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I thought the following was clear from my various comments in this and other threads.

In my opinion the beneficiaries of this move are the management of the banks. I allso think the banks will take the Irish Central Bank down with them.

Here's the most plausible scenario.

An Irish bank was on the brink of collapse. If the Irish Central Bank had intervened in the standard way, they would have dismissed the management, appointed an administrator and reorganised the bank's debt. Losers would be: the management, the shareholders, the creditors and those with over 20k in deposits, in that order. The bank would sooner or later be sold off, in one or more parts.

Instead, the government decided (without informing, let alone consulting, the ECB or the Commission's competition authorities) to guarantee the debt of all 6 Irish banks.

You do the syllogisms.

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 Fri Oct 3rd, 2008 at 12:31:06 PM EST
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