Jump to content
House Price Crash Forum
Sign in to follow this  
GreenWarwick

Ireland's Nuclear Option...

Recommended Posts

Excellent article today by Prof Morgan Kelly who accurately forecast what house house price inflation would do to the country. Well worth reading, in the UK context as well.

Sadly, no political party in Ireland would have the nerve to do what he suggests. Will the British establishment behave any differently come the financial denouement that Jonathan Davis et al are forecasting?

"Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average.(Minister for Finance) Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are."

......"However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost."

Full article at: http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

Share this post


Link to post
Share on other sites

Well done to Professor Kelly for putting such views openly in the Irish Times. The better economists/bloggers have been suggesting such a move for some time now. I looked up where I remembered reading this sort of thing and it was back on April 18th.

Ireland’s Housing Market

On Friday there was an auction of 84 properties at the Shelbourne Hotel in Dublin. I understand that Jagdip Singh who follows such matters closely feels that the prices achieved were 60% below the peak. The reason why this echoed in my mind is that a house price fall of 60% was the adverse scenario that Ireland’ s banking stress tests assumed less than 3 weeks ago. In some areas at least adverse is already here.

Whisper it quietly but if a country was to default and start again the biggest potential gains would be found in Ireland if it cut much of its banking sector adrift….

http://t.co/b6qQXy3

Mind you I notice in the comments section of the latest article that it appears that Ireland may at last get a reduction in the interest-rate charged to it for the bailout...

Share this post


Link to post
Share on other sites

......"However, our current slump is not temporary: Ireland bet everything that house prices would rise forever, and lost."

It beggars belief that anybody in power could believe this or let it happen.

Share this post


Link to post
Share on other sites

Why didn't the Irish vote for Sien Fein?

The only way to sort this out is default. The sooner it comes, the better for everyone.

Who (within Ireland) would suffer from a default?

  1. The banks.

  2. Property developers would go bankrupt.

  3. If the banks go down, the sizeable portion of the boomer generation currently jetting round the world would suddenly be living in poverty.

  4. All the fools who "invested" in property would see their dreams shattered.

Items 1 and 2 have the power of the "brown envelope".

Items 3 and 4 have the power of the ballot box.

Can't see Ireland defaulting until the number of desperately poor people is greater than all the VI groups listed above.

Share this post


Link to post
Share on other sites

Who (within Ireland) would suffer from a default?

  1. The banks.

  2. Property developers would go bankrupt.

  3. If the banks go down, the sizeable portion of the boomer generation currently jetting round the world would suddenly be living in poverty.

  4. All the fools who "invested" in property would see their dreams shattered.

Items 1 and 2 have the power of the "brown envelope".

Items 3 and 4 have the power of the ballot box.

Can't see Ireland defaulting until the number of desperately poor people is greater than all the VI groups listed above.

Everybody in Ireland would suffer apart from the current politicians. Look at Iceland the unemployment rate went ballistic and they had to introduce mass soup kitchens.

Ireland would immediately have to balance the budgets overnight and that would mean all public sector sector wages reduced massively, health spending only for emergencies, welfare slashed and income taxes and corp taxes raised substantially. Then there would be mass repos of housing stock because vulture investors would buy up the mortgage loan books of the Irish banks and then repo like crazy or forcing people to use savings (if they had any left to pay of chunks of the mortgage).

Deafult may sound ok but as ever it would be the average man in the street that took the largest hit.

Share this post


Link to post
Share on other sites

Sinn Fein have proven themselves to be economically illiterate in the past. If one of the mainstream parties had advocated default, there may have been a viable alternative at the last election. Instead it was Hobbes Choice of the people who bankrupted the country versus the people who cheered them on as they did it.

My place, outskirts of Dublin, good transport links etc is down 60% from peak. I'd hate to think what houses in the "commuter belt" of Wicklow & Meath are fetching.

I think most people are trying to tough it out and hope for some sort of recovery. The banks are getting desperate (PTSB is offering a 10% bonus to all lump sums paid off on the loss-making trackers).

Share this post


Link to post
Share on other sites

Everybody in Ireland would suffer apart from the current politicians. Look at Iceland the unemployment rate went ballistic and they had to introduce mass soup kitchens.

Ireland would immediately have to balance the budgets overnight and that would mean all public sector sector wages reduced massively, health spending only for emergencies, welfare slashed and income taxes and corp taxes raised substantially. Then there would be mass repos of housing stock because vulture investors would buy up the mortgage loan books of the Irish banks and then repo like crazy or forcing people to use savings (if they had any left to pay of chunks of the mortgage).

Deafult may sound ok but as ever it would be the average man in the street that took the largest hit.

Isn't Iceland recovering now?

Only the high paying banking jobs don't rake in what they used to. Where is the problem?

Are you sure it is Sinn Fein, that are the economically illiterate ones?

Share this post


Link to post
Share on other sites

Only the high paying banking jobs don't rake in what they used to. Where is the problem?

Oddly .. I read (in the Independent I think) that although wages in Ireland have fallen 15-20% over the last couple of years wages in the financial sector have risen 2.8% ..

So that's Ok then ..

Share this post


Link to post
Share on other sites

I didn't realise Tim Geithner was Treasury Secretary of Ireland too, I thought Ireland was a sovereign nation.

Share this post


Link to post
Share on other sites

I didn't realise Tim Geithner was Treasury Secretary of Ireland too, I thought Ireland was a sovereign nation.

This was one of the main points of the article. It states that the IMF delegation were very surprised that the head of the Irish Central bank and other Irish officials did not fight for the best interests of Ireland but instead took the side of the ECB and the EU. It turns out that when joining the Euro the head of the Irish Central bank actually works for Trichet not the Irish people. Hence he sold the Irish people down the river and took Trichets side which was to protect German and French bankers at the expense of the Irish people.

Share this post


Link to post
Share on other sites

Isn't Iceland recovering now?

Only the high paying banking jobs don't rake in what they used to. Where is the problem?

Are you sure it is Sinn Fein, that are the economically illiterate ones?

I think Ireland should default. but I was repsonding to a previous post that implied only bankers would be hit, whereas it will be the whole country.

Share this post


Link to post
Share on other sites

I suspect quietly an awful lot of people have decided not to pay their mortgages in Ireland right now.

Still carries jail time in eire.

Share this post


Link to post
Share on other sites

Why didn't the Irish vote for Sien Fein?

The only way to sort this out is default. The sooner it comes, the better for everyone.

Sien Fein won't default.

Al Queda won't default.

Hamas won't default.

Injin and his chums won't default.

They all talk high and mighty but when the time comes... they all won't default! :lol:

Share this post


Link to post
Share on other sites

This was one of the main points of the article. It states that the IMF delegation were very surprised that the head of the Irish Central bank and other Irish officials did not fight for the best interests of Ireland but instead took the side of the ECB and the EU. It turns out that when joining the Euro the head of the Irish Central bank actually works for Trichet not the Irish people. Hence he sold the Irish people down the river and took Trichets side which was to protect German and French bankers at the expense of the Irish people.

It's not the Irish Central Bank's job to issue sovereign debt and collect taxes. The buck stops with Ireland's politicians, it was their decision to guarantee the banks and their decision to ask for the bailout. I'm sure plenty of people were bullying them, but in the end it was their call to make.

Share this post


Link to post
Share on other sites

It's not the Irish Central Bank's job to issue sovereign debt and collect taxes. The buck stops with Ireland's politicians, it was their decision to guarantee the banks and their decision to ask for the bailout. I'm sure plenty of people were bullying them, but in the end it was their call to make.

I think you will find that your assumption written here is dead wrong. Do your research.

From 1:30, to start it off.

Edited by cashinmattress

Share this post


Link to post
Share on other sites

I think you will find that your assumption written here is dead wrong. Do your research.

There is no constitutional mechanism by which any EU institution could prevent the Irish from holding a general election. Even if somebody at the EU said that, it's just not true.

And more generally, there is no fiscal union in the EU. That means Irish politicians are 100% responsible for any fiscal decisions they take, including handing out taxpayer guarantees to banks and asking for their own government to be bailed out. Even if the EU/ECB/USA/IMF completely disagree, nobody can stop Ireland defaulting on its debts if that's what it decides to do.

Share this post


Link to post
Share on other sites

Oddly .. I read (in the Independent I think) that although wages in Ireland have fallen 15-20% over the last couple of years wages in the financial sector have risen 2.8% ..

So that's Ok then ..

I was talking about Iceland. Bankers wages would have fallen in Ireland if they had done the same there.

Share this post


Link to post
Share on other sites

It's not the Irish Central Bank's job to issue sovereign debt and collect taxes. The buck stops with Ireland's politicians, it was their decision to guarantee the banks and their decision to ask for the bailout. I'm sure plenty of people were bullying them, but in the end it was their call to make.

Read the article. I do not understand why you raise sovereign debt or tax collection that has nothing to do with the point I was making.

The article quite clearly describes a meeting where Lenihen after guaranteeing the banks had decided that they had lied to him about the amount of trouble they were in. At the meeting before the EU/IMF bailout Lenihan proposed that the only way forward from now was haircuts for Irish bank bondholders, in fact almost a complete default of all bank liabilities. The IMF expected this it was par for the course in there experience, George Osbourne supported it. The people against were the chairman of the Irish Central bank, an Irish man doing the ECB's work, The ECB and Geithner.

The point being that the Irish people should expect the head of the IRish Central Bank to work in their interests, he does not he works for the interests of the ECB. Treachery in my book, but what do I know.

Share this post


Link to post
Share on other sites

Read the article. I do not understand why you raise sovereign debt or tax collection that has nothing to do with the point I was making.

The article quite clearly describes a meeting where Lenihen after guaranteeing the banks had decided that they had lied to him about the amount of trouble they were in. At the meeting before the EU/IMF bailout Lenihan proposed that the only way forward from now was haircuts for Irish bank bondholders, in fact almost a complete default of all bank liabilities. The IMF expected this it was par for the course in there experience, George Osbourne supported it. The people against were the chairman of the Irish Central bank, an Irish man doing the ECB's work, The ECB and Geithner.

The point being that the Irish people should expect the head of the IRish Central Bank to work in their interests, he does not he works for the interests of the ECB. Treachery in my book, but what do I know.

Do I detect a bit of ass covering?

Share this post


Link to post
Share on other sites

I was talking about Iceland. Bankers wages would have fallen in Ireland if they had done the same there.

I was in all honesty being quite snarky :)

When I saw those figures I did think how is there not blood on the streets of Dublin ?

Share this post


Link to post
Share on other sites

From the article: "To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise."

Question: why do civil servants in Ireland enjoy salaries twice as much as their European counterparts? :huh:

Share this post


Link to post
Share on other sites

From the article: "To borrow so that senior civil servants like me can continue to enjoy salaries twice as much as our European counterparts makes no sense, macroeconomic or otherwise."

Question: why do civil servants in Ireland enjoy salaries twice as much as their European counterparts? :huh:

Because they feel they are worth it. The feel this because they are paid a lot of money to begin with.

They think if they sieze the effect - high pay - then it means they must also have obtained the cause - productivity and talent.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.