The Stealth Irish Bank Run

February 3, 2011

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  • The UK Telegraph is catching on to the ongoing bank run as mentioned by Guggenheim Partners, limited to mostly foreigners so far. An outright bank run is Guggenheim’s thesis for the trigger to increased intensity to the Euro plunge to parity.
  • Irish central bank data showed losses of €40bn (£34bn) in deposits from the key banks in December, compared with €27bn a month earlier.
  • Over the past year Irish lenders have pulled €110bn, equal to whopping 60% of gross national product.
  • S&P recently downgraded Irish banks on “both the ability and willingness of the Irish government” to keep propping up lenders.
  • Austerity versus foreign bank losses is poised to play a central issue in upcoming elections, with opposition party Fine Gael threatening to “impose losses on bondholders who lent to collapsed domestic banks”.
  • “Those who lent recklessly as well as those who borrowed recklessly should share the burden,” said Michael Noonan, the party’s finance chief.
  • Germany is attempting to impose yet more austerity measures.
  • Source : UK Telegraph

History Squared

  • The punitive punishment Germany is attempting to impose on the citizens of the PIGS on behalf of Germany Banks will inevitably lead to a revolt against established politicians (rightfully) by citizens in these countries as they are voted out of power.
  • The EFSF solution will be good for the banks, whatever it is, but is it likely to pass muster with citizens is the real question
  • Election dates will need to be watched closely in the coming years.
  • How long before this spreads to Portugal, Italy, and Spain.
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