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Thread: The €35,938,000,000 question:whywill FG/Lab pay the unguaranteed senior bondholders?

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    Question The €35,938,000,000 question:whywill FG/Lab pay the unguaranteed senior bondholders?

    There is much discussion on this site and others, that the new government is in a strait-jacket by reason of the complete mess the last government left them with. There is nobody who can disagree with this statement.

    But there is also a repeated suggestion, that the reason no bondholder wil/should be left behind, is because of the Bank Guarantee of 30th September, 2008. That does not appear to be so.


    92. Deputy Stephen Donnelly asked the Minister for Finance:
    the total euro amount of unguaranteed secured and unguaranteed unsecured senior bonds in the guaranteed Irish banks which have been paid back to bondholders to date; the estimate for the total amount outstanding for these categories of bonds which will be paid out; and if he will make a statement on the matter. [13818/11]

    Minister for Finance (Deputy Michael Noonan): In answer to the Deputy’s question, the Central Bank of Ireland has provided me with the following details:

    Unguaranteed Senior Secured. Unguaranteed Senior Unsecured.
    Amount repaid since 29 September 2008 €1,298 million €6,029 million
    Amount outstanding as at 30 May 2011 €19,632 million €16,306 million


    The above amounts are at current foreign exchange rates and the Deputy will appreciate that the amounts can fluctuate as exchange rates change.
    Dαil Ιireann - 01/Jun/2011 Written Answers - Financial Institutions Support Scheme

    Here were the full figures from the Central Bank.
    http://www.financialregulator.ie/pre...20Debt.doc.pdf

    Sorry, I may have missed the explanation (or a thread or two on it) but I just can't see the rationale why this new government will do this? Is there a link to say the whole banking system will collapse if the normal rules of capitalism are followed? Is there evidence of a dictat from the ECB? Are Fine Gaelers just honourable people who think debts of honour should be repaid?

    (The distinction between secured and unsecured bondholders might also be blindingly obvious - but what is it secured against?)

    €7.3bn: the cost of bailing out unguaranteed bank bondholders so far · TheJournal

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    Bizarre. There seems to be an untouchable Elite making bizarre decisions at the expense of the State.

    T'is very difficult to justify, in the same way that putting €30 Billion in to Anglo was crazy.

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    Politics.ie Member Panopticon's Avatar
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    Legally, they must dissolve all equity before imposing losses on holders of debt. This is a standard principle of corporate law and it is respected in every country. This would entail, in effect, the dissolution of the Irish banking system, as the State controls the banks through preference shares.

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    Politics.ie Member stopdoingstuff's Avatar
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    why? because the ecb insists and our political establishment take their orders from abroad. we have been sold out, just like the populations of the many third world nations forced to pay someone else's odious deb,t by the ecb and their irish representative, the irish state. our own state has made us slaves to the financial classes. that's why.

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    Because they are demonstrably by their actions and by breaking their pre-election promises = lies, that FG/Labour are simply the FF/Green party in new clothes

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    Politics.ie Member HarshBuzz's Avatar
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    Quote Originally Posted by stopdoingstuff View Post
    why? because the ecb insists
    exactly

    we have no leverage, the ECB control the funding tap and, if they turn it off, we're dead
    “'retail deposit flight, I don't see that as a great danger. Ireland is an island” - Brian Lenihan - to hundreds of international investors

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    Politics.ie Member macs magic's Avatar
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    Vote no1 FG, it'll be grrrrrrrrrrrrrrrrrrrrrrrreat

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    Quote Originally Posted by Panopticon View Post
    Legally, they must dissolve all equity before imposing losses on holders of debt. This is a standard principle of corporate law and it is respected in every country. This would entail, in effect, the dissolution of the Irish banking system, as the State controls the banks through preference shares.
    Can you elaborate on this point, please? (it stands to reason).

    In any normal liquidation, after the liquidator and revenue are paid, and then registered secured creditors, with the unsecured taking a cut of what's left. Anglo is obviously not a normal liquidation. But if the shareholder (us) loses the benefit of their 'asset' , then they are not pursued for debts. Next in line is the unsecured creditors (subordinated unguaranteed debt holders who face a severe haircut but not a complete wipeout to encourage takeup), surely the unguaranteed unsecured senior bondholders come next? How does the preferential shareholder (us again) get hit beyond losing what we have already 'invested'?

    (apologies for my ignorance and if I have confused terminology/concepts). Thanks.

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    Politics.ie Member hammer's Avatar
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    Quote Originally Posted by macs magic View Post
    Vote no1 FG, it'll be grrrrrrrrrrrrrrrrrrrrrrrreat
    Vote DELUDED Fianna FAIL IMF Anglo No 1.

    We know we destroyed the country and its people.
    Next time will be different

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    Quote Originally Posted by Panopticon View Post
    Legally, they must dissolve all equity before imposing losses on holders of debt. This is a standard principle of corporate law and it is respected in every country. This would entail, in effect, the dissolution of the Irish banking system, as the State controls the banks through preference shares.
    Sounds good to me.

    No point holding onto institutions that are sucking the lifeblood out of the economy.

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