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Let Anglo Go

April 5, 2010

David McWilliams continues to question the sanity of the government’s approach to the banking crisis. His latest column, in yesterday’s Sunday Business Post, draws on his experience as a trader in the defaulted-debt market. Echoing remarks made last October by Nobel laureate, Joseph Stiglitz, McWilliams says capitalism should be let run its course and the bank should be wound down.

Yes, the bondholders will lose money, but that happens all the time when businesses fail. It is literally an every day occurrence. Bonds are less risky than shares, so the bondholders will get some of their money back. Shareholders would not be so lucky. But then again, that is capitalism. No one said shares are a sure thing, although many people during the property and credit bubble seemed to think they were.

McWilliams also dispels the myth that armageddon is in store if we let Anglo fail. In fact, the opposite is true. Investors looking at Ireland will want to see a country on the path to recovery. That’s going to be pretty hard with the millstone of Anglo’s debt tied around our necks.

Below is Stiglitz’s interview where he called NAMA “criminal.”

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2 Comments leave one →
  1. April 9, 2010 4:07 am

    David McWilliams is sound on many matters, but wants to leave the Euro.
    At the moment that is a disastrous option and impractical. They are the only ones holding the Gombeen men in check.

    The worse this gets, and it will get much worse, the better that option becomes, as the weight of debt will crush Ireland given the deflation that will intensify.

    How about a union with Iceland? If they will have us? Innovation??

  2. Nemesis permalink
    April 26, 2010 3:00 pm

    Corporate Governance can only work if it is implemented by an independent organisation otherwise it is self regulation which will never work as was seen with Anglo Irish Bank. That seemed to tolerate low standards in high places and obviously ran a Golden Circle.

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