Mortgage Arrears Crisis deepens

I think the actual rate of growth has slowed over the last two quarters, but it is still at critical levels. Almost 13% of loans are now 90 days or more overdue. It is growing by over €1 billion per quarter.

How many more quarters of deterioration like this can the banks sustain before they need more capital injections?

@Stephen Kinsella

Good questions.

One I would like to find the answer to is: “How many more are in the pipeline i.e. how many are in the 30-89 days in arrears scale at the moment?”; “How many unemployed people are currently scraping by because some form of benefit is paying the interest on their mortgage (for now)?”; “How many are on the cusp but just managing to scrape it each month but could be knocked over by any sudden but relatively small increase in outgoings?”; “How many are currently destroying their savings to pay the mortgage?” etc.

I’ve been trying to find out but it seems to be closely guarded or unavailable info.

The effect of proposed personal insolvency legislation is currently open to lobbying and the banks appear to be winning. Anything that can be done to persuade legislators to remove mortgage debt from this or give banks some kind of veto on what debts are considered in it is being done with great gusto just now (I can assure you).

On the other side of the coin, I suspect that if mortgage debt can somehow be cleared via the proposed legislation (when we eventually get to find out what’s in it – end June eta?) then we will see an avalanche of applications. There are lots of people out there who feel trapped either through their negative equity or crippling monthly outgoings who desperately want to wipe the slate clean and start again – even if that means renting for the rest of their lives.

No doubt we will sort the problem by giving money to the banks and/or giving in to their demands. Fu*k the poor sod who lost their job through no fault of their own and now their savings have been destroyed because they’ve been trying to pay their mortgage while on unemployment benefits and didn’t qualify for some MIR payment.

It was always going to happen. Big spike in unemployment in a country with a high % of house owners with big mortgages. You could have probably done the sums on the back of a fag packet 2-3 years ago when we saw what was happening vis unemployment going up and house prices falling.

Prior to unemployment taking a hike up, everyone from the government, the banks and even family and friends were telling people to get on the property ladder before it ‘ran away from them’ and they would never be in a position to own their own house. It was bleeding obvious that a large chunk of those newly unemployed were going to have mortgages and were going to be in trouble with no obvious job creation schemes in place.

You didn’t need to be a prophet back in 2008-9 to see this coming and look how long it’s taken to still not have better insolvency legislation. TD’s should be ashamed of their pathetic lack of action on this front.

/rant over

Regarding question 2, I suspect that most of the effect of the proposed personal insolvency legislation on the growth rate of arrears has already happened. Any secondary effect on arrears when the legislation is actually passed and put into effect may be small or even work in the other direction, for example if the agreed terms for defaulted borrowers are more stringent than currently envisaged.

Food arrears crisis deepens

Calls for help to the Society of St Vincent de Paul have risen by 83 per cent since 2009, the organisation said today.

The charity said that its offices in Dublin, Cork, Galway and the mid-west received 88,072 calls for assistance from members of the public in 2011, compared to 48,064 two years earlier.

These numbers refer only to the requests for assistance through the organisation’s main centres and do not include individuals who contacted the charity through other regional offices.

Almost a quarter of all calls the SVP received last year related to appeals for help in getting food, while a further 16 per cent sought assistance in covering bills and energy costs.

Volunteers with the charity made an estimated 150,000 visits to homes across Ireland in the run up to Christmas and the Society of St Vincent de Paul was forced to issue a new urgent appeal due to the “horrendous” increase in numbers requiring its support.

http://www.irishtimes.com/newspaper/breaking/2012/0525/breaking18.html?cmpid=lunchtime-digest&utm_source=lunchtime-digest&utm_medium=email

@ OMF

“If we had non-recourse mortgages—jingle mail—and proper bank resolution laws, this issue would have sorted itself out by 2010 and we wouldn’t all be sitting here, watching the Central Bank breaking into a panic over this issue, and discussing how the government is going sort it out with its usual bundle of sticks and twine.

I swear, this country is being run by primary school students.”

But you can’t retrospectively go back and make all mortgage contracts non-recourse. The banks would probably need another €60 billion dig out to cover the cost of that!

I agree with you by the way that most of our senior ministers are poorly qualified for their brief. I actually felt sorry for Brian Lenihan having been thrown into the Finance ministry a few months before the biggest banking crisis in 80 years with scant knowledge of the industry. Of course he should have declined the offer of the position due to lack of experience, but that is hardly how politics is done in this country is it?

FYI Update from the Bundestag & Taoiseach in Waiting

SPD Demands Growth Components

Frank-Walter Steinmeier, the center-left Social Democratic Party’s (SPD) floor leader in parliament, has made greater economic stimulus measures a precondition for his party’s support for the European fiscal pact agreed to in March by 25 EU countries that is still awaiting ratification in the Bundestag. “Without taxation of the financial markets, without a strengthening of investment power and without an expansion of the loan volume available to the European Investment Bank, the SPD will not go down the same path as the federal government,” Steinmeier told SPIEGEL. The comments marked the first time the opposition leader linked growth measures to support for the fiscal pact. Previously, he had fought other members of his party making that demand.

“I guarantee you, there will only be a fiscal pact if it includes complementary growth elements,” Steinmeier said. “If they aren’t in it, then the SPD will not agree to it.” The demand puts Merkel in a corner given that passing the fiscal pact will require a two-thirds parliamentary majority. The chancellor will need support from the ranks of the opposition.

“Other conditions are that the concerns of the federal states need to be cleared up and that the question of parliamentary participation must be clarified,” he said, referring to the voice that would be given to the Bundestag in making decisions relating to the fiscal pact. Steinmeier also called for the creation of a European debt repayment fund. He said that euro bonds, which are currently being promoted as a way out of the crisis by French President François Hollande, could only be introduced “if they come with strict conditions and we have harmonized European economic and finance policy.”

http://www.spiegel.de/international/europe/german-government-wants-to-create-special-economic-zones-in-europe-a-835224.html

What is the attitude of the IMF towards the new insolvency bill? Rumour has it they are surprisingly close to the position of the Banks and to the right of the position of even the DOF. Reason, they have lent the state money and would quite like it back.

Gregory,
you have gone awfully close to the issue of Strategic Default there now. Be careful.

@OMF

“I swear, this country is being run by primary school students.”

I thought it was primary school teachers?

I guess your average Irish Joe could always do what the wealthy Irish do? ‘Give’ everything of value to someone you can trust to give it back later (wink, wink), run off to the UK, pretend you’ve been living in poverty at an address there for four months and go bankrupt under their laws. It’s only just up the M1 or a hop over on the ferry after all…. unless you name’s Quinn of course.

@Tull

Les banques sont une arnaque (con), des blaireaux (t*ssers), des charognards (vultures) et
des compacteurs de merde (self explanatory)

It also ties in with the fiscal compact

You’d rather not hear me use the word Titanic, or Hindenberg Zeppelin, our wonderful Govt have given us, would you?

The cohort in arrears would be the driving force behind our growth, no?

So, here’s some Led Zeppelin instead, In My Time of Dying 🙂

http://www.youtube.com/watch?v=z1yUvdQnERk

@ OMF

“I swear, this country is being run by primary school students.” No, its actually being run by primary and secondary school teachers. The amount of people I know who are planning an exit strategy is startling and most of them are in good, well paid jobs. Ireland has chosen its destiny and that destiny is a chaotic forced default after we have spent every cent we can borrow.

Some 27,000 interest-only mortages have been restructured. These account for 34% of total restructuring.

I was told by the Central Bank in 2007 that no data was collected on interest-only mortages even though they were the rocket fuel for the buy-to-let market (many units were bought not to let but for a quick sale).

@ Tull

“Trichet has suggested that a EZ state should if neccessary be put into bankruptcy and run by some sort of quango in Brussels”

JCT has gone elsewhere. I presume that comment was before the market turned on Spain and Italy

That solution is a bit like a Greek exit. Italy would be what % quangoed. One in , 6 in.
Italy is too big to manage from Bruxelles. Monti is having a hard enough time doing it from Rome.

Govt are flagging the way to deal with this is through Personal Solvency Reform. The problem with this is, see DeutcheBank AG link below, this will require another ¢5 bn recap for the banks. Link below to mortgage arrears advice also.

Delay in dealing with this is disastrous. This will further deter investors in Ireland.

Compare to Iceland, “Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit eventin Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year. ”

The question posed by the poster above is where exactly has the three years of austerity gotten us?

http://www.askaboutmoney.com/showthread.php?t=166468

“Personal insolvency reform is also a key measure in the mortgage arrears resolution process. As Members are aware, the Minister for Justice and Equality published the draft heads of a personal insolvency Bill earlier this year. This draft Bill was submitted to the Oireachtas Joint Committee on Justice, Defence and Equality and its findings were published on 6 March 2012. Its views and those of other interested parties are now being considered by the Government in the further drafting and finalisation of the Bill. This will be radical and complex legislation. Significant detailed policy development and drafting work is being carried out at present by the relevant Departments in consultation with the Office of the Attorney General. It is accepted that the preference would have been to have produced a final Bill at this stage. However, the drafting of such a complex Bill gives rise to significant legal and drafting considerations that must be teased out fully and worked through in detail before publication. While this work will take longer than originally envisaged, it is necessary and will be to the benefit of the final Bill when it is published and accepted by both Houses of the Oireachtas. The troika is aware of the detailed work under way and has accepted the publication of a Bill will take a little longer than originally envisaged. The Minister for Justice and Equality has indicated the draft legislation will be published before the summer recess and Members of the Oireachtas then will have the opportunity to consider the full details of the Government’s proposals on this crucial proposed legislation.

It is fair to state the reform of the personal insolvency legislation will be the ultimate game-changer in respect of the resolution process. There is acceptance, from the troika to the Government and all parties in this House and elsewhere, that the real change which must occur to resolve the position of those who are in acute mortgage distress can only happen on foot of necessary changes in the personal insolvency legislation. That is, as I have described it, the game-changer because it provides the legal context within which the banks then will be able to resolve all these matters. I made the point earlier all this is notwithstanding the schemes the banks will bring forward. While some banks already have brought forward novel schemes in respect of negative equity loans, shared loans and so on, there must be further engagement with them. However, the crucial change must be the personal insolvency legislation, in that it tips the balance in favour of resolving many such outstanding mortgage problems, which ultimately is where one will discern fundamental change in this area.”

http://debates.oireachtas.ie/seanad/2012/05/15/00005.asp

http://www.centralbank.ie/publicinformation/Pages/default.aspx

http://www.bloomberg.com/news/2012-05-18/irish-banks-may-tip-state-into-bailout-2-deutsche-bank-says.html

“Several states are angry at plans to fine them if they breach the fiscal compact’s deficit limits. They say that such fines already apply under an existing deficit cap, and the legislation would “unfairly” increase those penalties. “…..

“Juergen Trittin, co-leader of the Green Party parliamentary caucus, said after meeting the chancellor that the next step was for Merkel to reach an accord with France, Spain and Italy.

Earlier in the day, Gabriel made his own concession, backing off demands for so-called eurobonds.

After months of appearing to support calls by Hollande and others for the 17 eurozone governments to raise money jointly with eurobonds on capital markets, Gabriel adopted a more cautious line.

He told ARD public television that eurobonds “in the general sense” of “debt guaranteed in common” would “definitely” not be acceptable to his centre-left party. He called instead for a treaty to pay down excessive debts.

“Let us mutualize only that part of the debt which exceeds 60 percent of gross domestic product and let’s pay that off over 25 years,” he said. “That is a form of eurobonds if you will, but with clear conditions.”

The Social Democrat said the European Union had $25 billion in unused funds that could be mobilized to promote growth. Merkel has also pressed Brussels to unlock its special funds. ”

http://www.hispanicbusiness.com/2012/5/24/german_opposition_close_to_deal_with.htm

But you can’t retrospectively go back and make all mortgage contracts non-recourse.

Says who? We retrospectively went back and made every bet ever taken by private banks to be publically backed up by the exchequer.

The banks would probably need another €60 billion dig out to cover the cost of that!

Or we could, I don’t know, as private institutions just, say, put them into liquidation instead. Crazy notion for a capitalist society I know. Crazy notion, yeah. Let’s just give them more free money instead.

Those Commie Canadians………..
http://www.youtube.com/watch?v=sHgzOEuCsd8

2 to 1 leverage……..I guess we would have to set up a charitable foundation for newly impoverished bankers.

WE NEED BASE MONEY IN THIS JURISTICTION that some jokingly call a country with a domestic economy.

From a rational national economy perspective these mortgages or credit money is of little value to a national economy.
They are merely a mechanism for extraction at these leverage ratios.

@Cpar

“Greece exit from the EMU is imminent”

http://www.efxnews.com/story/12752/grexit-imminent-rumors-it-will-talk-place-june-2nd3rd-btmu-others

Coming To The Boil Underwater:

http://www.japlandic.com/2012/05/coming-to-boil-underwater.html

On the questions posed:

Q: at what point will this growth in arrears begin to slow appreciably?
It’s going to get a lot worse first! When the banks get their next bailout (sorry Mr Varadkar but there’s a lot more cents going into the zombies) they’ll start to flip the “extend-and-pretend” sub-90 day restructured deadbeats.

Q: what projected effect will the proposed personal insolvency legislation have on these arrears going (ahem) forward?
Minimal to none. The banks are being just as mollycoddled by Comical Mickey as they were by Comical Leni. At the end of this process, the pillock banks will have gone from 40% market share to 90% and they’ll have a nation of debt slaves. I reckon the banks will be very happy with this outcome.

Clearly the first capital injection(s) into the domestic Irish banks were used to offset mainly CRE losses but even these have yet to be properly provisioned….all banks in Ireland plus NAMA are still well short of where they need to be in writing down /off their CRE portfolios.

So now we come to Residential (and have yet to get to some other categories such as personal debt, etc). @ fravo Thanks for the Blackrock slides /analysis, although the US residential market is ‘apples and oranges’ in comparision to the Irish situation and there is little European precedent as Blackrock says (worrying that Spanish property prices appear higher than Irish prices in the slides!).

@ Tull “Conclusion: our creditors do not do (much) debt forgiveness so any large reduction of the mortgage burden will have to come from another group in Irish society by some means or other.”

From a previous thread: Tull ““I presume this means that NAMA won’t hit your hedge fund vulture’s ridiculously low bid. In refusing to do so is it not acting in my interest as a citizen and taxpayer of this country rather than your pal’s interest.”

Given the way the numbers are unfolding and the known, continuous decline of property values over recent years, do you really still think that telling PE /external investors to piss off over the last few years and the continuous kicking of the can down the road by the Govt /the banks /NAMA on Irish property has been the correct strategy?

Domestic disposition programmes should have started way before now, at what were in reality more favourable prices than can be achieved now. Despite being warned that it would cost more in the longer run, Official Ireland procrastinated. That was perhaps ok as an initial strategy (it happened everywhere), but it seems to have been adopted as a longer term strategy in Ireland based on the Troika funded, artificial “status quo” and path of least resistance /pain…..But now we begin to see the consequences (continue to) emerge in hard, cold stats.

@ OMF Liquidating the “pillar” banks would solve little at this point. The country needs a banking system. In any event, that wouldn’t fix householders’ balance sheets.

Again, reality will have to be faced. The money has to come from somewhere.

@ SK The only surprise is that the CBI is surprised and alarmed at the level of impairments. It is most unfortunate that Official Ireland has again underestimated /miscalculated. It’s perhaps a thankless job…..but in a real commercial bank context, senior management would get a real bollocking (if not fired) by a Board of Directors for such lack of performance, no matter what the excuse.

@Paul W
re “OMF Liquidating the “pillar” banks would solve little at this point. The country needs a banking system. In any event, that wouldn’t fix householders’ balance sheets.”

The country needs a banking system.

I agree. We should put one in place as soon as possible.
What we have now are debt collection agencies that happen to have responsibility for running a money transmission system.

@Paul

And I largely agree with you.
“Given the size of that problem, it would be a good starting point. If our esteemed leaders don’t get on with it, the Troika /EU will begin to enforce in any event….”

I do hope that before the Troika move on this that the prelude will be the removal of every senior layer in all of the Irish banks.
They need to be sent a message, if for ‘Moral Hazard’ reasons only.

@Tull
You are believing Karls fairy stories of Austerity.

But bankers never define what austerity really means……(saving a stock of debt)

They will try it I guess… cutting the money supply /public exp.

But the waste is not in the money supply …… its the credit supply.

Most likely given the structure of global finance our currency will seriously devalue against the $

I keep telling people they should redirect what remains of the capital budget to rail.
I really don’t want to be proven right on this but I will me thinks.

They will keep filling those potholes in until they can’t – its a sort of deep county council programming I guess.
We have one of the densest road networks in the word but a relatively sparse population by western european standards.
Maintenance of all these dendritic networks is impossible.
Unfortunetly our defective monetary system / accounting makes it impossible for most people to see the inherent waste withen the system.
If they really do spend 2 billion on that Nama stuff I will eat a hat or something.

@ Tull Sure, let the external bid compete against the domestic default bid…..if the latter has any money /equity?! Far from certain that. But let the market function rather than try to massage values to reach desired points on the accounting ‘dartboard’ (let’s be honest, pretend values to sanitise Govt projections). New capital must be brought into the country. Let’s stop pretendiing re property values and get some /a good bit of the stuff sold.

@ fravo “BlackRock PCAR assumptions were for 90+ delinquency to peak this year at 14% (base) to 20% (adverse)”.
Well clearly nothing has peaked yet, so I won’t be surprised if actual vs projected is 20%+ (and rising). CBI’s alarm has clearly been growing….

@Tullmcadoo

“At this point any sensible Irish citizen would move his money off shore as your deposits will be hair cut in real terms.”

And if the State were full of such sensible citizens, we would not have a State. In fact the first move I would make would be to implement capital controls.

But I take you point re there being no alternative to achieving a primary surplus much more quickly. We would however go about it in very different ways.

@ Eureka Don’t bet that we’ll be on the ‘right side’…..Spain is far more important to the Euro than an Ireland, Portugal and /or Greece. @Tull. I sincerely hope that the Greeks will not be ‘toast’…..there go the Irish but (so far) for the grace of God.

@ Tull Remember also that, while the banks and NAMA are nowadays large physical property managers (Unbelievable that this is so) and there would therefore be a need for some physical property disposition, most of what would be for sale would be property loans. There are well tried and tested ways of dealing with large property loan portfolio dispositions e.g. auctions based on virtual data room (allowing international participants remote participation, lower costs, easy logistics, etc)…..efficient and allows for a certain amount of ‘mop up’ of the ‘c**p’ on the tail of better quality sales, etc. Importantly for Irish public servants, auctions would be transparent…..But probably a mix of sales’ methods.

There is no reason this shouldn’t already be happening bar politics and current fudging of Irish Govt projections.

Reality needs to be faced…..or it will be forced by external creditors. Simple as that. Do the Irish want to retain control of this, or will it be the Troika dictating the programme? Also, nama and the banks should in any event be disposing property /property assets to get cash in advance of any major EZ ‘disaster’….at least to mitigate against same. What will NAMA’s and the banks’ books be worth if the proverbial hits the fan? The article posted by SK already indicates a 5-6bn shortfall (and huge overruns in physical property management costs…..God Bless the Irish property sector, but they certainly know how to play all sides of a crisis! Never waste a crisis and all that.

Final point for now (gotta go), it’ll be interesting again to see the reactions of the Irish pro austerity economists and supporters when the real extent of capital shortfall is revealed in due course……Will then then still think that Ireland’s debt levels are sustainable!

@ tull

I think we will see you in a Keynes outfit. Austeridad has been given 2 years and there is no growth. It is not rocket science. Spain and Italy are proper countries and they don’t want to be run by Basil Fawlty c/o Frankfurt.

The adults in places like Asia and the US are looking at the ideologues in Europe as the water floods the kitchen wondering WTF is going on.

I just wonder where it all leaves the UK.

Stephen didn’t you flag, to howls of derisive laughter from the commentatorati here, this issue back in 09? Calling for action,write offs, wrote downs, something? Top marks for head above parapet.

@ Eureka, PaulM

No to “wait and see”. Enough of that. The country /its leaders can actually do something positive and construcive, something other than ‘smoke and mirrors’ and political posturing, something real (before Morgan Kelly’s prediction of economic annililiation transpires). Is there any principled, real leadership in the bloody country?! I’m awaiting Patrick Honohan’s ‘rebirth’ or John McHale’s ‘enlightenment’. Colm McCarthy is also someone who can great…if only he can be more confident that he is right (most of the time). Others also.

@ Paul W
We are not strong enough to make a stand. We are small and divided. Wait and see is a reasonable approach.

It’s too hard to call this but I think Europe will make a complete mess of the Greek situation. Long term it could be the beginning of the forging of a collective European consciousness. Europe will have to reinvent itself. All its structures will need dismantling and it could be run along the Canadian federal lines (but with a directly elected President). It will need to be simpler and tighter.

And when this is over it will be seen not as a sovereign debt crisis but as a failure of private banks. If the state is now having to lend money, guarantee deposits, and cover losses – why is there a private banking sector at all? The world cannot live with the current private banking set up any more. But Goldman, Zerohedge and all that bunch have been very good at deflecting the blame for this from their industry.

From crisis comes opportunity. Let’s just wait and see. Let’s gently steer this madness to a solution which involves major overhaul of private banking

It’s worth noting that it is impossible for everyone to repay their loans under the current system of money creation whereby the vast majority of money is created through loans.

This is because what’s in circulation is cash +’principal of every loan. What’s owed back is the principal + interest. We owe more than exists.

To resolve the mortgages arrears problem we could get the Central Bank to create some digital money for it’s Government providing the economy with some much needed debt-free money to replace the function of cash

JR,
Where are you going to get 6bn from to fund this scheme. how are you going to pay back the billions you borrowed from the IMF to stick into the banks.

Seafoid,
I am a Keynesian at heart and by education. However, our problem is that we have a debt GDP ratio of 120%+ & no one to lend us the money. So we will have to piggy back off other people’s Keynesian stimulus. No doubt some one will suggest defaulting on bank debt and then borrowing from the markets. Well they markets might wait to see the resulting legal action before helping us out.

Now as regards your second very good question on where the money went. Consider the following. The State borrowed billions to build the beautiful road network. Much of that money went on land purchases. The lucky farmer had three choices i) AIB/BOI ii) buy another farm on a P/E of 80+ iii) buy property overseas ora mix of all three. The Four Seasons Hotel (irish owned) in Budapest/Prague etc c. 2006-07of a weekend was generally full of Irish-you could tell by the county jerseys-all buying blocks of apartments, often from Israeli investors who were cashing out. The equity came from the CP money and the leverage from Irish and Italian/French/local banks. Very often the money was borrowd in swiss franks or yen. Now this trade has gone horribly wrong as the asset prices have gone south and the CHF or JPY has appreciated against the Euro. So the typical 1-5m that was ploughed in is probably worth -1m to-5m now.

Now consider option 2. I know 1 person who sold their farms in a midland town for 10m. Because of age and being suspicious about asset prices, he retired, paid his CGT and bought a small villa in Spain near a golf course. The residual cash is in AIB, where he has banked for 40 years. Or it was until he was advised to move it offshore last year. I don’t know precisely where it is-my suspicions are that a lot of it is in US Tbills and short dated bunds.

The above real examples show how the wealth has vanished to both money-heaven and offshore and is thus beyond the reach of RBB and SF.

Paul W,
Events are being dictated by the Troika now. The pace and shape of policy is heavily influenced by them. For example, the IMF has a real problem with govt proposals on mortgage/insolvency. It suspects a large element of strategic default. Baed on vast experience, it must know fairly precisely the relationship between mortgage arrears and unemployment. We are above the line. Recent experience suggests rising non complaince on taxation. So our overlords might be getting a bit frustrated here.

@ JR PE might back the 6bn, but they can get 6% return in Boston or Chicago. Now if it was towards 10 /11%, you might get your capital. EU debt ‘appears’ cheaper than capital if you are going to do it that way.

However, do you want Govt being the landlord and investment manager (upkeep, etc) of physical property in Ireland. I therefore favour PE, whether local or foreign….new capital, far more efficient (albeit a harsher, near-term reality). Also, avoids all the gouging and moral hazard that Tull refers to.

@ Eureka When the going gets tough, the tough get going. Seems to me as if the Troika are relatively non-plussed how the details are dealt with, provided the debt service continues. The problem with the current status quo is that it is unfair to so many, with politicians simply not rocking the boat….fear. Not one Man or Woman of gumption among them. Not sure how you move that….Seems to me though that it is the likes of Patrick Honohan who need to influence and direct them on this. So many of the pro austerity economists in particullar are not ‘Big Picture’ (Patrick Honohan in fairness is not one of these)….they seem very happy with their models and theories…..no one willing to do other than ‘comfort zone’. Not sure how one moves that either…except continue to try. In any event, economists do not rule the world.

I see that the polls today are showing the Y camp will win. If that is the final result, the FC will no longer be for debate in my view. However, there is still plenty to resolve – property resolution, deficit resolution, insolvency resolution, social justice & cohesion for starters.

@ Paul W
There is nobody in the political sphere capable of delivering on this. This is a private banking mess and nobody in power can take them on because they are beholden to them or appointed by them.
The real pressure on the system will come from
Greece, Spain, the UK and (if Romney runs riot) the US.

This is a problem of banking. Thats where reform must start

Propaganda, there’s no other word for it, is coming thick and fast from RTE. Marion Finucane had a reporter, I think it was Fergal Keane, lengthy summary of political events during the past week. In closing remarks groomed his audience by remarking this was not a good time to use your vote to give a thumbs down to the government. How biased and propagandistic can one get? Irrespective of your views on this, its certainly not his role to be grooming the electorate towards a Y vote. RTE chicanery of this kind is a regular occurrence and becoming increasingly
apparent. Having said that, in spite of endemic cojoling in favour of a Y vote by RTE, its both edifying and surprising to see so many intending to vote No. Coverage of the Referendum campaign and the issues involved has been haphazard by RTE. Intellectual discussion of the issues involved has been stymied by a barrage balloon of members of academia trotted out to defend the status quo of Y at all costs with many excruciating efforts made to give mathematical substance to unfortunate projections on growth no one believes. Some academics on the No side however have done very well in defending their position; the Y campaign has truncated efforts to probe the dark depths of the FC preferring to make act of faith, exhortations based on shallow arguments on banal assumptions re stability and growth without much evidence on their side to redeem these arguments. Yet, their remains a dogged and persistent No campaign willing to debate deeply matters the Y campaign would like to bury and hide from. There could be surprises ahead 🙂

The elementary property valuation error;

http://www.independent.ie/opinion/letters/bubble-values-3034584.html

Thanks tull. I still think about the tiger gains in terms of waves. The last wave of bets were lost but were the previous iterations all reinvested in property? I wonder what % is now on deposit, how much in bonds and where, how much went to equity where, to hf etc. Re the arrears what level corresponds to honohan’s stuffing the banks with capital. Aib has enough for what level? What is the demographic of the typical arrears? Sub prime and unemployed and what else and what % of the demographic is on the arrears radar and has the worst case shifted since the banks were stuffed? Does anyone have a feel for it? I just don’t see enough info to make a call on I
t

other than that the level of individual suffering must be immense.

@ JC “The mortgage arrears problem started with one house–Leinster House.”
The elementary property valuation error; http://www.independent.ie/opinion/letters/bubble-values-3034584.html

John What the f**k? You keep posting this old-news BS (so what?!…we are in a different world right now), without any forward view it seems (are you purely a trying-to-be property historian?….). Have you a brain /idea in your head that can address, potentially, a way forward?

Move on. Use your head….and help. Join this world.

@ Dork
What’s on my mind is how markets are likely to move given what’s going on. It’s chaotic of course. However, V Barrett asked yesterday whether one should short oil for instance? Suppose you need to make such a daily decision…..

Then there is euro fx, etc, etc.

I would be very interested in whether you could (more concretely) translate your analysis to a ‘forward basis’…your provision of current stats is fascinating (the Italy and Spain oil consumption charts from yesterday were ‘awesome’). How does your forward translation work /look?

More bluntly, you have say Euro 1,000 (or even better, say Euro 100k of your own money) to invest and need to perform…you may lose all /go hungry otherwise (I trust not). How do you generate say [10]% pa (?) return in this world? Or even,how would you protect capital value? Open floor. Go anywhere you want or need to go.

Oh…the company /you have max. 6 months’ savings /buffer.

Part of this is how does Ireland /you invest Euro 1,000 /Euro 100k and help itself /yourself?

Open floor to anyone else also. I myself have no answers here….but this the kind of situation business is really facing every day. No choice….but make a decision.

@ Colm

I am not sure about these polls?

Meanwhile, the EU is frozen in the headlights once again as they wait for yet another election in Greece, the problem festers. What result are they hoping for in Greece? That a pro bailout coalition will be elected and that they will be able to impose impossible austerity measures, collect Greek taxes and bring the capital, and bank deposits that have fled the country? So their best case scenario is impossible, implausible and totally unrealistic

For years, they have avoided letting banks in Europe go bust by letting states go bust instead.. They denied they were insolvent, then did a series of bogus “stress tests” which amounted to nothing more than illegal cover-up’s for false trading. Now, the truth can no longer be denied and the truth is that the EZ is a busted flush and beyond repair. Ireland’s marching of it’s electorate out to vote for another bailout is window dressing that will become irrelevant but it will hasten the end game of default.

This ESM if it comes about will indeed prove to be the “bailout” that will totally sink the country and I am glad to report that all the usual suspects are on board, many with happy go lucky, student type economic theories and formulae based on 4% + growth complete with beggar thy children attitudes so that the pretense of successful lifestyles can be subsidised for another year or two.

I see that Russia has now become one of the safe haven countries for deposits leaving the EZ. Belgium and France are now entering the same league as the PIIGS in the eyes of depositors

China’s building boom is now bust with far reaching repercussions on commodity prices and EU exports.

Growth world wide appears threatened. For Ireland treading water is the best we will do for the next couple of years. Unless we vote No which will put the kibosh (caidh bhais one of the few Gaelic words in general use in English) on further advancement.

@Paul W

Wealth and worry go hand in hand. To maintain one’s real capital, one must be vigilant,skilful,bold and lucky.

Vote No.

And the Bank of Canada taking a relatively restricted view of its role, with consequent avoidance of the worst excesses of the Greenspan era.

http://www.bankofcanada.ca/2012/05/speeches/monetary-policy-decision-making/

@Robert Browne

“nothing more than illegal cover-up’s for false trading. Now, the truth can no longer be denied and the truth is that the EZ is a busted flush and beyond repair.”

+1

When you get Christine Lagarde mocking Greece with innuendo against anti austerity parties, there is a clear agenda on foot in EMU to stamp out all opposition to austerity and cuts. They want a military style police state to impose austerity. This is not a direction Europe should be taking.

Clearly Lagarde is not in favour of a similar form of austerity for the levers manipulating the european financial system; or for the shadowy figures behind it.

http://www.dailyherald.com/article/20120526/business/705269842/

“the left-wing Syriza party, wants to abolish Greece’s international bailout agreements”

Time to send the ‘unexplained phenomenom’ of the banking sector which is grooming the Irish Y, a message of independence 🙂

A future of debt peonage in a vassal police state stamping out efforts to save democracy and public services from the banking sector, is not a future that will bring stability.

http://www.imdb.com/title/tt0116629/

@ John Corcoran,

“In 1999 David McWilliams…”

He made a good call there, but he got it badly wrong re ‘the guarantee’; he mitigates criticism on this by suggesting he was advocating a ‘temporary’ guarantee to allow banks time to breath only. However, we all know how the temporary can morph into the permanent. In reality, Ireland spooked even Christine Lagarde, French Finance minister at the time and certainly spooked Alistair Darling, UK Chancellor for Exchequer, who rightly feared a run on English banks that were under pressure around the same time. Properly, the ECB should have been handed the problem; the Irish state should have been buffered from the consequences of unilateral action, that would later come back to haunt it. If ECB could not defend the state, the state should have set a ceiling beyond which it would not go to do so, but that would be asking for leadership beyond what apparently is available to us.

When faced with a choice between the inexorable logic of Colm & the random meanderings of Colm, I believe Colm.

Colm McCarthy has never made a mistake ever.

PS
I think Steve believes the very act of saving fuel will drive down the price of the stuff which will keep the stuff in the ground as it will be unprofitable to extract…….so lets say the price could plateau at $90 dollars a barrel as many people simply will not have the tokens in their pocket to drive the price higher….as we remain withen a never ending deflationary depression.

Anyway something really weird is happening in France.
We hear alot about all the sexy High speed & tram train stuff but there is fixed capital money going into the unsexy basic rail infrastructure as well , for the first time really since the war.

fr.wikipedia.org/wiki/Ligne_de_Flamboin-Gouaix_à_Montereau
I am trying to get a overall picture of the amount of money going into these projects but it can be quite difficult to gauge.
What we are witnessing is a recent drop in French diesel demand (commercial activity ?) which not unlike Germany was robust during 2011.
omrpublic.iea.org/demand/fr_dl_ov.pdf

However Like everywhere else is the eurozone total products demand is tanking as Gasoline , Home heating and Kerosene use nose dives.
omrpublic.iea.org/demand/fr_tp_ov.pdf

But are we getting effective good substitution in France ? , I don’t think so as they are operating withen a non optimal currency area.
Like everywhere else in the eurozone they cannot use the internal wealth of the country to its most effiecent extent because of a lack of token / base money withen people pockets.
So even “rational investment” itself is a sort of misallocation of resourses if persued withen a money vaccum.

Eureka,
I am voting No. I agree with the McCarthy analysis that a no vote means no guaranteed funding. I am also in the same page as Cormac Lucey. A new policy will be implemented here post No vote. It will be called Austerity.

@Tull

“When faced with a choice between the inexorable logic of Colm & the random meanderings of Colm, I believe Colm” Lol, Dat be Colm Mc logic vs Colm B meandering, or visa versa, or both for each, or both for one of 2?

Logic is missing in that sentence unless you have some paradox in mind whose meaning is lost in translation .

Perhaps you can identify the logic you refer to ? Didn’t know yu were signed up to
the Y ESM hope of a second bailout to write down bank debt. Good luck with that.

I did think I was quite clear in arguing for a No vote 🙂

@Tull
A policey of austerity (debt austerity) cannot be implemented in a rational national economy…. although Ireland is not a rational place so….

We were a semi national economy up to a point in the 70s ,early 80s.
We became a full market state entity and a part of a wider market state Soviet post 1987….. this in reality meant physical taxable trade balances were not important until the crash.
Post 2007 /08……we became a national economy again – bailing out international banking operations and their market state bets.
Post 2012……..life in a national economy will mean most of the “private jobs” are net extractive as they have developed to farm bank credit money.

When their input costs of driving to work are higher then their output costs…….
Yee guys really have to get over the PD programming file….. it was merely a moment in time….. a moment when consuming liquid fuel and turning it into grot & “services” appeared rational for purely global monetary reasons.

The modern market towns of Ireland were products of narrow gauge lines… the first suburbs the products of tram lines.
Unless we can link them together while burning the minimum of precious liquid fuel we will be going back to the dark ages.

There are plans to extend the Lyon T3 line 40 Km east of that city to link the medival town of Cremieu…
fr.wikipedia.org/wiki/Crémieu

Just saying like…….

fr.wikipedia.org/wiki/Chemin_de_fer_de_l’Est_de_Lyon

@ Tull

I admire your conviction but this mess has gone far beyond the days when it was an Irish problem.

JCT made a hash of things. We are where we are.

They’ll go to the edge of the cliff and come up with a Euro compromise.

@ Dork

Interesting as always. Many thanks. Today’s stockbroking fun and games are indicative of what’s still under the carpet. Of course the pile has always been fairly deep in D2.