Presenting The Irish Bailoutees: A Redux
Since once again we may have been a little too far ahead of the curve in demonstrating just who the biggest beneficiaries of the Irish taxpayer funded bailout are, we would like to repost an analysis from over a month ago presenting the key bondholders in Anglo Irish bank, who incidentally happen to be the cross-holders across most of the Irish capital structure, and which banks will likely be next in line for the bailout wagon. Not surprisingly, there are some names here (especially one) which Zero Hedge readers are all too familiar with.
Are Irish Taxpayers About To Bail Out Goldman? Is Peter Sutherland Stealing From His Own People To Give To The Vampire Squid? (Zero Hedge, October 17, 2010)
It is deja vu all over again. To little media fanfare the dire
financial situation in Ireland is nothing less than a repeat of the
Lehman collapse in those dark days of September 2008. With the recent
nationalization of half of the country's six big banks,
and the blanket guarantee over the rest of them, the Irish government
has effectively made sure that bondholders in all banks, even those
which such as long insolvent Anglo Irish bank will be made whole by the
long-suffering Irish taxpayers. And despite rumors of haircuts for at
least sub debtholders, actual facts validating this possibility remain
unseen. Which begs the question why is everyone in the world so
terrified of taking mark to market losses on even a few billion in debt?
Simple: as all of the world's banks, but Europe more so than anyone
else, are now caught in the biggest circle jerk ever imaginable, with
one entity's liabilities making up another's assets, which in turn are
someone else's liabilities, and so forth in a MC Escher (or is that HR Giger?)-esque flow chart of the surreal (as can be seen here),
even one dollar of write downs can spiral and affect tens if not
hundreds of billions of downstream assets (and thus liabilities). Which
explains why the ECB and everyone else in Europe is so intent on
preventing a failed auction in Ireland (we previously disclosed that virtually every September auction of
Irish bonds was purchased by the ECB, either directly and indirectly):
should the banks that are on the hook actually validate their
impairment, Europe is one step away from activating its own $1 trillion
TARP package. Yet what is amusing is that inbetween the cracks of
exclusively European-bank based senior and subordinated bondholders in
such bankrupt banks as Anglo-Irish, a familiar name emerges: Goldman Sachs.
nested quietly inbetween the €4,034,756,880 in face value of Anglo
Irish bondholders is the name that managed to pull the strings (via its puppet Hank Paulson)
and get bailed out when AIG threatened to make Goldman management and
investors insolvent. Is Goldman, via its UK-based Goldman Sachs Asset
Management Intl. subsidiary, currently petitioning Brian Lenihan to be
the only US-based bank to receive a direct bailout on its Anglo bond
position? Or is it, as always behind the scenes, negotiating on behalf
of 80 other European banks, among which Lombard Odier, Rothschild, and
Deutsche, and achieve what it always succeeds in: escaping scott free,
and stuffing taxpayers with the bill? We are confident Irish taxpayers,
and drivers of cement trucks, would be fascinated in getting the correct answer.
Guido Fawkes, who managed to obtain the Anglo Irish bondholder list, shares the following commentary:
Bank did not represent a systemic risk to the Irish economy, it wasn’t a
high street bank like AIB or the Bank of Ireland. If it had been
allowed to go the way of Lehmans the only losers would have been
shareholders and bondholders. The Irish state stepped in and
nationalised a bank that was basically run by crooks lending to property
speculators. The Irish people are taking losses that should rightly
have been shouldered by bondholders.
Every child in Ireland is
being bequeathed a huge debt at birth to protect the interests of
foreign, mainly German, bondholders – why? Guido was once a bond trader,
it was always understood that sometimes the bond issuer defaults. That
is the risk investors take.
So why is Dublin’s political
establishment so keen to protect foreign investors at the expense of
future generations? Guido has obtained the list of foreign Anglo-Irish
bondholders as at the close of business tonight. These are the people
whom Dublin’s politicians really seem to care about.
they hold Anglo-Irish bonds with a face-value of €4,034,756,880.
Shouldn’t they take the hit rather than future generations of Irish
taxpayers? Capitalism is a system of profit and loss, they took the risk
of investing in Anglo-Irish Bank. Is the Irish government under pressure from the European Central Bank in Frankfurt to protect German investors?
on question. And as the highlighted area in the chart below
demonstrates, we would like to add Goldman Sachs to the list of
bailoutees. Surely, few firms in the world deserve to be redeemed as
much as god's little helpers.
Little else that can be added here... except for this amusing anecdote of another Goldman Sachs International Chairman, one Peter Sutherland,
former Ireland attorney general and EU commissioner who just so happens
was a chairman of British Petroleum (remember those guys?) previously.
To wit from the Irish Times:
[Sutherland] and [recently heckled] Lenihan have remained in contact through the financial crisis. On one occasion,
Sutherland visited Lenihan to tell him what a great job he thought he
was doing and to say that Lenihan had the potential to be one of the
great taoisigh of the 21st century. Lenihan was taken aback, he says.
this great son of Ireland, who obviously has Lenihan in his back
pocket, is in active negotiation on behalf of his current employer,
Goldman Sachs. Yet something tells us Mr. Sutherland will be the last
person to share light on Goldman's twilight relationship vis-a-vis the
look-back Sutherland opposes is the banking inquiry. This is hardly
surprising from a former chairman of AIB who appeared at the 1999 public
inquiry into the Dirt tax evasion scandal.
have been better not to have an inquiry at this time because we have
limited resources and a diversion of those limited human resources into
an ex post facto analysis of the past is far less important than
remedying the immediate problem that we have now,” he says.
is a very difficult subject and to have all of these civil servants
sitting in listening to bloody evidence on the past when they all know
broadly what happened. We know what happened – we know it all. A
political football is not what we need. We need to look to the future to get it right.”
of revisionism is not too surprising coming from a person whose
personal, and future, fortune, is based on the past generosity of
American, and now Irish taxpayers. Because his wealth is certainly not
due to his skill at anything related to his actual career:
was also a board member at Royal Bank of Scotland (RBS) during the
financial meltdown when the UK bank collapsed into state arms after a
frenetic, debt-fuelled growth. Of the bank’s 2007 role in the
€71 billion acquisition of Dutch bank ABN Amro, the biggest ever banking
takeover, Sutherland says it made “the mistake of buying at precisely
the wrong time when the world was falling off the back of a bus”.
instead of driving trucks full of cement into Parliament, Irish
taxpayers can be a little more proactive, and ask one of their most
respected "leaders" just on whose behalf he is working on in this latest
bailout, which could easily be Ireland's last.