Terry, you do know how shares work? Anyone can buy shares that are for sale, even you.

Great stuff AIB. Now the citizens have a few more questions.

Will AIB be repaying the interest on the €20.8 billion that Ireland borrowed to pump directly into the bank? Or the estimated €13 billion that NAMA spent in taking the toxic commercial property loans off the bank’s balance sheet? Or the interest on that €13 billion also borrowed? Will AIB be reimbursing us for its share of the €17.5 billion and lost yield that was taken from the National Pension Reserve Fund demanded by Europe before the Troika would lend Ireland the money to bail out the banks? Will AIB be compensating us for its failure to provide credit to viable business over the past several years causing many of them to collapse where the former employees now draw social welfare instead of contributing tax in a double blow to the exchequer?

Will AIB be making amends for its part in the 6 year recession which the bank collapse triggered throwing hundreds of thousands on the dole and forcing hundreds of thousands to emigrate? Will AIB be making reparation for the vicious cutbacks to our social infrastructure in health, education etc in order to comply with the neo liberal agenda imposed by the Troika who can do so precisely because the bank bailout bankrupted the nation?

As a shareholder in A.I.B. – I must call an E.G.M. – The unconstitutional eviction policy of this bank is ruining my property rights with legal fees !

A.I.B. cannot be sold without a referendum – The Illegal E.M.C. and the legitimate Government of Eire only have management rights on all state-assets – Not selling rights !

Waddler, may I answer some of your questions, they are blindingly obvious.

The whole point of selling off the shares is to recoup the initial buyout to begin with, including interest. That is why there is no hurry until the share price reaches a level to do this.

The estimated €13B to NAMA, is no longer a concern of AIB’s, it’s NAMA’s job now to recoup this. Which they seem to be doing. They have another 5 years left in their life cycle and are on target to recoup the monies early.

The fact that we were spending over €20b per year above what we were earning in taxes, also seems to be totally lost to you. This money was spent to pay our PS, social welfare and healthcare.

I know you want the Bank debt to last for generations, as many have stated on this and many other forums, and it must be galling to finally realise that this debt will be paid off, but our spending caused more of the problems than the banks did

The rest of your questions, I haven’t a clue, and I won’t pretend I do nor will I copy and paste an article in to help that pretence.

These might not be the answers that you want to hear, I’m sorry about that.

Attention Paul Murphy T.D. -
Of to the high Court with you – an interlocutory injunction on the sale of any state owned assets in A.I.B. – until after the Banking Inquiry is over ..
The A.I.B. horse is still in the stable – shut the door before it bolts and heaps of serious potential information with it !
I have Spoken !

Danny,
The commercial banks will never compensate the citizens for the damage they have wreaked on the nation.

You should also understand that most countries run a budget deficit most of the time and it makes perfect macro economic sense to do so. It’s really only the Eurozone countries that are required to borrow their own currency in the market at an interest rate determined by the market. Fiat currency issuing nations like the U.S and U.K do not need to obtain dollars and sterling from the bond markets to finance a budget deficit or indeed to cover private banking debt in the domestic currency. The U.K. bank bailout cost around £850 billion in total and yet this enormous figure did not cause a sovereign default or force the U.K. to seek IMF loans.

A sovereign state with a floating currency can afford any debt denominated in its own currency. The debt and any interest is paid by simple keystrokes at the central bank. When those sovereign states do choose to issue government bonds, the primary objective is to implement monetary policy (e.g. drive their chosen base interest rate to target) not as a necessity to raise revenue. In addition, when those countries do ‘borrow’ in the market, they effectively decide what the yield/interest will be unlike the Eurozone nations subject to the tender mercy of the speculators.

Waddler, of you believe that €20b deficit with a €30b income (€50b spend in total) makes perfect sense, then that says all anyone needs to know about you brand of economics.

David correct me if Im wrong but the shares you see at 4cents each at the minute only represent a small portion of the equity in aib, 100 percent is not floated on stock markets

Hermes,

I’m not Paul Murphy!
Unfortunately the legal system will not ultimately protect the interests of ordinary citizen. ‘Democracy’ and the legislation function has long been captured by the powerful and wealthy minority. The law is largely written by that elite and is constructed to protect those who benefit most from the status quo and serves the interests of capital over the wellbeing of the majority.
We saw an example of this in 2013 with the promissory notes which were subject to a Supreme Court challenge. This didn’t stop Mr. Noonan who bulldozed through the midnight emergency bill in Feb 2013 to liquidate IBRC (Anglo and Irish Nationwide).

This made the Supreme Court challenge redundant and welded the odious Anglo/IN banking debt to the Irish people for 40 years as the notes were converted to government bonds. Noonan couldn’t contain his self-satisfaction with this stunt and has since admitted the promissory notes were illegal.
The citizens can’t look to the courts for protection. We must defend ourselves through the mass organization and activism of ordinary people.

Danny,

You’ve been misinformed as to how the monetary system functions. You are equating a household budget to the national finances when they are fundamentally different. The household or business is the user of the currency while the government (usually) is the issuer of the currency. A budget deficits is of no concern to the currency issuer. Quite simply, they can never run out of their own money.

Modern fiat currency money is not a scarce resource. It is created at will by the institutions public (central banks) and private (commercial banks) that are authorized to do so.
The money has no intrinsic value, is created primarily on computer keyboards and so largely exists as electronic account entries. All financial assets are matched by an equal liability and so cancel each other out and ultimately net to zero. What remains is the real wealth of goods and services primarily produced by the working class through their labour. Financial assets (money) is a claim on that real wealth and therein lies its power.

Government spending creates new money from nothing and puts it into circulation while taxation removes money from circulation and extinguishes it. Taxation is what ‘backs’ the currency. The government imposed tax liability creates a demand for the currency, ensures it is widely accepted and so gives the currency legitimacy.

A sovereign currency issuing state like the U.S, U.K. Denmark etc does not need to raise tax revenue from private sources in order to spend on it’s social program such as pensions etc The government/central bank is the monopoly issuer of their own currency and simply keystrokes the necessary money into existence.

Therefore these nations do not need to tax in order to spend in their own currency. The act of government spending is what actually creates the money which is then later removed from the economy via taxation. Such a state could for example implement a large scale social housing construction program to address the homeless crisis which Ireland currently faces. This would involve the government simply crediting the bank accounts of the builders, material providers, etc as necessary to have the homes built with the added benefit of creating desperately needed jobs in the construction sector. This contrary to neo liberal myth is how sovereign governments (e.g. New Zealand) actually spend in their own currency. They face no financial constraints whatsoever in that currency. The state can afford to buy whatever resources are for sale in the domestic currency.

For example, this is how sovereign governments pay the wages of their public sector employees. So the £2000 monthly salary for a nurse in Britain will see her Barclay’s account credited by £2k (broad money) and Barclay’s reserve account (base money) at the Bank of England increased by £2k, all done by simply pressing the necessary computer keys.

The state may face real resource limitations e.g. energy or skills shortages but not a financial constraint as it can never be insolvent in its own currency as it issues that currency. However if a state, promises to convert its currency to something else e.g. another currency or gold as a fixed rate, then it faces constraints in that other currency or commodity.

So nations which maintain a peg with the dollar for example must earn (through exports usually) or borrow reserves of dollars in order to maintain the peg. Greece and Ireland are effectively users of a foreign currency, the Euro and so are even further constrained. This is a deliberate design feature of the Euro which confers enormous power to the unelected and ultra capitalist institutions of the currency union such as the ECB who now hold the purse strings rather than the elected governments of the member nations.

The macro economy of nations and the globe is fundamentally different to the micro economics of business and households (private sector) who are users of the currency but not the issuer. A sovereign currency issuing government can afford to buy whatever resources are available for purchase in its own currency (including the labour of the unemployed) as they can never run out of keystrokes and so a budget deficit should not be considered a problem once this understood.

The U.K. can sustain any size of budget deficit or national debt once it is denominated in sterling as the debt and interest is serviced via simple keystrokes at the central bank. That is why the enormous £850 billion bank bailout in the U.K. did not bankrupt the nation as it did in Ireland’s case.
Therefore the budget deficit (or surplus) should always be allowed to float to whatever level is required to support full employment to maximize productive output while maintaining price stability. As the economy approaches maximum productive capacity with full employment, the state can then remove money from the system via taxation and reduce government spending to counteract inflationary pressures.

Therefore sovereign states don’t need to borrow in order to finance a budget deficit. When those states do choose to issue government bonds the primary objective is to implement monetary policy (usually to drive their chosen base interest rate to target) not as a necessity to raise revenue. The primary mechanism is that the government will issue new bonds/bills/treasuries which pay a higher interest than the central bank reserves which the commercial banks hold and sells them in return for any excess reserves the private banks may have. In the reverse transaction, the central banks ‘buys’ back the government bonds in return for reserves in an effective asset swap with the commercial banks when they need to increase their reserve supply. The primary function of these transactions is to drive the base interest rate to the desired target. The central bank selling bonds drains reserves and so increases the interest rate on reserves while buying bonds injects reserves and so lowers the rate.

The central bank reserves and bonds/bills/treasuries are created electronically at will by the central bank/treasury as necessary to maintain liquidity and the desired overnight interest rate in the interbank reserves market. In this way a sovereign country can never really default on its own currency denominated debts unless it chooses to as the central bank can always ‘buy’ back the debt with newly created central bank reserves which every commercial bank requires to function. In addition, when those countries do ‘borrow’ in the market, it is clear that they effectively decide what the yield/interest will be unlike the Eurozone nations subject to profiteering by bond speculators.

So since the gold standard was discarded in 1971 and the introduction of the fiat floating currencies there is no need whatsoever for a currency issuing government/central bank like Australia or Japan to ‘borrow’ at all in its own currency to raise revenue. They can and do simply keystroke the currency into existence at will. This is why sovereign currency issuing governments actually control bond interest rates regardless of the state of their economies. The government ‘debt’ market is in reality a risk-free, interest bearing deposit facility for the large financial institutions and ultra-wealthy.

Continuing this neo liberal agenda, the Eurozone was deliberately designed to allow private banks (markets) to profit to an even greater extent from member state debt. It’s only the Eurozone countries that are required to borrow their own currency in the market at an interest rate determined by the market as the EU allows the financial markets to set the borrowing rate for Euro countries on an individual basis with the ECB is the sole issuer of the currency and the nations prohibited from creating the currency themselves.

There can never be a shortage of money at a macro level so it’s cleat that austerity and deprivation is a policy choice at national government and EU level. There are no shortages of any of the real resources (e.g. energy, food, material to build housing etc) to eliminate poverty across the EU. The authorities pretend that there is lack of money to address the poverty of the citizens when in fact there can never be a shortage of a fiat currency like the Euro.

Neither is inflation a concern in the current recession where vast resources (including labour) are lying idle. There is no simple linear relationship between money supply and inflation despite what the establishment vested interests would have us believe. The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.

So the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy for example through infrastructural improvement which leads to GDP growth and so more availability of real resources to purchase. Another key factor which prevents inflation is large scale unemployment where the productive capacity of the economy is not close to its peak. In this scenario which we currently face in Ireland and across Europe, the labour of the unemployed can be purchased with newly created money with no risk of general inflation. In fact the Eurozone is now facing deflation due to the fall in aggregate demand through 6 years of austerity. The enforced shortage of fiat money which are in reality just keystrokes at ECB level is a political choice, not an economic necessity.

Under the QE program of the past few years, the ECB has created €1.4 trillion in reserves by pressing keys on its shiny computer in Frankfurt and made it available at extremely low interest rates to the parasite banks whose greed and stupidity triggered the economic crisis in the first place. So there are plenty of keystrokes available to shore up the parasitic financial system but not enough keystrokes to make sure Greek or Irish people don’t go to bed cold and hungry, that is if they have a bed.

Waddler, I have a question for you.

You are against the nationalisation of AIB, as is evidenced by your objections above.

What would have been your ideal alternative to a socialist policy of nationalisation. Would you have preferred a capitalist policy of letting the bank go bankrupt, leaving all depositors, be they workers savings or capital being held by businesses big and small go with the bank?

I don’t understand your opposition to nationalisation, it is one of the fundamental principles of a socialist society that you so wish for.

Or is it simply that you just want to complain, even if it goes against your socialist philosophy, in the hope that no one will point out this contradiction to you?

In reply to you long post, we are in the Euro, we cannot print our own money.

Even if we could, that is not a be all and end all solution. Look at Zimbabway, they print their own money like confetti. Where has it got them? Massive inflation. Their money isn’t worth the paper its printed on.
We relay on imports for many things, how would you propose to pay for these if our currency was worth bugger all?

The UK could do it, and the US, simply because they are massive economies.
We are not.

We took in €30b per year
We spent €50b per year
We had to apply for loans to gather the remaining €20b per year, which we have to pay back.

It really is as simple as that. No amount of copying and pasting can change these 3 facts.

Terry, yes, only a fraction of shares are on sale.
You can buy these, as you can buy any more AIB shares should they be sold. Anyone can buy shares that are for sale, even you.
Should the owner of shares (in this case, us, the Irish people) decide not to sell their shares, then they are not for sale, and will not be floated on the market.

Wrong again Danny. I am in favour of the nationalizing the banks including AIB and operating them in the interests of the majority of the citizens. I’m opposed to the path that was actually chosen by the past and present governments. They socialized the debts of the banks while allowing them to operate largely unhindered as private entities continuing their profit gouging function through exploitation of the citizens through the debt mechanism.

And again you fail to understand that there is no simple linear relationship between money supply and inflation (or debasing the currency) despite what the establishment vested interests would have us believe. The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.

In the U.S. the Federal Reserve has lent and spent $29,000 billion to rescue the financial system since its systemic collapse in 2008.
http://www.levyinstitute.org/pubs/wp_698.pdf
Yet this staggering sum, which amounts to over twice U.S. GDP did not cause any significant dollar devaluation or cause any significant foreign exchange devaluation . Ditto for the U.K. who conjured up £850 billion to shore up their financial system.

And indeed there is no simple linear relationship between domestic currency creation and foreign exchange devaluation. There are in fact no models which can accurately predict Fx movements such is the number and complexity of variables involved.

The hyperventilating neo liberals often point to the hyperinflation horrors of Zimbabwe and Weimar Germany as a warning to those who would even consider “printing money”.
Those hyperinflation episodes were the result of large foreign currency debt obligations and limited productive capacity and so little availability of goods to purchase. Neither of these factors apply to the modern day EU which has the monopoly fiat currency issuer in the ECB and is an economic entity with massive productive capacity lying idle.

The macro economic principles outlined above apply to all sovereign currency issuing states with a developed economy regardless of size. Examples include Denmark, Norway, Poland, Australia, New Zealand, Israel etc etc to name just a few relatively small economies.

The principles also applied to the Euro nations before the entered the currency union. Let me repeat again for you that it’s only the Eurozone countries that are required to borrow their own currency in the market. A budget deficit is of no concern to a nation that controls it’s own currency. They don’t need to borrow their own currency from anywhere,

The Euro was a deliberately designed monetary trap which Ireland, Spain, Portugal, Greece and the other austerity crippled nations will ultimately need to exit if the currency union continues down the current destructive neo liberal path which serves the interests of capital over the interests of the majority.

The macro economy is fundamentally about the production and distribution of real resources (goods & services). Money is a key mechanism in both production and allocation phases in that money is required to begin the production process and money is required by households/firms etc to access the output of production. Money is not a scare resource. It’s created at will by the public and private institutions that are authorized to do so, central banks and commercial banks respectively.

There can never by definition be a shortage of a fiat currency like the Euro. So if the EU chose to, they could simple keystroke the necessary money into existence to hire all the idle labour resources in the Eurozone to maximize the productive output of real goods and services.

This would meet the twin objectives of creating real output for consumption and distributing it to the people who need it via their wages which are then used to buy those real goods and services.
There is no lack of any of the real resources (e.g. energy, food, material to build housing etc) to meet the human needs of the citizens of the Europe or anywhere in the developed world.

Neither can there ever be a shortage of money at a macro level as explained. So all the ingredients are present to solve the economic and social crisis in Europe and elsewhere.Therefore it in inarguable that austerity and deprivation is a policy choice at national government and EU level. This policy choice serves the interest of capital as more and more of the world’s resources accumulate to the 1% at the expense of the majority.

”The estimated €13B to NAMA, is no longer a concern of AIB’s” I stopped reading at this point.

Waddler
I never said you were ..
point of information for you guys there and I am a fan ..
I contacted you in October 2014 – I got a reply last week – something fishy in your office ?
Regarding the injunction the legal points are as follows ..
1. Despite the fact that a judge failed to recognise the equality of a citizen whether public representative or not (David Hall case ) Mr. Murphy would should off that illegal legal loophole …
2. The public have a constitutional right for their interests to be protected .
there are more …
Political points …
1. Any doubt of Paul Murphy’s socialist credentials would be blown away if he challenges the government and the banks in the court .
2. The judiciary would be exposed for their ability to interpret the Constitution
3. His positive training and qualifications in Laaw form U.C.D. ring hollow unless he proves it by going to court …..furthermore he is entitled to bring the case himself as Patrick Kavanagh set a precedent for the public not needing a barrister or solicitor in a case fought by a former Fine Gael Taoiseach !
Keep up the good work Waddler !
All the above points are the ones I want the establishment to know – there are loads of others but they would be better for Eire if they were kept back from the media for now….

*shut off that illegal loophole …

Do share holders not get Dividends???

Certainly they do. And at €280 million a year we should expect to be fully paid back in approximately 100 years. Maybe sell the thing before then?

Take half its profits until it’s paid back the money it owes the taxpayer , until that money is paid off it should stay in our hands , if it takes 20 years so be it .

Deco, exactly where do you think these profits come from? If you take half it’s profits it will A) no longer be attractive for others to buy, reducing the potential price the government can get from it and B) force AIB to up their charges and interest rates as they’ll need to get even more cash in to remain solvent.

I understand the wish to punish those who brought us to the brink, but when it comes to cold hard cash it is in our interests to get AIB back on their feet, sell the shares we’ve got in it and put it back into our own economy. Waiting 20 years to get the investment returned only ends up making everyone suffer – including us.

It needs those profits to keep lending and re invest so taking half the profits will make it even longer to pay back . The dividend is the share of the profits .

Deco doesn’t really understand the concept of share ownership or the time value of money.

The value of all the future cashflows of AIB and the share price if we listed the company are the same thing. We will get the same amount of money in real terms if we sell the company or if we take the money each year.

DCF is pretty simple way to value a company.
http://en.wikipedia.org/wiki/Discounted_cash_flow

So once the bank is stable the only real question is, do we want the government to run a bank?

What return will we get on our 20 billion investment in AIB if we sell a 25 % stake in it today.
Why the urgency and who will profit from the sale.
Im glad to say the days of an unquestioning compliant population are over, the media is largely unquestioning so the people are asking questions themselves , politicians are going to have to get used to answering for their decisions, there are too many pis.sed off sensible people who wont be ignored any longer.

Nobody is proposing to sell the bank today Deco. We would get nothing for it today.

You hire a investment bank to do a “roadshow” and they go around selling the company as the best thing since sliced bread. You have a few more interim results out so that investors can see it will make say 1-2 billion a year in profit for example. They then take that level of profit for each year ahead and discount that back to today to get the value of the future cashflows.

How much is that stream of cash in the future worth today? That’s how much the bank is worth.

Or it’s worth whatever someone is willing to pay. If you think the bank is likely to grow more rapidly than other people think you should buy the shares and make a profit.

The problem with selling it is that if the share price goes up people are going to say the timing was wrong – with full 20/20 hindsight. The reality is that no one knows for certain when the best time to sell is, and it is at best an educated guess.

Reg, what is the hurry? We pay approx 100m in interest on the 20b invested, we receive 280 in dividend, profit 160 m. Why should we sell this goose

Eh, selling it off will recoup the money, left wing economics fail again!

Because it’s the same amount of money just we either get it all now or we get it slowly over time.

Considering that we could do with some public investment in transport and education we could probably do more with the money if we sell it.

Reg… SELL THE SHARES TO WHOM, U.S. companies who buy them cheap with a grant and then sell them back to this government in 7 years time at a profit?

Kevin Whyte, they don’t have to sell them right now but if the price increases over the next year or two, and with these results it should then the govenment should consider selling some of the shares. There are things the state could be doing with the money.

Michael Sands, I don’t really have a clue what you are on about.

Unless we repay the debt raised with any income from the sale of the shares, we will be very much worse off. We will then have to fund the repayment of the 20b plus 100m per annum interest from current income without anything coming in to fund it.
To me a profit of 180 to 200m profit to the exchequer is the best way to deal with this issue.

Kevin Whyte is economically illiterate.

Yes Verge, totally economically illiterate but take away lotsa zeros and my method worked for me in my personal life.
Put the zeros back, hand the matter to the literate and we ended up in the mess we are in

All for flying around the world for Paddy’s day for a week’s holidays, the poor dears need a break… Somewhere in their neck I say lol.

€244 euro each woo hoo sure just put it straight into the account lads.

I know Sinn Fein don’t have a grasp of how finance works but the facts are that we will get the same amount of money if we hold onto the bank and take the profits or if we list the bank on the stockmarket.

So the question is do we want the government to run the banks? Public ownership of the banks is doable.

You’ll accuse the government of meddling if they don’t sell and off selling the family silver if they do.

What would you like to see done and why?

The Govt will sell it off just as it’s recovering to fund their election promises then a few years down the line we’ll all be wondering how we let it happen. Nothing changes.

So you’re saying that they will make promises and that they have a plan as to how to follow through on those promises. They should hire you as spokesperson!

The Government will not get any money for day to fay spending from a sale.

Correct it Noonan who said shares were over valued and refused to sell the whole share to a US financial group!

It would probably send a good message to start selling off a small chunk some time this year and we are likely to get a decent price for it. It’s going to be a rolling process so getting the absolute maximum from any individual sale isn’t the end of the world.

I’d like to see them take a punt on PTSB and put in the needed capital ourselves instead of flogging it when it’s future is still unstable. It’s only 125 million so if we are wrong it’s not the end of the world. To give up 30% of the company for so little would be a bitter pill.

What is his pants like then lol.

No Tony, just a few typos due to small keys and big fingertips.

Don’t forget small brain Jason :-)