Economy Rigging 1

BSK log, 02/10/10 October 2, 2010

Filed under: Uncategorized — bashstreetkidjailbreak @ 3:43 pm

MAIN ITEM:

Today will be my tweets I exchanged with a most distinguished economist who shall remain anon. The topic I tweeted him on concerns the idea on defining the culpability and motive behind the banking and government  handling of matters at hand. Here are the tweet below.

#1 Why do you think the Irish gov are actually using the taxpayers funds to pay the bill that the private banks are responsible for.

#2 Do you think it is sheer incompetence and misunderstanding on their behalf or something else?

#3 I am not one either, but how can it be possible for such incompetency and error on such a huge scale. The odds are against it.

#4 How is it 5 years ago teenagers like my son knew the prices of houses where bonkers. And we are been told the professionals didnt?

#5 So you reckon they merely just put fingers in their ears and went LA LA LA LA?

#6 Well I am of the viewpoint that this is impossible to take place without some type of intelligence making it take place.

#7 and this is not conspiracy this is pragmatic common sense.

#8 It is pragmatic common sense to suspect that the insiders who benefited the most are making choices to make that happen.

#9 For the special interests at the top of the gravy train who do not need pensions, these guys made choices to inflate a bubble.

#10 A property bubble engineered to set in motion a get rich pyramid scheme.

#11 All the difficu;ities underway now originates with the property bubble and this was no accident and required competency to do.

#12 In my viewpoint it is an organized inside job to use the banks as a jackpot to cream as much euro from europe as possible.

#13 Using the inflation of a property bubble to milk the euro when we went with the euro in 2000.

#14 The loot has been transferred into tax havens. Have you been following the ANGLO isle of man story for example?

#15 I can argue the case very cogently the property bubble was engineered by insiders to cream the system to plunder the euro\

#16 Maybe it comes down to been Irish and knowing in your blood the level of cunning the Irish can use to get their pot of gold.

#17 the banking system and its operators provide lending through protocols. These protocols put aside. This is organized theft.

#18 Try and at least ponder the possibility that maybe this is organized white collar crime creaming of the euro from day 1.

And I will cap of this tweet list with this excellent blog on the whole of the financial system is in fact one gigantic pyramid scheme. Financial crisis? It’s a pyramid, stupid.

ITEM 1:

The Telegraph writing on Ireland ridiculed by City investors: Ireland’s finance minister Brian Lenihan ridiculed by City investors – Telegraph

ITEM 2:

Anon Comments the following on Irelands Sovereign debt:

There are many examples where sovereign financial crises have occurred and 10 years later, when the cycle has turned, they are back.Bondholders get paid interest to reflect the risks they take, they should all be burned in this case – its a system called capitalism, really works well when applied.There is an argument for Ireland to leave the Eurozone and devalue the currency as the UK has done, but devaluation of a currency has a number of problems including:

# Everyone cannot devalue their currency – as they are trying right now, including the USA, Japan, the UK etc;
# Devaluing a currency beggars its people;
# Devaluation may not create the export led boom that people think it will – capital may just move to even cheaper locations like Vietnam;

While I agree with many comments here that there will be a default on Irish Govt debt, it will most likely take the form of rescheduling; hence the rate of interest approaching 7% to reflect this risk. How much are you getting on your deposit account at the moment? Hedge Funds see an opportunity to make a killing with the carry trade.

Lastly, as an Irish ex-pat living in the US, I am deeply saddened by the utter incompetence of the Irish Govt which with every step makes matters worse.

ITEM 3:

Anon comments on ANGLO:

Anglo Irish Bank was a rogue bank headquartered in Ireland, that was audited annually by Ernst & Young, of Lehman Brother fame. It has no retail branches or retail customers, it is a commercial bank that unfortunately got covered by a blanket guarantee across the entire banking sector. During the boom years, the bondholders investing in the rogue entity, turning a blind eye as long as the pyramid scheme paid out big, but as soon as the tide turned these same financial institutions “advised” the government to protect this commercial entity with a blanket guarantee. The hopeless EU encouragerd the same guarantee without once conducting a review of the nefarious activity going on at the pyramid bank.

Prior to 2008, Anglo Irish Bank had nothing to do with the citizenry or government or Ireland. The Irish government debt for equity swap was the biggest coup for bondholders the world over. A country is now on the hook for the biggest pyramid scheme in history.

ITEM 4:

MAIN POINTS OF REGLING /WATSON REPORT: Main points of Regling/Watson report – The Irish Times – Wed, Jun 09, 2010

Below is a series of observations from the report produced by former IMF officials Klaus Regling and Max Watson which investigates the causes of the banking crisis

While global and domestic factors thus interacted in mutually reinforcing ways, it is feasible to disentangle the main homemade elements in the debacle.

Fiscal policy heightened the vulnerability of the economy.

Bank governance and risk management were weak – in some cases disastrously so.

The systemic impact of the governance issues crystallised dramatically with the Government statements that accompanied the nationalisation of Anglo Irish Bank.

Ireland’s banking exuberance indulged in few of the exotic constructs that caused problems elsewhere. This was a plain vanilla property bubble, compounded by exceptional concentrations of lending for purposes related to property – and notably commercial property.

Official policies and bank governance failings seriously exacerbated Ireland’s credit and property boom, and depleted its fiscal and banking buffers when the crisis struck.

The Government‘s procyclical fiscal policy stance, budgetary measures aimed at boosting the construction sector, and a relaxed approach to the growing reliance on construction-related and other insecure sources of tax revenue were significant factors contributing to the unsustainable structure of spending in the Irish economy.

It is clear that a major failure in terms of bank regulation and the maintenance of financial stability failure occurred.

There is prima facie evidence of a comprehensive failure of bank management and direction to maintain safe and sound banking practices,instead incurring huge external liabilities in order to support a creditfuelled property market and construction frenzy.

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