In what Brian Lucey has described on Twitter as:
Totally agree.
David has some radical idea's on how to solve the Irish banking mess. It needs radical ideas.
An incredibly well thought out article:
Perhaps the best piece iv read from @davidmcw in a very long time : excellent work David
Totally agree.
David has some radical idea's on how to solve the Irish banking mess. It needs radical ideas.
An incredibly well thought out article:
Step seven
When the time is right, the €97bn of deposits or some of that sum, should be converted into share capital. This has never been done before, but necessity is the mother of all invention and -- at a stroke -- the funding and capital position of the Irish banks would be solved, and the ECB would have taken a hit. But that's what central banks are there for. What part of risk of 'lender of last resort', do they not understand? The Irish taxpayer, who is already paying for his and her sins in the recession, should not have to pay twice.
Ultimately, the Irish banking crisis will be paid either by Irish taxpayers, German taxpayers, existing creditors, the ECB or a combination of all four. The Government wants the Irish taxpayer to pay; this is neither financially viable as it will just lead to a default further down the road nor is it morally justifiable as the debts were not the Irish people's to pay in the first place.
For those who worry that the ECB will react to these initiatives by cutting off euro to Ireland, they should be reminded that the ECB is as unlikely to cut off euro to Ireland as the Federal Reserve would cut off dollars to Texas.
We are involved in creating new financial architecture for Europe and this project will test Europe's much-reiterated rhetoric about solidarity. It is a test that Europe will pass.