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Generational Dynamics Web Log for 2-Apr-2010
2-Apr-10 News - Ireland's banks in crisis

Web Log - April, 2010

2-Apr-10 News - Ireland's banks in crisis

Israel carries out new military air strikes against Gaza.

'Worst fears have been surpassed' on Ireland's banks

An Ireland agency has found 80 billion euros of "toxic assets" in Ireland's banks, about half the size of the economy. The National Asset Management Agency (known colloquially as Ireland's new "bad bank") said on Wednesday that it will purchase these assets from the banks, at an average discount of 47%, according to Bloomberg. This will cleanse the banks of the toxic assets, allowing them one day to conduct normal business again -- or at least that's the hope.

The problem is that this represents a loss of 42 billion euros, and is much higher than expected. Analysts had estimated that the average discount would be only 35%, not 47%.

The 42 billion euro loss is "truly shocking," according to Ireland's Finance Minister Brian Lenihan. "Our worst fears have been surpassed," he said. "Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come."

The banks will have to make up the loss by selling stock or borrowing, possibly with government help.

This comes at the same time that Greece is still struggling to borrow over 10 billion euros by the end of May to avoid default.

It's now clear that the EU "bailout" or "backstop" plan for Greece announced last week is a total failure. The whole idea was that an EU "guarantee" would encourage investors to purchase Greek bonds as low interest rates. Instead, interest rates for Greece are higher than ever, and Greece's Prime Minister George Papandreou has already said that the country will not survive at these interest rates.

Thus, the "truly shocking" news from Ireland could not have come at a worse time, as the two countries will be competing with each other for investors' funds.

Israelis conduct air strikes against Hamas in Gaza

The tensions between Israelis and Gaza Palestinians continued to escalate on Friday as the Israeli Defense Forces (IDF) conducted 13 air strikes on targets in the Gaza Strip. The IDF told the BBC that the operation was targeting four weapons factories.

The strikes are the worst since the end of the Gaza war that ended early in 2009.

Since the death of Yasser Arafat, there have been three wars in the Mideast: Israelis vs Hizbollah in Lebanon in 2006, Palestinian Fatah vs Hamas in Gaza in 2008, and Israelis vs Hamas in Gaza in 2009. It's possible that a new war is approaching.

The latest round of tension began three weeks ago when Mideast peace talks between Israelis and West Bank Palestinians collapsed over an announcement that Israel would build 1,600 additional settlements in East Jerusalem.

Since then, there have been a chain reaction of increasingly confrontation events. Israel's Prime Minister Benjamin Netanyahu came to Washington to meet with President Obama, but left in humiliation as the President expressed dissatisfaction over the settlement announcement. Israelis and Hamas clashed in gun battles, in the first escalation since the Gaza war, after a Hamas ambush that killed two IDF soldiers. And last weekend, the Arab League condemned Israel and discussed preparing for the possibility that the peace process will end in total failure.

Friday's air strikes on Gaza take the chain reaction through another step, and another escalation.

From the point of view of Generational Dynamics, nothing has changed since what I first wrote in 2003, when President Bush launched his major peace plan. (See "Mideast Roadmap - Will it bring peace?") Generational Dynamics predicts that there will be a major new Mideast war re-fighting the 1948-49 war between Jews and Arabs that followed the partitioning of Palestine, and the creation of the state of Israel. There will be no peace agreement.

Additional Links

A new "Kosher" bus line is running in Tel Aviv. It separates men and women, according to Orthodox Jewish beliefs: The men sit in front of the bus, and women sit in the back. Ynet This is part of a worldwide trend, typical of a generational Crisis era, for revival of conservative religious beliefs of all kinds.

South Korea wants to have a Samsung robot in every home by 2020. HP Plus

Water, water everywhere, but not a drop to drink. That's becoming less true, as new technology is making it possible to desalinate ocean water fairly cheaply, making it drinkable. Guardian.

(Comments: For reader comments, questions and discussion, see the 2-Apr-10 News - Ireland's banks in crisis thread of the Generational Dynamics forum. Comments may be posted anonymously.) (2-Apr-2010) Permanent Link
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Generational Dynamics Web Log for 2-Apr-2010 2-Apr-10 News - Ireland's banks in crisis

'Worst fears have been surpassed' on Ireland's banks

Israelis conduct air strikes against Hamas in Gaza

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Generational Dynamics Web Log for 2-Apr-2010
2-Apr-10 News - Ireland's banks in crisis