What the bankers knew on the night of the guarantee

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Readers will definitely be interested in this piece by Tom Lyons on what the Ireland’s top bankers (and Indecon’s Alan Gray) knew, chiefly about the state of Anglo Irish Bank, in the run up to the crisis. There is at least one record of the events of the night as set down by Dermot Gleeson.

The (reported) state of knowledge is pretty much the same:

  • No one knew how deeply damaged Anglo’s balance sheets were, or could be;
  • Much of the focus was on restoring confidence in the system, with everyone talking in terms of liquidity rather than solvency issues, and in terms of preventing a run on the banks.
Despite this invaluable reporting by Tom Lyons one wonders why it took 2029 days to put these accounts into the public sphere. Brian Cowen was right when he argued in his GeorgeTown speech (.pdf) that “if we are to learn from the crisis it is necessary to understand why many of the actions taken seemed sensible at the time”.
Cowen goes on to write:

We had to deal with this crisis in real time. Our view at the time was that we would get one shot at calming the markets.

Tom Lyons’ piece seems to back up this account.

This piece by the FT’s Vincent Boland, featuring TCD’s Constantin Gurdgiev, The Irish Examiner’s Mick Clifford, and (ahem) myself has more reaction to the fallout from the Anglotrial.

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101 Responses to “What the bankers knew on the night of the guarantee”

  1. Frank Galton Says:

    Two things that stand out: Goggin saying that even with a government guarantee on a 5 billion loan to Anglo, they’d need assurance that they could get the actual cash back in a few days. And Dermot Gleeson believing that the plan was for an orderly dealing with Anglo within a few days.

  2. Ernie Ball Says:

    Good to see Gurdgiev putting forward this Zen koan of an idea:

    “It’s too late to go back and ask what caused the [crisis],” he says. “We have to learn the lessons of the crisis, to begin to tackle the issues that remain.”

    So, “learn the lessons” without “asking (or learning) about the causes.”

    In other words, don’t do those things that they did in 2008 which were never you mind.

  3. What Goes Up... Says:

    Ha! Ha! Ha! Ha! Ha! Ha! Ha!

    Expecting the guys (bankers and politiicians) who lost over €82 Billion* to give an honest answer?????

    Too funny!

    *€64Bn as always quoted + the €18Bn NPRF money that everyone forgets.

  4. Kevin Donoghue Says:

    Stephen Kinsella: “We tell ourselves that Ireland’s plight is all about two bad men who wrecked the place. What’s good about that story is that it exonerates the rest of us.”

    Tonto: “What you mean, we….?”

    Definitely not one of your better contributions to the debate. I’m getting a bit sick of hearing that we’re a bunch of morons in search of scapegoats, simplistic explanations and easy solutions. Greg Connor is peddling the same tripe with his “Myth of Sean FitzPatrick.”

    No doubt there are thickies in our midst, but I think most of us understand that the vices which gave rise to the banking and property collapse have a long history. It’s a sad state of affairs when a drama critic like Fintan O’Toole seems to have a better grasp of what went wrong than many professional economists (with notable exceptions including Colm McCarthy, Kevin O’Rourke and the much-missed Karl Whelan).

  5. John Corcoran Says:

    On page 123 of Tom Lyons and Brian Carey’s book The Fitzpatick Tapes it states; “Fitzpatrick declared ‘ Our exposure is not to the building,it’s to the money that comes from the leasing of it’he said’ If the value of the property goes down, it dosn’t matter. We still get our loan repaid’ Fitzpatrick was nothing if not consistent in this, one of his core philosophies”.

    If you examine Sean Fitzpatrick’s core philosophy if the property was worth zero he didn’t mind ,because he wasn’t lending against the properties he was lending against the feudal leases i.e ratchet upward-only rent reviews tied to 35/25 year leases with no break clauses. These unique leases were only available in Ireland, the average length of a commercial property lease in the rest of the world is five years.The corrupt Irish politicians had organised these leases for their bagmen paymasters. All Mr Haugey’s bagmen are sovereign landlords.

    Check out Carrisbrook house Ballsbridge Dublin 4 –an empty building which the state is the tenant on a sixty five year lease with ratchet rent reviews every seven years and no break clauses signed in 1969. The taxpayer has twenty years to go paying this rent. No other government on this planet would sign a lease like that. Guess who was Minister for Finance in 1969?.

  6. OMF Says:

    The (reported) state of knowledge is pretty much the same:

    No one knew how deeply damaged Anglo’s balance sheets were, or could be;

    Remember when Morgan Kelly predicted 70% property price collapses and bank insolvencies? Pepperidge Farm remembers.

  7. seafóid Says:

    Biffo’s” it was sensible at the time ” is dubious at best. Would you open a spread betting account for your 12 year old ? The Anglo people knew they could fall back on the State and the State had no idea of the risk. There was no EZ level bank wind down system.
    Why was the country reduced to making a late night decision in a panic ?

  8. John Foody Says:

    I agree, ‘sensible at the time’ is nonsense. I can’t think of any time our comprehensive flavour of guarantee would ever be sensible. In addition IMHO the reckless, ad hoc, amateur, brass, chute, chancer, fleckless manor in which it was provided is a shining beacon of all that is wrong with Irish governance.

  9. David O'Donnell Says:

    Did I hear a rumour that Fianna Fail had received absolution?_or has the information/propaganda war launched by the Systems of Money & Corporate Power Grabbers raging in Ukraine now reached the blog?

    Spose many of ‘our boys’ and the ‘odd lady’ do have some ‘form’ in this area.

    Agree with seafóid on ‘time’ – there were bucketfulls of it, a dense upper_echelon inter-linked communicative sphere of it, available in the run up to a mere moment in time ……… which merely serves to distract attention from the deeply rooted malaise within the Hibernian Sphere.

    ….. they tried to save ‘themselves’ – and ended up selling out the Citizenry.

    Said power-laded communicative sphere is still in situ.

  10. What Goes Up... Says:

    October 2008 – Eugene Sheehy:

    “We’d rather die than raise equity,”

    http://uk.reuters.com/article/2008/10/24/sppage012-lo717129-oisbn-idUKLO71712920081024

    €21 Billion later…

  11. What Goes Up... Says:

    July 2008 – Richie Boucher:

    On 2 July 2008 he told the Oireachtas Finance Committee “unequivocally, we do not think there is a Northern Rock in Ireland,” and the Central Bank here has stricter rules for how much ready cash banks must hold than any other country where the group does business.[4] “We do not believe that we have capital problems. The issues that we face are more down to liquidity rather than capital,” and added there were no arrears on his bank’s portfolio of 100% mortgages.[5]

    http://en.wikipedia.org/wiki/Richie_Boucher#Evidence_to_Oireachtas

  12. Robert Browne Says:

    @ John Corcoran

    Absolutely crazy. If they wanted to, they could change the law in the morning on ALL UORR’s. A high court judge said the constitution (particularly property rights, in this case a landlord clutching his UORR backed lease,) have to be interpreted by reference to the state of the economy.

  13. rf Says:

    I agree with Kevin Donoghue. This seems to be knocking down a strawman, largely.

  14. john gallaher Says:

    If anyone is too blame for the dumbest most idiotic stupidest solo run in history….
    “This idea had been floating around for some time, and I think may have been first proposed by economist David McWilliams”

  15. Johnny Foreigner Says:

    @rf

    It’s easy to accept that the vices have a long history. It’s harder to admit that the same vices can be found throughout Irish society beyond the golden circle. Church, unions, university VPs, HSE management, the professions, charity sector, farmers… Fianna Fáil calls itself the national party for a reason.

  16. rf Says:

    JF – I agree. Any organisation/institution can be corrupt (to a point) incompetent (to a point) badly organised (somewhat) Thats the nature of the beast.
    But to take one example from your list, unions, this would be my reasoning behind supporting ‘a union’, in general.

    (1)Unions as a generality get better wages/job protections for workers – some unions might be inefficient, (i dont care really go back to (1) ) + (2) unions are an important component in a properly functioning political economy. They can add an important opposition to business interests – some unions pay their heads to much, (i dont really care go back to (2) ) + (3) Any properly functioning society needs an avenue for workers to voice their opinion collectively – some unions called a strike that was wrong, (I dont really care go back to (3) ) + (4) Unions have been shown to be a vital institution in developing and maintaining democracy and lessening inequality – unions are paternalistic (I dont care)

    You see, good bad etc. Obviously the position of unions in modern economies is a complicated affair, but the common economist perspective /hypebole on/ that they should be pounded into the earth until their blood freshens the soil for capitalism to flourish/hyperbole off/ is not mine.

  17. Geronimo Says:

    So, the wise Irish bankers claim that they thought in September 2008 that Anglo-Irish bank had a liquidity and not a solvency problem. These same people (plus regulators and politicians) knew that in July 2007 (well over a year earlier) that the Maple 10 were given 25% recourse loans to artificially prop up the already pummeled Anglo-Irish shares.

    Theses bankers etc are either

    (a) Lying

    or

    (b) Totally incompetence

    Take your pick.

  18. Mickey Hickey Says:

    Interesting comments by Piketty on tax havens. We may have to build tank traps on the beach at Ballybunion.

    http://www.nytimes.com/2014/04/20/business/international/taking-on-adam-smith-and-karl-marx.html?hpw&rref=business&_r=0

  19. Geronimo Says:

    That speech by Brian Cowen in Georgetown U is truly and utterly pathetic. Why does the man (who seems a decent human being) do this to himself?

    Brian: Shut up for the next 50 years!

  20. seafóid Says:

    Sindo sez new insight despite lack of any government documentation . Nobody wrote down anything other than the chinese takeaway order. Maybe the docs were buried in sellafield.

  21. Geronimo Says:

    Why the heck would anyone invest in an Irish Bank, if all Irish banks are now legally able to lend to insider pals to prop up the share price.

    I still don’t understand how they arrived at 25% recourse. Would 75% recourse have been legal? How about 95% ?

  22. Michael Hennigan - Finfacts Says:

    The sun is great for the optimistic spirit and it was nice to see lots of people on Saturday among the tulips on St. Stephen’s Green!

    What the bankers knew…the two key ones from Anglo were missing from the meeting that night as was anyone from IL&P who would deliver a big loan or deposit of over €4 billion on the following morning, which happened to be Anglo’s year-end.

    @ Mickey Hickey

    It took a quarter century to clean up the personal tax system and end the common use of tax havens.

    Meanwhile corporate tax haven activities are extensive.

    According to William Fry, the Dublin law firm, 2% of all Irish companies are unlimited, and Ireland has more than twice as many unlimited companies as it has PLCs.

    An unlimited company is generally not required to file a copy of its annual accounts with the Registrar of Companies provided at least one of its members does not have a limit on its liability.

    However it is possible to use a structure, using non-EU companies as holding companies, where an unlimited company can avail of the non-filing exemption while also providing the original shareholders with limited liability.

  23. Johnny Foreigner Says:

    Of course unions and all the other groups I listed are valuable. What I’m pointing is that the leadership of those organisations, including unions, behaved badly when they got the chance. You could argue that it’s a much greater vice to have this naked greed in a union or university head. At least the bankers have the fig leaf of profit motives.

  24. Mickey Hickey Says:

    Swedish deflation!
    larseosvensson.se/2014/04/14/deflation-in-sweden-questions-and-answers/

  25. rf Says:

    Johnny F – Im sorry, I was a little drunk when responding so it’s not altogether relevant/coherent.

  26. rf Says:

    ..though, yeah. I agree with your point more or less. Which is ideally why you need rules, regulations, checks and balances, a culture of professionalism, so on and so forth

  27. john maynard keynes Says:

    Perhaps someone should write an article “what Irish academics said around the time of the bank guarantee”

  28. Ernie Ball Says:

    @rf

    Johnny doesn’t believe in anything like “a culture of professionalism.” In his view, everyone is out to get whatever they can with the least effort. So he advocates ever greater “accountability,” in the process destroying any professional/vocational ethos and producing the very sort of self-interested and unprofessional workers he assumed (wrongly) were there all along.

  29. theyenguy Says:

    As presented by the Apostle Paul in Ephesians 1:10, Jesus Christ has been successful in perfecting the paradigm and age of credit and currency carry trade investing, by driving the Eurozone Stocks up to their rally high on Thursday April 10, 2014, and then pivoting them dramatically lower, on Monday April 14, 2014.

    In the final two years of the age of credit, Ireland’s Bank, IRE, and Ireland, EIRL, provided stellar debt trade and currency carry trade investment rewards to the savvy investor, as is seen in the cominbed ongoing Yahoo Finance chart of Ireland’s Bank, IRE, Ireland, EIRL, Eurozone Stocks, EZU, Nation Investment, EFA, and the European Financials, EUFN … http://tinyurl.com/l7vwebe

    The world passed through peak prosperity on Thursday April 10, 2014, with the failure of credit in the Eurozone. Humanity has passed from the age of credit, which produced prosperity, into the age of debt servitude, where the new normal is austerity.

    Clearly, the money bubble has finally burst and the investor is going extinct. The failure of credit is an extinction event, that pivots the world economy out of liberalism, that is the paradigm and age of credit and investment choice, and into authoritarianism, that is the paradigm and age of diktat and debt servitude, which features the debt serf, is the centerpiece of economic activity.

    Under the power of the Rider on the White Horse, as is seen in Revelation 6:1-2, the bond vigilantes are effecting a global economic coup d’etat, transferring sovereignty from democratic nation states to sovereign regional leaders and sovereign regional bodies, such as the ECB, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48% on October 23, 2013, and thus are powering up the singular dynamo of regionalism to establish regional security, stability, and sustainability, to deal with the destructionism of unwinding currency carry trades and debt trades, such as those now seen in Eurozone Small Cap Dividends, DFE, and the National Bank of Greece, NBG, trading lower.

    Out of a soon coming Financial Apocalypse, that is a credit bust and financial system breakdown, the Beast Regime, seen in Revelation 13:1-4, will rise to replace Banker Regime, and by implementing policies of regional economic governance, and schemes of totalitarian collectivism, will establish regional panopticons of debt servitude, with the Eurozone serving as the ultimate example of regional fascism.

    Even now, Jesus Christ is developing new sovereigns for a new age. Under liberalism, the speculative investment community provided seigniorage through money manager capitalism, Under authoritarianism, regional leaders provide seigniorage through the word, will and way of their diktat, a case in point being the Troika’s management of the Greek economy and the terms of assitance to Ireland.

    Specifically out of Eurozone sovereign, banking and corporate insolvency, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty, where regional framework agreements will provide the legal basis for regional economic fascism enabling leaders from Brussels and Berlin to rule in diktat establishing Europe as the preeminent world power.

  30. francis Says:

    the “much-missed Karl Whelan” made me look up the

    http://www.irisheconomy.ie/index.php/2011/12/12/voxeu-piece-on-target-2/

  31. Geronimo Says:

    So I’m visiting with in-laws for Easter dinner in the U.S. and I ask fellow dinner quests (one of whom is a senior banker and the other a savvy lawyer, fellows who know nothing of Ireland) if a bank can legally lend a client money and it is fully know that that money will be used to buy shares in the bank.

    They looked at each other with a puzzled look. Well of course that is legal is the response. And they can make these loans on whatever terms they want — 25% recourse is of no concern.

    All that auditors care about is whether the bank has sufficient reserves to cover such a loan if it goes belly up.

    Patrick Whelan and William McAteer should cheer up and look forward to their appeal.

  32. DOCM Says:

    @ Mickey Hickey

    A very interesting link.

    http://larseosvensson.se/2014/04/14/deflation-in-sweden-questions-and-answers/

    But to be contrasted with another on the subject that the professor fails to mention; the possibility of a housing bubble that is continuing to inflate.

    http://www.globalpropertyguide.com/Europe/Sweden/Price-History

  33. Eureka Says:

    This is our real threat now:
    http://www.independent.ie/business/world/major-companies-concerned-over-oecds-plans-for-global-tax-reform-30202748.html

    We had better get up to speed with that (and with the fact that there will be a UK referendum on Euro membership (and the outcome is far from clear))

    Would be great to consider the impacts of these two threats and how to avoid them.

  34. Johnny Foreigner Says:

    @Ernie

    I agree with you that bankers need strict regulation. Far stricter than anything an Irish regulator has ever demonstrated the willpower or competence to enforce. What I don’t agree with is the idea that bankers represent some alien class of Irish citizen, born corrupt.

    Would you mind posting your list of professions that don’t need any oversight? University lecturers obviously, goes without saying that they would never do something like invent a whole raft of fake senior management positions and award themselves obscene pay rises. Or cook up a cosy pension top up scheme of dubious legality.

    Who else can be trusted because of their inherent virtue?

    Gardai? Priests? Doctors? Judges? CEOs of large charities? Senior management at a public sector organisation such as FAS? The heads of large unions? Politicians?

    Maybe it’s just the university lecturers eh? Which you have to admit, is great luck for you.

  35. brian lucey Says:

    “Would you mind posting your list of professions that don’t need any oversight?”
    anonymous trolls on the Interweb?

  36. Shay Begorrah Says:

    @DOCM

    But to be contrasted with another on the subject that the professor fails to mention; the possibility of a housing bubble that is continuing to inflate.

    So, just to clarify, thanks to currency hawks Sweden now has high personal debt, rising unemployment, a housing bubble and deflation. Sounds like the Riksbank failed the old Hippocratic oath of monetary policy there.

    Krugtron 3000 has this “fear of a property bubble made me do it” bullsh nonsense covered _here_

  37. Mickey Hickey Says:

    Oversight: sure tis all in the semantics formal, lexical and conceptual. Down in Kerry they would swear that semantics are incapable of conceiving. I have no reason to believe things are any different in Dublin.
    The World Bank has given it some attention as evidenced by their assistance to Latvia/Estonia. The Irish concept of oversight is you set a thief to catch a thief. The whole process operates according to Adam Smith’s invisible hand. Our financial regulator leading up to 2008 is a good example of the invisible hand.

    web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/EXTCENFINREPREF/0,,contentMDK:22667960~menuPK:7356126~pagePK:64168445~piPK:64168309~theSitePK:4152118,00.html

  38. grumpy Says:

    @Eureka

    Now that’s what I call ‘the reporting of news’ in a newspaper :-?

    “MORE than half of big global and home-grown Irish companies are very concerned about the impact of proposed changes to the international tax regime by the Organisation for Economic Co-operation and Development (OECD), a survey suggests….

    There was a wide consensus in the room that the cost of compliance will increase for business from these changes,” an EY spokeswoman said….

    The concerns include the pace of the potential change and the risk of unilateral actions, as well as increased compliance costs.”

    “Chartered Accountants Ireland has already expressed concern about another aspect of the plans around taxing high-tech multinationals, stating that smaller countries could be adversely affected.”

  39. Shay Begorrah Says:

    @Johny Foreigner

    I agree with you that bankers need strict regulation. Far stricter than anything an Irish regulator has ever demonstrated the willpower or competence to enforce. What I don’t agree with is the idea that bankers represent some alien class of Irish citizen, born corrupt.

    Bankers may not be born bad but they do seem to go bad rather a lot.

    Would you not accept that the modern financial sector puts a greater emphasis on evading, shaping and perverting regulation than almost all the others (pharmaceuticals and big agribusiness might be in there) and that the character of the industry inevitably affects the people who work in it?

    Obviously academia has its fair share of chancers and more than its fair share of backbiting and self important fools but the last thirty years seems to show that the financial sector has a culture that attracts greedy dishonest sociopaths and encourages the kind of selfish risk taking behavior that we all end up paying for.

  40. brian lucey Says:

    John G
    yer grammar checker needs rebooting there John. And install the sense plugin, run the virus check for BitterFeel also?

  41. brian lucey Says:

    oh look John… they made a film about you ….http://bit.ly/QshzIL

  42. francis Says:

    LOL,

    if we go on like this here, we will end the easter weekend with a donner party.

    At IBM we said, we engineers all speak a common language, broken english : – )

  43. francis Says:

    on the light side of life:

    eastern german policemen destroy their brandnew water cannon with eggs and tennis balls

    http://www.mdr.de/thueringen/schaden_wasserwerfer_polizei_uebung100.html

    I ll guess they have to reinforce that thing a little bit before they sent it into battle at the traditional labor day (that is 1st of May for you Americans : – ) riots in Berlin

  44. Johnny Foreigner Says:

    @Shay

    I think we need much tighter regulation of pretty much every profession in Ireland.

    What you would say to the idea of having public servants fired if they don’t do their job? How is it that most of the DoF staff weren’t fired?

  45. David O'Donnell Says:

    lookit – we wuz done into serfdom ….. now they are after the Ukrainians …. who are the neu Paddies – ripe for take over by systems of Money & Corporate Power and their neo-con political fixers

    [T]he New York Times magazine’s Ron Suskind reported on a visit to the Bush White House in 2004 in the course of which he recounts that “an aide” (commonly supposed to be Karl Rove) “said that guys like me were ‘in what we call the reality-based community’, which he defined as people who ‘believe that solutions emerge from your judicious study of discernible reality’… ‘That’s not the way the world really works any more’, he continued. ‘We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.’” If ever there were a declaration of hubris in defiance of the rest of humanity, not only abroad, but in the US itself, this was it. We can be sure it was carefully read in many capitals as a possible explanatory factor in the way they saw US policy going. It was to get worse, and there is no need to rehearse all the evils to which this approach to the comity of nations gave rise.

    http://www.drb.ie/essays/the-errand-boys-of-europe

    Very informative piece of historical political economy & Russian MindSets from Pádraig Murphy … a retired official of the Department of Foreign Affairs. He served as ambassador to the then Soviet Union from 1981 to 1985.

  46. Shay Begorrah Says:

    @Johnny Foreigner

    What you would say to the idea of having public servants fired if they don’t do their job? How is it that most of the DoF staff weren’t fired?

    I have no good answer other than it seems to be a pattern repeated world wide – perhaps they know where the bodies are buried.

    Obviously most people in the DoF have nothing to do with policy formulation but it seems highly probable there were many good candidates among senior civil servants for plank walking. Of course given the lack of transparency then and now and the unfortunate tendency for important documents to go missing and memories to fail it would be difficult to identify the most deserving candidates.

    The worst example of lack of accountability remains the EU, where failures fall upwards. As an example the unpopular Finish prime minister resigned recently in the hope that me might be anointed by his fellow politicians as a candidate for one of the extremely well paid Commission roles. Ticks all the boxes. From a small German aligned country, centre right politically and unpopular with the pesky voting public. He could go a long way and one day be informing us all of the necessity for belt tightening while he lives on a 200K euro tax free salary with cast iron job security.

    In any sane world Barroso, Rehn, Buti, Trichet and Bini-Smagi would have been fired but other than fiddling your expenses or being accused of assault there is literally no way that an individual Eurocrat can be peacefully disposed of. The new Royalty to our minor permanent government nobility.

  47. David O'Donnell Says:

    fyi NakedCapitalism.com

    Ilargi: Ukraine – Part of United States’ Desperate Solutions For Not Sinking Alone?

    Posted on April 21, 2014 by Yves Smith
    Yves here. While most of the commentary on the Ukraine has focused on geopolitical issues, and on the role of the neocons in the Obama Administration, this post looks at the Ukraine conflict from a different angle. It contends the drivers are actually economic (not that economics and politics are necessarily distinct). The source that Ilargi relies on is a bit screechy and appears to labor under the misapprehension that the US needs foreign lenders to finance its deficit spending. But if you can read past those shortcomings, I hope you’ll find it also raises some provocative issues.

    By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth

    LEAP2020 is a European political/economic research institute that doesn’t shy away from volunteering opinions on the topics it researches, something that works both for and against it. It publishes a new GEAB (Global Europe Anticipation Bulletin) report every month. I thought I’d share the ‘public announcement’ of the April 2014 issue with you, because it provides a clear idea of what some people think is going on with regards to the US/EU involvement in Ukraine and the war of verbal bellicosity they have initiated with Russia. Some voices, among them former US government official Paul Craig Roberts, are convinced there is a new neocon attempt aimed at provoking war with Putin happening. Others have pointed to the arms race many US allies in the Middle East and Asia appear to be conducting.

    Personally, I prefer to remain on the cautious side for now, but I do think Americans and Europeans alike should demand their media and politicians explain what really goes on, instead of merely shouting insults at anyone who looks remotely Russian. What did the US spend the $5 billion+ on that Undersecretary of State Victoria Nuland has stated was handed to an alphabet soup of Ukraine NGOs? What was Nuland doing in Kiev in the months leading up to the February coup in the first place? Ukraine had a poorly functioning government, true, but then so do dozens of other countries. Why Ukraine? Why did NATO rapidly expand eastward after the break-up of the Soviet Union despite explicit promises not to do that? Why is the US apparently about to deploy perhaps as many as 10,000 soldiers to Poland when it just signed a de-escalation deal with Russia? Are we going to hold back on asking these questions until the military chest thumping stand-off has reached a point of no return?

    For LEAP2020, the issues are primarily economic, not military. It sees the US as a nation on the verge of breaking down economically, which seeks to drag others (Europe) with it in order to disguise its own troubles:

    http://www.nakedcapitalism.com/2014/04/ilargi-ukraine-part-united-states-desperate-solutions-sinking-alone.html

  48. brian lucey Says:

    So good of the French laundry to ring you John and it before noon. Delude much?

  49. Johnny Foreigner Says:

    http://www.cqc.org.uk/sites/default/files/media/documents/cm_011404_item_5_report-regulatory-framework-finalv1.doc

    This is a good brief analysis of regulatory options in health care, arising from a review of the Care Quality Commission in the UK. Obviously very different field but striking how many issues relevant to finance arise. For example, should we have a generic regulatory work force?

  50. Mickey Hickey Says:

    Krugman on Lars Svennson and Swedish deflation. Svennson is an expert on Japanese style deflation.

    http://www.nytimes.com/2014/04/21/opinion/krugman-sweden-turns-japanese.html?action=click&contentCollection=Business%20Day&module=MostEmailed&version=Full&region=Marginalia&src=me&pgtype=article

  51. Mickey Hickey Says:

    @David O’D
    @francis

    Your link to drb is superlative. Them Murphys are a force to be reckoned with.

    I came across a book The Russian Roots of Nazism -White Emigres and the Making of National Socialism 1917-1945.
    Author Michael Kellogg 2005 (CUP).

    It explains some of what is going on in Ukraine today.

  52. Mickey Hickey Says:

    I would agree that the US is ratcheting up the pressure on Russia. The EU at present is going along for the ride. Obama is reported as saying that the US has conventional weapon superiority over Russia. That implies that he also knows that Russia has ample stocks of tactical and inter-continental nuclear weapons.

    It is not likely that the EU will allow the US to push Putin into a corner. It could lead to a quick splintering of NATO. Even tactical nuclear weapons would make large swathes of Central Europe uninhabitable.

    Tacitus Agricola had a good handle on it.
    “Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power.
    Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they create a desolate wasteland, they call it peace.”

  53. brian lucey Says:

    Meanwhile back in the reality of 2014 (let us know john when you want to rejoin the timestream. Maybe after your lunch in the French Laundry or whitecastles or whatever )…im.finding it shall we say hard to credit the lack of civil service written notes. How convenient no?

  54. seafóid Says:

    @ JG

    You mustn’t have majored in nuance . What happened to moving on ?
    I saw this recently

    http://www.ft.com/intl/cms/s/0/1eeb2f08-6179-11e2-9545-00144feab49a.html

    “You’ve got rows and rows of cash equity sales people,” says one. “Nice guys, play pretty good golf, drink a little bit too much; they’re likeable. They’re not that smart”

  55. eamonn moran Says:

    So it seems that the strategy they eventually went for (McWilliams guarantee all assets and liabilities) was not discussed even though the meeting had all the main players and and went on from 9.30pm till 3.30 am.
    McWilliams also reported the next day that some of the Civil Servants were against his idea.
    Is it believable that the representatives of BOI and AIB were not lobbying for a full guarantee?
    This was surely preferable to them than giving a short term loan to Anglo. Why were they not arguing for it? They knew if Anglo went they too were in danger.

  56. francis Says:

    Mickey,

    I feel that the drb link also contains a lot of nationalist stereotyping. 3 and 2 hundred years ago, pretty much everybody with a chance in Europe was on an imperialist trip, trotting our the supposed superiority of his particular kinship.

    Remember when I asked whether there has ever been an Italian Francesca or French Francois showing up in this blog? Or only some pesky German once in a while?

    Now there is a Franceska at

    http://www.ft.com/intl/cms/s/0/303eac42-c6d8-11e3-aa73-00144feabdc0.html?siteedition=intl#axzz2zT0LdvzR

    and she has some pretty interesting video links, which claim to show hard evidence, that some folks shot on the maidan were hit by there own people in the back. Take a look for yourselves.

    If you follow the discussion there, it is also very interesting, how brutal the FT is trying to censor things, which do not fit their blatant war mongering agenda,

    Francheska and Caldararo

    But t doesn’t work any more. The colored, dogs, Germans and Russians are barking back : – )

    Now a question, her very latest link

    “Ukraine Neo Nazi Syndicate Snipers Caught On Video”

    https://www.youtube.com/watch?v=bqnhJVx5EJw

    gives me the error message

    “Unfortunately, this video is not available in your country because it could contain music from SME, for which we could not agree on conditions of use with GEMA.”

    Can you see this in Ireland, America?

    What is there?

  57. brian lucey Says:

    If one were to be badminded one might eventually see an endgame where the only person of importance to the decision who is no longer able to comment (BLTD) gets fingered by the survivors. The groundwork is being laid I suggest for he being painted as alone and only the person who transmuted the McWilliams musings into action. Sure wasnt he the minister for finance ?
    Watch….

    Seafoid : John G is frothing away. I think he works in finance (when hes not hanging on the phone for world class restaurants to ring him…) so perhaps feeling the heat. We will never know what his views were in 2006. Perhaps just as well.

  58. Hugh Sheehy Says:

    I thought the article referenced in the original posting sounded familiar…..here is essentially the same content by a different author last September.

    http://www.independent.ie/irish-news/politics/daniel-mcconnell-as-lenihan-dithered-cowen-called-the-shots-on-disastrous-guarantee-29618377.html

    Apparently the message about Lenihan’s dithering needs to be reinforced.

    Mind you, my stated view on the article at that time would prefer Lenihan’s “dithering” to Cowen’s strong leadership.

    “Ah yes. Decisive leadership.
    If that’s what brought us the back guarantee then let’s have less of it.
    The fact that politicians and political commentators equate doing something (anything) with strong leadership indicates that they’re as as dumb as a bag of hammers. Sometimes the best thing to do is nothing. Nothing would certainly have been better than the blanket guarantee.”

  59. grumpy Says:

    http://www.bloomberg.com/news/2014-04-21/ex-barclays-executive-sees-golden-decade-for-banking.html

    ““Investment banking has a brilliant future,” Rudloff, 73, said in an interview in Milan on April 16, making his first public comments on the business since retiring from Barclays in February. “The industry is looking at a golden decade.”

    The growing need for capital will propel profits, once securities firms finish adapting to tighter rules designed to prevent a repeat of the financial crisis and shield depositors from trading losses, said Rudloff, who during his five-decade career helped foster the expansion of the Eurobond market in the 1980s.

    “It isn’t about trading with the firm’s money, but about allocating capital and playing the intermediary” by originating, packaging and distributing all types of securities, including derivatives, he said.”

  60. brian lucey Says:

    john G
    Subprime is actually not a problem. else, only people who could get mortgages would be the top 5%. The problem is : mispriced risk, where price includes the regulatory and other effects. Very few financial products are bad – its when they are mis applied/understood/regulated that problems arise. But continue on the manichean road. Simple tales are always easier for simple folk to swallow. Reality is an infinite spectrum of grey , but you seem to prefer black and white.

  61. brian lucey Says:

    John. Take a breath. Seriously. Take a deep breath, and chill out. Honestly, id get better sense and maturity from my toddler.

  62. brian lucey Says:

    John
    Take a walk down Mission St, and go to the seafront. Clear your head. Your ad hom rantings and borderline libelling are indicative of a troubled mind. I fear for you.

  63. brian lucey Says:

    This is the tragedy of the commons in action – no wonder KW fled for the calmer waters of Forbes. Ranting ad hom arguments, sockpuppetry, astroturfing and thread derailment have turned this place into the modern equivalent of bedlam. Some of us stand outside and occasionally peer into and interact with the inmates, then walk away shaking our heads. Anyhow. Back to work for me.

  64. Johnny Foreigner Says:

    @BL

    Now cracks a noble heart. Good night sweet prince: And flights of angels sing thee to thy rest!

    Well you did say it was a tragedy.

  65. brian lucey Says:

    Hi Francis

    You tried to lobby Germany to pressure the Irish parliament, while talking very differently at home.

    Really? How

    If you would be a state employee in Germany, I would try to get you before an Ethics commission.
    Well, I aint. But you can dream.

  66. francis Says:

    brian lucey,

    the original faz with you is behind a paywall for 2 Euro

    the reference here, the whole discussion an interesting read:

    http://www.irisheconomy.ie/index.php/2013/06/29/a-very-irish-story/

    July 1st, 2013 at 4:42 pm

    pretty interesting, my delusions about appealing to the good in you, before I learnt a little more about you : – )

  67. seafóid Says:

    “Our view at the time was that we would get one shot at calming the markets”

    I don’t think anyone at the ECB got the hang of market neurosis until Draghi came along. Just give them cash for trash and they’re pussycats.

  68. John Foody Says:

    @ John G.

    That Finance-magazine article is a god awful piece of work. I don’t know which is worse, the day in his life or the article he wrote about it. I have to say though, I don’t think there’s anyone on this board that doesn’t know about B.Luceys unfortunate poor ability to predict the future in 2006. He got it wrong. He messed up, but he has had 8 years of abuse about it since. IMO he’s paid for it, in fact I’m surprised he still posts.

    @ B.Lucey

    Perhaps you don’t care or give a monkeys but surely you got to take issue with the slimy finance guy saying ‘….we leave the table confident that we chose the right man to do this piece of work’.

  69. Mickey Hickey Says:

    We may be Irish but we must resist the temptation to live up to the stereotype. This forum is not a pub on the edge of the Gorbals on a Glasgow Saturday night.

  70. Mickey Hickey Says:

    A mother lode of international income comparisons.

    http://www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?hp&_r=0

  71. Geronimo Says:

    John Gallaher

    Brian Lucey in February 2006 made a bad call on Irish property. Yeah, he probably got a fee for his efforts but so did tens of thousands of other forecasters.

    John Gallaher time to stand up to the plate. The S&P 500 finished today 4/22/2014 at 1879.73. Where will it close in 4/22/2017 ?

    Stick your neck out John, give it a shot. You got nothing to lose but abuse on this blog.

    Hindsight is so clever.

  72. john gallaher Says:

    @geronimo anyone playing with the sp I hope is not betting their home,making the biggest most important financial decision of their often sadly young lives.
    Your faith in my crystal balls is flattering but misplaced,not my world and I’m hardly a media ho,unlikely the info will cover my otefoctiI do and always did have skin in the game so I stick m

  73. john gallaher Says:

    Apols typo filled.
    Your faith in my crystal balls is flattering but misplaced,unlikely the indo will write up my prediction,but I do stick my neck out just not on the sp.

  74. Geronimo Says:

    John Gallaher

    Please clarify John. What language is this?

    “I’m hardly a media ho,unlikely the info will cover my otefoctiI do and always did have skin in the game so I stick metri”

  75. brian lucey Says:

    John G wont rise. JP Morgan arent in that business

  76. Geronimo Says:

    John Gallaher

    I suspect we are both on West Coast time, still 11:39 p.m. 4/22/2014. How many drinks have you had ?

  77. john gallaher Says:

    @ger I thought I clarified with the ..apols…I wrote medi h**r bit harsh used media Ho …hmm.
    Went to edit a function missing and often lamented on here fat fingered hit submit.
    Oh I don’t drink,lots typos.
    I have borrowed commercial money from groups/companies in sub prime space.
    Towards the end say 06 it was outta control should have been curbed by the regulators or markets,the political will was not there either.but naïveté by a uni prof to be praising sub prime in that era. fair play for wetting his break is I suppose a valid point.

  78. john gallaher Says:

    beak.

  79. Geronimo Says:

    John Gallaher

    “Oh I don’t drink”

    Of course you don’t John. We understand.

  80. brian lucey Says:

    Geronimo..Let the man alone with his bottle and bitter

  81. john gallaher Says:

    Brian little beneath you no those non stop ad hom comments?
    Why not address your “Lincoln Bedroom” access all areas to the college for a few bob.Was that subprime lender HML your client or the colleges ?
    Any chance you let us have a peak at the report or at least the media presentation,can’t imagine Trinity having any issues or the client ?
    Was it common practice to get paid by subprime lenders for favorable reports or a one off….

    @John F my fav bit from Brian’s big day is/was…

    “Today, the author of the report, Dr Brian Lucey, lecturer in Finance will be presenting his findings to an invited audience of executives from the big players in the Dublin financial services market together with journalists, commentators and Government agencies.”

    “The presentation was well received and generated a number of interesting questions. Dr Lucey’s conclusion that there is no bubble in the housing market and that a crash or severe correction is not imminent is good news for the lenders in the audience and should get some positive coverage in the press tomorrow.”

    @ger I have no problem with Brian being wrong he’s wrong most the time I find him selling access to trinity too sub prime lenders troubling,attempting or using his position to influence the media by using the backdrop off the coll to make the presentation while trousering a fee just wrong,who footed the bill for the cocktail party the taxpayer/students or the client,I doubt Brian did.

    Oh look Brian’s big client has a paper out…addressing mortgage arrears…indeed.
    http://www.hml.ie/

  82. rf Says:

    Oh FFS

  83. Johnny Foreigner Says:

    Maybe it would be better to broaden the discussion to the ethical practices of academic economists in their media work, and in performing consultancy work? It is paid work and there is always the danger of wanting to sex up the article to ensure future work keeps flowing. Consultancy work is obviously a minefield.

    Is there any ethical code that academic economists are supposed to adhere to? It is a quasi-profession after all? My experience is that most Irish academic economists show good judgement in their media work, sticking to the facts and refraining from making ‘calls’ that they know are just a crap shoot, but there are the odd few that behave more like pundits than academics.

  84. brian lucey Says:

    Morning lads. Keep it classy now. Hows the head John?

  85. brian lucey Says:

    Exclusive – Video of Johnny Foreigner, Francis and John Gallagher honing their arguments ; leave it to yourselves to work out which is which.
    https://www.youtube.com/watch?v=hmyuE0NpNgE

  86. Johnny Foreigner Says:

    There is actually a great thread at the link below on the subject of whether or not economists need a code of practice.

    http://www.economist.com/economics/by-invitation/questions/do_economists_need_code_conduct

    The AEA code of conduct is described here.

    http://online.wsj.com/news/articles/SB10001424052970203436904577148940410667970

  87. john gallaher Says:

    How’s that report Brian can’t wait read it stay tuned,say oh I got a copy any issues your end me posting it?

  88. john gallaher Says:

    Brain you are constantly alluding to my drinking as is that lightweight “ger” I’ve been sober a long time,I’m a grateful recovering alcoholic who was also up to an 8 ball a week,what can I say success went to my head:)
    My head is fine today but thanks once again for enquiring about my health bit creepy and weird but…..
    Anyway as a courtesy can I take it that I have the authors or hired helps permission to post that report,given your not so veiled threat early in about libel.

  89. rf Says:

    jesus tonight

  90. Geronimo Says:

    John Gallaher

    “I’ve been sober a long time”

    Of course you have John. We understand

  91. john gallaher Says:

    Ger thankfully you have anonymity after some your rather ridiculous posts,you said a relative who’s a big time banker will lend non recourse to take a upwards only bet on his banks shares.
    Ok I’m in…..what’s easiest way get in touch any ceiling or unlimited.

  92. Geronimo Says:

    john gallaher

    Your out of luck John. He only lends to drunks.

  93. Michael Dowling (DCU) Says:

    Not sure what your point is here John Gallagher.

    You work with the information and the model you have at a particular time. Our estimates of the future are based on adjusting from information we have now. Obviously with appropriate controls for the data available, but still primarily based on information available to you.

    I’m surprised you need this fairly fundamental fact pointed out.

    Unis strongly encourage academic-industry collaboration. The TCD graphene breakthrough announced last week was a result of academic-industry collaboration.

    Working with a subprime lender was perfectly reasonable in 2006 based on the information that was available at that time. The stock market was heavily rewarding subprime lenders up until 2007, suggesting a new business model was being formed. Even the main corporate finance textbook (Brealey and Myers) in their 2007 edition devoted a large part of their intro to the wonders of mortgage-backed securities. It was accepted wisdom then that this was a reasonable way of lending.

    You are essentially looking at a career of economic analysis and picking one particular economic analysis that didn’t pan out and trying to use that to characterise a population of predictions without looking at any of the other analysis and its usefulness.

    You do realise that’s nonsensical, don’t you?

    If there were any actual economists still left on here (you’ll notice they just tend to post articles rather than read your comments) they would have pointed this out much earlier in these comments.

  94. john gallaher Says:

    @Michael Dowling at no point in the cycle were sub prime lenders consider anything but opportunistic high cost predators.
    What you say is simply not backed up by the performance of the loans.They were never “accepted” at all but yes they sought validation by purchasing favorable reports and throwing money at whatever hack would accept it.

  95. Michael Dowling (DCU) Says:

    When the mortgages were bundled together in bonds they got AAA ratings. They were clearly accepted by financiers. Mainstream opinion was that they were useful. George Bush and congress strongly encouraged the ‘ownership society’ led by the increase in subprime lending.

    You are looking back on this based on what happened, rather than what was accepted at the time, and where this was viewed as useful (and indeed profitable).

    They weren’t primarily considered ‘opportunistic high cost predators’. Wallstreet wouldn’t have invested in mortgage-backed bonds based on this premise if that was the accepted view, as it would have ended up costing them money, which it did. But presumably you know that already and yet are still trying to make your point. It doesn’t make sense though.

  96. Michael Dowling (DCU) Says:

    The other point about thinking it is reasonable to assess an entire career of economic assessments based on just the one economic analysis, but not the hundreds of others, still stands presumably.

  97. john gallaher Says:

    They were never ever accepted.
    “What GE got in the bargain, former WMC employees say, was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC’s top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys.

    In pursuit of these riches and perks, several ex-employees claim, many WMC sales staffers embraced fraud as a tool for pushing through loans that borrowers couldn’t afford.”

    http://www.publicintegrity.org/2012/01/06/7802/fraud-and-folly-untold-story-general-electric-s-subprime-debacle

  98. Michael Dowling (DCU) Says:

    ahhh you’re citing the equivalent of cartoon strips to support your argument. Nice. Think i’ll leave now, but good luck with that.

  99. john gallaher Says:

    @Michael D explain that to the poor suckers getting evicted and foreclosed who may have been led to belief that a finance prof had a clue.
    When you have that position and have no consequences for getting it shockingly wrong, more is expected much more than endorsing subprime.

  100. brian lucey Says:

    20 posts, every one of them ad hom to someone, from John G. As I noted, this is the visible workings of the lack of moderation on this board. 17 comments on Piketty thread – 283 on backward looking entrail biting posts on this/Seanie thread with a preponderance of those from sockpuppets and loons. That says a lot about the audience of this once useful board.
    John G – get help.

  101. Stephen Kinsella Says:

    Closing this thread folks.