Goldman Sachs says Irish bank losses not so bad

Why don’t they let us see the report published last week by Goldman Sachs, which says, in essence, that we have been far to negative in estimating our financial losses, at bank and national level. As a result, we are forcing the banks to raise unnecessary capital (and the shareholders to consequently take unnecessary losses). Some new capital may be required, but not on the scale indicated by the regulator.

In particular Goldman blames NAMA, as being far too pessimistic in estimating the value of banks assets being transferred to it. Even in a worst case scenario, the organisation is “unrealistically” pessimistic, they say. Our banks, which are forced by our government (-who then takes them over !!-) to face their full losses- and more – up front–uniquely in the world – have not in fact, lost that much more, as a percentage of their total loans, than banks in other countries, whose losses are covered up by government rescue schemes. (This applies in the EU also, where bank losses in every country are effectively cloaked by hidden bail outs). Goldman says:

“…Aggregating over the entire loan book, the assumptions
would give us gross credit losses for domestic banks of
€35bn over the 5-year cycle, which amounts to 8.4% of
total loans, and 22% of GDP (Table 1). This compares
with our colleagues’ estimates of total credit losses
worth 7% of GDP for domestic banks in the US, and
6.5% of GDP in the UK…”

They also say:

“…But if our estimates suggest anything, it is that the
ultimate losses, and the ultimate burden on the Irish
government, will be quite a bit lower than estimated by
NAMA, which is likely to make money on its
investments. Correspondingly, the government will
significantly have over-capitalised the banks, perhaps
by tens of billions of Euros….”

Its extraordinary that our media have not reported this to our people !.

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