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Posts tagged ‘Sovereign wealth fund’

By Christopher M. Quigley B.Sc., M.M.I.I., M.A.

Lastweek, on “black Thursday” the Irishgovernment in essence finally nationalized Allied Irish Bank. In response to the horrific national financial picturepainted by Mr. Brian Lenihan, Ireland’s finance minister, Peter Sutherland, former Irish attorney general, hit the media road. Mr.Sutherland’s mantra was similar to that previously presented by his acolyte Mr.Honohan (head of the Irish Central Bank). This mantra stated that though the figures were lamentable they were “manageable.”Now I have had a great deal of respect for Mr. Sutherland but as current events unfold I must respectively question hisjudgment. He points out that Ireland is not in “desperate” shape. He points outthat: “Ireland has funding up to 2011 and has 24 billion Euros in its Sovereign Wealth Fund.”  Thus, in his estimation,Ireland will not go broke until 2013, at least. According to his policy it is“OK” for the government to continue to fully guarantee, and pay as they falldue, “retail” banking bonds. It is my argument that these bonds should have been negotiated down in September of 2008 when the Irish bank guarantee wasfirst issued ( See article: “ A Bank Guarantee Too Far”). Should we adopt the course advised by Mr. Sutherland it is quite conceivable that Ireland will go completely bankrupt around 2013-2014, with no practical strategy for recoveryon offer.

This gruesome fact has even been acknowledged, publically, by nonother than Mr. Bill Clinton former President of the United States of America.

The former attorney general’s approach flies in the face of alternative prudentcouncil and public opinion. This council takes the view similar to that of aged grandparents who have saved all their lives and wish to present a legacy totheir grandchildren. These grandparents want these savings fostered, cherishedand grown. However, Mr. Sutherland wants to treat this treasure as if he were as a spoilt teenager. He seeks to squander it immediately and gamble this resource away on reckless bailing out of bondholders who lent money on risky land deals.Public opinion and international experts have pointed out that these sovereignwealth funds are the base through which Ireland could build its future. These funds could be used to set up a new, free and unencumbered National Irish Commercial Bank. This bank would get Irish credit and Irish commerce moving again. And the maths of this strategy makes sense. Under the new Basle banking agreement banks may lend up to 33 times their unencumbered cash base. This means that thesovereign wealth fund could be used to create credit in the amount of 24Billion multiplied by 33, which equals 792 billion. Almost a trillion Euros.This is the productive legacy the grandparents want for their savings. Not the squandering of hard saved assets wasted on transient speculators. These assets are Ireland’s Phoenix resource. The sovereign wealth fund is a pension fund not a teenage holiday stipend.

If Peter Sutherland’s views continue to be adopted as policy by the Department ofFinance, Ireland without its sovereign wealth fund intact, will be broke and vulnerable. In its inevitable bankruptcy Ireland’s “family silver” will eventually be put on the auction block by the IMF and theECB. Irish banks, airports, power plants, power grids, sea ports, roads, airspace, semi-states, media assets, railways, forests, lakes, water, remaining mineral rights, all will be up for grabs. The only folk with money or credit to fundsuch acquisitions will be the friends, associates and financial alumnae of Mr.Sutherland who, as you may know, is the non-executive chairman of Goldman Sachs International, one of the biggest “vulture” banks in the world.

 

_________________________________ Christopher M. Quigley B.Sc., M.M.I.I., M.A. QuigleyCompany@gmail.com

Comment:

Chris,

An excellent piece of work But I would go further Mr Peter Southerland is nothing more than a carpetbagger and a Goldman Sachs insider . see  http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 “we need Mr Southerlands imput in the irish financial disaster  like we need the plague”!

The Final Act of Treachery

 sent in today

 Photo :Irish independent(altered text )

29.th  November 2010

 I was utterly speechless when I discovered that Paddy Honohan of the “Irish” central bank was leading the “negotiations” to save the financial system of the Irish nation.

A leading Irish tabloid had the former Central Bank governor a lead joker in its card deck of Ireland’s most wanted. So everybody knew that the central bank was part of the problem not part of the solution. Brian Cowen’s appointment of Joker Honohan was Fianna Fails’s last act of national treachery. The outcome has proved true to form. The deal forcing Ireland to use its sovereign wealth funds first before any drawdown of IMF/ECB loans renders Ireland utterly bankrupt and helpless. When the next term of negotiations take place within the next few years, (as our austerity deal starts to unravel, due to negative growth) Ireland will have no fall back reserves. It’s hidden off-balance sheet derivative position mentioned by Pat Rabbit over the weekend ( see attached CSO report) will finally be laid bare for all to see and the repercussions will be onerous. The sovereign wealth fund could have been used to fund an unencumbered commercial state bank but instead the funds have been squandered by an incompetent administration. At this stage their failure is bordering on the criminal and criminal acts are null and void.

The rate of interest charged on this loan is penal. It is high because every financial dog on Wall Street knows default is in the offing thanks to Angela Merkels indiscretion. History will show that her lack of candour and experience was the beginning of the end for the Euro project. This currency which is actually an exchange rate experiment will die by a thousand crises over the next decade or so. The end result will be financial oblivion for Ireland unless its demise is planned for. If not Eire will end up but a piece of real estate foreign-owned. Life will go on as they say but it will never be the same. I believe the Fianna Fail party will never recover from this catastrophe and we will see it go the way of the Redmondite Party whose soul and purpose was usurped one week by a group of national patriots who took over a small part of Dublin on a faithful Easter Sunday to start a revolution and found a nation. The rest became history.

 Christopher

*Photo :Irish independent(altered text )

Peter Sutherland and Ireland’s Sovereign Wealth Fund

 

By  Christopher M. Quigley B.Sc., M.M.I.I., M.A.

 Last week, on “black Thursday” the Irish government in essence finally nationalized Allied Irish Bank. In response to the horrific national financial picture painted by Mr. Brian Lenihan, Ireland’s finance minister, Peter Sutherland, former Irish attorney general, hit the media road. Mr. Sutherland’s mantra was similar to that previously presented by his acolyte Mr. Honohan (head of the Irish Central Bank). This mantra stated that though the figures were lamentable they were “manageable.”Now I have had a great deal of respect for Mr. Sutherland but as current events unfold I must respectively question his judgment. He points out that Ireland is not in “desperate” shape. He points out that: “Ireland has funding up to 2011 and has 24 billion Euros in its Sovereign Wealth Fund.”  Thus, in his estimation, Ireland will not go broke until 2013, at least. According to his policy it is “OK” for the government to continue to fully guarantee, and pay as they fall due, “retail” banking bonds. It is my argument that these bonds should have been negotiated down in September of 2008 when the Irish bank guarantee was first issued ( See article: “ A Bank Guarantee Too Far”). Should we adopt the course advised by Mr. Sutherland it is quite conceivable that Ireland will go completely bankrupt around 2013-2014, with no practical strategy for recovery on offer. This gruesome fact has even been acknowledged, publically, by non other than Mr. Bill Clinton former President of the United States of America.

The former attorney general’s approach flies in the face of alternative prudent council and public opinion. This council takes the view similar to that of aged grandparents who have saved all their lives and wish to present a legacy to their grandchildren. These grandparents want these savings fostered, cherished and grown. However, Mr. Sutherland wants to treat this treasure as if he were a spoilt teenager. He seeks to squander it immediately and gamble this resource away on reckless bailing out of bondholders who lent money on risky land deals. Public opinion and international experts have pointed out that these sovereign wealth funds are the base through which Ireland could build its future. These funds could be used to set up a new, free and unencumbered National Irish Commercial Bank. This bank would get Irish credit and Irish commerce moving again. And the maths of this strategy makes sense. Under the new Basle banking agreement banks may lend up to 33 times their unencumbered cash base. This means that the sovereign wealth fund could be used to create credit in the amount of 24 Billion multiplied by 33, which equals 792 billion. Almost a trillion Euros. This is the productive legacy the grandparents want for their savings. Not the squandering of hard saved assets wasted on transient speculators. These assets are Ireland’s Phoenix resource. The sovereign wealth fund is a pension fund not a teenage holiday stipend.

If Peter Sutherland’s views continue to be adopted as policy by the Department of Finance, Ireland without its sovereign wealth fund intact, will be broke and vulnerable. In its inevitable bankruptcy Ireland’s “family silver” will eventually be put on the auction block by the IMF and the ECB. Irish banks, airports, power plants, power grids, sea ports, roads, air space, semi-states, media assets, railways, forests, lakes, water, remaining mineral rights, all will be up for grabs. The only folk with money or credit to fund such acquisitions will be the friends, associates and financial alumnae of Mr. Sutherland who, as you may know, is the non-executive chairman of Goldman Sachs International, one of the biggest “vulture” banks in the world.

The cost to the Irish taxpayer

SIMON CARSWELL

 

Photo Machholz

 What the bailout is costing Irish taxpayers

Anglo  – €29.3 billion (including €22.9 already committed by Government) – could go to €34.3bn in severe worst-case

AIB  – up to €6.5 billion (including €3.5 billion already invested by Government) A Basket case

BoI  – €3.5 billion (doesn’t need any more capital from Government)(So it says but can you belive them  I don’t!)

INBS  – €5.4 billion (including €2.7 billion already committed by Government) why is there no prosecutions for this fraud?

EBS  – €350 million (further requirement for €440 million and possibly more which is expected to come from its new buyer)

can anyone belive any buyer will stump up this kind of cash now?

Irish Life & Permanent  – doesn’t need any capital; didn’t engage in property development lending

No ,just helped Anglo Irish Bank to defraud its own investors and customers and Irish Life& permanent is now screwing its own customers now  

Total:  €45 billion – could go to €50 billion in Anglo severe stress case

Of this, some €35 billion of this is debt and is unlikely to be recovered – the €6.5 billion to be invested into AIB and €3.5 billion already invested into Bank of Ireland is regarded as an investment by the National Pension Reserve Fund, the €24 billion sovereign wealth fund held by the Government. The State is likely to make this €10 billion back and could make a profit by selling down the shares over time.

The figures relate to the State’s investments in the banks. AIB’s capital requirement is €10.4 billion of which it has raised €2.5 billion from the sale of its stake in Poland’s Bank Zachodni WBK, leaving €7.9 billion to raise – some of that will come from the sale of the 22.5 per cent stake in US bank M&T, the sale of its UK business and further (possible) investment from existing shareholders and institutional investors. The Government will underwrite the sale of new shares.

source http://www.irishtimes.com/newspaper/breaking/2010/0930/breaking37.html?via=rel

What about the dierivitave  losses that the Banks are hiding Bank of Ireland and Allied Irish Bank ?

 Machholz

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