Monday, 29 November 2010 12:37

Ireland's Bailout Is Finalized, The Indebted Gets More Debt As A Solution But The Fine Print Is Glossed Over - Caveat Emptor!

As reported by Bloomberg: Ireland Wins $113 Billion Aid; Germany Drops Threat on Bonds

European governments sought to quell the market turmoil menacing the euro, handing Ireland an 85 billion-euro ($113 billion) aid package and diluting proposals to force bondholders to bear some cost of future bailouts.

An oxymoronic comment in and of itself since the market turmoil stems from excessive indebtedness of sovereign states and this event marks the dumping of $85 billion of debt on said indebted state.

European finance chiefs ended crisis talks in Brussels yesterday by endorsing a Franco-German compromise on post-2013 rescues that means investors won’t automatically take losses to share the cost with taxpayers as German Chancellor Angela Merkel initially proposed to the consternation of bond traders.

If bond traders were a tad bit more fundamentally analytical in their perspective, they would realize that the Germans were simply being forthright and honest about an inevitable truth. With the current debt load, Ireland will most likely restructure its debt by 2013 anyway. The German proposal is actually a marked positive in that the restructurings (read, "haircuts") would be uniform, universally agreed upon ahead of time, standardized across the board and known by all market participants - basically a sovereign prepack bankruptcy deal. The so-called "bond traders" as referred to by the MSM, are apparently reported to prefer the anarchy of piecemeal, default as you go, restructurings with no standardized form or fashion. Argentina, here we come!

Is it that some believe that if they stick their heads in the European sand and ignore the problem it will go away in due time?

The first test of the twin decisions came as markets resumed trading after speculation intensified last week that Portugal and perhaps even Spain will require support.

If Ireland continues to have the problems that I believe they will have, not only will Spain and Portugal face their market comeuppance, but other European countries outlined in my Pan-European Sovereign Debt Crisis series as well.

I have been 100% correct year to date, much more so than the more widely publicized pundits, investment bank analysts and the IMF/EU themselves:

  1. The BoomBustBlog Contagion Model: How We Predicted 9 Months Ago That The UK and Sweden Would Rush To Bail Out Ireland, and Why
  2. Merkel Points to `Serious’ Bailout Risk as Spanish Bonds Drop, Reggie Middleton says “Ya Damn Skippy” – Here’s How We Called It
  3. Erin Gone Broken Bank: The 2nd EMU Nation That Didn’t Need a Bailout Get’s Bailed Out Within Months, Next Up???
  4. If the World Knew What BoomBustBlogger’s Know, Would Ireland Default Today?

Six months after the Greek rescue exposed flaws in the euro’s makeup and fueled doubts whether 16 countries belong in the same currency union, policy makers again found themselves meeting on a Sunday racing to calm markets. They convened after a week in which the cost of insuring Portuguese, Irish and Spanish government debt against default rose to a record and the 10-year bond yields of those nations, Italy and Greece averaged more than 7.5 percent, a euro-era record.

The fact that those flaws have not been rectified should not be lost on the more astute market participants.

Germany, which built the euro on the principle of budgetary rigor, unleashed the latest phase of the crisis by demanding a “permanent” system as of 2013 that would enable fiscally troubled countries to restructure their debts and cut the value of bond holdings.

The German push ran into criticism from policy makers elsewhere, who called it mistimed, and from European Central Bank President Jean-Claude Trichet, who warned it would unsettle bondholders. Merkel, who has faced domestic criticism for aiding EU neighbors, yesterday backed away from the pitch for an automatic penalty, agreeing to give the International Monetary Fund a role in determining losses on a case-by-case basis.

The new proposal, fast-tracked from a debate set for December, would introduce “collective action clauses” for debt sold as of 2013, enabling fiscally hard-hit governments to renegotiate bond contracts. EU governments aim to enshrine it in the bloc’s treaties by mid-2013 and pair it with a new emergency liquidity fund to replace the one expiring then.

Trichet yesterday called the compromise a “useful clarification” and the ECB’s Governing Council said in a statement that the Irish program will “contribute to restoring confidence and safeguarding financial stability in the euro area.”

As I stated earlier, the German idea is actually superior for it enforces a standardized vigor of discipline against imprudent risk taking, both against the governing bodies of sovereign states and those market participants who choose to fund them both directly and indirectly. By allowing a piecemeal, "default as you go", subjective perspective, the problems of the Eurozone will not only continue, but may actually be exacerbated. You see, just as the article intimated above, there were major flaws exposed upon the onset of the Greek debt crisis, in that 16 distinct, disparate and individual nations were forced into one common monetary and economic system under a relatively strong, export based economic (Germany). This flaw, which in retrospect should have been very easily recognized, has yet to be addressed. As a matter of fact, by watering down the German initiative, the flaw may very well be exacerbated due to political influences - as I re-quote from the Bloomberg article...

The German push ran into criticism from policy makers elsewhere, who called it mistimed, and from European Central Bank President Jean-Claude Trichet, who warned it would unsettle bondholders

Piss off the effective monetary masters of the European Union "Unsettle bondholders" and long over due and quite appropriate although contrary to the interests of those who hold the leash of the entities that control the lives and livelihood of European citizens and tax payers "mistimed"... Indeed!

The folly of disparate nations forced into a single economic block under Germany that I opined on earlier in this missive is certainly no secret and is even mentioned in this very same article...

Germany’s export-led economy has powered through the euro crisis, with business confidence at a record high in November and the government projecting expansion of 3.7 percent this year, the fastest pace in more than a decade. That resilience contrasts with recession in Greece and Ireland, splitting the euro region between better-off countries in Germany’s economic slipstream and poorer ones on the continent’s fringes.

Exactly what does one expect to come of this, particularly considering the geo-political proximity and the interconnectedness from an economic and trade perspective?

Yesterday’s decisions bring “hope of preventing contagion spreading to other countries but do not address long-term solvency issues,” said Andrew Bosomworth, a Munich-based fund manager at Pacific Investment Management Co. “It’s a kick-the- can-down-the-road solution as opposed to acknowledging and confronting the here-and-now insolvency problems.”

As is customary, there is a blurb of practical and common sense. This guys has actually understated the issue. The following is an interesting excerpt from the article...

Ireland said it will pay average interest of 5.8 percent on the loans, which break down into 45 billion euros from European governments, 22.5 billion euros from the IMF and 17.5 billion euros from Ireland’s cash reserves and national pension fund.

Notice, how the statement is "average interest paid", and not a stated interest rate. In addition, a very material amount of the bailout is actually coming from the Irish taxpayer! That's right, Ireland is borrowing from itself by dipping into cash reserves (but then what will it use as cash reserves???) and its pension fund (which was most likely already underfunded) - to the tune of about 11% of total outstanding debt. Now, if Ireland does default (or restructure, as the fancy pants professionals like to put it) as I actually anticipate, then it is virtually a double whammy for the Irish taxpayer, and particularly the Irish pension holder. The indebted borrows from itself and then defaults. Fact is truly stranger than fiction, isn't it? In addition, one can be nearly assured that the interest rate paid to the Irish pensioners inadvertently being set up for the shaft is less than that being paid to the IMF, which is most likely how the "average interest paid" statement was able to come in at 5.8%. Is the Irish pension fund being used to reduce the blended average interest rate? These tactics (or dare I say, antics) are indicative of moves of desperation. Anyone who observes this and then turns around and says that things are NOT out of control are either disingenuous or arithmetically challenged. Here it is from Cowen, himself...

“I don’t believe there were any other real options,” Irish Prime Minister Brian Cowen told reporters in Dublin.

A day after more than 50,000 protesters marched through Dublin to denounce Cowen’s budget cuts to stave off financial ruin, the EU gave Ireland an extra year, until 2015, to get its budget deficit to the euro limit of 3 percent of gross domestic product.

Including the bill for propping up Irish banks, the deficit is set to reach 32 percent of GDP this year, the highest in the euro’s 12-year history.

About Great Britain...

Close banking links led Britain, a non-euro user that didn’t contribute to Greece’s 110 billion-euro rescue in May, to contribute 3.8 billion euros to Ireland’s package.

“That is money we fully expect to get back,” Chancellor of the Exchequer George Osborne told reporters in Brussels. “It’s in everyone’s national interest and it’s in Britain’s national interest that we get some economic stability in Ireland and indeed across the euro zone.”

I doubt they expect that. I believe they expect the money to help cushion the potential for an Irish "run on the bank" that will hurt their interests...


claims_against_uk.jpg

Ireland has the largest claims against the UK as a percentage of the its respective GDP, the largest in the world. In a rush to raise cash by selling assets, expect some fire sales in the UK. For those who may be wondering how this may affect the UK, see our premium subscription report on the UK’s public finances and prospects (recently updated to include the last round of government projections): UK Public Finances March 2010 UK Public Finances March 2010 2010-03-29 06:20:38 615.90 Kb. Of course, this is the reason why the UK rushed to Ireland’s aid. This inter-crossed aid will be prevalent over the next year with different sets of countries running to each other’s side. The focus is now on the contagion effect of Ireland, specifically (jumping on a monthly basis from Greece, Portugal, Spain, etc.). We have performed a lot of work in this area in the beginning of the year. Let’s borrow from our foreign claims model (icon Sovereign Contagion Model – Retail (961.43 kB 2010-05-04 12:32:46) and File Icon Sovereign Contagion Model – Pro & Institutional) in order to see who may be effected from the rush to pull capital out of extant positions to fill the leveraged NPA holes left by the banks…

I am putting the finishing touches on the Irish Haircut Model and will post it in a few hours. Between now and then, I will give an example of how those that are pushing this bailout are relying on (or actually betting on) the ignorance of the investing public, in general.

Close banking links led Britain, a non-euro user that didn’t contribute to Greece’s 110 billion-euro rescue in May, to contribute 3.8 billion euros to Ireland’s package.

“That is money we fully expect to get back,” Chancellor of the Exchequer George Osborne told reporters in Brussels. “It’s in everyone’s national interest and it’s in Britain’s national interest that we get some economic stability in Ireland and indeed across the euro zone.”

Last modified on Monday, 29 November 2010 15:16

22 comments

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  • Comment Link Pieter Silvius Tuesday, 30 November 2010 11:39 posted by Pieter Silvius

    Dear Mr. Middleton,

    Ever, ever more money.
    Let's try, beeing a Dutch technician, to react to the bail outs in English (at least I hope its English).

    Yesterday it snowed for the first time this winter in the Netherlands. The length of our country is aprox. 210 miles. Due to the weather we had a traffic congestion of 600 miles. Unlike Curitiba (Brazil) we don't want a solid solution for the congestion, we don't want to invest in public transport. On the contrary, our short-sighted government, concerned about the expense of the traffic jam, is planning to add roads and allow cars tu use the emergency-part of the hihgways. Illegally as it turns out, the European Commision has determined that the air pollution in Holland is much too high for additional traffic. You see, as a result of better roads more people will buy cars and, in our dense populated country, will move farther away from their work to a place to live with cheaper houses and more room. Experience teaches that the congestion will be worse in 5 years.

    In my opinion we are facing the same problems with money. From the 16th century on the amount of available money has risen and after Nixon leaving the gold standard it exploded to an extend that cannot be managed any longer because of geo-political reasons; mankind and its planet cannot handle more money. So interest, that can no longer increase the total amount of money, has to be stolen. Besides, our money is debt-based, so with more money there is more debt and, as a result, less trade. For that reason the world economy hardly grows any more and the crisis will last. Our kind of money; it is too atractive to rob and hoard up and too little is left for trade and industry (only needing 3 percent of the current available amount). We don't want spend money, we want to keep it, to increase it.

    There is a lot of work to be done. There are a lot of unemployed people. There is al lot of money around. But there is no possible connection between them. Perhaps, as in my example of the transport in the Netherlands, we need a new approach, a fundamental one. Maybe we need another kind of money beside the euro and the dollar: public money; money that is not attractive to hoard and may serve our many needs.

    With kind regards.

    Pieter Silvius

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  • Comment Link Chris Tuesday, 30 November 2010 06:45 posted by Chris

    AFAIK anbout Poland. I don't know if blog's author nows it, but these days polish govt is planning to get back to public budget retiral money from named so II pillar. (First are public retirement funds, in popular socialistic scheme pay-as-you-go). It's as much as 24 mld PLN (about 6mld EUR)for budget in first year after this looting, and 2mld every next year.

    Not that the money belong to polish people. First, the organisations (OFE - Open retiral funds) must invest in 60% in polish public bonds, second the money comes back only as retirement monthly sums, third as far as I know they can't be succeded to chlidren nor families.

    But I personally see also public services going strongly for money - they send old forgotten blueys, or for bad parking. Friend of mine became 350PLN penalty beeing 3 days late with some fiscal declarations - papers only , not money.

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  • Comment Link John Ryskamp Monday, 29 November 2010 20:54 posted by John Ryskamp

    Idiocy. It would terrify the middle class and they would never spend another nickel.

    Next?

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  • Comment Link fred quimby Monday, 29 November 2010 16:44 posted by fred quimby

    Easy boys. You both have relatively rotten branches to swing from.

    There is ANOTHER option:

    http://fofoa.blogspot.com/2010/05/open-letter-to-emu-heads-of-state.html

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  • Comment Link Jim Monday, 29 November 2010 16:42 posted by Jim

    I studied in the Soviet Union as it was unraveling in 1991 and have visited Marx's home in Trier. He was a great philosopher but understood little of history or economics. My assets largely are gold, oil, my house and car. I have little to fear from your delusions.

    The structured defaults will be of weaker European economies. I travel to Europe often enough to tell you that little is left in Greece to take. The Poles aren't so bad off. Massive adjustments are coming to Europe, but they won't bring revolution to the US because the US doesn't hold the bonds. In fact, they may take some of the heat off and make our feeble treasuries look good. IMF intervention is a gimmick to get the US and Japan to help bail out the Euro, in which neither nation holds much stake.

    Despite your colorful language, you seem to have missed Mr. Middleton's point that Europe is structuring its liabilities out into a fan of 2013-2015 (or longer). Will it hit the fan for Europeans? Agreed. The question will become WHICH Europeans, which depends on a number of factors. Poles, for example, will not likely face the ugly restructuring of their pensions. When you mention an apocalypse for the poor working French, do you mean retiring at 62 - or at 65? British kids flipping burgers and living with the folks instead of going to university? Indeed, I envision a lot less vacation and provincial museums closing, but I will be surprised to see Germans rolling wheel-barrows of money down the street to buy bread. You may want to reach for the inhaler.

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  • Comment Link John Ryskamp Monday, 29 November 2010 15:59 posted by John Ryskamp

    And look at this:

    "If Portugal and Spain have to follow Ireland in tapping the EU's €440bn bail-out fund – as widely feared after Spanish yields touched 5.4pc – this will put extra strains on Italy as one of a reduced core of creditor states. The rescue mechanism has had the unintended effect of spreading contagion to Italy, and perhaps beyond. French lenders have $476bn of exposure to Italian debt, according to the Bank for International Settlements."

    Now all eyes are on this fund aren't they? Including yours. Fine. The liquidators will use some OTHER route, OUTSIDE the public eye. Try finding out what they are doing--you never will.

    You say it's nearing endgame? Completely ridiculous. Note that neither 401k nor mutual funds have been Federalized. And you're telling me there's a crisis? Utterly ridiculous. I know from crises, and baby, this ain't one. We've got a LOT more feeding at the trough to do before we hit splinters.

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  • Comment Link John Ryskamp Monday, 29 November 2010 15:52 posted by John Ryskamp

    It's a nice theory, but I don't believe it. What bankers? Do you seriously think they control things? This is simply ridiculous. This whole affair is entirely managed. I see- it's a worldwide cartel, but somehow "bankers" make decisions.

    The idea that there will be structured defaults while middle class unemployment in the U.S. is 4.7%, is simply ridiculous. There is still so much wealth to loot from the middle class--worldwide--that it is ludicrous to think that haircuts will be allowed. This is all one club at the top, and which one of its members do you suppose the other members are going to send to wall? Ridiculous. They all crossed the Rubicon a long time ago. No haircuts, no restructuring, and no defaults. Period. It's Hitlerian--NO RETREATS!

    Has it ever occurred to you that increasing yields on debts is a tool of Mellonesque liquidation? This shows your petit bourgeois orientation. How Marx would have laughed at you! As if somehow these "crises" aren't exactly what the doctor ordered in order to further loot and destroy the middle class. If there is power to lose, I assure you it's not going to be lost by those who have the largest share of it. These "crises" are made to order for cartelization, race to the bottom currency gambits, austerity--the entire bag of liquidationist tricks. Try another one: induced supply chain deterioration.

    You're playing with Hitler, Mussolini, Chinese gangs, Georgian thugs, Syrian mobsters (hello Barack!). Watch out--you'll burn your fingers!

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  • Comment Link John Ryskamp Monday, 29 November 2010 15:40 posted by John Ryskamp

    "The crisis is intensifying and worsening," said Nick Matthews, a credit expert at RBS. "Bond purchases by the European Central Bank are the only anti-contagion weapon left. It needs to act much more aggressively."


    This is now happening, partly funded by the U.S. There's about $20 trillion left to throw at this thing. Will it be enuf?

    Anyway, don't doubt there will be bailouts. No haircuts, no defaults. It's going right to the wall. Or do you want to wind up like Angela? I'm afraid she will soon be visiting Ronnie Chasen, if you know what I mean. She got uppity, she lost control. No way, baby.

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  • Comment Link Jim Monday, 29 November 2010 14:55 posted by Jim

    What Reggie is getting at, quite aptly, is the cash-flow mentality. Everyone is trying to cut losses by calling a moratorium on restructuring (that is, default) at different rates. Europe will take up Greeces default in the summer of 2013, while Ireland gets until the start of 2015. Mr. Ryskamp just doesn't get how sticky the assets will be, which is why European bondholders in Germany and France and just laddering the bad bonds. They're structuring a series of defaults based on what they think is least likely to cause contagion, based on the cross-interests of the horses pulling (Germany, France, Italy) and those being carried in the wagon (Greece, Ireland, Portugal, Spain).

    You'll notice that Ireland is being dealt with before Spain, which gets to Mr. Ryskamp's misunderstanding. Bankers don't like to flood the market with assets, because it depresses prices. They want an orderly exit of bad bonds that will preserve the most hair on their heads, because they understand that the assets eventually will mostly go bad. The slower they sell them and with the least panic, the more money they will bilk from the unwary. This is called price discovery. Reggie's numbers hint at what internal models likely show, namely that recovery will be below 20-30%, which are the good public estimates. Ouch!

    That's why the EMU will let Ireland go down, even though it's a lot bigger than Portugal. Its bonds are held by the UK, Switzerland, Sweden, and others outside the EMU, AND its economic output is trivial to Europe. Spain will be sacrificed to protect France and spread the pain with the UK, Switzerland, and Sweden. Germany and France are a team that will protect Italy for their own good, and because they all were part of Charlemagne's empire. Denmark is not in the EMU, but it has 20% of GDP exposed to Ireland. Go figure!

    What does this likely mean? The Swiss Franc, UK Pound, Danish Krone and Swedish Krone all are due to readjust seriously beginning in 2013. However, a lot can happen before then. Expect the Euro to drop significantly against the dollar in the meantime, and folks start thinking through the woes in Europe. Switzerland is the third largest trading partner with Europe and completely surround by Europe. You would think that they have the most to lose politically and financially as their neighbors get angry and all the money laundering next door. Will Denmark be able to beggar its southern neighbor to stability? Stay tuned, as Reggie starts to blog the currency story!

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  • Comment Link Nick Monday, 29 November 2010 14:26 posted by Nick

    Reggie-


    Do you have any reason as to why they are choosing 2013 as a deadline ? Seems like an arbitrary date.

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  • Comment Link John Monday, 29 November 2010 14:08 posted by John

    It's illusory. Look more closely.

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  • Comment Link Reggie Middleton Monday, 29 November 2010 13:57 posted by Reggie Middleton

    You should explain your theory to the senior debt holders of Allied Irish bank, who voluntarily (more or less so) took a 17%+ haircut.

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  • Comment Link Ruckus Monday, 29 November 2010 13:53 posted by Ruckus

    @John Ryskamp

    Its not about finding out who owes what to whom. Its about can i trust you to deal with me fairly. Once trust is lost its a free for all. People will find a way to survive without pay taxes because they dont trust the governments. Black markets are springing up all over America. People will learn how to survive without the bank. Little old ladies lending money for interest. John Ryskamp you think there is only one system working here. I grew up in the other and its not always civil. If the power that be keep this up, most of those who think they're untouchable are going to be touched pretty hard.

    Thanks Reggie, you others have saved my ass. Now I'm trying to educate my family and friends.

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  • Comment Link John Monday, 29 November 2010 13:50 posted by John

    As long as Bachelor's or higher underemployment in Ireland is less than 50%, there will be no haircut and no default. Do the math. Until then, there is value to be looted from those clerks. They're still eating aren't they? Fine, then the liquidators want THE BREAD OUT OF THEIR MOUTHS. When the going gets tough, you soften. You shouldn't, and you wouldn't if you knew more about Mellonesque liquidation.

    And I can tell you WHY you don't know more about it, because a supply chain professor in UK TOLD me why. It's because there is no monograph study of it, only scattered articles which present only glimpses into the liquidation mindset.

    And by the way, that brings up the supply chain, which is intimately connected to liquidation. This recession has caused, oh, about a 3% deterioration in the supply chain. No way, baby! Liquidators want it to virtually collapse--that increases their control over it. Are there still ANY items on ANY store shelf in Ireland? Yes. Conclusion? NO DEFAULTS AND NO HAIRCUTS. Look what they did to Angela when she suggested this. Do you really think liquidadtors are going to let anything as ridiciulous as a country get in their way. No way, baby!

    MELLONESQUE LIQUIDATORS WILL PRESS TO REVOLUTION. They will not backtrack, allow defaults, engage in haircuts, increasing social spending, or any of that. They are power, and they will drain every drop of it from the populace. Are you seriously telling me there is NO more money to steal from the Irish economy? Rubbish. If that was the case, unemployment would be 100%. As long as it's not, there is money to steal. Why should there be haircuits or defaults when you can still steal money from the Irish people? Nonsense. Steal it, and let them starve. Don't doubt for a moment that liquidators will press on--riots notwithstanding, elections notwithstanding, governments notwithstanding, Reggie Middleton notwithstanding--to drain EVERY DROP of value from Irish society.

    There's MUCH more to loot. Conclusion? NO DEFAULTS, NO HAIRCUTS, NO WAY. Hair-raising isn't it? Well, you're just going to have to get used to it.

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  • Comment Link pete Monday, 29 November 2010 13:48 posted by pete

    Wrong,,,we can still have a f*$#@ng! revolution boy!

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  • Comment Link Reggie Middleton Monday, 29 November 2010 13:32 posted by Reggie Middleton

    Actually John, my comments are just as good as they ever were. It is apparent that you just don't understand what it is you were reading. I didn't "predict" a haircut coming from the EU, I predicted a default or restructuring. Not necessarily mandated by the EU or Germany. As a matter of fact, I was shocked at the frankness of the German officials. Nothing in my opinion has changed. As a matter of fact, the rates that Ireland is paying is more pessimistic than what I have modeled.
    With this latest package, there is simply no way our of this other than a restructuring, eg. a default. You don't seem to understand this, but it is simple math, and the rate of debt accumulation is unsustainable.

    It is unfortunate that your lack of understanding (read ignorance) in this matter somehow, and apparently empowers and emboldens you to be rude, offensive and disrespectful. You should chill.

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  • Comment Link John Ryskamp Monday, 29 November 2010 13:15 posted by John Ryskamp

    "Overcapitalization and contingent capital do not, however, remove uncertainty about the precise eventual size of the losses at the banks, the associated total add to the government's debt and the implications for the feasibility of stabilizing the ratio in the future," noted BNP Paribas.

    This is the problem you are not facing, Reggie. You will NEVER be able to find out the size of the losses, because if that were ever publicized, the entire economic system of the world would collapse. Hiding those bad debts is the essence of government now. Not even YOU will EVER be able to find out.

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  • Comment Link John Ryskamp Monday, 29 November 2010 12:53 posted by John Ryskamp

    "I have been 100% correct year to date, much more so than the more widely publicized pundits, investment bank analysts and the MG/EU themselves."

    No you haven't. You predicted an Irish haircut. Exactly the opposite happened. The fact is that there will be no haircuits and money will continue to be poured into this rathole, until....? Well, until middle class underemployment hits 50%. That's how long it will take.

    "Germany’s export-led economy has powered through the euro crisis, with business confidence at a record high in November and the government projecting expansion of 3.7 percent this year, the fastest pace in more than a decade. That resilience contrasts with recession in Greece and Ireland, splitting the euro region between better-off countries in Germany’s economic slipstream and poorer ones on the continent’s fringes."

    No, this is Germany's own ill-advised gambit. It is a misallocation of resources. Why can't you see this?

    "Fact is truly stranger than fiction, isn’t it? In addition, one can be nearly assured that the interest rate paid to the Irish pensioners inadvertantly being set up for the shaft is less than that being paid to the IMF, which is most likely how the “average interest paid” statement was able to come in at 5.*%. Is the Irish pension fund being used to reduce the blended average interest rate? These tactics (or dare I say, antics) are indicative of moves of desperation. Anyone who observes this and then turns around and says that things are out of control are either disingenuous or arithmetically challenged."

    Wrong again. They've done the demographic research, and you haven't. Is middle class unemployment in Ireland 50%? No. Conclusion? The Mellonesque liquidation continues.

    Your problem is that you can't believe thieves won't stop stealing until their hands are cut off. Guess what? Thieves won't stop stealing until their hands are cut off.

    "I am putting the finishing touches on the Irish Haircut Model and will post it in a few hours. Between now and then, I will give an example of how those that are pushing this bailout are relying on (or actually betting on) the ignorance of the investing public, in general."

    They're not betting on anything. They know that middle class unemployment in Ireland is not yet 50%. Why don't you know that? You're wandering.

    Your comments are getting less useful and less predictive because you're letting the normative get in the way of the speculative. Take off your petit bourgeois glasses and look at reality.

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