The IMF came for a chat, and this is what they found

[Blue_Horseshoe]

From the IMF, 14th July 2010:

[

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2010 Article IV consultation with Ireland, the following documents have been released

](https://www.imf.org/external/pubs/ft/scr/2010/cr10209.pdf)

Through assertive steps to deal with the most potent sources of vulnerability, Irish policymakers have gained significant credibility.

However, the path from crisis to stability and recovery is a narrow one. With some reversal in the earlier loss of competitiveness and improvements in the global economy, exports will lead the recovery. … Moreover, the unwinding of home-grown imbalances from the boom years—arising from rapid credit growth, inflated property prices, and high wage and price levels—will create deflationary tendencies that act as a drag on growth. Banks remain a source of downside risks from higher than expected losses, uncertainties in global regulatory trends, and continued financial market tensions that restrict access to funding.

The high and persistent unemployment reflects ongoing structural changes. The headline unemployment rate increased from 4½ percent in 2007 to 13 percent in 2010:Q1; broader measures that include marginally-attached workers show the unemployment rate closer to 17 percent.

Emigration has eased labor market pressures somewhat.

Blue Horseshoe

[Disgruntled_voter]

RTE news mentioned that the IMF also advised Nama to get on with selling properties to “normalise the market”. I presume this was part of the same report. Could this be the start of the major firesales?

[IDONTKNOW]

breakingnews.ie/ireland/wage … z0tfiAQ9O2

The International Monetary Fund (IMF) has today warned that wages will have to fall further over the next two years to support Ireland’s economic recovery.

Read more: breakingnews.ie/ireland/wage … z0th7cRqj2

[discostu]

I was speaking to one of the big liquidation specialists a few weeks ago, the chap said they believe that NAMA will start to release LARGE volumes of apartments/houses in Q1 or Q2 next year. I asked would this not collapse whatever remains of the market and he effectively said probably but what will be will be

[yoganmahew]

@Disgruntled voter

RTE news mentioned that the IMF also advised Nama to get on with selling properties to “normalise the market”. I presume this was part of the same report. Could this be the start of the major firesales?

A. Restructuring
28. First, NAMA should schedule an orderly disposal of the property assets
acquired. NAMA is to manage the assets acquired with the aim of achieving the best
possible return for the taxpayer over a 7–10 year timeframe (Box 4). The authorities agreed a
holistic approach to NAMA’s success was needed. Rather than aiming to time the market for
an upturn in property prices, the goal should be to reduce the large overhang of property in
state hands (which could keep investors on the sidelines and prices low), restart market
transactions and, thus, help normalize the property market. The lesson from the experience of
all asset management companies—including those that dealt primarily with commercial real
estate (in Sweden and the Resolution Trust Corporation (RTC) in the United States)—is that
a sound and transparent process for the management of asset sales is needed, but moving
ahead with early sales is important. Governance of NAMA is strengthened by its
independent board. However, given the government’s large presence in the property market,
implementing the provisions for the oversight of NAMA’s operations, is vital.

[yoganmahew]

For me, the key bit of the homeowner “bailout” recommedation is this bit:

29. The increasing economic stress will require targeted support for homeowners.
    With increasing arrears and reschedulings, the Financial Regulator has cautioned that
    homeowner distress may be the “biggest legacy” of the crisis. The Regulator has required
    banks to wait 12 months from when arrears arise to initiate repossession on a primary
    residence if the borrower is engaged in restructuring arrangements. Government programs
    also assist with interest payments for mortgages originated in recent years and interest
    supplement to the neediest. The authorities noted that further support measures raise the risk
    of moral hazard, and, hence, of strategic default, and create a perception of unfairness. A
    working group on Mortgage Arrears and Personal Debt Review is studying available options.
    Mindful of these considerations, staff proposed that, with persisting unemployment,
    additional support measures may be needed for a narrowly-targeted group of vulnerable
    homeowners to limit the economic and social fallout of the crisis. With their capital bolstered
    by the state, banks could absorb the initial costs, perhaps basing themselves on the welfare
    system to identify eligible beneficiaries.

30. This process will be aided by an overdue shift to a more efficient and balanced
    personal insolvency regime. The authorities noted that discussions were ongoing regarding
    inclusion in the law of an optional out-of-court resolution mechanism, and whether this may
    apply to small businesses as well as individuals. This would allow a more timely and
    flexible, as well as less costly alternative to the current legal framework. Staff pointed out
    that a repayment period of three to five years and the removal of overly punitive elements
    such as imprisonment for nonpayment of civil debts would bring the regime more in line
    with European practices.

I believe this is the consensus on the 'pin (such as it is) that the insolvency regime is onerous, but that with reform it is the appropriate mechanism for over-extended borrowers. An equitable assessment of liabilities and needs has to take place. I’m not sure whether I am oddly comforted or beetle-browed suspicious that the IMF agrees…