canicemcavoy
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He was right and many other were wrong, this doesn't mean he'll be always right and others will always be wrong.
How incredibly insightful. I don't recall anyone claiming Morgan Kelly was omniscient.
He was right and many other were wrong, this doesn't mean he'll be always right and others will always be wrong.
I can't fully understand how one can feel that "better burning it" is over the top.
To me it simply expresses the idea of pouring good money after bad. By putting money into Anglo, the government must keep to their plan - or else seem foolish.
If one's opinion is that the hole in Anglo is large, then it is precisely correct to state that burning the 1.5Bn is a better use of the money - because that does not bring with it additional cost.
If the Minister had listened to me instead of to the clamour of calls led by Joan Burton to increase the guarantee, then we would not have the current problems with Anglo and the other banks. However, and this is very important, we would have wiped out the savings of very many people. Most people think that we have bailed out the banks. We have bailed out the depositors in those banks.The Irish banking system adheres to the European minimum[deposit guarantee]. And my own view, my personal view on it would be that this is the appropriate amount.
There is no such thing as a free guarantee. If you raise the guarantee to 50k which the Danes provide, in the end consumers are going to pay for that. So all of the banks contribute to that fund.
Dobson: Is it not unthinkable that an Irish government or any government would allow a retail bank, a major retail bank with all these branches and with all these customers to go under?
Me: I don’t think it’s inconceivable at all. The Government regulates Irish banks but the government does not and should not guarantee Irish banks and that is a very , very important distinction.
If banks behave badly in their lending or if they are reckless in their management or whatever, they should be allowed to go to the wall and that is a fact of economic life.
It would have an effect on the economy but giving some sort of soft guarantee to a badly managed banks would be irresponsible and very bad news for the long term
I am using analysis based on the available published information. Of course, if this information is wrong, then the analysis is wrong.The big failing of the Financial Regulator is the slow speed at which the Financial Regulator operates.
The Financial Regulator seems indecisive.
The Financial Regulator operates with undue complexity and formality.
The Financial Regulator adopts and excessively legalistic approach.
We have seen very little evidence that the Financial Regulator has the resolve to stand up to some institutions and individuals who are misbehaving. It seems that when challenged by misbehaving institutions, the Financial Regulator simply backs down.
The FR gives the impression that if it can find a reason not to act; this will be the preferred outcome. It appears to seek complexity and obstacles rather than to seek consumer oriented solutions to current and emerging problems.
The Financial Regulator hides behind the confidentiality clauses in the Central Bank Acts to avoid explaining its inaction
Fitness and Probity is not about form-filling.
How incredibly insightful.
There have always been economists who try to be sensationalist to go against the grain for publicity as opposed to having any firm convictions.
If Morgan Kelly had genuine convictions, his sensationalist way of conveying them undermined his chances of being taken seriously
I must say that it was a terrible piece of writing.
He suggested that the government would be better off burning €1.5billion instead of putting it into Anglo Irish Bank.
And when someone makes a comment like that, it destroys their credibility.
Nothing else in the article has any validity after a comment like that.
I am surprised that the Irish Times published it.
Brendan
If the Minister had listened to Joan Burton, he would not have rushed into the guarantee at all, and would have excluded Anglo and INBS. This would leave the state about €30 billion better off today.If the Minister had listened to me instead of to the clamour of calls led by Joan Bruton to increase the guarantee, then we would not have the current problems with Anglo and the other banks. However, and this is very important, we would have wiped out the savings of very many people. Most people think that we have bailed out the banks. We have bailed out the depositors in those banks.
From Joan's speech on the Dail record; http://debates.oireachtas.ie/DDebate.aspx?F=DAL20080930.xml&Node=H13&Page=7Hi Complainer
Apologies to Joan Burton if I have misquoted her or quoted her out of context. I went back to the RTE News segment, but it is not playing for me at the moment. My recollection was that she called for the Deposit Insuance scheme to be increased from €20,000. I don't recall her saying that Anglo or the Irish Nationwide should be excluded. But maybe she did.
We also wish to know the limits of the guarantee schemes, so that they do not apply, for example, in cases of subsequent acquisitions by institutions or irresponsible lending.
Having made my preparations for a bank crash months beforehand, opening various €20,000 accounts in several banks to take maximum advantage of the guarantee that existed before 2008 ( and the AIB staff thinking I was like one of those mad "the End is Nigh" characters) I was very annoyed by the blanket guarantee.
Like the wise virgins, I had made good preparations, but ended up paying for those who hadn't bothered.
I went on television when there was a run on the Irish banks. The run was a direct result of the credit crunch which was caused by the uncertainty in banks' balance sheets due to securitised sub-prime loans. Irish banks had no exposure to these, so I reckoned Irish banks were much more solvent. That was September 2008.
You can read the entire interview which is here . Canice - I think you really should ask your friends on the property blog spot to quote this bit as well.
"If banks behave badly in their lending or if they are reckless in their management or whatever, they should be allowed to go to the wall and that is a fact of economic life."
If the Minister had listened to me instead of to the clamour of calls led by Joan Burton to increase the guarantee
I'm glad you wrote such a report. I'm sure there were people who were far less critical of the FR. However, I cannot square that with your subsequent assertion that the banks were well-regulated.As chairman of the Consumer Panel of the Financial Regulator we published reviews of their performance which werep balanced.
[...]
We have seen very little evidence that the Financial Regulator has the resolve to stand up to some institutions and individuals who are misbehaving. It seems that when challenged by misbehaving institutions, the Financial Regulator simply backs down.
Then, given lending of about €80 billion to developers, it follows that Anglo Irish is facing losses on the order of €15 billion. The true figure could easily turn out to be twice as large.
With likely losses of this magnitude, the Government's proposed investment of €1.5 billion will vaporise in months, forcing it either to continue pouring good money after bad, or to repudiate Anglo Irish's liabilities. For all it will achieve, the money might as well be piled up in St Stephen's Green and incinerated.
Anglo Irish epitomised the Irish bubble economy. Its rise began a decade ago as the boom created a demand for houses and commercial property. As prices started to rise, banks made a miraculous discovery: the more they lent, the more prices rose; and the more prices rose, the more people wanted loans to get into the booming market. And the more loans that bankers made, the bigger the bonuses they could award themselves.
It was brilliant while it lasted. One of Bank of Ireland's stable of developers would buy an office block for €100 million, and sell it on a year later to one of Anglo's for €120 million, and so on: a process known to bankers as adding value.
Everyone was a genius and nobody could lose.
So much for the future. Right now, in the "nothing in the last six months has really happened" world of the Government, the bailout of Anglo Irish follows a compelling political logic. Anglo Irish funds developers, and developers fund Fianna Fá¡l.
By using taxpayers' money to acquire Anglo Irish's portfolio of dingy shopping centres and derelict development sites, the Government is squandering scarce resources that are needed elsewhere. Just as the State is putting too much money into Anglo Irish, it is putting in too little to recapitalise AIB and Bank of Ireland on which, whether you like it or not, large sectors of the Irish economy depend.
Governments tend to forget whose interests they are supposed to serve. Our Government was not elected to look after the managers, shareholders and bondholders of recklessly mismanaged banks.
Its sole duty is to Irish taxpayers: to ensure that banks that serve a useful economic purpose continue to operate, while those that serve none are swiftly closed down.