Greece is A+

This open letter has been published in full-page ads in the main international financial newspapers this week.


Q3 Mortgage Arrears Statistics

The latest update of the mortgage arrears statistics has been published by the Central Bank.  See here.

For the first time since the series began the total number of PDH accounts in arrears shows a quarterly fall (142,892 to 141,520).  This is a result of the slow-down in new arrears cases seen in recent quarters.  The situation of those in existing arrears continues to deteriorate with another significant increase in the number now 720 days or more in arrears (28,860 to 31,834). 

The outstanding balance on mortgages in arrears is €25.6 billion, of which €18.9 billion are in arrears of 90 days or more.  The total amount of arrears rose from €2.02 billion to €2.17 billion.

The total amount of PDH mortgage debt continues to fall and is now at €108.5 billion, compared to €118.6 billion when the series began in September 2009.  Capital repayments on existing loans are offset by new lending so the rate of capital repayment over the past four years has been substantial.

Interest-only or other reduced payment options remain the most utilised restructuring options though the number of accounts these were applied to fell from 44,805 to 37,643 over the quarter.  In relation to the overall drop in the number of PDH mortgage accounts in arrears it should be noted that restructuring through arrears capitalisation increased from 13,627 to 16,146 accounts.

In the Q2 data it was reported that there was 254 permanent interest rate reductions for PDH accounts.  Today’s release says that just 16 accounts now have a permanent interest rate reduction applied to them.  The number counted as having a temporary interest rate reduction increased from 870 to 1,426.

The number of split mortgages rose significantly from 306 to 1,154 over the quarter.  Term extensions remain the most used permanent restructure increasing from 14,630 to 15,447.

There are now 6,325 in ‘Other’ restructures (up from 2,300 in Q2).  This category “mainly comprises accounts that have been offered a long-term solution, pending the completion of six months of successful payments.”  Many of these are likely to be split mortgages agreed during the quarter which will move into that category on successful completion of the probation.

At the of September there were 80,555 restructured PDH accounts and 78.9 per cent were deemed to be meeting the conditions of the restructure.  There were 76 forced repossession in the quarter and 133 voluntary surrenders.

Data on the Buy-to-Let sector is also included in the release.


Wage Flexibility in Ireland

Donal O’Neill, Olive Sweetman and I have been working on the issue of wage flexibility in Ireland, and have put our initial results into a working paper. Here’s the abstract:

There is considerable debate about the role of wage rigidity in explaining unemployment. Despite a large body of empirical work, no consensus has emerged on the extent of wage rigidity. Previous attempts to empirically examine wage rigidity have been hampered by small samples and measurement error. In this paper we examine nominal wage flexibility in Ireland both in the build up to, and during the Great Recession. The Irish case is particularly interesting because it has been one of the countries most affected by the crisis. Our main analysis is based on earnings data for the entire population of workers in Ireland taken from tax returns, which are free of reporting error. We find a substantial degree of downward wage flexibility in the pre-crisis period. We also observe a significant change in wage dynamics since the crisis began; the proportion of workers receiving wage cuts more than doubled and the proportion receiving wage freezes increased substantially. However, there is considerable heterogeneity in wage changes, with a significant proportion of workers continuing to receive pay rises at the same time as other were receiving pay cuts.

The full paper is linked here.

Edit on December 17: link changed to working link

Banking Crisis Political economy

Collins -v- The Minister for Finance & Ors

Judgment here.

UPDATE. The following is probably also relevant here:

Bond Repayments: Motion [Private Members]

    “That Dáil Éireann:

      calls on the Government:

    — to immediately lobby the European Central Bank for a one-off exemption from the rules of monetary financing, to allow the Central Bank of Ireland to destroy the €25 billion in sovereign bonds issued in February of this year, in lieu of the remaining promissory notes, plus the €3.06 billion bond also being held by the Central Bank of Ireland in payment for the 2012 promissory note; and

    — to cease any and all interest payments currently being made on those bonds.”

    The first part of the debate on this motion is available here.
    UPDATE 2: The final part of the debate on the above motion is now available here.
Economic Performance Unemployment

QHNS Q3 2013

The CSO have published the latest Quarterly National Household Survey: Press release and Main release.

Employment is up 58,000 in the year.  Full-time employment accounts 53,500 of that.  Concerns about the distribution of the numbers employed into each sector remain (particularly the Agriculture, Forestry and Fishing sector).  There was a 30,200 increase in the numbers self-employed and a 27,300 increase in the number of employees.

Unemployment using the QNHS is now at 282,900, a drop of 41,700 over the year.  Self-classified unemployment is at 326,700 down 45,000 in the last 12 months.

The unemployment rate was 13.0 percent in Q3 (seasonally adjusted 12.8 percent).  Using the Live Register the CSO project that the SA rate in October was 12.6 percent.

The labour force has increased by 16,000 in the same time with a 0.5pp annual increase in the participation rate to 60.7 percent.

The number unemployed for one year or longer fell 27,800 of which 25,800 were males.  The long-term unemployment rate is 7.6 percent (8.9 percent a year ago).

Youth unemployment (15-24) has fallen from 74,000 to 60,400 with the youth unemployment rate at 26.5 percent.  The youth unemployment ratio is 10.3 percent. 

There is lots more detail in the release.  The Earnings and Labour Costs Survey for Q3 has also been released.