Never mind the cost, feel the process! September 8, 2010
Posted by WorldbyStorm in Economy.trackback
Yet another masterclass in evasion by the government as regards Anglo-Irish Bank. Rather than deal with the questions of cost, even to produce a ball park figure they seem to believe that unveiling the process delivers the ‘certainty’ that the markets – and God knows, the rest of us, demand. And even then the process, at least in terms of timeline seems curiously imprecise:
No exact timeframe for the workout of Anglo’s loans was provided, although Taoiseach Brian Cowen said it should take no more than 15 years.
In a way this has characterised their conduct throughout this financial crisis, the equivalent of someone saying, ‘Don’t bother looking at that enormous pile of steaming dung over there, look here at this…’. Where that turned particularly unpleasant was in the scape-goating of certain sectors of the workforce, but no doubt they’ll rationalise it as whatever is necessary.
Whether that’s good enough for those beyond the orbit of our media is quite another matter again.
Yesterday the premium demanded by investors to lend to the Government reached a new high, fuelled by renewed fears about the state of the Irish public finances and concerns about the cost of bailing out the bank, which is set to exceed €25 billion.
Of course today, all is changed utterly...
This lifted banking stocks off their lows, although they were still down on the day. Bank of Ireland saw the most action, with about 42 million shares traded. It closed at 70 cent, down about 3 per cent, having been off almost 7 per cent earlier in the session.
Of course the question there is if the markets whose runes are being read operate in tandem?
…and the process appears to have as it’s goal (if it has a goal other than the prolongation of the process) the maximisation of bond yields that we will continue to pay over decades / centuries / however long this crazy system lasts.
We may be debt slaves, but we can take comfort from the fact that we are some of the most profitable debt slaves in the developed world.
Cold comfort.
McWilliams made another good point this week – that when AIB, a bank where actual normal people keep their money, comes a-begging, the Brians will have to shrug and turn their pockets out because all the dosh has gone to Anglo.
To be fair, the markets’ “acting positively” does not mean they wouldn’t have acted equally positively, or even more so, to something else.
Yeah, I saw that, the AIB problem may become rather acute in the near future…
That’s true re markets… but doesn’t that underscore the essential instability of the moment?
Yes, I think it does.
The wrong kind of investors being made happy isn’t exactly proof of government competence. Even bad investments make money if the taxpayer is footing the bill.
[...] Never mind the cost, feel the process! « The Cedar Lounge Revolution [...]
[...] Never mind the cost, feel the process! « The Cedar Lounge Revolution [...]
Dont know if anyone saw The former Icelandic Finance Minister Ólafur Ragnar Grímsson, on Vincent Browne Last night. Amongs the other guests were Alan Dukes, Donagh Brennan of the ILR and Peter Matthews.
Listening to Grímsson give a description of what Iceland did read like what we could have done here.
They first realised that they couldn’t offer a guarantee as it would bankrupt the state. So they let the banks go, covering 90% of deposits.
Two new banks were set up (of which the creditors of the old banks have a stake) and were up and running fairly quickly.
Two years on they are on the way up again.
Needless to say Alan Dukes didn’t support what they did and Peter Matthews showed how smart he was before being taken down a notch or two by Vinny.
Worth a view on TV3s playback.
Interesting too in that Dukes was pressed into putting a figure on the eventual cost of Anglo and came up with 39bn – more again than any previous estimate.
Yep and then realised what he had done and backtracked
Will take a look thanks IELB