Bloomberg - Yet Another Extension of Bank Guarantee into 2011

[C. Flower]

http://www.bloomberg.com/news/2010-1...e-funding.html

The Guarantee is looking pretty threadbare at this stage, but now its out there, agonisingly difficult to withdraw from. Bloomberg say they have seen an Irish Gov. email that confirms the Guarantee will be renewed into next year.

Ireland’s government may seek to extend its banking guarantee beyond the end of the year to ease lenders’ access to funding, two people with knowledge of the situation said.
The Eligible Liabilities Guarantee plan, covering deposits and new senior bonds with maturities of up to five years, is set to expire on Dec. 31. Unlike the country’s original two-year guarantee, which expired last month, the ELG does not cover subordinated bonds. The plan is subject to a review every six months and the European Commission must approve an extension.
Ireland was the first country to introduce a bank guarantee in September 2008 as the country’s financial system came close to collapse. Still, banks are struggling to raise funds and Irish lenders’ borrowings from the European Central Bank rose 25 percent last month to 119.1 billion euros ($165.7 billion), the Irish Central Bank said on Oct 8. The figures include international and domestic institutions.
“The government will continue to support the banks through a guarantee scheme as appropriate,” Ireland’s Finance Ministry in Dublin said in an e-mail today.
Bank of Ireland Plc last week paid a new issue premium to sell 300 million pounds of government-backed bonds that’s more than double similarly rated securities. It priced the three-year notes to yield 440 basis points more than the benchmark mid-swap rate. The Irish guarantee carries an AA- rating from Standard & Poor’s and financial notes with a similar grade have an average spread of 184 basis points, according to Bank of America Merrill Lynch data.
No government-guaranteed lender has sold a benchmark bond since April, when Irish Life & Permanent Plc found buyers for 1.25 billion euros of bonds.

[morticia]

And why exactly do we need this, since the ECB is going to have to buy all those Irish bank bonds anyway, to make it look like there's a market??

I think I may have a solution: Step 1, ECB puts out a call for Irish bonds and buys up most of the however many billions outstanding. Step 2, we and our banks go through a radical restructuring process, involving writing off all the debt and writing ourselves a budget we have to live within, minus ANY future bond sales. Step 3: the ECB prints the same amount of money we've all just defaulted on. Step 4: repeat ad nauseam for any other troubled PIIGS. Step 5: make all government borrowing illegal (so it won't happen again). Step 6: make the banks lend out only what they have on deposit (so it won't happen again).

Collapse averted. But will anyone in Brussels or Frankfurt actually avoid the oncoming chaos and the collapse of the entire Western banking system?? Naah. Whoever taught those guys to drive forgot to mention swerving.

[Captain Con O'Sullivan]

Sovereign debt may be the greatest lever the EU ever had as a persuasive tool and I cannot see them failing to make hay with it.

[C. Flower]

And why exactly do we need this, since the ECB is going to have to buy all those Irish bank bonds anyway, to make it look like there's a market??

I think I may have a solution: Step 1, ECB puts out a call for Irish bonds and buys up most of the however many billions outstanding. Step 2, we and our banks go through a radical restructuring process, involving writing off all the debt and writing ourselves a budget we have to live within, minus ANY future bond sales. Step 3: the ECB prints the same amount of money we've all just defaulted on. Step 4: repeat ad nauseam for any other troubled PIIGS. Step 5: make all government borrowing illegal (so it won't happen again). Step 6: make the banks lend out only what they have on deposit (so it won't happen again).

Collapse averted. But will anyone in Brussels or Frankfurt actually avoid the oncoming chaos and the collapse of the entire Western banking system?? Naah. Whoever taught those guys to drive forgot to mention swerving.

You're making light of it, but the maths won't add up any other way.
If the banking debt was payable in Ireland, the personal debt, on top of it, will not be.

Production, and profits, are shifting east and to South America. Productive capacity has mushroomed globally and average profit rates have consequently flatlined for 30 years. Even now, hot funds are driving new bubbles in a hopeless way.

One damn bubble after another has been fostered and this last boom has blown the whole thing to bits, particularly in the weaker parts of the global economy like Ireland. We are close up enough here to have seen the squalid and meretricious character of the banker and developer beneficiaries of the boom in Ireland. This is really not worth saving. What is worth doing is stopping further damage being done to basic services and to peoples security and well being.

[morticia]

Indeed, but how?? The problem is, as one of the first to go through the wringer, we are likely to be punished, and I would seriously question the degree to which we have any sovereignty at all. Brussels and Frankfurt are steering the Titanic straight towards the icebergs, PDQ. If we could only delay until one of the big boys goes splat, there'll be a nice big bailout for all, no questions asked. Maybe, in that sense, austerity will buy us a precious few months.

[PaddyJoe]

It looks like the 6 month extension to the Guarantee has been approved according to today's IT.

[Ah Well]

Ask yourself .... if you had a lot of cash on deposit with Irish Banks and were considering shifting it pronto in the present climate ... would you read this and think, ah I'm grand now so, let it where it is ......

[ang]

IT have Guarantee up now:-

http://www.irishtimes.com/newspaper/...283024970.html

[PaddyJoe]

Ask yourself .... if you had a lot of cash on deposit with Irish Banks and were considering shifting it pronto in the present climate ... would you read this and think, ah I'm grand now so, let it where it is ......

And just below we have Cowen telling the world that the country will run out of cash by July 2011. If I had money and investments in Ireland I would say, 'Thanks for the heads up, Brian! 6 months to get the lot out. Fair play for the notice. Come over to Geneva any time for a few pints after the ungrateful buggers kick you out'

[Ah Well]

And just below we have Cowen telling the world that the country will run out of cash by July 2011. If I had money and investments in Ireland I would say, 'Thanks for the heads up, Brian! 6 months to get the lot out. Fair play for the notice. Come over to Geneva any time for a few pints after the ungrateful buggers kick you out'

Well, to be terribly honest, if in possession of any sort of financial wellbeing as of now, one would seriously want to take a long hard look at the overall picture and then take appropriate steps - personally I'd think shifting at least some level of finances into a place where they were covered by a non Irish Bank Guarantee would be the minimum ....

[PaddyJoe]

Well, to be terribly honest, if in possession of any sort of financial wellbeing as of now, one would seriously want to take a long hard look at the overall picture and then take appropriate steps - personally I'd think shifting at least some level of finances into a place where they were covered by a non Irish Bank Guarantee would be the minimum ....

And in all seriousness I would absolutely agree with that.

[Ah Well]

And in all seriousness I would absolutely agree with that.

I'd probably take the option of shifting the finances partly to

(1) where a non Irish Bank Guarantee operates

and partly to

(2) where they are not subject to Irish jurisdiction/legislation at all viz. somewhere on the Continent

Keep the eggs in a few baskets so to speak

But each to their own

[PaddyJoe]

I'd probably take the option of shifting the finances partly to

(1) where a non Irish Bank Guarantee operates

and partly to

(2) where they are not subject to Irish jurisdiction/legislation at all viz. somewhere on the Continent

Keep the eggs in a few baskets so to speak

But each to their own

It would also help to have tried and trusted close relatives in another jurisdiction

[Ah Well]

It would also help to have tried and trusted close relatives in another jurisdiction

Get 'em to open a Bank Account for ya

[ang]

The EU has approved the extension of the Bank Guarantee:-

The European Commission said on Wednesday it had approved the extension of an Irish bank gaurantee system until June 30th of next year.

The Commission said in a statement the guarantees, which are aimed at reassuring investors, were "adequate means to remedy a serious disturbance in the Irish economy".

http://www.businessandfinance.ie/new...sbankguarantee