Ireland: The big uncertainties

Robert Peston, BBC

15:38 UK time, Thursday, 18 November 2010

It would be far cheaper for the Irish government if markets were to be reassured by the existence of a substantial borrowing facility – because Ireland would only pay the full 5% interest rate on drawn down loans.

…

(I)t is the perceived weakness of Ireland’s bloated, lossmaking banks that is the fundamental problem.

That said, is it the case that these hobbled banks would be able to borrow from commercial lenders again, and would become less dependent on the European Central Bank for funds, if all that happened was that a few more tens of billions of euros was injected into them as new capital, as additional protection against losses?

Or would investors and banks still be wary of lending to these banks, if they felt that the entity standing behind the banks – the Irish state – remained a credit of dubious worth?

…

(T)he other huge unknown is over the other strings and conditions that would be attached to the loans or borrowing facilities.

In particular, will Germany get its way and force the Irish government to raise its 12.5% corporate tax rate, which the German government has long seen as unfair tax competition, as a de facto bribe to big international companies to settle in Dublin?

…

Curiously the Irish government’s preferred tax-raising measure, I am told by officials, is to increase the number of citizens paying income tax, by lowering the income threshold at which income tax is payable.

I’m not sure whether the economics of keeping corporation tax low while raising more from low-income families quite works. But the politics is certainly very intriguing.

A Charlie Brown Thanksgiving.  Mostly premiers.

We don’t have none of this stuff in the boy’s room! Wait a minute! We don’t got none of this… we don’t got doors on the stalls in the boy’s room, we don’t have, what is this? What’s this? We don’t have a candy machine in the boy’s room!

• ABC Family– Mean Girls, Cheaper by the Dozen (while it does have Steve Martin, not the good 1950 version)
• AMC– Hidalgo x 2
• Bravo– Real Housewives marathon (with premier)
• Disney– Charlie and the Chocolate Factory (Depp, not Wilder)
• ESPN– College Throwball, UCLA @ Washington
• ESPN2– College Hoopies, Maryland v. Pittsburgh, Illinois v. Texas
• Food– Feuds (premier)
• FX– It’s Always Sunny in Philadelphia, The League x 3 (premiers)
• History– Aliens! (with premier)
• Lifetime– Her Sister’s Keeper
• National Geographic– Naked Science (premier)
• Turner Classic– The Naked Maja, On the Beach (Ava Gardner night)
• TNT– Hoopies, Suns @ Magic, Nuggets @ Trail Blazers
• Travel– Man v. Food marathon (thank goodness)
• USA– Burn Notice (premier)

Later-

• AMC– Wild Wild West
• Disney– Phineas and Ferb
• Style– Pretty in Pink
• Turner Classic– The Angel Wore Red (more Ava)
• USA– Psych (this week’s), Burn Notice (Instapeat)

Dave hosts Jim Carrey and Nicki Minaj.  Jon has Phillip K. Howard, Stephen Salvatore Giunta and Dick Wolf.  Conan hosts Jesse Eisenberg, Venus Williams, and The Decemberists.

Oh ho ho, I see. Now I’m the “master of this mechanical stuff.” As opposed to five minutes ago, when I was calmly and coolly trying to find a solution to this very problem. But then something happened. Someone, who will remain nameless…  JIM WEST! …decided to jump over the wire, thereby providing us with that exhilarating romp through the cornfield, and that death-defying leap into the abysmal muck! And here we stand, with that demented maniac hurtling towards our President, with our one and only means of transportation, with Rita as his prisoner, armed with God-knows-what machinery of mass destruction, with the simple intention of overthrowing our government and taking over the country!

Zap2it TV Listings, Yahoo TV Listings

Evening Edition is an Open Thread

1 Anti-UN unrest spreads to Haiti capital

by Stephane Jourdain, AFP

6 mins ago

Solid premiers.  Of them the most interesting to me are Secrets of the Dead Lost Ships of Rome and Circus, both on PBS.

Keith is bringing back ‘Worst Person In The World’.  I wonder what’s behind that?

I’m Burke. Carter Burke. I work for the company. But don’t let that fool you, I’m really an okay guy.

…

Look, this is an emotional moment for all of us, okay? I know that. But, let’s not make snap judgments, please. This is clearly-clearly an important species we’re dealing with and I don’t think that you or I, or anybody, has the right to arbitrarily exterminate them.

• AMC– Aliens x 2 (the best one)
• Bravo– Top Chef (Season Finale)
• Disney– Avalon High
• Discovery– Mythbusters (last week’s and new), Storm Chasers (premier)
• ESPN– Hoopies, Suns @ Heat, Bulls @ Spurs
• ESPN2– College Throwball, Bowling Green @ Toledo
• Food– Throwdown Thanksgiving Feast (premier)
• FX– Terriers x 3 (premier)
• History– The End Of The World! (as we know it)
• Lifetime– Sleeping with the Enemy
• Oxygen– Barbershop x 2
• Sci Fi– Hollywood Treasure x 2 (premiers)
• Turner Classic– The Kid, The Pilgrim (shhhhh, Charlie Chaplin night)
• TNT– You’ve been Gumped (again)
• Travel– Man v. Food marathon (with premier, thank goodness)
• USA– Psych (premier)
• Vs.– Bruins @ Rangers

Later-

• AMC– Alien 3 (not so good)
• Disney– Phineas and Ferb
• Turner Classic– One Week, Steamboat Bill, Jr., Safety Last (shhhhh)
• TV Guide– Fan boy coverage of Harry Potter and the Deathly Hallows (premier, still useless, are you going to tell me Emma Watson kisses like an animal?)
• USA– Burn Notice (this week’s)

Dave hosts Jake Gyllenhaal, Fran Lebowitz, and Ne-Yo.  Jon has Jay-Z, Stephen Ian Frazier.  Conan hosts Susan Casey (you need a damn wiki entry), Russell Brand, and Kid Rock.

Boondocks– Ballin.

Those specimens, are worth millions to the bio-weapons corperation. If you’re smart, we can both come out of it as heroes and we’ll be set up for life.

You’re really crazy Burke, you know that. You really think that you can get a dangerous organism like that passed ICC quarantine?

How can they impound it if they don’t know about it?

They “will” know about it, Burke, from me. Like they’ll know that you are responsible for the deaths if 158 colonists here.

You’re wrong.

I just read the colony log. Dated 0-6-1-2-7-9 signed Burke Carter J. You sent them to that ship and you didn’t warn them. Why didn’t you warn them, Burke?

Okay. What if that ship didn’t even exist, huh didn’t you ever think about that? I didn’t know. I went in and made a major security issue out of it, and everybody steps in, and the Administraor steps in., and I made a decision and it was a bad call, Ripley, it was a bad call.

Bad call? These people are dead Burke! Don’t you have any idea what you have done here? I ‘m gonna make sure they nail you right to the wall for this, you’re not gonna sleaze your way out of this one. Right to the wall.

You know Ripley, I was hoping that you would be smarter than this.

I’m happy to disappoint you.

…

You know, Burke, I don’t know which species is worse. You don’t see them fucking each other over for a goddamn percentage.

Zap2it TV Listings, Yahoo TV Listings

Evening Edition is an Open Thread

1 Europe heads for Irish bank rescue

by Roddy Thomson, AFP

32 mins ago

Economics 101

The time has come, the Walrus said, to talk of many things.  Of shoes and ships and sealing wax, of cabbages and kings.

I want to focus here on Credit Default Swaps.  Since the abbreviation (CDS) is close to the abbreviation for Collateralized Debt Obligations (CDO), which includes as a subset Mortgage Backed Securities (MBS) there is a tendency to confuse them all together.

A Credit Default Swap is an insurance policy on a debtor paying their debt.

For a fee someone with deep pockets agrees to make good the debt if the debtor doesn’t pay.

Now as long as the debtor pays this is easy money, but what we are finding is that when they actually do default, the people who sold these insurance policies don’t actually have such deep pockets after all.

And since they’re “Too Big To Fail” financial institutions who owe other “Too Big To Fail” financial institutions the money is coming out of Taxpayer pockets instead.

As I might have mentioned before (but am too lazy to look up at the moment) it is Insurance Fraud not to keep sufficient reserves to pay off your policies.

What makes this even worse is that you don’t actually have to own the debt to buy the policy.  It’s like letting random people take out life insurance on you and not counting on them coming up with some brilliant Strangers on a Train scheme to bump you off.

It is fundamentally no different from going into a Casino and betting it all on Black.

The Debt Problems of the European Periphery

By Anders Åslund, Peter Boone and Simon Johnson, The Baseline Scenario

November 17, 2010 at 12:18 am

Last week’s renewed anxiety over bond market collapse in Europe’s periphery should come as no surprise.  Greece’s EU/IMF program heaps more public debt onto a nation that is already insolvent, and Ireland is now on the same track. Despite massive fiscal cuts and several years of deep recession Greece and Ireland will accumulate 150% of GNP in debt by 2014.   A new road is necessary: The burden of financial failure should be shared with the culprits and not only born by the victims.

The fundamental flaw in these programs is the morally dubious decision to bail out the bank creditors while foisting the burden of adjustment on taxpayers.  Especially the Irish government has, for no good reason, nationalized the debts of its failing private banks, passing on the burden to its increasingly poor citizens.  On the donor side, German and French taxpayers are angry at the thought of having to pay for the bonanza of Irish banks and their irresponsible creditors.

Such lopsided burden-sharing is rightly angering both donors and recipients.  Rising public resentment is testing German and French willingness to promise more taxpayer funds.  German Chancellor Angela Merkel’s hasty and ill thought out plan to demand private sector burden sharing, but only “after mid-2013”, marks a first response to these popular demands.  We should expect more.

Financial crises are actually not rare, and the rules for their resolution are clear. The fundamental insight is that huge amounts of financial losses, of seemingly real value, need to be distributed across creditors, debtors, equity holders and taxpayers.

My emphasis.

Ireland: How much punishment for British and international banks?

Robert Peston, BBC

09:09 UK time, Wednesday, 17 November 2010

Are haircuts in or out for Ireland? Will the putative experts at the IMF, European Commission and European Central Bank, who will spend the next few days examining Ireland’s intertwined banking and fiscal challenges, recommend that there should be losses imposed on the providers of tens of billions of euros of wholesale debt to banks.

…

It is that phrase “restructuring of the banking sector” which may alarm the banks and financial institutions which are wholesale creditors of Ireland’s banks, the providers of more senior debt which is supposed to be least at risk of non-repayment. The implication is that consideration is being given to forcing losses on them, such that they would share in the costs of rehabilitating Ireland’s banks.

…

(I)t would be a bit odd if the ECB, in the shape of all its senior movers and shakers, were opposed to such haircuts: there is a powerful moral argument, of the sort that normally appeals to central bankers, to the effect that overseas banks and institutions in the UK, Germany and so on should have known better than to encourage Ireland’s banks to lend recklessly and pump up a completely unsustainable property bubble – and that they therefore deserve a bit of a spanking.

What’s more, if Ireland is fundamentally incapable of paying off all it owes – which is equivalent to an oppressive 700% of GDP when banking, public sector and private sector debts are added together -some will say it is grotesquely unfair that the cost should fall entirely on taxpayers in Ireland, the European Union and (if IMF money is drawn) the rest of the world.

…

What would then be triggered would be enormous payments by underwriters of credit default swaps (CDSs), the debt insurance contracts taken out by lenders and speculators. These payments would generate enormous losses for the financial institutions, including banks, which provided the CDS cover.

…

Even without the CDS loss multiplier, the impact of debt haircuts would be painful for British and international banks. According to the Bank for International Settlements, total lending of non-Irish banks to Irish banks is around $170bn, of which British banks provided $42bn, German banks provided $46bn, US banks $25bn and French banks $21bn.

…

What’s more, if there are haircuts imposed on Irish bank debt, it’s very difficult to see how haircuts could be avoided for Greek and Portuguese bank debt too, and also for plain vanilla Irish, Portuguese and Greek government borrowings.

If you add all that together, it comes to $435bn of exposure for international banks to the banking and public sectors of the eurozone’s three weakest economies. If, say, a third of that were written off (enough to make the residual debt almost bearable) that would trigger not far off $150bn of losses for banks alone.

Well, it took me a while but I finally tracked down the Wall Street Journal article on the BP Blowout Disaster that every one-

• AFP
• Reuters
• AP
• The New York Times
• The Washington Post
• Bloomberg
• Business Week
• USA Today

is referencing.

I didn’t think it was much of a much in terms of things we didn’t know already, but it sure got the print media’s attention and since it did take so long to find I thought I’d share it with you.

Gulf Spill Linked to BP’s Lack of ‘Discipline’

By STEPHEN POWER, BEN CASSELMAN And RUSSELL GOLD, The Wall Street Journal

NOVEMBER 17, 2010

Engineers’ Report Blames Oil Giant for Failing to Ensure That Safety Trumped Cost; Regulators’ Technical Acumen Is Panned

An “insufficient consideration of risk” and “a lack of operating discipline” by oil giant BP PLC contributed to the worst offshore oil spill in U.S. history, according to a report due for public release Wednesday from a team of technical experts.

…

The report provides little new information on the specific causes of the explosion on the Deepwater Horizon rig, instead providing a long list of decisions by BP and other companies that it says may have played a role in the disaster.

…

But the panel also identifies non-technical factors that it says likely contributed to the accident. The panel cites off “a lack of management discipline” and a “lack of onboard expertise and of clearly defined responsibilities.”

The report doesn’t attempt to assign blame to individual workers or companies, and it doesn’t directly address one of the key questions raised by Congressional and other investigators: whether BP cut corners to save money. It does say that many of BP’s choices “were likely to result in less cost and less time relative to other options,” and it criticizes the lack of processes to ensure that safety didn’t take a back seat to cost.

One nice thing about it is that it does have a link to a .pdf version of the preliminary report.

Premiers.  Nova has Secrets of Stonehenge which could be interesting.

Time’s up! What do we have for the losers, judge? Well, for our defendants, it’s a life time at exotic Fort Leavenworth! And, for defense counsel Kaffee, that’s right, it’s a court martial! Yes, Johnny! After falsely accusing a highly decorated Marine officer of conspiracy and perjury, Lieutenant Kaffee will have a long and prosperous career teaching… typewriter maintenance at the Rocco Globbo School for Women! Thank you for playing “Should we or should we not listen to the advice of the galactically stupid!”

• ABC Family– Miss Congeniality
• AMC– A Few Good Men
• Disney– Sky High
• Discovery– Dirty Jobs (premier), Auction Kings x 2 (premiers)
• ESPN– College Hoopies, Butler @ Louisville, South Carolina @ Michigan State
• ESPN2– College Throwball, Ohio @ Temple
• Food– Private Chefs of Beverly Hills, Chopped (premiers)
• FX– The Italian Job (not the good 1969 version)
• History– Apocalypse PA. x 2 (Series Premier)
• National Geographic– Explorer, Lost Mummies of New Guinea (premier)
• Oxygen– Bad Girls Club (premier)
• Sci Fi– Stargate Universe (premier)
• Speed– Monster Jam (premier)
• TBS– Family Guy marathon, Glory Daze (Series Premier)
• Turner Classic– The Ghost and Mr. Chicken, The Apple Dumpling Gang (Don Knotts night)
• Toon– Son of the Mask, Tower Prep (premier)
• Vs.– Flyers @ Canadiens, College Hoopies, Arizona State @ New Mexico
• VH1– ATL

Later-

• AMC– The Sum of All Fears, Crouching Tiger, Hidden Dragon
• Disney– Phineas and Ferb
• ESPN2– College Hoopies, San Diego State @ Gonzaga
• Sci Fi– Stargate Universe (Instapeat), Merlin’s Apprentice
• Turner Classic– The Incredible Mr. Limpet {more Don)
• USA– Psych, Burn Notice (this week’s)

Dave hosts Jay-Z, Jamie Oliver, and Rihanna.  Jon has Bethany McLean and Joe Nocera, Stephen John Legend.  Conan hosts Harrison Ford, Rosario Dawson, and Reggie Watts.

Boondocks– Shinin’.

We joined the Marines because we wanted to live our lives by a certain code, and we found it in the Corps. Now you’re asking us to sign a piece of paper that says we have no honor. You’re asking us to say we’re not Marines. If a court decides that what we did was wrong, then I’ll accept whatever punishment they give. But I believe I was right sir, I believe I did my job, and I will not dishonor myself, my unit, or the Corps so I can go home in six months… Sir.

Zap2it TV Listings, Yahoo TV Listings

Evening Edition is an Open Thread

1 Britain compensates former Guantanamo detainees

AFP

1 hr 10 mins ago