Ireland's Finance Minister, Brian Lenihan learned banking and finance at the kitchen table, two days after Lehman failed. All he knew when he first sat down was that Alan Greenspan was God.
The incompetence of central bankers and finance ministers over the past few years has been breath-taking, but Ireland's Minister for Finance, Brian Lenihan, takes the golden biscuit for sheer ineptitude.
From David McWilliams' recent book, Follow The Money: The Tale of the Merchant of Ennis, we learn that Lenihan, a lawyer by training, received his first lessons in banking and finance at McWilliams' kitchen table - on the 17th of September 2008.
Before that, McWilliams tells us, Lenihan had learned everything he knew about finance from a biography of Alan Greenspan(!) that he had picked up over the summer. We learn that Lenihan had no idea that Irish banks were in trouble until after the failure of Lehman Brothers just two days before.
Less than two weeks after that late-night cram session at McWilliams' kitchen table, Ireland announced to the world that it would fully guarantee its banks liabilities -- for both depositors and bondholders.
We now know that this hasty decision would lead to national bankruptcy and the specter of sovereign default. But at the time, Lenihan -- not unlike a number of other clueless politicians scattered throughout the formerly industrialized world -- was only following the advice being offered by the "experts" who surrounded him. Shockingly, among those "experts" were none other than a team of advisors from Merrill Lynch.
Turns out that a week after the Finance Minister's introduction to basic finance, the Irish government paid Merrill Lynch $10M for a seven-page report that told them:
- "All of the Irish banks are profitable and well capitalised.”
No wonder Irish eyes are crying - what was billed as a costless way to avoid a banking panic ended up bankrupting the nation.
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Here's more detail:
The strange case of the disappearing Merrill Lynch research note
US investment bank Merrill Lynch had a critical role in the banking collapse in Ireland and censored an analyst's report that predicted the crash back in 2008, it was claimed today.
The US bank retracted a report by one of its research analysts in March 2008 that was negative about the banks after the Irish banks called Merrill Lynch and threatened to take their business elsewhere. It toned the research note down and months later its author, Philip Ingram, left the bank, according to a much-anticipated cover-story in the new edition of Vanity Fair.
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