Mortgage Arrears Data

The latest set of mortgage arrears data has been released by the Financial Regulator.  There are now 8.1% of mortgages in arrears of 90 days or more. 

There have been some suggestions that there is an increased number of “won’t pay” as opposed to “can’t pay” borrowers in the recent increase because of the debate about debt forgiveness and bankruptcy last August and September.  If someone decided not to pay at this time it is unlikely that they would have been 90 days in arrears when the data were collected. 

Most of the current quarterly increase is still likely to be as a result of those in the “can’t pay” category.  This may be different in subsequent updates.  Any change in bankruptcy law is not going to make provision for someone to be declared bankrupt because they won’t pay their debts.

74 thoughts on “Mortgage Arrears Data”

  1. The release and the media tend to focus on the fraction of mortgages that are in arrears. It looks even worse if you look at the mortgage balances. Mortgages in arrears accounted for 10.8 percent of all mortgage balances in September, up from 9.4 percent in June.

    Also, the big increase in the data was in the category of people who are over 180 days in arrears. These people were in arrears long before the public discussion about mortgage debt relief in August.

    It looks like a process in which there is a steady inflow into the arrears category with a limited amount of “self-curing” going on. Unemployment may have stabilised but the worry would be that, at this rate of unemployment, we are going to see a continuing steady inflow.

  2. If unemployment is 15% what % of arrears would be expected? I thought a good chunk of those unemployed were under 30 and unlikely to have a mortgage. Is much known about the group of people in arrears who are still working ?

  3. Karl is right. 10.8% is the figure that should be quoted.

    These stats seem to relate to Owner Occupied property. Note 2:
    “2. Residential Mortgage Loan Account:
    Means an account which records loans to individuals for house or apartment purchase, renovation, improvement or own construction of housing fully or completely secured by a mortgage on the residential property which is or will be occupied by the borrower as his/her principal private residence. “Top up” of existing mortgages and re-mortgages should also be recorded in this category. Mortgages secured on properties located in the State only should be included.”

    So what do the Buy-to-let numbers look like.

    I mightn’t be popular to say, but the arrears stats are made worse by banks not completing workouts i.e. there’s a flow in, but no flow out.

  4. http://www.centralbank.ie/press-area/press-releases/Documents/Trend%20Data%20end%20Sept%202011.pdf

    This link give a better comparative view of the quarters.
    Karl Whelan’s focus on mortgage balance in addition to numbers is very relevant in this regard.

    The number of mortgages in arrears has increases as follows over the past 4 quarters.
    Quarter No % in Arrears Value % in arrears
    Dec 2010 5.7% 7.4%
    Mar 2011 6.3% 8.3%
    June 2011 7.2% 9.4%
    Sept 2011 8.1% 10.8%

  5. “Buy-to-let” is a euphemism (especially if the property can’t be let). “Second home” is better . If the banks have a problem with arrears on second homes the issue looks different.

  6. Assuming unemployment is stabilising (emigration and further training/education may be feeding the perception that no more jobs are being shed) the outlook for those over forty finding employment in time is still bleak – not just by way of age, but family, health, welfare trap, etc play a role. Let’s assume for the sake of argument that most of those purchasing owner occupied houses between 02 and 07 were 30 years old. Anyone in that category is now shading under forty and if they are out of work the prospects are not sanguine. Of course a percentage of these would have entered permanent PS employment. Be interested Karl on you thoughts on this. But it seems that for some years to come, the situation can only disimprove.

    The second point, and one likely to be overlooked in shock of the figures, are the implications for property sales and credit. The country is awash with property, but claims that it could become awash with mortgage default do not look excessively exaggerated. In this situation credit will tighten up even more, as if that is possible. Property prices will fall even further. Business investment will shrink even more.

    Switching to anecdote mode, when I am back in Ireland I spent a deal of my time checking meat prices in supermarkets. This time I have been struck, more than other times, at the number of shoppers who seem stressed and irritable, harried looking. Several times I have overheard a mother tell her son or daughter that she just didn’t have the money for something or other. Sorry for going off topic but beneath the figures there are real people.

  7. @Ahura Mazda & Karl Whelan
    I’m not so sure. For me ““Top up” of existing mortgages and re-mortgages should also be recorded in this category.” is significant – a single household with multiple mortgages.

    We know there was a lot of equity release either for consumption spending or for speculation on property. Top-ups accounted for the largest single category of mortgage issuance during the bubble – around 30% during the peak madness years.

    I think arrears as a proportion of households with mortgages would be the best (only?) figure that would give the social dimension.

  8. @Ahura Mazda
    “I mightn’t be popular to say, but the arrears stats are made worse by banks not completing workouts i.e. there’s a flow in, but no flow out.”
    And even when there is a workout, banks are hoarding inventory – we now have to factor in shadow REO (with no geographical breakdown) when trying to figure out available for sale supply.

  9. @hoganmahew

    No wonder rents are rising again (per last Daft report). We need to force residential rents down in order to make renting more attractive. Most of the Bull McCabe mentality in this country is gone but rents are still too high to make renting a no-brainer for people with underwater mortgages.

  10. @ Hoganmahew

    Re: “I’m not so sure. For me ““Top up” of existing mortgages and re-mortgages should also be recorded in this category.” is significant – a single household with multiple mortgages.”

    I see what you’re getting at – proportion of distressed households. What I tend to use is proportion of distressed debt.

    Re: Bank workouts. Given our recent realisation of German oversight, here’s some German foreclosure stats:
    http://www.immobilien-versteigerungen.de/statistik_zwangsversteigerung_2010.116.html

  11. In future banks should have to disclose aggregate ‘mortgagee capital’ figures, as well as relating them to the quantum of mortgages per mortgagee

    So I’m thinking these are relevant to ‘mortgage capital’ :
    – value of other unencumbered assets
    – a ‘human capital score’…keeping it simple, would suggest past average earnings, age, years experience and educational level

    Also more detailed information about the mortgages should be revealed:
    – LTV ratio,+ date when V was calculated
    – property asset class info (based on nationally agreed categories, likely location, property purpose and size)

    All of this data would be very useful for regulators, and more importantly investors in assessing the health of the bank.

    As a barbed aside….such info would be very useful to the mgmt/directors of the bank also, were they to have it, or know what to do with it.

    The time for these reforms is now, and they would vastly diminish chances of another bubble, and allow investors much more confidence in the banks. Fact is banks are complex entities, and need to release more data in order to be properly funded,valued and regulated.

  12. Does these figures include people who have negotiated a change of terms with their bank? e.g extending the maturity or moving to interest only for a period.

  13. Sorry. I only just took the time to open the link in the opening post after making my comment which is lazy of me. I can see that arrears and restructured mortgages are treated separately in the central bank statement although there is considerable overlap.

    Oddly there are €12.3bn mortgages in arrears but only €6.3bn of the restructured mortgages are in arrears. So €6bn are in arrears but have not yet agreed a restructuring with their bank if I am interpreting that correctly.

  14. @ Desmond

    Ireland is nowhere near having the infrastructure required to ensure “never again” for the banks . Here is one key missing component :

    http://www.iput.ie/uploads/documents/news/SCS_article_in_The_Irish_Times.pdf

    “The Society of Chartered Surveyors has been calling for the establishment of a public database to maintain and publish relevant details of all property transactions including sales, lettings and rent reviews along with details of all incentives and side agreements which would address the issues raised.
    Such a database is vital for a fully transparent commercial rent review process. The need is now more pressing and a report published in July 2010 of a working group established by the Minister for Justice concluded such a database would provide transparency, help raise confidence in the rent review process and assist in fixing rents which would be demonstrably consistent with true market values for comparable properties.
    The database is also capable of delivering fundamental improvements to the commercial banking sector.
    The valuations, which are an essential part of loan and banking decisions for transactions, would be more reliable because they would be founded on accurate up-to-date information. If all those involved in property transactions have access to such information, then better quality projections can be made, leading to improved decisions. This could be a major plank in developing key elements of a programme of economic recovery and the restoration of credibility for Ireland.”

  15. @Seafóid
    Our conveyancing system is 19th century…and Law Society kiboshed 2005 eConveyancing report.

    It would take courage to bring in any of what you or I suggest…and recall what Sir Humphrey says about courage in Yes Minister 😉

  16. @Ahura Mazda
    “I see what you’re getting at – proportion of distressed households. What I tend to use is proportion of distressed debt.”
    Yeah, it depends on what you are trying to measure really.

    Proportion of debt that is distressed will give some idea about the state of the banks (and maybe aggregate demand?).

    The proportion of mortgages issued in distress probably says something about what future bank margins/LTVs are going to be like.

    Proportion of households with mortgages in distress is, as I say, the ‘social’ indicator – my guess is that’s the one that interests politicians. The ‘wheresmyNAMA’ camp tend to conflate all the numbers together picking the highest one to suit their case. The ‘itsquiteasmallproblem’ camp do the opposite…

  17. @ Desmond

    As a start how about putting together the top 30 items ? Start with the property register and go down through commercial lease law, company law, state procurement, tribunals etc. Reading the IT and paying attention is a real eye opener. Even getting the most obnoxious failings together in one place would be a start. Then throw it out on the net. It could be a great basis for discussion for the next election. Official Ireland is shite in so many ways that people don’t know about. And it is too much of a load for the country to carry any more.

  18. There have been some suggestions that there is an increased number of “won’t pay” as opposed to “can’t pay” borrowers in the recent increase because of the debate about debt forgiveness and bankruptcy last August and September.

    I’m always perplexed by this “can’t pay” “won’t pay” dichotomy in relation to mortgage holders. They seem to be the only people in the entire state who have ever seen a “won’t pay” label attached to them.

    None of the banks, none of the developers, none of the companies, none of the civil servants, none of the businessmen, none of the bankers, none of the politicians, none of the Nama wide boys, none of the Quinns; none of these has ever had a “won’t pay” label stuck to their pin. It’s always been “can’t pay”, “couldn’t possibly pay”, “would love to pay, but there’s no money”. “That’s all gone.. it’s not coming back” in the contented words of one Nama-ed Harry Crosbie.

    But the mortgage holders? No, they won’t pay. Squeezed from all sides though they may be, forced to shoulder the bailouts, debts, pensions and more of all of the above, seeing rates, taxes, prices shoot up, and wages and hours plummet down; they just won’t pay. How dare they spend so much on food, and heat, and clothes! Those covetous, profligate, house buying scoundrels can pay, and should pay, and must pay; every last cent they agreed to and more besides.

    Whether they can or not, the mortgage holders must pay in order to pay for the others in Ireland who didn’t pay and who will never pay. The devil will have his due.

  19. The ‘throughput’ effect is quite important to understand in these statistics. Even with a return to employment, a household is unlikely to begin repaying the mortgage at principal plus interest right away. The emigration figures also mask another important facet of the problem–people emigrating to the UK/US/Canada etc but still servicing the mortgage back home.

    So the problem is compounding. I’d also agree with OMF that the can’t vs won’t pay distinction is relatively unimportant, simply because the overall picture is quite bleak.

  20. @OMF

    The problem with your post is that is inconvenient. There is a fiction at play in Ireland. Ever since I was a boy it has had the same story arc. It relies for persuasive affect on no one denying the major premise, that would be subversive, inconvenient. From endless assurances about soft landings to promises of a Wondrous Smart Economy. So instead of facing down this self-serving blather, the endless debate focuses on how many epsilons fit on the head of pin, how some set of variables or other vary with time in the presence of some other set of variables, and while this is important but it is also largely safe. It allows orchestration of the enormous political fiction that all the policies and talk about debt, bailouts, recovery and mortgages can be conducted in a value-free zone, untainted by the various existential crises being played out in homes and small businesses up and down the country. Awhile ago on one of my trips here, I attended the funeral of a man who, I was told, was in such despair over debt that he may have placed his head under the hammer of a post driver. Of course, it could have been an accident. I won’t go into details. Many times on this blog in the past I have argued that default begins at home, while almost everyone seemed to argue it should begin with overseas debt. If Ireland is to come ‘good’, some major and radical rethinking will have to be done about those who are forced to shoulder the variety of balls ups that have occurred. But that would require more than blogs, tweets and face booking. It would require something to happen at popular street level, but somehow I believe that an atavistic masochism among the ‘ordinary people’ plus a huge swathe of state dependents will prevent that from happening. You’ll never be promoted for denying the major premise.

  21. @Obsessive
    You are writing some great stuff lately , I can feel your anger – I was angry once although I was never a good writer.
    Me speelliings are not up to Karls standard you see.

    Whats really frustrating is that Irish economists in general do not make the link between credit / money supply and willingness or ability to pay odious debts.
    (you might have the willingness to pay odious debts but what if this willingness effects your life support or the shopkeepers life support ? – is it better for the real economy that you pay regardless ?)
    These people (defaulting mortgage holders) are doing us a favour by not paying these debts as their spending is keeping general life support intact…..although not for long……..

    I am getting these Edwardian collapse nightmares lately……does anybody else out there see something very dark when we finally turn the fourth corner ?
    Got a book with nice pictures of Cork before and not so nice pictures after the continental currency collapse………. , not a good idea in this envoirment I guess – I know we got away from the worst of it but still – the shock waves were so strong.
    Even if we get through this without much violence
    How are the spin masters going to rejig the “ownership culture” of the market state where you paid a rent for aspiration and success to a possibly high tax nation state culture again.
    Whats is truely unique about the present Irish sociological experiment is that they are trying both simultaneously , it not going to work.
    You either have one fictional narrative operating or none at all.

  22. Ever since I was a boy it has had the same story arc. It relies for persuasive affect on no one denying the major premise, that would be subversive, inconvenient.

    There is indeed a deep amorality in Irish public life. It has always been present; our civic figures and institutions have always been indifferent to the plight of the people and the state of the country. It’s a national failing, today more so than it has ever been.

  23. Ordinary Joes are like junk rated players. Bottom of the pile. Have to pay everything back because there is no money left to absorb their losses once the AAA and AA and A and BBB and BB and B financiers get back their 100 cents in the Euro on failed investments. And that is the way it is. Some things will never change.

  24. Nothing like a bit of Aogan O Rathaille at such times

    Tir gan eaglais chneasta na cleirigh!
    Tir le mioscais, noch d’itheadar faolchoin!
    Tir do cuireadh go tubaisteach, traochta
    Fa’smacht namhad is amhas is meirleach!

    A land without a meek church or clergy!
    A land which wolves have spitefully devoured!
    A land placed in misfortune and subjection
    Beneath the tyranny of
    enemies and mercenaries and robbers!

  25. @ ObsessiveMathsFreak
    +1

    These ‘can’t pay’ are a strange animal, because all the people I know are so scared of rocking the boat. They accept what ever misery is dished out. I hear so often that we have no choice, we must try and just pay the bills. I know a few who only tread water because family dig them out, single and married. Ireland used to be know as the land of saints and scholars, soon it will be the land of the meek and foolish.

    But then again pride comes before a fall and when the fall happens well hold on to more then your hats folk .

  26. This should have been dealt with through proper bankruptcy legislation. Why still no legislation. They can legislate for the banks in 3 days. Why not for the people?
    We need proper bankruptcy legislation – where is it?

  27. @ alchemist
    ‘The country is awash with property, but claims that it could become awash with mortgage default do not look excessively exaggerated. In this situation credit will tighten up even more, as if that is possible. Property prices will fall even further. Business investment will shrink even more’

    That is logical. A death spiral.

    @ sefaoid

    ‘Official Ireland is shite in so many ways that people don’t know about. And it is too much of a load for the country to carry any more.’

    There is a fair bit of consensus on that now. The problem is one of state reform. Democratic state reform. cf Paul Hunt.

    @ dork

    ‘I am getting these Edwardian collapse nightmares lately……does anybody else out there see something very dark when we finally turn the fourth corner ?’

    Yes. Child abuse/neglect, prostitution, loan sharking, forgery and con tricks, etc etc.. Overcrowding and breakdown of hospitals and other institutions. Random violence fuelled by alcohol, hash and kill-em video games. A post-welfare state Hades.

    @ alchemist

    ‘If Ireland is to come ‘good’, some major and radical rethinking will have to be done about those who are forced to shoulder the variety of balls ups that have occurred. But that would require more than blogs, tweets and face booking. It would require something to happen at popular street level…’

    Ireland has a lot of ghettos. Let’s hope that muggings, assaults and household tie-ups dont’ become the popular street level response. We have eight to a cell on occasion at Mountjoy already. Not to mention slopping out.

    BTW, today’s IT is pretty explicit about the role played by Wall Street’s man in our downfall. He didn’t cause all our problems but he sure added to them. Thanks Tim.

    http://www.irishtimes.com/newspaper/frontpage/2011/1119/1224307824125.html

  28. OMF & Dork & Alchemist

    +1

    This “wont pay” is a smokescreen from the banks. It reminds of the spin of how the 100% mortgage was a major cause of the problems when in fact 90% or 100% mortgage over 20 to 30 years makes diddly squat of a difference provided the asset in question has been priced correctly and of course the fact that people were being robbed by greatly overpriced properties (and we know what/who drove the prices) is sort of conveniently not mentioned in any of the spin

  29. @Paul
    I can recommend the book “Pure Cork” by Micheal Lenihan for Christmas (you can flick through it before sending it to the Americas or elsewhere).

    It sounds People Republics of Corkish but it is’nt really.
    It has the most evocative unworldly pictures some of which have not been seen before.
    It starts off with the Cork International exhibition of 1902 which must have been quite something.
    It then covers wide ranging topics such as entertainment & transport.
    Then it covers banknotes and invoices with banknotes issued before Peels bank act I guess and then the Ploughman notes of the currency commission days.
    But what really caught my eye was a picture of Bridge street 1910 (directly below Patricks Hill) – a large gleaming white car with occupants dressed in Finery ,with a tram ,horses and pedestrians.
    Little did those passengers realize that the burning of that oil rather then coal or horse calories would change the worlds entire monetory system – with a massive shift of wealth to the petro dollar after the Great war.

    Anyhow its a strange picture for a Corkonian or any Irishman really and sits it stark contrast to the burning of Cork Pictures.
    But I sense you are thinking of a kind of 19th century Jekyll & Hyde Edinburgh transfered to a Irish 21rst century context.

  30. @ Paul Quigley

    Just wondering where the consensus is . Is it in the business community or in the media or in the universities ?

  31. I get the feeling the Jackeens don’t quite understand the Irish collapse of the 20s & 30s as Dublin was still a British Empire administrative zone in the 20s & 30s – The Empire was somewhat insulated from the 20s European collapse and subsequent American collapse of the 30s ( Royal Navy strike excepted)
    But Cork was much more tied into Continental trade until 1914 – while at that time the core exploded and its trade shocks were felt outwards , this time the periphery is imploding due to complex & not so complex financial engineering in a attempt to prevent another European disaster in the core.

    Having said all that I was walking through Pana today and I could feel the wealth again – for the first time in 3 years !!
    If the Euro boys can learn to expand the money supply and at the same time tax this hopefully rising supply in intelligent ways that concentrate commercial activity in our cities things might work out – but if the money supply keeps falling all bets are off.

  32. @ seafoid

    I meant consensus on this board. The mainstream and its embedded media will be the last to recognise reality. As Mark Twain said:
    ‘It is hard for a man to understand something when his salary depends on his not understanding it’.

  33. @ dork

    Interesting ref. I am sure you are correct in your suspicions about the capital, but you are too knowledgeable to engage in namecalling. Ordiinary Dubliners have sacrifced a lot. The 1913 Lockout , the associated meningitis epidemic and the Citizens Army to name a few things. How many had to go to Liverpool for work ?

  34. @Pual Quigley

    According to Blind Biddy, There is only one ‘right and proper’ response to Tim G, the only man who left Cannes with a massive smirk of a smile on his face: Trigger a little CDS in the EZ …. and observe it exponentially rise until it eventually explodes on Wall Street. And let 99.9% of the global citizen-serfs smile, if for a while …

  35. @The Dork

    Trying to find a gentle way of putting this – but the Deeds of Cork are being used as collateral by AIG in New York to get more dosh from Timmy G and Benny B. to gamble on ever more dodgy derivatives in the EZZ. It follows that all Certificates of Authentic Corkness are deemed to be null and void as sent down in Decision KJI87/lolr/111111 of the Deutsche Constitutional Court. Tuff ol times alrite … and not a rebel in sight.

  36. @Paul
    Sure Paul I am just playing up my Peoples Republic of Cork Stereotype but somebody has to do it on this site since everything is so Dublin centric.
    As a Provincial I have always found Dublin a alien place and could never quite figure out how everything fits together – I was always more comfortable in small French cities for some funny reason.

    http://www.youtube.com/watch?v=8xJpIabJbZ4

    The Huge gulf is living standards during the Edwardian era was appalling but I am just making a observation about the total wealth in society back then.
    Post Great War Cork was hit harder as you had a large scale agri export industry that was knocked for six with no adminstrative wealth to counter the trade vacuum , pre war it also had a slightly more balanced wealth distribution then the extremes of Dublin’s inner city

  37. @Dork
    The reason you find Dublin an alien place is because it is full of culchies who are desperately trying to not be culchies.
    Always makes me laugh when people complain that Dublin gets everything. It does! And who gives it to Dublin? Culchies in the Dail and civil service who live there!

  38. A bit off topic..but are we in mortal danger of falling behind the Greeks by next year…
    “The minister presented two possible scenarios affecting the budget deficit – one taking into account a bond swap foreseen in the latest European Union debt deal for Greece and the other disregards the swap. In the first case, the deficit would be reduced to 5.4 percent of GDP from the 6.8 percent foreseen in the budget while in the second scenario, the deficit would drop to 6.7 percent.

    The aim is for Greece to report a primary budget surplus of 1.1% of GDP next year, Venizelos said. “It will be a small primary surplus but a surplus nonetheless,” he said.”

    Remind me what percentage we are scheduled to have next year?

  39. @ Paul Quigley

    Thanks . I meant not widely known by the wider public. PR Guy had something a few weeks ago about how sites like these are important for a minority to express themselves.

    I wonder if we’ll ever see the Sindo join the dots. There seem to be lots of professional groups drawing attention to the problem but is there any momentum?

    I came across this the other day

    ” Life is not so bad if you have plenty of luck, a good physique and not too much imagination.”
    Christopher William Bradshaw Isherwood –

  40. Ha – must get one of those.

    However I am leading a underground movement known as Republique Populaire De Munster (- North Tipperary) that will counter the very very recent Irish Times editorial decision to join the Sterling zone again.

    This is infact a Irish nationalistic endeavour as we are all better off with at least three masters fighting over the spoils rather then one supreme Overlord.
    Anyway it will be perhaps the most optimal currency arrangement for entire Island as Dublin can trade with Belfast on a equal footing while Micheal Lowery can use the existing Stormont infrastructure for his “investments”
    Meanwhile North Tipp can use rocks as their medium of exchange while we can get on with the business of corporate tax arbitrage.

  41. @ dork

    Now you’re talking boy. The economic history of Cork is indeed poorly understood outside that part of the world, and more’s the pity, because it’s very interesting and relevant as you say.

    And you are dead right about that sense of alienation in our capital. It’s like a larger version of the petty ‘townie’ prejudices in provincial Ireland. I speak of course of the time when thirty miles was a long journey.

    It’s a million miles off thread, but Michael D is also hitting the nail on the head in his focus on inclusive citizenship. The biggest losers from Dublin’s power structure are Dublin’s own poor and marginalised. Not much new there.

    BTW, I am neiither a native Dubliner nor a Labour Party supporter.

  42. @ Alchemist
    “There is a fiction at play in Ireland. Ever since I was a boy it has had the same story arc. It relies for persuasive affect on no one denying the major premise, that would be subversive, inconvenient. From endless assurances about soft landings to promises of a Wondrous Smart Economy. So instead of facing down this self-serving blather, the endless debate focuses on how many epsilons fit on the head of pin”

    There is perhaps an even greater fiction than this at play not just in Ireland but in many other Anglo-American countries too. This is the fiction of agency – the assumption that the macro character of the socio-economic trajectory into the next 10-15 years can be influenced by individuals, organisations or governments. I see no objective evidence for any such belief based on either attempts 80-odd years ago or over the last four years to stave off depressions.

    What is interesting to me at least are national differences in facing up to the reality of not being able to shape the future. The mapping of global cultural areas over time as reported here:
    http://www.worldvaluessurvey.org/wvs/articles/folder_published/article_base_54 has a mapping by Inglehart and Weltzel that is thought- provoking. Official Ireland exerts considerable effort to try and maintain a fiction of agency, anticipation and control which is increasingly fatuous. (This includes political communication, ‘independent’ commissioned reports and strategies, manifestos, and the implicit assumptions underlying much media comment and even the content of this learned blog). Why does official Ireland feel the need to treat its citizens like children by persevering with this fiction? Broadly similar behaviour is in evidence in the other countries identified in IW’s map as ‘English Speaking’. Yet in the group of countries labelled ‘Protestant European’ notably Iceland, Switzerland, Norway, Denmark and Germany my sense is that there is no comparable fiction and the character of communication is adult.

    It is clear from the map that those countries which are most evolved (i.e. at the top right of the distribution – strong on self-expression and secular/rational values) seem best positioned economically to deal with a decade of depression and indeed are doing so. Over the last two decades Ireland values have apparently been shifting from the traditional (focus on family ties and religion) towards secular/rationalism – the Euro Protestant grouping. Yet ‘official Ireland’ still communicates and in some ways behaves as if nothing has changed. It seems inevitable that there will be mortgage capital repayment holidays asa minimum, sooner or later, despite pressure from all those not directly affected to leave matters as they are. It will be interesting to see how that plays out in coming years.

  43. Why does official Ireland feel the need to treat its citizens like children by persevering with this fiction?

    That’s not the reason. Official Ireland behaves likes this because the people running it are effectively like children: inexperienced, unsure, timid, not knowing what to do and hoping that an adult will come along soon to set things right. Hence the propensity of officials in this country to latch onto any solution or demand tossed at them by the EU/IMF and cling desperately to it despite the damage it causes.

    Irish officialdom is suffers from a combination of a mass inferiority complex, abandonment issues, chronic neurosis and of course, endemic incompetence(We could add narcissism and lack of empathy, but let it pass). Nothing else can bring this home as much as the recent advise given to one Labour MEP who was opposing the appointment of Kevin Cardiff to the Court of Auditors; she was told that if she continued, she could be sued for the resulting “loss of income” by the applicant. Clearly this was the product of a deranged mindset.

    Remember John Gormley’s comments about Government being like an ‘asylum’. I don’t think he was referring solely to his fellow cabinet members.

  44. ‘@Paul
    No – I always thought Micheal D simulated the wild colonial boy routine that was acceptable practise in North Kerry and Limerick.
    However this became folklore / as this became the real deal in Galway – long after independence this fiction created enough wealth to be exported to the teacher set of the time that reexported these new semi individualistic ideas to the New Gaelic proles.

    PS in my Dorkish view the modern west is in the dollar zone just because it can – meanwhile the southern bit remains in the euro zone and Sterling middle & north is just is because it can…………
    It would all be fantastically fucked up but in a interesting way.

  45. Is Spain worse than Ireland for mortgage problems?

    CAM says its non performing loan ration is now over twenty percent

    http://theindependentbd.com/business/banking/80638-ailing-spanish-bank-cam-counts-17b-euro-loss.html

    CAM is a story worth following for all the ‘Euro is toast’ merchants out there. Some funny goings on that may well have a knock on effect on Spain’s bond yields and credit ratings. We shall see what happens to it after the election (it’s sale was very deliberately put back until afterwards). I do hope Spain isn’t going to set up a NAMA!

  46. @ dork
    God preserve us from being fucked up in an uninteresting way. The old signal/nolse ratio has deteriorated a bit there. Must be the Beamish 🙂

  47. ” OMF

    ‘Irish officialdom is suffers from a combination of a mass inferiority complex, abandonment issues, chronic neurosis and of course, endemic incompetence(We could add narcissism and lack of empathy, but let it pass). Nothing else can bring this home as much as the recent advice given to one Labour MEP who was opposing the appointment of Kevin Cardiff to the Court of Auditors; she was told that if she continued, she could be sued for the resulting “loss of income” by the applicant. Clearly this was the product of a deranged mindset’

    I do not find that kind of story surprising, although I know nothing of the inner workings of the Labour Party. My sense of Irish institutional culture is that

    * stakeholder and insider interests are paramount
    * most significant decisions are taken off the record and in camera
    * the more significant the decision, the more likely that is to be the case
    * formal meetings and external consultations are rubber stamps
    * decision makers motivations are generally concealed from view
    * rational exploration of alternatives is conducted within in-house boundaries
    * such practices take precedence over adherence to regulatory and legal norms
    * loyalty to institution is rewarded by promotion, while dissent is treated as ‘spiritual error’ and attracts sanction
    * unlwaful practices are disguised or defended on grounds of expediency
    * legal advice is sought only to buttress, to defend a pre-determined line of action, or to arrange a private settlement in the case of indefensible and egregious abuse
    * knowledge of law and governance is discouraged as it interferes with ‘normal business’

    That is to say, anything which does not suit the institutional stakeholders tends to be described as ‘unlawful’. I would imagine that intimidation on that sort of spurious basis is not at all uncommon.

  48. @ a few

    Professor* Colm McCarthy in fine form this morning –

    Professor Franz, and numerous other opinion-leaders in Germany, could do with a tutorial on the “collectivisation of debt under the auspices of the ECB”. It is the Irish Government’s job to communicate effectively that debt has been collectivised on an industrial scale, and at the insistence of the ECB, in Ireland. The Government has failed dismally to get this message across where it counts, in Germany.

    http://www.independent.ie/opinion/analysis/lets-prepare-for-the-long-stay-at-rock-bottom-2940087.html

    *UCD response to TCD Unilateralism 😆

    @An Taoiseach

    A few more tooreen hurlin tutorials – and bring the hurley to Berlin next time!

    @Karl Whelan

    You handled Sinn; Issing isn’t worth the bother; who do we send in to tackle Franz? Wonder does that Kilkenny full-back do economics?

  49. @Tony Owens

    Re “the endless debate focuses on how many epsilons fit on the head of a pin”

    Interesting observation reminds me of the Bernie Madoff strategy of hiding a simple con trick behind a massive firewall of deception using abstruse mathematical formulae and financial deceptive wizardry.

    Or the document snow of tens of thousands of documents snowed onto the Senate Inquiry into the banks re 2008.

    http://wp.me/pBbF3-gd

    Ireland’s Titanic of debt has settled ever deeper into the water with news of the 150,000 in arrears.

    Its rather ironic but salutary in its inept mismanagement of our economy to focus on the latest number 2 from the government.

    The vat rate increase it seems will burden the lower percentile income levels most and will hit small to medium sized business operating in Ireland the most.

    Politicians, banxters, those on high income levels in the public service, those operating the FIRE economy that is burning down our economy, will be further protected if not fueled in the coming budget.

    Instead of focusing on how many epsilons on the head of a pin, this country needs to get out from under the emerging Germanic superstate, and adopt a fundamental change in approach, Iceland in post 2008, or Argentina in the ’70’s, adopt Bo Lundgren’s method for Sweden in their 90’s meltdown.

    He sees technological development as a way to move Iceland forward after tragedy.

    “Reading was always important to people in Iceland and a literary creativity,” he said. “Somehow, with the digital revolution, this interest was transported over to computers, websites, mobile phones and so on. So Iceland now ranks among the top countries in all of these areas, and it has brought forward a new generation of people who are creating companies in these fields.”

    The country has rebounded significantly since the 2008 meltdown, he said, and that’s because Iceland bucked the advice of the international community and decided not to bail out the banks and financial institutions that helped create the foreclosure crisis.

    “We are coming out of this crisis earlier and more effectively than I think anyone, including ourselves, could have expected. Iceland is now serving as an interesting example of how you can get out of a very deep financial and economic crisis.”

    Unfortunately, this country is led by a cabal of incompetent banxters led by 2 super incompetent banxters, Kenny and Gilmore, currently tilting their schenanigans at MERKOZY to try to persuade them to do Weimer Republican inflation to safeguard the dead dreadnought IFSC/Ireland INC, lift Ireland’s FIRE economy, and resume the worst excesses of the Celtic Tiger…..pour more finance into the Irish debt colander,.,.,

    Meanwhile we’re fast turning into a Nicolai Ceausescus state satellite of the EUSSR with our budget fixed by the German Bundesbank and debated by the finance committees of the German parliament, before we get to be humiliated by it?

    Kenny and Gilmore deserve a smile:)

  50. All SHRINKING VIOLETS note:

    it my be an offense to criticise anyone holding public office on the grounds that your critique might constitute loss of earnings for your target at some stage in the future.

    Another bellyfeel Orwellian blackwhite rule:)

    lol.

  51. @Paul
    Yes one must do what it takes to provide urgent liquidity to the system.

    I see Colm Mc still wants to reduce the defecit to zero – he will never learn me thinks – he is trapped in a 80s mindset.
    The Basel thingy has made a nonsense of banking.

  52. @OMF
    Cannon law has done as much damage to the country as the synchronised fibbing the establishment now engages in.

  53. I’m not sure what the ‘open’ thread is for things European at the moment so apologies for going off topic but as of last night, Samaras (Greece) was still refusing to put his signature on any letter to the Troika. It will be interesting to see who blinks first.

  54. In the context of mounting mortgage arrears, the recently reported increase in rents is shocking and dire bad news.

    I have on a number of occasions argued that high rents are a serious competitiveness obstacle to Ireland’s recovery. My presupposition was that the casual relationship always flowed from the sales market into the rental market – logical if one considers the high levels of owner occupancy in Ireland.

    But now artificially high rents are also posing a problem in the other direction: High rents lock default homeowners into bankrupt ownership arrangements, making it harder again to clear the sales market in a way that will help bring rents down.

    On this site, others have warned me that in Ireland it will never come to evictions. I don’t believe this is true. Five years ago I was just as readily informed that Irish people would never accept residential property taxes – a tune no one is singing today.

    The policy priority for the entire country should be on cleaning up the housing market. It is really the only thing Ireland can do that will make any difference.

    This requires coordinated action in terms of

    – transparency: Every house must be valued, put on a national register, and every sale that house has been engaged in should be accessible through a google maps style application. As is: Click on it and you know its tax profile (rental revenue, imputed rents, last known sales price, no. of legal bedrooms, plannning permissions etc.)

    – new bankruptcy laws: Clean it up. You don’t pay your debts? We get you through the courts quickly and out of the house you do not own and cannot hope to pay for. Get the frakkin’ judges on overtime (Saturday courts, anyone?) until they clear the backlog. It’s call taking one on the chin for the country.

    – auctions: Nothing clears a market like low-reserve auctions. We own the banks? Make them arrange auctions and get the property off their balance sheets. Their loss is the cash buyers’ gain. Because many of them will be Irish (or at least interested in the long-term recovery of Ireland, which is a lot more than we can say for the bank bondholders) this realisation of paper loss is a transfer of wealth from international gamblers to real people will mud on their Wellies.

    – property tax: Based on an imputed rental value and a flat rate per square metre. Property taxes encourage occupancy, by putting more rental units on the market.

    – close Nama: Sell its assets in a big auction. It was never a good idea. Its very existence makes people think the govt was committed to defending a price floor on property (which it was).

    The goal should be to bring down rents by at least 40%. Abolish the minimum wage once someone on €7 / hour can afford a one-bedroom flat in Dublin (one bedrooms could cost as little as €500 a month).

    Then we market Ireland as a dynamic European capital in which business can pay low wages to workers who can still afford to live.

  55. Or does anyone here have a better answer for why Ireland is

    – the EU country with the fifth highest UE rate

    – WHILE ALSO BEING the country with the third highest minimum wage ( http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:MW_EUR_July_2011.png&filetimestamp=20110805142929 )

    – AND the country with a vacancy rate roughly double the EU average

    – EVEN THOUGH rents are still among the highest in the EU (page 90 http://abonneren.rijksoverheid.nl/media/dirs/436/data/housing_statistics_in_the_european_union_2010.pdf )

  56. The Arrears dilemma is a function of our decision to guarantee the banks, a function of our ‘guarantee’ of the commercial/residential property sector, a function of NAMA, a function of eurowide ECB support of the FIRE (Finance/Insurance/Real Estate) model of indentured indebtedness to preserve bondholders and commercial investment banks across the eurozone.

    Its a business model built to fail. Its corrosive effects on our economy are well outlined by posters above.

    In Ireland property prices/rental prices are now controlled by Frankfurt to extract our rentier state payments to support the banks and our precious .00000001 ‘growth’ in the eurozone?

    In such a false economy when €3.6 can magically appear and reappear all growth forecasts of course are suspect.

    What epsilon on what pin will burst the bubble!

  57. @ LHE

    I agree entirely. But it is most unlikely to happen in an organised way. Too many vested interests! But it will happen.

    As to the increase in rents, at a guess, there are two main explanations (i) people unable to get mortgages are forced to rent and, indeed, this may become a permanent pattern (ii) the continued over-generous payment of rent supplement, effectively a subsidy to the quarter of mortgage holdings that are buy-to-let, a cabal of mainly small business operators who have influence across all the main political parties. Half are in negative equity (according to the CB report in the link just posted by Karl Whelan).

    Rents are also impacted by the limited supply of accommodation in the right location because of Ireland’s abysmal planning record.

    But, one must look to the bright side. Advertising in terms of “priced to sell” has begun to emerge timidly across the country as have smaller-scale distressed proprty auctions.

  58. The trend on those arrears cases is of concern. Projecting it out to 2015 the artists formerly known as the banks are going to have a massive problem. Especially with austerity strangling growth.

  59. @seafóid

    the artists formerly known as the banks are going to have a massive problem

    Phew! Thank goodness we’ve extended the bank guarantee, then. So far just for one more year, but then no doubt for another …

  60. @LHE,
    Couple of other points.

    1) A lot of people (including, I would guess, most of those who are economically literate) have no intention of buying until the market bottoms out, regardless of what the banks are prepared to lend, so they are renting.
    2) On the employment and minimum wage issue, most of the increase in Irish unemployment can be accounted for by the collapse in construction activity, loss of employment in exporting industries caused by the recession, the resulting loss of spending power in the domestic economy, and a rational preference for saving and paying down debt. Only a small part can reasonably be attributed to the minimum wage. However, the minimum wage is a significant part of the explanation for why the economy is not undergoing the sort of adjustments needed for employment to recover.

  61. Hi BeeCeeTee

    Sorry, this thread is dead but I was away so I missed it. I agree with both of your points.

    Just one related point, though. Minimum wages have iterative effects on employment costs higher up the labour value chain, through substitution effects.

    As in,

    John has two career choices. He can get EUR 8.65 making frothy white americanos in Butlers, or he can do an advanced training course in graphic design, for which he will need a EUR 4 000 loan.

    After some quick mental arithmetic, John decides that if a graphic design job pays anything less than EUR 16, the investment in the course is not quite worth it. So given a min (Butlers) wage of 8.65, he joins the graphic design labour supply curve (LSC) at € = 16.

    If, however, the min wage falls to 7, this makes the graphic design career more enticing, even at a lower wage level. Hence, John might enter the graphic design LSC at € = 15, so we can imagine this has an influence on the equilibrium price of graphic design labour.

    These kinds of iterative effects mean that a lower minimum wage helps competitiveness right across the economy.

    Of course, as our goal is not to make people poorer, John will need a €200 reduction in his rent in order to compensate him for the wage cut and still be exactly as well off as he was before.

  62. the only problem is ludwig there are a few people who will be worse off i.e. those who live off Johns (whether rent or taxes)

    which explains why current policy is to attempt to sustain the unsustainable.

  63. @ Garry,

    Yes, true. The €200 a month in this example is coming out of the pocket of John’s current landlord. Indeed, cutting costs in non-productive sectors will always have distributional effects.

    But I would argue that the extra jobs which the graphic design company brings to Dublin due to the fact that it can hire a fully qualified John at €15 will in the medium-term benefit John’s landlord too.

    Not to mention the fact that he will be able to get his frothy white americano at Butler’s for cheaper, due to the lower labour costs.

    He will also not be as likely to have his house broken into by the desperate, unemployed graphic designers / coffee shop guys who have been kept out of the labour market due to high minumum wages and still can’t afford the NAMA-inflated rents in Dublin…

  64. @ Ludwig Heinrich Edler,

    Good comments. If you’re starting a country from scratch, it’s certainly the way to go. Given the existing levels of debt(/wealth) tied up in property, a transition to lower house prices is a sensitive, and potentially expensive, process. We need borrowers to repay their obligations.

    The banks’ unwillingness to move on unsustainable debts needs to be tackled. Over the last 2.5yrs banks should probably have worked out 10,000 mortgages (4k per annum is probably at the low end of what they should be doing). Draconian bankruptcy laws shouldn’t matter from a lenders perspective.

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