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It didn't stop the banks going into free-fall.  And if, as you say, one was on the point of failing, what was to prevent a domino effect?  They are all hugely exposed to the property market.

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 1st, 2008 at 11:26:16 AM EST
[ Parent ]
Um, so the problem was one of solvency? Did the Irish government just guarantee the debts of 6 insolvent banks?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 11:30:20 AM EST
[ Parent ]
I don't know.  At least they weren't hedge funds, or sub-prime mortgage providers or "investment banks" trading in derivatives big time - but a lot of their loans are secured on property which is now of dubious value.  It all depends on how far down the property market goes....

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 1st, 2008 at 11:39:03 AM EST
[ Parent ]
They weren't? So who were they? And why did they need the liquidity?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 11:40:49 AM EST
[ Parent ]
A "crisis of confidence" and apparently foreign hedge funds betting against them. The small scale of the Irish market makes it very vulnerable to manipulation by the big boys...

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Oct 1st, 2008 at 11:53:32 AM EST
[ Parent ]
So the Irish government stepped in to prop up the share value?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 12:03:37 PM EST
[ Parent ]
That's not really the way to behave for the state. Our banks were down 10-20 % that fateful day, but that's just life you know? Sucks to be a shareholder, but no reason for the state to step in.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Oct 1st, 2008 at 12:10:43 PM EST
[ Parent ]
Apparently so.

IHT: Ireland 'blank check' to banks raises questions (October 1, 2008)

That Irish blank check amounts, in a doomsday scenario, to a maximum estimated liability of €400 billion (US$560 billion) -- just to repay the debts and deposits of six banks. That's double the country's annual gross domestic product, nine time the national debt and €95,000 ($135,000) per citizen.

But Ireland's government leaders themselves have stressed that they made the unprecedented promise only because they calculated, by doing it, shares would rebound, foreign capital would flow in, and they would never have to spend a cent of taxpayer's money bailing out a bank.

Prime Minister Brian Cowen said he had "not handed over any money to any bank. I have provided the reputation of this state to the banks."



A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 05:22:23 PM EST
[ Parent ]
Financial Times is saying that the French are now looking to the Irish model for a bailout.

I think that Globalization just ended. And unless the ECB steps in to clean up the mess, I think that the single market just got torn into several dozen pieces.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Thu Oct 2nd, 2008 at 01:39:48 PM EST
[ Parent ]
Bloomberg: European Officials Squabble Over Response to Crisis (Oct. 2)
European officials squabbled over how to respond to the global credit crunch, with Germany opposing a coordinated approach and the Netherlands calling on states to set aside funds to help troubled banks.

French President Nicolas Sarkozy distanced himself from comments by his finance minister Christine Lagarde over the need to set up a ``rescue fund.'' Luxembourg Prime Minister Jean- Claude Juncker told DeutschlandRadio today he didn't ``see the need'' for an effort to emulate the $700 billion rescue package that U.S. senators passed yesterday.

...

Lagarde told the German newspaper Handelsblatt in an interview today that a ``rescue package'' was needed to help ``smaller'' European states ``threatened with a banking failure.'' Germany opposes the proposal ``based on its current assessment of risk,'' said Finance Ministry spokesman Stefan Olbermann.




A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Oct 2nd, 2008 at 01:48:32 PM EST
[ Parent ]
Whatever the merits of the Irish actions, it seems that waiting for a coordinated EU response was not an option...

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 2nd, 2008 at 01:57:13 PM EST
[ Parent ]
They didn't even bother consulting the Commission - considering the Fortis deal went through the Commission in 24h...

In addition, central bank intervention of a failing retail bank can be swift. They just didn't have stomach to do their job.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Thu Oct 2nd, 2008 at 01:58:54 PM EST
[ Parent ]
"they" being the Irish authorities?

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Oct 2nd, 2008 at 02:02:49 PM EST
[ Parent ]
The Irish Central Bank.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Oct 2nd, 2008 at 03:12:10 PM EST
[ Parent ]
Check out my diary.

Zaptero has got into the act, and Santander looks to be playing a major role in pressuring Brown into doing the right thing.

That and the possibility that the City of London may re locate to Dublin if he doesn't act.  Wouldn't that be ironic given the talk about keeping the City happy?

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Thu Oct 2nd, 2008 at 02:35:15 PM EST
[ Parent ]
Santander owns 3 of 10 demutualised UK building societies (now all 10 of them are failed banks).

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Thu Oct 2nd, 2008 at 03:13:13 PM EST
[ Parent ]

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