What *Really* Caused the irish Banking Disaster ?

The shareholders were just as enraptured by the mania as anyone else and were generally cheering the management on.

deluded would be more accurate. Within the limits of their delusion, most banks exploited the situation as they saw it, quite efficiently.

It's the public who were at the ottom of this in believing house prices would rise exponentially forever and then later demanding that politicians and bankers make it so.

I'll assume the smiley negates the statement. I'm certainly on record in uk.finance in making the above prediction back then (and somewhat more besides).

[China...]

The US isn't through this yet. They're still borrowing impossible amounts in order to avoid facing the music and reordering their economy to live within their means.

It will be interesting to see which way they jump. I have the feeling though that the population won't give them much leeway and that they'll be quickly out of power.

FoFP

Reply to
M Holmes
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That doesn't dilute the responsibility of the management. The business is their responsibility irrespective of the views of the 'amateur' shareholders.

Deluded for management is incompetency.

I agree. But the bank management had a higher responsibility and completely ignored those responsibilities.

Anyone can make predictions that become true later - that doesn't mean there was a justification or grounds for it. A broke clock is right twice a day.

True.

Thats is an enormous hurdle to jump and an easy statement to make. Things have been much much worse in China and nothing happened.

Howard

Reply to
Howard

It was worse than that. In my researches during the bubble, I noted at least three instances of managers ignoring (and in two cases actually sacking) their Risk Managers for telling them that the course they were pursuing was risky to the point of destruction. By this point of course, management had been completely captured by the trading arms of the organisations and were themselves enraptured by the gleaming riches being promised.

An even worse case was:

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FoFP

Reply to
M Holmes

On Feb 28, 6:01 pm, M Holmes wrote: [...]

Have you got any more information or sources about this Chinese property bubble? I've watched a couple of Carrie Gracie's pieces on BBC Newsnight about China, 'Return to White Horse Village', eg:

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but I don't recall her saying anything about entire cities of empty property.

If Chinese growth (c.10% pa?) is, as you seem to suggest, partly based on a dodgy property bubble, then the repercussions when it does burst are like to be interesting, to say the least. But surely two big differences between China, and Ireland in the 'Celtic Tiger' years, are that China makes and exports stuff, quite a lot of it, plus they have considerable foreign currency and sovereign debt reserves?

(I'm posting and reading from ul.legal btw.)

Reply to
pensive hamster

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Yes, the foreign currency buffers are significant. However, if they're forced to start liquidating those, what will that do to the US economy?

Something which won't add to social cohesion in the bust: many local loans are routed through Chinese mafia gangs - people who can be quite insistent about getting their money back. I've already encountered rumours about local government officials ummm, retiring from the game when they were unable to arrange this.

FoFP

Reply to
M Holmes

Regulation on the shadow banking sector could help here I hope.

I can't see how banks could operate without fractional reserve banking nowadays. The minimum reserve could (and should IMHO) be increased.

Like mass extinctions in nature it's not always the "best" companies that go under. Generally it's the giants that survive, possibly with reduced competition. I wonder how many new startups failed that may have gone on to great success.

Exactly.

I agree 100%

Correct. However property has some "intrinsic" value in that people need somewhere to live and work. No-one "needs" tulip bulbs.

Or people learn ;-)

Reply to
Mark

Thanks for these links. Interesting, and slightly scary, reading.

Reply to
pensive hamster

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