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gruffydd

Irish Economy In Shock Contraction In Second Quarter

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http://www.telegraph.co.uk/finance/economics/8020317/Irish-economy-suffers-shock-contraction-fuels-fears-of-a-double-dip-recession.html

EEEEEEEEEEEEEEEEEEEEEEK

The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.

This followed a rise of 2.2pc in the first quarter - the first gain since 2007.

Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.

Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout.

Ireland's plight, along with earlier figures showing slower European growth, added to concern about the ability of some European nations to pay their debts.

In a flight to safety, bond investors dumped Irish and Portuguese bonds to buy German bunds

The yield on 10-year Irish bonds spiked to 6.3pc and the extra yield investors demanded to hold the debt over German bunds rose 425 basis points to a fresh all-time high.

Portuguese 10-year bills were trading 400 basis points higher than the German benchmark, another record gap.

Bunds are the benchmark of lending safety in the eurozone.

IMF and Irish officials last week dismissed fears of an Irish default or emergency rescue, but the rising interest rates indicate increased jitters among investors about lending to the heavily indebted government.

Edited by gruffydd

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If only it was that simple - the IMF and their printing pals are laying the foundations of economic armageddon. Trouble is, these old men are applying old solutions to new problems. Oh well, I'll enjoy watching...

Ireland's fecked - we're all fecked.

Edited by gruffydd

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On a lighter note, the BBC came out with this gem regarding the contraction.

The Irish Republic's economy shrank by 1.2% in the second quarter of this year, surprising analysts who had expected it to grow.

Which analysts were these exactly? How in the name of God can a bust economy like Ireland's, riven with corruption, where the welfare state pays better than most of the work, GROW?

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On a lighter note, the BBC came out with this gem regarding the contraction.

The Irish Republic's economy shrank by 1.2% in the second quarter of this year, surprising analysts who had expected it to grow.

Which analysts were these exactly? How in the name of God can a bust economy like Ireland's, riven with corruption, where the welfare state pays better than most of the work, GROW?

It doesn't need to actually grow, though, just publish figures that say it is growing. There is obviously not enough corruption. :D

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If only it was that simple - the IMF and their printing pals are laying the foundations of economic armageddon. Trouble is, these old men are applying old solutions to new problems. Oh well, I'll enjoy watching...

Ireland's fecked - we're all fecked.

TO be fair, the old solutions never worked, either.

The 'traditional' economic raids are getting closer to home..

Step 1: Lend plenty of easy money to a given country

Step 2: If required, hand out plenty of bungs to make sure the money is borrowed.

Step 3: Call in the loans. Act surprised that they can't be paid back.

Step 4: Force the government of the day into a program of union-bashing, austerity and privatisation. Act surprised at the riots in the streets by people who clearly don't understand economics.

Step 5: Acquire assorted assets (Electric utils, water utils, mining companies, etc) in rushed, emergency privatisations at knock down prices.

Step 6: RInse and repeat on another country.

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TO be fair, the old solutions never worked, either.

The 'traditional' economic raids are getting closer to home..

Step 1: Lend plenty of easy money to a given country

Step 2: If required, hand out plenty of bungs to make sure the money is borrowed.

Step 3: Call in the loans. Act surprised that they can't be paid back.

Step 4: Force the government of the day into a program of union-bashing, austerity and privatisation. Act surprised at the riots in the streets by people who clearly don't understand economics.

Step 5: Acquire assorted assets (Electric utils, water utils, mining companies, etc) in rushed, emergency privatisations at knock down prices.

Step 6: RInse and repeat on another country.

Sure thing! Yet they were in some kind of control of the situation. Now the situation is in control of them - they are always a step or two behind and the consequences will be unintended!

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would be interesting to see how the GDP is split up.

did private sector investment fall 1.2%?

or is that steady.

Is the 1.2% entirely down to Public sector investment reducing?

If the latter, then the entire reduction of GDP is a cause for celebration..the cure is working.

Markets should be rising, rates should be falling...but of course, the MSM wont want that, hooked on the headline.

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Looks like Spain and Greece with the strikes and riots are already at step 4.....

When will it all kick off in Dublin?

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The yield on 10-year Irish bonds spiked to 6.3pc and the extra yield investors demanded to hold the debt over German bunds rose 425 basis points to a fresh all-time high.

Can someone explain to me, while 10 year bonds are trading at 6.3 pc why the Bank of Ireland is only offereing 2.5 (ish)% on it's savings? Surely, it could borrow more from consumers (The UK Post Office bonds and savings are actually provided by the Bank of Ireland) outside of Ireland for cheaper than on the bond market if it offered attractive rates?

Am I missing something?

Edited by MinceBalls

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The Irish have been debating the lack of any kicking off - many agree that in Irish society any kind of mass 'kick-off' is highly unlikely - it's a very conservative place and the main point people make is everyone's looking over their shoulder the whole time, and getting paranoid about what the local gossips are saying and neighbours are thinking. Of course you have the legacy of people like Jim Larkin, etc., but he seems to have more admirers in Liverpool than Dublin!

I remember being whacked by a granny in Wexford who said I had the look of a trade unionist about me - she gave me a right dressing down (there was a lorry blockade at the time). In fact, I was waiting for the bleedin ferry like she was, but it kind of gave me a taste of what protestors face - granny attack!

Spain and Greece are the homes of anarchism and leftist action - took the CIA to break the Greeks after WW2

Edited by gruffydd

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Looks like Spain and Greece with the strikes and riots are already at step 4.....

When will it all kick off in Dublin?

[/quote

Doubt if it will kick off here in Dublin, at least not for the moment. Irish history is replete with instances where we have been fecked over repeatedly and nothing ever really happens. The independence movement was lead by upper class idealists for the most part, not an angry working or middle class. Many of the under twenty fives are or already have emigrated. Bertie Ahern and his buffons in government bought off the welfare classes by throwing buckets of money at them, which is why ireland still has a very generous welfare state. There is no angry lumpenproleteriat ready to riot. Those who have been fecked over are the poor gullible lower middle class in their late twenties/early thirties who believed the lies of the property pushers. They are conservative with a small c and are just concerned with holding on to what they have. In my own opinion most Irish people think it is inevitable that we will be bailed out either by the ECB or IMFand are sadly resigned to the fact. Hence the recent willingness to sign away our sovereignty under the second Lisbon Treaty. Also, the baby boomers coined it during the property scam and they run the political parties and many of the media outlets. Sadly all this was avoidable as we had a decent export lead economy until the late nineties, when the electorate foolishly elected Ahern, who brilliantly masqueraded as a man of the people while in reality he took the country over in a coup d'etat fot the property pushers.

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Can someone explain to me, while 10 year bonds are trading at 6.3 pc why the Bank of Ireland is only offereing 2.5 (ish)% on it's savings? Surely, it could borrow more from consumers (The UK Post Office bonds and savings are actually provided by the Bank of Ireland) outside of Ireland for cheaper than on the bond market if it offered attractive rates?

Am I missing something?

Bank of Ireland is not a central bank like the BoE, Bank of Ireland is a retail bank so can not offer bonds on behalf of the Irish govt.

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Can someone explain to me, while 10 year bonds are trading at 6.3 pc why the Bank of Ireland is only offereing 2.5 (ish)% on it's savings? Surely, it could borrow more from consumers (The UK Post Office bonds and savings are actually provided by the Bank of Ireland) outside of Ireland for cheaper than on the bond market if it offered attractive rates?

Am I missing something?

Well, the premium over German debt is about 4%. So that is equivalent to a default every 25 times you do this. In practice you are probably more likely to see a restructuring one time in five where you only lose a fifth. Whether this is realistic or not, it is what the market predicts and you can get wealthy if you know any better. The trade you suggest would lose money on average (though would make perfect sense for a moral-hazard seeking institution).

Having said all that, depositing money at 2.5% when the state that guarantees the deposit pays 4% just for its perceived default risk may be somewhat unwise, except maybe if the bank is substantially safer than the state it's in ....

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Looks like Spain and Greece with the strikes and riots are already at step 4.....

When will it all kick off in Dublin?

Never the Irish only rebel against absentee landlords not absentee bondholders.

The truth is that bondholders in the troubled Irish banks like every other class of failing bank bondholder world wide should have been given a number one buzz cut when this crisis struck with most of their holdings being converted to equity.

The ongoing Irish disaster is a template for what happens when the finacial sector is allowed to dictate to the rest of the economy and VI cronyism takes over the political process. Just running constant rounds of austerity spending cuts while not addressing this core issue is one of the reasons why the financial crisis is just going to run and run. The problem the Irish government now face is that their 100 % bail out offer to all and sundry in the financial sector is now having to be funded from a shrinking economy and a rapidly contracting tax base. Worse the figures suggest that despite rounds of cuts they still do not have public sppending under control, presumably because they are having to lob ever increasing sums of taxpayers money to plug the half mile wide holes in their banking system

The only good thing that will come out of this fiaco is that most of the bondholders are going to get screwed sooner or later if only because the governments that they are relying on to bail them out are going to fail just like the banks

Edited by realcrookswearsuits

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On a lighter note, the BBC came out with this gem regarding the contraction.

The Irish Republic's economy shrank by 1.2% in the second quarter of this year, surprising analysts who had expected it to grow.

Which analysts were these exactly? How in the name of God can a bust economy like Ireland's, riven with corruption, where the welfare state pays better than most of the work, GROW?

The problem isn't the welfare state for ordinary people. It's the welfare state for the rich - the bailout to Anglo-Irish Bank which should be allowed to die, die, die.

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Can someone explain to me, while 10 year bonds are trading at 6.3 pc why the Bank of Ireland is only offereing 2.5 (ish)% on it's savings? Surely, it could borrow more from consumers (The UK Post Office bonds and savings are actually provided by the Bank of Ireland) outside of Ireland for cheaper than on the bond market if it offered attractive rates?

Am I missing something?

What is missing in your logic is the irrational arrogance of bankers.

Over the years, the funding desks of banks, governments and supranationals have created complex matrices with respect to retail and wholesale funding spreads and have talked almost religiously about cannabalising (sp?) funding sources. They are arrogant and misguided enough to believe that they control the market and can dictate terms in all conditions.

The rigidity of their funding spreads (by term and lender) leaves them in a position where their funding dries up when they most need it. By the time that many of them realise that their funding needs are so dire that they should through their historical spreads between retail and wholesale out of the window, they are so deep into a liquidity crisis that they end up revealing their insolvency.

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Can someone explain to me, while 10 year bonds are trading at 6.3 pc why the Bank of Ireland is only offereing 2.5 (ish)% on it's savings? Surely, it could borrow more from consumers (The UK Post Office bonds and savings are actually provided by the Bank of Ireland) outside of Ireland for cheaper than on the bond market if it offered attractive rates?

Am I missing something?

Yes. The 10 year bonds are just that - the government takes the money for 10 years and will not pay it back until the years are up. The rate you get on your savings at the banks is for instant-ish access.

If you bought 10 year Irish bank debt, you will get far in excess of 6.3%.

You are free to lend the Allied Irish Bank your euros for a decade and will get a handsome return of 12.5% for your money, twice the tame 6.3% the government pays!

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TO be fair, the old solutions never worked, either.

The 'traditional' economic raids are getting closer to home..

Step 1: Lend plenty of easy money to a given country

Step 2: If required, hand out plenty of bungs to make sure the money is borrowed.

Step 3: Call in the loans. Act surprised that they can't be paid back.

Step 4: Force the government of the day into a program of union-bashing, austerity and privatisation. Act surprised at the riots in the streets by people who clearly don't understand economics.

Step 5: Acquire assorted assets (Electric utils, water utils, mining companies, etc) in rushed, emergency privatisations at knock down prices.

Step 6: RInse and repeat on another country.

+1

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The 'traditional' economic raids are getting closer to home..

Step 1: Lend plenty of easy money to a given country

Step 2: If required, hand out plenty of bungs to make sure the money is borrowed.

Step 3: Call in the loans. Act surprised that they can't be paid back.

Step 4: Force the government of the day into a program of union-bashing, austerity and privatisation. Act surprised at the riots in the streets by people who clearly don't understand economics.

Step 5: Acquire assorted assets (Electric utils, water utils, mining companies, etc) in rushed, emergency privatisations at knock down prices.

Step 6: RInse and repeat on another country.

The IMF are partly funded by the loans they make, so they have a VI in pushing debt. Until the crisis hit they were in danger of going bust as- for some odd reason- the demand for their 'services' was in decline.

The story goes that they experienced far more angst over the downsizing of their own staff than they ever had over the austerity driven mass unemployment their 'solutions' had demanded.

Just another bunch of self serving amoral scumbags.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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