AN OFFSPRING CALLS

"Hey, pops."

"Hi, Will. Whats on your mind?" (Will is #1 son).

"The Irish. What do you think"

"Tough one this week. I hear they're all banged up, still trying to get over the loss of their camerman and..."

"No you idiot (a term of endearment), not Notre Dame, the IRISH!" What's going to happen?"

"Oh, sory. Well, nothing until next week. All the movers and shakers are finalizing transport to Korea for the G-20. Dumping on Obama and calling The Suit and the head of the Fed idiots--politely I might add unlike some one I know--is far more fun than dealing with this mess."

"I thought you said the Greeks would be the first to go into the tank."

"Still do. So do the bond guys. The Greek debt is 1200 above the Bund and the Irish only 800-900 bp's. Rock solid by comparison. Different problem as well. Greece has a soverign risk problem, Ireland has a bank problem...they're own banks about whom few care. Normally I would say just keep things going in the banks by providing liquidity when needed, adopt a helpful regulatory stance and most importantly not allow the auditors to do anything stupid; tried and true methods all. In short, if the clients can service the debt, i.e. pay interest, the Banker's Axiom the, "A rolling loan gathers no loss," applies."

"That the case here?"

"To be honest my son, I don't know. I'm hearing outrageous numbers about loan quality--numbers like I've never heard of before. This may not be a classic liquidity problem at all. These guys may be toast. On top of all of this the G-20 announced today that they are going to memorialize in memorandum form the idea that NO institution is too big to fail. The timing is exquisite for the poor Irish. Of course if you know anybody who believes that if DeutscheBank or Soc Gen heads south in the toilet that the Germans or the French are going to remember what the hell it was they signed, send him my way because I have a bridge on offer." But Ireland is a tad smaller and would need help.

"So, what happens?"

"Well, I think Kelly has to get on top of Utah quick, 'cause..."

"You are an idiot."

"Indeed, but remember about the Irish: what tho the odds be great or small, they win over all...sometimes"

"Bye, Dad."