Or more to the point Reada. Guaranteeing what by what?

Lame duck banks being guaranteed by a bankrupt country whose only capital is what they can rob from the pockets of those that can least afford it. It’s time to stop this nonsense.

The bank guarantee guarantees deposit holders funds. If the govt withdrew the guarantee, a huge number of people would move their funds away from Irish institutions. How do you expect the banks to pay the govt(the taxpayer ) back the money that was put in, if they do not remain as commercially viable businesses?

Well, they’re not commercially viable, which is why most are nationalised or part state owned and have a state guarantee. Not sure this guarantee covers ordinary deposits. They’re protected anyway…

Maybe you should ask yourself who owns the money in these failing banks? Could it be that the last Government have large deposits that they need to protect? Ohh, that surely couldnt be?
When will it be that enough is enough?
Foreign Economists urged Ireland that it shouldnt bail the Banks out int he first place, but Fianna Fail kept going, protecting THEIR interests in the name of protecting the Tax payer.

As far as I know, deposits up to €100k are covered by a separate guarantee.

This is about bondholders and “contagion”.

The worst thing for me is that it’s merely a blind extension of a failed policy. Could a conditional or limited guarantee not be formulated? Or even a Memorandum committing the Government to negotiate with bondholders in the event of collapse?

What was it Einstein said about doing the same thing and expecting different results?

Insolvent banks underwritten by an insolvent state is a sham.
Market rumours reported in the media today that a major European bank slipped into insolvency in the past few days precipitating the intervention of several central banks yesterday.
This house of cards will come down soon.

Of course it should be extended, without it the security blanket for people’s savings will go and there would be a further flight of cash out of the country and banks would collapse. All things being equal, the banks should be let die but that can’t happen. Property prices, pensions, banks, taxes, bailouts….. All intertwined, it’s like unpicking a big knot without cutting the rope!

Perception of cosy cartel politics behind the slip in Irish public sector corruption rating. Ireland slips 5 places.
http://cpi.transparency.org/cpi2011/

Was about to make the same point mate. Is it possible to guarantee deposits but not liabilities?

Yet again, we’re expected to believe that There Is No Alternative.

There are of course alternatives. Disgusted that there hasn’t been more public debate on the topic.

Not sure that guaranteeing deposits only would satisfy the bondholders, who are the main audience for this, from where I see it, but the government should at least have dealt with such proposals and explained why the guarantee needs to be extended, before getting to this point.

I wish it was that simple.

Sorry the spelling is ‘lose’ Matthew when it’s the verb. As in if you lose something. As opposed to the screw is ‘loose’.

there isn’t any comparison between Iceland and Ireland worth mentioning except they are entirely different situations. fact.

Shares are a gamble, putting money in a savings account shouldn’t be. That’s what removing the guarantee would mean. Plus a run on the banks would lead to a collapse that would ruin the country completely.

@Elizabeth True. The Icelandic people are clearly far smarter than us.

@Maria I don’t think anyone is suggesting removing the guarantee for depositors. The problem is the guarantee covered everything including the bondholders, so when the toxicity of the loanbooks in Irish banks was revealed the Irish state was rendered bankrupt just like the banks. The blanket guarantee is what forced us into the so-called bailout and now that it’s being renewed we’ve cemented our position as debt slaves for years to come, until we finally have to default.

@Official – ignorance of the situation solves nothing. You are clearly ignorant of the differences between Iceland and Ireland on this point. Iceland is NOT a euro member. Secondly, most of their banks which failed did not have to be guaranteed. Imagining that Ireland is in this position doesn’t solve the matter. So before posting irrational statements, get your facts correct.

Irish banks didn’t “have to” be guaranteed either. It’s all about decisions. Iceland took mostly the right ones, while we managed to take all the wrong ones. That much is obvious to anyone with half a brain at this stage.
What facts did I get wrong? The important facts are that Iceland’s banks were actually even bigger than ours in terms of GDP, but they’ve spent a tiny fraction of what we did in trying to sort them out. That’s why they’re on the road to recovery, while we have been consigned to crippling austerity and debt slavery for decades to come.

They do- it’s called the mortgage arrears resolution process and it was brought in around this time last year. All banks are obliged by law to comply with it when dealing with mortgages on main residences.

That’s the story, really; we can rant all we like against the government but in the end we don’t have any alternative.

Am still waiting on anybody with an alternative if banks fail what then ?

Well, the government could’ve refused to go all-in on the Euro’s survival. Don’t really like those odds, never mind the possibility of an unrelated shock to the global economy in 2012 – war, oil shortage, anything.

The only way it makes sense is as a signal to “the markets” that we remain fully committed to the Euro. Is it really worth putting our economic future on the block for that?

Thing is, it’s not Ireland that has the most to lose if the banks collapse, it’s bondholders throughout the Eurozone … the dreaded “contagion”.

The blanket guarantee ties our hands if the worst happens, at least we’d have some negotiating position and room to manoeuvre without it.

The answer is a ‘PIGGY BANK’
We all had them as kids and theyre far safer (speaking as a pig myself)

How’s Iceland doing? Fine.

we are not Iceland. http://www.frbatlanta.org/cenfis/pubscf/nftv_1103.cfm this article will show why the same won’t work here. It’s the only comparison we have, so before saying Iceland is fine, check out the difference.

Morgan Kelly gave them and you an alternative. They and 75% of the Irish people rejected it. tough it out now bitchez.

They need (as they were advised) to follow the Swedish solution. The problem here is the banks have complete autonomy STILL. There should be specially recruited people to push the Bank’s backs to the wall and MAKE them comply with conditions set by the government. The banking culture of no accountability needs to be crushed, not the banking system.

We have to extend it?? Are you off your game? We, a bankrupt country, have to keep handing over billions of euro we don’t have to the likes of Anglo bondholders?? Jesus wept. This government have today finished the work started by FF; this country is well and truly doomed. This is the final nail in the coffin.
I actually think the government knows how crazy this is, but are too spineless to stand up to the ECB. Also, they know most Irish people are too apathetic/stupid to notice they’re being swindled and too slapless to protest it.

Pat, what you said is harsh. Yet I can’t thumbs down. I agree.

If the original guarantee was a mistake, what’s different this time around?

Unconvinced that appearances couldn’t be maintained by measures that are less potentially ruinous to the taxpayer and the state.

Niall – the difference is that the promises made under the original Guarantee cannot be undone, even if we allow the Guarantee to lapse, in other words it’s not the same Guarantee.

The current Guarantee is really just window dressing but very important window dressing nonetheless. The State is in the hock for everything, Guarantee or no Guarantee so we might as well have it.

Window dressing with the very real potential to explode and destroy the house.

We’ll be on the hook for virtually all of the banks’ borrowings over the course of the year – bondholders can plough in as much as they like, with the comfort that the state will repay them, even if it takes 50 years and the destruction of the state as a functioning entity.

And we’re worried about Civil Servants’ pay and pensions?

Niall, junior bondholders in all Irish banks have taken a hammering. I’m not sure what you mean by ‘bondholders can plough in as much as they like’.

We own the banks (apart from BOI) – they are nationalized – that means we Guarantee them anyway. That’s what I mean by window dressing.

The banks are separate legal entities – without the guarantee, their borrowings are liabilities of the company, regardless of its owners. With it, they’re liabilities of the state.

What I mean is that bondholders/investors/speculators can operate secure in the knowledge that, even if the bank eventually ceases to exist, the state will be around to pay them. Probably.

I’m not sure that the borrowings of the banking sector over the course of a year would even come to a huge amount, but the state is in no position to take unconditionally take on further unascertained liabilities, given its fiscal position. A conditional or limited guarantee may have been acceptable, a blanket guarantee is not.

What I mean by window dressing is that it’s a signal to “the markets” that Ireland is still fully behind the banking system and the Euro.

The banks are nationalized. This means we are the banks, not just their biggest shareholder. There is a difference.

As I understand it, the Irish banks are still sourcing most of their funding from the ECB.

Are you suggesting that we send a signal to the markets that the State is not ‘fully behind the banking system and the Euro’.

Not my understanding, Donal. I’m of course open to correction by someone more knowledgeable than I, but I would have thought that the banks retain separate legal personality, and that their borrowings would be liabilities of the particular entity, say Irish Bank Resolution Corporation, the hollow shell formerly known as Anglo, rather than of the Irish State per se.

That leaves open a whole range of options that don’t exist with a blanket guarantee in place.

I am suggesting that we should send a signal that our support for the banking sector and the Euro is not unconditional.

My understanding is that a nationalized bank (or any other nationalized entity) cannot be bankrupt unless the Sovereign is.

We’ll have to refer it to Senior Counsel. But seriously, Donal, if there weren’t practical reasons as to why the guarantee suits bondholders, “the markets” and the troika, would you not expect the government to (be allowed to) make a big deal of dropping it, and reap the political rewards?

Niall, the Troika are currently keeping our lights on and dictating our Economic policy.

The only way for us to escape such a severe level of oversight is to restore the system to a level of health were the markets will lend to us again at an economically sustainable rate.

To even have a hope of getting there, we must send the right messages.

Was thinking about this over my sandwich there …. if you are right, and the guarantee is being extended just for the hell of it, doesn’t that make it even worse? The government making a u turn to endorse their predecessor’s failed, disastrous, policy, without any practical reason.

I still think the legal position would be significantly more favourable for Ireland and more difficult for investors without the guarantee, mind. Don’t have time to check the 2010 Act at at the moment, but, by the by, in general bankruptcy doesn’t apply to corporate bodies, there are a range of other interventions available.

I think you’re believing in fairy dust here, that if we do what we’re “supposed to do” that eventually everything is going to go back to “how it was”. Interestingly, an ESRI economist said yesterday that we’re doing what we’re “supposed to do”, but we’re still staring a depression in the face.

What I would like to see is a compromise. A commitment by the state to seriously consider any potential claim on the back of bond holdings in a failed bank. Or a guarantee limited to a certain level per creditor institution. Or some other formulation.

The way we’re going, our grandchildrens’ futures are going to be sacrificed to a currency that’s likely to fail, whatever happens, probably dragging down many of the very private institutions elsewhere in the Eurozone that the Irish taxpayer is funneling money to. I think that any attempt to put a “firewall” around the “contagion” of private misfeasance here has been overtaken by events.

We need to make a statement that there’s only so much we will take, and a point could easily be reached in the not too distant future where it isn’t worth our while to prop up the whole system any longer.

….Back to the ‘PIGGY BANK!’

Far from it, Mark. As has been evidence from the other comments, the answer is not ‘self evident’ – or, at ieast, it is not that way to everyone. It’s not for me (or, I dare say, for anyone else) to assume that people voting one way or another simply don’t understand the flipside of the argument. It’s unfair to suggest that someone who wants to cut the link between the State and the banks simply doesn’t understand their importance.

We are often accused of running polls here simply to provoke anger on the part of our readership, but this is never the intention – what do we gain from having dozens of people all posting angry responses, with little chance for some considered debate to break out? In fact, a tense and hectic poll actually means a larger workload for us, as it leaves us having to spend more time moderating comments and less time putting together other news stories.

We ran the poll simply because it’s a subject that is in the news, and which we thought would be able to prompt some meaningful discussion. Like any of our polls, we don’t claim any kind of legitimacy or scientific accuracy – it’s simply a straw poll, but one we felt was worthy of asking.

Gavan, it’s clear that a large number of people do think along the lines of ‘banks source of problem, therefore kill banks’, so your running of the poll is totally valid.

‘Some of the responses actually show how little is understood of the fundamental part in the economy played by the banking system.’
What a self righteous comment! Particularly in relation to a ‘straw poll’ which is purely a snapshot of a particular demographic at a particular time in relation to short ‘non opinionated’ introductory piece.
Most commenters here are pretty quick to ‘caution’ thejournal.ie on matters that might bother them but the compilation of a poll upon which most people have varying degrees of understanding is hardly a case of low journalistic standards.

As my way of indicating how little I understand of the ‘fundimental’ part the banking system has played in the national economy I will say that it wrecked it!