Spoke with a couple of major builders/developers in the last couple of days. Their mood was much more upbeat than for a long time. The general consensus was that with the banks now underwritten by the government there should be much more money available. Also with the prospect of ‘affordable housing’ loans up to €300k via the local authorities coming up in the budget this should help to create a floor of €300k under the price of the basic house. Happy days.
If I was a developer I would be feeling optimistic. They now have a chance to exit the market with a profit.
For us this effectively turns out crash into a long winded Japanese style crash. I will give it a few weeks to see how things pan out and if the developer ends winning I’ll look at emigrating for good.
Expect mortgage rates to rise to cover the banks bad debts
1% on a loan book of 100 billion only makes a billion extra
some of them will need several billion which will require a new issue of share capital from the public or the government.
You cant attract share capital from the public without profit, and profits will be hit by writedowns
The Irish Banks willl have loads of dosh from all the new deposits sloshing around now to lend out at higher interest rates to their new mortgage clients just in time to bail out the builders and make a higher profit.
they can only lend a a multiple of their own capital (their reserves)
It would be reckless to increase this reserve ratio as it is from this money that losses must be met.
The ECB would not allow it.
Some irish Banks are currently lending about 15 times their own capital ( tier 1)
These Deposits are only good for the banks if they stay with them.
This little windfall will be temporary and prob be exiting early next week when a deposit guarantee Europewide will probably come in.
In fact I predict this will lead to Irish bank net withdrawals.
Think about it.
Anglo with a Mary Coughlan guarantee or HSBC with a Gordon Brown guarantee??
Indeed - going ‘all in’ doesn’t seem so bright if your opponent does likewise. Especially when you’re holding muck and relying on not getting called.
Neither - Rabo with a Jean-Claude Trichet guarantee - yes please!
Exactly - nail…head.
thats a 3rd for airport pints
I’ll be there too lads. One last pint of Arthur’s finest before heading down under. Seems a bit of a shame but if the developers get their €300k minimum I’ll be gone. It only takes 48 hours to get a visa and book a flight.
I can understand the anger and despondency about this but seriously,even if any of you were serious about emigrating, do you not think the same problems will be staring you in the face in your new country of choice? UK/USA/Canada/Aus/NZealand are the most poular choices and all have had similar bubbles to Ireland,the banks have got governments in most countries up a wall with a gun to their head - so what will emigrating achieve exactly?
No. The suggestion of increasing local authority housing loans to €300k to prop up the market and “help” FTBs is unique in Ireland, surely? It is a a way of the government bailing out developers.
I can live with bank bailouts (I don’t like the idea but it’s necessary and the same the world over), but the developers MUST be allowed go under - the sooner the better.
Make it a 4th, I’m just biding my time…
that was 6 there was a 5th on another thread.
I think we are up to 7 now
Oh Im serious about emigrating. I had a job offer in Perth in 2006 but decided to go back to college before heading out there. I was never 100% on going out. Ideally I want to go down under with the option of coming back. They are removing that option. I dont see Australia giving their developers and banks a blank cheque. Im fairly sure the Govt are planning on using the affordable housing scheme by extending it to practically everyone to mop up the surplus housing stock. Lets hope by bailing out the banks they arent just buying time for the developers.
But never mind we will have a right piss up in the airport.
Another reason why I will reduce my banking where i have exposure to these Junkie BANKS.
Its more bubble mentality informed policy making crap than anything else.
Now that the government has guaranteed the banks, the banks are now expected to resume normal business. Therefore there should be no need for the local authorities to provide any financing. The dropping of that plan should be the very least we demand for providing the banks our tax Euros as a guarantee.
Oz is not the answer guys same problems…
Can someone start a discussion on this…
Ill start it off what we require.
- English speaking
- Low cost of living
- Low housing costs.
- Broadband access (for trading)
Just some thoughts nothing concrete…