Irish debt yields in new record despite better job data

Radiantsoul

Blacklight wrote: »

My question is, where has their own 35bn gone that they lent out?

A lot of it has probably been spent on houses that nobody really wants or office space that will never be occupied.

Blacklight

Mr_Mumble wrote: »

Bank lends $1m to company A to buy a warehouse, company A goes bust and the bank, as secured creditor, gets the warehouse. Bank tries to sell warehouse and the highest offer is from company B who'll only pay $300,000. This simple example is no exaggeration. The Irish Central Bank's estimate for peak-to-trough fall in commercial property prices is 70%!

I realise that, but have there really been 35bn of defaults? That's a hell of a lot of repossessions!

It just doesn't stack up to me, same as the UK banking bail out. The repossession numbers are still low, yet all this money as disappeared leaving a big hole in someones pocket that has to be filled up with tax revenues.

Is it not the cast that the banks just write off every loan that looks a bit iffy on paper, like all the 100% and 125% mortgages on their books but the debt is still being repaid by 99% of those debtors?

Mr_Mumble

Generali wrote: »

If the solvent take on the debts of the insolvent they risk insolvency themselves.

And..? The folks who should take on the debts should be those responsible for 'em. I don't see why the Irish taxpayer looking into the abyss for doing nothing wrong (you can't blame 'em for being born there ) should bailout the creditors - mainly British, German and French banks - who were an active part of the process of supporting crazy levels of lending. The Irish are still planning to pay subordinated owners of debt some cents on the euro and still consider senior debtholders sacrosanct, on a level with depositors, t'is crazy.

Bizarrely we had the story of the Germans finally paying off the French for WWI this week. I'm no fan of Keynes but he was right about the hardship the Germans were about to experience back then. The Irish government look like they are willing to make the same mistake for political expediency (note: this isn't expedient with the electorate but with the political class e.g. ECB, EU bureaucrats, German, French and British governments).

Generali

Mr_Mumble wrote: »

And..? The folks who should take on the debts should be those responsible for 'em. I don't see why the Irish taxpayer looking into the abyss for doing nothing wrong (you can't blame 'em for being born there ) should bailout the creditors - mainly British, German and French banks - who were an active part of the process of supporting crazy levels of lending. The Irish are still planning to pay subordinated owners of debt some cents on the euro and still consider senior debtholders sacrosanct, on a level with depositors, t'is crazy.

Bizarrely we had the story of the Germans finally paying off the French for WWI this week. I'm no fan of Keynes but he was right about the hardship the Germans were about to experience back then. The Irish government look like they are willing to make the same mistake for political expediency (note: this isn't expedient with the electorate but with the political class e.g. ECB, EU bureaucrats, German, French and British governments).

Even the pedant in me can find nothing to disagree with in this.

All holders of bank debt and equity (I don't mean depositors) should be wiped out before the Government buys a single share. That includes preference share holders and employees IMO.

Mr_Mumble

Blacklight wrote: »

I realise that, but have there really been 35bn of defaults? That's a hell of a lot of repossessions!

It just doesn't stack up to me, same as the UK banking bail out. The repossession numbers are still low, yet all this money as disappeared leaving a big hole in someones pocket that has to be filled up with tax revenues.

Is it not the cast that the banks just write off every loan that looks a bit iffy on paper, like all the 100% and 125% mortgages on their books but the debt is still being repaid by 99% of those debtors?

Anglo Irish Bank is mainly a commercial banking operation afaik it has little retail presence and not much of a mortgage book. This makes it a very different enterprise than, say, Northern Rock whose assets were effectively residential property. The $35bn is a worst case scenario under stress-test conditions and includes the money to capitalise the new institutions, plenty more info here:
http://www.financialregulator.ie/press-area/press-releases/Pages/StatementonAngloIrishBankrestructuringcapitalcosts.aspx

tomterm8

Aren't there insolvency procedures? This bank isn't a retail bank, it's an investment bank. It shouldn't be bailed out. It should go to /dev/null.

Degenerate

Blacklight wrote: »

It just doesn't stack up to me, same as the UK banking bail out. The repossession numbers are still low, yet all this money as disappeared leaving a big hole in someones pocket that has to be filled up with tax revenues.

You do know that the UK bailouts are looking very likely to at least break even overall?

The Irish situation is very different. Unlike us, their boom was stoked by a decade of inappropriately loose monetary policy, and their options in the bust have been limited by the same Euro straight-jacket. When an economy really craters like their has, it's not surprising that asset values collapse, leaving the banks that lent out on those assets deep in the red.

GeneHunt_2

Mr_Mumble wrote: »

Irish citizens should be rebelling,

Do you know there are only 2 million Irish Tax Payers :eek::eek::eek:

Mr_Mumble

GeneHunt wrote: »

Do you know there are only 2 million Irish Tax Payers :eek::eek::eek:

And 100,000 of the workers are expected to leave before 2012 :eek:

I like the WSJ take on the bailout. They make it clear this is a choice by the Irish government and go through the arguments for and against default. Personally I'm flummoxed by the Irish finance minister's explanation for bailing out creditors - the senior debt is/was that of private enterprises not the government!

The likes of Microsoft, Intel, Dell et al will not leave Ireland because of defaults on debt owed to banks and pension funds. However, these tech companies are likely to leave Ireland if they have to pay higher corporate taxes levied to pay back the debt used to save creditors!