IMF on: Fiscal Adjustment; Construction Cycles

Two new IMF studies:

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137 thoughts on “IMF on: Fiscal Adjustment; Construction Cycles”

  1. This is a period in Ireland of far below average construction spend when tender prices are depressed and unemployment is high and long term borrowing costs have fallen. This is a time when the EPA says Ireland will breach her legal emissions reduction obligations within a couple of years, incurring fines.

    This is a good opportunity for investment in major public transport infrastructure projects like Metro and DART that have passed planning and financial justification stages.

  2. In my opinion the best thing that could be done now is implement, non-recourse property lending! It would focus minds among the inept in the banking sector holding out for the next property bubble.

    It might even be the push they need to develop the talent required to lend to our domestic economy.

  3. @ : ‘The Driving Force behind the Boom and Bust in Construction in Europe.’

    The specific dynamics for Ireland indicate that there was a a ‘housing boom’ and that “credit conditions” were one of these dynamics. Another specific dynamic, not included presumably because it is not an economic one, was the unrelenting PR hype of the various property interests. Another Ireland specific dynamic – ‘rent inflation’ in the commercial sector, must have been a significant dynamic as well.

    All in all, there is nothing of significant note in the paper: you pump more liquidity into an economy and it will find somewhere to go. QED. Increases in construction shares correlated with increased GDP growth, but there was a parallel increase in debt levels. No mention of this is sharp increase in property related debt is in the paper. High rates of increase in debts mandate correspondingly high rates of income growth. If incomes falter: that’s trouble. And we have ‘trouble’.

    We already know most of what occurred here between 2002 and 2007 (except how the Irish commercial and domestic financial institutions were able to borrow so much, so quickly!). What did they tell their lenders?

    And: “an auto-regressive, error correcting process is …”, reversion to the mean. Nifty!

  4. Two quotable quotations from the first paper!

    “Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.”

    And the conclusion;

    “Finally, the application to actual country examples casts doubt on claims that very large multipliers have been operating. In particular, based on plausible potential output assumptions, multipliers significantly exceeding unity would imply a large positive contribution to growth from purely private-sector factors in Greece in 2010-11, which seems counterintuitive. As this assessment could be sensitive to the potential output assumptions, alternative potential output paths are tested, all pointing to the same conclusion. A closer look using this framework suggests that GDP forecast errors for Greece were due more to over-optimism on potential growth than to underestimating fiscal multipliers.”

    In short, on the issue of multipliers, much ado about nothing!

    The only lesson that can really be drawn is that the IMF should have left the countries that decided to create the euro to their own devices.

  5. fyi
    End Austerity Now

    Mark Blyth is Professor of International Political Economy at Brown University and the author of Austerity: the History of a Dangerous Idea.

    In fact, any talk of recovery is premature until the losses incurred by austerity are recouped. As it stands, every country that has implemented an austerity program without imposing losses on private creditors has more debt now than when it started. For example, according to official estimates, Spain’s public debt, which amounted to only about 36% of GDP when the crisis began, has almost tripled – and the actual figure may be much higher. More telling, the countries that cut expenditure the most experienced the largest bond-yield spikes and the most significant debt growth.

    Read more at http://www.project-syndicate.org/commentary/why-austerity-is-the-wrong-prescription-for-the-euro-crisis-by-mark-blyth#kXoBsc5M1tMQhRrh.99

  6. Below is the link to the elementary property valuation error that bankrupted Ireland;

    http://www.independent.ie/opinion/letters/bubble-values-3034584.html
    Professor Neil Crosby’s online response to this Irish Independent letter
    “Bubble values” 29th February 2012

    “The analysis may be simplistic but unfortunately it is not flawed.
    Banks ask valuers to tell them what the market value/exchange price is
    at a point in time and then lend vast amounts over time based on that
    simple number. The surveyor gives them that simple number and do not
    think it is their job to tell the banks that the question they have been
    asked is stupid on its own and what they should have asked for is the
    underlying value. It was obvious in 2005 and 2006 that prices in the
    property market were higher than could be sustained by any rational cash
    flow analysis. But in a culture that rewards individuals for short term
    performance rather than longer term perspective, it was in neither the
    bankers’ nor the valuers’ interests to stop it. I cannot see anything in
    what the UK regulatory authorities have proposed that makes me think
    they understand the role of property valuation in driving asset bubbles
    and will prevent it all happening again sometime in the 2020s.”

    Neil Crosby
    Professor of Real Estate and Planning
    University of Reading

    John Corcoran – Neil Crosby is quite right to point out the critical and corrupting role of valuers and banks in the property bubble. RICS and other property related professionals should hang their heads in shame for not raising the alarm bells and not challenging landowners, banks and homeowners about the outrageous rise in property valuations which had no relationship with reality or ‘underlying value’. Their role is similar to that of ratings agencies which were paid to sign off triple A ratings by their clients for junk.financial instruments most of which related to property assets..Sadly it does not require a university professor to point this out.

    Anyone with a modicum of experience in property and development knew we were headed for trouble and I am sure I was not the only person to flag it up.
    http://www.youtube.com/watch?v=rRfMO6agqGQ

    If these so called professionals had been held to account by their so called professional bodies ( as the General Medical Council regulates doctors) half of them would have been struck off. Their primary responsibilty should have been to the reputation of the valuation profession and not their commission. In many countries property is taxed and valuers are independent or are part of the state.

    Radical reform is required or we will surely revisit this crisis again in the near future.

  7. DOD,
    Without hysterity the underlying Budget deficit would,be over 20% of GDP each year, Who do you suppose would give us the money to fund this deficit?

  8. @ BW

    “an auto-regressive, error correcting process is …”, ..vested interests hunkering down and the young emigrating

    Meanwhile Government looking at ESM guarantees for trackers

    http://www.rte.ie/news/business/2013/0823/469974-tracker-mortgage-esm/

    Why aren’t trackers automatically switched to whatever economic rate stops the banks bleeding losses on the business? Why are these contracts sacrosanct when so many other types of contract have been broken in response to the crisis ?

  9. ‘Who do you suppose would give us the money to fund this deficit?”

    With an ESM guarantee and a juicy yield, Tull, the hedge funds would be lining up, I tell you. Very hard to get the right yield profile these days, you know. Irish gilts would be much more attractive than EM stuff with all that currency risk as well.

  10. Seafoid,
    You would want to be on the sauce or some illicit pharmaceuticals if you think the ESM or anything beginning with E would extend credit to a fiscally incontinent country with a 20% budget deficit .

    These Shakespearean characters want their money back.

  11. It’s interesting that a fantasy housing boomlet is making the news when completions in the first half of 2013 were back to the 1960s (data for Q1 1970 was at 3,700, the same level as H1 2013 output) and mortgage approvals were back to the 1973 level in Q2 2013.
    Meanwhile, five years after the biggest housing bust in Europe, change in the sector is on the old reliable slow boat to China: there are still 88 planning authorities (yes 88 not 8) and over 400 development and area plans have to be produced for the country of 4.6m.

    Land rezoning remains taboo for fear of upsetting farmers who need more public welfare but last May, the Cabinet agreed to accept the Mahon Tribunal proposal to appoint a planning regulator who will have power to review plans to help the minister of the day make a decision or not.

    Interesting fact from Julien Mercille of UCD: “between 2000 and 2007, the Irish Times published over 40,000 articles on economic topics – but only 78 were about the real estate bubble, or 0.2% of the total.”

    He surely didn’t come to Ireland to become a media whore!

    Still on the topic of reform and what happens when it’s tried (what could be possibly learned from those Finns?)…this week Sean Byrne of the Dublin Institute of Technology had an interesting op-ed piece this week on exams:

    Some years ago the Leaving Certificate biology paper caused a national outcry when a question appeared on the frog, which had not been examined for several years and therefore was not “predicted”. Distraught mothers phoned Joe Duffy on Liveline and the State Examinations Commission had to reassure pupils and parents that the unexpected appearance of what Dickens’s Mr Gradgrind would have called “our commonest amphibian” would not lead to lower marks in the exam.

    http://www.irishtimes.com/news/education/exam-standards-leave-many-students-ill-equipped-to-thrive-at-third-level-1.1501382

  12. Oops! That smiley above is supposed to be the figure 8.

    On education/ enterprise, has anyone ever seen criticism of the methodology of international rankings when Ireland’s or for example a university’s rank rises? Press releases are issued by government and institutions while a slippage is usually ignored.

    However, the highlighting of the low level of support for Irish research from some of the world’s biggest companies in their sectors, is a bitter truth that has to be countered:

    http://www.irishtimes.com/news/education/research-performance-of-universities-has-soared-over-recent-decades-1.1502678

  13. @Michael
    0.78% sounds low but how would it compare to press article percentages in the typical boomy country? I haven’t seen many articles in the NZZ predicting a swiss house crash either.

  14. @ MH

    What swiss data are you looking at?

    Looking at http://www.globalpropertyguide.com/Europe/Switzerland/Price-History
    I see a real growth rate of about 2.0%, and reading eng/swiss_news/Could_Switzerland_be_facing_a_property_bubble.html

    They came out of their subprime crisis and presumable resulting price trough of the 90ties.

    Therefore the 2.0% are compatible with an average productivity rise of 1.5%

    @ DOCM

    Countries are entitled to IMF help according to their quotas. The Euro help was voluntary.

    The IMF was and is a sine qua non condition to further Euro help, because they had the expertise to draw up the turn around plans and to avoid endless pickering within Europe.

    If the plans drawn up by the IMF were misleading the good taxpayers of the EuroZone, then of course the IMF has to go first with writing down their credits in OSI : – )

  15. @Brian Woods Snr
    A few bits a pieces in the paper,measuring the effects of property porn would be outside its scope,debt levels were a non issue during the boom,it was only when values fell that LTV-loan to value-ratios became an issue.The irish banks were horribly and foolishly overexposed to property.There appears to have been very little modeling or sensitivity analysis off a few basic ‘what if’s”-black swan events were certainly not expected in the RE sector.

    from the paper..the definition and measurement is the ‘value added’ as a share GDP.
    Worth keeping in mind that its estimated a 1% increase in const. share as a % of GDP results in a 1% reduction in the unemployment rate,pg5.
    Given the unemployment rate in Ireland perhaps a bit off construction,could chip away at that rate…
    The correction in Ireland has been much greater than the model predicts,Spain looks to be headed for further trouble,based on this model with further contraction in construction activity predicted.

    In summary,Ireland has over achieved yet again in its construction bust…like its boom…

    this is a decent summary/report on irish const. sector,if somewhat dated.
    http://www.dkm.ie/uploads/pdf/reports/Irish%20Construction%20Industry%20in%202012%20DKM%20SCSI.pdf

    Green shoots are back too…
    http://currencyofideas.tumblr.com/post/58264006033/ireland-seeing-green-shoots

  16. Since I find there bubble index methodology interesting,

    I post http://www.ubs.com/global/en/wealth_management/wealth_management_research/bubble_index.html as well

    They went from the mid of a severe slump to risk territory from 2001 on.

    “Sustainable” are constant fraction of household income, with the “affordability” formulae in mind.

    Just for comparison reasons:
    30 year bond yields: CH 1.67%, DE 2.71%, US 3.80%
    their price / rent ratio being neutral 2009q2 with 26 is close to my 4.1% here now, and their price bubble is clearly driven by flight money, overvaluing the CHF by 15 % EUR to 25% USD until 2011/09/30, when they cried uncle and pegged to the deutschmark.

    To the fiscal adjustment paper,

    e.g. Figure 6, if you feed 10% per year unrecoverable foreign gifts into the economy, the resulting GDP will be higher by that, boooah, what a surprise.

    To the construction paper,

    Jesus, to take Germany over the period of reunification as the reference sample for “advanced Europe”, where do these people live? This reference is fraught with some many special issues, data availability, special factors.

    I dont see this paper taking vacancy rates, real estate prices into account.

    Am I getting too picky?

  17. @ Michael

    Geneva and Zurich are in the danger zone and prices are up by more than 10% since 2011
    Balanced economy but interest rates are rock bottom and prices have gone up as rates have come down. Pension funds are ploughing into res property as well because yields are so attractive.

  18. @francis,vacancy rates are not a factor in this paper,from Irelands point of view it simply points out the overshoot in the boom and resulting undershot.It predicts an uptick or return to ‘norm’ for Ireland and perhaps a decline in the UK and Spain.
    However,the 500 pound gorilla in Ireland,are the mortgage numbers.They are simply off the charts given the recent very benign interest rate environment,which is bout to change for the worse.A complete abject failure to govern,until this is resolved there will be no return to norm in the construction sector,further hampering irelands recovery.
    http://www.centralbank.ie/press-area/press-releases/Pages/ResidentialMortgageArrearsandRepossessionsStatisticsQ22013.aspx

  19. @ JG: Got that John. The predicament we face is how to get the truth out of the Irish financial principals who were in charge (made both the borrowing and the lending decisions) from 2000 onwards. Most folk zero in on the end-lenders – with more attention being focused on the Principle Dwelling House [PDH] borrower,. Whereas its the prime borrower (the financial institution) they we should be focusing on. Without their connivance, this property disaster would not have occurred.

    In respect of debt. Its a ‘non-event’ in economic terms. Which is a nice assumption to make – in the abstract, but a catastrophic one in the real. The faster the debt burden is increased, the faster disposable incomes must increase. Ignore this relationship and you will fetch up on the rocky shore of insolvency. And we have.

    In to-days Irish Times (p 4) a piece by Hancock and Newenhan states that 12% of PDH borrowers are in arrears of 90 days: effectively three full repayments behind. No-one really recovers from that – barring a cash windfall, or a significant writedown (or maybe even a writeoff). Whatever. So things are not looking too good. And God help us if mortgage interest rates start to increase. That 12% could climb to 20%!

    A companion piece by Hancock, on the same page, allows that there may be many bankruptcy cases, beginning in September. Maybe, again. The process seems a tad drawn-out. We will have to wait three years to see what the actual outcomes are.

    I have little faith in the validity in the published estimates of PDH sales. The sales seem highly sectorized. Dublin is the capital city (highest concentration of ‘wealth’), hence the current economic regression has less impact here. The ‘boom’ lasted, near enough a decade, so I would expect that it would take approximately 15 years for PDH values to revert to mean. We appear to have already reached Morgan Kelly’s (2009 estimate) of a -60% fall in value. With the caveat that the PDH sector is significantly regionalized. Lets wait and see what 2015 or 2016 brings.

    “Are there any ‘men’ in Ireland who would rid us of this troublesome mortgage debt?”

  20. @Brian Woods Snr,hi Brian,rates are going up,how quickly and by how much is the question.The Milken Piece link above on green shoots,does reference the mismatch off short term borrowing with long term liabilities,borrowing short lending long and pocketing the diff. until….
    Brian,shareholders wiped out,boardrooms cleared,layoffs and asset disposals not sure how much or what the banks have left to give,there is NOT the slightest chance pensions are getting touched,never.
    For those still naively advocating defaulting on debt….
    http://dealbook.nytimes.com/2013/08/23/hedge-funds-win-ruling-in-argentina-bond-case/?_r=0

  21. Francis,
    So you view the IMF has havining misled Core,European taxpayers. So having laid off the full cost of the EZ banking bust on periphery tax payers, you now advocate laying off the residual on the taxpayers of the rest of the world including the developing world. You must think you are some of superior being immune from the cost of your stupid investment decision.

    I think Schauble is hinting that 2014 will involve European core OSI. The IMf will be paid back.

  22. @ francis

    Your view on IMF involvement does not stand up to serious examination. It is involved because Merkel and Schauble took fright at the prospect of Germany handling the crisis in the euro on her own and the “Western” i.e. European powers could decide as they dominate IMF decision-making. Washington – without whose agreement nothing can be decided within the IMF as the US has a de facto veto – acquiesced and has since had ample reason to regret the decision, notably the “Alleingang” of Merkel on various issues, Libya being the the most obvious example.

    I do not subscribe to any view of relations between nation states as a morality play. There are no “good guys” and “bad guys” when the players are all subject to the rules of functioning democracies, of which Germany
    happens to be one.

    Neither do I think that Germany holds all the cards in the present situation. There are major costs for Germany if some semblance of normality in the central bank control of the banking sector is not restored.

    http://deutsche-wirtschafts-nachrichten.de/2013/08/19/danke-draghi-schaeuble-saniert-staats-finanzen-auf-kosten-der-sparer/

    @ John Gallaher

    Unless the rules of international finance are to be radically altered to suit Irish domestic political preoccupations, the moment of truth is at hand i.e. someone has to pay! The BTL sector will be the first to take a hit followed by those hopelessly under water in relation to mortgage debt on their main residence.

    A solution will be found; with some further assistance from the creditor countries of the EA for the reasons outlined above.

  23. @DOCM-ya mean credit enhance the pool,sounds good wonder can they go credit rating shopping !
    Given the ratios,the pool would be junk,the second link indicates that the stress tests have ben pushed further back !
    Have the banks not hedged them or is that not an option ?

    The Indo should be all over debt forgiveness,debt equity swaps,like WTF no NEW EQUITY-only in ireland only in little dirty old ireland,would taxpayers be given a bill by a media company and not have a clue off the deatils,specifics…

    ‘In April, it announced that a consortium of eight banks, including AIB and Bank of Ireland, had agreed to write off almost €140 million of its debt.”

    http://www.irishtimes.com/business/sectors/media-and-marketing/independent-news-media-cuts-debt-burden-by-148m-after-sale-of-south-african-assets-1.1501468

  24. @ JG: Yep! That’s about how it is. Mind you, in ‘ye olde days’, pre 1980s, stockholders, bondholders, employees, etc., all took the insolvency ‘hit’. It was rarely foisted onto the taxpayer – and their dependents. There might have been a levy imposed on the solvent institutions – which needless to say, they passed onto their customers!

    And then again, lending into the residential property market was a stodgy, prudent affair. You had to have your cash deposit (from savings), more cash to pay the transaction costs, and the lenders were very iffy about your nett income. Defaults were supposedly in the sub 1% level? Now its 12% – and rising. Something bad must have happened on the way to this show!

    Sure ‘repossessions’ will ramp up, but where are the buyers for those properties. As I said, Dublin may be ‘fine’ – and some small pockets in the larger cities also. But in those exurbs? Apartments may be bought by ‘investors’ but their yield expectation might such that they want prices (and values) to decline 20% – 30% from current. Res properties in ‘good locations’ will sell – but again I expect prices to decline slowly. Especially if the number of properties being offered for sale should increase above the current somewhat lowish level.

    If interest rates increase (improbable in current situation) then property values will certainly decline – but by how much? It will be interesting to observe the effects of increases in property relate charges on property values. This will need about 3 – maybe 5 years, to ‘kick in’. In the meantime, its ‘wait and see time’.

    The revenue totals from the different taxes and charges will be available next December. These need to show a statistically significant increase (say + 3%) on 2012. If not … …!

  25. @Brian Woods Snr-rates are going up,bet the house on it..
    In NY most co-op’s discourage or prohibit mortgages all very i don’t know..condo’s yes but not co-ops.Out east in the hamptons,its a cash market,buyers use their line of credit.Financing contingencies or dependent upon mortgage approval unheard off,ya be laughed at !
    Brian,there is a lot of confusion over repo’s and evictions,quick look at the numbers indicates high level of voluntary surrender.Borrowers should play hard ball,you want the gaff,sure i sell it but i walk away clean,we call it a short sale over here.
    In that after selling the lender is ‘short’ a few bob,but to avoid protracted messy expensive litigation or a scene,you co-operate so should the bank….
    Plenty of buyers the irish enjoy a good bargain or deal,auction rooms have been packed with multiple bids,they not as squeamish as one is led to believe.Bit off distress they love it,your man paid what half a mil im buying it for 250 great then..
    Why should the young and new entrants be denied an opportunity to financially benefit,shur wont they be paying for the f**ks ups off their elders for years,at least allow them buy a gaff or two at real market prices.Keep an eye on the banks hoarding inventory artificially supporting prices.

  26. @ Paul Quigley

    “Responsibilities of leadership and all that.”:

    Mission civilatrice. War is great for arms sales and afterwards for reconstruction, especially when demand at home is flaccid. Never mind the lies and the dead. Feel those animal spirits.

    @ John Gallaher

    “For those still naively advocating defaulting on debt….”

    I’ll take your Argentina and raise you Greece. The next down phase will need more magic and QE won’t cut it.

    Back in 2010 McKinsey had a paper on deleveraging. The average duration in a crisis is 7 years they said.

    This one is el Gordo. Long time to go yet. Did you see the excitement here when the UK’s q2 growth was revised upwards by 0.1%? People desperately want to believe it’s over.

    There is no getting over (yet) featuring LMFAO

  27. @ John Gallaher

    Interesting too how the Cork Crosbies who have been running the Examiner since 1841, this year were able to retain control of the group with State-owned AIB picking up some of the tab for boomtime follies.

    Note how quiet the ‘burn bondholders’ folk can be when there is some perceived personal downside to outrage.

    When asked about the debt forgiveness in the Dáil , Michael Noonan, finance minister, said: “I have been informed that due to data protection rules and customer confidentiality the banks are not in a position to discuss details of individual customer circumstances.”

    Just like ministerial and bankers’ pensions being compared with property rights covered by the Constitution, these excuses are not to be taken too seriously. Former Waterford Crystal workers had to go to Luxembourg to protect their pension rights and the European Court, after a decade of taxpayer lawyer fees, criticised Ireland for having continued its case against its own citizens even though the court had already ruled in favour of an English claimant in a similar case.

    @ All

    There is an interesting piece on France in the NYT today.

    http://www.nytimes.com/2013/08/25/world/europe/a-proud-nation-ponders-how-to-halt-its-slow-decline.html

    The Socialists have become a conservative party, desperately trying to preserve the victories of the last century. Many in the party, like the anti-globalization campaigner Arnaud Montebourg, now the minister in charge of industrial renewal — let alone those further to the left — seem to believe that France would be fine if only the rest of the world would just disappear, or at least work a little less hard.

    We can see a similar pattern in Ireland and in recent weeks we have had the sparring between Fintan O’Toole and Michael McDowell, both conservatives arguing from opposite sides of the political spectrum about institutional structures rather than the system that made both of them materially comfortable.

  28. @ DOCM

    Paul Gillespie had an article on a similar theme in the IT a few weeks ago. Lots of big questions over Ireland’s institutional arrangements if the UK downgrades its EU status and if Scotland votes for independence, esp wrt Norn Irn.

  29. @ DOCM

    I actually don’t see our descriptions of the role of the IMF that far apart. The US is a significant protection against certain French ideas.
    The same holds for the ESM. If I think about what certain neighbors might think about, if those would be bilateral loans : – )
    Just with the dot.com bubble, a little hurt in time is very valuable education.

    We are now in a much better situation than 2002, and even then we told Rumsfeld “We are not convinced”. So, today the chances that we get drawn into any imperial adventures, is just zero, zilch, de nada.
    We will go it alone, with our “coalitions of the willing” more often, like Schengen, like ESM, we got used to it.

    And I doubt that the UK will leave the EU. The US have also ideas about their kind of “Ordnungspolitik”, to not support this.

    @ John Gallaher
    That vacancy rates and prices are not part of the model, just shows again, that these peoplelook at things exclusively macro, and that is as useful as those folks, who just looked at 10 – 20 year plots of stock prices early 2000.

    Together with some equally useless paper of Menzy Chinn last week, and some other stuff, it just tells me, there is nothing to learn any more from US/UK economists.

    We had a similar crash in eastern Germany in 1998/99, where people also forgot about affordability, and market forces.

    @ fiat

    I actually think the IMF did not overestimate the growth potential, but more the Greek potential for mischief, especially in the first year : – )
    But it doesn’t help anybody now to point this out again and again.
    The German Greenies actually encouraged them, most visibly Papandreou on their party convention 2011, and people like me do not forget this.

    @ Tull

    People like you make it emotionally so much easier to say “Not one cent” : – ) But when I look around here, you are now a minority in this blog.
    And before anybody gets any idea, that I am getting overly pious here, yesterday we opened the bridge here, and our local politicians didn’t waste any time, and picked already new fights about the next 2 bridges (over repairs) , 4 and 2 weeks ago. Many folks just need this.

  30. Francis,
    I am afraid the outcome is inevitable. Post the election, the core and particularly th Germans are going to have to chose between OSI, QE and some backdoor fiscal transfers or the end of the European project.

    I doubt the German political and bureaucratic class will want to be blamed again for destroying Europe. You can shout “not one cent” all you want but it is as futile as the Irish left calling for an end of austerity. Loose money, debt write downs, fiscal transfers and balanced budgets in the periphery are,coming to a Europe near you.

  31. @seafoid,it’s making legal history,lots off implications…link above.
    Do they default on the restructured bonds,who will act as intermediaries.?

    “His ruling contained two crucial features. First, he said Argentina had to pay the holdouts on their defaulted bonds whenever it next made payments on the restructured bonds. And in a move that has few precedents, Judge Griesa came up with a way to potentially enforce his decision if Argentina chose to ignore it. He singled out the financial firms that pass the payments on the restructured bonds from the Argentine government to their holders. If these firms handled the payments, they could effectively find themselves in contempt of the court’s ruling.”

    @MH over NPR can hardly get funded,bye bye Elmo!
    Yet in Ireland the taxpayer is catching a falling knife…
    “The latest batch of ABC figures for the national newspapers once again highlight the pressures they face as readers continue to migrate online.
    Overall, daily sales declined by 6% across the board in the first half of the year while Sunday sales were down by 7% according to the ABC.”
    http://www.adworld.ie/news/read/?id=ea978c7b-3db4-4496-ba2b-4eb947c75c3a

    @francis in fairness the vacancy rate is not really a factor,the paper is an attempt,pretty good one,at estimating the future decline or return to “norm” of construction.Signifant negative implications for Spain,the vacancy rate would be captured under economic conditions.

  32. @ DOCM

    The risk of the UK leaving the EU is unlikley to overtake domestic ones of more urgency and where we have the power to do something about.

    The prospects of a trade war are remote.

    @ Fiatluxjnr

    Jeremy Warner:

    Now fast-forward to today, and much of Europe’s economy is engulfed by a depression of unprecedented intensity…

    The calamity howling seems a bit overdone…

    A commenter on the Telegraph site says:

    I travel a lot and I have lived in many countries. I have friends in many countries. Yet one thing always stands out , that is that the standard of living is better in many of the EU countries than in the UK. …where 20 million need benefits to survive and nothing works as it should.

    @ John Gallaher

    The average circulations of The Irish Times and Sunday Business Post are down 30% since 2006.

    Ex-bulk sales or free distribution, The Irish Times circulation is down to 72,000 copies daily; the idiocy of providing free content online is illustrated by the drop in the Indo’s daily sales from May to June despite the ‘Anglo Tapes’ stories – which must have been the scoop of the decade.

  33. Anyone listen to Gregory Connor on RTE radio @ 13.25 today? Incredible stuff.

    In response to a question about the number of ‘strategic defaulters’;

    “Its not 50%, less than 50% …”

    And explained this value by ” … inference from other markets …”

    Actually, GC had to admit, near the end of his interview, that actual factual data to clearly distinguish deliberate defaulters from involuntary ones was not available, but allowed that there was likely to be a higher proportion of deliberate defaulters in the BTL sector. Maybe baby Gregory! Just trash the truth. Long live the fiction!

    The presenter has now used – “20% strategic defaulters”, twice, whilst interviewing Deputy Ciaran Lynch on the issue.

    If these critters keep this up, the fiction will rapidly become hardened fact!

  34. @Brian,Gregory has offered/volunteered to crunch the data numerous times.
    Have not heard the interview but good luck Gregory,the truth is often uncomfortable ….

  35. MH,
    Precisely. Trouser as much as possible including rent supplement & wait for the deal. Hopefully the Banks will spot a bit of financial “decimation” here pour encourager… One is tempted to advocate actual decimation but that is going a bit far..perhaps.

  36. @ JG: The truth may indeed be uncomfortable and inconvenient, but there are significant and emotive issues involved here, and if one is asserting stuff on public radio – it just might be useful to keep clear of the issue until you had the actual data to hand.

    There is a population of private residential mortgages. This number is known, and is verifiable (I hope!). A proportion are in good order. This also can be known. The remainder are not. Of this latter, the truthful assertion is that they are ‘not performing as agreed in the mortgage contract’. Going further, and asserting that some of these latter mortgagees are actually witholding payments, whilst also factually accurate – is very misleading indeed!

    An individual may be witholding any payment because they are incapable (due to loss of income) of making the payments. That is, they might make a full payment if they could, but cannot.

    An individual may be witholding part of the payment for ditto reason: Income constraint. That is, they might make a full payment if they could, but cannot.

    An individual may be witholding any payment because they have made a conscious decision to do so – for pecuniary reasons best known to themselves.

    So, in the population of Irish residential mortgage holders; how many are in each of the three categories? How do you measure these? What is your Measured Response variable? How do you ensure your measurement process is in Statistical Control? Are your estimates Reliable? Are they Reproducible? Well?

    This is a serious site (I hope), so I expect, and demand, that anyone making quantitative assertions about something as emotive as ‘strategic default’ has done their homework. Seems not.

  37. @Brian,the data is NOT available,so assumptions have to be made,the CB does not want it done,nor the govt.
    This is rapidly becoming a bigger issue,what do you think the market reaction will be if the banks require additional capital..positive ?
    Its very very ’emotional’ out there at present,investors are nervous a bit jumpy,risk off,irish gilts/bonds are one or two bad stories away from blowing out and quickly derailing any recovery.
    There have been various excellent and informative treads on here by Gregory,including debates about the definition and how to measure it.For the record i think Gregory is great,a yank over there messing it all up,way to go Greg keep it up don’t let them get too you.

    Brian on BLT no metric really required,is the mortgage current..eh no..thanks then.
    The rational or reasons are numerous,lots hard luck stories im sure,BTL was a put or option on future resi prices that went wrong,they were all over 18 could read and were greedy.Most rational people are smart enough to figure out that they have sufficient exposure to resi pricing/capital appreciation via PPR-principal private residence.Additionally investing or taking on a position in BLT has downside risks,or has irl invented the free lunch…
    It was simply greed and hubris,c’mon lads last orders at the last chance saloon,time to pay the bill,what do you think happens if i cant cover a margin call on Monday..

  38. here is the link just about listen to it.
    http://www.rte.ie/radio/radioplayer/rteradioweb.html#!rii=9%3A20426731%3A72%3A25%2D08%2D2013%3A

    regarding paper one above interesting comments here as always,saves me reading it then..
    “This is by now such an obvious and basic point I can only wonder why it is not incorporated into the analysis. By ignoring this point, what has been done is just inapplicable to some major economies. I do not like being so critical and blunt, but this is no academic debating point. And I would hate to think that this reasoning has been ignored precisely because its implications about the timing of fiscal consolidation are so clear.”
    http://mainlymacro.blogspot.com/

  39. @ JG

    “”it’s making legal history,lots off implications…link above.
    Do they default on the restructured bonds,who will act as intermediaries.?”
    His ruling contained two crucial features. First, he said Argentina had to pay the holdouts on their defaulted bonds whenever it next made payments on the restructured bonds. And in a move that has few precedents, Judge Griesa came up with a way to potentially enforce his decision if Argentina chose to ignore it. He singled out the financial firms that pass the payments on the restructured bonds from the Argentine government to their holders. If these firms handled the payments, they could effectively find themselves in contempt of the court’s ruling.”

    The US – it all depends on your judge. Did the founding fathers say anything about Argentinian bonds that judge Scalia could turn into eternal truth LOL ?

    A dose of Monthly Review for a bit of clarity

    http://monthlyreview.org/press/books/cl3133/

    “The authors point out that increasing monopolization of the economy—when a handful of large firms dominate one or several industries—leads to an over-abundance of capital and too few profitable investment opportunities, with economic stagnation as the result.”

    Those bonds are part of that capital with nowhere to go.
    Look at the state of the financial markets in the US- tooling around with algorithms that track micro changes in price. We don’t know how to manage the data – big crash NASDAQ Friday -it’s so laughable.

    Up Mayo!

  40. John,

    if you talk only about Ireland now, then I understand you.

    But the paper was about all of Europe, even the World, and in Spain and here around vacancies and price pressures were important on a 10-year time scale.

    For Spain they also seem to ignore the very high immigration 2000 – 2007 (15% !)

    And about the other countries, nobody knows, or does somebody have data here?

  41. Construction:
    A new bridge has been finished crossing the Elbe in Dresden: lighting courtesy of Eurobats : http://www.eurobats.org/:

    http://www.sueddeutsche.de/kultur/waldschloesschenbruecke-dresden-erlebt-sein-graues-wunder-1.1753635

    Bridge over Dresden Waldschlößchenbrücke : graues Wunder
    Bei Schönebeck in Sachsen-Anhalt wird am Dienstag übrigens auch eine Elbquerung eröffnet. Aber davon hat kaum einer etwas mitbekommen, weil dort nicht so schön gestritten wurde wie in Dresden.

    Poor old Albertbrücke didn’t go to the ball, and its renovation wont happen for ca 1-2 years

  42. The Netherlands has mortgage debt of 130% of GDP; 25% of loans are in negative equity and the official unemployment rate is close to 7% (they had mortgage interest relief at the top rate of tax).

    Rabobank said this week that it has a €210bn mortgage book. Of its 1.2m clients, only 7,000 customers were more than 90 days behind with their payments. Local rival ING Groep NV earlier this month said provisions on its Dutch mortgages rose by 53% to €81m, representing 1.6% of its entire mortgage book.

    Obviously unemployment levels are different compared with Ireland but maybe the Dutch are too Protestant!!

    The Dutch also have long-term saving schemes and some of it is similar to endowment mortgages where a maturing lump sum is used to pay-off the mortgage.

    In Ireland, the total value of home loans in arrears of more than 90 days was valued at €27.2bn, which is almost a fifth of the total value of outstanding mortgage accounts in the country worth €142.2bn.

    12.7% of all residential mortgages were in arrears of over 90 days end June; there were 30,326 (20.4%) residential mortgage accounts for buy-to-let (BTL) properties in arrears of over 90 days at end-June 2013.

    An estimated half of Irish mortgages are trackers linked to historically low rates. The main ECB rate has fallen from 4.25% in mid 2008 to 0.5% in May 2013.

    So those in jobs have made real gains in lower repayments offsetting negative equity.

    Fitch, the ratings agency estimated Spanish 3-month arrears including net defaults at 5.2% in Q1 2013.

    The Economist said in April, Spanish mortgage delinquency is running at 3.5%, below the overall non-performing loan rate of 10.4%. It is not worse because many mortgages have guarantors (often family members), interest rates are low and the average loan to value is just over 60%, says Fitch, a ratings agency.

    Maybe also the Spanish are better Catholics!!!

    Bloomberg reports that Spanish banks granted 274,700 new mortgages in 2012, a drop of 80 percent from 2006, data from the National Statistics Institute shows. There were 16,000 in Ireland – at the 1973 level.

  43. @francis…the paper!
    “This paper studies the factors behind pro-cyclical but widely varying construction shares (as a percent of GDP) across countries, with a strong focus on European countries. Using a dataset covering 48 countries (including advanced and emerging economies within and outside Europe) for 1990-2011, we find that country’s geography, demographics, and economic conditions are the key determinants of a norm around which actual construction shares revolve in a simple AR(1) and error-correction process. The empirical results show that in many European countries, construction shares overshoot relative to their norms before the recent global crisis, but they have fallen significantly since the crisis. Nevertheless, there is still room for further adjustment in construction shares in some countries which may weigh on economic recovery.”

    i would suggest that the term ‘economic conditions’ catches vacancy rates in so much as they are highly linked to …economic conditions !
    To suggest that vacancy rates are un correlated or ‘lag’ is beyond the scope off the paper.And yep i limited my comments on here to ‘ireland’ but did have a long hard look at the spanish situation which is curious and worrying…but may be offset by tourism.

    @Seafoid-want to try it….mid teen yields sound good!
    “For that reason, the reaction in the bond market was largely subdued, in already-thin summer trading. Argentina’s 2033 dollar bond, one of the more frequently traded bonds, was mostly unchanged. The 2033 bond traded at 62 cents on the dollar after the ruling, after trading at 62.25 earlier in the session, according to Jefferies. The bond currently yields around 14.5%.”
    http://online.wsj.com/article/BT-CO-20130823-707603.html

  44. @ MH: ” …So those in jobs have made real gains in lower repayments offsetting negative equity.”

    ????? Michael. Like to think that one through a bit.

    @ JG: “It was simply greed and hubris …”

    Nope John, but lets leave it here. Its a tad quite more complicated.

    ” … what do you think happens if i cant cover a margin call on Monday..”

    You’re in Shitsville – is what! 😎

  45. @Brian,I think we can agree to disagree as you know I always enjoy the banter with you.
    Lets assume most BTL punters already owned a gaff,now basic investing 101 discourages too highly a concentration in one asset class.As the gaff makes up in most cases people highest percentage of new worth in a highly efficient tax manner,like WTF were they going doubling down and taking on more exposure,leveraged too.
    If that’s not greed and hubris then it’s stupidity,markets are cyclical BTL buyers were chasing a quick buck,got burned.
    It’s simply not credible with prevailing vacancy and interest rates that BTL owners are not diverting income,lockbox or order the tenants to pay the lender directly.

  46. @ All

    Either there is something in the water that makes Ireland different to other countries or the problem of strategic defaulting exists and is growing. Property as an investment was driven by misguided tax incentives which were the invention of politicians and voters who knew very well what they were doing. Both have been putting off the evil day of reckoning using a battery of emotive justifications.

    The attempt now is to get further assistance from “official sources”, i.e. other countries, in dealing with the inevitable. Given that the problem is not confined to Ireland – and has impacted a core country of the EA – the possibility of this happening cannot be entirely ruled out, it would seem to me. But further delay is impossible.

  47. JG,
    BTL was the only way to get leveraged exposure to a rising asset class for a whole swathe of the Irish professional classes. Buying bank shares & CRH was an alternative for the slightly more sophisticated.
    The current hope in many golf clubs across the land is for a debt write off and to get to keep the asset.
    Cash is being diverted to every purpose other than debt service. Many of these BTL are fully let and on trackers so the carry is positive. This fraud will not stop until somebody is made an example of.

  48. @ John G

    LOL, I am not giving in : – )

    I think their “economic conditions” is just catch phrase.

    They took the population data from IFS, poorly referenced, I assume http://www.ifs.org.uk/

    And the population data for Spain were by many, including the CIA, not properly maintained, corrected only in 2012, something I see as very likely for the IFS too, given the text “For Spain, the fundamentals suggested a relatively small difference in the construction share norm (of less than 2 percent) with that of Germany (before the crisis”

    Here around vacancies were reduced by active destruction, something they stopped just one year ago, and now they talk already about social housing and rent controls. Idiots. If some policy becomes insane, then talk with Fortress and renegotiate. Even after hurling lawsuits over 1 billion at each other : – )

    @ Dorothy

    nobody is talking about tearing Albert bridge down (“ball” huuuugh).
    They are just fighting whether the cars or public transport gets screwed during partial shutdown for repair. Now it looks, they have to close it down completely and therefore I believe they will come to their senses and start the repairs immediately. Its a fight everybody again everybody, factions against their own (deputy) mayors

  49. @ JG

    “markets are cyclical BTL buyers were chasing a quick buck,got burned.”

    I think a fair whack of BTL was pension related investment given equities were expensive and bond yields were low back in the day when credit was fluirseach. Maybe Tull has more on this. Pat Kenny’s pension was brought up in a recent interview and he seems to have lost a good chunk of it in property.

  50. @Tull,the CB should release the numbers for BTL separately,it’s disingenuous to lump then in with PPR.
    Creates confusion and emotional commentary,do judges in IRL still have no registry of interests….

    @francis I expect no less,enjoying the exchange as always.
    Measuring vacancy rates is a very inact science more an art form,for example say a large firm has downsized or relocated.There old space is now vacant but generating rent,it’s available for sub let.
    Is this shadow inventory to be included or not,it’s vacant available to rent but,but….

  51. @ JG: Disagreeing is fine John. It’s agreements I worry about! 😎

    This mortgage arrears business is one bad mess. I suppose it will eventually be ‘sorted’ – but some folk are going to lose-out bad. Others will ‘win’. I doubt anything that is written on these threads will have any positive effect. But you never can tell! Maybe Little Bro is ‘watching’!

    Cheers!

  52. @Seafoid people’s motivation for bad gambling habits are off no interest to me.
    I’m sure there are hearth wrenching stories involving unscrupulous advisers,estate agents and bankers.
    It is what it is,bets were placed on the assumption incorrectly that the resi market only ever goes up.
    Leveraged ones too,people gambled away their futures now they expect other members of society to pay.
    Regarding media personalities I won’t be able sleep tonight with the worry…whatever credibility and it was not much was flushed down the toilet with the whole Bull McCabe saga with the neighbor.

  53. @JG, Major developments in your neck of the woods, John. Did you read NAMAWinelake Digital magazine edition 12 (today)? If not post a temporary yahoo or gmail address here and I’ll send you a copy.

  54. @jg
    The btl melodrama is just one play in a book called too much capital chasing limited real world returns. I don’t have any more sympathy for dumb bondwallahs who didn’t analyse the risk they were taking on than for the btl masses. Btw you can buy a fine hol house down in wexford these days for 100k. Every cloud has a silver lining.

  55. @ All

    FYI

    http://www.revenue.ie/en/tax/it/leaflets/s23.pdf

    “Relief for expenditure incurred can be set against the rent received from that property and other Irish rental income so that the amount of a
    person’s taxable income is reduced.”

    The genius of the scheme lies in five words “and other Irish rental income”.

    @ seafóid

    Investing to provide a pension which the evil state failed to provide is just another sob story.

  56. @WSTT mbl on the old iPhone hence the typical horrendous typos and grammar errors,so far no one has called me out !
    Had a quick glance at the major stories WSTT,assume you referencing eh ehm that site next door the ritz 🙂
    I did read with interest the David deposition….I take it you have some skin in there,good luck!

  57. Tiger, John subscribes to nwl magazine. Its only 25E / 4 wks…don’t be cutting and pasting all that good work!

  58. Tech issues with linking here ya go DJ,eh francis what’s this all about then …,

    “However, the bridge cost the city more than just the 180 million euros ($240.8 million) it took to build it. The structure also cost the Elbe River Valley its UNESCO world heritage status. The title was withdrawn in 2009, because UNESCO said the bridge interfered with the unique view of Dresden’s baroque old town. It was the first time that a site lost the prestigious listing.”
    Link above 🙂

  59. @ John,

    its always a pleasure for me too.

    Often I feel I look at things way more the american way than the average German.

    The more typos you make, the less people complain about my grammar : – )

    vacancy rates, sigh, true, even 10 years ago I screened more than 100 places here to find one acceptable.

  60. @ John & Dorothy

    You should be better reading the Jackson Hole papers : – )

    There was a plebiscite about the bridge with over 50 % participation and 68% for the bridge in 2005, with the UNESCO neutral at that point, after at least 8 years of discussion. The article reflects the habitual precision of many red-green journalists in German media.

    1. Then suddenly the UNESCO didn’t like it anymore, with a green politician on the committee, and sued, that they have the power to override any German building decision. Huuugh ? But they sued, up to the supreme court.
    2. Then they alleged they thought the Waldschlößchenbrücke is not built at the Waldschlößchen, but 5 miles downstream.
    3. threatening to withdraw the title.
    4. discovering some endangered species “die kleine Hufeisennase”, some little bat, like the flying spaghetti monster, nobody has ever seen any here around. When I read it first, I thought it is a theonion like joke. Investigations, another 2 million for a guiding tree based underpass under the bridge
    5. Costs have gone up ? Sue for invalidity of the plebiscite
    6. The street leading to the bridge, built for that 150 years ago might have more traffic and noise to a distant hospital? Sue over it.
    7. All this doesn’t work? Come up with a plan for a tunnel under a flood prone river, to be allegedly cheaper
    8. Plead for arbitration

    And all this, just to run down the 3 year binding period, to then overrule the will of the people in some sub council

    Counter measures:
    Keep all lawsuits open with just a preliminary ruling, and the final ruling hangings. Runs up lawyer costs and absorbs energy, and divert hopes

    Of course, this way you end up paying 180 m for bridge which could have been build for 50 m with a straight process

    And of course this is repeated again and again with any major infrastructure project here, Königsbrücker Straße, …

    My Questions:
    1. why do you think we have no construction boom here around. Dresden is debt free, could borrow at below inflation costs.

    2. What are the chances, that we will not get our will with the banking union with politicians on our side, who are experienced in this kind of trench warfare? Take that! ROFL

    Your filibuster is for starters : – )

    @ DOCM
    There comes the point, where people simply do not care anymore, what the left-greenie try to construe in the German media, and one week later the CDU/FDP is again up by another point.

    To this Volkan
    The thing I smiled most about, is that the social democrats already know who is responsible, the defense minister : – )

    I nearly ran into him, 2 years ago, with my bike in Altkötzschenbroda. Nobody is afraid anymore of the big bad German military, sigh.

  61. @francis I knew about the bridge,and did read the odd speech watched a few interviews too.
    http://www.bloomberg.com/news/2013-08-23/lagarde-calls-for-more-global-coordination-as-qe-exit-plans-loom.html
    Here is what WSTT is referring too,there are a few court cases ongoing in the states,NWL vol 12.
    “Former CEO of Anglo Irish Bank, David Drumm has, according to an affidavit in a Chicago court case, said that Anglo had engaged in fraudulent practices to defraud borrowers by over-charging interest”

  62. @JG And the rest John……
    NAMA’s intimidation of plaintiffs after writs were issued.
    Knowledge of fraudulent practices at IBRC that were possibly covered up contrary to Section 19 of the Criminal Justice Act 2011?
    Affidavit from Declan Ganley confirming “TIBOR” overcharging by Anglo.
    The sale of the Chicago Spire loan for $35 million. Refusal to engage with prospective purchaser of loan at $93 million. (Site recently valued at $350 million).

    Jeez.. the stenchl is overpowering.

  63. @ All

    FYI an interesting article by AEP relayed by the Indo on the likely mechanism for plugging the Greek funding gap without having to consult the Bundestag about it. (The rules relating to regional funding, notably the level of matching funds that have to be raised nationally, can hardly be altered to suit just one country even if it is notorious, because of administrative inefficiency, in the delays in drawing down funds).

    http://www.independent.ie/business/world/britain-to-be-roped-into-eu-rescue-aid-for-greece-29528036.html

  64. @ seafóid

    Indeed! It underlines the main weakness of Merkel the tactician; doing things at a snail’s pace with the result that the cost becomes higher. This is the criticism of the opposition that is hitting home. She is shifting ground. There will, for example, be no repeat of the attitude adopted during the Libyan crisis in the case of Syria.

    Greece seems unlikely to be a catalyst cf. this interview with Dominique Moisi – often consulted by RTE – which is right on the target IMHO in outlining the overall European situation.

    http://www.cfr.org/france/france-heading-south/p31164

  65. After all this useless IMF theorizing about boom and bust, without taking vacancies into proper account,

    After, 50 years later, listening to the doctor (“there was fear in the air”)

    Martin Luther King – I Have A Dream Speech – August 28, 1963

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

    I dreamed last night, and remembered

    Life of Brian – Choosing the correct stones for the stoning punishment in Sharia Law

    http://www.youtube.com/watch?v=7uOafmIBvuo

    And I dreamed that we would put those Greenies into chains and lead them through the city, to let the good citizen pelt them, with whatever is at hand, rotten tomatoes and eggs, ….

    And then I tried to calculate how many shekel I could make from selling a load of stones.

    Trying to think like a MBA, should I develop a marketing strategy, pre sorting and selling smaller, round stones first, and the larger, sharper later.

    But then I woke up, the sun came through my open window, the birds are pretty quiet now, and too bad, we don’t do this anymore, no business opportunity here.

    A real business opportunity is, that I sell you a boat load of my greenie busybodies as an ironclad guarantee against future busts, because with them you will never ever have again a construction boom to begin with.

    How much do I have to pay you per each capita of them? Would be 50k OK to begin with?

  66. @ DOCM

    We all know that the Spiegel (especially Weiland and Gebauer, I am sure the appropriate authorities have a close eye on them) and the Greenies and the cfr are “ferngesteuerte Unterhosen” (wow, the original FJS quote not found on google!) “pansies on alien remote control”

    The former west communist, now Greenie, Trittin is a Bilderberger http://www.youtube.com/watch?v=_d_F1l6D7i0

    The vast intellectual and character superiority of Merkel and her team shows by not giving in to the propaganda of alien agents and the gut feelings they try to introduce.

    There are some nice words, which in effect mean, not one german soldier for this war crime.

    The Majority in Germany values that the same way, we liked that with red/ green Schröder/ Fischer in 2002 : – )

  67. @. francis

    The issue of the appropriate response to the situation in Syria is of interest – and possibly on-topic – only in the context of demonstrating that the world does not turn according to the aseptic models so beloved of economists. Nation states act in the light of the totality of their relationships with other states, not just the economic ones.

    Merkel and Westerwelle will not repeat the Libya experience not because they would not like to but because it would not correspond to the gut instinct of the German electorate.

    I may be mistaken. Events should demonstrate fairly quickly if I am.

    P.S. I see that the Greens can be identified by the fact that they refuse to wear ties.

  68. @DOCM, Greens also known to wear sandals and brown shoes. Male version can be seen carrying babies. I’ve never trusted them since they stopped eating meat!

    @JG, The “Old Bill” aka the GBFI turning attention to fraudulent overcharging issue.

  69. @ seafoid

    House prices and most other prices follow long term affordability, so the bust follows the boom, when it is no longer sustained by the underlying economic fundamentals, and we will see this in the UK too.

    @ DOCM
    I am fully with you, that economics and trade are a smaller part of a much larger picture.

    I actually doubt that I understand what you mean with your repeated “Libya experience”. Please expand on your view.

    As far as I know, there was a UN vote about certain actions, and when US,UK,FR went beyond it, our warships and fighter planes got a call from home, and turned around.

    With respect to Syria, as far as I know, German military is in NATO Turkey to defend NATO airspace, and german ships and subs are loitering in international waters, to look at things we are interested in.

    And when a Turkish general gropes a German female sergeant, he gets something on his fingers.

    And that is it.

    Or ?

    To the Tie thing, when the Greens came 1983 to parliament in an, at that time, somewhat unconventional attire, it was some statement. Now Trittin wears one too, sooo …?

    And Lagerfeld is bitching about Merkel not wearing his garp.

    I became aware, that most here probably did not understand my “FJS” quote. FJS stands for “Franz Josef Strauß”, the Bavarian archont.

    A suitable list of his quotes is found at http://www.fjs.de/fjs-in-wort-und-bild/zitate.html

    And I wish to direct to “Ich habe in Herbert Wehner stets einen Mann strenger Pflichterfüllung gesehen, der viel von anderen verlangen konnte, weil er sich selbst am wenigsten schonte” there.

    Herbert Wehner was a survivor of Hotel Lux, and with Strauss a founding political rock of my republic.

    Like Elizabeth I, Angela Merkel and “Die Ilse” http://www.faz.net/aktuell/politik/wahl-in-bayern/ilse-aigner-almauftrieb-12545584.html have no children, and can focus solely on the common good.

    @ D o D

    Why don’t you troll around a little bit with your “Frankfurt school” friends at nachdenken seite.de They would love that : – )

  70. @WSTT none the advisors caught it,memories getting longer,paperwork files moved relocated.
    The greens and most socialists take themselves awfully earnestly,orange is the new black is a hit tv show over here,I hope aptly named good look seeking accountability in Ireland !

  71. I had a look at the Bild this morning.

    “Griechenland benoetigt weit mehr Hilfe als bislang diskutiert!”

    Greece needs way more money than ever discussed to date!

    Just fancy that ! I mean, who could have imagined it.

    The good news is that Miley Cyrus has far more space on the front page than Griechenland.

    So I reckon the NTMA needs to contact Billy Ray via MWR FM and get Miley to twerk while bringing up the subject of a part refund on the bailout.
    If it’s done properly the Bild will definitely go for it.
    Unabhaengig. Ueberparteilich

  72. @ DOCM

    Libya was a total disaster. Humanitarian bombing is a bit like expansionary contraction. The country will need years to recover from the after effects of the bombing. But who cares as long as the sweet crude is flowing, eh ?

  73. @JG, No accountability in Ireland……. just a cover-up. Only accountability can be in the US. Not sure DG made the right move bringing it to PC Plod in Harcourt Street for obvious reasons.

  74. @JG, Odd about the advisors. Maybe entertained with too many liquid lunches, or didn’t know enough to read the Bloomberg screens. Margin was OK….. so why look any further. Internal papers told them what the DIBOR was … so why would you check it? Too much trouble…… “Have another glass of wine”

  75. I dunno about accountability in the US.

    Sure they go after the odd inside trader but for the big stuff it’s impunity as usual. Levin vs the Squid was a good example.

    Has anyone done time for Iraq yet ?

  76. @WSTT,NWL simply has to go digital,I roared at a poster on here for linking something and making me register for a piece referenced/behind a pay wall!
    But on an obscure IMF paper,after 100 posts most readers will have wander off to something new.
    Not aware of any lawsuits from the RE community over here regarding LIBOR and overcharging,lots in the foreclosure/mortgage arenas.
    @Seafoid now now,it may not be perfect but this is surprisingly vigorous,no one really got “hurt” here an example been set perhaps…

    “MADRID — A former JPMorgan Chase & Co. trader wanted by the United States for allegedly falsifying bank records to cover up $6 billion in trading losses was arrested in Madrid Tuesday, Spanish police said.”

    http://www.huffingtonpost.com/2013/08/27/javier-martin-artajo-arrested-spain_n_3821665.html

  77. @JG, No lawsuits in the US. All US Anglo loans were sold to Lone Star. Loan Star settled with most borrowers by selling the assets back to them at a discount. Part of the settlement was a “do not sue” clause. They have operating banks in the US willing to lend on restructured loans – unlike here…… No functioning banks. Just deadbeat zombies, killing the economy.

  78. @WSTT looks like Ulster considering all it’s options too,I’m jumping into a meeting but will find out if any LIBOR cases.
    Will check in a little later,plenty lenders here loan to loan lending but still quite specialised but with right sponsor relatively easy.
    The auctions have taken off over here,perhaps the banks should consider auction.com or eBay for their burgeoning foreclosed portfolio,cuts out the middle man and nonsense.

  79. @ seafóid

    I was not commenting on the success or failure of US policy but on the peculiar company Merkel chose to keep in the matter of Libya. I went on to make the point that such action is most unlikely to be repeated in the case of Syria because her electorate would wake from its state of sedation and begin to ask the obvious question; whose side are we on?

  80. tracking down a copy of the filing,will put up a link shortly,ch 15 the basics.

    “The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country. This general purpose is realized through five objectives specified in the statute: (1) to promote cooperation between the United States courts and parties of interest and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases; (2) to establish greater legal certainty for trade and investment; (3) to provide for the fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor; (4) to afford protection and maximization of the value of the debtor’s assets; and (5) to facilitate the rescue of financially troubled businesses, thereby protecting investment and preserving employment. 11 U.S.C. § 1501.”
    http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter15.aspx

  81. have ALL off Anglo’s IRBC’s BK filings,they are located behind a ‘paywall’ accessible only to US residents, in ‘pacer’ anyway have them-any ideas,thoughts suggestions on how to get them up here greatly appreciated.
    Does any “mod’ want them to open a tread-have them as PDF’s can email ?

    Filing Date # Docket Text
    08/26/2013
    1
    (5 pgs)
    Chapter 15 Petition for Recognition of Foreign Proceeding. Fee Amount $1213 Filed by Irish Bank Resolution Corporation Limited. (Collins, Mark) (Entered: 08/26/2013)
    08/26/2013
    2
    Receipt of filing fee for Petition Foreign Proceeding (Chapter 15)(13-12159) [misc,volpfp15] (1213.00). Receipt Number 6727660, amount $1213.00. (U.S. Treasury) (Entered: 08/26/2013)
    08/26/2013
    3
    (20 pgs; 2 docs)
    Exhibit(s) (Verified Petition Under Chapter 15 for Recognition of a Foreign Main Proceeding) Filed by Kieran Wallace and Eamonn Richardson, as Foreign Representatives for Irish Bank Resolution Corporation Limited (In Special Liquidation). (Attachments: # 1 Exhibit A) (Madron, Jason) (Entered: 08/26/2013)

  82. [trolls trolls trolls trolls …. trolls.

    trolls trolls trolls trolls …. deutschertrolls.

    trolls trolls trolls trolls …. trolls.

    trolls trolls trolls trolls …. trolls.

    trolls trolls trolls trolls …. deutschertrolls.] x7

    + bolero + 1812 on deutschertrolls (ascending)

    Oops – just working up my Oirish entry for the €urovision Song Contest; Am I off-thread?

  83. @ seafoid

    You reminded me, that I really should look sometimes at bild.de. This outlet is 3x more popular than 2nd runner spiegel.

    @ DOCM
    I do not see that anything has changed in the German position, government and in general, in the last 2 years and since 2002: not the bones of one pommerian grenadier for anglo war crimes.

    Libya is a typical example. After the US found out, that they were behind the lockerbie and Berlin disco bombings, they bombed women and children in Libya. Get their terrorist, sentence him. Then the UK needs to lick the boots of Dictator Ghaddafi, in exchange for oil, releases the terrorist, and Ghaddafi Junior buys his PhD at the LSE. Then it is not enough oil, and they bomb women and children in Libya again. Their terrorist friends pay in kind and shoot the US ambassador.

    Why should Germany get involved in such things?

    You can not win elections in Germany being pro War, but you can lose them with that.

    So far only the green traitor Nouripour (extra ordinary ugly tie on tagesschau : – ) is talking for it.

    Our Russian friends seemed to be pretty determined in this case. “Pulverfass” names 12 surface ships in
    http://meta.tagesschau.de/id/76431/hintergrund-militaerpraesenz-in-der-region-um-syrien

    The Daimler R134a story looks like at least sometimes we can all behave like adults, let the courts decide, and then on the technical merits of a little more safety vs a little greener impact. Good.

  84. @ francis

    I am taking no position on the rights and the wrongs of likely military action, past, present or future. My point is simply that Germany will fall into line on this occasion because Merkel has reached the limits of the Alleingang commenced by Schroeder (in cahoots with Chirac; remember him!) in relation to Iraq.

    I agree with your comment in relation to motor vehicle emission standards. Each country will fight its own corner within the EU. The important point is that they agree to do so within the agreed rules of the game.

  85. @ DOCM

    When I read the comments to this shameless war lie I feel great communality with the english people. All comments I see are very negative for William Hague

  86. @JG, IBRC Covering their ass big time. Obviously worried about US cases in NY and Cook County. Desperately trying to stop David Drumm testifying in New York.

  87. @WSTT-i have all the doc.’s in the filing just reading them now,hoping they become available to everyone but out my hands now…
    I let you know where to find them shortly,Kieran Wallace’s declaration worth a read.
    Not trying to be a ‘tease’ here but some clearance probably required.
    Oh they can also void/walk away from any lease obligations ……hello boston boston anyone home,NY is closed-as you know PMcK is landlord up there in Boston:)
    Few bonds outstanding too-WSTT lets give it another hour or two ok ?

  88. @JG, From the bankruptcy docs: “…Currently, as the Irish Proceeding progresses, professionals assisting in the wind up of IBRC have become one of its largest categories of creditors”
    Jesus wept!

  89. @WSTT in fairness that excellent moderator and poster on here Gregory Connor has first dibs on them,it may be a bit complicated his end.
    They are in a “Dropbox” and in the cloud,just waiting for clearance!
    Quick read looks like about 200 million in unhappy senior bond holders…..
    About 320 million of subordinated notes….
    The fun and frolics will commence shortly,will hold off too many comments until they get out there.Im very “zen” these days,but heading out I probably link them after a few….not!

  90. @JG, Very economical with the truth in the affidavits, John. No mention of the F word…. just overcharging. Merely an unfortunate miscalculation……. not!

  91. @WSTT,if I’m not mistaken some loans required borrower consent to sell,I seem to remember that being withheld in a few instances,this has interesting implications.Specifically as the remaining loans hit the market,when is Noonan/Dail back ?
    Nice timing by the DofF….

  92. @JG, I believe this is a direct response to the New York case but also to what they expect will be other such cases alleging fraudulent overcharging of interest on Anglo loans with all of the potentially large amounts of liabilities that will flow from all such suits. They are trying to have the New York case stayed – including discovery – and to prevent the filing of any other such suits that would/could/should name IBRC as a defendant since those stay provisions of the Bankruptcy Code also bar the filing of new suits against IBRC unless they are filed in the Bankruptcy Court in accord with whatever scheduling there that the Bankruptcy Court orders. Their immediate goal is thus to put the plaintiffs in the New York case and others with similar claims on hold and keep them all there for as long as they can. But the New York case also cites NAMA…….

  93. @WSTT indeed I noticed that part,all very curious.The docs make various references to the ability to ignore loan provisions,specifically relating to borrower consent,regarding sale/transfer.Funky little case in Tampa too,finally I thought Fir Tree was appealing ?
    Anyway,no one else has them,Gergory will get them up tomorrow,allow everyone to read and review,comment as appropriate.Regards as always,Jameson’s are flowing.
    @DOD my own recommendation for your competition…
    http://m.youtube.com/watch?v=6Ozu57s6QcA&desktop_uri=%2Fwatch%3Fv%3D6Ozu57s6QcA

  94. @WSTT now that’s a terrific link,thanks wow,what a ginormous f**k up.
    I thought I had done a few bad ones…..case study,perfect dissertation for any final year PE student.

  95. @JG, Not as big a c*ckup (being very kind here – depends on motive) as selling Chicago Spire loan for US$35 million – a site valued less than a year ago for $350 million. Big cover-ups going on. Incompetence in Tampa, hmmmm??? in Chicago, widesread fraudulent overcharging in New York. Public are being given the mushroom treatment. Keep them in the dark and feed them sh*t!

  96. @WSTT a quick read also indicates a desire to protect the remaining US loans from litigation and enabling the transfer/sale without consent from the borrowers.
    Has to impact pricing,but NAMA is a backstop.On the overcharging,any recourse to the auditors/accountants from the borrowers perspective?
    Part of the problem/issue is that the govt. has demonized the developement community,difficult to garner a lot of support.
    As this is before the courts trying to stay above the fray a little,but is it alleged that the agreed upon spread over LIBOR was widened w/o consent or the benchmark-LIBOR/TIBOR- was not accurate?

  97. @JG. Thanks for the info to NWL, John 🙂
    No, it was not the margins that were increased. That would be to easy to spot. It was the underlying DIBOR/LIBOR rates that were manipulated – “loaded” if you prefer. Only those sophisticated enough with Bloomberg screens and a finance director would have picked it up. Not many of them in the muck and wellies world of the builders with the office in the boot of the car. It was the perfect scam.

  98. @JG, NAMA won’t last long. If they didn’t know what was going on with the loans they bought, they were incompetent and at the very least negligent. If they did know they were complicit and Frank and Brendan should resign forthwith.

    If it was known that fraudulently loaded loans were being acquired then the GBFI will have some questions to ask of a few participants – particularly in relation to Section19 of the Criminal Justice Act 2011.

    http://www.irishstatutebook.ie/2011/en/act/pub/0022/sec0019.html

  99. @WSTT something quite “Irish” about possibly manipulating an already bogus bench mark!
    No prob with the docs hope they helpful,ask NWL for my email if you need anything stateside.
    It’s 50th anniversary today of “I have a dream” so best luck with everything.
    No idea what’s happening with granting everyone access to Anglo’s US BK filing,looks like the IT’s crackerjack reporter is still obsessed with Dunner!
    Also,holiday weekend approaching so I may be “off the grid” for a while.

  100. @JG, IBRC flailing around in Delaware. Going to find opposition to the bankruptcy. You don’t escape fraud that way. Shot themselves in the foot and froze their US assets. God bless America! Enjoy the holiday.

  101. In his ground breaking book ” Breakfast with Anglo” the distinguished Irish author and developer Simon Kelly,former resident of Shrewsbury Road and son of “Posh”Paddy Kelly, states “Banks believe valuers, which always amazes me because valuers don’t buy buildings. Some time ago, a system evolved whereby a valuer’s word was absolute, and a valuation was almost as good as money.”

    Below is the link to the elementary property valuation error that bankrupted Ireland;

    http://www.independent.ie/opinion/letters/bubble-values-3034584.html
    Professor Neil Crosby’s online response to this Irish Independent letter
    “Bubble values” 29th February 2012

    “The analysis may be simplistic but unfortunately it is not flawed.
    Banks ask valuers to tell them what the market value/exchange price is
    at a point in time and then lend vast amounts over time based on that
    simple number. The surveyor gives them that simple number and do not
    think it is their job to tell the banks that the question they have been
    asked is stupid on its own and what they should have asked for is the
    underlying value. It was obvious in 2005 and 2006 that prices in the
    property market were higher than could be sustained by any rational cash
    flow analysis. But in a culture that rewards individuals for short term
    performance rather than longer term perspective, it was in neither the
    bankers’ nor the valuers’ interests to stop it. I cannot see anything in
    what the UK regulatory authorities have proposed that makes me think
    they understand the role of property valuation in driving asset bubbles
    and will prevent it all happening again sometime in the 2020s.”

    Neil Crosby
    Professor of Real Estate and Planning
    University of Reading

    John Corcoran – Neil Crosby is quite right to point out the critical and corrupting role of valuers and banks in the property bubble. RICS and other property related professionals should hang their heads in shame for not raising the alarm bells and not challenging landowners, banks and homeowners about the outrageous rise in property valuations which had no relationship with reality or ‘underlying value’. Their role is similar to that of ratings agencies which were paid to sign off triple A ratings by their clients for junk.financial instruments most of which related to property assets..Sadly it does not require a university professor to point this out.

    Anyone with a modicum of experience in property and development knew we were headed for trouble and I am sure I was not the only person to flag it up.
    http://www.youtube.com/watch?v=rRfMO6agqGQ

    If these so called professionals had been held to account by their so called professional bodies ( as the General Medical Council regulates doctors) half of them would have been struck off. Their primary responsibilty should have been to the reputation of the valuation profession and not their commission. In many countries property is taxed and valuers are independent or are part of the state.

    Radical reform is required or we will surely revisit this crisis again in the near future.

  102. @ DOCM

    I wondered , whether I put this response to you here on a more recent thread, but since I said “war lie” , and “I feel great communality with the english people” here . I think it belongs here

    “it was the first time a British prime minister had lost a vote on war since 1782”

    http://www.reuters.com/article/2013/08/30/us-syria-crisis-britain-idUSBRE97R1BD20130830

    Good. Now peace nobel laureate O’bama is alone with H’Ollande

    and there will be no pomerian bones for this:

    http://www.spiegel.de/politik/deutschland/krise-im-nahen-osten-bundesregierung-schliesst-syrien-einsatz-aus-a-919534.html

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