Submitted by Reggie Middleton on 04/07/2013 08:07 -0400
Ireland, I Make No Apologies For What I'm About To Show You. You have had a banking crisis that nearly wiped you out. In an attempt to save the banking system (potential mistake #1), you brought the bad debt of private, for profit, risk taking institutions onto the taxpayer's balance sheet - twice! You then conducted sham stress tests to placate the public into thinking the worst has passed. Promptly after nearly all of your banks passed these shams, they started collapsing again. Leprechauns don't really exist, and you can't end insolvency with magic and lucky charms. It was at this point you were coerced/forced to accept the outside aid of the Troika and further in debt your citizens as well as endure extreme austerity. Guess what, it's apparently not over - not by a long shot!

I have spent the last week clearly demonstrating how Irish banks could have passed the stress tests yet fail anyway. See:

1.Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" As This Bank Scrambled For Capital!!!
2.As If On Cue, BoomBustBlog Shenanigan Research Gets Real In Ireland, Why Aren't These Guys Knocking On My Door?
3.Are You About To Get Cyprus'd in Ireland? When A Single Word's Worth Billions Of Euros...
4.Dear Ireland (& AIB), Haven't We All Learned The Problem Is Insolvency, Not Liquidity?
5.Oh No! Is It Possible? A 3rd Irish Bank With Hidden Charges Not Revealed In Its Annual Reports?
The gist of this reporting is that it appears as if there was a significant amount of debt and/or encumbrances on Irish bank's balance sheets that was:

1.Not reported to regulators or possibly stress testers and
2.Material misstatements and/or omissions regarding encumbrances and debt.

In essence, these banks were not as healthy as they claimed! If one were to add the encumbrances and unreported borrowing back on to these bank's balance sheets, then add this (since the Irish government essentially bought many of them) onto the Irish government's balance sheet, what would we have?

My guess is we'd have a country that was forced to go back to the Troika on hands and knees. Worse yet, we'd have the "Cyprus" style of bank recaps become mainstream with Irish bank depositors losing money faster that a floozy loses virginity on prom night. Below is a very extensive financial modelling of the Irish bailout by the Troika - the same model that was used to generate the subscription documents in Beware of the Potential Irish Ponzi Scheme! This is a level of analysis that is simply not available on the web, but I'm making it available as a PSA (public service announcement) for the Irish people. I invite you to, no... I dare those of you who are in the industry to play with it and add back the levels of debt that has been mysteriously disappeared from Irish bank regulatory statements. Go ahead, and see where the country of Ireland really stands.

I don't think it will be difficult to ascertain that Ireland may very well need another bailout, of both its banks and quite possibly the motherland herself. After Cyprus, we all know who'll pay for the bank bailout, right?

Max talks to Reggie Middleton about fraud and collapse at the heart of what remains of the Irish banking system.