BOI less than 1 euro per share

mike65

Should the NTMA buy into BOI?

Mike

gurramok

Captialise the banks. Of course Minister Mary Coughlan ruled this out last week.

Darragh29

mike65 wrote: »

Should the NTMA buy into BOI?

Mike

At the current rate of decline, a classroom full of next years communion kids could pool their communion funds and buy BOI!

Interesting week ahead...

brazen_dude

is it a good buy at this price?

Time Magazine

brazen_dude wrote: »

is it a good buy at this price?

No.

Trotter

Darragh29 wrote: »

At the current rate of decline, a classroom full of next years communion kids could pool their communion funds and buy BOI!

Interesting week ahead...

Especially because by next year there could be 200 kids in the room.


The amateur in me says its a good time to buy them now, that they won't be allowed to drop much further. Why do the experts think they'll fall further? Won't the stability factor of the state guarantee kick in, effectively making the euro mark pretty much as low as it will get?
Sorry if I'm completely wrong, I'm still trying to figure the shares/stocks out.

dan719

When(I don't think it's a matter of if anymore) the banks are recapitalised the existing shares will become basically worthless. Assuming the government decides to recapitalise to pre-crisis levels then the current shares will form only one sixteenth of the new share pool and the that the banks will not be allowed to issue dividends on ordinary shares they don't seem as much of a steal.

the groutch

would be a long term investment (5-10 years) imo

Time Magazine

Trotter wrote: »

The amateur in me says its a good time to buy them now, that they won't be allowed to drop much further.

Who's "not going to allow them to drop much further"?

It's pretty simple. There's a reasonable chance that Bank of Ireland are insolvent. A government bail-out will not be for the shareholders, it will be for the public. If the government intervene, you will almost certainly lose money if you have Bank of Ireland shares.

BenjAii

The Economist wrote: »

It's pretty simple. There's a reasonable chance that Bank of Ireland are insolvent.

Where are you hearing this ? They say they are solvent and indeed just posted over €650m in profits.

On what does one base a reasonable chance that BOI are insolvent?
Thats crazy talk in my opinion.
They are funding businesses as per usual at the moment,just not those directly related to the downturn

Insolvency means they cannot meet their commitments which is crazy talk.They were always worth less in terms of share price that AIB (though obviously not only a third their value).
This latest price fall has been due in the main to the pension funds [and others] selling as they need shares that pay dividends.

If the government intervene, you will almost certainly lose money if you have Bank of Ireland shares.

Thats a loaded statement.
Theres no certainty in losing money in a long term investment especially in my opinion with one of the two main banks in Ireland.
Re capitalisation via the government should it come (and it probably will) will be a short term thing.The UK Government for instance expect to sell their shares in their banks for a profit.

If one thinks a bank is doomed to making little or no money (which a Sub 1 euro share price in the Irish Economy would suggest and which is the implication of the statement of certainty as regards losing money on them) forever and a day,I'd suggest attending the same counsel that Jack O'Connor of Siptu does [who was ranting on 5-7 live yesterday in leftist pseudo communist speak about the collapse of neoclassical capitalism] as one would be in good company...bad company in my opinion but good company to share those thoughts with.

Of course over the next 2 years not much is to be made on bank shares,they are a buy in my opinion if you have the money and don't need it soon regardless of whether they go down some more in the short term.
They will recover.
Saying they will recover in my view is a sounder statement than saying with certainty that people will be doomed to lose money on them.

People will of course lose money on them if they are stupid.
Three definitions[there may be many more] of stupid immediately come to mind in terms of my two posts here on this subject :
1. If you need the money you are using to buy them for something else in the near future.
2. If you sell when the price is falling/you don't hold onto them for the guts of at least 5 years.
3.You borrow money for to buy them-as doing so suggests that you have no ready cash to punt on them ergo you might need that borrowing capacity elsewhere in a shorter time than is required to see your investment grow enough to give you a return over and above funding the loan.

Baird

dan719 wrote: »

When(I don't think it's a matter of if anymore) the banks are recapitalised the existing shares will become basically worthless. Assuming the government decides to recapitalise to pre-crisis levels then the current shares will form only one sixteenth of the new share pool and the that the banks will not be allowed to issue dividends on ordinary shares they don't seem as much of a steal.

What on earth are you talking about may i ask?
If the banks are recapitalised using pref shares the shareholders base remains intact.
If the banks are recapitalised using a bond loan scheme as used in Germany the shareholders base remains intact.
If the banks are recapitalised by selling assets like AIB will probably do the shareholders base remains intact.
The only way the shareholders will lose out is if the government takes a full
shareholding the in the banks which they definitely do not want to do as they
are in enough trouble without bad debts from property developers on their balance sheets.

Baird

The Economist wrote: »

Who's "not going to allow them to drop much further"?

It's pretty simple. There's a reasonable chance that Bank of Ireland are insolvent. A government bail-out will not be for the shareholders, it will be for the public. If the government intervene, you will almost certainly lose money if you have Bank of Ireland shares.

For crying out loud mate you are a mod here and you are posting this bull****.
Honestly you should be banned for this. That is just reckless and downright false.
Stop talking crap please :rolleyes:

Darragh29

Baird wrote: »

For crying out loud mate you are a mod here and you are posting this bull****.
Honestly you should be banned for this. That is just reckless and downright false.
Stop talking crap please :rolleyes:

They are obviously not insolvent, but they cannot continue in business as a bank without having funds to lend, and at the moment, they are not just shut for business with regard to certain businesses, they are not lending to any business. Someone above made the point that they had only stopped lending to businesses effected by the downturn. Every business is effected now, it's not just effecting property, every business out there now is cutting back and dealing with smaller sales.

Also, they will have to provide for bad debt on property which they have yet to write down and provide for. When a number is eventually put on the hugely devalued land banks that are currently being used as security for loans to developers that are being defaulted on, 650 Million in profits will seem like very small change. There's a day of reckoning coming along here, the likes of what we haven't seen before with the banks, they are rolling over interest on huge loans in the hope that tomorrow, when they open the Irish Times, the headline will be that property prices are on the way back up again, the whole thing has turned into a game of bluff between the banks, the developers and people purchasing a property. If they can't afford to pay a dividend, I think it is because they are carrying/rolling over some huge loans for developers, that have to be paid back to the wholesale bank. These loans are basically "on hold", with no repayments being made on them, being carried by the bank, eating into profit because the loans are that big that the banks are literally afraid to send in the receiver. This is all going on before we even look at the losses that will ultimately have to be set in stone when the receivers are eventually sent in, to sell property that is down 40-60% when compared to the loan value it is securing.

Darragh29

I just want to make this point as well, that the longer that this situation is allowed to prevail, the more we are going to suffer.

Cowen is not reacting to what small businesses are saying, which is that there is now no credit available for growth or to bolster up cash flow. If you have a quiet week or two weeks now, you could literally be looking at closure. This reaction, or complete lack thereof, from Cowen, is fully consistent with how he has handled everything since he got the job, failure to act within a proper time frame, or at all, as is clearly the case here.

The best thing the government could do is instead of recapitalising the banks, lend the money directly to small businesses and compete with the banks. What is going to happen, as we've seen with the bank guarantee, is that they will be recapitalised and just use the injection to continue rolling over huge loans they have given to developers, who are unable to repay.

The bank guarantee has done absolutely nothing to help businesses in this country, Biffo and Brian have given the title deeds to Paddy's Green Shamrock Shore to the wholesale banks in order to prop up Irish banks and it hasn't made the slightest bit of a difference on the ground, which must prompt the question, was it worth doing at all then???

The recapitalisation when it comes around, is going to be more of the same. I don't know what we are expecting when we have a Barrister as the Minister for Finance and a Solicitor running the country, two professions that would know as much about getting value for money as the orangatangs down in the Phoenix Park.

Darragh29

Darragh29 wrote: »

they are not just shut for business with regard to certain businesses, they are not lending to any business. Someone above made the point that they had only stopped lending to businesses effected by the downturn. Every business is effected now, it's not just effecting property, every business out there now is cutting back and dealing with smaller sales.

I can tell you for a fact that your statement regarding BOI not doing new lending is incorrect.You should stick to Facts rather than fiction.

Also, they will have to provide for bad debt on property which they have yet to write down and provide for. When a number is eventually put on the hugely devalued land banks that are currently being used as security for loans to developers that are being defaulted on, 650 Million in profits will seem like very small change. There's a day of reckoning coming along here, the likes of what we haven't seen before with the banks, they are rolling over interest on huge loans in the hope that tomorrow, when they open the Irish Times, the headline will be that property prices are on the way back up again, the whole thing has turned into a game of bluff between the banks, the developers and people purchasing a property. If they can't afford to pay a dividend, I think it is because they are carrying/rolling over some huge loans for developers, that have to be paid back to the wholesale bank. These loans are basically "on hold", with no repayments being made on them, being carried by the bank, eating into profit because the loans are that big that the banks are literally afraid to send in the receiver. This is all going on before we even look at the losses that will ultimately have to be set in stone when the receivers are eventually sent in, to sell property that is down 40-60% when compared to the loan value it is securing.

Roughly 90% of Banking customers,based on that analysis rant,they make no money on ...which is utter rubbish.

It of course assumes that banks are stupid.
Flakey assumption that.

Darragh29

Deleted User wrote: »

I can tell you for a fact that your statement regarding BOI not doing new lending is incorrect.You should stick to Facts rather than fiction.
Roughly 90% of Banking customers,based on that analysis rant,they make no money on ...which is utter rubbish.

It of course assumes that banks are stupid.
Flakey assumption that.

I know that the people I'm talking to on the ground are of the opinion that BOI is not lending at the moment to businesses. To say that they haven't lent to a single business is of course not true, but the point I'm making is that there is a huge inconsistency between what the reality on the ground is (that they are not lending and this is what anyone who is running a business is seeing), and what they are stating on the public record through the Dail PAC. This is a fact, not a fiction. Maybe your not running a business or in daily contact with people who are running businesses and therefore not in a position to know what the actual situation is. They will lend if you are in a position to secure the loan with 100% cash security. If you have 100K in a cash security, and you want a 100K loan, of course they will lend to you, but you have exactly what you started out with, 100K! If you want a 200K loan and you have 100K to put up to secure it, no can do. That's the situation on the ground.

I can state as fact that they are responsibly lending mortgage finance at the moment and am aware of plenty of new business loans that they are giving out.

To be honest with you theres a lot of shoite being put about by lots of people 10% of which might be true and I say might.

Baird

Darragh29 wrote: »

They are obviously not insolvent, but they cannot continue in business as a bank without having funds to lend, and at the moment, they are not just shut for business with regard to certain businesses, they are not lending to any business.

What you have just said is wrong. Because a banks Tier 1 isnt high enough
doesnt mean its insolvent, they are completely different issues. No Irish bank
has ANY liquidity issues. They are practically soverign entities for crying out
loud. If they are having liquidity issues, then every single bank in Europe are
having worse problems as no other banks have the clout our banks have in
the debt markets. Completely baseless argument and one that is totally wrong.

Someone above made the point that they had only stopped lending to businesses effected by the downturn. Every business is effected now, it's not just effecting property, every business out there now is cutting back and dealing with smaller sales.

To be honest if i was a shareholder i would be more than a little pissed off
if the banks handnt reigned in their lending. Lending has definitely slowed
but its hasnt completely dried up.

Also, they will have to provide for bad debt on property which they have yet to write down and provide for. When a number is eventually put on the hugely devalued land banks that are currently being used as security for loans to developers that are being defaulted on, 650 Million in profits will seem like very small change.

Irish accounting practices do not allow provision for future bad debts.
What would you like the banks to do, ignore the regulator and take your advice?

There's a day of reckoning coming along here, the likes of what we haven't seen before with the banks, they are rolling over interest on huge loans in the hope that tomorrow, when they open the Irish Times, the headline will be that property prices are on the way back up again, the whole thing has turned into a game of bluff between the banks, the developers and people purchasing a property.

Ok how about this for a scenario so:
Banks force all developers to value their properties at the present values.
Bad debt figures are computed using asset prices in a firesale environment.
The construction sector collapses completely and bad debts hit astronomical levels.
Every bank either goes bust or is forced to be fully nationalised.
The astronomical bad debts are then forced onto the government balance sheet.
There are no banks left, liquidity completely leaves the system and the country is broke.
Debt goes through the roof, unemployment soars above 50%, we are kicked out of the EU and 20 years of stagflation begins.

That my friend is exactly what the idiots who call for the banks to fully
price all their assets right now are actually looking for and they dont know it.
People who dont fully understand what is going on should really stop making
ludacris calls when they havent a clue what the implications of these calls will be.

If they can't afford to pay a dividend, I think it is because they are carrying/rolling over some huge loans for developers, that have to be paid back to the wholesale bank. These loans are basically "on hold", with no repayments being made on them, being carried by the bank, eating into profit because the loans are that big that the banks are literally afraid to send in the receiver. This is all going on before we even look at the losses that will ultimately have to be set in stone when the receivers are eventually sent in, to sell property that is down 40-60% when compared to the loan value it is securing.

Ever think they might be withholding the dividend as part of the government bailout ? :rolleyes:

Darragh29 wrote: »

I just want to make this point as well, that the longer that this situation is allowed to prevail, the more we are going to suffer.

Cowen is not reacting to what small businesses are saying, which is that there is now no credit available for growth or to bolster up cash flow. If you have a quiet week or two weeks now, you could literally be looking at closure. This reaction, or complete lack thereof, from Cowen, is fully consistent with how he has handled everything since he got the job, failure to act within a proper time frame, or at all, as is clearly the case here.

We would have no banks or else we would be in the absolutely screwed
situation that the UK are in after destroying their banking system, if we
had taken quick and knee jerk action ala Gordon Brown
The banking guarantee was a credit to this government despite the disgrace
of a budget that followed thereafter.
Failure to act within the proper timeframe? What are you talking about.
They definitely should take their time and see what schemes are working
in other countries because if they get this even slightly wrong our economy
will be completely decimated. I for one would prefer a few thousand
more people joining the live register and to get this right than to act now
to save those few thousand and destroy the economy in 6 months.

The best thing the government could do is instead of recapitalising the banks, lend the money directly to small businesses and compete with the banks. What is going to happen, as we've seen with the bank guarantee, is that they will be recapitalised and just use the injection to continue rolling over huge loans they have given to developers, who are unable to repay.

This is the same government that cant afford cancer vaccines and medical cards for OAPs? You are joking with that last statement arent you?
Plus the fact that it would be completely against EU competition law.

The bank guarantee has done absolutely nothing to help businesses in this country, Biffo and Brian have given the title deeds to Paddy's Green Shamrock Shore to the wholesale banks in order to prop up Irish banks and it hasn't made the slightest bit of a difference on the ground, which must prompt the question, was it worth doing at all then???

Read my other replies. Without the guarantee you would be applying for
loans and mortgages in german or spanish as there would be no banks left.

The recapitalisation when it comes around, is going to be more of the same. I don't know what we are expecting when we have a Barrister as the Minister for Finance and a Solicitor running the country, two professions that would know as much about getting value for money as the orangatangs down in the Phoenix Park.

What on earth you are trying to say here i honestly dont know.

Darragh29 wrote: »

I know that the people I'm talking to on the ground are of the opinion that BOI is not lending at the moment to businesses.

Well start talking to more people because the 2 or 3 you have been speaking to are wrong

To say that they haven't lent to a single business is of course not true, but the point I'm making is that there is a huge inconsistency between what the reality on the ground is (that they are not lending and this is what anyone who is running a business is seeing), and what they are stating on the public record through the Dail PAC. This is a fact, not a fiction.

I think you are speaking a bit of fiction there yourself mate.
Of course banks are not lending like they used to, if they were it would be
completely wreckless in the current environment. To say they have closed
their doors is plain and simply wrong though.

Maybe your not running a business or in daily contact with people who are running businesses and therefore not in a position to know what the actual situation is. They will lend if you are in a position to secure the loan with 100% cash security. If you have 100K in a cash security, and you want a 100K loan, of course they will lend to you, but you have exactly what you started out with, 100K! If you want a 200K loan and you have 100K to put up to secure it, no can do. That's the situation on the ground.

Have you seen the current economic environment?
Every bank in Ireland has been priced to go bust because of bad debts which
according to some geniuses are going to hit 1500bps.
If banks were seen to give out loans in the same fashion as they did 2 years
ago the management would be arrested from crying out loud.
I myself got a 15K loan 2 weeks ago with no collateral so there definitely is
money being given out. I got it in 3 days with no fuss and little track record
before you ask.

Darragh you seem extremely angry and concerned but you are venting
your anger at the banks and the government when infact the problems
are outside of both of their controls. The EU is in recession for the first time
ever, do you honestly think even if you saw it coming 5 years ago that
we could have done anything to stop it happening here? Of course not. We
are one of the most open economies in the world, what happens in the US
and the EU happens here, plain and simple.
Recessions happen, its inevitable now we have to work our way out of it

Grawns

Imagine I put €1000 (spare money) into boi shares with the idea of holding them for 20 years. Is that a bad idea?

Personally I don't think so as it's spare money and I'm aware and willing to deal with a total loss. Risk worth taking then? 20 years from now they should be worth something!

Darragh29

Baird wrote: »

This is the same government that cant afford cancer vaccines and medical cards for OAPs? You are joking with that last statement arent you?
Plus the fact that it would be completely against EU competition law.

Yeah, it's the same government that can't afford cancer vaccines for kids and medical cards for the elderly that is going to be recapitalising these very banks probably before the week is up.

The government has been competing with the banking system on the investment front for many years, through the IDA and County Enterprise Boards, albeit fairly inefficiently in the case of the County Enterprise Boards.


This mantra I'm hearing here about banks lending is simply a cod. Two people here who are insisting that I'm not correct here, do you by any chance work for a bank???

Darragh29

Baird wrote: »

Have you seen the current economic environment?
Every bank in Ireland has been priced to go bust because of bad debts which
according to some geniuses are going to hit 1500bps.
If banks were seen to give out loans in the same fashion as they did 2 years
ago the management would be arrested from crying out loud.
I myself got a 15K loan 2 weeks ago with no collateral so there definitely is
money being given out. I got it in 3 days with no fuss and little track record
before you ask.

Darragh you seem extremely angry and concerned but you are venting
your anger at the banks and the government when infact the problems
are outside of both of their controls. The EU is in recession for the first time
ever, do you honestly think even if you saw it coming 5 years ago that
we could have done anything to stop it happening here? Of course not. We
are one of the most open economies in the world, what happens in the US
and the EU happens here, plain and simple.
Recessions happen, its inevitable now we have to work our way out of it

First of all, I'm not angry, but I'm alarmed at how much is being lost on a daily basis on the jobs front, and we have a government that appears to have fu*k all of a plan with regard to what to do about it, and we have on the other hand, banks that simply won't come clean about the extent of the problem we have here.

If you genuinely believe that external factors are the cause of the problem as you appear to, grand, that's your opinion. I don't run with this at all, the sooner the banks sort out the issue of them being basically constipated with regard to large loans to developers that are being defaulted on, the sooner we can draw a line under this.

There is a reason that two banks now have a share price that you could buy for less than a can of Pepsi. Nobody has any confidence in the banks management, wait 'til you see, they have barely finished the sentence where they said they didn't need any capital and they will be recapitalised by the end of this week if not next week!?!?!?!

gogo

Darragh29 wrote: »

. Maybe your not running a business or in daily contact with people who are running businesses and therefore not in a position to know what the actual situation is. They will lend if you are in a position to secure the loan with 100% cash security. If you have 100K in a cash security, and you want a 100K loan, of course they will lend to you, but you have exactly what you started out with, 100K! If you want a 200K loan and you have 100K to put up to secure it, no can do. That's the situation on the ground.

Thats funny TBH, who are your "people on the ground", did they happen to work for Joe Duffy. Bank of ireland are making profits of up to 3 million a day - a day.
Was talking to a friend who worked for AIB, she said they had a business man in looking for finance and shouting to all an sundry that the BOI weren't lending and he was leaving them. She said ok and applied for finance, turns out this guy had over ninety unpaids on his account with BOi and had also been refused for finance with halifax. You'll find that it these type of people 'on the ground' who are saying the BOI isn't lending. Of course they are more choosy with their lending, but with the current times I'd expect them to be.
On a side note, no mention of Angle irish who hit 94cent per share today also, Aib hit 2.45,or is it only BOI who you have a bug bear with?

Darragh29

gogo wrote: »

Thats funny TBH, who are your "people on the ground", did they happen to work for Joe Duffy. Bank of ireland are making profits of up to 3 million a day - a day.
Was talking to a friend who worked for AIB, she said they had a business man in looking for finance and shouting to all an sundry that the BOI weren't lending and he was leaving them. She said ok and applied for finance, turns out this guy had over ninety unpaids on his account with BOi and had also been refused for finance with halifax. You'll find that it these type of people 'on the ground' who are saying the BOI isn't lending. Of course they are more choosy with their lending, but with the current times I'd expect them to be.
On a side note, no mention of Angle irish who hit 94cent per share today also, Aib hit 2.45,or is it only BOI who you have a bug bear with?

No, I've no inherent issue with BOI or AIB or any other bank as you incorrectly have implied. I just know from talking to some folks who are by no means running "small" business operations, they have found that you are wasting your time going to a bank for finance now. It's no skin off their nose, one of them just let 5 people go today instead! That's progress for you. There is very clearly a problem with banks lending now, especially to younger businesses that haven't had the last few years of growth behind them to get properly capitalised, so that they can weather the storm.

This myth that there is no problem is only making the problem worse in the longer term.

dotsman

Looks like Cowen is getting getting ready to make a move - Breakingnews

Baird

Darragh29 wrote: »

Yeah, it's the same government that can't afford cancer vaccines for kids and medical cards for the elderly that is going to be recapitalising these very banks probably before the week is up.

The government has been competing with the banking system on the investment front for many years, through the IDA and County Enterprise Boards, albeit fairly inefficiently in the case of the County Enterprise Boards.


This mantra I'm hearing here about banks lending is simply a cod. Two people here who are insisting that I'm not correct here, do you by any chance work for a bank???

Darragh29 wrote: »

First of all, I'm not angry, but I'm alarmed at how much is being lost on a daily basis on the jobs front, and we have a government that appears to have fu*k all of a plan with regard to what to do about it, and we have on the other hand, banks that simply won't come clean about the extent of the problem we have here.

If you genuinely believe that external factors are the cause of the problem as you appear to, grand, that's your opinion. I don't run with this at all, the sooner the banks sort out the issue of them being basically constipated with regard to large loans to developers that are being defaulted on, the sooner we can draw a line under this.

There is a reason that two banks now have a share price that you could buy for less than a can of Pepsi. Nobody has any confidence in the banks management, wait 'til you see, they have barely finished the sentence where they said they didn't need any capital and they will be recapitalised by the end of this week if not next week!?!?!?!

Mate honestly you are talking some serious crap in this thread.
How the hell do you not think external factors are the reason we are screwed?
Do you honestly think there are enough jobs in this country without FDI or
exporting? Jobs are being wiped out due to currency and the collapse of
the consumer in the UK and USA.
You are naive to say the very least if you think the banks lack of lending
is the reason we are in this mess.
Sterling, high commodity prices until recently and now the collapse of the UK
and US consumer are by far the biggest problems our government faces.
Oh and guess what, it has no control over any of them.
Have a read of the papers or yahoo finance and realise that just because
some mechanic in Mayo cant get 50k of a business loan doesnt mean the
economy is screwed. However when you see the likes of Circuit City collapse
and the world shipping index collapse 92% in 5 months then you see that this
is a huge global issue and we are just along for the ride. We have NO control
over whats happening. We can perform damage limitation but ultimately we
are at the mercy of our trading partners because our economy is so open and
dependant on trade.

mike65

If enough "mechanics" can't get a loan then the economy is screwed.

Mike

Baird

mike65 wrote: »

If enough "mechanics" can't get a loan then the economy is screwed.

Mike

No its not, if enough mechanics cant get a loan it means their business' are
screwed. If they cant get a loan they are not in a strong enough business
position to warrant one. Lending is most definitely still happening its just got
tighter criteria on it. If Darraghs people on the ground cant get credit its
because they dont warrant it. Simple as that.

pisslips

So, I just thought, since both my parents took early retirement from the Bank of Ireland and their entire income is solely from the bank, if the bank were to get in to trouble would they be in jeoperdy.

mike65

Baird I disagree as far as I can see we have reached the point where perfectly good businesses are being denied a line of credit cos banks are too busy re-capitalising themselves, they are not lending.

Anyone here want to admit to being a bank manager? Maybe we can get some first hand info.

Mike

Darragh29

Baird wrote: »

Mate honestly you are talking some serious crap in this thread.
How the hell do you not think external factors are the reason we are screwed?
Do you honestly think there are enough jobs in this country without FDI or
exporting? Jobs are being wiped out due to currency and the collapse of
the consumer in the UK and USA.
You are naive to say the very least if you think the banks lack of lending
is the reason we are in this mess.
Sterling, high commodity prices until recently and now the collapse of the UK
and US consumer are by far the biggest problems our government faces.
Oh and guess what, it has no control over any of them.
Have a read of the papers or yahoo finance and realise that just because
some mechanic in Mayo cant get 50k of a business loan doesnt mean the
economy is screwed. However when you see the likes of Circuit City collapse
and the world shipping index collapse 92% in 5 months then you see that this
is a huge global issue and we are just along for the ride. We have NO control
over whats happening. We can perform damage limitation but ultimately we
are at the mercy of our trading partners because our economy is so open and
dependant on trade.

Nothing crap about the following opinions:

(1) Our government made a decision to allow our economy to become overly dependent on the property market. This is not an external problem, this is an internal cause of what is now a major problem in our economy, specific to our country our economy and our government.

(2) Our country has never sucessfully encouraged entrepreneurship in this country. Any worldwide economies that have enjoyed long term growth, have been places where there is a healthy business culture which rewards and encourages, product innovation, risk taking and entrepreneurship. This country is not one of those places, we had two recent boom short term economic booms which ran into each other, one brought about by major FDI by US and other multinationals in the mid/late 90's,
and the second one brought about by the rapid rise in the value of property in the last 5 years in particular.

The decisions behind the strategy to (A) encourage a lot of employment in foreign multinationals, and (B) to allow the economy to become completely dependent on the property market, these two decisions are tied to the government of this country. Real long term growth, while it might be kick started by the introduction of FDI and multinationals and a boost to employment, is sustained over the long term by product innovation and a healthy culture of entrepreneurship in a society. We've put all our eggs into two baskets in recent years, property and large foreign multinational employers and now that decision has come back to revisit us...

There is nothing foreign, or indeed stupid about the above.

Baird

Darragh29 wrote: »

Nothing crap about the following opinions:

(1) Our government made a decision to allow our economy to become overly dependent on the property market. This is not an external problem, this is an internal cause of what is now a major problem in our economy, specific to our country our economy and our government.

Are the property collapses now being seen in the UK, US, Spain, Germany etc
etc also as a result of our governments policies?
If the global financial crisis had not happened would we be in recession?
The answer is definitely no and as such external factors are majority of
the cause for our current situation. The banks are now reacting to this and
thats why we are in a recession.

(2) Our country has never sucessfully encouraged entrepreneurship in this country. Any worldwide economies that have enjoyed long term growth, have been places where there is a healthy business culture which rewards and encourages, product innovation, risk taking and entrepreneurship. This country is not one of those places, we had two recent boom short term economic booms which ran into each other, one brought about by major FDI by US and other multinationals in the mid/late 90's, and the second one brought about by the rapid rise in the value of property in the last 5 years in particular.

The decisions behind the strategy to (A) encourage a lot of employment in foreign multinationals, and (B) to allow the economy to become completely dependent on the property market, these two decisions are tied to the government of this country. Real long term growth, while it might be kick started by the introduction of FDI and multinationals and a boost to employment, is sustained over the long term by product innovation and a healthy culture of entrepreneurship in a society. We've put all our eggs into two baskets in recent years, property and large foreign multinational employers and now that decision has come back to revisit us...

There is nothing foreign, or indeed stupid about the above.

Of for crying out loud you are blaming the lack of entrepreneurship now
for our current plight? Mate honestly wake the hell up. Without the property
boom and FDI we would be where Poland are now if we are lucky.
We have no natural resources and we are not an innovative people by nature.
Instead we have built a knowledge economy off of the proceeds of FDI and
the property boom which it brought with it. No matter how big the crash
turns out to be we will still be in a better position after the crash than
we would have been if we had tried to grow at 1% a year for the past 20
years by selling "innovative" products and stimulating domestic industry.
The Irish model is copied around the world by nearly every emerging country
for a reason, it worked spectacularly. To say the gov made a mistake is
just downright stupid. We would be a peripheral economy still reliant on
agriculture if we had followed your idea. We are now one of the richest
countries on earth from being a 2nd tier country on the edge of europe
that people knew nothing about.
Oh and we would also not be in the Euro and as such our currency would
have collapsed months ago if we hadnt developed at the rate we did.

Darragh29

Darragh29 wrote: »

Nothing crap about the following opinions:

(1) Our government made a decision to allow our economy to become overly dependent on the property market. This is not an external problem, this is an internal cause of what is now a major problem in our economy, specific to our country our economy and our government.

Actually theres a big flaw in that logic,you ignore the results of 2 elections in the period and who were returned to power. Irish people made a decision,they kept voting for it.They got what they wanted.

(2) Our country has never sucessfully encouraged entrepreneurship in this country. Any worldwide economies that have enjoyed long term growth, have been places where there is a healthy business culture which rewards and encourages, product innovation, risk taking and entrepreneurship. This country is not one of those places, we had two recent boom short term economic booms which ran into each other, one brought about by major FDI by US and other multinationals in the mid/late 90's,
and the second one brought about by the rapid rise in the value of property in the last 5 years in particular.

Thats a very sweeping statement-A bit like the one on BOI lending you made [I hear it's running at about 60% of last year by the way..thats a lot of lending in the current climate].

The decisions behind the strategy to (A) encourage a lot of employment in foreign multinationals, and (B) to allow the economy to become completely dependent on the property market, these two decisions are tied to the government of this country. Real long term growth, while it might be kick started by the introduction of FDI and multinationals and a boost to employment, is sustained over the long term by product innovation and a healthy culture of entrepreneurship in a society. We've put all our eggs into two baskets in recent years, property and large foreign multinational employers and now that decision has come back to revisit us...

That statement would hold in part were it not for the fact that a large minority of those employed in buildings have been Polish and theres been no collapse in FDI employment.

mike65 wrote:

Baird I disagree as far as I can see we have reached the point where perfectly good businesses are being denied a line of credit cos banks are too busy re-capitalising themselves, they are not lending.

With respect,thats not the case.Businesses with good sets of accounts are getting loans as usual and thats the responsible way it should be.
I know plenty of people involved in various stages of banking and thats what they are telling me.
For as long as I'm alive,you'll have had people moaning about banks..a lot of them because they have an axe to grind.They are just getting more vociferous now because they think they can[join the band wagon]but that doesnt make their angst more viable.
The actual more serious issue that is affecting business is people reigning in spending.That will increasingly affect businesses bottom lines and ultimately their ability to borrow.
It will be the accounts that they are presenting to banks next year for lending requirements that will be a problem.
Less so for those with good track records and rightly so.

gurramok

Baird wrote: »

Are the property collapses now being seen in the UK, US, Spain, Germany etc
etc also as a result of our governments policies?

Germany did not have a property boom in this millenium. Only Ireland and Spain have had one in the Eurozone.

Baird wrote: »

If the global financial crisis had not happened would we be in recession?

Yes

Baird wrote: »

The answer is definitely no and as such external factors are majority of
the cause for our current situation. The banks are now reacting to this and
thats why we are in a recession.

Now, your trying to rewrite history. The housing bubble burst in mid 2006, a full year before the credit crunch happened.

Having 25% of our countries GNP based on construction related activity(source DKM report for Dept Environment) caused this recession.

Baird wrote: »

Of for crying out loud you are blaming the lack of entrepreneurship now
for our current plight? Mate honestly wake the hell up. Without the property
boom and FDI we would be where Poland are now if we are lucky.
We have no natural resources and we are not an innovative people by nature.
Instead we have built a knowledge economy off of the proceeds of FDI and
the property boom which it brought with it. No matter how big the crash
turns out to be we will still be in a better position after the crash than
we would have been if we had tried to grow at 1% a year for the past 20
years by selling "innovative" products and stimulating domestic industry.
The Irish model is copied around the world by nearly every emerging country
for a reason, it worked spectacularly. To say the gov made a mistake is
just downright stupid. We would be a peripheral economy still reliant on
agriculture if we had followed your idea. We are now one of the richest
countries on earth from being a 2nd tier country on the edge of europe
that people knew nothing about.

What a silly post.

"you are blaming the lack of entrepreneurship now for our current plight".
No he is not. The blame is a lack of entrepreneurship in home grown industry instead of speculating on property since circa year 2000. Before that, Ireland manufactured lots of stuff.

But now, where are the Irish MNC's??

To add, private sector debt is the highest per capita in the EU at nearly €400bn.

Oh and we would also not be in the Euro and as such our currency would
have collapsed months ago if we hadnt developed at the rate we did.

Now, that is misleading. If we were not in the Euro, the Irish currency would of collapsed Iceland style many moons ago because of a property bubble. (hint: that private sector debt has to be paid back hence banks would of went under)

timber19

1) long term its a good buy, they will bounce back with in 5 years.

2) its not in the interest if the Government to let bank of ireland go under.
3) allowing the second biggest bank in Ireland to collapse will have huge negative inpact on the european economy.

4) will the government nationalise boi and in turn make the value of all shares go to zero, NOT A HOPE OF IT, WHY??????? they all have shares in boi, aib etc, etc, etc, they are also losing their Bo**ox at the monent, we know they will never look after us but do you think they will not look after themselves, they always do, so for this reason along Im buying boi shares.......big time.....

5) a few years ago Elan were classed as a "strong sell", I had a gut feeling and bought while everyone was selling, I made a fortune, Im going with my gut feeling again. it hasnt let me down yet.......

Im not telling anyone to buy shares in any company, you can do what ever you want,Im just telling ye why Im buying in.

Idu

timber19 wrote: »

5)Im going with my gut feeling again. it hasnt let me down yet.......

I LOL'd at that

Darragh29

Deleted User wrote: »

With respect,thats not the case.Businesses with good sets of accounts are getting loans as usual and thats the responsible way it should be.
I know plenty of people involved in various stages of banking and thats what they are telling me.

What they are telling everyone, including what they are telling themselves and what they are doing or actually not doing, are two different things. 07 accounts are not being taken seriously because they do not reflect the huge changes many businesses have had to endure in 2008 and the further expected worsening of the situation next year. I'm not saying the banks should lend, I'm not criticising the banks for having stopped lending to businesses, what I'm criticising is the fact that the banks are telling us one thing and doing the complete opposite. There is a problem with lending to businesses, the banks should call the problem and start resolving it. That's why they were guaranteed by the state, to resolve this issue and get capital mobility back into the economy.

Six weeks and one 500 billion state guarantee later and they are still refusing to admit that there is a problem!

Now the country that says it hasn't got 10 million to vaccinate young kids against cancer, is going to bail these people out to the tune of a few more Billion Euro!?!?!

timber19 wrote: »

2) its not in the interest if the Government to let bank of ireland go under.

Why not??? I'm fully convinced now that they should be let go to the wall. What are the long term negative consequences to us of any Irish bank failing tomorrow???

Our banks are like heroin addicts, the more you give them, the more they'll want and they won't admit that there is a problem... More more more, that's all I'm seeing and they should be allowed to to the wall and made clean up their own unsavory mess.

Darragh29

Darragh29 wrote: »

What they are telling everyone, including what they are telling themselves and what they are doing or actually not doing, are two different things. 07 accounts are not being taken seriously because they do not reflect the huge changes many businesses have had to endure in 2008 and the further expected worsening of the situation next year.

With respect thats not the case.I know for a fact that banks are lending based on 2007 accounts [and on cashflow ongoing actualities and projections]

I'm not saying the banks should lend, I'm not criticising the banks for having stopped lending to businesses, what I'm criticising is the fact that the banks are telling us one thing and doing the complete opposite.

Thats not the case,they are lending.From my information up to 60% of last years levels so far.

There is a problem with lending to businesses, the banks should call the problem and start resolving it. That's why they were guaranteed by the state, to resolve this issue and get capital mobility back into the economy.

As I said theres no problem with sound businesses.

Six weeks and one 500 billion state guarantee later and they are still refusing to admit that there is a problem!

With respect thats not the case.They are lending,I know this.The availability of funding internationally via the government guarantee will be known in the coming weeks as it's only now that they are going out on the strength of it * (see below)
They are not taking any unrealistic punts anymore and that includes businesses affected by the downturn in spending who don't have a good track record and probably all businesses that are related to house/building expenditure.
You can get a car loan for instance if you have the figures to prove you can pay it back.Likewise under the same terms you can borrow for that new kitchen or conservatory.
But people increasingly aren't even looking to borrow for that or even spending the money if they have it as they reign in their spending.
Thats a far bigger problem for business than borrowing.

Now the country that says it hasn't got 10 million to vaccinate young kids against cancer, is going to bail these people out to the tune of a few more Billion Euro!?!?!

Well you see theres the rub and the bone I have to pick with politicians in this country.They are either trying to get votes all the time [thats the system...if you don't try to make people happy you dont get elected] or they simply don't have the expertise to run a country properly.
I think it's reprehensible that this current government were so blazé with their spending when they had money.
I blame the unions for a lot of that and their stranglehold on creating ever more public and civil service jobs and taking unsustainable salary rises.

*However,I'm a realist and we are where we are.
The government have boxxed themselves in.The banks share prices are looked at when the banks go looking for funding internationally-funding that they need to lend.
It's unknown whether the government guarantee will be enough for to allow them to get that funding competively compared to most other EU countries banks who already have had public capital injections.
They probably will have to follow suit with the public injections,it's out of their hands.
But mark my words : the government will make a profit on any money they put in...they are already guaranteed €500m a year for the lenght of the guarantee.I suspect that you can add another billion or two on top of that for any money the government put in either from the PRF or from borrowing.

Thats money for old rope and it does two things,it ensures the continuation of lending and ergo shores up the economy and it helps long term the government coffers.
Both of those once we get out of this crisis will see the next government into a position of being able to fund public things like that cancer vaccination.

Why not??? I'm fully convinced now that they should be let go to the wall. What are the long term negative consequences to us of any Irish bank failing tomorrow???

Our banks are like heroin addicts, teh more you give them, the more they'll want and they won't admit that there is a problem... More more more, that's all I'm seeing and they should be allowed to to the wall and made clean up their own unsavory mess.

It's good to rant like that sometimes..It lets off steam but theres no point in directing it at me,I'm on a different page obviously

gurramok

gurramok wrote: »

Germany did not have a property boom in this millenium. Only Ireland and Spain have had one in the Eurozone.

and of course Britain outside of the Eurozone.

Now, your trying to rewrite history. The housing bubble burst in mid 2006, a full year before the credit crunch happened.

Gurra,thats debateable.

I don't disagree with the idea that house prices had to fall and that they were begining to aided by a kick from politicians speculating on stamp duty and the fact that demand must have been starting to meet supply by then..
What I ghly doubt is that bank share prices would have fallen by quarter as much as they have if the sub prime shenanigans,lehman bros etc hadn't come to light.

Yes something would still have to have been done about property lending but the fall out of that would have been much less painfull for the banks in my opinion

gurramok wrote: »

Now, that is misleading. If we were not in the Euro, the Irish currency would of collapsed Iceland style many moons ago because of a property bubble. (hint: that private sector debt has to be paid back hence banks would of went under)

Actually I'll differ on that to say that we mightn't have had a property boom at all as our interest rates would have been much higher...

Darragh29

Deleted User wrote: »

With respect thats not the case.I know for a fact that banks are lending based on 2007 accounts [and on cashflow ongoing actualities and projections] Thats not the case,they are lending.From my information up to 60% of last years levels so far. As I said theres no problem with sound businesses.

With respect thats not the case.They are lending,I know this.The availability of funding internationally via the government guarantee will be known in the coming weeks as it's only now that they are going out on the strength of it * (see below)
They are not taking any unrealistic punts anymore and that includes businesses affected by the downturn in spending who don't have a good track record and probably all businesses that are related to house/building expenditure.
You can get a car loan for instance if you have the figures to prove you can pay it back.Likewise under the same terms you can borrow for that new kitchen or conservatory.
But people increasingly aren't even looking to borrow for that or even spending the money if they have it as they reign in their spending.
Thats a far bigger problem for business than borrowing.

Well you see theres the rub and the bone I have to pick with politicians in this country.They are either trying to get votes all the time [thats the system...if you don't try to make people happy you dont get elected] or they simply don't have the expertise to run a country properly.
I think it's reprehensible that this current government were so blazé with their spending when they had money.
I blame the unions for a lot of that and their stranglehold on creating ever more public and civil service jobs and taking unsustainable salary rises.

*However,I'm a realist and we are where we are.
The government have boxxed themselves in.The banks share prices are looked at when the banks go looking for funding internationally-funding that they need to lend.
It's unknown whether the government guarantee will be enough for to allow them to get that funding competively compared to most other EU countries banks who already have had public capital injections.
They probably will have to follow suit with the public injections,it's out of their hands.
But mark my words : the government will make a profit on any money they put in...they are already guaranteed €500m a year for the lenght of the guarantee.I suspect that you can add another billion or two on top of that for any money the government put in either from the PRF or from borrowing.

Thats money for old rope and it does two things,it ensures the continuation of lending and ergo shores up the economy and it helps long term the government coffers.
Both of those once we get out of this crisis will see the next government into a position of being able to fund public things like that cancer vaccination.



It's good to rant like that sometimes..It lets off steam but theres no point in directing it at me,I'm on a different page obviously

Do you work for a bank by any chance??? Would you be one of those people who 12 months ago were telling us that we were in for a soft landing as all would be just fine????

You clearly are on a different page, you work for a bank and are just repeating the mantra you are being told to drum out.

Darragh29

12, 18 and 24 months ago, we had people telling us that the property market "couldn't be allowed to collapse" and it did and we'll get over it. Now we have people saying that the banks "cannot be allowed to collapse" and more scare mongering by vested interests who are acting like heroin junkies falling over each other outside the GPO.

Let one fail and then the ones that are left might start coming clean and we might be closer to resolving the issue.

You might be correct when you say that banks are still lending, but they are not taking risks, if they lend now, they are saying that your business is in a different arena than it was for the last 1,2, or 5 years and they want their loan fully secured with cash on deposit. There is no problem getting a loan, but why would you want to get a 10K loan when you have 10K in cash!?!

Baird

gurramok wrote: »

Germany did not have a property boom in this millenium. Only Ireland and Spain have had one in the Eurozone.

So why have property prices collapsed if they didnt have a property boom?
Why have prices in the UK and Denmark collapsed ?
External market forces perhaps?

Yes we would be in recession

How would we be in recession when the only reason any country is in recession at the moment is because of the financial turmoil
Im going to really enjoy your response to this

Now, your trying to rewrite history. The housing bubble burst in mid 2006, a full year before the credit crunch happened.

The housing bubble most certainly didnt burst in 2006. It peaked in 06
that is completely different from saying it burst. It didnt burst until the end
of last year.

Having 25% of our countries GNP based on construction related activity(source DKM report for Dept Environment) caused this recession.

Why were we not in recession 2/3/4/5 years ago when this statistic still held through?
:rolleyes:

"you are blaming the lack of entrepreneurship now for our current plight".
No he is not. The blame is a lack of entrepreneurship in home grown industry instead of speculating on property since circa year 2000. Before that, Ireland manufactured lots of stuff.
But now, where are the Irish MNC's??
To add, private sector debt is the highest per capita in the EU at nearly €400bn.

Irish MNC's? Do you honestly think that we can have a domestic manufacturing
industry with the 2nd highest minimum wage in the EU.
We cannot be a manufacturing economy as we are too skilled a workforce
We are a knowledge economy with the major emphasis on services.
And before you say about the construction sector, it is built on migrant workers.
Simple solution is send them home!

Now, that is misleading. If we were not in the Euro, the Irish currency would of collapsed Iceland style many moons ago because of a property bubble. (hint: that private sector debt has to be paid back hence banks would of went under)

May i ask for some clarity on what you actually mean by this?

Baird

Darragh29 wrote: »

What they are telling everyone, including what they are telling themselves and what they are doing or actually not doing, are two different things. 07 accounts are not being taken seriously because they do not reflect the huge changes many businesses have had to endure in 2008 and the further expected worsening of the situation next year. I'm not saying the banks should lend, I'm not criticising the banks for having stopped lending to businesses, what I'm criticising is the fact that the banks are telling us one thing and doing the complete opposite. There is a problem with lending to businesses, the banks should call the problem and start resolving it. That's why they were guaranteed by the state, to resolve this issue and get capital mobility back into the economy.

You are misguided to put it mildly
In march BOI's total loan book was 136bn, at the end of sept
the total loan book grew to 145bn. This isnt exactly the figures you see
from a bank that has closed it doors is it?

Six weeks and one 500 billion state guarantee later and they are still refusing to admit that there is a problem!

Now the country that says it hasn't got 10 million to vaccinate young kids against cancer, is going to bail these people out to the tune of a few more Billion Euro!?!?!

Why not??? I'm fully convinced now that they should be let go to the wall. What are the long term negative consequences to us of any Irish bank failing tomorrow???

The alternative is let the banks fail and then we dont have the money to
repair roads or keep hospitals open in 2 years time as our economy will have
imploded. Banking credit is the lifeblood of an economy. It is vital that this
credit is locally sourced. Without a national banking system the economy
will stagnate, wither and fall into disrepair. Those are the implications.
Hospitals, schools and banks are about as important as it gets.

Oh and how have they not admitted there is a bad debts problem?
Go read BOI's IMS or AIB's and see the huge rise in bad debt assumptions

Our banks are like heroin addicts, the more you give them, the more they'll want and they won't admit that there is a problem... More more more, that's all I'm seeing and they should be allowed to to the wall and made clean up their own unsavory mess.

What on earth does this actually mean?
The more you give the more they want?
Why dont we just walk away so and let Deutsch bank run our country.
Hell while we are at it lets let HSBC run the country and lets readopt sterling.

Baird

Darragh29 wrote: »

12, 18 and 24 months ago, we had people telling us that the property market "couldn't be allowed to collapse" and it did and we'll get over it. Now we have people saying that the banks "cannot be allowed to collapse" and more scare mongering by vested interests who are acting like heroin junkies falling over each other outside the GPO.

George Lee called the housing collapse imminent in 1994 before the boom even started!
David McWilliams said it was gonna happen in 2001.
If you are negative long enough you will be right, its a pity it took 14 years for George though :eek:

Let one fail and then the ones that are left might start coming clean and we might be closer to resolving the issue.

You have no idea what the implications of what you are looking for
Seriously mate stop making a fool of yourself.

You might be correct when you say that banks are still lending, but they are not taking risks, if they lend now, they are saying that your business is in a different arena than it was for the last 1,2, or 5 years and they want their loan fully secured with cash on deposit. There is no problem getting a loan, but why would you want to get a 10K loan when you have 10K in cash!?!

And may i ask what is wrong with banks being more risk adverse?
Isnt that you said should happen in about 15 different posts?
Do you even know what you want may i ask?

Libero

Baird wrote: »

No its not, if enough mechanics cant get a loan it means their business' are
screwed. If they cant get a loan they are not in a strong enough business
position to warrant one. Lending is most definitely still happening its just got
tighter criteria on it. If Darraghs people on the ground cant get credit its
because they dont warrant it. Simple as that.

Mark Fielding, Chief Executive of ISME wrote:

“There is now irrefutable evidence that the banks are rowing back on lending, as many companies have recently had their facilities reduced or have failed to secure much needed facility extensions. Consequently businesses, particularly those who are experiencing late payments, are unable to meet their payment terms to their suppliers, creating a domino affect throughout the economy and ultimately closure of otherwise profitable businesses”

http://www.isme.ie/stg/public/download.php?site=site685&file=08309__banks.doc

Darragh29

Baird wrote: »

And may i ask what is wrong with banks being more risk adverse?
Isnt that you said should happen in about 15 different posts?
Do you even know what you want may i ask?

There is nothing inherently wrong with banks being more risk adverse, but this carries with it an assumption that all businesses are not in early stage growth, but are well capitalised after trading successfully for a number of years. This isn't the case for many new and small businesses out there. The successful businesses of the future are small businesses now. The sucessful businesses of the future might not even be started up yet, and with the banks talking out through both sides of their mouths, many of these businesses won't get off the ground. This is the type of stuff that is going to draw out the duration and depth of the recession we are in! You'll disagree with me, but I'm talking to one lad running a well established and profitable business and the banks are reviewing his overdraft, an overdraft that hasn't even been used in the last 12 months, it's just there as a safety net facility!

Obviously you are employed within the banking system so you have a default opinion on this. Grand, but the sooner we start hearing what the banks are saying, coming close to what business people are saying, the sooner we start to fix the problem. BOI still thinks that it bad debt provision for next year will be 1% ffs!!!

eamonnm79

Isnt it a possibility that many companies are used to getting loans and overdrafts on request?
Perhaps some of them should not have been given these loans. Perhaps that lead to businesses over borrowing for current expendature in the past. It would partly explain why private debt has sky rocketed in the last 10 years.
If these businesses are now being refused loans for current expendature that they should have been refused in the first place, it seems that the banks are doing the right thing (all be it way too late) by not providing credit.

The alternative for the banks is to continue to lend in a wreckless fashion.

Perhaps this is justifiable to give businesses time to get accustomed to more stringent lending practices. afterall it was the banks who gave them money when they proboly shouldnt in the first place.

The availability of cheap freeflowing credit during boom time meant lots of bad/ badly run businesses had the odds stacked in their favour and allowed them to survive and even thrive.

When ISME say that good businesses are being refused credit. They probobly mean 'good' by the old, prudence free, standards.

Baird

Darragh29 wrote: »

There is nothing inherently wrong with banks being more risk adverse, but this carries with it an assumption that all businesses are not in early stage growth, but are well capitalised after trading successfully for a number of years.

No it doesnt at all.
It makes no assumption regarding the current status of businessess
It is based on the business models of the banks not the requirements of the
market.

The successful businesses of the future are small businesses now.

The successful companies in the future are a mix of current start ups and current successfull companies.

The sucessful businesses of the future might not even be started up yet, and with the banks talking out through both sides of their mouths, many of these businesses won't get off the ground. This is the type of stuff that is going to draw out the duration and depth of the recession we are in!

Mate honestly small start up companies are the last thing that leads economies
out of a recession. For crying out loud do some research. Do you
actually want to know what leads markets out of recession and that is true
in nearly every single historical recession? Yup you guessed it, its financial
stocks followed by construction stocks.

You'll disagree with me, but I'm talking to one lad running a well established and profitable business and the banks are reviewing his overdraft, an overdraft that hasn't even been used in the last 12 months, it's just there as a safety net facility!

The current PWC audit of the banks means that they have to do this.
The government require it as part of the bail out.

Obviously you are employed within the banking system so you have a default opinion on this. Grand, but the sooner we start hearing what the banks are saying, coming close to what business people are saying, the sooner we start to fix the problem. BOI still thinks that it bad debt provision for next year will be 1% ffs!!!

Just to clarify i do not nor have i ever had any connection to any bank.

And since you obviously dont understand this ill take you through it slowly.
An overall bad debts number covers the entire loan book.
This includes low risk books like mortgages and high risk books like residential
development. BOI are guiding for nearly 500bps on its commercial dev book
and around 220bps on its entire property and construction portfolio.
It is still plausible despite this that the overall loan book will only have bad
debts of 100-150bps which is historically a huge number for an Irish bank.

Darragh honestly you seem to be quoting garbage you are hearing on Joe
Duffy in response to facts. You are also basically ignoring every retort i post
that you cant rebutt and instead you respond by saying i work for a bank
and im talking my own book. I dont own ANY shares. I dont work for ANY
financial institution but unlike you i fully understand them.

Darragh29

Darragh29 wrote: »

Do you work for a bank by any chance???

God,is that all the defence you can mount to my post?

Would you be one of those people who 12 months ago were telling us that we were in for a soft landing as all would be just fine????

If it were up to Irish conditions alone,I'd be pretty confident,that there would have been a soft landing.

You clearly are on a different page, you work for a bank and are just repeating the mantra you are being told to drum out.

I see so you have no answer to my points then..
That says a lot.

gurramok

Baird wrote: »

So why have property prices collapsed if they didnt have a property boom?
Why have prices in the UK and Denmark collapsed ?

Ok let me spell it out. Ireland, UK, Spain and Denmark to a lesser extent have had housing bubbles with collapsing prices.
The biggest bubbles are as follows:
Ireland
Spain
UK
Denmark

Those that go up the highest fall the furthest. Roughly speaking

External market forces perhaps?

No. The UK for example are a year behind us. They're economy is less than half based on construction related activity compared to ours. Their problem is now is its too much service based and is getting hammered. Their credit exposure to the housing bubble is also hammering them from external market forces as the credit loans to the UK banks also freeze up.

How would we be in recession when the only reason any country is in recession at the moment is because of the financial turmoil
Im going to really enjoy your response to this

You may enjoy it
As explained in the previous post, the primary reason is domestic. International financial turmoil is exacerbating the problem here.

The housing bubble most certainly didnt burst in 2006. It peaked in 06
that is completely different from saying it burst. It didnt burst until the end
of last year.

Yes it did. Prices and demand fell off a cliff mid-2006 onwards. We had price drops occurring back then. the media/estate agents off course blamed McDowell for his stamp duty speech that Sept '06.

Why were we not in recession 2/3/4/5 years ago when this statistic still held through?
:rolleyes:

Because ECB rates were lowered in 2002. This cheap credit was fuelled into the housing yr on yr until now since then. Construction related activity did constitute smaller % of economic output back then, still a bit oversized in 2002 for example.
It grew yr on yr as credit was loosened wildly and stopped. Once the housing units built peaked, the slide began.

Irish MNC's? Do you honestly think that we can have a domestic manufacturing
industry with the 2nd highest minimum wage in the EU.
We cannot be a manufacturing economy as we are too skilled a workforce

Hold on here.
So Germany, Japan, France and.. pick any country from the biggest industrialised countries do not have skilled workforces as they manufacture alot?..LOL

Is Ireland too thick to manufacture stuff?

We are a knowledge economy with the major emphasis on services.

Very well. I work in IT services for example and we're getting hammered with redundancies as we service the international sector.

And before you say about the construction sector, it is built on migrant workers.
Simple solution is send them home!

They are going home, all types of workers. 100,000 in 2008 http://www.rte.ie/business/2008/1119/economy.html

IBEC wrote:

He points out that 100,000 are estimated to have left Ireland in 2008

By the way, IBEC disagree with you also on the economic front, they say the economy has crashed.!

May i ask for some clarity on what you actually mean by this?

Iceland had a financial bubble. They boomed, credit was tightened and their currency crashed with sky high interest rates.
As i said, the bubble here burst in 2006, the currrency would of been devalued back then as cracks started to appear especially in late '06/early '07 before the credit crunch hit.
And of course, if we stayed outside the euro, there probably would of been no housing bubble and Ireland would of actually had some industry to be proud of today with banks intact and low private sector debt.

Darragh29

Baird wrote: »

Mate honestly small start up companies are the last thing that leads economies
out of a recession. For crying out loud do some research. Do you
actually want to know what leads markets out of recession and that is true
in nearly every single historical recession? Yup you guessed it, its financial
stocks followed by construction stocks.

What business sector employs most people in this country??? Small businesses do, that's who "mate"! If you could take your head out whatever textbook down at the IFSC that you obviously have your head stuck in, you might get a bit of an insight into the real world, where it's all a very simple process really, more people in employment equals a stronger economy. When small businesses start to wobble our economy starts to wobble. Just like on the last occasion in the 80's, when we got to grips with unemployment, the economy strengthened. The withdrawal of banking facilities to small and medium sized businesses is costing our economy jobs, reinforcing the complete lack of confidence that is out there and is only going to substantially prolong the poor situation we are now in.

The sooner we see our government taking control of the situation from the banks, and forcing them to use the capital they will ultimately be given as part of a recapitalisation package, to the majority of businesses out there that meet a reasonable set of criteria with regard to their credit worthiness, the sooner we will see light at the end of the tunnel.

<snip by mod>