Thursday, October 02, 2008

Bank Guarantee to be made Law

"The emergency legislation to give effect to the Government's €420 billion bank guarantee scheme is set to be signed into law by President Mary McAleese at around lunchtime today."

Our government stayed up way past beddy byes last night in an attempt to come up with a solution to out currant free falling economy. They've offered to cover the asses, sorry, assets of six of our major lending institutions and possibly one or two Uk owned Irish bacnks too. Other UK banks are pissed off, claiming anti- competitive actions. But oh well, in time of crisis each must look to their own.
You can read the article here.

Well, there's that I suppose. So why do I feel so twitchy about it all. Why do I get a feeling we, us, the tax paper, are going to get hit in the goolies to shore up this guarantee? How can the government afford to cover it should things get much worse? Are not the revenues and thus Irish coffers very much down this year? Is this a case of borrowing from Peter to pay Paul?
I'm nervous. How you doing?



Blogger morgor said...

yeah, I can just imagine the banks now.

"they're falling for this?"


"so we can basically do what we want, when times are good we give ourselves enormous pay checks, when times are bad we take enormous pay checks and get the public to pay the losses our company is making"

"yeah, sweet".

Speaking of which, i was reading private eye last night, they have a little thing called number crunching, where they have interesting figures like :

6 billion : the amount of cash spent on salary bonuses by lehman bank in 2006.

7 billion : losses made by lehman bank forcing it into bankruptcy 2008.

(might not be 100% accurate, but close enough to demonstrate the point)

8:19 a.m.  
Blogger fatmammycat said...

Oh now, what's a billion here and there between brass.
The English banks are amusing this morning, decrying the government action as 'nationalist' and pondering why we wouldn't wait for a more 'european- centric' solution.

From the FT.
"A separate dispute flared up over the Irish government's surprise decision on Tuesday to guarantee the debts and deposits of Ireland's six largest lenders - a step that instantly attracted funds from the UK, where bank customers suspected guarantees would be less comprehensive.

On Wednesday, Brian Lenihan, Ireland's finance minister, said he was "sympathetic" to Royal Bank of Scotland's application to have its Irish subsidiary included in the guarantee system.

Last night Dublin said it would consider applications to join the scheme from foreign banks with a significant retail presence in Ireland. Nellie Kroes, EU competition commissioner, pleaded with governments "not to act unilaterally"."

9:18 a.m.  
Anonymous problemchildbride said...

I'm petrified.

In the US, things have not been this bad since the Depression. The idea of this bill is to take the toxic mortgage debt from the banks who, at the moment cannot give out the everyday loans people need for their businesses, lives etc. Small businesses fail, people stop buying cars, the car dealer goes under, the guys there are out of work so they spend less, eat out less, hunker down and the economy slows.

The hope with this bill is that it will free up liquidity in the economy again. The House Republicans have, however amended the bill since last reading by larding it up with all sorts of weird, esoteric spending (several completely no-economy related sub-bill Republican sweeteners are squeezing through with this one).

The idea of spending 700 billion tax payer dollars to bail out greedy corporations is sickenign to the stomach. Most people loathe the idea, but, in order to unfreeze liquidity something of this order is needed and fast and there's no way around it. Right now, nobody can get any ordinary every day credit: a mortgage, a car loan, a short term loan to buy inventory for small businesses to make their next big job - shops for example cannot borrow against Christmas sales to purchase Christmas inventory. The whole system is in paralysis right now, seized right the hell up.

This revised bill looks set to pass but it is no cause for celebration when it does. My daughter's generation are going to be paying for this their whole lives.

The plus is that Wall Street will never be the same again - the boomtime, cash-slappy days are over for the fatcats. They get this lifeline, this phone-a-friend (the American tax-payer). Main Street will not engage in dubious sub-prime mortgages, ill-advised refinancing and cashing out equity in houses any more and plain old speculators trying to make a fast buck by betting the housing bubble will continue to rise and rise and never ever burst.

Fuck, the whole thing is really depressing and horrible horribly scary.

9:27 a.m.  
Anonymous problemchildbride said...

I hope to God it works. There is no guarantee of that.

9:30 a.m.  
Anonymous sheepworrier said...

Im just wondering what the situation is with us nordies who use Bank of Ireland, First Trust etc - are we reaping the benefits at the expense of southern tax payers? Seems a bit unfair.

9:44 a.m.  
Blogger fatmammycat said...

Aye Sam, from my understanding it will be a bit like that here, the banks will be faced with tougher regulations and accountability. Certainly there's a lot of people feeling the crunch, and while every body is personally responsible for themselves, the bank with their credit laxity and 100 percent mortgages must shoulder some of it too. It's going to be dicy for the next year or two and that's for sure. Nerve wracking.

Shepie, I don't know, but I imagine there are fees or financial sureties involved somewhere.

10:02 a.m.  
Blogger Conan Drumm said...

The only reason the government had to try this was that a bank or banks was/were being refused interbank credit and were threatened by a run on liquidity on the deposit side. We don't know for sure which bank/s were affected, nor do we know the exact nature of the threat.

The reason we find ourselves in this situation is exactly the same reason we ended up collectively bailing out the catholic church/religious orders for abuse - the government failed to exert proper regulatory authority.

Having been so focused on 'the economy' it failed dismally in its duty of care to our society. There is no effective sanction against those who traded us into this dire situation.

I do not expect things to change in any meaningful way, because I remember the AIB bail out in the 1980s. The AIB logo is a bird feathering its nest. It's perfect, it's what banks do.

Just cross your fingers and hope we don't get incremental inflation and the Euro losing value. If that starts happening we'd better start looking to growing our own to feed ourselves.

10:29 a.m.  
Blogger fatmammycat said...

'eep' crosses fingers.

10:38 a.m.  
Blogger morgor said...

@ Conan.

Yeah makes you wonder what these dopes are up to :

10:43 a.m.  
Anonymous sheepworrier said...

Ah, we're all f**ked anyway.
Anyone fancy a pint?

10:57 a.m.  
Anonymous Anonymous said...

You're welcome, Ireland!! (high-fives America)

2:13 p.m.  
Blogger Andraste said...

It's sickening over here. Bush and his economic "plan," huh?

Funny how the last democratic president left office with a budget surplus, miniscule unemployment, at peace, and with a booming economy. Just saying...

I'm with Sheepie. I'll be riding this out quietly, at least helping to keep the pubs from going under. That's the important thing.

2:14 p.m.  
Blogger Medbh said...

I can look forward to teaching until I'm 80!
I pity anyone with a house for sale just now.

2:28 p.m.  
Blogger fatmammycat said...

Damn you Sheepie, I"m off hooch until 2.5 minutes after the marathon.*

* Time it takes me to get to pub and order bucket of rum.

It is really very worrying, bills on the up, I actually DREAD to see what they come up with in the budget. Thank fuck I don't smoke because no doubt fags will be hit. CG's gonna have to give up.
I'll have to keep working even after I'm dead. Medical Science will have to pay for this corpse.

3:42 p.m.  
Anonymous Anonymous said...

I thinks it's more than a tad ironic, the UK dcrying us as nationalistic in this action.
Considering they steadfastly refuse to renounce the old pound and pence and enter the eurozone...who the fuck are they kidding.
I'm thinking old Biffo might not be as dumb as he looks

9:03 a.m.  
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11:33 a.m.  

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