This Week

Another busy week for business news. Here’s a brief summary of developments during the past week.

The week began with Meltdown Monday – the largest one day points drop in the history of the DJIA (-777 points) and the single biggest daily percentage fall on the Irish market (-13%).

This was caused by the collapse of UK bank Bradford & Bingley and the large Dutch/Belgian bank Fortis last weekend. The failure of the US House of Representatives to back George Bush’s $700bn plan to help US banks and the collapse Wachovia, the fourth biggest bank in America, also sent stocks lower.

However, you need to put Monday’s fall in the Dow Jones in context. It was not the biggest daily fall in the Dow in percentage terms, only in points terms. The Dow fell 777 points but the percentage fall was 7%. The last big daily fall in the Dow Jones was 22% in the 1987 stock market crash. Read the following article and see how large falls in the Dow Jones occur every 7 years.

On Tuesday, there were rumours that at least one Irish bank was in danger of default. The government quickly responded by guaranteeing the safety of all deposits in the six Irish commercial banks – AIB, Bank of Ireland, Anglo Irish Bank, Permanent TSB, Irish Nationwide and EBS.

They have also guaranteed the repayment of loans given to these banks by other financial institutions. The total cost of this guarantee could reach €500bn. This is over twice our annual GDP and over 14 times our National Debt.

Question: What effect will the above guarantee have the Irish operations of UK and foreign banks here?

On Wednesday, the CSO released the latest unemployment statistics for Ireland. The number of people unemployed has increased by 50% or 80,000 people in one year. This is the biggest ever annual increase in the Live Register. Our unemployment rate (6.3%) is now the highest it has been in 11 years and is likely to reach 9% in 2009. Download the CSO report.

On Wednesday night, Warren Buffet made his second big investment in a week when he purchased $3bn worth of stock in General Electric and the option to buy $3bn more over the next five years. This follows his $5bn investment in US bank Goldman Sachs last week. He made a profit of $783m in one day in Goldman Sachs.

On Thursday, Facebook announced that it has chosen Dublin as its European Headquarters. Dublin is now the European HQ for internet companies such as Ebay, PayPal, Google, Yahoo and Amazon. They will be creating 70 jobs in Dublin. These are now the types of jobs that will be created in Ireland in the future. What type of workers are Facebook looking for?

Don’t forget to look at some cases that have been resolved by the Labour Relations Commission and the Labour Court.

For example: Is this a case of a change in work practice?

And finally, another example of an organisation not taking data protection seriously. I’m sure Newcastle and Ireland keeper, Shay Given,  would agree.

Keep up to date with all the daily business news on Down to Business.


11 Responses to “This Week”

  1. 1 carlossera October 2, 2008 at 10:21 pm

    Your article is very accurate summary. This week has been pretty darn interesting so far, and we still have tomorrow. It reminds me of when I was a greenhorn back in October of ’87. If you want to read something truly unexpected, read my blog “An Unexpected Tale.” You may enjoy it.

  2. 2 Mr. Hannon October 3, 2008 at 7:46 pm

    Answer the following question:

    What effect will the above guarantee have the Irish operations of UK and foreign banks here?

  3. 3 Nigel N October 6, 2008 at 11:07 am

    The guarentee could have a serious effect on the UK and foreign banks in Ireland. With the government guaranting that the Irish banks are safe it means that people with money in UK and foreign banks will take it out and put it into Irish banks because they know that it is safe because they won’t close down with Irish Govt. guarentee. However, the UK and foreign banks are not entirely safe in Ireland because the Govt. will only back up Irish banks.

  4. 4 jake October 6, 2008 at 5:37 pm

    Members of UK and foreign banks may take their money out and put it into 1 of the 6 Irish banks that have the guarentee. This may mean more business for the 6 Irish banks and less business for the UK and foreign banks. So this could be a possible effect of the guarentee.

  5. 5 Danny K October 6, 2008 at 6:08 pm

    The guarentee will have a huge effect on the uk and foreign banks in Ireland.This is because people who have money in the non irish banks will redraw their money and lodge it into one of the irish banks because they know that even if the bank goes bankrupt they will get all their money back.They do not have this guarentee with the non irish banks!!

  6. 6 Daragh October 6, 2008 at 8:35 pm

    The uk and foreign banks in Ireland wouldnt be happy with the decision made by the irish government.

    what i belive will happen over the next year or so is that people will start putting their money where they think its safe (IE) the six banks in ireland covered under the guarentee.
    as a result of this there will be a lot less business for the uk and foreign banks in ireland, profits will drop and these banks will find it hard to get loans from other banks as they would be seen as risky.
    In the long term i belive their will be just a few huge banks in ireland who will take all of the irish business, and a lot of the uk or foreign banks in ireland will go bankrupt or be pushed out of ireland due to lack of business

  7. 7 David October 6, 2008 at 8:39 pm

    This may result in people moving thier money from foriegn owned banks into one of the 6 Irish owned banks who benefit from the governments guarantee. However, I think that only people with large amounts of savings in their account will transfer their money to the Irish banks as the British government gaurantee up to £50,000 deposits

  8. 8 Des October 6, 2008 at 8:59 pm

    This guarantee is likely to have a bad effect on the Irish operation of Uk and foreign banks due to the Irish government guaranteeing the safety of peoples money in the 6 Irish banks, causing customers to put their money in these banks instead of the Uk and foreign banks which operate in Ireland. It could even lead to the end of some of the foreign banks operations’ in Ireland.

  9. 9 Mark October 6, 2008 at 10:07 pm

    This will be a great disadvantage to UK and foreign banks. Now that the safety of the six Irish banks has been guaranteed, those who have money lodged in UK and foreign banks will look to withdraw their money and place it in one of the six Irish banks as they are guaranteed to get their money back if the bank goes bankrupt.

  10. 10 Donal G October 6, 2008 at 10:34 pm

    i think people that have money in non irish banks in ireland will take there money and put it in 1 or the six that is covered,these non irish banks may loose alot of money ireland,BUT WHO WOULDNT CHANGE TO A BANK THAT IS COVERED BY THE IRISH GOVERNMENT.i think non irish banks will do badly for the next bad economic growth years.

  11. 11 shanereilly October 7, 2008 at 11:49 pm

    Once again I’d question the credibility of the Shay Given article, even though I saw it in other tabloid papers.

    Did this article feature in any broadsheet?

    I mean, who orders a mini-statement and dosen’t look at it until they get home? Am I right in saying that mini-statements don’t have your name on them?

    “I think maybe Shay’s statement must have been left lying around on the printer and when they went to print mine out, they got mixed up.”

    Why would his mini-statement be lying around on a cashiers desk, the only reason it would be there is if he went in and ordered one in which case he would have taken it himself. There is also the fact that neither party made any comment on the alleged incident.

    Maybe I’m wrong but the whole story seems a bit far-fetched.

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