IMF WEO: Dealing with Household Debt Post author By Philip Lane Post date April 10, 2012 The IMF WEO chapter on household debt is here. Categories In Uncategorized 45 Comments on IMF WEO: Dealing with Household Debt ← Social Justice Ireland’s Socio-Economic Review → The crisis as a balance of payments crisis: Current versus capital account aspects 45 replies on “IMF WEO: Dealing with Household Debt” Forgiveness? Can’t see it happening. DanO’s brief Sinn-Opsis here: “Bold” household debt restructuring programmes can help prevent recessions becoming deeper and more protracted, according to research by the International Monetary Fund. In its bi-annual assessment of the health of the global economy, the fund cites evidence from a range of countries where mechanisms have been put in place to cut debt levels. The study said restructuring household debt “can significantly reduce debt repayment burdens and the number of household defaults and foreclosures. Such policies can therefore help avert self-reinforcing cycles of household defaults, further house price declines, and additional contractions in output.” http://www.irishtimes.com/newspaper/breaking/2012/0410/breaking30.html Flann O’Brien and the ‘hape o’ debt’ … households at 200%GDP around here … but would need the breakdown in deciles etc The ‘mean/average’ in Ireland has lost its validity. @Philp Lane Thanks for posting. An excellent paper though I have not read all of it yet. HOLC (P17-P18) was new to me. I was not aware that the US in the 1930s took such an approach, one that the Grapes of Wrath reading does not convey. “To prevent mortgage foreclosures, HOLC bought distressed mortgages from banks in exchange for bonds with federal guarantees on interest and principal. It then restructured these mortgages to make them more affordable to borrowers and developed methods of working with borrowers who became delinquent or unemployed, including job searches (Box 3.1 provides further details on the program). HOLC bought about 1 million distressed mortgages that were at risk of foreclosure, or about one in five of all mortgages. Of these million mortgages, about 200,000 ended up foreclosing when the borrowers defaulted on their renegotiated mortgages. The HOLC program helped protect the remaining 800,000 mortgages from foreclosure, corresponding to 16 percent of all mortgages (Table 3.1).32” One has to applaud the IMF for its non-idealogical thinking, not something that I associated with the IMF over the years. What a disaster the straight-jacket of ECB-European policy is by comparison. The IMF, unlike the ECB, has learned from its past. The paper notes that household debt expressed in terms of income rose beyond 200% in Ireland, Iceland, Denmark and Holland . I was talking to someone in holland today. He said things are not great , that austerity is on the cards and banks are deleveraging so house prices are falling and the situation is exacerbated by the dysfunctional political system where Wilders calls many shots but is not housetrained enough to be in Government. And I read in le Canard Enchaine this week that the ex leader of the French Trotskyite party was asked what the new leader would do if he were elected and said “il serait dans la merde !” “He would be in deep shit”! So perhaps 2012/2013 will be the years the core gets infected. Synopsis http://www.imf.org/external/pubs/ft/survey/so/2012/RES041012B.htm Germans were getting worried two to three years ago that labour was becoming dissatisfied with wage stagnation. Now that labour are pushing for wage increases that reflect productivity gains over the last ten years the managerial/investor class are anxious to say the least. If the mighty German manufacturing juggernaut falters the Euro will take a hit. That will help the EZ countries who have had success exporting manufactured goods. Ireland is handicapped in that we have not been competitive for years and wages have not eroded enough to ensure an influx of investment in manufacturing. If we are to believe the WSJ wages are down 4.3% since 2008. There is an article in print: European Debt Crisis Irish economic crisis devours eateries Paul Sonne Wall Street Journal Staff Galway, Ireland I know it is fluffy but that is what Americans are reading. It would appear we continue to suffer from decreased demand domestically and have done little to nothing about regaining competitiveness in export markets. @All Folks – not being smug or anything appraoching it but I told you guys this solution many years ago. Mark my words this will happen. Economics or politics won’t deliver the solutions to us but basic mathematics. The numbers never lie – the normal man can’t be expected to fix the Govts balance sheet, fix the Banks’ balance sheet and fix his own at the same time. Something will have to give. @Joseph Ryan, Brian Di Palma Not to worry; isn’t the main hope of this government to be waving the IMF goodbye? It really shows how up sh*t creek we are when the IMF are the progressive force in the crisis. I always new they were lefty liberals underneath it all!!!! I Published below in tasc and anywhere else I could find in 2010. I think the beggar my neighbor element that crops up with debt forgiveness for those in difficulty (and how others slightly out of that grouping) would need elimination. The notion of marrying fiscal stimulus with a national policy reflection of the chronic political mismanagement of the housing sector would be beneficial in Ireland. I think issues with the suggestion such as the management of transferring mortgages from non-bailed out banks and the enforcement of a parallel rental reduction are manageable, but the IMF report now, is another potential motivator for something like this or better version to be actually pursued: 1. Tell banks that they will reduce personal mortgages for all citizens to an upper value of €1 million and one property per adult mortgage owner; by 20% • Reduce the amount the banks owe in terms of government investment repayment preferential shares etc.). Or (reduce from ownership by Irish state and have available to bondholders’ equity credit to the value of this reduction (approx 16 billion). • This is money already borrowed from the ECB under the guise of NAMA and would then act as an ongoing stimulus to the most indebted sector of the population of on average €240 per month, which would not have the difficulty of instantaneous withdrawal and would stimulate mostly indigenous growth as it would progress as long as mortgages run (It is hard to see that the Irish people have not given enough to the banks at this point) • The long-term and ‘re-found’ nature of this stimulus should guarantee its spending through the economy • There should be a significant decrease in the future levels of mortgage defaults which looks set to become a major economic and social issue as things are currently • Offer a direct government stimulus to those in the rental market while ensuring that the benefits be kept from landlords for adult citizens without mortgages The report doesn’t seem to acknowledge that bank-account money is deleted from the economy as debts to banks are repaid. When a loan is repaid the borrower’s bank balance is lower. No-one else’s bank balance is raised and this is why there is less money during a recession. From the point of view of keeping the money supply fit for the purpose of trading, a mass default is not undesirable. Not many economists, including those in the IMF seem to appreciate this. Paul Ferguson Sensible Money Another simple but Brilliant & elegant anylasis from Steve from Hicksville. Economists should be ashamed of themselves. “Finance failure is little different from others: there is a chain of false assumptions that, by themselves are insignificant, but together lead to disaster. One assumption is that credit and business have a tendency toward expansion. This is silly because thermodynamics insists otherwise. Our strategy to overcome natural physical laws in 2012 is for central banks to recycle credit and pray for increased car- and house sales. The central banks are the last line of defense for finance’s Titanic. Water leaks in faster so the bankers can bail. The strategy is to keep lending, to keep issuing more and more credit, which is what the ship does not need. Every bucket bailed by the bankers winds up somewhere else on the ship. The small problem is the slowdown in the expansion of private credit, much of which is unsecured. What is called a ‘boom’ is an expansion of un- or under-collateralized credit. This includes credit cards, student loans, HELOCs and poorly/fraudulently underwritten mortgage loans as well as loans within (shadow) banking secured against phantom/re-hypothecated collateral. There is no business activity that provides a return except for Hyman Minsky’s Ponzi finance schemes. Collateral worth shrinks across the board. Central banks can do nothing to alter the absence of return … except to rush more buckets of ‘liquidity’ though the Titanic over and over. Central banks are collateral constrained, that is the nature of central banking. A bank making unsecured loans cannot be the central bank. Otherwise, collateral would be of indeterminable worth: all banking would eventually cease because there would be no unambiguously worthwhile collateral or ‘risk-free assets’. The purpose of the central bank is to defend the worth of collateral. It takes onto its own balance sheet collateral that the market refuses. By doing so it insures there is always a bid in the collateralized marketplace. This is a form of institutionalized moral hazard: because the central bank takes on collateral at par the other banks are given the incentive to do the same. Banks become secure enough in the collateral offered to lend against it, at least that is the hope. Another tiny problem is that industrial enterprise does not pay for itself. Except for taxi drivers and deliverymen, driving a car and all the trillions invested in the ‘experience’ around the world does not produce a return. It is pure waste for its own sake that must be propped up with bottomless debt- and energy subsidies. This is the reason for the tens- of trillions of dollars worth of debt taken on in the first place. If industry could pay for itself it would have! There would be no debt because returns earned by industry would have retired it! The outcome of subsidized waste over the term of decades is repricing of inputs due to decreasing rate of supply relative to the scalding increase in demand. The gap between what an enterprise ‘earns’ (zero) and what it must pay for inputs becomes unbridgeable. That is, the cost of credit needed to make these enterprises ‘profitable’ is too high. This is why the world’s industrial economies are collapsing with nothing at all to be done to stop them. Since industrial enterprises cannot pay their own way there is no relevance to central banks’ strategy. All industrial collateral is worthless. This is why most analysis is wrong and frustratingly so. Central banks don’t ‘print money’, national governments do. Central banks provide credit against collateral. Their efforts fail because the collateral grows more worthless with the passage of time, not because of the banks but because of the failed waste-based economic system that falsely labels non-remunerative activities such as driving aimlessly in circles as ‘production’. There are two basic money systems in this world: the debt money system and fiat money. The term ‘money’ includes both currency and credit. Both systems are binary: the debt system binary is ‘asset = liability’, the fiat binary is ‘issue = tax’. In the debt-money system the central banks don’t print money: currency increases as government securities are exchanged for at-par loans from the bank. The loan becomes currency. In a fiat money system the government issues currency without offering security. Because the government is the issuer, security is assumed: consider Abraham Lincoln and the ‘Greenbackers’. Unfortunately, governments choose not to issue fiat currencies. Otherwise the massive overhang of dead-money debt could be swiftly reduced, there would be no generalized increase in the money supply (inflation) as applying currency to existing debt would extinguish both. FYI Transcript of the WEO Analytical Chapters Press Briefing Tuesday, April 10, 2012 Washington DC Panel: Jorge Decressin Rupa Duttagupta Daniel Leigh Gita Bhatt Our press briefing today will focus only on the two analytical chapters, Chapter 3 dealing with household debt, and Chapter 4, commodity price swings and commodity exporters. Now let me turn it over to Mr. Jörg Decressin, Deputy Director of the IMF’s Research Department. He will make some brief introductory remarks and then we’ll hear some of the main messages from the chapter team leaders. … Why might household debt have such an effect on growth? The key is that people that go into debt tend to react more to changes in their income and wealth so that when something happens like a collapse of a housing boom, these people cut back more on their spending. And in an economy with a lot of indebted households like that there is an overall fall in demand, less demand for products means less employment, unemployment goes up more and incomes of families fall. They find it harder to meet their debt payments and that sets off a negative chain reaction with more defaults, banks being more worried about lending, and there can be long-term damage to the economy. http://www.imf.org/external/np/tr/2012/tr041012.htm Recall the visceral ad hom attacks on those in 2010 and onwards stating this,on this blog and dpelsewhere? @ Dork: Thanks for that posting. But will it travel any further than this site? Its hard to decide whether our Government (and I suppose their ‘advisors’) are making policy, without, despite or just burying, the evidence that it is in the public domain. This would be dreadful. But the alternative? They regard their actual policies as the evidence for those same policies. The more they pursue what they are pursuing, the more I am inclined to think they are utterly clueless, arrogant and obstinate. Outright political bullies. I know that some individual ministers cannot possibly be that bad, so why are they not objecting in public? The car and the salary? A malinformed citizenry? I do not really trust the IMF, so there is a sub-agenda here. Perhaps they are a tad miffed at the Leinster House clowns, and decided to brandish a briar with the intention to deploy it if the aforementioned clowns continued with their non-reforms programme. Interesting. Reflecting on that posting, and some commentaries I have made from time to time on this site. Most folk may have no proper understanding of how a modern economy actually works (or fails to work). They do not seem to know that they have to have an economic Model-in-Use (it is parked in their brain) but they cannot access that model – even if prompted! The, Policy is Evidence, paradigm looks about right. Scary stuff! @Brian Think of Japans Monetary financing & Richard Koos dead air graphs during the 90s , this can increase efficiency if more of these tokens have somewhere to go that is less wasteful. I.e. the banks can’t provide me with credit to buy a car but goverments can introduce more tokens that may allow me to get on a train. If Goverments don’t provide fiat society will begin to break down. Indeed that is their most important function. The German idea it seems is to crush people and indeed entire countries so as to create a credit surplus that can be wasted by those that remain. This is what firewalling is all about – its about destoying us so others can have the bank credit to buy BMWs Bank credit is all about wasting a surplus , but now there is little surplus to waste The Irish Society of Chartered Surveyors may tender for the job of valuing household debt. Bill Mitchell has a interesting take on the IMF doc. via a MMT perspective. bilbo.economicoutlook.net/blog/?p=18959 The graph of consumption loss and debt to income ratios graph clearly depicts Ireland as one of the most extreme cases. @Dork: You got me thinking (well, reflecting perhaps) – which may not be a good ‘career move’ – as they say! I know how a single (non-photosynthetic) cell maintains itself – ie: it can grow in size and reproduce itself. Has to get its chemical energy from its surroundings. Transports those chemicals into the interior (needs energy to do this), metabolizes same, and extracts some chemical energy for its internal consumption. Growth means transforming one set of chemicals into another set. Needs energy. Has to expel waste products. Needs energy. Has to create a new ‘daughter cell’. Needs energy. Has to put by a store of internal energy (against that Rainy Day!). Needs energy. The internal stores have two forms: carbohydrate (same as wood) and hydrocarbon (same as oil). Mobilizes these when external nutrients are short. Needs energy – to get its energy. Nett: approx 70% of the chemical energy in the original, ingested chemicals, is NOT captured. The parallels with economic activity in our global biosphere are a tad uncanny – and worrisome. Since a single-cell organism is a ‘finite’ system, its biochemical (aka: economic) activity is governed by some very un-yielding, immutable laws. These laws make the so-called laws of Economics look like sick jokes. Economic laws appear to have no grounding or relationship to the finite system to which they are being applied. As Richard Feynman said, “… nature is not fooled”, (by PR spinola, or policy masquerading as evidence). Funny how none of this finds its way into Economics texts – Nicholas Georgescu-Roegen excepted*. Like, you might need some sort of energy supply to keep your finite economic system up and running. But as your internal energy store (our fossil fuels) become depleted, then what do you do?. You go into maintenance mode, since growth mode is no longer an option. Some folk are in for a very unpleasant suprise any day soon. Maybe that day is arriving? The fools have substituted a virtual form of energy, credit, for the real McCoy. That, = Virtual Growth. Like a eunuch attaching a pair of clip-on testicles and pretending to be Mr Tom Cat himself! Performance may be dramatic, but the outcome will be disappointing. * The Entropy Law and the Economic Process . I cannot see our grasping chancers giving debt relief to distressed and heavily over mortgaged homeowners. I am actually surprised that our nationalist party has not loudly and aggressively intervened at foreclosure auctions and/or evictions. When the Gov’t protected the bondholders and depositors equeally the taxpayer became the guarantor. So instead of the major foreign banks and hedge funds absorbing the losses the heavily burdened Irish taxpayers and homeowners are on the hook. Four years in and there is still no deposit insurance scheme in place. Could Honohan or someone from DoF get on the phone to Mark Carney Governor of the Bank of Canada and have him email the details of a Deposit Insurance scheme that actually works. Shure ’tis da constitushun Sheila our hands are tied. If this ineffectual attitude keeps up your hands will be tied and not metaphorically. A bunch of incompetents playing politics with teachers, totally devoid of initiative and imagination. That is what passes for Gov’t in Ireland. @Mickey The goverments most important role & duty is to produce fiat and destroy the private debt under such circumstances. It is quite clear we don’t have a goverment ,infact I don’t think we ever had. It was always a Toy Republic , a sad but nasty joke of a thing. Its run (into the ground mostly) more like a large estate then a country. In the 60s & 70s the French never took us seriously – they were right. @MH +1 I’ve been at pains to get this point across on related posts. To borrow a phrase – ‘it’s the ownership stupid’. The fact that we now ‘own’ these banking institutions has for some folk changed their attitude towards much sounder economics such as those proposed by the IMF yesterday (I never in my life thought I’d ever write such a thing, things change). Sadly many are stuck in the notion that because we now own these banks that its taxpayers bailing out taxpayers and ‘that’s not fair’. I say it again please for the love of God can we divorce ourselves from the ownership thing and look at the wider picture and ask the right question which is : Whats best for the economy in the short, medium and longer term and not confine ourselves to narrow arguments such as its not fair that I am paying for the mortgage of those in No. 3 etc. That argument was lost on 31st March 2011 and 28th Sept 2008. Time to move on and embrace what the IMF are suggesting and to ‘be bold’. To implement whats suggested it requires those in Dame Street namely Matt and Pat to realise that Tier 1 Capital Ratios of 10.5% in a depression are as daft as a brush. Banks cannot easily do whats required of them under the IMF paper unless the Regulator catches a severe dose of humilty and does a U turn on the notion that higher than normal ratios at this point in the cycle are unnecessary and plain stupid. @ Brian Woods Snr “I know how a single (non-photosynthetic) cell maintains itself” Handily there is photosynthesis. Solar power Brian, come on you know you love it. @Gav A perfect expression of the pure waste withen this false germanic – eurogenic economy , solar panels north of 50 degrees……….Ha you crack me up. A Mercantile madness meme planted into our little Bog Brains. Lets cut the credit crap and increase the money crap and then see which enterprises rise or fall. Since our balance of payments problems (the chemical stuff does not count because we don’t tax it much) are mainly caused by liquid fuel imports / euro money exports , what can the solar stuff do ? , not much me thinks. When we get back to a rational currency energy efficiency will look something like this. http://www.youtube.com/watch?v=Phza7V0EbJg A town out of time….. http://www.youtube.com/watch?v=qjBWEOrWRMw http://www.youtube.com/watch?v=wtTHP6sa0UY @ The Dork Not my topic but: “A perfect expression of the pure waste withen this false germanic – eurogenic economy , solar panels north of 50 degrees……….Ha you crack me up.” Solar power all over the Sahara, and piped into Europe? As this is Ireland – wind and tide? @ GC: Ok, Ok! Solar is wonderful. Palm trees, white sands and crystal blue sea comes to mind. I’ll stop there. Now I have it from the most irresponsible authority, that we will soon be able to purchase our own personal i-Leaf, which will provide us with all our personal energy needs – as long as that Sol doth shine – and the batteries function (they are re-chargable). The only problem seems to be designing a suitable human interface. Bayonet or screw-in? 😎 Seriously, Solar is a non-runner to substitute for electricity generation – on the industrial scale that we currently need. Now if our electricity needs were one thousanth of current. Might work. But the laws of thermodynamics would still apply. @MH: “I cannot see our grasping chancers giving debt relief to distressed and heavily over mortgaged homeowners.” They won’t – they’r superannuated Calvinists. But events may overwhelm them. I hope. @Dork: You know them B-things? Well No1 son arrived home with the latest – low emissions version!!! When I think back to my first 4 wheeler – an R4. You could push it uphill. The Great Depression example put forward by the IMF is not really applicable to the Irish problem. The HOLC seems to have taken loans with positive equity and the main action taken, in terms of affordability, was to extend the mortgage term. A lot easier to do when the loans seem to be 5-10yr bullets. Reading between the lines, it seems that many of these loans were having problems refinancing. This post from Freakenomics by Price Fishback provides a better summary than the IMF. “Between 1933 and 1936, the HOLC bought slightly more than one million troubled mortgages from lenders and then refinanced the loans with new terms for the borrowers. The mortgages accounted for roughly 10 percent of the number of owner-occupied nonfarm homes. The borrowers aided were all considered prime loan candidates when their loans were made. They typically had made down payments of 50 percent of the house price and faced more stringent loan terms than found for current prime loans. The HOLC rejected over 800,000 applications — some because the household was not in dire need, others because the borrower was not likely to repay the loan. The program contributed to a major transformation in the nature of housing lending. The HOLC offered a subsidized interest rate of 5 percent when low-risk private home loans were offered at 6 percent. The loan-to-value ratio was allowed to rise from the traditional 50 percent of the value of the home to 80 percent. In many cases, the 80 percent figure was applied to the value of the home from better times, so the true percentage loaned on the value of the house was much higher. The length of the loan was expanded from 5 to 15 years. Equally important, instead of the borrower paying interest for five years and then paying a balloon payment of the loan principal at the end, the HOLC loan payments were amortized so that the borrower made equal payments throughout the life of the loan. The typical mortgage refinanced by the HOLC in 1933 was more than two years in default on the principal. The borrower had been allowed — by the forbearance of the lender or by government moratoria — to put off paying the vast majority of the loan for more than 40 percent of the original life of the loan. In addition, the typical loan refinanced had not paid taxes on the property for two to three years. The HOLC also reconditioned about 40 percent of the homes to raise their values as collateral on the loan. People who anticipated that the HOLC would fully resolve the problem were likely disappointed. The mortgage-foreclosure rate only fell slightly over the next three years. In June 1936, nearly 40 percent of the HOLC borrowers were more than three months behind on their mortgage payments. By 1940, the HOLC had foreclosed on 17 percent of its loans.” http://www.freakonomics.com/2008/10/17/economist-price-fishback-the-real-facts-about-the-original-home-owners-loan-corporation-and-what-they-mean-for-a-modern-incarnation/ It would be useful to hear the IMF’s views with regards the ‘mortgage-foreclosure rate only fell slightly’. Can someone provide detail on the debt write-off that the IMF refer to? Perhaps it was a write-off by lender at the point of selling the loan to HOLC, but this isn’t clear given the element of ‘positive’ equity. There’s also a lot of good information here: http://www.nber.org/books/harr51-1 @Gav Too capital intensive , we are living in a false monetary envoirment which requires mountains of bank credit…….. therefore people can’t see the wood for the trees. Even if they do work which they don’t very well – they can only partially solve our Nat Gas importation problem (electricity generation). We have destroyed so much wealth capital over the years so we must keep it simple , which means replacing oil fueled burners with wood gas stoves and dumping the private car for rail , bus & taxi But we can’t do this withen the Euro cage. A rational sovergin honourable goverment would produce fiat and tax waste that grossly effects our balance of payments. Things that may appear archaic now would appear normal again. http://www.youtube.com/watch?v=FjyEsh-dCmM @ Bundesboy The IT op-ed, which you were no doubt one of the authors/signatories to, was immensely vague and came with three highly divergent “costings” between 10-49bn. I think that was most people’s complaint. http://www.irisheconomy.ie/index.php/2010/11/11/economists-propose-mortgage-debt-relief/ @Brian Well we still need cars……… but not so many and not so powerfull. No need for those capital intensive electric cars ……. you know why you have to rent those Lithium batteries and not buy them off the French don’t you ? It would be impossible to sell those electric lithium cars as they are far too capital intensive. (input / output ratio) The Skoda fabia Greenline is by far the best car in real conditions primarily down to higher gear ratios (nothing complicated). From a capital outlay and running cost perspective its the best there is and beats the Kia Rio 1.1 in the real world although officially the Kia has better figures. http://www.youtube.com/watch?v=xqNOQAgQIf0 This is very poignant considering the state of things in 2012 http://www.irishlifeandpermanent.com/~/media/Files/I/Irish-Life-And-Permanent/Attachments/pdf/presentations/irisheconomy? @ Bundesboy See how much support there was for my idea of debt forgiveness in 2010 The governor Honohan had a particular dread of it, still does! http://www.irisheconomy.ie/index.php/2010/02/25/expert-group-on-managing-the-household-debt-crisis/#comment-37407 eoin bond longtime lurker here. do you see professors under every bed? Eoin Bond seems to think everyone here who pointedly disagrees with him is That Prof. The only logical conclusion is that he himself is….:) There is no cash for a widespread resolution mechanism now. So, that horse has bolted. But in good news, and I’m sure Eoin is delighted here, the plucky unguaranteed unsecured AIB bond holders got repaid 1,500,000,000 today. Sure who needs to remove the debt burden of, ooh, 20k households when we can do that. And then let’s not mention the 3.1b (or say another 40k real productive enterprises, aka homeowners) we immolated last month. Nope, it’s all the bond holders still. And Eoin cheers and claps them on. One must assume that he’s short Ireland, because no true irishperson could do other than hang their heads in shame at this state of affairs. Robert Browne. clearly you are That Prof. as well as me. As I say, no cash for real families, lots for the bond risk takers whom Eoin eponymously champions so well here. gimme A B…. Gimme a O…. @Bundesboy There is always cash , its almost free to make is it not ? @AM: “The Great Depression example put forward by the IMF is not really applicable to the Irish problem.” Exactly! So why use it? Fills up a few col inches I suppose. Distracts the dopey. Good dinner-table conversation for the un-enlightenable. A residential property bubble unwinds slowly – usually into a slow uptrend in the background G*P. But if our G*P is on a downtrend … … that’s real bad news. Asset values just keep descending into a slowly sinking pit. That spells real bad trouble on the revenue income side. The December 2012 tax outcome may give some insights, but my guess it may be Dec 2013 before the real horror of this appears out of the fog of disinformation. Of course if Espana should go belly up. All bets are off! @ Bundesboy You’re either the Prof, his apologist or his stalker. Maybe all three. A categoric denial of being the Prof would put the moderators in an interesting ethical quandry were I right though. Don’t really care either way (though you do, hence the referencing of the past debates on here), though the suggestion that i’m “short Ireland” would be in stark contrast to previous suggestions from people on here that I was either long Ireland or in fact a government plant. Other people literally see government PR officers called Eoin under their bed. You also seem to take very personally a comment which apparently wasn’t even directed at you… @ Sahalin Fortunately not. I just see almost exactly the same prose formation, and opinions, from multiple different pseudonyms, in multiples venues. Makes you go ‘hmmmm’. @ BEB Come off it. Bundesboy is very defensive about the CB but that doesn’t mean he’s Batman. You have been very protective towards the Squid in the past but I don’t believe you are Lloyd Blankfein. @ Seafoid I’ve been protective of the squid only so as to make sure people don’t kid themselves into thinking that getting rid of the squid would solve all the market problems (which some of the tabloid media would probably have you believe). I’ve been rather consistent in noting that (a) all banks conducted in similar behaviour to at least some degree and (b) society and governments bought into the general idea. There’s lots of blame to share around. Yours ever, Lloyd. And he’s not Batman. More like Mr Furious from Mystery Men… @ Brian Woods Snr, In terms of debt, rather than GNP/GDP, I’d like a blob of inflation. The original amount borrowed stays at its nominal amount. So with an adequate amount of inflation, real prices can fall but there’s a good chance that the nominal price covers the principal borrowed. I accept there’s a lot of arguments against inflation, but it does help correct overvalued goods and services. Re IMF report – I guess what I’m getting at is that if there is good reason to exclude USA’s HOLC, then the IMF’s other examples are too flimsy to make a case. E.G. Iceland and Hungary are too recent to judge and Columbia doesn’t look like debt forgiveness. Meanwhile, the italian debt auction is…tepid. Rises less than desired at a higher price. http://www.reuters.com/article/2012/04/12/italy-bonds-auction-idUSL6E8FC2BL20120412 But of course, a good dose of austerity will jump restart the Italian economy, it having succeeded so well n Ireland, Greece, Spain…. Nice graphics Interesting to note the base House price of 100 for 2002 implies Ireland appears to be back to 2002 prices right now. How did these people get a figure for “real house prices” in Ireland to support the nice graph? Comments are closed.