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  1. #1
    LeDroit LeDroit is offline
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    The Deal with the Devil

    Sept 2008. Anglo, AIB, BoI, etc all turn up to a late night meeting with the two Brians. They give the country an ultimatum. Guarantee us or if we go down, the country goes down with us. The govt reluctantly agrees. So far, so plausible.

    Over the course of the following year the govt realise the 'data' given by the banks was basically lies, nowhere more so than from Anglo. The govt are told that ALL of the banks have broken financial regulations in their dealings with the public, each other and the govt. These breaches offer the govt a way out of the guarantee. But they don't take it. Puzzling.

    Also over the course of the that year the govt never approach the bondholders of the banks to discuss, negotiate or inform them that their investment/bet hasn't panned out and that they will have to take a hit. The govt don't do this because they say if we did then these same bondholders wouldn't lend to us. Meanwhile, the bond yield hits 9.2%. More puzzlement.

    And so we see that the reasons for the guarantee were bogus. The reasons to maintain the guarantee were bogus. The reasons for the bailout of bondholders were bogus.

    So why did they do it? Follow the money. The bondholders, as we've discovered, were all German, French and British banks and pension funds. If we'd insisted on the bondholders taking the pain, the contagion would have destroyed their economies. Therefore, Occam's Razor applies. The most obvious reason is most often the truest. We did a deal with the Devil. The Germans, British and French made us an offer. Be good, take the medicine, and we'll ensure you won't go under. It started with making ECB funds available for promissory notes to actually pay the bondholders. Then, they made ECB funds available to buy Irish govt debt on the bond markets to push down our yields. This is in direct contravention of ECB rules. Why? Occam's Razor. The Deal.

    So, what's the next step of the deal? The ECB bailout will cover all of the new national debt caused by the bondholder bailout, €60-80Billion. But, still why would the govt take that on if they didn't have to? Watch the interest rate we're charged. If it's 2-3% it means our growth and/or inflation over the next ten years will eat into the debt. In other words, we just cover the interest and the capital will dwindle in relative terms over time. But still, you say, why would we do it? My hope is it enshrines our Corp Tax rate and will probably get us some minor goodies like the return of fishing rights etc, but my fear is that the Brians were panicking so much, and being intimidated so much that they did it just to keep the Devil happy. The only problem is when you play cards in the Devil's casino, the house always wins.
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  2. #2
    Absurdo Absurdo is offline

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    Or it could be .....

    ... simpler. The Brians did not want the bondholders to enforce their contractual rights to liquidate the assets underlying the bonds. This would have exposed all the tentvillers and wiped out the great and the good of the golden circle. Swopping into EU bonds keeps it political and buys time - maybe their horse will sing. Like the NAMA nonsense.

    I don't believe in the sudden surprise being sprung that night. Many people expected it (was there not some legislation prepared before hand?). The endless procrastination in the investigations is just more of the same.

    I was at Kilkenomics and Macca was sure that housing had another 30% to drop. Other interesting point was from Minister for the Economy of Argentina - they went into 5 year on year growth rate of 8% p.a. within months of default - we know this is the only thing that will work.
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  3. #3
    DeGaulle 2.0 DeGaulle 2.0 is online now
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    Suppose Anglo collapsed and banks in France (pop 65 million) and Germany (pop 82 million) lost 35 billion. That's the equivalent of a 1 billion loss to Ireland's banks. This conspiracy theory makes no sense. The simplest explanation is stupidity and incompetence.
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  4. #4
    Doodah Doodah is offline

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    There are potential legal problems with the proposed Irish-Portugese EU bailout, with a challenge to the Greek bail-out due in a German court. The IMF (via Strauss-Khan) have descibed the Irish problem as a banking problem - ie. Anglo.
    Merkel/Germans/EU want private bondholder liability in matters of sovereign debt. eg. Anglo bondholders.
    Germans/Brits/French gave support on Friday.
    Forget 2013. Liquidate Anglo in the morning.
    Let the ECB deal with the details afterwards.
    Bail-out complete.
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  5. #5
    maxthedog maxthedog is offline

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    Quote Originally Posted by LeDroit View Post


    It started with making ECB funds available for promissory notes to actually pay the bondholders. Then, they made ECB funds available to buy Irish govt debt on the bond markets to push down our yields. This is in direct contravention of ECB rules. Why? Occam's Razor. The Deal.

    So, what's the next step of the deal? The ECB bailout will cover all of the new national debt caused by the bondholder bailout, €60-80Billion.
    We already have a national debt of 90Billion add on your ECB bail-out off 80 Billion plus the 400K we need each week too run the country and any idea you put forward of time plus inflation, easing the debt is ludricous.

    What you are witnessing is that Ireland is the money laundering machine, for the corrupt business and politians who stand to make fortunes as they shift another 80 billion into the wild west.

    They don`t care if Ireland can repay, they simply need a credible story so as to soak the public. "We must take 80Billion and give it too Ireland so as to protect the Euro"

    Rubbish, thats like saying if Kentucky goes bust.the US will collapse.

    In 20 years time the penny may finally drop and the people of Europe will ask , Where did all those Billions go. But by then they wil be too late as bogus companies,complicit auditors and a corrupt political mafia, will have retired.
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  6. #6
    hmmm hmmm is offline

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    Why the conspiracy theories? We've already found out that Cowen and Lenihan were off at the races that weekend, I think they thought they could pull a stroke by signing a guarantee and get back to opening supermarkets. There has been no evidence that they properly prepared for this decision, if they had prepared they wouldn't have needed midnight meetings.
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  7. #7
    consultant consultant is offline

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    Quote Originally Posted by maxthedog View Post
    We already have a national debt of 90Billion add on your ECB bail-out off 80 Billion plus the 400K we need each week too run the country and any idea you put forward of time plus inflation, easing the debt is ludricous.

    What you are witnessing is that Ireland is the money laundering machine, for the corrupt business and politians who stand to make fortunes as they shift another 80 billion into the wild west.

    They don`t care if Ireland can repay, they simply need a credible story so as to soak the public. "We must take 80Billion and give it too Ireland so as to protect the Euro"

    Rubbish, thats like saying if Kentucky goes bust.the US will collapse.

    In 20 years time the penny may finally drop and the people of Europe will ask , Where did all those Billions go. But by then they wil be too late as bogus companies,complicit auditors and a corrupt political mafia, will have retired.

    You know, reading this reminded me immediately of Bertie.

    Same MO, same spin.

    Either he is cloned or every country in th EU has someone similar. Or the FF mafia is more widespread than we thought!!
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  8. #8
    hammer hammer is offline
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    They didn`t believe the Bankers, did they ?

    Surely not.

    They got & paid for expensive independent advice.

    The bankers didn`t lie. They just didn`t understand how bad it was going to get. They probably believed the Government spin that was out there at the time as well. Soft landing. Regulator saying everything was well capitalised.

    Dont blame just the Bankers, blame the w.............
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