Ireland: In Shock & With Our Collective Heads in the Sand

Ireland: In Shock & With Our Collective Heads in the Sand

Well here we are, end of September and heading towards Q4 and then the final year of this decade.

This weekend another British bank has been nationalised, Fortis is on its knees and the US is pretty much bankrupt.

Ireland, the economic miracle, has gone through one of, if not the, biggest speculative property bubbles in history. The bust has come.

The country is without doubt facing the greatest crisis (notwithstanding the great loss of life in both the Civil War and The Troubles) that it has ever faced since the foundation of the State in 1922.

Talk of an Irish bank failing has been bandied about. Yet in all probabability within the next 24 months it will not be one bank but the entire Irish financial system that will be on its knees. A scenario where only one amalgamated bank, with executive control being held by officials in the Department of Finance, surviving is not a wild when all is considered, with Ireland’s financial system being held together with funds from the ECB.

Ireland’s economic sovereignty is at stake, yet it very much appears our establishment are in shock, with their collective heads in the sand.

I should say this is my own opinion and not a copy of an article.

I have to disagree with you. The developers have used all the sand to build concrete. The establishment has its head up its arse.

Exaggeration. Irish banks have not had large numbers of non performing mortgages that have brought down american banks. Their main exposure is to developer loans. And of course we all know developers are going to end up selling their unsold stock to the state as affordable housing.

The only way for all banks to fail would be if everyone withdrew all their deposits and put them with the post office which is not realistic as the post office does not offer banking to businesses.

One could argue that Ireland are behind in the cycle. Mortgage defaults could soar. I can’t see developers being bailed out given that the coffers are increasing ever into the red by the day.

and investors loans…

Who was buying all the property?

The importance of House Prices Going UP!!

Investor Demand

Interest Only Loans

Bankruptcy Laws

Not yet - but when the 25% of GDP which was construction related largely disappears, there are going to be serious numbers of defaulting mortgages.

The US sub-prime mortgage market relied on people prices going up, allowing defaulters to sell up and cover the mortgage - they haven’t seen mass defaults at the prime level, yet. The Irish mortgage market relied on borrowing to provide incomes for a huge proportion of the economy. Neither are sustainable.

So far - and the only reason that they don’t have more individual defaulters is that while the developers keep building, they keep employing.

Which can’t absorb anywhere near enough to make a meaningful difference over a multi-year period.