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Banking

Trichet’s Friendly Advice

Michael “Irish Mike” Noonan ain’t a man to cross even if the old buzzard is past his three score and ten.  That low growl and beady eye tells you all you need to know if you’re unlucky enough to kick over the spittoon on his foot as you edge past him in the saloon.

If I was you, my friend, I’d git to cleanin’ that there mess offa this here boot, and then I’d git to skedaddlin outta town afore someone gits real mad.

Oh, I’m tellin you, my friends, Y’all wouldn’t mess with Irish Mike Noonan, not never, not no-how,   It don’t make no never-mind. That gun hand is still faster nor an angry rattlesnake and his eye  is good.  Some men swear they seen him pop a slug-sized hole in a high-spinnin dime from a fifty feet dead start, but no-one never  lived to tell the the same if they was on the wrong of the toss, cause all them ones had was a slug-sized hole right between the eyes.

And still, Irish Mike is a peaceable man, jest so long as you don’t never fergit not to rile him.

That is, of course, less’n y’all happen to be Frenchie Trichet, the meanest gunslinger ever seen west of the Pecos.  A man with a dead stare and twitchy fingers, he’d drill you right there on the spot jest for thinkin bad on him, specially if you jogged his drinkin elbow while he bellied up to the bar. They say he once blew up a whole bank jest cos he could.

noonan trichet bondholder bailout

One time, Irish Mike’s outfit got burned in a raw cattle deal, somethin they didn’t never have nothin to do with.  They jest bought into a bad ranch when the slippery dry-gulchers who owned it skipped town, leavin the Bond and the Holder outfits with no cattle and no money neither.  But it weren’t no concern of Mike nor his boys and the whole West done knew it.

I ain’t gonna pay no man for what’s not my debt.  It jest ain’t right, and I ain’t gonna do it.

That’s how Irish Mike said it, and everyone in the saloon knowed he were right.

Everyone apart from Frenchie Trichet, that is.

Pardon me, friend, he said, pushin back his chair from the poker table, as the pee-ano player ducked behind the bar and the girls quit dancin.  I couldn’t help overhearin.

Yeah? hissed Mike, as his eyes got squinty.  What’s it to you?

Well, Frenchie shrugged.  See, Holder and Bond is friends of mine. Real good friends. You might even call em kin. I done stood for Jake Holder’s firstborn, an’ my daughter married Jesse Bond’s boy, Ethan.

Mike cracked his knuckles and looked right back.  Everyone was froze between wantin to git out and wantin to see the end.

Frenchie, he drawled, you and me goes back a long ways, an’ we ain’t never had no beef between us, ain’t that a fact?

Trichet nodded slowly as a bead of sweat ran down the stubble of his cheek. That’s a fact, Mike.  We’s friends.

We is.  An’  I’m a-gonna tell y’all here an’ now, this debt ain’t none of our makin’.

Is that a fact?  Frenchie eased back his long coat, showin’ the pearl-handled Navy Colt .44 cross-draw style.  Let me give you some advice, Mike.  Speakin as one old friend to another old friend, if I was you, I wouldn’t be thinkin of stiffin Jake Holder and Jesse Bond.   They’re good men.  Good honest hardworkin men with families, but more than that, they’re friends of mine.  Just like you, Mike.   Comprende?

Crazy Mike Noonan stared back at Frenchie, an’ everyone could see his trigger-finger a-twitchin’, but in the end he laughed out loud an’ the pee-ano player started playin again.   The girls went back to the dancin an’ the bartender lined up a shot of red-eye for everyone.

Dang me Frenchie if you ain’t one ornery ole rattler, Irish Mike chuckled.  I ain’t never gonna do no wrong to your kin.

I’m mighty glad to hear it, Mike, said Frenchie.  Mighty glad you took my advice.

So am I, Frenchie, said Irish Mike, with a lopsided grin.  So am I.

Categories
Economy Favourites

Burning the Bank Bondholders. ECB Changes Position.

Hands up all those who said you can’t burn senior bondholders.

Anyone?  No?  You’re all very quiet over there.

When even the Financial Times was saying Ireland should impose burden-sharing on the failed banks’ bondholders by insisting on a debt-for-equity swap, there was a clamour, not only from European politicians and from the European Central Bank, but also from our own domestic doomsayers, predicting the end of the world if we didn’t bail out these mega-rich investors and save them from the consequences of having made a bad business decision.

And so we duly went and put Irish citizens into hock for generations to come so that unimaginably wealthy business people might not suffer any loss when their bet went bad.  I’ll keep repeating this until they physically hold me down and gag me.  The money poured into Anglo and Irish Nationwide was not a bank bailout.  Why?  Because those banks were dead and had no hope of ever trading again.  It was the rescue of gigantic hedge funds and private investors all over the world and it was heaped on the shoulders of the Irish people by two idiots, Brian Cowen and the late Brian Lenihan.

As a result of bailing out these speculators, our country is on its knees.  Imagine it.   These two buffoons took it on themselves to turn private-sector losses into public debt.  Did you ever hear the like of that?

B&B invented a new political ideology that was the very opposite of capitalism.  It was more like a demented form of communism in which the State took over not the means of production, but the means of making a loss.  Where it came closer to Soviet-style communism was in the fact  that the private citizen mattered not one iota.  Lenihan even had the effrontery to tell us that this was our patriotic duty.

Our patriotic duty, to subject ourselves to penury so that no gambler in the betting shop of the markets might lose a wager.

And if B&B were inept, they were enthusiastically egged on by Jean-Claude Trichet in the ECB.  When Trichet issued his instructions, his two bumbling marionettes in Dublin danced to his tune.  Even when the Danish government inflicted losses on bondholders, the mantra went on: you can’t burn the bondholders.

Well guess what?  You can.  Suddenly, since Spain and Italy ran into trouble, since Francois Hollande ascended to power in France and since Mario Draghi took over from Trichet at the ECB, it now becomes possible to do what the FT, Joseph Stiglitz and every other person of sanity has been saying.  Suddenly, it’s possible to stand back and let investors take their losses in true capitalist style.  That’s what Spain will be doing, with the blessing of the ECB.  No bank guarantee for them.  They’ll be saying this is a private-sector problem, with private-sector companies failing and it has nothing to do with the sovereign government.

Great news for Ireland, you’re probably thinking.

Eh — no, Ted.  Unfortunately, all the Anglo and Nationwide bondholders have already been paid off.  They’re gone and so is the money.  Gone, including Abramovich who bought Anglo bonds at ten or 20% of face value on the secondary market and insisted on getting the full price from our government.  How many Chelsea players did the Irish taxpayer fund with that handout?

Abramovich threatened to sue the government for going back on its commitments.  The threat was hollow, since the government was never obliged to stick with a unilateral guarantee that carried no reciprocal benefit for the Irish State and which was based on false information provided by the banks.  More on that another time as we begin to peel back the onion-layers on the night of the incorporeal cabinet meeting.  A virtual cock-up in every sense.

So where are we going with this?  What’s the end-game?

Well, we still have the issue of the promissory notes.  If you remember, these are debts owed by our government to the Irish central bank.  You see, in order to pay off the bondholders, the central bank created money out of thin air, as it’s fully entitled to do.  But our government must then pay yearly sums into the CB to write down that funny money.  Now here, as I see it, is where there might be scope for manoeuvre.  Because the ECB has accepted the principle of burden-sharing for Spain and Italy, Ireland is the only country left swinging in the breeze.  Up to now, at the insistence of the Germans who have a pathological fear of inflation following their experience with the Weimar Republic, there has been no possibility of quantitative easing, which is a nice way of saying printing money.  But Ireland’s money is gone and our government is on the hook to pay it back, so what I would do in Baldy Noonan’s shoes, is look for a derogation.

Let us be the exception in two ways.  First, we’re already the exception in having guaranteed the failed banks 100% at the insistence of the ECB, which now agrees that such a policy is insane.  Therefore, for a quid pro quo, let us also be the exception by permitting cancellation of the promissory notes, effectively increasing the Eurozone money supply.  The fig-leaf can be that it’s a once-off deal involving a piddling sum in European terms, to acknowledge that Ireland went far beyond what Spain or Italy are prepared to do and to recompense us for the pain caused by the obduracy and stupidity of Trichet’s policies.

That’s what I’d be looking for, but then again, I’m not an economist and I’m not a politician.

Maybe smarter people than I am might be able to explain it better.

 

Categories
Economy

Brian Lenihan Rewrites History : I Resisted Bailout

Isn’t it amazing what a difference new software makes?

You just can’t compare the 21st-century political Lie-Bots with the equipment we had to use back in the 1960s.

Brian Lenihan Senior ran on Liar 1.3 and he got by pretty well, but his mature-reflection processor was slow and clunky.  It could take him years to invent a new version of the truth that made him look good.

The next-generation Lenihan-3000 unit from Lie-Tech not only has a blazing fast reality-distortion processor, but it also runs Mendacity, the latest lie-generating software beamed from the preserved brain of Steve Jobs directly into the microchip.  It’s the first true man-machine symbiosis, where all of Lenihan’s fantasies are stored on a vast Apple starship orbiting a far-distant nebula.

Cloud lying.

The Lenihan-3000 is not the final product, and Jobs’s brain has indicated it probably won’t go to mass production.  An even more devious version is planned to roll out in the new year.  Codenamed Bartholomew, the iBert, running on a super-devious Nebula Nine processor, will be able to distort the facts before they even happen.  Governments across the world have placed pre-production contracts and a military version is also planned, with an enhanced atrocity-denial module.

Consumers should be able to buy early hand-held versions of the iBert some time in mid-2012.