Countdown to new crash plus bail-in

How long till a new housing crash followed by a bail-in of at least half of Irish deposits?

  • 18 months or less
  • 19 to 36 months
  • 37 to 72 months
  • 73 to 120 months
  • 121 months or more (Basically never)

0 voters

Pretty self explanatory. The median gross Irish wage is €1644/month. That means that every second Irish worker earns that little or less before the taxman and Irish Water take their pound of flesh.

If it seems like that’s not enough to safely take the risk of mortgaging up at modern Irish house prices, that’s because it is. The average Dublin house costs 212 times gross median wage. And that’s before we factor in interest costs.

I don’t see this ending well without a second crash. The bail-in principle gives us prior warning of how this will play out. People who think Irish banks are safe will wake up one fine morning with a large chunk of savings vanished. How long do you give it?

Give it until the end of 2017, excluding any major external shocks. Govt will start majorly sucking up to voters now in the next budget with the election looming, will also probably try and circumvent the CB rules by further interference with the housing market, this along with the mounting mortgage arrears and general indebtedness of the country will eventually result in a LARGE meltdown, maybe! 8DD

I expect there are quite a few months to go yet but it will surely happen. Prices in Dublin bear no correlation to incomes and are considerably overvalued. All of the reasons why prices collapsed before apply to an even greater extent now. Government policies are once again the main contributor to the inevitable collapse. If they had allowed the pressure valve of repossessions to happen, then the market might have found something like the real floor. Then we might have seen a real recovery. Any external shock will now show up the economy for what it really is… a bubble fuelled by a lie that a housing boom is driving growth when in reality it is only an illiquid housing market that is causing house price rises that are stimulating a paper recovery

Don’t really know but it appears that there is a greater risk of deflation so people with savings may dump it into property to prevent the banks from eroding its value with charges as opposed to giving interest on the savings.

Looking more likely that the days when the average wage earner could afford to buy the average urban house are numbered.

The sovereign debt default crisis is not resolved. I believe the shock will come from the continent, political change is happening across the Europe, Ukraine is likely to end up with a military dictatorship and the hunt for more tax revenue is likely to send capital to ground or to the US fleeing an unstable Europe. Sooner or later the unravelling of the Euro must come however that will likely take another 8 to 10 years. Remember the bail-in legislation is in place and the banks marked for termination have likely already been decided behind closed doors the timing of those events remains to be decided. (Note IBRC was terminated at the same time the Cyprus banks were.)

Surely in deflation the purchasing power of peoples savings increases and they are more likely to increase their savings? What you are describing is a consequence of inflation.

It is until the banks start to charge for holding the money, in which case the value could shrink faster than deflation increases its purchasing power.

A house is a depreciating asset (it has to be maintained). If banks charge for the money then why not put it under the mattress, it still increases in value in deflation?

Doesn’t make sense as BR said. Slow erosion is preferable to a giant gamble. When interest rates are higher, they are rarely beating inflation anyway, so slow erosion is the best you can do with a 100% secure (in theory!) investment. Who says house prices can beat deflation either? (Not wanting to mix up the threads, but why doesn’t your logic for oil apply to houses?). In any case – and I can vouch for this personally – anyone with the sense to see the writing on the wall for the high Irish deposit interest rates two years ago is sitting pretty for a while more with locked in high rates easily beating bank charges and deflation. The real enemy is the government, which has doubled the tax on deposit interest in the last few years.

Now this I agree with. Not to mention the considerable likelihood that our neighbours across the sea will leave the EU, and even though they are not in the EZ I think the impact will be felt strongly, and here in particular. Once the EU looks vulnerable I think sovereign debt will come under renewed attack. I’m certainly hoping to get the timing right between taking the banks’ interest (thank you very much) and running for the exits.

I went for never. I do see prices falling but don’t think banks will collapse.

Which is a fair enough point. If house prices don’t spiral too high from here, and if lenders are retrained, then the arrival of the crash will only hurt those who bought in the post-2011 boom. So far that’s a small number. There is still a chance to nip this in the bud.

I don’t think they will, I think they’ll squander the chance, but the chance still is there.

Yep. Think the mini-bubble pulled in enough sucker-cash that the banks would be able to limp through another crisis. The rest of the economy will suffocate but the banks will survive just fine.

How, though? Where would they get the limping-through money from?

By 2017, Ireland won’t even be a major tax-dodge country any more. MNCs will have more incentive to shut down Irish operations once the legal tax avoidance schemes are shut down.

While I agree with most of the other posts on this thread, I would be hesitant to predict a crash. Prices have risen ridiculously in spite of poor economic growth and the fact that a large cohort are unable to afford even a modest family home. And yet the zeitgeist in the MSM is ‘yes, but they* fell *by 50-60-70%’ Repossession just simply won’t happen, at least not before the election, so increased supply will not come from that front.

As an aside, what I’m seeing an ever increasing economic polarization of Irish society. On the one hand there are reports of food poverty and increasing homelessness of entire families and on the hand a wine writer talking about ‘affordable luxuries’ such as an 80€ bottle of wine in Lidl ( … 4_232_.mp3). The current Meadows and Byrne ad (utterly nauseating in present context) has a target audience out there somewhere.

In the economic madhouse that is contemporary Ireland, I get the awful feeling it might be the other way round. :frowning:

Hang on … what.

Prices rising = Banks collapse. Is that right?

I mean the banks might collapse through lack of revenue and need another bail out, but the prices won’t fall. Nobody can get credit to buy anything at the inflated prices, so the banks can’t make any loans, performing or otherwise and we just end up with a tiny, inflated, illiquid housing market and no functioning credit system; not so different from what we’re seeing now, just more of it. :wink:

So 60% of people who voted in this poll (at the time of writing) believe there will be a ‘bail in of at least half of Irish deposits’ within three years?

Am I misreading the question?


18 months or less 21% 21% 8 ]
19 to 36 months 24% 24% 9 ]
37 to 72 months 13% 13% 5 ]
73 to 120 months 8% 8% 3 ]
121 months or more (Basically never) 34% 34% 13 ] x
Total votes : 38

This place is starting to get a bit ZeroHedgie.

They won’t need it because it’s already done. We’ve recapped them. They are slowly deleveraging and high SVR’s are subsidising the arrears.