Bank Governor Patrick Honohan slams Anglo Irish rescue bid
Central Bank governor Patrick Honohan said Anglo Irish Bank should have been allowed to go bust in 2008. "Too late Mr. Honohan making that kind of statement now that the horse has bolted"
The Government should have let the toxic lender Anglo Irish Bank go bust in September 2008, the country’s top financial watchdog has said.
Patrick Honohan, Governor of the Central Bank of Ireland, estimated the cost of trying to rescue it, and the other banks, at 40 billion euro – 8,734 euro for every man, woman and child.
The professor told the parliamentary banking inquiry in Dublin that the late finance minister Brian Lenihan was overruled on plans to let Anglo go under during late night negotiations to guarantee all the deposits and borrowings of Irish banks.
Initially reluctant to name names, Mr Honohan said he believed someone pulled rank during talks with bankers and regulators which led to the crippling 440 billion euro pledge on September 30 2008.
“The point is obvious,” the professor told the banking inquiry.
“I don’t want to be on television naming people.
“The Taoiseach (Brian Cowen) and the AG (Attorney General Paul Gallagher) were present and they are the only other political people who were present.”
Mr Honohan revealed hat Mr Lenihan told him personally that he had wanted to burn two billion euro worth of subordinated debt in Anglo by nationalising the rogue lender around the time of the guarantee.
Ultimately, the Irish state pumped 64 billion euro into a taxpayer-funded rescue of it and the three other main banks – 34 billion euro alone for Anglo and Irish Nationwide Building Society before they were nationalised and liquidised.
Mr Honohan said he rejected the idea Anglo was a systemic bank and told the parliamentary inquiry Anglo should have been nationalised over the course of a weekend.
At the end of the four hour hearing, the governor was repeatedly pressed on where the bailout cash ended up and who would have benefited from the rescue of Ireland’s big banks.
He said that targeting bondholders on the international markets for profiteering from the crash and bailout was “very bizarre” and insisted that all creditors, bondholders and depositors in Irish banks, who took money out of the system in 2010, were using money borrowed by the state.
“It went on buildings that nobody wants to live in, that’s part of it,” he said.
“It went on paying wages of the builders.
“Where did the money go up in smoke?
“It went up in smoke on properties that weren’t worth anything and weren’t any use to anyone.”
Mr Honohan insisted that the crippling effect of the bank bailout was not the main reason Ireland’s public finances spiralled out of control in late 2010 resulting in the 67.5 billion euro in loans from the International Monetary Fund, the Europe Union and the UK.
He pointed to imbalances in the public finances, a collapse in tax and massive spending.
“People are mainly paying for rebalancing the fiscal accounts and not paying for this amount, 40 billion, it was formerly borrowed by the banks from bondholders, the bondholders have been repaid and now it is borrowed by the State from the Euro system,” he told the inquiry.
He told the inquiry that the damage to society as a result of the penal tax increases and spending cuts introduced to cover the bank rescue was being felt much more greatly in poorer households and communities.
“Some crashes have affected the rich worse than the poor – this one in Ireland has affected the poor worse than the rich,” Prof Honohan said.
“I don’t dispute the fact that this has been very bad for the poor and also the poor haven’t the ability to weather a loss of income … (it has) definitely been very bad for the poor.”
Mr Honohan described Anglo in September 2008 as having a “business model that was not credible” and that it had “run out of cash” and that government or regulators should have stepped in and removed the management.
This week Finance Minister Michael Noonan suggested the Government could end up making a profit on some of the bailout, particularly the 99% shareholding it now had in Allied Irish Banks.
Mr Honohan, who disagrees with the minister’s optimism, was called into the banking inquiry to discuss a report he compiled for the Government on regulation from 2003 to 2008 before he was appointed Central Bank governor.
He said he stood by his 130-page report and that regulation in 2008 in Ireland was one of “a triumph of hope over reality”.
But, challenged on the watchdog’s standards in the years running up to the crash, Mr Honohan admitted he now believed it was not intrusive.
“The Government, and not just the Government, the whole regime did not want to interfere,” he said.
European Central Bank chief Mario Draghi has so far rejected calls for him to come to the committee to answer for the authority’s role in Ireland’s bank guarantee scheme and the subsequent need for a bailout.
Mr Honohan was pressed on a reported voicemail left by an ECB chief on the late Mr Lenihan’s mobile three days before the guarantee was signed which allegedly warned him to “save your banks at all cost”.
The professor said he spoke to Jean Claude Trichet, ECB chief at time, about the allegation, who told him: “I spoke to the Irish the same as I spoke to everyone, there is no system, you must have responsibility for your own banks.
“I did not ask him about the voicemail specifically.”
Mr Honohan suggested Mr Draghi was considering how he could assist Ireland’s banking inquiry without appearing to be answerable to the Dublin parliament.
Aside from the alleged voicemail, there was also the issue of the tone and content of a letter to the Irish Government threatening to withdraw emergency funding from the Irish banking system in late 2010.
“I have no evidence whatsoever,” he said.
“I don’t believe it to be the case that the ECB asked the Irish Government to guarantee the banks.”
Prof Honohan dismissed the idea that the collapse of Lehman Brothers bank in New York was to blame for Ireland’s banking meltdown pointing to “one shock or another” being the catalyst.
He said regulators should have known Anglo was bust in September 2008 but it should have been allowed to fail as a “European Lehmans” even if the Government faced being treated like a pariah internationally.
Mr Honohan was blocked from answering questions on a seven billion euro short-term deposit loan between the then Irish Life & Permanent and Anglo Irish Bank as a trial is pending and he was also prevented from discussing his rationale for phoning RTE Radio one morning in 2010 to reveal the possible extent of an IMF bailout three days before a formal application was made.
A 20 minutes brisk walk each day, could be enough to beat an early death
A brisk 20-minute walk each day could be enough to reduce an individual’s risk of early death, according to a new research.
A brisk 20-minute walk each day could be enough to reduce an individual’s risk of early death, according to a new research. 0The study of European men and women found that twice as many deaths may be attributable to lack of physical activity compared with the number of deaths attributable to obesity.
To measure the link between physical inactivity and premature death, and its interaction with obesity, Cambridge University researchers analysed data from 3,34,161 men and women across Europe participating in the European Prospective Investigation into Cancer and Nutrition (EPIC) Study.
Between 1992 and 2000, the researchers measured height, weight and waist circumference, and used self-assessment to measure levels of physical activity. The participants were then followed up over 12 years, during which 21,438 participants died.
The researchers found that the greatest reduction in risk of premature death occurred in the comparison between inactive and moderately inactive groups, judged by combining activity at work with recreational activity; just under a quarter (22.7%) of participants were categorized as inactive, reporting no recreational activity in combination with a sedentary occupation.
The authors estimated that doing exercise equivalent to just a 20-minute brisk walk each day – burning between 90 and 110 kcal – would take an individual from the inactive to moderately inactive group and reduce their risk of premature death by between 16-30%. The impact was greatest amongst normal weight individuals, but even those with higher BMI saw a benefit.
Using the most recent available data on deaths in Europe, the researchers said 3,37,000 of the 9.2 million deaths amongst European men and women were attributable to obesity, however, double this number of deaths (6,76,000) could be attributed to physical inactivity.
A lack of empathy may be caused by Social Stress & a lack of interaction with strangers
The social stress we feel when we are with strangers limits our ability to express empathy.
Empathy — the capacity to share and feel another’s emotions — is known to be mostly absent in people with an Autism Spectrum Disorder, and so, increasingly, scientists study this unique emotion to understand its genesis and effects. New research that directly explores how empathy arises between strangers comes to a surprising conclusion. The social stress we feel when we are with strangers, say the McGill University researchers, is what shuts down our ability to express empathy.
“It turns out that even a shared experience that is as superficial as playing a video game together can move people from the ‘stranger zone’ to the ‘friend zone’ and generate meaningful levels of empathy,” Dr. Jeffrey Mogil, a psychology professor and senior author of the study, stated in a press release.
Sensory Processing Sensitivity
Lack of empathy, in the case of people with autism, is well-known and well-discussed, yet the flipside is rarely mentioned. According to Dr. Elaine Aron, a psychologist, about 20% of the population is highly sensitive and responsive to the moods of other people. Aron refers to this as “sensory processing sensitivity,” and she and her colleagues believe they can track the neural correlates of this not altogether rare trait. In one study, Aron discovered experiences of empathy in people with this trait showed stronger activation of brain regions involved in awareness, empathy, and self-other processing.
For the current study, Mogil and his colleagues compared the reactions of student volunteers to painful stimuli in various scenarios. His previous research demonstrated how two well-acquainted mice (cage mates) will experience more pain from a stimulus when they are together than if they experienced the same stimulus when alone. Mogil’s past research also indicated two unfamiliar mice do not experience a difference whether alone or together. So is the same true of humans?
To find out, the researchers designed a study where the student volunteers experienced pain under five separate circumstances: alone; with a friend; with a stranger; between two strangers given a stress-blocking drug; and between two strangers who had spent 15 minutes playing the video game Rock Band prior to testing. The pain stimulus remained consistent throughout all experiments: the students were asked to submerge an arm in ice-cold water.
While the students rated their pain at the same level whether they experienced it alone or sitting across from a stranger, their pain ratings actually increased when they were with a friend. “It would seem like more pain in the presence of a friend would be bad news, but it’s in fact a sign that there is strong empathy between individuals,” Mogil said.
Next, the researchers gave the volunteers the drug metyrapone,which inhibits the “flight-or-fight” stress reaction, before the experiment. Among the students paired with a stranger, their stress levels were reduced after the drug and they felt pain as they would in the presence of friend.
To further test the stranger/social stress barrier to empathy, the volunteers who had been paired with strangers played Rock Band prior to the experiment. Even after only 15 minutes of playing together, their empathy for one another increased as measured by the ice water pain test. If both strangers played Rock Band separately before the experiment, no increase in empathy occurred.
“This research demonstrates that basic strategies to reduce social stress could start to move us from an empathy deficit to a surplus,” Mogil said. “In this case, creating empathy was as simple as spending 15 minutes together playing the video game Rock Band.”
The study’s findings raise some new questions about empathy including, Could simple shared activities be a way to increase empathy among autistic children? Still, Mogil finds it to be “pretty surprising that empathy appears to work exactly the same way in mice and people.”
13% of Irish women smoke throughout their pregnancy?
Women who experience a great deal of stress are much more likely to continue smoking during pregnancy.
13% of mothers-to-be in Ireland smoke all the way through their pregnancy, according to the latest report on Irish children.
The report, part of the Growing Up in Ireland study, found women who experience a great deal of stress are much more likely to continue smoking, while poverty and poor education are also factors.
It found the opposite was the case for women who drink during pregnancy; those with higher levels of income and education were more likely to drink while expecting a child.
The researchers also warned that due to Ireland’s drinking culture, babies are more often exposed to high levels of alcohol until a woman’s pregnancy is confirmed.
The number of Irish women who smoke while pregnant has dropped from more than one in every four to fewer than one in every five, according to these latest figures.
The latest National Longitudinal Study of Children shows that the proportion of women smoking during pregnancy dropped from 28% in 1999 to 17% in 2007.
It found that 13% of women smoked all the way through pregnancy, even though smoking more than 11 cigarettes a day decreases a baby’s birth weight.
The study also found that compared to women in Britain, Irish women were significantly less likely to report drinking during pregnancy.
Two dwarf planets could exist beyond Pluto
For decades astronomers have debated whether there could be a planet waiting to be discovered beyond Pluto.
Now scientists from the University of Cambridge and Complutense University of Madrid have hypothesised that there’s not just one, but at least two dwarf planets beyond Pluto.
But why did they come to this conclusion and what does it mean?
What is a trans-Neptunian object?A TNO, which range from 25 to 60 miles across, with the sun reduced to a bright star at a distance ofi over 3 billion miles away (Nasa)
Any minor planet that orbits the sun at a greater average distance than Neptune can be considered a trans-Neptunian object (TNO). The first to be discovered was Pluto itself, now classified as a dwarf planet, back in 1930.
As of last year, there were 1,352 TNOs listed on the Minor Planet Center’s list. Of these, 200 have their orbits well-enough determined that they have been designated as permanent minor planets.
The scientists who believe there to be planets beyond Pluto say that they must exist to explain the orbit of many TNOs.
What makes scientists suspicious of some of their orbits?
The most accepted theory about TNOs says that these objects’ orbits should be distributed randomly, and their paths must fulfil a series of characteristics: a semi-major axis with a value close to 150 times the distance between the Earth and the sun, an inclination of 0 degrees, and the closest point of their orbit to our Sun must be close to 0 or 180 degrees.
But at least a dozen of these objects’ orbits don’t even come close to these standards.
“This excess of objects with unexpected orbital parameters makes us believe that some invisible forces are altering the distribution of the orbital elements of the ETNO and we consider that the most probable explanation is that other unknown planets exist beyond Neptune and Pluto,” explains Carlos de la Fuente Marcos, scientist at the UCM and co-author of the study.
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