article is badly written and internally contradictory. The idea that it was the instigation of the legal guarantee is far-fetched in the extreme. For one thing he advovated a verbal guarantee only and not the legal monstrosity eventually produced with it’s blather about irrevocablilty and unconditionality and it’s incomprehensible amateurish failure to included a clause whereby it would be void in cases where the beneficiaries lied misled or withheld material information. So I’m afraid DMcW cannot be used to let BLTD and BC off the hook.

To include an opt out clause in such a document would seem to be pretty basic – in fact Ch 10 in my AXA policy document could be used without altering one word. It also provides for informing the law enforcemment authorities should such misrepresentation or deception occur.

@Hugh

Ta — most enjoyed the Liaisons Dangereuses skit, especially since I’m a (European) civil servant close to retirement myself.

Awaiting the tricoteuses.

@hugh sheehy

Total liabilities covered were just under 100,000 per person in the country.

Here is a clue:

Questions— 3 February 2009. Written Answers

“…….means the total covered liabilities guaranteed by the Government. Under the terms of the Scheme covered liabilities include: senior unsecured debt; asset covered securities; dated subordinated debt (Lower Tier 2); along with deposits (retail, corporate, and interbank). The estimated total amount of covered liabilities under the scheme for the final quarter of 2008 (an average of the end-month liabilities for October, November and December) amounts to 376bn. The deposits covered by the Deposit Protection Scheme amounts to 90bn which means that the total amount covered by both schemes is 466bn.

The Deputy should be aware that all covered liabilities are treated equally under the terms of the Government’s Bank Guarantee Scheme with no distinction made between those originating from at home or abroad.”

So the total deposits covered was about 90bn. If the cost of the 100k guarantee being called upon was 82bn then there was only 8bn held in accounts with more than 100k in them.

That add up to you?

@Hugh
Those French speaking californians are so cheap, $150,000 is borderline poverty – without further reductions in the minimum wage they will not find servants to make their dreams a reality – I hope their pensions are index linked.
Other wise Ben Bs high powered money will destroy their dollar dreams.

QE 2 is the first good thing that he has ever done – the man has discovered what central banks role is – how amazing.

A three years history of disingenuous language combined with elitist exclusion of possible alternative propositions – There is no other way! – peaks in public gag order wet dreams.

You could not make it up!

Exactly why deposits started to leave the Irish banking system months before this debate began is unclear to me, especially since no-one has suggested burning the depositors, but that is another issue

Probably one of those curious insider tales.

This piece is taken from an article about the Galway hurling team from the late 1980s. Who actually won things. Lenihan is the wrong man in the wrong place. I read this and thought of him in his talks with the Eurowallahs.

“Keady chuckles at the mere mention of Linnane. “Sylvie used have a great oul’ saying in the dressing-room,” he smiles. “He’d say: ‘Lads, ye’ll win nothing if ye haven’t a few tinkers in the team.’ And we’d say: ‘Well, we’re delighted to have you anyway Sylvie!'” “

@ De Roiste

‘The Nobel prize winner Paul Krugman has called on Ireland, Greece and Portugal to consider leaving the euro zone and defaulting on its debts.’

As brilliant as this man may be, what is his track record on making very serious economic decisions that impact the lives of many, many people?

@ Michael

I was thinking of more along the lines of having an open and honest forum for what went wrong and leaving the people decide……..then if that decision was to stay in the euro so be it but we got a shambles with no one being held to account…….and the 2 Brians were great at shoving the Iceland thing down our throats to frighten the population, has any journalist asked them about Iceland recently!

@MH

Agreed re Paul Krugman. He has been upfront that globalisation didn’t pan out as he expected and that it has had a much more detrimental effect on workers in the western world than he expected. I note he does not link that to the trade imbalances which have contributed to the current crisis.

No doubt this is because Krugman doesn’t want to hurt people in the poorest countries by being perceived to lend supprt to protectionism. Nevertheless, you would think he would have learned a bit more humility and would be more straight up with people about the “known unknowns” and the “unknown unknowns” in this situation.

@ A Mcgrath

Are you related to McWilliams or something?

The SBP article is not contradictory.

Later in the article he mentions deposits and does not mention creditors. That is true. Because he is only talking about one part of his plan at that time.

“For one thing he advovated a verbal guarantee only and not the legal monstrosity eventually produced” evidence please?
I can see lenny the next morning. “I am issuing a verbal guarantee that the irish….” are you serious?

The day after Lenny gave the guarantee McWilliams called it a masterstroke in the headline of his Indo article.
That wasafter it had been passed in the Dail.
A little more than a verbal guarantee don’t you think?

I can’t understand how Fitch can, on the one hand rule out the possibility of default, while on the other hand cut our debt rating. Either there is a risk of default and hence a lower rating or no risk and hence a high rating.

@Eamon Moran
As I said – the article is poorly written and to me at least contradictory and I will accept the point you make that he praised it the following day. To suggest that McWilliams was a major influence in the construction of the guarantee is just nonsensical. McWilliams advocation of the guarantee was clearly based on less information about the state of the banks than the government at the time had, albeit that the bankers were also more economical with the truth than they were with their finances. Blaming McWilliams is just a red herring that distracts from the real culprits. The really big issue for me is the fact that they put a guarantee in place with some basic insurance that if they were being misled that it would be voided. A poor decorator might accidentally paint himself into a corner but to do what they did deliberately is criminal – and generations to come will pay for it.

@seafoid
“AIB is a disgrace. Do none of the capital markets wallahs screwing the taxpayer for another 40m have a conscience ?”
This was the last straw – I was faithfully trusting them with my little depsoit until I heard that news item. I suspect there are a few more of like mind.

@ zhou_enlai

Daniel Okrent, the first ombudsman/public editor of the NY Times made an interesting comment on Krugman: “For a man who makes his living offering strong opinions, Paul Krugman seems peculiarly reluctant to grant the same privilege to others. And for a man who leads with his chin twice a week, he acts awfully surprised when someone takes a pop at it.”

That isn’t unusual of course.

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