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Posts tagged ‘Central Bank and Financial Services Authority of Ireland’

1916: We need an Easer Rising today

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The Sunday Independent today has practically vindicated every stance I have taken on the banking crises, the overpaid golden circle of top civil servants and the current Irish laws which protect the rich and well connected and punishes the poor. We do not have a just society in Ireland and there cannot be any justice as long as the current political class maintain their grip on the country’s wealth and the livers of power. We have only the notion of democracy in this country, we go through the motions of voting in a new government only to find out that nothing has changed .The promises made only six weeks ago are long forgotten and we are now beginning to see we have replaced one lot of gangsters with a bunch of stooges The crooks from the last government still have their cronies and lackeys in their positions and nothing is going to change.

The poor and the outsiders (85% of the Irish people) have now been made debt slaves and we don’t have one decent patriot in the Dail that will stand up and demand justice for the people of Ireland

No Sir we will have to do this ourselves just like in 1916 .Not one member of the Dail today is worthy to untie the shoe laces of those men of 1916.They must be wondering what did we die for ?

Ireland Should Consider Joining the Sterling Area or the Dollar.

 

This excellent article was sent in to day by our friends in www.wealthbuilder.ie

 

Ireland Should Consider

 Joining the Sterling Area or the Dollar.

 

“On Thursday 18th  November 2010 The IMF arrived in the Emerald Isle. What a sad sad day that was  for the proud people of Ireland. Following 300 years of armed struggle the then resident Fianna Fail government replaced English masters with the Continental variety. However the method of usurpation this time was not guns and bullets and starvation but economic and financial prowess. To the victor will go the spoils.” 

This was written at the end of 2010. It is now  nearly 5 months on  and the crisis which brought the IMF to Ireland shows no signs of abating. As we speak the full extent of the problem has not been fully comprehended.  As mentioned previously there are now in effect 7 levels to Ireland’s financial fiasco.

1.         Insolvent Property Development Lending.

2.         Unsustainable Annual Government Deficits.

3.         Sovereign Debt Credit Rating Collapse.

4.         Insolvent Consumer Debt Lending.

5.         Insolvent Mortgage Debt Lending.

6.         “Off Balance Sheet: Mark To Market” Derivative Debt.

7.         140 Billion Short term ECB/ Irish Central Bank Lending Facility Which Cannot Be           Secured Long Term.

All the above “problems” need a solution. The Euro is on the verge of implosion and we are still only half way through recognising the crisis, never mind solving it. As more and more countries become affected the options open to the mandarins at the ECB/IMF will be fewer and fewer. Eventually it must be recognised that the only way to solve the banking crisis is for each country to find a way to restore growth. When the implications of the austerity cul-de-sac is fully understood it will finally be accepted that the only real option left will be currency devaluation. This measure would save the tourist industries in Spain, Greece and Portugal and return competitiveness to Irish manufacturing, tourism and agriculture.

Thus Ireland needs to take action similar to that taken by Argentina in 1998. In that year this formerly South America tiger faithfully managed to “humble” American banks and dollar bondholders. She de-coupled her currency from a disastrous one-to-one parity with the Dollar and so saved her economy and her social contract. In addition she forced American mortgage holders to accept “pari-pasu” payment in the new devalued currency rather than in old dollars. Thus Argentinean homeowners did not suffer the fate currently being experienced by Latvians and Lithuanians where hard Euro mortgages must be repaid in sinking national currencies.

Ireland needs to get support from her Euro zone partners that enables her to significantly cut her debt exposure to private bank bondholders. If this action is not allowed Ireland should let it be known that she will consider joining the Sterling Area or possibly merging with the Dollar. This course of action may seem extreme but the simple fact is that the economic picture is so grave that it is only through such decisive and courageous measures that the disintegrating Irish financial structure can be salvaged. The Irish have nothing left to lose.  Ireland will not be able to negotiate with strength if she does not have options on the table and threatening to leave the Euro, or even the Euro zone completely, is a very strong bargaining chip. But the threat will have no value if it not backed up with planning, organisation, critical review and cost-benefit analysis. Thus forthwith the new coalition government, under Prime Minister Enda Kenny should set up a task force to explore all aspects of the respective Sterling and Dollar strategies. Ireland is in a difficult place and it is time for creative thinking. The European association has all but destroyed Ireland. The Irish nation must realise that we now owe Brussels  nothing for it failed to regulate the availability of European Central Bank credit as is mandated under the Maastricht treaty. It has thus proved itself to be strategically, administratively and politically incompetent.

Why is it important that Ireland explore these options? Well the main reason is that through simple devaluation we can restore competitiveness to our economy without applying crippling ECB/IMF deflationary “austerity measures.” Of course to prevent inflation and its concomitant problems undermining future growth of the nation, real enterprise with real wealth benefits must be promoted. The civil service mentality of pay without production must be finally put to rest. Economic survival demands it. The joust with European socialism must cease forthwith as it has brought us to the brink of national collapse.

If Ireland chooses to stay in the “Imperial” Euro and tries to continue to belong to a club it cannot afford Brussels’ price will be economic suicide for the proud Irish nation. Without strong renegotiation of our way of doing business with the Europeans Ireland will be left saddled with a debt burden that is unsustainable. The country will be left by the European elite to slowly but surely rot in economic stagnation, living on hopes and prayers and dreams and sound-bites emanating from a media bought and sold for by bond technocrats in Paris, Frankfurt and Strasbourg.

German and French banks call the shots

THE latest figures from the Bank for International Settlements (BIS) show that Ireland owes banks in other EU countries a massive €310bn, with €196bn of this money due to banks elsewhere in the eurozone. These huge exposures almost certainly explain why the ECB has refused to countenance “haircuts” for the senior bondholders of the Irish banks. One of the salient features of the Irish banking crisis since it first erupted two-and-a-half years ago has been the dogged refusal of the ECB to allow us to impose haircuts or discounts on the holders of the senior bonds of the Irish banks. This was despite the fact that these senior bonds were trading at a significant discount to their face value. Instead, for reasons best known to itself, the ECB — in clear contravention of both previous market precedent and financial logic — has insisted that the senior bondholders be repaid in full and has lent the Irish banks, institutions which it must have known were hopelessly insolvent, €70bn to do so. So why has the ECB been so solicitous of the interests of the senior bondholders. The most recent figures from the Bank for International Settlements, the umbrella body for the world’s central banks, provide us with some clues. At the end of September 2010 Ireland owed the banks of other EU member countries €310bn, of which €196bn was owed to banks in other euro zone countries. In fact the underlying situation may be even worse than even these figures indicate as they exclude €123bn of “other exposures”, mainly derivatives and government guarantees that could become payable. As we in Ireland know only too well, government guarantees have a nasty habit of coming back to bite the guarantor. Of these other exposures, €78bn are potentially payable to banks in other eurozone countries. While the fact that Ireland owes UK banks €113bn with other exposures of €45bn hardly comes as any surprise given the large presence of British banks in the Irish banking market, the extent of our debts to banks from other eurozone countries isn’t so widely known. So to whom in the eurozone do we owe all of this money? Top of the list are German banks, to whom we owe €92bn with a further €38bn of other exposures. Does the fact that Irish banks potentially owe their counterparts up to €146bn explain the German government’s implacable opposition to any write-down of the Irish banks’ debts? After the British and the Germans, it is the French banks — with total Irish bank loans of almost €32bn and a further €23bn of other exposures — who have the biggest exposure to Ireland. Does this provide at least a partial explanation for French president Nicolas Sarkozy’s truculence when faced with Irish requests that senior bondholders be forced to accept a haircut? The Spanish and Italian banks have relatively small exposures to Ireland with direct loans to this country of €9.2bn and €10.6bn respectively as well as other exposures of €3.2bn and €6.4bn. However, there is one other large European creditor listed in the BIS statistics. This is the unspecified “other euro area“. The banks from these countries are directly owed almost €42bn by their Irish counterparts with a further €6.1bn potentially due under the other exposures heading. Who are these other euro area banks? Up to now the general assumption had been that this heading mainly covered Dutch, Belgian and Luxembourg banks. But given the sudden emergence of Finland as one of the most vehement opponents of cutting Ireland any slack I can’t help wondering if one or more of the Finnish banks have large piles of Irish debt sitting on their balance sheets. What is clear from the BIS figures is that a complete collapse of the Irish banking system would have had very serious consequences not just for British banks but also for banks elsewhere in the eurozone. This almost certainly explains the ECB’s phobia of any “contagion” caused by imposing a haircut on holders of senior bonds in the Irish bank bonds. It also gave the Irish government serious leverage, if it had chosen to exercise it. On the basis that if you owe the bank a million euro it is the bank which has a serious problem, the Irish banks owing other EU banks up to €433bn should have meant that it was the other EU banks who had a problem. Why wasn’t this leverage employed in the run-up to this week’s publication of the results of the stress tests on the Irish banks? Was there a failure of nerve on the part of the new Irish government?

source:http://www.independent.ie/business/european/german-and-french-banks-call-the-shots-2607577.html

Comment :

 “Not one cent more” was the cry and now these same people are now looking to pump 24,000,000,000:00 Euros more into these self same toxic banks. In the entire announcement there is no mention of the derivates losses that are still been hidden be the two banks Allied Irish Bank and Bank of Ireland in their IFSC off-shore branches. Well firstly these losses are been hidden in their offshore branches in the IFSC and they would appear that they are not subjected to any regulation, as the Irish central Bank says it is the ECB’s job to regulate these banks (because of their perceived offshore status) but the ECB says it’s the Irish Central Bank ‘s job,  so in the meantime nobody is regulating and so the Boys in Allied Irish Bank and Bank of Ireland have the best place to hide such losses and possibly also hold on deposit vast sums of hot money from around the world .

There is no mention as to the status of current derivative trades belonging to Allied Irish Bank and Bank of Ireland why?

There is no mention as to the further requirements of Anglo Irish Bank, who has just announced 17.500, 000,000:00 losses .The largest corporate losses announced by any company in the Irish republic’s history. These losses are swallowing 72% of the new funds we are now about to put into Allied Irish Bank and Bank of Ireland .This is just madness. So the Bank Debts are now 150 Billion owed to the ECB and approximately 55 Billion owed to the Central Bank this is so called short-term debt then we have our own national debt of 94,000,000,000:00 and we are now putting 70 billion into the banks and not to forget the borrowings of 75 billion extra to run NAMA for the Next 10 years .We then need another 19 billion to fill the gap in our national yearly budget, this year and perhaps the next four years as well. So let’s see our totals then!

150 Billion ECB

55 Billion Irish Central Bank

94 Billion Current National debt

70 Billion Bank bailout so far.

75 billion to run NAMA next 10 years

19 billion current projected year budget deficit.

Total so far 463 Billions and counting!

Note :

My figures seem to be conservative as I have not taken into consideration the debts Irish banks have to other European banks as highlighted above . I have only the ECB figures so things are in fact worse ,the overall figure could be well over  the 500 billion mark god help us !

 We are spending 54 Billion running the country, and we will end up paying 9 -10 billion just on interest payments every year and that is on current interest levels which are heading up by the way. The government have committed to cutting 3 billion in spending cuts in the next budget .But with these new borrowings I expect this figure to rise or they will have to cut a lot more civil service jobs either way spending 19 billion more than we are taking in will have to stop and the new masters in Europe will soon demand results      

 The number of mortgages outstanding in the Irish state is 786,164 and the total amount due on these mortgages is €99.08bn by the end February 2011. Surely it would be cheaper for the government to pay off all outstanding mortgages in the state and let the banks go down as would be the norm in any other capitalist system. In the Unites States last year 240 banks went out of business while here in Ireland we cannot close down even one bank however toxic it is! To keep NAMA going we are going to have to pay another 75,000,000,000:00 Billion over the next 10 years and that money is just going to waist, as this is the cost of running this new financial Quango. All we are doing is keeping X Bankers, solicitors, and estate agents in well paid jobs and these “insiders” are consistently telling the rest of us to tighten our belts and take our collective austerity medicine and shut up! By paying off the mortgages of all citizens we effectively are giving the largest stimulus the state has ever see and this would overnight put money into people’s pockets and would remove the massive mortgage millstone around every Irish families neck .Suddenly people would have money to spend and the economy will take off .it is certainly better that just pouring these billions into black holes and get nothing in return!

The economy is not likely to generate any serious jobs growth in the next three years as we are now more than likely going to have to endure even harsher budgets to come up with the funds to pay off the interest on these lost billions. More and more people will be losing their jobs and emigration is just getting started and home prices are heading down at least another 30 % from here.  The new government are fast abandoning promises to the voters of Ireland and we are left with the question what it all was for the good ship Ireland is still maintaining the course set by the previous despots and traitors who promised us that this bailout would be the cheapest in history! Nama is now turning out to be the mother of all Quangos and its jobs and Jobs for the well connected.

The mystery of the €7bn deposit into Irish banks by Minister Lenihan on the eve of the general election

By namawinelake http://wp.me/pNlCf-1ff

Last Thursday 31st March, 2011 can’t have been a pleasant day for our new Minister for Finance, Michael Noonan. With the weight of the commitments contained in the Programme for Government, it cannot have been easy to tell the Dail late last Thursday afternoon that the State would need inject a further €24bn into the banks, that there would be no burning of senior bondholders and perhaps most disappointingly, he wasn’t even able to offer us the consolation that the ECB was at least committing to the medium-term funding of our beleaguered banks. Perhaps he might have taken some comfort from the fact that the mess that he is confronting is not of his making, but regardless it was a speech no Irish finance minister would have wanted to make. Fast-forward two hours to when the newly-created Economic Management Council gave a news conference, the first five minutes of which are available here. During the news conference, Minister Noonan stated that in February, 2011 former Minister Lenihan put €7bn into the banks and slightly smirked as he observed to the media that “ye didn’t pick that up”.
I would like to bring you the transcript of precisely what Minister Noonan said but the 45-minute press conference which was shown in full on RTE Online doesn’t appear to be available, certainly not from RTE’s website or the government information service merrionstreet.ie but the €7bn was alluded to again today during RTE’s This Week radio programme when Tanaiste and one of the four members of the Economic Management Council, Eamon Gilmore again mentioned it in passing.
You will recall that in February, 2011 we were supposed to have injected €10bn into the banks as part of the EU/IMF bailout but that Minister Lenihan decided on 9th February, 2011 that he didn’t have a mandate, the general election having been called on 1st February2011. He invited the finance spokespeople for Fine Gael and Labour to write to him if they disagreed with his position, which neither did. So you might have thought therefore that no money was put into the banks in February, 2011? Not so, it seems according to Minister Noonan and Tanaiste Gilmore – €7bn was put in.
And where did the Department of Finance magic this €7bn from? In what must make the financial accountability of our government a travesty, we don’t know. If you consult the Exchequer Statement for the month of February, 2011 there is no mention of it there. There was obviously no press release at the time. So how did the banks get €7bn? My guess is that it comes from NTMA reserves or from National Pension Reserve Fund liquidations of position but neither made a statement on the matter in February 2011. But it might also come from the Central Bank of Ireland who doggedly refuse to disclose information on the €70bn Emergency Liquidity Assistance programme.
What significance does this €7bn have? Arguably none because we now seem resigned to injecting €24bn of which this €7bn is part. The significance I draw from it is that there is no presumption of accountability on behalf of government. A Minister can claim on one hand that he doesn’t have the mandate to inject €7bn+ into the banks but on the other can engineer €7bn of deposits. And when Minister Noonan said, “ye didn’t pick up on that”, how was the media supposed to have picked up on that when neither the national accounts, the Exchequer Statement nor other state agencies including the NTMA and Department of Finance didn’t make any statement on the matter.

source:http://wp.me/pNlCf-1ff

comment:

Brian Lenihan said in February, 2011 that he didn’t have a mandate to put another 10 billion into the banks but now we hear that he put 7 billion in to the banks on the eve of the general election???

This is a perfect example of lies and dam lies, Lenihan should be brought before the Dail and asked to resign his seat, in my eyes he is as big a layer as Lowry if the Moriarty report is to be believed. Minsters seem to think that it is acceptable to lie to the public and we the public seem to accept it because we vote these creeps back into Dail every time .What can we do about this corruption now?how much more can we the people of Ireland take?

Bank Bailout 5 on to number 6 !

In the Sunday Independent today the paper is full of the usual cheer leaders of government policy and these self appointed oracles of our economy are falling over themselves to try and convince the Irish public that taking on Euros 70,000,000,000:00(billions) debts of the private banks is the only way back to prosperity for the now enslaved Irish people. The new Government promised not one cent, but apparently now the goal posts have changed and the bondholders have made it clear just exactly who is now running the country. So we can change the government as often as we want but the outcome will be the same.The Dail this showed us that it too has no power but it can look after its own never the less

The boys are sitting pretty and with a massive majority we can expect to get just lip service as they pour billions more into the toxic banks Irish democercy is killed off.

 Promises made to us the little folk will drop away like dead leaves from autumn trees.

(photos : Sunday Independent )

Burning the Economy, Not the Bondholders

Live press conference: Publication of Capital and Liquidity Results by the Central Bank of Ireland 31/03/2011 16:30

The press conference will be available to view live online from 4.30pm.

 video here link

Not “one red cent” Mr.Kenny!

The government says it will not put “one red cent” more into the banks until we know the size of the overall requirement.

By namawinelake |

 The expression “one red cent” is gaining a lot of currency here in recent times. The origin of the expression is said to be the copper-ish red colour of the lowest unit of currency, the cent, in the US in the early 19th century and is used to betoken the smallest sum of money possible – to not pay “one red cent” means to pay nothing. Not only did Denis O’Brien unconvincingly – in the sense that most respondents to an opinion poll published in last weekend’s Irish Independent, didn’t believe him – claim that he had not paid former Minister Michael Lowry a “red cent” in return for favours in awarding a mobile telephone licence in 1995, but it was only a month ago when then-Opposition parties were eager to tell us that they would not be putting “another red cent” into Irish banks until the results of the stress tests became known in March.
Well, here we are one month later, and the stress test results will be published tomorrow but as this is Ireland, we seem to have had a healthy dose of leaks already which has caused Irish Life and Permanent to suspend trading of its shares until 1st April and the consensus is that the stress tests will indicate that a further €20bn will be needed by the banks to meet stringent capital requirements. This is €15bn less than the €35bn allotted to resolving our banking difficulties in the EU/IMF bailout, though it’s not clear which contributor to the bailout – EFSF/EFSM/IMF/domestic resources – will see a reduction in their contribution. However if the additional cost of capitalising the banks is put at €20bn then that will still mean that the cumulative bank bill will rise to €66-71bn. The table below is from the Department of Finance last September 2010 and shows the commitments at that time.
Anglo was to have cost us €29-34bn and unless we get an update on Anglo’s needs tomorrow (remember the stress tests didn’t touch Anglo or INBS) then we will probably have a range of values tomorrow also.
So what next? Will the stress tests be debated in the Dail and will options be explored including default? Will the Coalition simply stump up the €20bn without debate? Is it imperative that we act on the results of the stress tests immediately or have we the freedom to ponder our options over the coming weeks? Is now the time to re-open the “burning the bondholders” debate
– remember this was the bondholder position in Irish banks in February 2011, although there has been a massive redemption of bonds since the guarantee in September, 2008 there are still substantial sums that can, theoretically, be burned. Here are a few scenarios for the next few days.
(1) The government tells our bailout partners, particularly the ECB, that when we accepted the bailout in November 2010, the understanding was that the maximum additional sum required for the banks would be €10bn – after all, that is what one of the key negotiators, Central Bank of Ireland, Patrick Honohan was saying – and now that it is €10bn more, this is an appropriate time to discuss burden sharing. Might the ECB be supportive of burning the €16bn of unsecured unguaranteed senior bonds, maybe by paying them 50c in the euro.
(2) The government accepts the €20bn additional cost for bailing out the banks, but requires the ECB “medium term” facility to be set at €190bn, not €60bn. In that way, Irish banks will have a strategic certainty which they presently don’t have – the ECB, which is providing exceptional liquidity support, might unilaterally pull the plug. No country should allow its banking system to operate on this hand-to-mouth basis, especially since the “hand” is the ECB and beyond the nation’s control.
(3) The government accepts the €20bn additional cost for bailing out the banks but requires the EU to provide its element of the bailout at a cost interest rate, that is 2.8%. The 3% saving would amount to some €10bn in interest savings over 10 years. Given the Irish nation is taking on 100% of the banks’ liabilities, including those to shaky banks in Germany, France and the UK, then the least that can be done is to provide these funds at cost.
(4) The government accepts the €20bn additional cost and seeks a stimulus grant from the EU to allow our economy to grow so that the debt can be repaid and we don’t default. The stimulus might be used to fund capital programmes in broadband and communications, energy, transport, education, health, security including prisons. It happened before in the 1990s. Surely we now need it more than ever.
(5) The government accepts the €20bn additional cost but seeks an extension of the term over which the EU loans can be repaid. If the EU element of the bailout has to be repaid by 2018 and repayments start in 2015 then that means we need find €10bn per annum which might still be costly to secure from the market.
(6) The government chooses the nuclear option and takes the position that not only is the additional €20bn not sustainable but the €35bn of promissory notes already created last year for Anglo and INBS will not be honoured. The government disowns the guarantee, perhaps justifying itself on the basis that the guarantee was founded on incorrect information. A bank resolution process is put in place which protects depositors to €100,000 or €20,000 and beyond that, the banks are wound down as would normal commercial companies. No-one realistically believes the nuclear option will be pursued but it should surely be made clear that it is an option.
I have a feeling that tomorrow’s stress test results will be a bit of an anti-climax but regardless we are likely to have an official point estimate of the “final” cost of rescuing the banking system and the moment of truth will have arrived for our new government. sourceURL: http://wp.me/pNlCf-1da

Comment:

Not only do I expect this Government to brake this promise I would also expect that they will add another corrupt toxic bank (Irish Life and Permanent )on the list of banks the taxpayers of this country will be lumbered with. This corrupt Financial insider trading institution has been fleecing its own customers out of millions in a hopeless attempt to fill the black hole at the centre of its toxic bank and at the same time Directors who are responsible for the worst financial meltdown of this state have continued to benefit from the perks of their lottery salaries and pension entitlements. So far this new government has done nothing to rectify this criminal activity and are turning a blind eye to this outrageous exploration of all Irish bank customers. It would appear that the new government is content in allowing the Irish banks to exploit their own customers in attempting to top up their diminishing deposits. Instead of shoring up these toxic brands, the new government should immeadely wash its hands of these criminal intuitions and start afresh with one new commercial bank. It certainly would be the cheaper option .I personally wouldn’t trust any one of the current Irish banks, they are damaged goods and thrust is long gone .Close them down now!  I am holding the Government to their promise “Not One Red Cent”

Just what is stopping this palsied government?

By namawinelake 

“There is not one moment to be lost”
Labour Party Programme for Government, introduction
Okay, it was only 25th February, 2011 when we cast our votes in the general election and it was only 6th March, 2011 when Labour and Fine Gael (FG), who together had been tipped for months as the likely new coalition government, hammered out a deal for forming the new administration and it was only 9th March, 2011 when new Taoiseach, Enda Kenny formally picked up his medal/seal from the President confirming his appointment. But what we had a month ago was not a snap election, an election was firmly in the offing ever since the Greens (remember them?) announced with babes in arms on 22nd November, 2010, that they would be withdrawing from government imminently when certain bailout-related commitments were put in place. And even prior to that there had been a number of incidents last year – Willie O’Dea’s tribulations, Garglegate, the bombshell on 30th March when Minister Lenihan estimated Anglo’s bailout at €25bn, the controversial stag-hunting bill – which should have naturally put Opposition parties on an -election footing. The point is, that the new administration should have hit the ground running with policies and initiatives that had been developed over the previous months, if not indeed, years. This entry examines progress to date.
You might ask if it is too early to demand to see progress with a new government. After all they have just gotten their feet under the desks, why should we expect any real progress at this point? In response, not only should this administration have hit the ground running but it seems to be accepted as a truism that the first 100 days in a new government is when you start putting in place the reforms and developments which you intend seeing implemented. Okay, theoretically, the FG/Labour coalition will be in power for 1,800 days but most of this will be spent in the detailed implementation of policy and then ramping up for a re-election.
Looking at the Programme for Government, the document which sets out the jointly-agreed policy positions of Labour and FG, it is striking that practically no progress has been made. Take one example, the restoration of the minimum wage to €8.65 per hour – remember it was cut in January 2011 to €7.65 per hour in line with a commitment given in the IMF/EU bailout agreement, and it was to apply to new hires only. Given that both Labour and FG pledged the reversal of the cut in their individual manifestoes, the pledge then making it unaltered in the joint Programme for Government and given Labour and FG have 113 deputies in the 166-deputy Dail, not to mention the same commitment from others, Sinn Fein and United Left Alliance for example which comprises a further 19 deputies, then why has the new government failed to restore the minimum wage? Surely this is entirely within their control and doesn’t involve State expenditure. Curious.
Looking at the Finance commitments which of primary interest on here the Programme for Government, progress here is representative of progress across all the departmental portfolios, that is, there doesn’t appear to have been any.
(1) Renegotiate IMF/EU bailout – on hold, initial overtures rebuked apparently because the Taoiseach would not offer something in return, specifically in the area of corporate tax
(2) Structural reforms – none announced
(3) Replacing emergency ECB funding with medium term funding – there are rumours of a €60bn medium term fund custom-made for Ireland. Irish banks are in receipt of €180bn+ of short term funding at present from the ECB and Central Bank of Ireland. Will confidence be restored amongst investors if only one third of current short-term funding is converted into medium term funding?
(4) Ending further transfers to NAMA – On 7th March, 2011 AIB announced the transfer of €1.1bn of loans to NAMA. There has been no further public word on NAMA’s intentions with Paddy McKillen’s loans or with the sub-€20m exposures at AIB and Bank of Ireland.
(5) Increasing credit availability – nothing announced
(6) Introduction of special resolution regime for bank insolvencies – this was commenced by the previous administration on 28th February, 2011 with the publication of the CENTRAL BANK AND CREDIT INSTITUTIONS (RESOLUTION) BILL 2011 but as far as I can tell it has not been debated in the new Dail or progressed in any way.
(7) Disposal of public stakes in banks – nothing announced
(8) Creation of “integrated decision making process” to improve government responses to the financial crisis – well there is now a grouping of four – Taoiseach Enda Kenny, Tanaiste Eamon Gilmore, Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform, Brendan Howlin – but it is not clear how it is working and whether or not it has yet accomplished anything
(9) Restructuring banks boards and creating pools of suitable candidates – nothing announced
(10) Highest standards of transparency in the operation in NAMA – nothing announced. The NAMA quarter four, 2010 (year end) report is apparently already on Minister Noonan’s desk, a week before the due date of 31st March, 2011. How long will it take him to publish it?
(11) Establishment of a strategic bank – nothing announced
(12) Establishment of credit union commission – nothing announced
(13) Establishment of financial services taskforce to maximise employment and opportunities – nothing announced
(14) Investigation of banking failures – nothing announced
Michael Noonan has reportedly spent much time talking – talking domestically with the NTMA, Central Bank and his new staff at the Department of Finance and, I would expect, NAMA; talking internationally with the IMF, ECB, EU and Federal Reserve. Of course what is overshadowing the many micro-decisions that must be made, is the ongoing stress test, but I understand that the results have been known in general terms for a couple of weeks and there is now even reporting which claims the tests will show an additional capital requirement in the €20bn-zone, more than the €10bn that was to have been injected in February 2011 but less than the €35bn allowed for in the bailout. So why should the stress tests be holding up progress elsewhere?
Of course it is still unknown how “the market” will react to the stress tests when the results are published this Thursday but the betting is that regardless of the level of detail disclosed, there will still be some scepticism about future losses (and not just in Anglo and Irish Nationwide Building Society, neither of which is even being subjected to a stress test). And the big decisions facing Minister Noonan will closely involve the EU/ECB and to an extent, the IMF. But Minister Noonan must now at least know the broad parameters of the problem, and anyway why is that stopping progress elsewhere in his department.
So, as far as I can see, there is little outward sign of much life in the Department of Finance. New initiatives to deliver the commitments in the Programme for Government are also apparently absent from other ministries. Perhaps more than one month is needed to start the ball rolling but the urgency suggested by Labour’s spirited statement “there is not one moment to be lost” does seem to be at odds with the apparent lack of progress across all ministries including Finance.

source URL: http://wp.me/pNlCf-1cz

 

Comment:

Everybody I know that is in the markets is not taking a blind bit of notice of the 3rd stress tests

They believe that we will not get the real picture as we are now really playing a European game dictated by the German banks and the new Irish government is still going to stay the previous Fianna fail course .They have said as much by telling the Irish public that there will be no change for the next two years !

When the public finally realize this they will come out on to the streets but then it will be too late as we will have lost all our own funds in the National Pension Fund.

Irish bailout set to double as ECB converts overdraft to term loan

 

By namawinelake

How much of a bailout will Ireland need to rescue her from the financial crisis? “You can work it out for yourselves” said former Minister Lenihan last November, 2010 on the eve of the EU/IMF rescue. And on here, we did and estimated €207bn. In the event, the headline bailout was confirmed at €85bn a few days later, which was greeted with surprise  here. The €85bn comprises €17.5bn from Ireland’s own reserves and €67.5bn from external sources (simplistically €22.5bn from the IMF and €45bn from the EU). The €85bn bailout was advertised as comprising €50bn for dealing with our ongoing budget deficit and €35bn for the beleaguered banking sector. Four months later and it seems that realism is creeping into the assessment of Ireland’s finances. And the bailout, it seems, is now set to double for the following two reasons.
(1) It is now understood that Irish banks will face funding difficulties for some time to come. Confidence in the country’s banking system has evaporated which has had a double-whammy effect – deposits have fled and alternative market sources of funding have not been available. Step forward the ECB and the Central Bank of Ireland which have been funding Irish banks to the tune of €100bn+ since last May 2010. This funding is typically short-term which makes our banking sector entirely dependent on the ECB and with the stroke of a pen in Frankfurt, Ireland could be rendered back to a barter society. Plainly this is no way to run a banking system, or indeed, a country. And it now seems that the ECB has been persuaded to convert its overdraft to Irish banks to a more formalised term loan which might give the banking sector (not to mention the nation) some confidence that its ATMs will be operating after the weekend. The Irish Times today reports that a new “medium term” facility totalling €60bn is to be made available to Irish banks. “Medium term” is not defined so we don’t know if it is three months or three years but the tone implies the latter. No sources for the story are cited, it’s an “The Irish Times has learned –“ piece but the claim is that there will be an announcement after the results of the bank stress tests are revealed on Thursday next, 31st March.
With respect to the bank stress test results on Thursday next, the opinion bubbling through the media is that additional capital of some €25bn (compared with the €35bn which the bailout makes available) will be required. Taoiseach Enda Kenny apparently has the draft numbers – I would be shocked if the ballpark numbers have not been known for some weeks – but it will be Thursday next when we get the presentation of the €20m-costing exercise. The battle to convince our bailout partners that there shouldn’t be further capital-sapping fire sales seems to have been substantially won. And that being so, it seems imperative that medium term funding for our banks be strategically secured. It would seem though that €60bn still leaves the banking sector heavily exposed to changes in sentiment and dependent on the ECB, but perhaps that is intentional as it will place the ECB is a commanding position when those pesky domestic interests demand a burning of the bondholders.
(2) Although the NTMA might try to give you some guff that the existing bailout will meet “existing debt maturities” to 2013, the EU believes that we will need go back to the market in the second half of next year. And if we look out the window to see how the market is looking at the moment, then the prospects of a return there next year don’t look great. Our 10-year bond closed at 10.12% mid-point yesterday, a record and up from the 6.6% at the end of September, 2010 which saw us decide to retire from the bond market. Will we be able to attract “market” finance for the State at rates below 6% by the second half of 2012? Maybe, who has a crystal ball but from this position, it seems like a demanding ask. And if we are effectively deprived from seeking market finance then we will need to seek an augmentation of the bailout. We have €6.852bn of debt maturing in 2012 and €7.137bn maturing in 2013. Are we going to leave the funding of this maturing debt unaddressed for another year? That is no way to run a country, so presumably we will shortly seek funding to cover this maturing debt also. How much will we need? With a further €12.674bn maturing in 2014, about €25bn should cover our needs until the end of 2014.
And together, the €60bn medium-term ECB facility and the funding of our maturing debt to the end of 2014 of €25bn will give €85bn, a doubling of the existing bailout. Some further points:
(1) Although David McWilliams might say that the ECB is funding “worthless rubbish” in Irish banks, there are other views which claim that the ECB is careful to fund gilt-edged assets in the banks and to apply appropriate haircuts. So this formalisation of funding from the ECB could be said to be backed by verifiable asset values in banks.
(2) The funding of maturing debt will not add to our national debt in that we are simply substituting one loan (from the market) with another loan (from the IMF or EU).
(3) Even with a formal €60bn medium-term facility, Irish banks will still be dependent on the ECB and Central Bank of Ireland to the tune of €120bn + (end February 2011 figures). So it seems that Ireland will remain dependent on the ECB for stability of its banking system for some time to come. Yes, the other 16 Eurozone countries are likewise dependent on the ECB but we are absolutely dependent on short-term lending which must surely expose the country to a national strategic risk.
(4) The €60bn facility will be between the ECB and the banks, but the betting is that it will be guaranteed by the State. In any event, the main banks – Allied Irish Banks, Bank of Ireland and EBS are either State-owned or effectively State-controlled. Irish Life and Permanent’s status as an independent financial institution doesn’t look too promising and the stress test results on Thursday next might make that bancassurer particularly exposed to mortgage losses.

source: URL: http://wp.me/pNlCf-1cf

Comment:

“The ECB and the Central Bank of Ireland which have been funding Irish banks to the tune of €100bn+ since last May 2010”. Wrong I believe it is 150 billion from the ECB and 50 Billion from the Irish Central bank. In any case the notion that we the taxpayers are going to be expected to again pour another 25 billion into these toxic black holes is sheer madness .These bankrupt and corrupt financial institutions are toxic and have lost all credibility, for the last two years they have been fleecing their own customers trying to shower up their balance sheets and after two and a half years we still do not have a final figure, Why? Because they are powerful enough to tell the government of the day to piss off and keep pumping billions into their coffers to replenish their private bad debts. The figure we are going to get next week will not be the true figure as there is still no mention of the enormous derivative losses still been hidden from the Irish public .These losses are more than likely been kept in the off shore branches of Allied Irish Bank and Bank of Ireland (In the tax haven IFSC) .I would estimate that total losses are in and around 280 Billion to 340 Billion .Why should we believe stress test three, why not stress test four, or stress test five????

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