Comments on: HOW TO RESCUE YOUR BANKING SYSTEM WITH A SWEDISH MODEL

By: Dublin Opinion » Blog Archive » There Should Be No Sacred Cows

Dublin Opinion » Blog Archive » There Should Be No Sacred Cows — Tue, 14 Oct 2008 11:08:25 +0000

[…] in the EU are providing for their banks, it’s pretty clear that until the Cowen follows the Swedish Model that they are going to fall further. In fact, at this point they’ll inevitably require […]

By: Conor McCabe

Conor McCabe — Wed, 01 Oct 2008 22:38:39 +0000

The Irish scheme can’t be part of an EU plan - for the EU would insist on knowing the extent of the debts. That’s the whole point, I reckon, for the solo run. It’s to keep the EU as far away as possible from the accounts of AIB and Bank of Ireland.

By: Donagh

Donagh — Wed, 01 Oct 2008 22:32:31 +0000

On the nine o’clock news we had George Lee again, and this time he made a very good point at the end. The problem with this plan is that the terms and condition are not known, and the legislation is going to be very broad so we may not know the terms and conditions properly for a while. However, we can’t appreciate the implications of the bail out because we don’t know the extent of the banks bad debts, and we don’t know that because the banks aren’t telling.

We must assume then that those bad debts are very large indeed, and for the government now to guarantee the debts of foreign banks is mind boggling. Never mind that the government is acting unilaterally without wanting to be part of some EU plan which would consolidate government guarantees. And what does that say about Lisbon?

By: Conor McCabe

Conor McCabe — Wed, 01 Oct 2008 20:59:14 +0000

Cheers Damien. By far the most informed, articulate, and insightful work on this is that by Morgan Kelly and Michael Taft, as per the links in Donagh’s comment.

By: Damien DeBarra

Damien DeBarra — Wed, 01 Oct 2008 20:50:10 +0000

Great piece. Thankyou.

By: Donagh

Donagh — Wed, 01 Oct 2008 12:16:55 +0000

Well, it’s not as if I win a prize for linking to an article in the New York Times and anyway, you’re post is a great reaction to the decision of the Irish Government to ensure that the banking sector can continue on its merry way and continue to hide all its bad debts, no matter what Morgan Kelly and Michael Taft have to say.

Actually, Morgan Kelly was on Primetime last night, but I missed it. A colleague told me that he was saying that this bail out (which is not a bail out) won’t make a damn bit of difference.

Here’s Morgan Kelly making a concluding point in his piece Just How Sound is the Irish Banking System?

Bankers are well known for getting carried away during bubbles which is why governments appoint central banks to keep an eye on them. You probably think that the fact that Irish banks have given speculators €100 billion to gamble with, safe in the knowledge that taxpayers will cover most losses, is a cause of concern to the Irish Central Bank, but you would be quite wrong.

At a recent Irish Economic Association discussion of house prices, the Central Bank official in charge of financial regulation (whose publications with the ultra-libertarian Cato Institute strongly oppose any form of bank regulation: a real case of an atheist being appointed an archbishop) stopped the proceedings to announce that the view of the Bank was that, as long as international markets were happy to buy debt issued by Irish banks, there could be no problem with their lending policies.

We can only hope that this insane logic is correct, and that the refusal on ideological principle of bank regulators to regulate banks does not lead to the same debacle here that occurred with Savings and Loan Institutions in Reagan-era America.

What, driven by ideology, the banking system? Well I never. I guess the answer to the question in the title is ‘not very much’.

By the way, as well as Michael Taft’s piece on the lunacy of the bail out I’ve also published a piece by Dr. Gerry Burke on the TASC survey which was published last Monday. It argues that people in Ireland are more left wing than we think.

Don’t mind me, I’ll keep plugging away:)

By: Conor McCabe

Conor McCabe — Wed, 01 Oct 2008 09:31:11 +0000

oops!

Shit. I promise. I do read ILR.

You should have put some ladies on, Donagh, I mean, Sweden and model, it writes itself!

By: Donagh

Donagh — Wed, 01 Oct 2008 09:29:48 +0000

Glad to see that my little posts on ILR are not going entirely unnoticed

http://www.irishleftreview.org/2008/09/25/how-sweden-solved-its-bank-crisis-nytimescom/

By: Conor McCabe

Conor McCabe — Tue, 30 Sep 2008 22:50:20 +0000

Cheers for the comment, Emerald, and for the additional information. In relation to your comment that Irish banks act as if they own the country, I think the actions of the government today shows that it is no act.

And great point about us being shrewd for once. Absolutely true.

By: Emerald Islander

Emerald Islander — Tue, 30 Sep 2008 22:45:05 +0000

Very interesting article. Thanks for sharing the information. I remember some bits of the Swedish crisis, but was not familiar with the details, as in 1992 I was going through a major change in my own life - moving to another country, changing my profession and a lot more.
The Swedish government has also imposed stricter rules on the banks, which in particular work for the good of customers. For example, money lodged into an account in the morning in one part of the country is available to be withdrawn anywhere in Sweden within hours.
Irish banks still take days for that, and even longer if it is a cheque. Should it be a foreign cheque, it could take up to four weeks. This is unacceptable in the time of international electronic banking, and the only reason for doing it is that it gives the banks extra time to use our money for their speculations and gambling.
Now is the time to put new rules in place and tell the banks that they are after all nothing more than businesses with customers. They still behave in a Victorian manner, as if they own the country, even though the quality of their staff has declined steadily over the past 10-15 years. It will be up to the government to make the right decisions on the big scale, but we customers should voice our discontent towards the banks on the lower levels individually. As things are, they need us now more than ever, and even more our money. Let’s be shrewd and get a fair deal in exchange.