Originally Posted by SPN

a) Did the UK burn senior bond holders

b) Could we have done this unilaterally when EU/EZ policy (supported by ECB liquidity to the banks) was to rollover bonds as they matured.

Had we had a bank resolution mechanism, and been prepared to put the banks into resolution, we could probably have done more or less what we liked...or rather, and this is the point, we could have done what was in the bank resolution mechanism. ECB support, which is what gives the ECB's opinion weight, is necessary only because the government preferred to pretend the banks were solvent.

All a little moot, though, because people are forgetting or ignoring another massive point, which is that the government agreed with the ECB.

Originally Posted by ibis

All a little moot, though, because people are forgetting or ignoring another massive point, which is that the government agreed with the ECB.

Everyone agreed with the policy, they were trying to save the Euro, what everyone didn't agree on was who was going to carry the can for the cost, but the ECB made sure we got stuck with the total of that. They're playing with the big boys now in Spain and Italy and suddenly the attitude & policy changes, amazing isn't it?

Will we stay with the same policy says the ECB, like f**k we will say Spain and Italy, fair enough then says the ECB. The EU "all for one and one for all" policy at work.

Believe it or not, but there are those among us who would like to see us hand over what independence we have left to the same EU and they've managed to convince themselves that it would be good for us. What world they are living in I do not know.

It is also likely that Draghi knows the real story in Italy and is using the Spainish problems to push the agenda so that when Italy hits the buffers they can just point to the Spanish precedence of burning bond holders....

Originally Posted by tonic

Everyone agreed with the policy, they were trying to save the Euro, what everyone didn't agree on was who was going to carry the can for the cost, but the ECB made sure we got stuck with the total of that. They're playing with the big boys now in Spain and Italy and suddenly the attitude & policy changes, amazing isn't it?

Will we stay with the same policy says the ECB, like f**k we will say Spain and Italy, fair enough then says the ECB. The EU "all for one and one for all" policy at work.

Believe it or not, but there are those among us who would like to see us hand over what independence we have left to the same EU and they've managed to convince themselves that it would be good for us. What world they are living in I do not know.

Hmm. One in which Ireland is not helpless and insignificant, but is often badly governed and thus the author of its own misfortunes, perhaps.

What remained burnable after the majority of bondholders were paid off under the guarantee amounted to maybe €8 billion in possible savings, which is 12.5% of the bank costs (calling those €64 billion approx), or 6% of our debt burden. The other 78.5% was taken onto Ireland's books by the September 2008 decision, which, in turn, was taken before the ECB decided we should stick to what we'd said we'd do, something the government agreed to - and that's a matter of record (and some surprise to the IMF).

Who would take on the debt but Ireland, if the senior bondholders were not going to be burned, as appears to have been government policy throughout?

It might be worth pointing out, before we spiral off into an argument, that I'm not one of the "bankster gaurantea woz treeeeson!!!" brigade. Admittedly, of course, that's because I see it as a nearly inevitable outcome of a decade of bad decisions...

Originally Posted by Howya

It is also likely that Draghi knows the real story in Italy and is using the Spainish problems to push the agenda so that when Italy hits the buffers they can just point to the Spanish precedence of burning bond holders....

That occurred to me too.

We will find out shortly what the market thinks. If sovereign yields rise then we know Spain and Italy are in very deep ************************. If they fall then it's great.

Originally Posted by odlum

We will find out shortly what the market thinks. If sovereign yields rise then we know Spain and Italy are in very deep ************************. If they fall then it's great.

Spanish usage of ECB facilities has risen €350 billion in a year and now totals 35% of the system's deposits.

This % could rise quite sharply depending on how such news is received. Did Draghi think of this? Did he intend for this if its proven to be the case?

Separately, the whole 'bad bank' proposal. I struggle to understand how a 'bad bank' can legimately issue bonds to raise cash from the ECB. Doesn't the ECB already have enough junk on its books?

Crucially, the bad bank will be able to issue bonds which can be used as collateral to access ECB facilities, a little-noticed form of back-door central bank sovereign funding.

Would this not be some form of back door about way to raise cask for junk, without revealing the quality of junk?

Rajoy Needs to Stand Up to Spain's Banks - WSJ.com

Originally Posted by ibis

You can't bankrupt a central bank. It's a divide by zero error. But no doubt ZeroHedge have some way in which this not only can happen, but must happen, will happen, and will bring the euro down in a matter of days.

Central Banks can go bankrupt.

Originally Posted by odlum

We will find out shortly what the market thinks. If sovereign yields rise then we know Spain and Italy are in very deep ************************. If they fall then it's great.

Where do you think some of the €450 Billion that Eurozone banks withdrew from the ECB deposit facility since Wednesday will go?

Ireland still has bondholders. 2 big ones in fact. The IMF and the EU.