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Thread: Lenny's Big Fat Lie

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    Politics.ie Member Malbekh's Avatar
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    Default Lenny's Big Fat Lie

    It's hard not to like Brian Lenihan. He didn't ask to be Minister of Finance and take on the world's worst economic crisis, none of which was his making. It's hard after all, to influence government economic decisions as Minister for Children (2002 - 2007).

    There's also his courage and endeavour to tackle and withstand an awful cancer.

    Nonetheless, such is the catastophic nature of our economic crisis that sympathy has to go out the window particularly if like me, you are following an agenda to get rid of this government as quickly as possible. So regretfully, I'm afraid I am going to have to call Lenny out on the big lie this week, the one that he and other FF ministers and TD's have trotted out with gay abandon.

    The lie we are told, is that at all times the government has seeked to limit the losses to the taxpayer. This is easily disproved in the case of Anglo Irish and INBS. In order of cost, here are the losses accrued to the stakeholders in these fine, upstanding financial institutions.

    The senior bondholders post September 2008. The state guarantees any bonds sold by any of our financial institutions post 2008 to present. This is why the senior bondholders can't be burnt. It is to all intents and purposes as good as sovereign debt, if we were to default on these bonds (and it is for the lifetime of the bonds) then we might as well default entirely. These bondholders are making an excellent return in the rate of interest they are charging. No loss, excellent profits.

    The senior bondholders pre September 2008. The state has guaranteed to pay back these bondholders during the lifetime of the scheme. All bar about 4b has been paid back. In spite of the fact that these bondholders took a calculated risk when they took what effectively were worthless bonds in an insolvent bank, they have either gotten their money back or will be getting it back shortly. With interest. No loss, reasonable profits.

    The depositors. Anyone with a deposit in these institutions will get their money back. Whether you are a family, or the ECB, your deposit is guaranteed and earning the relevant interest allowed, if applicable. Zero loss. Some profit.

    The subordinated bondholders. Anglo has already aggressively seeked to limit the repayments on these bonds, in spite of the guarantee scheme. Typically they have and will be discounted by up to 70%. Hilariously, this will be spun as making a profit when reality they are worthless junk bonds. These bondholders are losing 70% of their stakeholding, but will be thankful in getting anything.

    The shareholders. Once nationalised, the shareholders lost everything. This includes families like you and I along all the way up to the top financial instutions. I put this next to last, because any shareholding has a risk. Total Loss.

    And finally, we have the Irish taxpayer. We will be putting 40b+ into these two institutions and getting absolutely nothing in return. Unlike the shareholders, we did not sign any coupon along the dotted line to participate in this scheme. Our losses are total, and we are the bottom of this particular pyramid scheme.

    Brian Lenihan has expressly said that at all times, he has seeked to reduce the cost to the taxpayer. In his dealings with these institutions he has done the reverse and actively pursued a policy to maximise the losses to the taxpayer.

    Brian Lenihan.

    Liar.
    Blessed be the threadmakers.

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    As usual Prof. Morgan Kelly is on the money :


    This debt would probably be manageable, had the Irish government not casually committed itself to absorb all the gambling losses of its banking system. If we assume – optimistically, I believe – that Irish banks eventually lose one third of what they lent to property developers, and one tenth of business loans and mortgages, the net cost to the Irish taxpayer will be nearly one third of GDP.

    Ireland is like a patient bleeding from two gunshot wounds. The Irish government has moved quickly to stanch the smaller, fiscal hole, while insisting that the litres of blood pouring unchecked through the banking hole are “manageable”. Capital markets may not continue to agree for long, triggering a borrowing crisis which will start, most probably, with a run on Irish banks in inter-bank markets.

    Ireland may therefore present an early test of the EU bailout fund. However, in contrast to Greece, Ireland’s woes stem almost entirely from its banking system, and could be swiftly and permanently cured by a resolution which shares the losses of Irish banks with the holders of their €115bn of bonds through a partial debt for equity swap. Morgan Kelly: Whatever happened to Ireland?; Bank losses may push Ireland's debt-GNP ratio up to 140% in 2012

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    Tabloid.
    Self-serving.
    Factually incorrect.
    Nonsense.

  4. #4
    Politics.ie Member Catalpa's Avatar
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    Quote Originally Posted by Malbekh View Post
    It's hard not to like Brian Lenihan. He didn't ask to be Minister of Finance and take on the world's worst economic crisis, none of which was his making. It's hard after all, to influence government economic decisions as Minister for Children (2002 - 2007).

    There's also his courage and endeavour to tackle and withstand an awful cancer.

    Nonetheless, such is the catastophic nature of our economic crisis that sympathy has to go out the window particularly if like me, you are following an agenda to get rid of this government as quickly as possible. So regretfully, I'm afraid I am going to have to call Lenny out on the big lie this week, the one that he and other FF ministers and TD's have trotted out with gay abandon.

    The lie we are told, is that at all times the government has seeked to limit the losses to the taxpayer. This is easily disproved in the case of Anglo Irish and INBS. In order of cost, here are the losses accrued to the stakeholders in these fine, upstanding financial institutions.

    The senior bondholders post September 2008. The state guarantees any bonds sold by any of our financial institutions post 2008 to present. This is why the senior bondholders can't be burnt. It is to all intents and purposes as good as sovereign debt, if we were to default on these bonds (and it is for the lifetime of the bonds) then we might as well default entirely. These bondholders are making an excellent return in the rate of interest they are charging. No loss, excellent profits.

    The senior bondholders pre September 2008. The state has guaranteed to pay back these bondholders during the lifetime of the scheme. All bar about 4b has been paid back. In spite of the fact that these bondholders took a calculated risk when they took what effectively were worthless bonds in an insolvent bank, they have either gotten their money back or will be getting it back shortly. With interest. No loss, reasonable profits.

    The depositors. Anyone with a deposit in these institutions will get their money back. Whether you are a family, or the ECB, your deposit is guaranteed and earning the relevant interest allowed, if applicable. Zero loss. Some profit.

    The subordinated bondholders. Anglo has already aggressively seeked to limit the repayments on these bonds, in spite of the guarantee scheme. Typically they have and will be discounted by up to 70%. Hilariously, this will be spun as making a profit when reality they are worthless junk bonds. These bondholders are losing 70% of their stakeholding, but will be thankful in getting anything.

    The shareholders. Once nationalised, the shareholders lost everything. This includes families like you and I along all the way up to the top financial instutions. I put this next to last, because any shareholding has a risk. Total Loss.

    And finally, we have the Irish taxpayer. We will be putting 40b+ into these two institutions and getting absolutely nothing in return. Unlike the shareholders, we did not sign any coupon along the dotted line to participate in this scheme. Our losses are total, and we are the bottom of this particular pyramid scheme.

    Brian Lenihan has expressly said that at all times, he has seeked to reduce the cost to the taxpayer. In his dealings with these institutions he has done the reverse and actively pursued a policy to maximise the losses to the taxpayer.

    Brian Lenihan.

    Liar.
    I agree with your opening lines but bear in mind that ANY Minister of Finance anywhere has ala 007 a License to do what needs to be done in the Service of the State - to a point.

    Lenihan can lie his pants off if by doing so he stops a run on Ireland and lowers the cost of our ability to borrow.

    Its not his lack of honesty here that is the issue but his blundering into such a huge undertaking (The Guarantee of Debts by the Irish Financial Institutions) when he had no idea how much they owed.

    That and his gullibility at believing the spoofery he was being fed by certain people within those institutions.

    A fact he has now all but admitted.

  5. #5
    Politics.ie Member LongShanks's Avatar
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    Quote Originally Posted by tonic View Post
    Tabloid.
    Self-serving.
    Factually incorrect.
    Nonsense.
    I presume you're referring to "it's of systemic importance".
    "every saint and sinner in the history of our species lived there on a mote of dust suspended in a sunbeam. -Carl Sagan, Pale Blue Dot

  6. #6

    Default

    Quote Originally Posted by tonic View Post
    Tabloid.
    Self-serving.
    Factually incorrect.
    Nonsense.
    Stop going on about Lenihans press performances of late. He is not a well man. You would do well to remember that. I thought you were supportive of the 'party'.
    Sure Lenihan tells the truth, the whole truth and nothing but the truth, so help me Willie o'Dea.
    Fianna Fail - The Anti Democratic Party & The Anti Constitutional Party. Traitors of Irishmen and Irishwomen.

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    Malbekh, you logic is completely flawed.

    How do you know what the cost to the taxpayer would be if other options, like letting Anglo go, or de-stabilising the entire system would be?

    Your logic seems to be that because the cost is enormous, that the we have defaulted to the worse case scenario. You can't make that assertion, because we will never know the consequences of other decisions.

    To use an analogy, the economy was a car flying down a road with Lenihan at the wheel. Suddenly we had a blow out, and the car started careering out of control. Lehihan had to crash it somewhere; it was going to be a wreck no matter what he did, and the fact that he steered it into into one ditch rather than the other doesn't change that.

    Debt is like matter. It can't be destroyed. You can squash it down but it will just pop up somewhere else. Regardless of what action has been taken, Anglo's debt would have to be dealth with somewhere and sometime.
    A demagogue is someone who will preach doctrines he knows to be untrue to men he knows to be idiots.

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    There's also his courage and endeavour to tackle and withstand an awful cancer.



    How the hell is he being courageous???
    He is getting the best of care that our money can buy. I have more respect for the thousands or ordinary people out there that have to battle this awful disease with little or no means. And I make this point...he is the healthiest looking cancer patient I have ever seen. Awhole year of Chemo, long economic late nite sessions added to the undoubted stress of the
    situation, and the man looks perfectly healthy...does he really have cancer or is this a lie too????

  9. #9
    Politics.ie Member Catalpa's Avatar
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    Quote Originally Posted by goosebump View Post
    Malbekh, you logic is completely flawed.

    How do you know what the cost to the taxpayer would be if other options, like letting Anglo go, or de-stabilising the entire system would be?

    Your logic seems to be that because the cost is enormous, that the we have defaulted to the worse case scenario. You can't make that assertion, because we will never know the consequences of other decisions.

    To use an analogy, the economy was a car flying down a road with Lenihan at the wheel. Suddenly we had a blow out, and the car started careering out of control. Lehihan had to crash it somewhere; it was going to be a wreck no matter what he did, and the fact that he steered it into into one ditch rather than the other doesn't change that.

    Debt is like matter. It can't be destroyed. You can squash it down but it will just pop up somewhere else. Regardless of what action has been taken, Anglo's debt would have to be dealth with somewhere and sometime.
    Its more a case he was put in the driving seat as the car headed over the cliff...

    But he had other options than the one taken and chose not to pursue them.

    He could have guaranteed the depositors in each bank up to a certain amount and gone the whole hog for BOI & AIB (not Anglo-Irish!)

    With hindsight the decision made was clearly the wrong one.

    The Government should have had not made such a huge commitment when it knew it was not in a position to judge the depth of the losses incurred in the Irish Banking system.

  10. #10
    Politics.ie Member Malbekh's Avatar
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    Quote Originally Posted by tonic View Post
    Tabloid.
    Self-serving.
    Factually incorrect.
    Nonsense.
    Thanks for your detailed analysis of my thread.
    Blessed be the threadmakers.

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