is there suh a thing as a savings Bull?!
Yes, total outstanding private (non Government) debt in Ireland has been steadily falling since April 09, with the total amount of private debt still on the books falling by a couple of billion a month. There was €400bn in such debt at the peak though, so it’ll take another few years to make a real dent in the debt mountain. Still, it’s progress!
Of course, this means the existing banks are toast - if old loans are being repaid or written off, and no new fresh loans are being handed out to replace them, that eventually equals death for a modern bank.
This is still bad news.
We had a situation where personal debt increased hugely in place of national debt and now the reverse will happen. People saving money will equate to less tax income, more unemployment and social welfare costs.
Irish people are becoming more financially savvy - putting away an average of almost 300 euro a month, a survey has revealed.
I thought savvy was buying loads of houses!
Didn’t John Fitzgerald tell us that week that we were on the cusp of a new consumer spending splurge?
How is this measured. Is it cash savings?
It also equates to less money wasted on interest payments, and more capital available for productive business investment. A high-savings rate is not the enemy.
But you’re right about the debt burden being transferred from private to public shoulders. As sidewinder points out, no modern bank can survive a prolonged debt deflation, and the government will do what it can in this regard to ensure a demand for credit.
Yet desperate as their efforts are they won’t be enough to save our broken banks.
Paying down debt is good, but people refusing to spend is bad.
Cant win really.
The main problem with prolonged debt deflation is that it will massacre the real economy. Never mind the banks.
topic on this in another thread
I’m also not convinced that we are really seeing much in the way of payments. Would the figures not be consistent with the losses the banks have taken on some loans?
The Central bank publishes monthly statistics
There’s a section on page 10.
Households (m's) Jan 09 Nov 09 agreed maturity <2yrs 36,313 30,935 agreed maturity <2yrs 3,529 3,150
taking the labels at face value, it would suggest that these deposits aren’t growing. However, I should hold my hands up and say I don’t know the definitions for these numbers. Anyone know?
That said; page 25 shows that outstanding credit card balances are the same over the year. It’s reasonable to assume that the credit quality of this debt has decreased.