Ivan Yates: "We bailed out the banks..."

IdesofMarch

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Going bankrupt is ok then? We all know the law allows it but it's morally wrong and leaves an awful lot of good people up the swanny and their families too. Yates owed people money and if it was owed some of the people that think bankruptcy's ok, they might have a different view of things.
The banks went tits up also but where bailed out by you and me care of the State Guarantee. (Oh sorry, the depositors and bondholders only). The result of which, an awful lot of good people are paying extortionate variable mortgage rates and getting no interest on their deposits.
 

IdesofMarch

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Yea, that sounds very like Jack Kennedy's version of what happened. I think most people know it's BS.

Nobody should be criticised for taking decisions based on a sound and well researched reasoning which contain an element of risk. People taking massive risks, literally betting the Farm, when there's no need to should be criticised. I see no difference between what he did and the people who kept borrowing to buy property against the capital in the last property they borrowed. I know a Tiler who, during the boom, had 6 rental properties and borrowings of over €2 million. Should he not be blamed for attempting to improve his lot?

(Please remember to keep your answer simple for me as it seems you know much more about this than the rest of us and I was too stupid to see that by reading your previous posts. In fact I thought the opposite; silly me!)


Absolutely; what we did and are still doing is forcing our children to pay for our mistakes. It's disgraceful.
Purple,

Jack Kennedy story is a story and it basically tells that credit risk is all about timing. Most fools know this, even you.

All entrepreneurs take massive risks, that is how they make it. You probably sit in an office, 9 to 5, never employed anyone in your life and never had to take real risks. The people who employ you take the risk and a pretty big risk at that. Is that plain and simple enough for you.

Regarding your tiler story, the banks lent him the money, they have probably received his properties and have a judgment mortgage on his house. However, you (through the State Guarantee) assured the bank's survival for this reckless lending. I am sure the CEO's of each respective bank are sitting on their comfortable chairs thanking You and the great unwashed for their extra weekly contribution in taxes to pay their wages. (Trying to keep it simple for you)
 

Purple

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Jack Kennedy story is a story and it basically tells that credit risk is all about timing. Most fools know this, even you.
Most fools know that the Jack Kennedy story is BS, maybe even you too now.

All entrepreneurs take massive risks, that is how they make it. You probably sit in an office, 9 to 5, never employed anyone in your life and never had to take real risks. The people who employ you take the risk and a pretty big risk at that. Is that plain and simple enough for you.
I employ me. I'm a shareholder in my business. We take risks all the time but we measure the risk first and make sure it's worth taking. We also don't take risks which are big enough to wipe us out and we consider that there are about a hundred people here who rely on this business to pay their mortgages and rent and feed themselves and their families. We remember that as an employer you derive your income from the work your employees do as well as the work you do so you owe them a little bit every week or month and you certainly owe them as much job security as you can give them. I have nothing but contempt for business owners who recklessly risk the job security of their employees based on greed and ego.

However, you (through the State Guarantee) assured the bank's survival for this reckless lending.
A Bank is a vessel through which money flows. They are buildings and structures, not private businesses owned by single people. The owners of the banks are the Shareholders and the people with spam in the game are the bondholders, depositors and shareholders. It was the depositors and the bondholders who were bailed out. If you can't understand that then you really shouldn't be calling other people stupid.

I am sure the CEO's of each respective bank are sitting on their comfortable chairs thanking You and the great unwashed for their extra weekly contribution in taxes to pay their wages. (Trying to keep it simple for you)
The CEO's of all the Irish banks have changes since the Crash, as have the Boards. What point are you trying to make here?
 

Purple

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The banks went tits up also but where bailed out by you and me care of the State Guarantee. (Oh sorry, the depositors and bondholders only). The result of which, an awful lot of good people are paying extortionate variable mortgage rates and getting no interest on their deposits.
So you think the massive amount of credit pumped into the banks internationally through quantitative easing has nothing to do with low interest rates? You do know that we are in the Euro and the ECB sets the interest rates don't you?

You see no link between the high rates on mortgage default, coupled with the very low rates of repossession and the high SVR's that people are paying on their mortgages?
 

IdesofMarch

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Most fools know that the Jack Kennedy story is BS, maybe even you too now.

I employ me. I'm a shareholder in my business. We take risks all the time but we measure the risk first and make sure it's worth taking. We also don't take risks which are big enough to wipe us out and we consider that there are about a hundred people here who rely on this business to pay their mortgages and rent and feed themselves and their families. We remember that as an employer you derive your income from the work your employees do as well as the work you do so you owe them a little bit every week or month and you certainly owe them as much job security as you can give them. I have nothing but contempt for business owners who recklessly risk the job security of their employees based on greed and ego.

A Bank is a vessel through which money flows. They are buildings and structures, not private businesses owned by single people. The owners of the banks are the Shareholders and the people with spam in the game are the bondholders, depositors and shareholders. It was the depositors and the bondholders who were bailed out. If you can't understand that then you really shouldn't be calling other people stupid.

The CEO's of all the Irish banks have changes since the Crash, as have the Boards. What point are you trying to make here?
Purple,

I don't believe you for a minute, a business man who employs 100 people would not be taking time out to comment on this open forum in the speed, frequency and manner that you do. such a man would be too busy to post a single comment never mind over 8,000 of them. Purple the businessman la la la la can't hear you!
 
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IdesofMarch

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So you think the massive amount of credit pumped into the banks internationally through quantitative easing has nothing to do with low interest rates? You do know that we are in the Euro and the ECB sets the interest rates don't you?

You see no link between the high rates on mortgage default, coupled with the very low rates of repossession and the high SVR's that people are paying on their mortgages?
This argument has been trundled out many times by people who have not go a clue what they are talking about (usually bankers). The difference between the variable rate mortgages in this Country and those of our European compatriots far exceeds the costs associated with the low repossession rate in this country. It is simple math.
 

LDFerguson

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Purple,

I don't believe you for a minute, a business man who employs 100 people would not be taking time out to comment on this open forum in the speed, frequency and manner that you do. such a man would be to busy to post a single comment never mind over 8,000 of them. Purple the businessman la la la la can't hear you!
This sounds like childish jealousy to me. I know nothing of Purple's business matters, nor do I want to. But I do know that there are two types of people in business. (1) You build a business and as it grows it demands more and more of your time and you give in to those demands until eventually you have little or no free time for yourself or for anything outside of the business. I'm reading Matt Cooper's book on Tony O'Reilly at the moment and in it, during the height of his success Tony said in an interview about his young children "the children are almost a memory for me", due to his simultaneously running businesses in both the US and Ireland. Despite the billions, I found this an incredibly sad statement and I would believe that the man is to be pitied rather than envied for the level to which he allowed his addictions (workaholism / not knowing when to say "enough" etc.) to consume his life. The other type of person in business (2) is smarter than that and employs people as the business expands, to cope with the expansion. A very good businessperson can eventually make themselves redundant (but well-paid) if the team they build are able to run the business. Perhaps Purple has enough time to contibute to Askaboutmoney because the 100 employees are doing their jobs well.
 

Sunny

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This argument has been trundled out many times by people who have not go a clue what they are talking about (usually bankers). The difference between the variable rate mortgages in this Country and those of our European compatriots far exceeds the costs associated with the low repossession rate in this country. It is simple math.
Simple maths? Give it to me then. Whats the probability of default of an Irish mortgage compared to a German mortgage. What is the loss given default of the same mortgage? Whats the cost of AIB's non-performing loan book compared to the leading French banks?
 

IdesofMarch

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This sounds like childish jealousy to me. I know nothing of Purple's business matters, nor do I want to. But I do know that there are two types of people in business. (1) You build a business and as it grows it demands more and more of your time and you give in to those demands until eventually you have little or no free time for yourself or for anything outside of the business. I'm reading Matt Cooper's book on Tony O'Reilly at the moment and in it, during the height of his success Tony said in an interview about his young children "the children are almost a memory for me", due to his simultaneously running businesses in both the US and Ireland. Despite the billions, I found this an incredibly sad statement and I would believe that the man is to be pitied rather than envied for the level to which he allowed his addictions (workaholism / not knowing when to say "enough" etc.) to consume his life. The other type of person in business (2) is smarter than that and employs people as the business expands, to cope with the expansion. A very good businessperson can eventually make themselves redundant (but well-paid) if the team they build are able to run the business. Perhaps Purple has enough time to contibute to Askaboutmoney because the 100 employees are doing their jobs well.
LDFerguson,

Maybe so, maybe not, who is to know, but any businessman (maybe Purple) who says that the extortionate variable mortgage rate charged by banks in this Country is down to the low repossession rate has not got a clue what they are talking about. Do the math!
 

IdesofMarch

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Simple maths? Give it to me then. Whats the probability of default of an Irish mortgage compared to a German mortgage. What is the loss given default of the same mortgage? Whats the cost of AIB's non-performing loan book compared to the leading French banks?
Probablity of default would be costed now, but it was not costed for prior to the financial crisis as mortgages that were taken out at that time had no real history of default, so that angle is a red herring.
 

Leo

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Purple,

I don't believe you for a minute, a business man who employs 100 people would not be taking time out to comment on this open forum in the speed, frequency and manner that you do. such a man would be too busy to post a single comment never mind over 8,000 of them. Purple the businessman la la la la can't hear you!
A number of people on this forum who have met Purple over the years can attest to his claims being true.
 

RedOnion

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Probablity of default would be costed now, but it was not costed for prior to the financial crisis as mortgages that were taken out at that time had no real history of default, so that angle is a red herring.
Sorry, are you trying to say that because there was no history of default at the time the mortgage was issued, that there's no cost to the bank?
 

Sunny

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Probablity of default would be costed now, but it was not costed for prior to the financial crisis as mortgage that were taken out at that time had no real history of default, so that angle is a red herring.
Eh???? Probability of default and loss given defaults were always part of any banks risk and pricing models. Before the crisis, during the crisis and after the crisis. Maybe now, they are just more realistic. So again, show me the maths that you claim is so easy to prove your point. Show me where you calculated what the correct mortgage rate should be in your eyes considering Irish banks cost of funds including cost of capital, impact of Non performing loan book, impact of tracker mortgages, high operating costs etc etc....
 

IdesofMarch

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Sorry, are you trying to say that because there was no history of default at the time the mortgage was issued, that there's no cost to the bank?
No, I am saying that such a costing for the setting of the variable rate at the time the mortgage was underwritten and granted by the originator (prior to financial crash) would have been relatively insignificant. Now such costing would obviously put upwards pressure on variable rates, but variable rates are falling due to Government realising that there was price gouging going on at a systemic level in Irish mortgage lending. I don't understand why Irish bank don't follow their European neighbours and have fixed rate mortgages for the lifetime of the mortgage. The risk to the bank is greatly reduced.
 
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Leo

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Didn’t AIB double down on this to divert 2 billion in State funds to finance mass redundancies & pensions from their Pension scheme.
Not aware of this one, were they state funds or funds from the pension scheme?
 

Purple

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who says that the extortionate variable mortgage rate charged by banks in this Country is down to the low repossession rate has not got a clue what they are talking about.
Where did I say it was down to that? I asked you if that was a factor. The world isn't black and white and more than one factor can influence things. I'm sure a member if the elite intelligencia such as yourself would know such things.
 

Deiseblue

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1.1 billion of State funds to recapitalize the Bank diverted to the pension scheme - the temptation to round the figure to 2 billion was too much for me !
 
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RedOnion

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I don't understand why Irish bank don't follow their European neighbours and have fixed rate mortgages for the lifetime of the mortgage. The risk to the bank is greatly reduced.
Sorry, my head is caught up with something else, and I seem to have misunderstood the point you were trying to make with your earlier post, but I completely agree re lifetime fixed mortgages. They're much easier to fund on top of reduced credit risk.
The problem is there's a limited to zero appetite from borrowers in Ireland for such a product. Just look at the posts on AAM from people uncertain about fixing even for 5 years.
I spoke with a friend recently who said they'd never fix again as they were stuck on a 12% rate back in the 90's! They couldn't see this wasn't going to be a problem when they could fix at 3% (unless they're expecting negative borrowing rates being available). There's a perception that if the bank is offering a low fixed rate, they must know something the customer doesn't. You'd think at this stage customers would realise the banks know sweet F all about what's going to happen!
 
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