Comments on: There Should Be No Sacred Cows

By: Conor McCabe

Conor McCabe — Thu, 16 Oct 2008 14:05:41 +0000

Winged monkeys powered by pigeons. There’s a neoliberal think tank where such a thing has been proven possible. They don’t provide any evidence, of course, but they ARE experts in these things, so, you know, we should believe them. It would be an awful abuse of trust were it shown that they were lying to us.

By: Donagh

Donagh — Thu, 16 Oct 2008 09:26:38 +0000

What about winged monkey’s? People always forget the power of winged monkey’s in a debate.

By: Conor McCabe

Conor McCabe — Wed, 15 Oct 2008 22:23:25 +0000

“(Usenet is the best Internet medium for debate, but people seem determined to let it wither).”

Have you tried pigeons?

Pigeons are great.

By: Donagh

Donagh — Wed, 15 Oct 2008 10:55:59 +0000

Fergus, all of this is speculative. It’s not as if we have had a recession at the same time as a collapse in an over-valued property market, at the same time as international crisis in the global financial system that has effectively brought all private lending to a halt and the part nationalisation of almost the entire global banking sector recently to take pointers from.

Perhaps blogs are not the best forum for gentlemanly (or ladily) discourse, and I have always considered blog posts to be provisional notes on contemporary events, based on the information you have. Comments add to this, making the whole thing into a conversation, challenging points of view or providing more information. If I sound ‘apocalyptic’ it is only because I think that the dangers are being ignored and that the government needs to face up to them if the outcome is going to be better rather than worse.

As the budget has shown, this government is still determined to maintain the price of housing at its current level, while at the same time penalizing those further down the pecking order.

By: Donagh

Donagh — Wed, 15 Oct 2008 10:43:46 +0000

Damian, I think you’re right. But there is a problem with that. What is the value of an insurance policy if the Finance minister announces that he has such faith in the adequate capitalization of the banks that he is willing to make a false promise, because it is well known that if one or more banks go down there is no way that Ireland PLC could meet their needs. I would argue that, as we can see from the Irish banking shares (although the flucuations in the stock market are so volitile that it doesn’t indicate very much at the moment) that insurance policy is kinda worthless.

I would change my opinion on one thing that I mentioned above. I don’t think that the motivation behind the guarantee was a political attempt to hide their own part in this mess. That was a bit naive. In a sense, the situation is far worse, and as you say with no money to shore up the banking sector this, they felt, is the best they could do. But it wasn’t the best thing to do, necessarily, and by choosing to provide this guarantee they are postponing the problems for later on, just around the time that the banking sectors in other countries will be beginning their recovery.

By: FERGUS O'ROURKE

FERGUS O'ROURKE — Wed, 15 Oct 2008 10:24:19 +0000

Comments to a blog are a very unsatisfactory way to have a debate, and I am not going to attempt it. (Usenet is the best Internet medium for debate, but people seem determined to let it wither).

Suffice it for now to say that just because I resist the apocalyptic conclusions drawn by Donagh does not make me into an apologist for bad lending, bad government or bad regulation.

By: Damian O'Broin

Damian O'Broin — Wed, 15 Oct 2008 06:15:25 +0000

Donagh, I don’t think it’s necessarily a case of choosing not to follow the Brown model, rather of not being able to. The guarantee looks like a bit of a hail mary play, fingers crossed and hoping to god it works. But with Irish bank share prices continuing to fall against the general rally in other financial stocks, clearly investors BELIEVE that it’s a bad debt / capitalisation issue - whether or not that is actually the case.

I think the government is hoping that (a) they won’t have to step in and recapitalise themselves - because the cash isn’t there and (b) are banking on a fall back that if prices continue to tumble, some nice private sector sugar daddy will step in and buy up BOI and AIB for next to nothing, saving them the hassle of having to do it themselves. Risky business.

By: Longman Oz

Longman Oz — Tue, 14 Oct 2008 18:06:48 +0000

So long as you are not responsible for the automatic right to a medical card being abolished, then I see no need for any apology whatsoever! Thanks though!

By: Conor McCabe

Conor McCabe — Tue, 14 Oct 2008 17:07:29 +0000

Sorry Longman. I’m a bit snappy today - a bit more than usual, even for me. Apologies.

By: Longman Oz

Longman Oz — Tue, 14 Oct 2008 17:02:47 +0000

You do realise that we are making the same fundamental points?

Me: […] clearly both factors [solvency & liquidity] are relevant to what has happened.

You: This is not a simple liquidity issue. It is BOTH a liquidity and solvency issue.

*********

You: The idea of the Swedish model is that you flush out bad debts, and recapitalize. And you adapt that to your own situation.

Me: I agree and have been saying much the same thing on my own site.

My concerns with (part-)nationalising the Irish banks are raised above - (1) it cannot be seen as a panacea just because Sweden came out if it well and (2) HOW CAN WE POSSIBLY RECAPITALISE THE BANKS when, for example, we are being told that it is necessary to abolish the automatic right to a medical card for our oldest citizens (who never once heard the Celtic Tiger roar) just to plug an existing damn hole in the public finances? I just want people to please start focusing on the potentially HUGE UPFRONT CASH COST of taking shares in Irish banks!

You ask a good and provocative question at the end, by the way. I am only surprised that you said “subsidiary” rather than “vassel”.