Year: 2010

The World’s Slowest Recap: A Cunning Plan?

I think it is widely agreed that undecapitalised banking systems saddled with bad loans are a threat to the efficient functioning of the economy. I think it’s also widely agreed that, whatever the mechanism, the goal of any banking plan is to return the sector to a healthy well-capitalised condition.

Given that, I find it very disappointing that eighteen months after the Irish banks were thrown into crisis and at least a year since it was clear that losses threatened the solvency of the banks, we are still taking our time getting the banks recapitalised.

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Brian Lucey on banking policy

Brian Lucey provides a critique of the announcements in this article for the IT.

Update: Brian provides a more detailed explanation for why Anglo should be shut down in this Indo article.

Interview with Brian Lenihan

Brendan Keenan interviewed Brian Lenihan yesterday – here is the article.

Honohan article in the FT: A Plan to Restore Ireland’s Banks to Health

Patrick Honohan has written an article for the FT: you can read it here.

Promissory Notes, Real Money and Borrowing

This is hardly the most important issue right now with so much going on but it’s a two cents I’d like to toss out there all the same.

Last year, I regularly heard the following argument on this blog, in the media and in private. “Overpaying for assets via NAMA is actually the best way to recapitalise the banks. This is because we can purchase the property assets with “NAMA bonds” that we can just print off. They’re not real money, just IOUs. But if we paid a low price and had to recapitalise nationalised banks, we couldn’t do this. We’d have to borrow the money expensively on sovereign debt markets and then hand over real money to the banks.”

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