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Tchocky · 10-03-08, 01:16 PM

Mixed feelings, honestly.

On one hand, it puts confidence back into the Irish system, which is good. The corollary is that it undermines investor confidence in every other European economy, and leads to massive savings withdrawals from European banks at the precise moment when banks need as much liquidity as possible.

So much of the national wealth is tied up in housing that no bank was going to be allowed to fail. So this step isn't so brave. Rather disruptive and damaging, I think.
It's a article of economic faith that the state makes a bad banker, so the end result of this, should the guarantee need to be underwritten, would be a huge and inefficient banking sector.

Not that that could happen - the value of all accounts in the country is twice our GDP. So it's a fall-on-sword moment.

I don't know how the Government expect to pay for this.

I'm supposed to feel reassured that my account is safe - I was reassured already. This does nothing but create trouble for other banks and countries.

That said, if the ideal move here is for all EU countries to do the same, there's no way that all countries could reach consensus in time. This kind of confidence restoration needs to be done quickly. More quickly than 27 governments can do it.

So, I think we're overall worse off, but it wasn't an inherently bad idea.

10-03-08, 01:16 PM	#63
Tchocky Navy Seal Join Date: Jul 2004 Posts: 5,874 Downloads: 6 Uploads: 0	Mixed feelings, honestly. On one hand, it puts confidence back into the Irish system, which is good. The corollary is that it undermines investor confidence in every other European economy, and leads to massive savings withdrawals from European banks at the precise moment when banks need as much liquidity as possible. So much of the national wealth is tied up in housing that no bank was going to be allowed to fail. So this step isn't so brave. Rather disruptive and damaging, I think. It's a article of economic faith that the state makes a bad banker, so the end result of this, should the guarantee need to be underwritten, would be a huge and inefficient banking sector. Not that that could happen - the value of all accounts in the country is twice our GDP. So it's a fall-on-sword moment. I don't know how the Government expect to pay for this. I'm supposed to feel reassured that my account is safe - I was reassured already. This does nothing but create trouble for other banks and countries. That said, if the ideal move here is for all EU countries to do the same, there's no way that all countries could reach consensus in time. This kind of confidence restoration needs to be done quickly. More quickly than 27 governments can do it. So, I think we're overall worse off, but it wasn't an inherently bad idea. __________________ [SIGPIC][/SIGPIC]