Sign in
Become a MarketWatch member today
MarketWatch First Take
March 31, 2011, 1:23 p.m. EDT
View all MarketWatch First Take "º
"¹ Previous Column
Berkshire, Buffett will suffer fallout over trades
First Take "º
One way to end Irish crisis "” let banks go bust
By MarketWatch
WASHINGTON (MarketWatch) "” Missing in the 88 pages the Central Bank of Ireland has produced in determining that the Irish banking system is undercapitalized by some $34 billion (24 billion euros) is a different way to end the euro-zone nation's financial crisis.
It's an elegant and simple solution, and one that could prove cheaper: Let all the banks collapse.
That isn't to disparage the loan-loss assessment performed by BlackRock, the same folks who will be auctioning off the mortgage-backed securities of the New York Federal Reserve, or the capital and liquidity assessments performed by the central bank.
Libyan rebels are locked in battle with pro-Gadhafi troops for control of the eastern oil town of Brega. Video and image courtesy of Reuters.
But Ireland has already injected 46 billion euros into these lenders, and the European Central Bank and the Central Bank of Ireland combined have loaned roughly 175 billion euros. Let's call it day and let them die, Lehman-style.
What about Irish depositors and companies? Their holdings can be guaranteed for a short period of time, say a month, to transfer money elsewhere, to banks in Germany or France or Cyprus for that matter.
A euro is a euro is a euro, right? What better way to kickstart euro-zone banking system integration than by having an entire nation without a lender?
There really is no good reason for Ireland to have its own banks, which as we can see, haven't been a particular strong suit of a nation that has only taken tentative steps toward reform.
That said, the proposed solution won't ever be adopted, owing both to the Irish government's fear of the unknown as well as the international desire not to see bank creditors in Germany, France and the U.K. suffer.
But the average Irish citizen, it would be better off for the nation to call it a day in banking "” it may be no fun asking for a loan from a Rolf or Pierre, but it's better than writing the check yourself.
"” Steve Goldstein
Missing in the 88 pages the Central Bank of Ireland has produced in determining that the Irish banking system is undercapitalized by some $34 billion is a different way to end the euro-zone nation's financial crisis, says Steve Goldstein.
1:24 p.m. March 31, 2011
"Big share-price moves hit Ireland's banking sector; BoI up 21%; Irish Life off 48% http://on.mktw.net/ha4z34" 2:40 a.m. EDT, April 1, 2011 from MarketWatch
"Hong Kong stocks gain as property, energy shares rise; Hang Seng Index up 0.5% http://on.mktw.net/eJSW2F" 8:33 p.m. EDT, March 31, 2011 from MarketWatch
"Japanese stocks start new fiscal year with gains; Nikkei Average up 0.3% http://on.mktw.net/h9Um27" 7:05 p.m. EDT, March 31, 2011 from MarketWatch
"RT @dcallaway: Hey SF fans of MarketWatch. Cool investing debate in town on 4/5 at the Clift Hotel. Pls joins us. http://on.fb.me/flYoy3" 5:07 p.m. EDT, March 31, 2011 from MarketWatch
"RT @dcallaway: Six threats to stocks in the second quarter http://on.mktw.net/ewIJ8P" 4:48 p.m. EDT, March 31, 2011 from MarketWatch
Ethics Monitor
Corporate spying goes unreported
On the Markets
Should you sell in April and go away?
Consumer Confidential
Take that tax refund and spend it
No-Nonsense Investing
China's economy may soon hit the brakes
Commodities Corner
Oil ETF buyers beware
Have developed markets had their fun?
Money and Power
In victory, tea party can taste only ashes
Read Full Article »