Ireland, I Make No Apologies For What I'm About To Show You. You have had a banking crisis that nearly wiped you out. In an attempt to save the banking system (potential mistake #1), you brought the bad debt of private, for profit, risk taking institutions onto the taxpayer's balance sheet - twice! You then conducted sham stress tests to placate the public into thinking the worst has passed. Promptly after nearly all of your banks passed these shams, they started collapsing again. Leprechauns don't really exist, and you can't end insolvency with magic and lucky charms. It was at this point you were coerced/forced to accept the outside aid of the Troika and further in debt your citizens as well as endure extreme austerity. Guess what, it's apparently not over - not by a long shot!
I have spent the last week clearly demonstrating how Irish banks could have passed the stress tests yet fail anyway. See:
- Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" As This Bank Scrambled For Capital!!!
- As If On Cue, BoomBustBlog Shenanigan Research Gets Real In Ireland, Why Aren't These Guys Knocking On My Door?
- Are You About To Get Cyprus'd in Ireland? When A Single Word's Worth Billions Of Euros...
- Dear Ireland (& AIB), Haven't We All Learned The Problem Is Insolvency, Not Liquidity?
- Oh No! Is It Possible? A 3rd Irish Bank With Hidden Charges Not Revealed In Its Annual Reports?
The gist of this reporting is that it appears as if there was a significant amount of debt and/or encumbrances on Irish bank's balance sheets that was:
- Not reported to regulators or possibly stress testers and
- Material misstatements and/or omissions regarding encumbrances and debt.
In essence, these banks were not as healthy as they claimed! If one were to add the encumbrances and unreported borrowing back on to these bank's balance sheets, then add this (since the Irish government essentially bought many of them) onto the Irish government's balance sheet, what would we have?
My guess is we'd have a country that was forced to go back to the Troika on hands and knees. Worse yet, we'd have the "Cyprus" style of bank recaps become mainstream with Irish bank depositors losing money faster that a floozy loses virginity on prom night. Below is a very extensive financial modelling of the Irish bailout by the Troika - the same model that was used to generate the subscription documents in Beware of the Potential Irish Ponzi Scheme! This is a level of analysis that is simply not available on the web, but I'm making it available as a PSA (public service announcement) for the Irish people. I invite you to, no... I dare those of you who are in the industry to play with it and add back the levels of debt that has been mysteriously disappeared from Irish bank regulatory statements. Go ahead, and see where the country of Ireland really stands.
I don't think it will be difficult to ascertain that Ireland may very well need another bailout, of both its banks and quite possibly the motherland herself. After Cyprus, we all know who'll pay for the bank bailout, right?
This app will be available to the public until the middle of next week, after which it will be solely the purview of my professional and institutional subscribers (click here to subscribe). I will place comments from time to time below in the comment section.
If you have believe that the information below actually identifies a gross misrepresentation of fact, omission or outright fraud, simply contact the SEC and let them know that Reggie Middleton suggested they look into it. You can actually use this form to convey my message. For paid subscribers, I've posted another potentially "Cyprus'd" EU bank with shortable US/LSE traded shares/options for subscribers, reference EU Bank Capital Confusion, Part 2 - Malarkey (you may subscribe here). There will be another bank added within 36 hours.
Here's that interest rate calculator from EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation . It shows how much interest you should be getting in return for the banking risk that you are taking.
As a reminder for those who wish to ignore my banking calls as a frivolous episode of Chicken Little, BoomBustBlog is the place that was the first to reveal:
- The collapse of Bear Stearns in January 2008 (2 months before Bear Stearns fell, while trading in the $100s and still had buy ratings and investment grade AA or better from the ratings agencies): Is this the Breaking of the Bear?
- The warning of Lehman Brothers before anyone had a clue!!! (February through May 2008): Is Lehman really a lemming in disguise? Thursday, February 21st, 2008 | Web chatter on Lehman Brothers Sunday, March 16th, 2008 (It would appear that Lehman’s hedges are paying off for them. The have the most CMBS and RMBS as a percent of tangible equity on the street following BSC.
- The collapse of the regional banks (32 of them, actually) in May 2008: As I see it, these 32 banks and thrifts are in deep doo-doo! as well as the fall of Countrywide and Washington Mutual
- The collapse of the monoline insurers, Ambac and MBIA in late 2007 & 2008: A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton, Welcome to the World of Dr. FrankenFinance! and Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion
- The ENTIRE Pan-European Sovereign Debt Crisis (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010: The Pan-European Sovereign Debt Crisis
- Ireland austerity and the disguised sink hole of debt and non-performing assets that is the Irish banking system: I Suggest Those That Dislike Hearing “I Told You So” Divest from Western and Southern European Debt, It’ll Get Worse Before It Get’s Better!