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Ireland Beginning To Feel The Pain From Lagging I R Hikes


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http://uk.biz.yahoo.com/061018/323/gp2ut.html

Wednesday October 18, 08:47 AM
Irish Central Bank's Hurley says rate rises starting to cool housing market
PARIS (AFX) - Irish Central Bank governor John Hurley said rising European Central Bank interest rates are starting to cool the booming Irish housing market, but economic growth in the country will remain robust for at least the next few years.
'What we are beginning to see are tentative signs coming from housing indicators and from anecdotal evidence of maybe the
lagged effect of the increase in interest rates,
' Hurley said in an interview with the Financial Times.
Hurley is a member of the ECB's rate-setting governing council.

Slowly, almost imperceptibly, the madness comes to a close to be followed by a correction commensurate with the degree that prices have strayed from the fundamentals. Soft landing? Dream on....................... :o

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yes , funny how for years the Irish economy has been running out of sync with the larger Eurozone economies....

Eurozone IRs have been low because of the sluggish Franco-German economy while Ireland boomed....so HPs have gone to crazy levels....What will happen if France and Germany pick up as Ireland's economy slows?...Higher IRs combined with an slowdown will decimate their housing market....

They joined the Euro because at the time the Irish , understandbly, embraced all things European....but the Euro hasnt worked IMO..... Spain will be the first country to leave it i think

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They joined the Euro because at the time the Irish , understandbly, embraced all things European....but the Euro hasnt worked IMO..... Spain will be the first country to leave it i think

Most bets are on Italy being the first one to have to leave. I can't remember what the actual cause would be.

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Most bets are on Italy being the first one to have to leave. I can't remember what the actual cause would be.

they've been becoming more and more uncompetitive as they refuse to trim their public expenditures and everyones been getting nice big pay rises, assuming the ECB will bail them out if necessary. Unfortunately....

http://www.nasdaq.com/aspxcontent/NewsStor...NLINE000641.htm

The European Central Bank won't act as a lender of last resort if faced with a sovereign financial crisis within the euro zone, ECB governing council member Christian Noyer said Tuesday.

"The market seems to believe that there will be a bailing out" of euro-zone countries that get into financial difficulties after living above their means, Noyer said.

"That simply cannot happen, and will not happen," he added in an interview with Dow Jones Newswires. "The ECB won't accept as collateral the public debt of any country that is downgraded to non-investment grade, even to BBB."

Banks regularly borrow money from the ECB by bidding at weekly refinancing auctions run by the central bank. Those loans are backed by the securities - including sovereign bonds - which banks deposit with the ECB.

So a government whose bonds were no longer accepted as collateral by the ECB would find that demand for its debt would shrink, increasing the interest rate it would have to pay in order to borrow.

Italy appears to be the major euro-zone borrower that is most at risk of having its credit rating downgraded to the point where its bonds would no longer be accepted by the ECB as collateral.

Credit rating agencies Standard & Poor's and Fitch Ratings are mulling a downgrade in Italy's credit rating. Standard & Poor's is expected to publish its conclusions on Italy's budget situation by the end of this month, and will be paying particular attention to efforts by the government to eliminate structural factors contributing to the country's chronic deficit.

But even then Italy's rating would remain two notches above the A- minimum set by the ECB, and only a continued inability to bring the public sector debt down to sustainable levels would likely lead to the further downgrades that would be required to place Italy's rating in the BBB category.

Noyer wasn't referring to any specific euro zone country, and his message to existing and prospective euro zone member countries is that that the ECB won't come to their rescue if lax fiscal policies push up their debt burdens to intolerable levels.

Fixed income analysts say that despite the likelihood that the Italian deficit will be cut by about EUR15 billion in 2007, the lack of structural spending measures is likely to result in a one notch sovereign credit downgrade from AA- to A+ this year.

"The threat of a downgrade has been well flagged for a couple of months and has been priced in," said Orlando Green, fixed income strategist at Calyon. "An effective downgrade won't have much of an impact on Italian government bonds. Whether or not the spending cut measures materialize next year is the real issue for bonds."

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yes , funny how for years the Irish economy has been running out of sync with the larger Eurozone economies....

Eurozone IRs have been low because of the sluggish Franco-German economy while Ireland boomed....so HPs have gone to crazy levels....What will happen if France and Germany pick up as Ireland's economy slows?...Higher IRs combined with an slowdown will decimate their housing market....

They joined the Euro because at the time the Irish , understandbly, embraced all things European....but the Euro hasnt worked IMO..... Spain will be the first country to leave it i think

Remember the Irish economy was built on EU subsidies. Its a small country and has received a lot of money.

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.What will happen if France and Germany pick up as Ireland's economy slows?...Higher IRs combined with an slowdown will decimate their housing market....

But if the higher IRs are compensated by increased business from a resurgent France and Germany the economy will level off, not crash.

Most bets are on Italy being the first one to have to leave. I can't remember what the actual cause would be.

Italy could be the first to leave because it is a sh1thole where corruption is the norm.

(I hate Italy and the Italians btw - the 'Allo 'Allo character of the Italian general is exactly right)

Remember the Irish economy was built on EU subsidies. Its a small country and has received a lot of money.

The Irish economy was built in the digital telephone infrastructure put in place in the 1980 and early 1990s - way before any other country in Europe could manage it.

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