Why are we bailing out snr bondholders again?

J

Jim Davis

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All joking aside, what exactly is the ethos for us bailing out these senior bondholders? Wasn´t the original reason we were given because we couldnt let our banks fail because of our international reputation and our ability to raise finance on the markets?

What would be the potential consequences at this point in time not to bail the banks out any further?

Also, can someone tell me why does the government think that this is the best option? I mean at this stage surely the game is up, cant we just say no and do a deal with the bondholders or am I being to simplistic?
 
Very informative link.

I still don't understand why we're bailing out the bondholders either.
It seems there is a risk to being a bondholder (hence the return).

Did Lehmans not have bond holders?
 
umop3p!sdn said:
... I still don't understand why we're bailing out the bondholders either.
It seems there is a risk to being a bondholder (hence the return).
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It is the senior bondholders whose claim is being respected. They have the same standing as you or I might have if we held our savings in the same institutions. Subordinated bondholders get a higher return, and they have been burned.

There seems to be no legal way to protect my savings and not the deposits of the senior bondholders.
 
Why are we protecting senior bondholders then?

(I don't expect my savings to be safe.)
 
We are protecting senior bondholders because people in general expect their savings to be safe, and because the consequences of allowing all bank customers to be wiped out are horrendous. If you think that things are bad as they are, it is nothing to what they would be like if we let the banks collapse.
 
Things aren't too bad at the moment for a large amount of people.
It'll be interesting to see what you think after the next budget, or indeed in 2014. That's when things will be bad. Once all the the money has been drained out of the economy and given to these senior bondholders.

Let the banks fail. It's happened before.
How are Iceland and Argentina doing these days?

As for the €100,000 guarantee - well good luck to you. I don't trust it because I can't see how the government can possibly honour it.
 
The government could very easily let the senior bond holders be wiped out...after all Anglo was a bankrupt private bank. It could always have given compensation to the depositors up to a certain limit.
To say that it is protecting the senior bond holders because it wants to protect the depositors is in my view not true.
First it was protecting the senior bond holders because of systemic risk... that the rest of the banking system would collapse. Well the rest of the banks have collapsed.
The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
The trouble is the people of Ireland will be subjected to savage cuts and no jobs and forced emigration for our young people for a generation because of Lenihans decision.
 
The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
The trouble is the people of Ireland will be subjected to savage cuts and no jobs and forced emigration for our young people for a generation because of Lenihans decision.
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This makes the most sense.
 
sunrock said:
The real reason I suspect and I will be blunt about this ...is that the government prefer to keep onside with the moneymen in the city of london and the elite in this country who have a vested interest in these bonds being paid back.
.
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Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?
 
Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?
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This doesn't mean that we'll never get lent money again.
If senior bond holders think they will make money, then they'll lend money.

Who lends to other countries that have defaulted in the past?
 
Sunny said:
Imagine that. Who do you think lends the Government the €20 billion that it is short of to run this Country this year?
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Comparing a private bank with sovereign debt is not correct

Anglo was a private bank that went bankrupt. The government could easily have left it go to the wall with no repercussions to the government finances, just as the government let thousands of private companies go bankrupt all over the country.

The money that the government owes,that is soverign debt and which is paid back to fund our e20 billion deficit we incur every year , is totally different from a private bank debt.
To link the two is totally disingenius.
 
sunrock said:
Comparing a private bank with sovereign debt is not correct

Anglo was a private bank that went bankrupt. The government could easily have left it go to the wall with no repercussions to the government finances, just as the government let thousands of private companies go bankrupt all over the country.

The money that the government owes,that is soverign debt and which is paid back to fund our e20 billion deficit we incur every year , is totally different from a private bank debt.
To link the two is totally disingenius.
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Not comparing the two. I am simply pointing out the fact that you want to force losses on the very people who lend the Government money and you think there won't be consequences for Government funding?

There is a reason no European Country has defaulted on senior bank debt and now people have decided that Ireland should be the lab rat to see what the consequences are. To be honest, I am tired of having this debate with people. I have no problem with bondholders taking losses but I do have a problem with people believing that forcing them to take some of the pain is a painless excerise and that the only reason it hasn't been done is because of come conspiracy between the Government, international financial markets and the elite in this Country.
 
sunrock you were suggesting that the government's actions were motivated by a base desire to keep international moneylenders onside. Sunny pointed out the rather obvious that there is nothing base about this at all, it is a matter of the country's survival. You have now changed tack by saying that welching on Anglo would not after all have angered these evil foreign usurers.
 
The bit about senior bondholders is a red herring they are only in hoc for about 4 billion.

No one and I mean no one is saying where is all the money that was lent by anglo.

We are working in a far murkier environment that one is led to believe and we may never get a true answer.

The ECB are waiting in the wings and ......

To be honest when we look at our wage/salary structure in the various services I am not surpirsed we have ended up where we are. Lets be real we are paying people fortunes for what??

noah
 
To be honest when we look at our wage/salary structure in the various services I am not surpirsed we have ended up where we are. Lets be real we are paying people fortunes for what??
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Well I know the answer to this one.
We are paying a fortune for votes. This is how FF have stayed in power.
 
The U.S. government left Lehman Bros go to the wall and billions of dollars are still invested in U.S. treasuries and bonds.
Investors would still invest in irish government bonds if Anglo was left go. Investors would know their money was safe with the government and the interest on the bonds would be much lower.
Lenihan is playing nice guy to the anglo creditors to the tune of 45 billion.......that is e 10,000 for every man woman and child in the country just to cover anglo alone.
If it turns out that if the depositors in Anglo are protected, then the senior bond holders must be protected too, then I say let them all take the hit.
We will have to endure a generation of hardship for the vast majority of irish citizens and I just think that is too high a price to pay for something that the Irish government does not legally have to pay for.
 
If I had my savings in Anglo, I wouldn't be very happy if the Gov't reneged on its promise.
 
How i see it the senior bondholders lent/invested the money with Anglo to make money only a guess but lets say 3% return, they are now loaning the money to the Irish government to pay themselves (the bondholders) back. but now they are getting 6.5% and all the security on there own money, nice deal, few rumors in there own money markets and the % keeps on increasing. On the good side they will keep lending or they lose there own money next time so carnt see us needing the IMF.
 
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