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Originally Posted by Tellos Athenaios:
What kind of thinking, did we start having revolutions and coups about fifty years ago? I'm confused...... :indian_chief:
I understand what you mean but I'd disagree with you: that kind of thinking ought to have been firmly debunked about 50 years ago or so.
Are you confused, or are you wearing pink glasses that show the world through tea and scones, and possibly stiff upper lips? There's some kind of odd stereotype that suggests Britain is some bedrock of stability: all the world could perish but we on our island are impeccable and immune to such turmoil.
And 50 years ago is especially significant (well, 52 years ago) because of: http://en.wikipedia.org/wiki/1958_No...ill_race_riots
Perhaps you might enjoy that article since it places the word “Fascism” in more illuminating context. As if Britain was any less prone to such loopyism.
no, i'm not confused, this country absolutely has been a beacon of external and internal stability for a VERY long time.
you're wonderful example is an exception that very much proves the rule.
Originally Posted by Tellos Athenaios:
And yet, through all that how many time has the government fallen and chaos ensued? The fact that there have been occasional riots does not make Britain unstable, it demonstrates that we don't usually riot.
Are you confused, or are you wearing pink glasses that show the world through tea and scones, and possibly stiff upper lips? There's some kind of odd stereotype that suggests Britain is some bedrock of stability: all the world could perish but we on our island are impeccable and immune to such turmoil.
And 50 years ago is especially significant (well, 52 years ago) because of: http://en.wikipedia.org/wiki/1958_No...ill_race_riots
Perhaps you might enjoy that article since it places the word “Fascism” in more illuminating context. As if Britain was any less prone to such loopyism.
Take the sedate way the constitutionally troubling Hung Parliament was handled, in less than a week.
Is a falling government the pinnacle of or the cue for chaos? I don't think so, we have a care-taker government for that and everyone goes about his way (well some might privately celebrate a bit first :beam:).
No the real point is that Britain is more like the other banana republics than you think: riots occur in Britain all the same[*], and the banana republics actually know a thing or two about gracefully (well as far as politics is ever graceful) handling a “crisis” without it being the cue for heads against the wall and blood on the street[**]. Or in other words: to sneer that a Britain merely tightens its belt whereas a Germany unleashes World War III is almost alarmingly outdated.
[*] Which is not to say that they occur all the time; just that they occur in much the same way.
[**] Elections, referendums, constitutional courts, and “keep calm & carry on” is not uniquely British.
Ok...
Where to start: AAA credit rating - financial markets think we're stable.
Riots: what riots? Occasional demonstrations on small things like a new road / Iraq war (and that's going back a few years now). None aimed at trying to overthrow the political system. Last general strikes: roughly 30 years ago.
For all its faults, a country with low political corruption, no record of political prisoners, few breaches of Habeas Corpus.
IN all honestly, your post is pretty nonsensical if you're trying to compare the UK with Nicaragua. Saying that things - although haven't happened - might is hardly an argument.
I do intend to emigrate in c. 2 years, but this is purely due to economic / career motives, not that I've any concern with the stability of the UK.
~:smoking:
Originally Posted by rory_20_uk:
Same can be said of France, Germany, Netherlands, Belgium... list goes on. See? The others not as different as you might think.
Ok...
Where to start: AAA credit rating - financial markets think we're stable.
Riots: what riots? Occasional demonstrations on small things like a new road / Iraq war (and that's going back a few years now). None aimed at trying to overthrow the political system. Last general strikes: roughly 30 years ago.
For all its faults, a country with low political corruption, no record of political prisoners, few breaches of Habeas Corpus.
Originally Posted by :
Good thing I don't try to compare Britain with Nicaragua (or any literal banana republic for that matter), then.
IN all honestly, your post is pretty nonsensical if you're trying to compare the UK with Nicaragua. Saying that things - although haven't happened - might is hardly an argument.
Originally Posted by Tellos Athenaios:
During the current election Commonwealth observers noted that although the electoral system was run in a way which allowed endemic corruption, they could find virtually none in fact.
Is a falling government the pinnacle of or the cue for chaos? I don't think so, we have a care-taker government for that and everyone goes about his way (well some might privately celebrate a bit first :beam:).
No the real point is that Britain is more like the other banana republics than you think: riots occur in Britain all the same[*], and the banana republics actually know a thing or two about gracefully (well as far as politics is ever graceful) handling a “crisis” without it being the cue for heads against the wall and blood on the street[**]. Or in other words: to sneer that a Britain merely tightens its belt whereas a Germany unleashes World War III is almost alarmingly outdated.
[*] Which is not to say that they occur all the time; just that they occur in much the same way.
[**] Elections, referendums, constitutional courts, and “keep calm & carry on” is not uniquely British.
Britain is an inherrently stable country, this is why we still have paper ballot registers and didn't have a revolution 200 years ago like everyone else. If you think about it, this is not surprising because Britain, and before that England, has been politically cohesive for a lot longer than most of Europe.
Euro stress tests a joke, politically inspired rubbish that will do zilch to reassure the markets:
http://www.telegraph.co.uk/finance/c...in-common.html
when the yanks and the brits conducted their stress tests on the banks the markets had confidence that they were rigorous, the result is that the markets trust those banks enough to lend to them.
right now, the strong suspicion is that the strees tests conducted on euro-zone banks are a political flummery, the result will be the markets have zero confidence that further lending is responsible.
this will have two results:
1. bank debt will be flogged off on the cheap to those willing to take the risk, thus devaluing the banks reputation
2. markets will be unwilling to provide new loans to banks to roll over debt that has become due, so they must call on the ECB
this is going to lead to a european Lehmans, and if it does it will trigger a meltdown in any bank that is deemed to be overexposed to PIIGS debt. all. over. the. euro. zone!
the purpose of the stress tests is to admit that x percent of your value is likely to be bad debt, and that this has been appropriately written down, and new capitalisation created to accommodate for this loss, therefore when you ask for more credit it is because it is a sensible business decision and not a last minute attempt to avert insolvency.
the eurozone is treating it like a political beauty pageant, and appears oblivious to the fact that the markets are not interested in what europes political objectives, they want to know whether it is safe to lend to european banks or not.
i predict two utterly predicable responses when the first big euro-bank crisis arrives:
1. it was all the speculators fault for their immoral profiteering ways leading to the destruction of poor citizens savings
2. the answer must be more regulation to reign in their free-wheeling piratical ways, and it must come from Brussels
try, just try and tell me that this is not exactly what will happen.................
[edit]
interesting Der Spiegel article on the perils facing german banking and the flaws in the stress tests:
http://www.spiegel.de/international/...4663-2,00.html
Originally Posted by :
Renewed Turbulence Guaranteed
Indeed, as long as the financial markets refuse to shed their anxiety, the foundation of the new recovery remains fragile. Renewed turbulence is virtually guaranteed. The banks still have enormous quantities of toxic assets on their books. Nobody knows when or to what extent these debts will have to be written off.
In some cases, these bad investments consist of junk bonds from the days before the crisis, including second-class US real estate loans called subprimes. In other cases, they include burdens that hardly anyone was aware of a year ago, like government bonds from Greece and other southern European countries, which were touted as a fairly sound investment at the time.
Analysts at the US investment bank Morgan Stanley say that Europe is caught in a "vicious cycle." Instead of using government funds to forcibly recapitalize all banks, as the US did, the euro countries opted for another approach. After the Lehman Brothers bankruptcy, many banks loaded up on cheap cash from the European Central Bank (ECB).
According to Morgan Stanley, they have been using this money since October 2008 to finance the purchase of government bonds worth €420 billion. During this spending spree, the banks targeted high-yielding bonds from shaky southern European countries, primarily Spain, Greece and Portugal. They then deposited these bonds with the ECB as security for more loans from the central bank.
At the outset these lucrative deals soothed nerves on the markets, but they have now turned out to be time bombs. Nobody knows exactly how these bonds are weighted on the balance sheets -- and even less can be said about what they will actually be worth in the end.
Indeed, despite euro-zone bailout packages for ailing members of the currency union, few doubt that Greece will eventually have to restructure its mounting debt. Creditors would be forced to forego some of their claims.
Breeding Mistrust
Would all banks survive such a haircut? And what happens if further euro-zone members run into trouble, plunging even more banks into difficulties?
There is an enormous sense of uncertainty, and that breeds mistrust. Banks recently parked over €300 billion with the ECB overnight for the ridiculously low interest rate of 0.25 percent. Anyone who borrows money for 1 percent, only to turn around and deposit it overnight with the ECB for just 0.25 percent -- instead of earning considerably more by loaning it to the competition -- has one problem above all: fear.
Last week the banks borrowed significantly less money in new loans than what they had to pay back to the Bundesbank, but that only briefly reduced the edginess. "There is still a great deal of tension," says Hans-Günter Redeker, head foreign exchange strategist for the major French bank BNP Paribas. He says that the balance sheets are too shadowy. "We need a sound stress test on the table, which will also be made public." This is something, at least in principle, that everyone attending last Wednesday's meeting in Frankfurt also agreed on. But there were differing opinions on what was sound and what wasn't.
There have been a number of stress tests in the past. But they weren't made public, and they did not take into account -- of all things --the greatest risk on the banks' balance sheets: the government bonds from the so-called PIIGS countries (Portugal, Italy, Ireland, Greece and Spain).
Horror Scenario
What the markets fear most of all is that these assets could plummet in value -- that these countries could declare bankruptcy and their debts would need to be refinanced. But this horror scenario is not taken into consideration in the current stress test. Otherwise critics could insinuate that the Bundesbank and the BaFin have doubts about the success of the bailout package.
Instead, the bank auditors went on the assumption that a deepening of the debt crisis could drive up the price of credit default swaps on bonds from countries like Portugal and Spain, causing their value to drop and leading to write-offs for the banks. An additional routine scenario goes on the assumption that there could be another economic downturn.
Many questions remain unanswered, however, and the representatives of the banks, the Bundesbank and the BaFin will no doubt have to meet again soon.
Originally Posted by Furunculus:
That is sugar coating it. They want to know if they can profit from them, and if not, can they profit from their demise.
The eurozone is treating it like a political beauty pageant, and appears oblivious to the fact that the markets are not interested in what europes political objectives, they want to know whether it is safe to lend to european banks or not.
you want to borrow more then you demonstrate you are solvent and prudent.
you need to borrow to rollover old debt then you still have to demonstrate you are solvent and prudent.
if the banks do not consider you solvent and prudent then they will charge you a higher rate for new issued debt.
if the banks believe your imprudence is leading to insolvency then they will seek to sell off your old debt to those willing to assume the increased risk.
if banks are flogging off your current debt that will lower the attractiveness (and hence the return) of any new issue of government bonds, which if combined with an inability to afford the market rates for new borrowing, will result in a default on your debt.
if you default on your debt the result will be less inward investment into what is now considered a volatile market, and interest on borrowing will be much higher than given to your peers for many years afterwards.
it is that simple.
To profit from a market's demise you need to "short" stock - borrow from one who has already the stock, sell it and buy it back later for less. Or invest in tracker funds or other derivative markets who will pay out when the market falls. Both, as well as any other systems for one lot to profit, others have to have lost. FOr the whole market it is still a bad thing - money isn't being made, merely one lot do well whilst everyone else falls.
Free markets are supposed to be an efficient method of providing resources to those in a position to make best use of them. Ideally, governments / companies borrow to improve infrastructure / expand which increases returns so the interest can be paid off - and everybody wins. These more exotic structures were initially supposed to help spread the risk to a wider audience, making the cost of risk decrease: you can hedge currency spreads so the future is more stable, or hedge the cost of commodities if they are one's raw materials for example.
Most countries recently have been borrowing to pay off... borrowing and in essence pay off their voters / backers today. Any attempt to try to fix the system is met by squeals of rage and accusations that the rich are benefiting the most - such as reducing civil servants redundancy payouts for the current up to 6 YEARS they get, or cutting the renovation of schools that wasn't done for 13 years, but was announced during a downturn before an election.
~:smoking:
Originally Posted by :
Is this not part of the problem no one was actually prudent and solvent before the crisis and the banks lent the money anyway. The banks had trapped themselves in a cycle which basically grew through lending which generated fee's.
you want to borrow more then you demonstrate you are solvent and prudent.
you need to borrow to rollover old debt then you still have to demonstrate you are solvent and prudent.
Originally Posted by gaelic cowboy:
because the banks accepted the political fiction that eurozone was an optimal economic unit, because brussels said it was and national leaders pretended it was too.
Is this not part of the problem no one was actually prudent and solvent before the crisis and the banks lent the money anyway. The banks had trapped themselves in a cycle which basically grew through lending which generated fee's.
that mistake won't be made again for quite some time!
Hmm. Don't think that did apply much to the USA or UK who were outside of the Euro zone anyway? Try again?
Originally Posted by Furunculus:
Are you lads kidding me I am talking in a generic sense about the banking system worldwide here. UK USA are just as culpable as anyone EU me :daisy: this has nothing to do with the EU and everything to do with eejits thinking they can sell house's or debt and whatever your havin yourself forever and ever regardless of income.
because the banks accepted the political fiction that eurozone was an optimal economic unit, because brussels said it was and national leaders pretended it was too.
that mistake won't be made again for quite some time!
Originally Posted by Tellos Athenaios:
Yes it did how could it not.
Hmm. Don't think that did apply much to the USA or UK who were outside of the Euro zone anyway? Try again?
Originally Posted by gaelic cowboy:
Obviously, which was why asked Furunculus to try again?
Are you lads kidding me I am talking in a generic sense about the banking system worldwide here. UK USA are just as culpable as anyone EU me :daisy: this has nothing to do with the EU and everything to do with eejits thinking they can sell house's or debt and whatever your havin yourself forever and ever regardless of income.
Specifically I meant to say that since I don't think UK or USA debt can be explained in terms of “Eurozone membership”, making the concept of “Eurozone” a scapegoat to explain away general banker's responsibility when they lend is just silly. (And let's not forget that banks only got into trouble because they essentially lent themselves loans they could not repay -- hence the excessive demands for CDS packages which in turn are basically one big “toxic asset”.)
Originally Posted by Tellos Athenaios:
no.
Hmm. Don't think that did apply much to the USA or UK who were outside of the Euro zone anyway? Try again?
US and the UK had their own problems, GC may have selectively quoted just a portion of my post but it came from a wider discussion of the failure of the european market and the inevitable failure of the policy response to that original failure.
Originally Posted by gaelic cowboy:
my response presumed your selective quote was referencing the wider argument in the original post, not isolating one statement and assuming it applied more broadly.
Are you lads kidding me I am talking in a generic sense about the banking system worldwide here. UK USA are just as culpable as anyone EU me :daisy: this has nothing to do with the EU and everything to do with eejits thinking they can sell house's or debt and whatever your havin yourself forever and ever regardless of income.
.
Originally Posted by Tellos Athenaios:
i'm getting board now, read above.
Obviously, which was why asked Furunculus to try again?
Specifically I meant to say that since I don't think UK or USA debt can be explained in terms of “Eurozone membership”, making the concept of “Eurozone” a scapegoat to explain away general banker's responsibility when they lend is just silly. (And let's not forget that banks only got into trouble because they essentially lent themselves loans they could not repay -- hence the excessive demands for CDS packages which in turn are basically one big “toxic asset”.)
EU publishes some of the assumptions that its bank stress tests presume, and they turn out to be a joke:
http://blogs.telegraph.co.uk/finance...y-stress-free/
quell surprise? ~:handball:
Part opinion piece part omen for the future I would say from Brendan Keenan
Originally Posted by :
Brendan Keenan: Economics and politics diverge, but in Europe politicians usually win
Many governments do not share academic perspective
THE Baltic Dry Index is falling -- and I am keeping a careful eye on it. This measure of the costs of shipping goods across the globe was one of the earliest signs that something nasty was happening to the world economy. So early that I did not pick up on its significance. Nor did anybody else very much.
Okay, I admit it -- I didn't actually ever look at the Baltic Dry Index. But when other, more familiar, data became available, it was clear what the Baltic had been telling us: the fall in trade and output was at a pace even greater than that of the crash of 1930.
Fortunately, it levelled out sooner than happened in the 1930s. This critical difference is generally ascribed to the huge stimulus applied almost immediately after the crash, through large government deficits and record low interests
But, while economic output has not contracted by as much as it did 80 years ago, it has not yet shown any sustained recovery.
Now, the Baltic Dry is falling again. Those who know about such things say it is being distorted by a surfeit of ships, but it has now been followed by other data pointing to renewed weakness in the world economy.
Paradoxically, the Irish services sector had its strongest showing in June since the crisis began, while the euro area and the UK weakened -- but Ireland has been out of step for some time.
This makes us look particularly vulnerable to what has become known as a "double dip". The domestic crash was so profound that it has taken until now for the surveys to show manufacturing and services returning to growth. Presumably, it would not take much to go wrong abroad to see them shrink again.
Response
If something is going wrong -- and the evidence is growing -- the response of governments may be very different from 2008. Interest rates are very low, and little more direct stimulus can come from them. Governments have piled up far more debt in the past few years and their ability to offset another downturn with further borrowing is limited. Or is it?
The fiercest argument is not over whether governments can borrow more to offset a second downturn. If they cannot, they can always print money. It is whether they ought to do so.
This seems quite extraordinary. After 80 years of sophisticated economic science, and 65 years of unprecedented international co-operation, one would have thought there would be agreement on such a basic matter as the role of government in a financial and economic crisis. Far from it.
There is, it has to be said, a fair degree of consensus among the economics profession. For them, what matters is the sum of saving and borrowing, rather than who does it. Private firms and households are reducing their debts in response to the crash, so governments should compensate -- at least partly -- for this by borrowing more.
Yet many governments, led by that of Germany, seem not to accept the majority academic view. Germany has been followed by Conservative-led Britain and, somewhat more surprisingly, by France and Italy. Do they disagree with the economists? Do they -- as has sometimes been suggested -- not actually understand them?
A more probable answer is that, in Europe anyway, the politics and the economics diverge. When that happens, politics usually win. In the USA, both tend towards encouraging further stimulus measures.
One reason the economics are more favourable in the US is that, even with current heavy borrowing, public debt would not reach 100pc of GDP until 2025. Some EU countries already exceed that figure.
Others, including Ireland, could well reach it in the next three or four years.
Even so, it is the politics of Europe that differ most from those of the USA, and which seem to pose the greatest dangers to the economy. Those four decades of international co-operation meant the recent G-20 summit could not be seen publicly to fail. Under the resulting compromise, those countries that wish to are cleared to try to halve their budget deficits in just three years.
Germany is going to try, which means others, especially in the eurozone, will have to follow. The words "have to" must surely apply to Ireland, although not everyone seems to agree.
Irish mixture
That peculiar Irish mixture of pessimism and arrogance has been to the fore recently.
The pessimism holds that our problems are insoluble: the arrogance maintains we should do a solo debt default, even a devaluation -- an event which, if it happened, would probably break up the euro. In the real corridors of power, no such options are open to Irish governments.
The position of a country like Ireland in these circumstances is the one complained of by Cassius in "Julius Caesar" -- creeping under the huge legs of the great powers to find somewhere safe. If we had been more aware of that, we might be in less trouble. And now, the huge legs are on the move.
In a recent essay for the Bruegel thinktank, Wolfgang Proissl, a former Brussels correspondent for 'Financial Times Deutschland', argues persuasively that, despite the existence of the euro, under the pressures of the crisis, the old European monetary system is reasserting itself. Germany is the benchmark and, to survive in the system, other member states must follow the benchmark.
It is not that the Germans want it that way. But it has become clear that they cannot pay the political price of a true monetary union. Not only would there be transfers between states, but the union would have a softer currency, larger deficits and higher inflation than Germany alone can have -- and wants.
The French on the other hand, says Proissl, wanted the euro precisely as a way of not letting Berlin and Frankfurt set the parameters for everyone else.
The resulting messy euro compromise has not worked well in its first great test and may yet fail altogether. Or at least come close.
If these forces do look like pushing the eurozone into a second recession, or threatening the whole euro project, once unthinkable changes could yet come to pass.
Until the fog of this battle clears a bit, a country like Ireland is best advised to play by the rules -- whether Merkel's or the market's -- whatever we may think of them. What we think of them is irrelevant, and arguing about them at best pointless, and at worst dangerous.
Irish Independent
Originally Posted by :
good article, been saying for ages.
It is not that the Germans want it that way. But it has become clear that they cannot pay the political price of a true monetary union.
If these forces do look like pushing the eurozone into a second recession, or threatening the whole euro project, once unthinkable changes could yet come to pass.
agreed, germany must decide whether the bundestag is sovereign.............. or not, and have their constiutional court rule accordingly.
interesting article on the need for EU reform:
http://www.economist.com/node/16536898
Entering a Death Spiral?
http://www.spiegel.de/international/...712511,00.html
Originally Posted by :
"The only thing that interests me anymore is my daily wage. A loaf of bread is my political party. I want to help my country -- give me work and I'll pay taxes! But our honor as first-class skilled workers, as heads of families, as Greeks, is being dragged through the dirt!"
"If you take away my family's bread, I'll take you down -- the government needs to know that," Meletis says. "And don't call us anarchists if that happens! We're heads of our families and we're desperate."
He predicts the situation will only become more heated. "Things are starting to simmer here," he says. "And at some point they're going to explode."
Slightly delusional, aren't they? Reminds me of the 1970's where workers appeared to think they had a god given right to do a certain type of work for a certain wage and that the government should somehow stop other countries producing cheaper and more reliable alternatives.
Emotive talk of bread. I imagine their trigger is vastly above that.
~:smoking:
the euro crisis still has a way to go yet!
When the national sport is tax evasion, what do they expect?
Slovakia says screw you, good for them. I don't mind working till I'm 67 but not because Greeks want to quit at 55. Pay your own socialism. Oh wait you can't.
Originally Posted by InsaneApache:
Just so you know.....
When the national sport is tax evasion, what do they expect?
http://www.vanityfair.com/business/f...printable=true
It's a long read but worth it if you want to see inside the Greek psyche.
lol, cheers.
I used to love Greek tragedy. Now the entire culture is.
Still...crafty monks.
I think my avatar could use their services.
Anglo Irish Bank bailout could reach €34bn
Originally Posted by :
The Governor of the Central Bank has said that even after today's banking system announcements, the total figure was still one that could be worked out without external help.
Patrick Honohan said the process would be painful but, while the bill was colossal, it was manageable.
His comments came after Minister for Finance Brian Lenihan confirmed the cost of sorting out Anglo Irish Bank would be €29bn, but could go to €34bn in a worst case scenario.
He indicated that the Government will have to bring in a harsher Budget in December than originally planned.
Brian Lenihan said that the proposed €3bn in cuts would have to be increased, and a significant consolidation in public finances achieved next year.
The Government is to publish a budgetary framework for the next four years at the start of November.
Speaking at Government Buildings, Mr Lenihan would not be drawn on what the additional cuts for next year would be, until the Government had analysed exchequer returns due next week.
The Government had committed €23bn to Anglo by the end of August.
The bank is to be split into an asset recovery bank and a funding bank.
The Financial Regulator said the asset recovery bank would need €29bn, while the funding bank would require €250m.
Its estimate was based on advice from the National Asset Management Agency on how much it will pay Anglo Irish Bank for the loans it is taking on.
The bank has taken discounts of 58% so far, but the Regulator's assessment estimates a discount of 67% on the remaining loans.
But the Regulator carried out an additional assessment based on an 'extreme' scenario, which included a discount of 70% on the rest of the NAMA loans. This led to the additional €5bn 'extreme' estimate.
A special Cabinet meeting last night signed off on the figures. The early morning announcement was timed to secure a head start on markets that have been nervous about the scale of the State's exposure to Ireland's banks.
In a statement, Finance Minister Mr Lenihan said that while the overall level of State support to the banks remains 'manageable', there will have to be further 'consolidation' of the public finances next year, over and above the targets already announced.
He also said greater certainty on the final cost of repairing the banking system would provide reassurance to the international markets.
He added that the National Treasury Management Agency had decided not to proceed with the remaining auctions of Government bonds scheduled for the next two months, but would return to the bond market in 2011.
A statement from eurozone finance ministers meeting in Brussels described today's banks statement as an 'important and helpful clarification of the situation'.
Irish borrowing costs fell slightly on bond markets after the announcements on the banks.
The interest rate demanded by investors to lend money to Ireland for ten years was at 6.81%, down from 6.9% earlier.
The gap between Irish and German costs was steady compared with yesterday.
AIB to get €3bn, Nationwide to get €2.7bn
AIB and Irish Nationwide will also require more money from the State.
The development will push Ireland's deficit to 32% for this year, according to the Minister for Finance.
AIB will need a further €3bn on top of existing State funds being converted into shares.
That is likely to push the Government's shareholding to a majority stake potentially over 90%, but the bank will retain a stock market listing.
Shares in AIB dropped by almost 20% to 45 cent in early trading in Dublin.
Irish Nationwide will need a further €2.7bn, bringing its total bailout to €5.4bn.
Minister Lenihan has confirmed that AIB Chairman Dan O'Connor will step down within the coming weeks.
AIB's Managing Director, Colm Doherty, will also leave the bank before the end of the year.
Asked whether the pair had chosen to stand down or had been asked to leave the institution, Mr Lenihan said discussions had been conducted with AIB on his behalf by the NTMA and agreement was reached.
He said there has to be change because the existing board has been unable to attract sufficient capital.
The Minister said that in conjunction with the recapitalisation of the bank, he expects there will be progressive management and board changes at AIB.
The Government has accelerated the process of transferring loans to NAMA to get final figures to repair Ireland's banking system.
Anglo Irish Bank's remaining loans will be transferred by the end of October, while loans from all of the other banks will now be transferred in one single batch each by the end of the year.
Market analysts have welcomed the figures. Analysts said they provide much-needed clarity on the anticipated final cost of the Irish bank restructuring, which could come to €46bn in total.
In a statement this morning, Central Bank Governor Patrick Honohan said the higher costs will mean a bigger deficit for Ireland.
He said that would require a reprogramming of budgetary profile.
He added that it was important to recognise most of the funding would come from other sources.
Labour Party Finance Spokesperson Joan Burton has said today would go down as a day of infamy in Irish history and would become known as Brian Lenihan's Black Thursday.
Budget will be harsher than planned - Lenihan
Originally Posted by :
Minister for Finance Brian Lenihan has warned that December's Budget will be harsher than originally planned.
The Government is to publish a budgetary framework for the next four years at the start of November.
Mr Lenihan said he did not anticipate that hospitals or schools would have to close as part of the fiscal adjustments.
He said some of the Irish banks had deliberately concealed massive losses even before the emergence of the banking crisis.
The Minister said the State now had to downsize Anglo Irish Bank and Irish Nationwide to stop them becoming a systemic threat to the State itself.
The Central Bank announced this morning that the bill to bailout Anglo Irish Bank is expected to be €29.3bn, although under a worst case scenario, the figure could be €34bn.
The Central Bank said AIB and Irish Nationwide will also require more funding from the State.
Earlier, Taoiseach Brian Cowen said that the Government remains on target to reduce the Budget deficit to 3% by 2014.
Critics have called for that deadline to be extended, arguing that the measures required to meet the deadline would be too brutal and trigger a slump.
However, addressing the IBEC HR Conference, Mr Cowen warned that there were no soft options solutions for economic recovery.
He acknowledged that people were rightly angry about the cost of bailing out the banks and described those costs as an appalling reflection on the lending policies pursued by the banks.
The Taoiseach described the period between now and the end of the year as crucial for Ireland.
He echoed Finance Minister Brian Lenihan's comments that a four-year budgetary plan is being prepared and will be published in early November, adding that this would build confidence at home and abroad in our fiscal policy and capacity to meet targets
hmmm, still not looking good in the eurozone..........
^^
Then ye better hope we do not go under because who else but Britain would be hit Irish insolvency
Like diarrhea on a tiled floor it just keeps on speading outwards.
To be fair though it's not like this was not unexpected for Ireland.
Everyone will grumble but disruption like Greece is not really gonna happen.