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Archive for the ‘Government-guaranteed for Banks X Bank of Ireland X institutional investors X mortgage’ Category

spreads tell a story

CDS spreads  

Mr Lenihan, these figures tell the Irish People the real story the spreads cannot be dismissed and you are going to have to come clean on the true nature of the Banks derivatives time bomb

No more account gimmickry! No More drip, drip losses!

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Welcome to the crises of Credit

Welcome to the crises of Credit

Ireland is going through a crises of credit .The attached video clip explains how this crises happened

And hopefully also gives you an insight to the problem we are facing. So the next time Brian Lenihan says we have turned a corner or property has bottomed out you will know better.

We haven’t even begun to deal with the real problem and that is the derivatives time bomb.

Credit default swaps are mentioned in the video clip pay close attention to them!

With the government having embarked on the slash and burn budgets and now their attempt to get the opposition to sign up to even tougher budgets and all because they want to hand over the savings to international “investors” you don’t have to be a genius to see that this is bringing us down the road to destruction Why? Because they are taking away the means for the still paying home owners to pay their mortgages, people start losing their jobs and then they will start to default, already 90,000 people are behind in their mortgages payments and that is before we even get started on the even tougher budgets

Of 2011,2012,2013,2014 each budget will have to slice off approximately 5,000,000,000:00 each year of the budget deficit and that is not counting the billions that we have to pay in interest on the remanding national sovereign deficit plus the cost of bailing out Anglo Irish Bank, the bonds sold into the market by the rest of the banks .

The government has to come clean on the Credit default swaps and the leveraging exposures of the banks only then will we know the exact nature of the problems facing us.

We are nowhere near the bottom and lenihan knows it only too well and now the opposition parties have some idea as well! With the government’s insistence on bailing out the private bank Anglo Irish and their establishment of NAMA they have created the perfect storm. They have done exactly the wrong thing; they have rewarded the gambling investors and are cowering down to their demands to be bailed out and have the Irish taxpayers pay for their sour investments.

This course of action is not surprising because the government are receiving advice from the same advisers that advised the international investors to lend their funds to Anglo in the first place!

In a nutshell vested interests are running the finances of this country and when nothing is left they will consent to calling in the IMF who will have no other option then other than to sell off the country in bits and pieces to the same vested interests

What a scam!

How spin works

There you have it Brendan Keenan (Independent Newspapers) says the banks are fine swallowing the government’s line that the Irish Banks aren’t insolvent. Then we had Professor Morgan Kelly (UCD) advocating allowing the non retail (Anglo Irish Bank) banks to be let go! Then we had Kevin McConnell, Head of Research, and Bloxham Stockbrokers again touting the spin of the Government

Fast forward to today and see who was right surprise surprise why the noble professor.

Now what have learned out of this?

The establish news media in towing the government line and you can’t believe a word from the vested interests of people like Bloxham Stockbrokers who after all want to sell you shares in these Toxic banks Stockbrokers get paid in fees on trades. They have no incentive to talk down the market. It hasn’t gone unnoticed how they have been the cheerleaders for NAMA.

Markets are right to be worried

Markets are right to be worried — ‘final’ €50bn to fix banks looks like tip of iceberg

Sunday October 10 2010

THE soaring cost of bailing out the banks means that Ireland is now locked out of the bond markets.

Lenders are terrified that they might not get their money back. And they are right to be worried because the real cost of fixing our broken banking system is almost certain to far exceed even the €50bn figure that has so terrified Irish taxpayers and the international financial markets.

Last week, Finance Minister Brian Lenihan announced that the cost of fixing Ireland’s broken banking system had risen once again. He put the “final” cost of sorting out the Anglo mess at between €29bn and €34bn, up from the €25bn figure that had been previously indicated by official sources.

Just for good measure Mr Lenihan also announced that AIB would require an extra €3bn of new capital while the Irish Nationwide needs an extra €2.4bn.

When the estimated cost of bailing out each institution is totted up, the total comes to just more than €50bn.

That is a truly terrifying figure, the equivalent of about 40pc of the value of this year’s economic output as measured by GNP.

The reaction to Mr Lenihan’s announcement was immediate and severe. The government was forced to cancel the last three monthly bond auctions of 2010 as international investors insisted that the government devise a credible fiscal strategy; while the political system went into a deep shock from which the only escape route is likely to be an early general election.

Unfortunately, things aren’t as bad as Mr Lenihan told us last week.

They are almost certainly much worse.

First things first. Even the €34bn cost of bailing out Anglo, which the government insists is a “worst-case scenario”, will almost certainly be exceeded. That is the view of ratings agency Standard & Poor’s, whose bearish stance on the likely cost of the Irish bank bailout has consistently been vindicated by events.

For what it is worth, some analysts now reckon that bailing out Anglo will cost up to €40bn.

This would push up the total cost of fixing our banks to €55bn.

However, horrific and all as it might be, a €55bn tab for sorting out the banks might be just about bearable if we and our creditors could be confident that this was the final figure. Unfortunately we can’t be sure that the meter will stop running at even this enormous figure.

When one looks closely at the figures published last week it is clear that, with the exception of Anglo, the extra capital being pumped into the banks relates almost exclusively to losses suffered on loans being sold to Nama or, in the case of AIB and Bank of Ireland, loans of between €5m and €20m that had originally been destined for Nama but will not now be transferred to the state’s bad bank.

Which, of course, begs the question, if the banks have suffered such horrific losses on the loans they are transferring to Nama, about a fifth of their total peak lending, what sort of losses can they expect on their other loans?

When it published its half-year results on August 4, AIB revealed that, after transferring about €23bn of bad loans to Nama and the disposal of its Polish, American and UK interests, that it would have a loan book of about €81bn.

This loan book will include €27bn of Irish residential mortgages, €32bn of business banking loans, €16bn of commercial and SME loans and €6bn of personal loans.

Over at Bank of Ireland, the composition of its expected post-Nama and disposals loan book looks remarkably similar to that its great rival.

Bank of Ireland is expecting to have a total loan book of €82bn of which €28bn will be Irish mortgages, €31bn of non-property lending to SMEs and other corporates, €24bn of property and construction lending and €4bn of consumer lending.

Meanwhile, Irish Life & Permanent‘s mortgage banking subsidiary Permanent TSB, which has transferred no bad loans to Nama and has not had to be bailed out by the taxpayer, had a €38.7bn loan book at the end of June which included €27.6bn of Irish residential mortgages, €8.1bn of UK residential mortgages, €2.3bn of commercial lending and €1.5bn of consumer lending.

What are the odds on at least some of the banks’ post-Nama loan books going bad?

Between them the six Irish-owned banks had €99bn of residential mortgages on their books at the end of June. With house prices now down by at least 50pc from the peak and still falling, a significant writedown in the bank’s mortgage loans books is inevitable.

Even a 20pc writedown would cost the banks a further €20bn in fresh loan losses.

The combined €50bn that AIB, Bank of Ireland and the Permo have lent to SMEs and other companies must also be vulnerable to further, substantial writedowns as is their €11.5bn of personal lending. And as for the banks’ non-Nama property and construction lending, I’d be very surprised if it wasn’t cause for a few sleepless nights among the surviving bank bosses.

Add it all up and it is clear that even the €55bn estimate for the cost of bailing out the banking system will be comfortably exceeded, with Standard & Poor’s now putting the likely figure at €90bn.

The way things are going, I suspect that the S&P estimate could well turn out to be a floor, below which the cost won’t fall, rather than a ceiling, above which it won’t rise.

Comment :

             +derivative Losses 200,000,000:00?

This figure is creeping up and up and up and This Minster Lenihan is definitely not firing on all cylinders!

He is going in the wrong direction, Mr Lenihan is still digging an even bigger hole and I think we will not now be able to get out of it without massive help from the IMF.

With the available figures still dirp, dirp, dripping out of the Finance Department I now believe we are looking at a possible 150,000,000,000:00 (Billion) but without a look at the books in Bank of Ireland, Allied Irish bank, and Irish Life and Permanent, remember these institutions are issuing their own bonds and the government are guaranteeing these bonds.

There are bonds coming up for renewal to the tune of 30 to 45 Billion from the various banks and I can’t see how the banks are going to re-finance under the current circumstances.

Needless to say we are not been given the full figures and I expect that Lenihan and his gang of financial terrorists will try to sneak out more bad figures soon ,this would more than likely be done using cronies from the various media they control .

At this stage we the public have been softened up and there is likely to be more and more drip drip feed of bad news.

The government’s attempt to con the opposition parties into a half-baked union is most telling and this tells me that the real figures must be really bad!  Even worse that my figures as I keep reminding people there is no mention of the huge losses on their derivatives trades by the  various banks and these losses will have to be brought out for all to see sometime .  
    
This brings a whole new meaning to the praise “Well connected”
This stinks to high heaven!

http://thepressnet.com/2010/10/03/nama-changes-were-designed-to-keep-bank-of-ireland-private/

and http://thepressnet.com/2010/10/02/majority-of-countrys-banking-system-nationalized/

Bank of Ireland and accounting gimmickry

Bank of Ireland announced that €2.1bn of formerly NAMA-bound loans would not be going to NAMA. Where are they going, if anywhere? Why are they not going to NAMA? Is this a further contraction in NAMA’s performing loan portfolio (BoI have had the best performing loans thus far evidenced by their top of class 36% average weighted haircuts on Tranches 1 and 2). It is interesting that the EU Decision on BoI’s future which was made in July 2010 has not yet been made public more than two months later. BoI emerged from yesterday’s statements as the only healthy NAMA Participating Institution in the sense that it doesn’t need additional capital. Has some jiggery pokery gone on with the €2.1bn of formerly NAMA-bound loans to enable BoI to meet its PCAR requirements?

Full article here http://namawinelake.wordpress.com/author/namawinelake/

German war reparations

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It took Germany 90 years to pay off 25 billion in war reparations for the First World War.
The US gulf will need 20$ Billion to clean it up .

Ireland is now been saddled with debts of 36.5 billion and that’s just Anglo Irish Bank plus the other banks another 14 billion a nice round 50,000,000,000:00
How long will it take for this little country to pay off this private debt?
Cowen and Lenihan will go down in history as the most incompetent politicians in Irish History and the leaders of the opposition parties coming in close behind.
This country needs competent men and woman in the dail and not selfish leaches sucking our country dry.

Place you’r bets on Bank Of Ireland

 

A few months ago, I said that  Bank of Ireland share price would fall  to 55 cent  and even lower down to the 20’s . Any of my followers that took heed of my advice will now be nursing huge profits

Bank in April I warned that the rights issue was a complete rip off and the Government went ahead and purchased 575.6 million shares at €1.80 each. So at this mornings prices we the taxpayers have sustained loss again of 70 % = 402.92 million Euros in 5 months

In any other business these incompetent baboons Lenihan and Cowen  would be kicked out of office  ,Truly monkeys wouldn’t do any worse!

As for the distressed shareholders I afraid there is more bad news on the way .Bank of Ireland I believe ,Is harboring derivatives, and the news  cannot be  good . Anglo and Allied Irish Bank are also in the dog house and nothing will change the direction of the shares until the full facts are known and I don’t mean the banks telling us fibs we need to have an independent audit done on their derivatives trades of which I believe we are looking at 150billion at least in losses

In other words all the banks are insolvent and we are on course for a final showdown with the IMF having to step in and save the day

Shareholders get rid of the toilet paper you are holding.

http://thepressnet.com/2010/04/29/aib-shares-worth-0-60-cent/

http://thepressnet.com/2010/05/20/ponzi-scheme-warning/

http://thepressnet.com/2010/04/26/%e2%80%9cthis-is-a-blatant-attempt-to-rob-existing-shareholders-of-the-merger-holding-of-the-carcass-that-is-bank-of-ireland%e2%80%9d/

http://thepressnet.com/2010/08/11/bank-of-ireland-posts-huge-losses/

Lenihan logic: heads you win and tails you win for the bondholders

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Irish Finance Minister Demonstrates that he doesn’t believe in Capitalism
By The Fundamental Analyst, on September 24th, 2010
Here again we see another case of those that embraced capitalism on the way up, shudder at the consequences when things go the other way. Take the latest comments from the Irish Finance Minister, from Reuters:
Irish finmin says no chance banks, govt will default
DUBLIN, Sept 22 (Reuters) – It is unthinkable that Ireland or its banks would default on senior debt, Finance Minister Brian Lenihan said on Wednesday.
Opposition politicians and some media commentators have called on Lenihan to force bondholders in Anglo Irish Bank [ANGIB.UL] to take some of the hit for the nationalised lender’s massive losses, which are a major burden on the exchequer.
“It’s unthinkable that Ireland would default on senior debt or that Ireland’s banks would default on senior debt,” Lenihan told Reuters in parliament.
“Ireland is not prepared to be some kind of social experiment for bank default.”
Why is it unthinkable? I’m not up to date with the extent of Anglo Irish Bank’s problems, but if the losses are big enough to eat through all subordinated debt then senior debt is next in line, simple. This is what happens in a restructuring, equity holders get taken out and bondholders take a haircut. Maybe the losses aren’t that big that senior bondholders need to take their lumps, but even so, to make a blanket statement such as the Irish FM has made demonstrates that he is firmly of the belief that bondholders aren’t responsible for their mistakes and that capitalism should be suspended when things go pear-shaped.
 
Comment:
There you have it once again Lenihan is way out of touch with the norms of capitalism
Its all about risk that’s why bondholders get to demand such high interest payments because there taking a gamble and if things go pair shaped they go and take a bath
Lenihan has a logic of heads you win and tails you win for the bondholders and they love him for it!
Maybe it would be better if Lenihan was in charge,”lets shift Cowen “me thinks the bondholders might be thinking”!

“A picture is worth a thousand words”

Europe’s biggest can of worms is overflowing again.
Fears that Europe’s banks are vulnerable to losses on risky government bond investments are sending shivers through the European bond markets, especially Ireland and Greece. Investors are dumping risky bonds tied to weaker European economies and crowding into the safe havens of German and British government bonds.
Ireland, which is grappling with an increasingly expensive bail-out of troubled lender Anglo Irish Bank, is the single worst performer Tuesday.
The premium that Ireland has to pay over Germany to borrow from investors in the bond market has hit its highest level since the euro was created in 1999 (Specifically, 3.75 percentage points compared with 3.47 percentage points on Monday.) Prices of Irish bonds have fallen, sending the yield on the benchmark 10-year Irish bond above 6%. (Bond prices and yields move inversely.)
Greece isn’t faring much better. The yield on its 10-year note is nearly 12%, while its own “risk premium” over Germany has also blown higher. Portugal’s spreads are also weaker. Credit-default swaps for Spain, Portugal, Ireland and Greece have all jumped in price, suggesting investors are more worried about these countries defaulting on their debts

Source http://blogs.wsj.com/marketbeat/2010/09/07/europes-bond-market-tanks-again/

Struggling with the euro zone’s biggest budget deficit relative to its gross domestic product at more than 14% last year, Irish authorities are also grappling with the ballooning cost of bailing out the banks, especially state-owned Anglo Irish—a bill that has already hit €33 billion ($42.55 billion), or roughly 20% of Ireland’s GDP.

Source http://wsj.com

ON THE radio on Monday, Brian Lenihan spoke of “not showing his hand” to the European Commission. He suggested that we in Ireland had to “hold our nerve”. These phrases are not normally used in economic policy — rather, they come straight from the world of poker.
This language is appropriate as it probably best sums up the Government’s policy throughout the banking crisis — it has all been a big bluff.
Yesterday, the financial markets reacted to the gambler’s words by selling Irish bonds, thus driving the yield (at one stage) up from 5.78pc to 6.15pc.
Yields came down to 6.01pc, following rumours that the European Central Bank was buying Irish bonds. We are fast becoming a vassal state of the ECB, the only institution prepared to buy Irish bonds.
The ECB is doing this for one reason — to protect the bondholders of Anglo from the default which has to come. In this little game, we issue expensive IOUs at 6pc that the ECB buys with money it prints for nothing to keep open zombie banks that don’t lend. The ECB is doing this not to protect you, but to protect rogue creditors who have no right to expect that they will be paid.
source http://www.davidmcwilliams.ie/2010/09/08/we-dont-have-an-economic-policy-its-all-just-a-big-bluff

Ireland has effectively nationalised its financial system for two years: it will guarantee deposits and debts for the country’s six biggest banks until 2010. This means it is assuming potential liabilities of around EUR550bn, compared with existing government debt of EUR40bn and overall GDP of EUR160bn. The move has increased pressure on the UK authorities to boost the size of the deposit guarantee.
The move was designed to shore up rapidly dwindling confidence in the banking sector. Irish financial sector shares plummeted early this week amid fears that it is particularly dependent on the frozen interbank market; loan to deposit ratios are 150% in Ireland compared with 130% in the rest of the EU, Sebastian Orsi of Merrion pointed out in the FT. Banks have been “bleeding money” as the Irish property and construction markets have tanked, noted Ambrose Evans-Pritchard in The Daily Telegraph. Ireland has become the first eurozone member to slide into recession now that the property bubble has burst and consumption has slumped.
What next?
By effectively betting its economy, Ireland has “certainly upped the stakes in the confidence game that is banking”, as Alphaville said in the FT. The hope is that the guarantee will improve Irish banks’ access to funds on world markets. But Ireland may be in for a bumpy ride. Note that the banks’ assets are highly concentrated in “fast-fading” UK and Irish property, said Lex in the FT. At Anglo-Irish Bank, the exposure to these two sectors is 80% and at Bank of Ireland and Allied Irish it is 71% and 60% respectively. And if markets keep withholding wholesale funds from “property plays”, then the government “may have to reconsider that guarantee”.
source https://info.moneyweek.com/article.php?p_id=10807

Comment :
“A picture is worth a thousand words”

I have posted the various sources above in support my own opinion that the government are totally on the wrong economic path and what’s even worse they are hell bent on sticking with this disastrous policy all logic seems to have disappeared and we are becoming slaves to the mantra we must spin ourselves out of this mess no matter what
Brian Lenihans language is increasingly that of a gambler (read DavidMcWilliams latest posting on this Link above)
David is one of the country’s finest economists and it would appear this government are choosing to ignore his sound advice just like they did on the eve of the first bank blanket guarantees
This is the time when the government should be getting the best minds in the country to come up with a real solutions to the financial crises that is after all their own making
Whether you agree with me or not, that facts are the well informed lenders (Bond Traders) of the world certainly do so, and what’s more they are getting very nervous at the lack of this governments realistic economic road map
The constant dirp drip feed of ever more disastrous figures emanating from Anglo and NAMA should frighten all of us
The Governments belligerence and a misplaced sense of loyalty to their pals a la Galway tent has to be abandoned pronto, and these gamblers must face the music themselves
The Irish nation cannot afford the commitments made by incompetent government minsters that are overwhelmed by the sheer complexity that is the Derivatives market
It is just plain stupid to expect civil servants who have no training in this field to advice party indoctrinated con men to understand these financial nuclear bombs
There are only a hand full of people in the world that understand these complex financial instruments ,even after 10 years of market participation myself I still don’t know anybody in the field that has successfully traded their way into profit
These financial instruments were created by the largest financial corporations in the world (AIG, JP Morgan, Citi etc and they were designed as far as I can make out to protect themselves as they were the market makers as well as the insurer and we all know that insurance companies are notorious in looking after themselves
the bottom line here is the markets have now copped on to the spin the Irish Government have been spewing out on the world’s airways and they Ireland Ink has a set repayment capability and that is now breached and any further surprises coming from Anglo Irish and Allied or Bank of Ireland is going to push this little country over the Default Bridge
And with the current Captain on the Irish Titanic ignoring the warnings of Icebergs dead ahead what does he do?
Call for more Ice for his pals cocktail,s

Mr. Aynsley and the greens playing to the cameras


Mr. Aynsley of Anglo Irish Bank last night hit out at the Green Party’s call for a wind-down of the nationalized lender.
He would wouldn’t he! Nobody likes to have to leave a party in full swing! And he is having a ball at the expense of the Irish taxpayers sitting on a nice fat salary and pension with no pressure to deliver profits.
Disastrous results is the new norm that is expected from his boss the Minister of Finance Brian Lenihan who is an expert at getting his figures wrong .
Any other CEO would be fired on the spot
I would like to know why the greens have now decided to jump ship as it were. with Anglo chief executive Mike Aynsley coming out yesterday warning of “horrendous” results on the way do they know something else that is hidden from the rest of us?
Mr. Aynsley was scathing in his response to the Greens’ comments, saying it was “difficult to understand” “While some of the information is commercially sensitive,(another way of saying we won’t tell you everything least of all the real truth) we are more than willing to sit down with interested parties and take them through it,” he said. “If the Green Party’s Finance spokesman is interested in getting an informed perspective he is more than welcome to meet us,”
Well Mr. Aynsley I’m an interested party along with the rest of the Irish public.
Does your invitation extend to the citizens that have to pay your salary?
No is the answer here again here is some more code
Sources in the bank stressed that it would be “no surprise” if the European Commission imposed some limitations on Anglo’s so-called ‘good bank’
In other words the EU has major doubts about this half-baked idea to Split the bank up
I believe it is an attempt by the boys to dump all the toxic crap onto to the taxpayers of the country and keep themselves in good jobs and run with the choice assets.
In other words good old “asset stripping “to the tune of 10,000,000,000:00 Billion euro
We the public have been lied to from the outset by Brian Lenihan who claimed that the whole Anglo bailout would cost 4.5 billion but so far we are looking at a minimum of 36,000,000,000:00 billion that we know of, but it could be a lot more maybe up to 50,000,000,000:00
The rising cost of rescuing Anglo was partly responsible for a surge in Irish bond yields last week with interest rates reaching highs of 5.9pc.
Another interesting point made yesterday by Minster Ahern was his statement that
“There was no political difficulty with the Greens and indeed Fine Gael as he claimed they were all on board in accepting the governments stated objective for Anglo Irish Bank
So voting for Fine Gael would be a vote to continue the same bailout madness to the top developers and bank fraudsters still sitting on the boards of the corrupt banks.
Now I see why Edna Kenny was so at home, as he crewed around the fairways of the K-club.
Why he is amongst friends and you always look after your friends in the political world .

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