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Ireland Stunned To Uncover "Truly Shocking" Information By Its Banks, Institutes Austerity
Below is the Central Bank Of Ireland's take on dealing with what it has just uncovered to be a busted banking system and imminent austerity measures. The PIIGS have just been rebranded to PIIIGS. Don't take our word for it: here is what the Irish Finance Minister just said:
IRISH FINMIN: INFORMATION REVEALED BY BANKS 'TRULY SHOCKING'
IRISH FINMIN: WE MUST STABILISE BANKING SYSTEM NOW
IRISH FINMIN: BANKS MUST REPAY DEBT BY FACILITATING RECOVERY
IRISH FINMIN: ECB TRICHET BACKS AUSTERITY MEASURES
As disclosed, Ireland has instituted a "Bad Bank" concept to acquire 1,200 loans, or €81 billion worth, at a 47% discount. Sounds about right. Of course, the US financial system still carries most of its loans at about par: you see we have a printer and they don't, so we can do whatever we want.
Here is the ICB's response to broad banking system insolvency:
The Financial Regulator has today (30 March 2010) published the results of its review of banking capital requirements for
the next three years until 2012. New capital levels are being set for
some of the main banks covered under the government guarantee to ensure
that they can withstand future losses, even under very stressed
conditions.
These measures are a long term solution and should ensure that Irish
banks move to a strong capital position as soon as possible to speed
their recovery and that of the economy.
A level of 8 per cent of core tier 1 capital to be attained by the
end of this year is to be applied. This level of capital must be met
after taking account of all future losses, from both NAMA and non-NAMA
portfolios. This capital will be principally in the form of equity – a
7 per cent equity requirement. Equity is the highest quality form of
capital, and the emerging international standard. In addition, further
amounts, specific to each institution, are to be added on in the
calculation of future loan losses. The new requirements also mean that
banks cannot go below a level of 4% core tier 1 capital in a severely
stressed scenario.
Speaking today, Governor of the Central Bank, Patrick Honohan said,
“After a period of great uncertainty, these actions and announcements
create a secure platform on which confidence will be built. While the
costs that are today revealed are certainly significant, they are
manageable and affordable for the Irish State. They are certainly a
necessary measure to put the banking crisis behind us and provide for a
stronger economy.”
Head of Financial Regulation, Matthew Elderfield said, “It is
important that our banks move to a strong capital position as soon as
possible and that we draw a line under the Irish banking crisis.
Sufficient capital is an essential ingredient to ensure that banks can
withstand future losses. We have applied a robust, realistic and
prudent capital standard informed by our own detailed analysis and by
emerging best practice internationally.”
The capital requirements set by the Financial Regulator must be in
place by the end of 2010. The institutions will be required to submit
recapitalisation plans to the Financial Regulator within 30 days.
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Dial 1-800-IMF-FAST
Time is running out!
Awesome. Oh, I think it's a "900".
And in the meantime, indices trundle ever higher
Yeah, no big whup! Euro steady in light of greek wider spreads and of course raging negaitivity in EuroLand. Oh, but France had a positive (fractional) GDP nbr, that's it.
Sure isn't billion the new million?,NAMA will transfer banks losses to the taxpayer for generations to come.How long will it take for the Irish along with the rest of the western world to realise this is the biggest ever organised theft ever perpertrated on the planet?
surprise surprise......
www.businessworld.ie/livenews.htm?a=2471691;s=rollingnews
Maybe the nice Mr Rothschild is buying Irish sovereign debt that is dramatically increasing as it transfers the banks junk on to their national debt
Well at least they are in good hands. The same people that started the bank scam.
Yes , it may have highlighted how serious the situation was/is - these guys may need to secure their claims - they know us well and realise that although we can be feckless ,we are also very conservative with regards the payments of debts - however if the situation becomes impossible then it may change our culture permanently
"Ireland Stunned To Uncover "Truly Shocking" Information By Its Banks, Institutes Austerity"
This "austerity" crap won't affect my bonus, will it? I mean, I'll have to work twice as hard to fix what I broke. That's worth at least a doubling of last years bonus. Don't mess with me or I'll bring the whole stinking cesspool down with me, including those pedophile priests.
In fact, it seems interesting that this little story has pushed the other story off the front page.
http://www.chron.com/disp/story.mpl/world/6922365.html
http://www.nytimes.com/2010/03/25/opinion/25thur1.html
Well both are of the same theme, molesting children and scaring them for life. In one they will carry the emotional and psychological scars for life, the other they will carry the economic scars for life. With so much talk about protecting the children, they are the ones we use as the dumping ground for our mistakes.
And this becomes the headline in 6 months...
"U.S. Stunned To Uncover "Truly Shocking" Information By Its Banks, Institutes More Money Printing"
"U.S. Stunned To Uncover "Truly Shocking" Information By Its Banks, Institutes More Money Printing. Obama Blames Bin Laden, Increases Troop Levels in Afghanistan and Warns Pakistan to Turn Bin Laden Over or Suffer the Consequences."
9/11, the "gift" that keeps on giving.
Throw in Iran, and you have a 2 front war you can't possibly lose.
Ask Hitler.
It's all quiet on the Western Front. Can we send "Little Boy Timmay" there? Pleeeeeeeease?
Timmy IS Elliot!
Why wasn't every other word "terror"?
Come on guys! We need the ratings! Let's go!
Sorry RC.
(Looks down at his shoes and kicks a pebble absentmindedly as he contemplates the tongue lashing he just received.)
I'll try harder next time. I guess I'm just not a terrorist at heart. Maybe I could pull up the NY Times headlines from 2001 to today and review how domestic terror (black) ops are conducted.
Popey is busy running interference for the apostles of finance. He's ordered a doubling of choirboy molestations and is insisting that girls be included for the first time since the increased rate of priest rape is using up all the little boys at an alarming pace. The priests are decidely unhappy that they'll now be forced to touch a vagina but Popey has threatened eternal damnation if they don't get their fingers a little moist.
Yes, I know this is sick, but I'm just the messenger.
I am Chumbawamba.
Jesus and I was second guessing myself as to whether I would comment on a controversial subject.
Nothing like privatized gain and socialized risk. This mutant system is a bankers wet dream. Where is the damn pitchforks and torches?
Pitchforks? This is Ireland - Where are the sheleighlies? I call shennanigans!!
"shenanigans"
synonomous to bullshit (aka. shens) I call shens! Thank you urban dictionary. Please see definition # 4. http://www.urbandictionary.com/define.php?term=shenanigansThat may be true, but saying something like this doesn't instill confidence in this context. Future losses already on the horizon, one might think.
With all these financial institutions in a distressed state, it makes you ponder whether this will be the reason for implementing a new monetary system worldwide (one world currency) if it crashes.
It's the old spread the liabilities to the peasants trick, hey we just did that over here.
Bring down the dome Chief this is a top secret conversation.
Hey, does it seem like this water is moving faster to you guys? And why does the river seem to just suddenly just disappear over a horizon up there?
"Yeah, I can hear it too!"
Lets hurry up and let the IMF sell all its gold so we can put them out of their misery -
They'll stick unemployment at 30 percent and put cash for gold stores everywhere.
More austerity blarney. Whatever they do, a per drink surtax better be off the table. The mobs would burn Ireland to the ground.
That bad bank holds the equivalent of 30% of Irish GDP.
National Asset Management Agency sounds suspiciously like Fanny Mae or Freddy whatshisname.
In collateral news Anglo Irish Banks' former chief executive, Sean FitzPatrick, and former finance director William McAteer were both released after their arrest earlier this month. The investigation continues.
It's a version of the Resolution Trust Corporation. They are following (I think) the Swedish model here, minus the ability to devalue the currency.
I think it's also not far from the form that TARP was originally supposed to take.
NAMA was supposedly based on the Swedish model, but supposedly it's not actually very similar. For one thing, the Swedish government apparently didn't take any loan transfers from private banks.
This "truly shocking" b.s. is getting old. The banks sought ever increasing rents from the same old economy, and now that people can't pay, they are "shocked". They want bailed out with hoards of fiat which they expect to hold value in perpetuity. "Austerity" means the peons nominally stagnant paychecks get smaller and smaller as bankers collect gigajillions. Just print already. The game is up.
Will leprechauns be the fiduciary managers at NAMA? Because there is obviously a belief in some type of mythical creature acting as an advocate for the peole's interest.
And FWIW, someone should have written this news item in the form of a limerick.
Pot of gold...bitches?
there once was a banker named Rick
who said "as the irish are thick...
i'll rip off their pounds
then re-lease the hounds
so y'all can just go suck my
dee-dul dedul doe dy dee um"
No worries, its a one off. Wont happen again, now that they are trying to limit leverage.
Who is the third "i" in PIIIGS now? Ireland was already a member of that group. We know that Ireland is in trouble, but at least they are being somewhat proactive about it.
Iceland? Illinois?
Illinois...that's awesome! LMAO in Peoria!
http://www.youtube.com/watch?v=WoIfglXAbh0
Some sadly misinformed people used to give the acronym as PIGS for Portugal, Ireland, Greece, Spain or PIIGS for Portugal, Iceland, Ireland, Greece, Spain, despite the obvious fact that Iceland's not a Eurozone country. For some reason these misunderstandings seem to have been especially prevalent in Italy.
Great Famine part 2.
When is the UK's fuckin austerity?
At the CORE of Iceland and Ireland and most of the scams around the world IS THE BANK OF ENGLAND.
The Sterling Bill's use as an imperial war weapon remains in full effect.
Austerity?? WTF...that means, what, repay the banksters the money they NEVER HAD in the first place? You know, like they asked Iceland to do...repay in real wealth, real electricity, real things.
You have to love this moneychanger clan racket...you be really aggressive in business, cheat a little, be parsimonious as hell, totally cheap, and you save up some gold. Then you start kiting the shit, lending out what you don't even possess, and all you have to do is call a FEW loans and the whole fkin system deflates because you monopolize the paper!
And, jfc, in a deflationary collapse, you can say eff you I ain't lending, your interest rate just went up, too much risk. And you get all the real collateral behind the loans despite NEVER HAVING HAD ANYTHING to lend.
When your paper has to be paid back by a LARGER loan of your own paper, you have the entire world of collateralized borrowers over a freakin barrel. At ANY point, all you have to do is change the interest rate upward and anyone who needs more of your paper for the interest is in default! They can't get it. Inflate, then deflate, then get all the collateral.
This is PRECISELY what the BOE had been doing for 100 years before the Founding Fathers said FUCK YOU ENGLAND.
I find it amazing that we permit banks to lend what they do not have, then expect debtors to actually repay REAL things to them.
Do you understand just why Greenscum got a "Sir" from HRH?
His knighthood was always a bit hard to explain.
Is/was he still a US citizen?
Just what did he do to so please the Royals?
or Obama's CMS nominee. CMS = Centers for Medicare and Medicaid Services
Get ready for much more of this stateside from Obama's piss-poor vision and version of healtchare (much like the h.m.o.'s)
"that have little or no benefit to those receiving them, for example some joint replacements" -Strategic Health Authorities of the NHS --->Britain
Don't you know, the statistical models tell them that, it has to be true. Don't ask anyone who's had one though. Reality is a mother.....
AIG said all was well too, as well as the TBTF banks using the same approach. Our statistical models told us.......
Statistical outputs that are interpreted to be what they want them to be. Statistics, the new dog and pony show that everyone thinks is Shakespeare. If the pyramid was built on such a foundation, would we ever know it to have existed?
Can Banco Santander/RBS just finally blow up already.
It is infuriating when you understand how the game actually works, the business is so great they are literally printing money. This explains the quote from Ford stating if Americans understood their system of credit, they would riot tomorrow. And Thomas Jefferson said, "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The consolidation/takeover has happened before, it is in the congressional record that the american bankers association colluded to stop loaning as of a certain date, and this reduced liquidity causing deflation and resulted in the foreclosure of farms, land and real estate. They are even more dangerous without the threat of bankruptcy and the government backstop - who cares if you are technically bankrupt when you can take ownership (control) of all real assets and sell the garbage back to the public/gov at inflated prices?
They wanted more interest so that encouraged rising prices (more willing to loan out a higher $ amount for assets). Income has never supported the appreciation in housing prices, increased debt has. Now that they over-extended (just one thin mint), they have run to the government for bailouts, sell houses back and forth between banks so that the inventory looks younger and they can keep it on the books at a higher price, and in some cases just keep the foreclosures off their books. We need true affordable housing, that has nothing to do with the huge loans making banks rich, but cheaper housing prices. It's easy to see they are too expensive because of all the empty houses (not supply/demand market).
The cycles of inflation and deflation based on available liquidity from the central bank is the key, and they are the masters of the universe because people are staying within their debt system. There is a better system, check out swarm usa.
Why Apocalypse Now, it sure sounds like you're describing a conspiracy. But various trolls and other assorted ZH posters swear to God (and swear at anyone suggesting a conspiracy theory) that conspiracy theories are for the weak willed and general public misfits.
You mean there might actually be conspiracies between large numbers of men (and women) and that they are potentially aided and abetted by governmental and corporate powers that be? Lordy Lordy, the next thing you'll be saying, the money in my wallet ain't worth a red cent.
47% eh? Every major US bank would be insolvent several times over in all likelihood. But that's the point isn't it. We just don't know, so are forced to guess.
Just out of interest, does the NAMA haircut constitute a 'mark' hrmm?
Trav7777: Don't borrow it if you don't want to repay it. If Jack lends Jill a beach blanket he borrowed from John, Jill still owes the blanket. If the deal includes "interest" (we won't ask what Jack wants from Jill!), so be it. So what if both Jack and John both have some sort of ownership interest in the blanket. Jill has it and has to give it back to someone.
But the blanket is a tangible asset. Its a totally different scenario.I would work better like this:
Jill wants a blanket. Jack has a blanket for $100. Jill doesn't have $100 so she comes to John. John creates $100 out of thin air (virtually no risk to him) and gives it to Jill. Jill buys blanket from Jack. After a few months Jill still owes John $30 for the blanket but cant afford to pay him. John forcloses on Jill and takes the blanket. John now has a tangible asset that he ((rightfully)) claimed by doing virtually nothing.
At least at the moment John had to have (or is suppose to have) some time of base reserve to create that $100. Wait until we go to the zero reserve banking.
If you are a bank back-stopped by the gov then all it is is asset fishing. Make as many loans as possible then forclose on what you can as more and more people become unable to pay.
Not sure about you but I would love to slowly be able to accumulate all of the assets from a given area. And if you dont get the asset, then you have still made money on the interest on the loan.
Inter-alpha group going down?? or is that a little later?
Once more folks seem astounded when it is discovered that a mature organization, public or private will do everything within its power to avoid responsibility for anything bad and no matter what, the costs will be rolled downhill to those whose proper job is to support these organizations.
A statement from the Irish Minister for Finance.........
http://www.youtube.com/watch?v=wzu1ToAxdFk
But tell me, tell me Dork of Cork,
Is the Minister really shocked?
Or does he simply act the role,
Hoping against faintest hope,
To keep serfs' pikes out of his hole?
Brian Lenihan (Finance Minister) has no real input - he is but a passenger or perhaps at most a micro manager - Trichet runs this great little nation - NAMA is a convenient opportunity to expand the base euro money and also provides a firewall for bank bond holders but it helps if the local stooges are both corrupt and stupid.
Within a few years this country will be populated by penniless serfs - the independence experiment is over.
Let me answer that one. At the time he announced NAMA, Lenihan estimated a discount of about 30%, and he stood behind that figure despite widespread skepticism as he pushed the NAMA legislation through. So naturally he now has to ham about the shock of this new, unforeseeable surprise outcome.
Ohoho. First, those assets aren't being marked to market even now. They're being priced according to one of those sunshiney "Long-Term Economic Value" estimates assuming a strong economic recovery and a corresponding rebound in real-estate values. If they don't meet the LTEV target, then the Irish taxpayer will of course be eating this part of the loss directly.
Second, this is only the discount on the first tranche of loans to be transferred to NAMA. There is reasonable speculation that the real shite will be in the later transfers.
Wall Street Journal said the discount was estimated to be in the 30-40% range, which some thought a "little light." I'd say so, if 47% is where they came out after what I imagine was a pretty heated discussion where nobody at the table was interested in dropping that number any further. You can figure our banks, and the Fed, hold similar paper worthy of similar discounts. Yeah, we have a printing press to use to pass assets around and pretend they are still worht something, but bad debt doesn't cash flow, so how long can you hide that?
Some actuaries I know would call this an opportunity to smooth. Consider the notional from the reno's of the new 20 year leases that start paying in only five years! Green shoots Ned.
Irish economists meet to test their analytical skills in a difficult game of strategy and logic
Who is the prisoner and who has the dilemma ?
http://www.youtube.com/watch?v=fd-oFPJl_v0
Sounds like the 47% is splitting the underlying haircut which is higher. Bad bank acquires at a discount but not at 'fire sale' AKA real market value...good banks get underlying market value (say 25% of par) plus a nice plug of sweetener (the other 25%--er, 22%).
But, won't those remaining losses just get bailed out in turn anyway? Is there really any haircut or is it just a two-step bailout on the commoners' tab? Or do the Irish banks really take a hit here?
OK, it is a two-part bailout:
'Mr Lenihan said that finding a long-term solution for Anglo Irish Bank was by far the biggest challenge in resolving the banking crisis. Winding it up was not, and was never, a viable option. He added that he understood why many wanted the bank closed and the “impulse to obliterate it from the system”.
However, he could not countenance such a course of action because of the realisation of the costs involved and the wider disruption to the financial system would generate enormous instability for the State with unforeseeable but potentially long-lasting damage to the overall economy.
Unpalatable as it was, only the taxpayer could provide the capital.
This was the least worst option, and he was providing €8.3 billion this week, and he said the bank may require an additional €10 billion over time.
“I must point out that the bank will need further capital to cover future losses and accomplish the restructuring of the bank and its balance sheet,” he added.'
Well. There it is, then. Might as well close the universities too...or just run them on a volunteer basis...
It's an n-stage bailout, beginning with the announcement of a temporary bank guarantee, then a round of recapitalisations, then NAMA, and soon more "recapitalisations". Anglo's a few steps ahead of the others, as it was nationalised well before NAMA. All the previous bailouts have been crafted to try to prevent the goverment from getting majority stakes in the banks, but now they've run out of rope. So this round of recapitalisations will see several other banks - probably including Allied Irish Bank[s], one of the two Big Kahunas - join Anglo as state-run zombie banks. For lo, it is now the decree of the government that no Irish bank shall ever be permitted to fail, or even to default on any of its senior debt. I'm not even exaggerating.
If by 'austerity' you mean 'taxes' and 'welfare cuts'. All other forms of austerity just left the building today.
Civil servants have already taken on average 20% +(also no more overtime payments) reductions through salary reductions / special taxes etc , also mortgages are increasing almost at a monthly basis to square the funding gap , hospital cutbacks are increasing waiting times substantially , wages in the private sector are crashing , no new loans are being provided so the money velocity is dropping like a stone , taxes on petrol /diesel up ,consumption tanked also because of a reported 12% savings rate(good in the long term but if we get a hyperinflationary event in the next few years people will be pissed , I could go on......
The new provisional agreement that you refer to is provisional on no new economic shocks so this ain't over , brace for impact
I am being sodomised and I don't even know the rapists name , please please Mr Bank Bondholder tell me your name and I will be a good boy .
"It is important that our banks move to a strong capital position as soon as possible and that we draw a line under the Irish banking crisis."
A line under the banking crisis = depression and MASSIVE deflation.
It's the only sane way to go though, come hell, revolution, or highwater.
The hyperinflationary holocaust, would be/will be worse.
You expect the serfs to continue to pay 100cent on the euro + interest to individuals or institutions who took a low risk bet - there is a easier way to avoid hyperinflation , burn the bank bondholders on the bonfire of the vanities.
This will force the remaining capital into truly viable investments - these guys need to understand that there is consequences for such malinvestment
Of course, the US financial system still carries most of its loans at about par
This is why the USA is the BIG turd in the toilet
How big is BIG. I mean, can you estimate? Will we even survive the passing?
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