BOI less than 1 euro per share

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>

Time Magazine

Darragh29 wrote: »

Obviously you are employed within the banking system so you have a default opinion on this.

Darragh29 wrote: »

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.

It'd be lovely if you weren't making quasi-insulting presumptions about people, thanks.

traco

Great thread even if it has moved away from the OP. I run two businesses and we use credit but I am far from a finance professional as I am too busy trying to get stuff done but I'll throw in a few comments for disection and analysis based on my observations and thoughts. I have my flame suit on on in the event that I offend anyone.

Credit has tightened up and that is a good thing I believe. Now as a director I personally gaurantee all loans, leases and finance that I have obtained to date. The company does not, so if the business goes t*ts up I am personally liable. The banks come after me and my house. This can be summed up very simply and I don't know where I heard or read it "If you owe the bank 100k its your problem, if you owe the bank 100mil its their problem" and I think this is where we are in relation to the construction industry.

This tightening up on credit is and will continue to cause job losses in small business which are very important to all small local towns and villages around the country, rural locations losing 5 jobs is very significant in terms of a local economy as there could be 15 people directly dependent on those incomes (husband, wife and one child).

All that aside, I believe that their is an huge fear in lending at present and that all businesses are under the same dark cloud due to the diaster in property development. The banks need to get back in contact with local businesses and understand what they are trying to do and learn how they work, its a back to basics approach that wil benefit the banks and businesses in the long term. Make this clear and readily available for shareholders (it could be already but I haven't seen it), those with a proven responsible track record will win those that got it wrong will pay the price but the air is cleared and progress can start.

Local businesses and entrepreneurs - I believe this is critcal even though some posts previous have dissmissed it. Ireland is a small country with an open ecconomy and needs trade. I do not accept that labour is too costly for manufacuring here - it depends what you manufacture. Higher value, low volume, IP products and services have higher margins and are very viable but the issue is the barrier to start up. Contrary to what people may believe, Enterprise Ireland (EI), IDA etc are not capable of supporting indigenous companies. They are not structured to support local start ups and even admitted that in the case of the two young lads from Limerick that developed some software 12 months ago.

If you are FDI then you can expect the red carpet and champagne and money even though you may only employ a few people. Now FDI is critical and has been since the late 80's (I will to return to that) but the lesson that EI and the IDA have failed to learn is that Irish people employed by these foreign multinationals have learned a huge amount. They have all the criteria to make a go of it but the current structure does not faciliate Joe Bloggs walking out and getting up and running. It has been my experience that anyone that has tried has spent the few k they got in time and effort in producing the papwerwork in the first place that it has not been wrothwhile, others have just given up. Now here I see a solution - these organisations have thousands of square meters of industrial units around the country that taxpayers pay to maintain when they could be provided rent free (pay maintenance, light, heat etc) to startups for the first year or two - the cost would be minimal.

As an annecdote - there was a Multi national in SW Dublin that closed a few years back, state of the art cleanrooms, airlocks, water treatment facilities etc. They spent a fortune improving the building, when they left the authorties made them gut it back to the shell that they rented - the kit was scrapped when it should have beenused to tempt someone else in or to support start ups in electronic or medical.

Return to 80's and I am willing to be corrected on this - but Ireland was a disaster. Unemployment and imigartion ruled. Towards the late 80's we started too see FDI grow and in early 90's we had Intel come in and lots of others. Jobs came, salaries grew, people saw their quality of life improve, they started to buy houses and borrow, money started to move then came the property boom but this was only possible after the creation of jobs. Up until this point EI and the IDA did a good job but from here they did not regroup and change direction, they stuck with FDI when they should have shifted focus to grown grown talent.

WRT the construction industry, this boat has sailed. There is no IP in porperty either commercial or private. The majority of the developments over the last few years have fed off ego's and I beieve that is partly why we are in the current situation. The banks are over the barrel here as the builders have started and must complete to have any chance of paying off. A significant amount of developments are interest only or defered loans so the banks have not realised any return on the capital or equity in the assets. There is no way out now but to complete the build and hopefully recover several years down the road. The banks are holding the torch on this one. I wonder, rather than the Government just bailing out the banks, should they buy the developments off the banks at current market rates plus a percentage and let the bank and the developer take the hit for the balance. At least the tax payer would be getting something for his money that could have a value down the line or be developed and resold if and when the markets recover.

As for our recovery - if the leadership does not do something constructive then I am very worried. Many talented people have lost their jobs in the last 12 months and are having to sign on, many are immigrating. It would be far more benefical to allow them sign on and give some sort of assistance to them starting up. We are reliant on FDI and I am worried about Q1/2 next year as I would not be surprised if there are some very significant losses yet to occur.

When I started up several years ago, I went 5 months without being able to pay myself, christmas was coming and I needed some help, kids mortgage etc. I tried to sign on and told them that I was trying to build a business. I was told that I could not as "I was not available for wrok" I would have and to disolve the company and sit at home to be eliglible. All I can say is thank god for credit cards. Here is another interesting fact for you - as I am a director and PAYE emplyee, if we fold in the morning I am not eleigble to sign on as I am entitled to nothing. As a result I cannot allow my business to fail.

So to wrap up and I apologise for the long winded post. The whole situation is a mess but everyone is seeing it as someone elses doing. Evryone had a part to play in arriving here and everyone has a part to play in recovering but it needs to start from the ground up

Reward risk, initiative and drive, open up trading, that will help create jobs help secure lending and start to move things again. This will take 5 years at least but the mechanisms need to be put in place now.

Increasing VAT and taxes will only serve to depress the current situation further - you can't lift a bucket of **** when you are standing in it.

Banks need to learn what normal regular businesses do and forget the huge high profile deals.

Credit needs to start flowing in a reponsible manner.

Bank shareholders need to understand the real value of an investment and ROI as nothing continues one way for ever.

BTW - this is worldwide even huge ecconomies like China are losing jobs and production but in amidst all this mess there are huge opportuinites. We can only address our own and let the others worry about themselves.

As for the OP - I would take the punt if its cash sitting idle and don't need it, just decide if its longterm 5-10 years or set a return 15-20% and once you hit that get out.

mountainyman

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.

You are confusing a stock market collapse with a recession.
Risk AVERSE not Risk ADVERSE

cavedave

Might be of interest.

Resume lending or face full nationalisation, banks warned

timber19

donr be scare mongering, thats an english newspaper, it has nothing got to do with Ireland, a lot of people on this forum will be eating a bit of humble pie in a few years time. all of us who got in under the euro price, what a buy!!!!!!! , retiremant in 5 years time while the people living in the safety net will be working till 75, yippeeeeeeeee

ranger4

timber19 wrote: »

donr be scare mongering, thats an english newspaper, it has nothing got to do with Ireland, a lot of people on this forum will be eating a bit of humble pie in a few years time. all of us who got in under the euro price, what a buy!!!!!!! , retiremant in 5 years time while the people living in the safety net will be working till 75, yippeeeeeeeee

Our shares with the banks might not be worth the paper they are written on in 5 years, present shares could be possibly diluted to exstintion, present banking sector structure could be unrecognizeable in 5 years.

Idu

timber19 wrote: »

donr be scare mongering, thats an english newspaper, it has nothing got to do with Ireland, a lot of people on this forum will be eating a bit of humble pie in a few years time. all of us who got in under the euro price, what a buy!!!!!!! , retiremant in 5 years time while the people living in the safety net will be working till 75, yippeeeeeeeee

Retirement in 5 years? How many shares did you buy?

cavedave

timber19

@ cave dave
donr be scare mongering, thats an english newspaper, it has nothing got to do with Ireland, a lot of people on this forum will be eating a bit of humble pie in a few years time. all of us who got in under the euro price, what a buy!!!!!!! , retiremant in 5 years time while the people living in the safety net will be working till 75, yippeeeeeeeee

How is posting an article in a reputable news paper scare mongering? I posted it to contrast the Irish governments response with the British ones.

To say

it has nothing got to do with Ireland

is wrong. For example a number of these banks operate in Ireland if nationalised they will not be able to offer the same interest rates to savers. So this is likely to result in a reduction in interest rate competiton for depositors amongst banks in Ireland.

So I ask you to withdraw that statement.

Darragh29

cavedave wrote: »

Might be of interest.

Resume lending or face full nationalisation, banks warned

The current situation with the banks in complete control of the economic situation, reminds me when some school kid years ago would get caught in a laneway by a gang of kids out to give him a hiding. Back then, they were in control, and if you couldn't take back control, you most likely got a hiding in the laneway off 5 c*nts.

What Biffo needs to do now is get one big bank in a headlock and dish out around 50 serial punches to the head he has under his arm. The rest will stand back for a minute in shock because they won't be expecting this development. He needs to tell the other banks, if they don't do what he says, he'll snap the head clean off the bank he has in a headlock and then he'll do the same to the other banks... If this government don't take the gloves off soon and take back control of this situation, we are fu*ked.

dotsman

Darragh29 wrote: »

The current situation with the banks in complete control of the economic situation, reminds me when some school kid years ago would get caught in a laneway by a gang of kids out to give him a hiding. Back then, they were in control, and if you couldn't take back control, you most likely got a hiding in the laneway off 5 c*nts.

What Biffo needs to do now is get one big bank in a headlock and dish out around 50 serial punches to the head he has under his arm. The rest will stand back for a minute in shock because they won't be expecting this development. He needs to tell the other banks, if they don't do what he says, he'll snap the head clean off the bank he has in a headlock and then he'll do the same to the other banks... If this government don't take the gloves off soon and take back control of this situation, we are fu*ked.

What are you on about?

It's this bank-bashing that's getting us further and further away from the resolving this crisis.

Cutting off the head to cure the headache...