Bernard L. Madoff

Whatever happened to Ireland

80 posts in this topic

What you get when you lend 100% of GDP into an asset bubble and it pops. The Irish govt is now incessantly injecting 10s of billions of Euros into housing and banking to try and stop this runaway train. The trains getting faster and the government is bankrupting itself. Memories of Argentina early 20th century. Rinse...repeat.

Ireland went from getting about 5% of its national income from house building in the 1990s – the usual level for a developed economy – to 15% at the peak of the boom in 2006–2007, with another 6% coming from other construction. In effect, the Irish decided that competitiveness no longer mattered, and that the road to riches lay in selling houses to each other.

However, driving the construction boom was another boom, in bank lending. As Figure 1 shows, back in 1997 when Ireland’s economy really was among the world’s best performing, Irish banks lent sparingly by international standards. Lending to the non-financial private sector was only 60% of GNP, compared with 80% in Britain and most Eurozone economies. The international credit boom saw these economies experience a rapid rise in bank lending, with loans increasing to 100% of GDP on average by 2008.

These rises were dwarfed, however, by Ireland, where bank lending grew to 200% of national income by 2008. Irish banks were lending 40% more in real terms to property developers alone in 2008 than they had been lending to everyone in Ireland in 2000, and 75% more to house buyers.

Read the whole article

http://www.voxeu.org/index.php?q=node/5040

In other Celtic news

Ireland nationalises second-biggest bank Allied Irish

• Allied Irish becomes fourth bank to be nationalised

• Anglo Irish needs at least €7bn more to survive

• News follows huge protests against bank bailouts

http://www.guardian.co.uk/business/2010/sep/30/ireland-banks-bailout-allied-irish

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What you get when you lend 100% of GDP into an asset bubble and it pops. The Irish govt is now incessantly injecting 10s of billions of Euros into housing and banking to try and stop this runaway train. The trains getting faster and the government is bankrupting itself. Memories of Argentina early 20th century. Rinse...repeat.

Read the whole article

http://www.voxeu.org...php?q=node/5040

In other Celtic news

http://www.guardian....ut-allied-irish

i just love this picture

post-191-000242500 1285998156_thumb.jpg

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The situation we will be faced is:

When she goes does our government try and follow the leads of the USA, Ireland, Britain etc and [unsuccesfully so far] try and stop the train with govt funds (your taxes)? I think the Irish situation it amounts to just under 40% of tax revenue.

So...Do nothing and pick up the pieces after? Or, The govt borrows heavily and thinks it can save the show, even tho the Americans, Celts and Brits couldn't?

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think i read that irish bad debt is now equal to total tax income. over/ greece in the euro thread. 8im strill waiting for the gov to throw good money at buying down our dollar value, cant imagine the nightmare if they had to also bail out some banks. either case of bail or no bail its gonna be bad,

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Well, they could legislate NOW with 70% LVRs etc and ease this baby down but that is politically unpalatable when our cocktosser treasurer appears on Sky News every few hours blurting about our solid economic foundations and the strokers at the RBA are bubble deniers.

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The situation we will be faced is:

When she goes does our government try and follow the leads of the USA, Ireland, Britain etc and [unsuccesfully so far] try and stop the train with govt funds (your taxes)? I think the Irish situation it amounts to just under 40% of tax revenue.

So...Do nothing and pick up the pieces after? Or, The govt borrows heavily and thinks it can save the show, even tho the Americans, Celts and Brits couldn't?

At the very least the government should be acting now while they still can to increase the capitalisation of the banks. Ideally our banks go offshore and rope in suckers prepared to sink equity into them now while they still appear sound.

Maybe a 1% increase per annum in required capital over deposit taking for the next 10 years. In 10 years time assuming we can hold out for that long our banks will be very well capitalised indeed and if we hiccup in 3 years than the capital will still offer significantly more protection to the govs guarantee of deposits than it does now. That the gov had to offer this guarantee in teh first instance is in itself proof the capitalisation ration is not high enough at this time!

Shareholders will miss out as banks will have to retain profits for the next few years to achieve this higher level of capital but really isnt this all that the reforms suggested out of G20 summits etc are meant to be achieving and our government rather than embracing them are saying we are different from you blookes I hope you don't expect us to adopt these suggestions? Another point of note in this scenario these equity holders will get exactly half the return on thier investments assuming capital ratio doubles in the good years when their equity was levered up to the very hilt. I say tough sh*t if the gov has to guarantee them than clearly they are not operating under a sound model. This is out opportunity to change things for good, and to let thsi opportuity pass us by would be absolutely daft.

I think there is a second chance here for Australia due to a new found exubarance in Australian bank stocks, an opportunity to change the governments exposure to the banks here once and for all this change importantly cannot be done once sentiment changes, it is then too late. The government would be absolutely daft to let it pass them by and wait till we are bailing our banks out with taxpayer dollars.

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At the very least the government should be acting now while they still can to increase the capitalisation of the banks.

Good idea (along with credit controls via LVR caps).

Ideally our banks go offshore and rope in suckers prepared to sink equity into them now while they still appear sound.

So true, but for how much longer?

I just read this frightening article. These numbers are alarming...

Total foreign bank exposure to Ireland’s economy is $844bn, or five times the value of Ireland’s GDP or economic output. Of that, German and UK banks are Ireland’s biggest creditors, with €206bn and €224bn of exposure respectively.

To put it another way, German and British banks on their own have each extended credit to Ireland greater than Irish GDP. Which doesn’t sound altogether prudent, does it?

http://www.cjr.org/the_audit/crisis_warning_lights_are_blin.php?page=1

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when does the gov guarantee of bank deposits end? i think i need to sort out pulling all my cash :P

The Australian Prime Minister announced on October 12, 2008 that, in response to the Economic crisis of 2008, 100% of all deposits would be protected over the subsequent three year period

oh another year :)

Edited by savagegoose

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when does the gov guarantee of bank deposits end? i think i need to sort out pulling all my cash :P

Be grqateful you have any to pull out! :P

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this won't help the Irish cause, might be the script for Aussie banks too?

Anglo Irish bailout: Savers should protect themselves

Savers with money in Irish banks are covered by a 100% guarantee until the end of the year, but should seek a safer haven for their cash after that

...

The Irish government has long claimed that customers with savings in all of Ireland's major banks are safe. It extended a 100% deposit guarantee to all Irish-owned financial institutions in 2008 until 29 September 2010, and this has recently been extended to the end of the year. But panicked savers have continued to withdraw their cash – in the first half of this year customer deposits fell by more than €5bn to €23.1bn.

Once the state removes the 100% deposit guarantee the level of protection will drop to €100,000 per customer per institution under the Irish Deposit Guarantee Scheme – but up to a third of deposits in the Irish banks are estimated to exceed this threshold.

Andrew Hagger of Moneynet.co.uk says: "Savers who have fixed-rate bonds with Anglo Irish Bank or other Irish banking groups will just have to wait for them to expire. When they do, especially if this is after 31 December when the 100% government protection is scheduled to end [depending on when savers took their bonds out – check with your provider], and especially if they have savings worth more than €100,000 in any one group, customers might want to spread their cash around to be safe. No one is saying the banks will go under, but then no one thought Icesave would go bust."

...

so almost 18% of their bank deposits have walked in the last 6 months? :fear:

more here: http://www.guardian....vers-protection

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but will we see a flight from deposits in the lead up to the 3 year mark that ends the guarantee, will that be the signal that leads to higher interest rates here?

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but will we see a flight from deposits in the lead up to the 3 year mark that ends the guarantee, will that be the signal that leads to higher interest rates here?

That would be the logical conclusion - reward is a function of risk!

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Do you think the Irish might try to flee the couinry? As in emigrate wherever possible? Or does it boil down to having a huge housing loan around your neck and there's no way out of having to repay it -- you can't really emigrate anywhere and skip out because there's no suitable countries who are taking people in the downturn due to unemployment problems everywhere -- with the exception of Oz, perhaps -- they are clamping down now, but a year ago would have welcomed Irish immigrants with any bare skills with open arms...

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Do you think the Irish might try to flee the couinry? As in emigrate wherever possible? Or does it boil down to having a huge housing loan around your neck and there's no way out of having to repay it -- you can't really emigrate anywhere and skip out because there's no suitable countries who are taking people in the downturn due to unemployment problems everywhere -- with the exception of Oz, perhaps -- they are clamping down now, but a year ago would have welcomed Irish immigrants with any bare skills with open arms...

Well the irish have traditionally buggered off when trouble has occurred in the past so I don't see this episode being any different historically. Won't be long before their are hoards of Irish arriving on boats and stinking the place up, complaining about the guinness here and bitching that the place is not a patch on the old country. We're all gonna have to laugh politely at their jokes and every second barman will be a paddy... :o

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Do you think the Irish might try to flee the couinry? As in emigrate wherever possible? Or does it boil down to having a huge housing loan around your neck and there's no way out of having to repay it -- you can't really emigrate anywhere and skip out because there's no suitable countries who are taking people in the downturn due to unemployment problems everywhere -- with the exception of Oz, perhaps -- they are clamping down now, but a year ago would have welcomed Irish immigrants with any bare skills with open arms...

In Perth the Irish are coming in solid numbers. They are bloody good value with similar education standards to our own but a much harder upbringing it would seem which seems to give them less of an entitlement syndrome. Australia would do well to welome them, it is just important we bloody well build something to show for this greater capacity!

I am not seeing the SA's or UK emigrants this year as we did early last year but lots of Irish.

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Had lunch at the Marina on Friday with some colleagues (steak, chips, salad and beer for $10!!) the backpaper (blonde, blue eyed, and THE body) babe doing the tables was an Irish lass from Dublin with a Law/Commerce degree from the prestigious Trinity College and she doesn't want to go back and is looking at a legal career here because as she said (excusing herself) "its joost blooody foocked".

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Had lunch at the Marina on Friday with some colleagues (steak, chips, salad and beer for $10!!) the backpaper (blonde, blue eyed, and THE body) babe doing the tables was an Irish lass from Dublin with a Law/Commerce degree from the prestigious Trinity College and she doesn't want to go back and is looking at a legal career here because as she said (excusing herself) "its joost blooody foocked".

I love the accent TP!

Perfect rendition.

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I love the accent TP!

Perfect rendition.

Hehehe

Except she was just gorgeous and perfectly spoken, as I'd expect with her CV with that tantalising lilt...until I'd brought up the Irish economic woes and the outbreak of invective was spectacular. The more I brought up property speculation the fouler it became. I suspect family are underwater in Ireland.

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Do you think the Irish might try to flee the couinry? As in emigrate wherever possible? Or does it boil down to having a huge housing loan around your neck and there's no way out of having to repay it -- you can't really emigrate anywhere and skip out because there's no suitable countries who are taking people in the downturn due to unemployment problems everywhere -- with the exception of Oz, perhaps -- they are clamping down now, but a year ago would have welcomed Irish immigrants with any bare skills with open arms...

It's happening right now, plenty of young Irish folk here working, even a working holiday here is a better prospect than staying there from what I understand. Some will return home but many will stay.

Despite all the lip service and of course an immigration system fed by non-english speaking international students, I'm pretty convinced Australia still makes it easier for english speaking white people.

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Whilst there may be plenty of young Irish/brits wishing to come here, as per bernies anecdote, they aren't exactly cashed up and here to prop up our housing market, especially now with a stronger dollar. The migration rules strongly favour the under 30s, who like here, typically haven't accumulated much in the way of assets.

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My dad is irish (with a name like Eamonn i get confused for being Irish as well! - I was born here however!)

I'll teach you how to speak irish:

Whale

Oil

Beef

Hocked

:)

It is quite bad over there at the moment, however at least their bubble has popped and they are rebuilding.

From other countries examples i shudder to think what will happen with us!

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The Irish Times - Monday, November 8, 2010

If you thought the bank bailout was bad, wait until the mortgage defaults hit home

Ireland is effectively insolvent – the next crisis will be mass home mortgage default, writes MORGAN KELLY

http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

Apparently the Irish are still paying their mortgages even though they are under water.

“A new sovereign bond crisis is upon us,” said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., in a note to clients. “Defaults on sovereign debts of Greece and Ireland — and a potential failure of the banking sector in Ireland are widely expected. The consequence would likely be another financial crisis on the same scale as the Lehman Brothers failure.”

http://www.marketwatch.com/story/greece-dodges-bullet-but-sovereign-jitters-remain-2010-11-08

What happens when Alison realises she is pushing a turd up a hill paying off 520k on 190K (or less) "asset"? She realises that throwing the keys at the bank and declaring bankruptcy is less pain?

LAST Thursday morning when I saw the words “A docklands deal” on the front page of this property section, I felt like crying.

All day I eyed the block in question from my fifth-floor apartment window, in the next- door building on Hanover Street.

If there was a competition for throwing dirty looks, I would easily have come first, for those aesthetically beautiful Grand Canal Square apartments are being offered to first-time buyers for a sickening €190,000.

Two years ago, with help from my parents, I bought into the same sought-after riverside location in Dublin 2, but for the horrifying sum of €525,000.

http://www.irishtimes.com/newspaper/property/2010/1014/1224281058402.html

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Absolutely, there is no debtors prison in Ireland so unless she has the capicity to earn 100,000 quid a year or more you would just cop the 5 years in the sin bin wouldn't you?

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Absolutely, there is no debtors prison in Ireland so unless she has the capicity to earn 100,000 quid a year or more you would just cop the 5 years in the sin bin wouldn't you?

Yep. If its good for corporates why not?

Hell, you aren't locked up you just can't get credit for a few years...big deal. As someone who has no debt except mortgage and only uses a CC to gain FF points (auto swept clear ever month) I'd look at is a no brainer. Lets see - pay off 500K for decades on a falling anvil worth 190K or less OR just walk and rent/board for 5 years.

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