Ireland's Finance Minister Brian Lenihan Ridiculed By City Investors

[interestrateripoff]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8038000/Irelands-finance-minister-Brian-Lenihan-ridiculed-by-City-investors.html

The call with Brian Lenihan and hundreds of investors rapidly descended into farce, forcing Citigroup, which staged the event, to pull the plug.

The treatment of the minister, which comes as Ireland faces a standoff with a group of hedge funds over its rescue plan for Anglo Irish Bank, will increase tensions between the country and the debt markets.

Mr Lenihan had been speaking for less than two minutes on Friday before a mistake by Citigroup meant that the bank's clients were all able to be heard on the line.

Between 200 and 500 investors are understood to have been on the call, and as they realised their lines were not muted many began to heckle Mr Lenihan.

Some traders began making what one banker on the call described as "chimp sounds", while another cried out "dive, dive". A third man said "short Ireland" before adding "why not short Citi too?"

As the call descended into chaos, with one participant heard to say "this is the worst conference call ever", Citigroup officials shut down the line.

Host Philip Brown, head of public sector debt at Citigroup, restarted the call 20 minutes later, allowing Mr Lenihan to make his address, before answering investors' questions.

A spokeswoman for Citigroup said there had been some "technical problems" with the call.

The bungled call comes at a tense time for relations between the Irish government and investors, some of whom have been dismayed at what they see as the country's attempts to dodge its commitment to guarantee the debt of the country's banking system.

On Friday it emerged that a small group of hedge fund debt investors were threatening to take Ireland to court if it pushed ahead with moves to impose so-called "haircuts" – or writedowns – on the value of their holdings in Anglo debt.

The group, which is thought to number no more than six funds, say they could force a default of Anglo, which would have catastrophic consequences for Ireland's already hugely stretched public finances.

Got to the free market ideology the profits are privatized but the losses are socialized on the taxpayers. If you invest there is a risk you might lose your money, in the free market if you make a bad bet it's tough you lose.

However the political elite have made stupid promises and commitments which cannot possible be made.

Everything has already degenerated into farce and now we get the traders who helped create this mess just taking the p155. Excellent

Still I'm sure it's contained.

[azogar]

meanwhile, iceland favours better than ireland according to some:

In the Irish case, most of the losers will be Irish, one way or another. With shareholders largely wiped out, they will be either Irish taxpayers, as currently planned; Irish pension funds, likely the biggest holders of the bonds; or Irish depositors.

Only one European government has chosen to impose significant losses on unsecured creditors in the latest crisis: Iceland. "In retrospect, Iceland looks pretty good compared to Ireland," says Mr. Gros.

The size of Iceland's banks dwarfed its economy more even than Ireland's did. Bank assets in Iceland were equivalent to 10 times annual economic output, compared with seven times in Ireland.

But Reykjavik had something else going for it: A large proportion of its bank creditors were outside the country. Iceland changed the rules of the game, promised to pay the banks' domestic creditors in full and allowed the banks to default on liabilities to foreign creditors. Iceland's taxpayers saved huge sums.

Iceland did pay a penalty: Its access to international markets was closed and remains so. Mr. Lenihan says that for Ireland that would be too high a price.

Mr. Gros says there are probably other factors influencing the Irish decision. A default on Irish bank debt would push funding costs higher for banks across the euro zone. He says other euro-area governments would be strongly urging Dublin not to let this happen.

But he disputes the idea that allowing the banks to default would hurt the Irish government's ability to borrow. "A government can still make a clear distinction between its own obligations and the entities that it owns which are limited-liability companies."

Bailing out bank creditors provides no incentive for them to undertake proper due diligence among banks. The European Union is currently grappling with this moral-hazard problem as it debates setting up national resolution funds to bail out troubled institutions.

Mr. Gros says the issue could be solved by offering creditors a menu of options to swap their claims—for example, for bonds with a lower face value, bonds paying less interest with later final maturities, or even an equity stake in the bank—that would more fairly share the pain.

http://online.wsj.com/article/SB10001424052748704483004575524073046184954.html

[bogbrush]

Got to the free market ideology the profits are privatized but the losses are socialized on the taxpayers. If you invest there is a risk you might lose your money, in the free market if you make a bad bet it's tough you lose.

However the political elite have made stupid promises and commitments which cannot possible be made.

Everything has already degenerated into farce and now we get the traders who helped create this mess just taking the p155. Excellent

Still I'm sure it's contained.

Not sure what you mean here. Surely nobody thinks any of this underwritten fraud guarantee nonsense has anything whatsoever to do with a free market?

[interestrateripoff]

Not sure what you mean here. Surely nobody thinks any of this underwritten fraud guarantee nonsense has anything whatsoever to do with a free market?

That's what I mean that if you are going to take the profits you have to accept the losses rather than going to crying to mummy when it goes wrong and you lose the bet. And mummy then offering you a full refund.

[_w_]

That's what I mean that if you are going to take the profits you have to accept the losses rather than going to crying to mummy when it goes wrong and you lose the bet. And mummy then offering you a full refund.

From what I read of their behaviour and attitude towards a head of state you're asking for too much!

Some traders began making what one banker on the call described as "chimp sounds", while another cried out "dive, dive". A third man said "short Ireland" before adding "why not short Citi too?"

[R K]

Seems typical of the pathetic children who are todays bankers and hedgies, who steal from anyone and everyone and are incapable of making a living without leeching off the state.

Their mothers must be proud. They all deserve each other. We deserve to be rid of them all.

Edited October 2, 2010 by Frank Sidebottom

[bogbrush]

That's what I mean that if you are going to take the profits you have to accept the losses rather than going to crying to mummy when it goes wrong and you lose the bet. And mummy then offering you a full refund.

Too right. It makes me sick to watch this twisted charicature of business.

[Realistbear]

The Sovereign Debt Crisis has not gone away and it may well rear its head again before this month is out.

In the meantime the Euro is soaring vs. the £ (below 1.15) and the US $ as if the Eurozone was well on the road to a jobless, manufacturingless, good creditless recovereh.

Thinking about it, our 5TR total public debt (including the off-balance sheet stuff Gordon kept hidden) and 70.3% debt to GDP public debt makes Ireland look pretty stable. Politics must be keeping us from a credit downgrade. Or the US.

Edited October 2, 2010 by Realistbear

[Redcellar]

That's what I mean that if you are going to take the profits you have to accept the losses rather than going to crying to mummy when it goes wrong and you lose the bet. And mummy then offering you a full refund.

You are perhaps not fully understanding the complete deal. The buyers of debt and the lenders alike receive insurance/assurance from governments, which in exchange means:

'a') they buy the deals, otherwise no-one will touch them

'b') they buy on favourable terms for the nation, i.e. they do not add in the risk as an excessive margin (significantly inflated rates). That keeps the cost of borrowing lower.

Without the governments/national banks effectively insuring the deal, the cost of borrowing would mean the economy comes crashing down.

Edited: for weird smiley insertion

Edited October 2, 2010 by Redcellar

[mdman]

You are perhaps not fully understanding the complete deal. The buyers of debt and the lenders alike receive insurance/assurance from governments, which in exchange means:

'a') they buy the deals, otherwise no-one will touch them

'b') they buy on favourable terms for the nation, i.e. they do not add in the risk as an excessive margin (significantly inflated rates). That keeps the cost of borrowing lower.

Without the governments/national banks effectively insuring the deal, the cost of borrowing would mean the economy comes crashing down.

Edited: for weird smiley insertion

That sh1tty 'understanding' (aka spin) ain't fooling anyone anymore

Those chimps need a good haircut. Failing that a good old-fashioned chimp-lynching. The sound of those monkey boys screeching economic Armageddon if they don't get their bananas - it's getting tedious. Noone believes you anymore

[interestrateripoff]

You are perhaps not fully understanding the complete deal. The buyers of debt and the lenders alike receive insurance/assurance from governments, which in exchange means:

'a') they buy the deals, otherwise no-one will touch them

'b') they buy on favourable terms for the nation, i.e. they do not add in the risk as an excessive margin (significantly inflated rates). That keeps the cost of borrowing lower.

Without the governments/national banks effectively insuring the deal, the cost of borrowing would mean the economy comes crashing down.

Edited: for weird smiley insertion

Ludwig von Mises describes the endgame brought on by reckless expansion of credit: "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

So they just carried on with the credit expansion. Still I'm sure it will end well.

[OnlyMe]

This is going to go down well with the political "elite" who have seen their precious Euro area specifically targetted by the banks and hedge funds.

Maybe this will bring forward some swift curbing of the ability of these "talented" people to game the system, London being the centre of this cesspool a lot of the time (outside of the US) would not be immune to legislation.

Bring it on.

Edited October 2, 2010 by OnlyMe

[Protect Rural England]

This is going to go down well with the political "elite" who have seen their precious Euro area specifically targetted by the banks and hedge funds.

Maybe this will bring forward some swift curbing of the ability of these "talented" people to game the system, London being the centre of this cesspool a lot of the time (outside of the US) would not be immune to legislation.

Bring it on.

don't be silly.

the banks have owned Governments for near on 200 years in modern times.

the jews were persecuted on mainland europe for the past 500 years

jesus threw the money lenders out of the temple 2000 years ago

bankers exist because we go out and borrow from them

stop borrowing, stop expecting interest from them and they will wither. until then if you cannot beat them, join them.

all this whinging but you still do nothing?

[Arbitrage]

Not sure what you mean here. Surely nobody thinks any of this underwritten fraud guarantee nonsense has anything whatsoever to do with a free market?

Or tax payer funded bailouts of failed, unprofitable businesses - that's got nothing to do with the free market and fair competition either.

The problem is that in our society the rich, e.g. bankers, get insulated from competition, whilst the poor, e.g. those who worked for Woolies, get the free market.

My preference: a fair competition. No bailouts for anyone, regardless of your 'connections', or background.

[wonderpup]

The problem is that in our society the rich, e.g. bankers, get insulated from competition, whilst the poor, e.g. those who worked for Woolies, get the free market

Yep.

The reason given for why incomes of the workforce must fall in the west? =Global competition.

The reason given why incomes of CEO's in the west have gone to the moon?= Global competition.

Sooner or later the free market pavlovians will wake up to the fact they have been sold an ideology by people who had not the slightest intention of ever being bound by it themselves.

Edited October 2, 2010 by wonderpup

[Arbitrage]

Yep.

The reason given for why incomes of the workforce must fall in the west? =Global competition.

The reason given why incomes of CEO's in the west have gone to the moon?= Global competition.

Sooner or later the free market pavlovians will wake up to the fact they have been sold an ideology by people who had not the slightest intention of ever being bound by it themselves.

Yes, the rich can even buy extra time for their thick kids so that they can do better in their exams.

Yes, they're dyslexic - apparently.

It costs £500 for the test, so there aren't many poor dyslexics.

Fair competition - dream on.

The rich play by different rules - they don't like to compete against the plebs by the same rules.

Like Bogbrush, they talk a good game on competition, but they don't like it.