Morgan Kelly says Ireland to contract by 20-25%, Unemployment 20%

FreedomJoe

Piling Anglo losses on to national debt risks bankrupting the State

Kelly claims in the Irish Times that the nationalisation of Anglo Irish must be stopped at all costs.

He is predicting He the Irish economy will contract by 20-25% before this is over and unemployment will rise to 15% this year before rising to 20% next year.

We are as a nation doomed if this forecast proves to be true!

http://www.irishtimes.com/newspaper/opinion/2009/0120/1232059661333.html

El Stuntman

Kelly has been correct on everything else he has said and is not beholden to any vested interests (unlike FF). FF have been wrong on everything.
hmmm, who should we believe?

his analysis of Anglo\INBS (yes I bracket them together - as the Fitzpatrick scandal displayed, they are effetcively the same thing) is spot on

screw Anglo\INBS - let them fail and their shareholders, bondholders and employees take the hit

screw FF too - they have proved themselves to be nothing more than a treasonous cabal who have hijacked the country's finances in the interests of their developer paymasters

OhNoYouDidn't

meanwhile in the Indo they are talking about Anglo shareholders being victims. :rolleyes:

About time someone called a spade a spade in relation to this deal. FF are risking the countries future to bail out their chums.

jmayo

OhNoYouDidn't wrote: »

meanwhile in the Indo they are talking about Anglo shareholders being victims. :rolleyes:

About time someone called a spade a spade in relation to this deal. FF are risking the countries future to bail out their chums.

For once we agree on something, FF are indeed selling all our futures and for what ?
Anglo is not a high street bank that most consumers and businesses use.
Is not most fo their loending to property develoeprs and speculators ?
Let them go and concentrate on saving the banks that matter.
If we spend all our money on Anglo, what is there left to helpthe others ?

I do think the shareholders are victims in this mess.
This number also probably includes pensioners, that have money invested in funds, where fund managers saw Anglo and the other banks as safe bets and thus probably piled in money.
I know one person, a normal worker not some rich connected person, who inherited Anglo shares once valued at over €200,000.
What are they worth today ?

The shareholders were screwed over by the people that were hadnsonely paid to run the institution, the authorities that were meant to make sure everything was done to ensure the system was well run and the auditiors who are meant to oversee the accounts are not misleading.

Who in their right mind would now invest in Irish shares, never mind bank shares, when there is a preception that the whole system is corrupt and there are no real checks and balances to make sure your investment is protected from being abused.
We have bank executives taking massive loans, hiding them from auditors who should have the cop on to investigate executives transactions.
We have companies being run by people who are using company funds to buy shares either in their own company or in other companies.
The whole system now stinks and the dirty little secrets of corporate Ireland are still being hidden by the government and authorities.

Does anybody in this country go to jail for insider trading, misuse of company funds, tax evasion, breaches of company law ?

Until all the sh** is out and people in positions of power are made do the perp walk, we cannot move on and nobody in the wider world will touch us.

zootroid

jmayo wrote: »

For once we agree on something, FF are indeed selling all our futures and for what ?
Anglo is not a high street bank that most consumers and businesses use.
Is not most fo their loending to property develoeprs and speculators ?
Let them go and concentrate on saving the banks that matter.
If we spend all our money on Anglo, what is there left to helpthe others ?

I do think the shareholders are victims in this mess.
This number also probably includes pensioners, that have money invested in funds, where fund managers saw Anglo and the other banks as safe bets and thus probably piled in money.
I know one person, a normal worker not some rich connected person, who inherited Anglo shares once valued at over €200,000.
What are they worth today ?

The shareholders were screwed over by the people that were hadnsonely paid to run the institution, the authorities that were meant to make sure everything was done to ensure the system was well run and the auditiors who are meant to oversee the accounts are not misleading.

Who in their right mind would now invest in Irish shares, never mind bank shares, when there is a preception that the whole system is corrupt and there are no real checks and balances to make sure your investment is protected from being abused.
We have bank executives taking massive loans, hiding them from auditors who should have the cop on to investigate executives transactions.
We have companies being run by people who are using company funds to buy shares either in their own company or in other companies.
The whole system now stinks and the dirty little secrets of corporate Ireland are still being hidden by the government and authorities.

Does anybody in this country go to jail for insider trading, misuse of company funds, tax evasion, breaches of company law ?

Until all the sh** is out and people in positions of power are made do the perp walk, we cannot move on and nobody in the wider world will touch us.

couldn't agree more, I really fear for the direction the country is taking. While other countries will go through a mild recession, we're f*cked. Thanks FF.

Kama

I know a couple of jail terms would do more to 'restore confidence in the banking sector' for me anyway; passing the risks onto the State does the precise opposite. The lack of an economic case for supporting Anglo should be > crony suction...

FTA69

FreedomJoe wrote: »

We are as a nation doomed if this forecast proves to be true!

http://www.irishtimes.com/newspaper/opinion/2009/0120/1232059661333.html

Yep. I'd say we are to tell you the truth.

I'd say this country will end up straight in the hands of the IMF, when they apply their typical conditions you will see a complete rolling back of any semblance of a welfare state that we have here. Fees are most definitely going to be introduced for third-level education in the event of IMF intervention, the likes of the dole being €200 with €80 rent-allowance will be drastically cut. I can't see anything fixing our woes in the next few years, as soon as Bangalore gets up and running properly with adequate communications infrastructure (roads etc) then every electronic and IT industry will be legging it out of this place.

Personally I'm delighted I got out of the machine operating in London and got my arse back into college. Soon as I'm finished my degree I'm off to Canada to land a nice teaching job for myself. Because I'm f*cked if I'm staying in this sh*theap, life is too short to be honest.

OhNoYouDidn't

jmayo wrote: »

I do think the shareholders are victims in this mess.

Sorry, but they took the investment risk in a bank that was offering higher returns than its competetors without understanding the nature of their business and balance sheet. The directors loans aside, and yes that was a clear and flargant witholding of information from the shareholders, but the price crash was already in full flight at that point.

If you invested in a bank that primarilly lent to the property industry and held on when the market crashed, you are a fool, not a victim.

jmayo

OhNoYouDidn't wrote: »

Sorry, but they took the investment risk in a bank that was offering higher returns than its competetors without understanding the nature of their business and balance sheet. The directors loans aside, and yes that was a clear and flargant witholding of information from the shareholders, but the price crash was already in full flight at that point.

If you invested in a bank that primarilly lent to the property industry and held on when the market crashed, you are a fool, not a victim.

You could say they were fools for not getting out, you could say that they were greedy for investing in a bank that primarily made money out of property development, but what about if you money in pension fund that is really outside of your own control ?
What about if you were one of the ones that thought things would bounce back, after all the commentators and authorities were telling you that the fundamentals were sound.
You reach a stage where you have to stay in for the long haul, as with pensions, because you have already lost so much :mad:

There is now a huge problem in Ireland Inc, if people do not invest then we are where we are the moment.
Take alook around and you see a lot of worried people, be they business owners, private sector workers or public sector employees.
Nobody knows what is going to hit the fan next, how safe are the shares that their pension owns ?

People will not invest, if they think that their investment is at the mercy of dodgy characters who are misleading you and lining their own and their friends pockets.
At the moment no foreign investors want to touch Ireland, because they see us as a bunch of cowboys that can't be trusted.
How do they know that the money they invest will be save since they can't rely on the authorities to stamp oput shodgy practices :mad:

Would you blame them ?

In Ireland up until recently there were certain tenants of respectablity and trust worthyness, that people believed were there for good and could be relied upon.
One of these used to be the Church, another was Gardai, another was bankers.
Now all of these have been shown to be hollow, immoral, corrupt, greeedy and in some cases criminally dangerous and not worthy of the trust that was once placed in them.

OhNoYouDidn't

JPMayo - to clarify, when I say shareholders I mean people who made a decision to buy and hold Anglo stock. No sympathy and the state should give them nothing.

I do not mean people who are in funds that bought Anglo. Those fund managers helped prop up the entire ISEQ artificially, but thats another story.

jmayo

OhNoYouDidn't wrote: »

JPMayo - to clarify, when I say shareholders I mean people who made a decision to buy and hold Anglo stock. No sympathy and the state should give them nothing.

I do not mean people who are in funds that bought Anglo. Those fund managers helped prop up the entire ISEQ artificially, but thats another story.

Jeeze I am not saying the state should compensate them, we can't afford to at the moment and you take a risk investing so them are the breaks.

But and it is a big but, the state does owe them to go after and hang out to dry the ones that drove that bank into the ground, the ones that ran the bank like a private slush fund, the regulators that failed to at any stage see how the place was being run and indeed the auditors who missed the fact that 80 odd million worth of loans belonging to directors was coming and going every year.

In Ireland for too damm long we have tolerated too much sh**e from people that run large institutions be it public or private ones.
It is about time that the ordinary decent hardworking tax contributors to this state, saw that people can't royally screw us over and walk away, often living off the proceeds of their cack handed and often immoral efforts.

Why should Roddy Molloy (sorry molloyjh) get a golden handshake, why should the complete sniveling little sh** Neary be rewarded for the fact he couldn't run a p*ss up in James Gate, why should Fitzpatrick and Drumm get to walk away while the taxpayer carries the can and ordinary investors see their pensions disappear ?

They should be treated like a piece of dogsh** you would find stuck to your shoe.
They deserve no better because to them we are the eejits that will make sure they continue to live in luxury, immune from their deceptions and decisions.

Mr.Micro

I am not sure that the Government can now do a U turn re the Anglo. I think that it will have to go ahead and nationalize the Anglo and use it for whatever. Morgan Kelly may well be right in his assessment as far as the cost of nationalization of the Anglo, but is there an alternative? Are there any other factors that we the public do not know about such as the full relationship of the Quinn group and major developers. Since the former is in the insurance and health care business perhaps and allowing Anglo to fall would have a significant knock on effect on this group? Of all the banks the Anglo appears to have been used by its own executives and a handful of customers for their exclusive use. I would love to know how much bad debt it really has and we may find that the bulk of it is down to a small number of people.

As far as employment going to 15% then 20%, very possible as there appears to be very little going now that the construction has gone down. Obama plans to spend billions to create jobs in form of public projects etc, our Government does not sem to have any programme in place, apart from FAS.

pepsicokeacola

once a nation of emmigrants, always a nation of emmigrants

Rebeller

pepsicokeacola wrote: »

once a nation of emmigrants, always a nation of emmigrants

Unfortunately (or fortunately, depending on how you look at it) the safety valve of emigration is not available this time around. While Ireland is probably one of the countries the most affected by the recession, it is a global phenomenon.

Leaving for the US, UK, Australia etc is not an option this time around.

The masses of newly redundant citizens will no longer be able to flee from the sinking ship that is the (Banana )Republic of Ireland. This can only lead to the slow build up of frustration, anger and resentment, which will have to boil over at some point.

When it does, I hope that our anger is not directed at our fellow citizens in the form of increased anti-social random drunken violence but instead at the corrupt cabal in Leinster House who have sold all our futures to the most venal and unredeemable amongst our business "elite".

Many might disagree, but mass civil disobedience, accompanied by violent protest directed towards those in authority who have so spectacularly betrayed us is where are only salvation lies.

The ballot box and passive party political democracy will not save us!.

It's time to clean out the cobwebs and start from scratch. What better time than on the 90th anniversary of the sitting of the first Dáil.

professore

Rebeller wrote: »

Unfortunately (or fortunately, depending on how you look at it) the safety valve of emigration is not available this time around. While Ireland is probably one of the countries the most affected by the recession, it is a global phenomenon.

If unemployment hits anywhere near 20% I'm outta here ... that's a desperate level of unemployment.

turly

professore wrote: »

If unemployment hits anywhere near 20% I'm outta here ... that's a desperate level of unemployment.

Don't come to Spain, then - it's already 12.5% and the EC said yesterday that it'll hit 18.75% this year.
Like Ireland, there was a bit of an unsustainable construction bubble.

FTA69

professore wrote: »

If unemployment hits anywhere near 20% I'm outta here ... that's a desperate level of unemployment.

Where are you going to go? Canada seems to be doing ok from what I hear.

PeakOutput

its obviously possible it could get as bad as the op says i just find it unlikely. if you take the worst estimates and the best estimates the truth will probably be somewhere in middle.

the other two banks are not going to be allowed fail we might get into alot of debt because of it to recapitalise them but they are not going to be allowed fail. when they are recapitalised they will start lending and the cycle can start again.

nationalising the bank is a good thing we now have control over how its run and can try and insure that the people who are most in need of protecting in that bank are protected and the scandal has publicised to a certain extent the failures in the system so they can be fixed.

i thought making anglo a bad debt sponge is a great idea but it appear this is not what the government has in mind

gurramok

20% by the end of the year, did i read that right?

It seems a bit extreme. Rate has gone up roughly 0.5% per month so far so maybe 13% by end of the year.
Of course if the country goes bankrupt in 2009, that rate just might skyrocket 80's style alot sooner. :eek:

Mr. Presentable

FTA69 wrote: »

. Fees are most definitely going to be introduced for third-level education in the event of IMF intervention, the likes of the dole being €200 with €80 rent-allowance will be drastically cut. .

But these are things that need to be done, if the govt has any balls. This country has been handing out money to sloths just as much as to wolves for too many years.

nesf

gurramok wrote: »

20% by the end of the year, did i read that right?

It seems a bit extreme. Rate has gone up roughly 0.5% per month so far so maybe 13% by end of the year.
Of course if the country goes bankrupt in 2009, that rate just might skyrocket 80's style alot sooner. :eek:

Nah, 20% by next year, still a pretty high estimate. He's predicting 15% by the end of the summer though. If we manage to hit 15% in 2009 it's hard to see the trend not hitting 20% the year after but it's contingent on his initial assumptions etc.

PeakOutput

nipplenuts wrote: »

But these are things that need to be done, if the govt has any balls. This country has been handing out money to sloths just as much as to wolves for too many years.

everyone paying fees will be a disaster for this country the only light at the end of the tunnel in this crisis is our highly educated work force

people who earn over 100K should have to pay fees for their kids though

nesf

PeakOutput wrote: »

everyone paying fees will be a disaster for this country the only light at the end of the tunnel in this crisis is our highly educated work force

Free fees has accompanied massive grade inflation pushing down the value of the qualifications which actively undermines the perception of our "highly educated workforce".

But this is a whole other debate tbh.

Euro_Kraut

FTA69 wrote: »

Where are you going to go? Canada seems to be doing ok from what I hear.

Hmm they are like much of the Western World I'm afraid: http://www.cbc.ca/money/story/2009/01/09/unemploymentdec.html

Canada's jobless rate rises to 6.6% in December
Last Updated: Friday, January 9, 2009 | 11:44 AM ET
CBC News

Canada lost 34,400 jobs in December, a figure that was worse than economists had been expecting, as the economy weakened.

They are very dependent on trade with the US particular in the primary sector (wood, minerals etc) so a drop in demand there will hit them badly.

As for Morgan Kelly, prehaps he will be right - but knowing him from my days in UCD he is an awful drama queen. He enjoys the attention he gets from such predictions. When an economist uses derogatorive words like 'gobeen' to describe Brain Cowen it is hard to take him seriously. He should not have to rely on name calling to build an argument for an economic forecast.

blast05

only light at the end of the tunnel in this crisis is our highly educated work force

Highly educated relative to what ?
Google in Dublin were trying to hire 100 engineers a few months back. They could only fill 30 positions cos they couldn't get the right calibre of employee so moved the whole 100 posts elsewhere. The highly educated thing is a myth in my view, perpetrated by everyones favourite FF :mad:
To make the situation worse, over the last 10 years too many people went off doing arty farty degrees instead of technical subjects.

PeakOutput

blast05 wrote: »

Highly educated relative to what ?
Google in Dublin were trying to hire 100 engineers a few months back. They could only fill 30 positions cos they couldn't get the right calibre of employee so moved the whole 100 posts elsewhere. The highly educated thing is a myth in my view, perpetrated by everyones favourite FF :mad:
To make the situation worse, over the last 10 years too many people went off doing arty farty degrees instead of technical subjects.

we have top class universities that are open to everyone we are at least as educated if not more than britain / france / germany / america and our lack of computer science / computer engineer graduates is a cause for concern but not a reflection on the entire third level system. particularly in ireland this is a marketing problem for the computer industry not a reflection of poor standards in the degrees that exist

the last person who said our educated work force would be our saviour was a completely independant american administration economic advisor so while ff has latched onto it as some sort of party success / saviour does not mean they invented it out of thin air. just like when they get criticised for latching onto the creation of an 'information society' from our educated workfore like its something they just made up. many social theorists talk about information societies in a modern technological world

we need people doing arty farty degrees just as much as we need people doing technical degrees were do you think most of our secondary school teachers come from? these people are important too not to mind the fact they should be allowed study whatever floats their boat

my point is of all the things that the government is wasting money on education is definitely not one of them

nesf

PeakOutput wrote: »

we have top class universities that are open to everyone we are at least as educated if not more than britain / france / germany / america and our lack of computer science / computer engineer graduates is a cause for concern but not a reflection on the entire third level system. particularly in ireland this is a marketing problem for the computer industry not a reflection of poor standards in the degrees that exist

What do you mean by top class? If you mean our universities do well in the ranking tables they simply do not. We rank consistently well below the major universities in other countries, which considering the funding going towards our universities isn't surprising. Also over the past decade while third level funding has increased, funding per student has fallen. This results in a lower quality of education for students. Also since the huge increase in numbers this has resulted in a need to drop academic standards to keep failure rates down, if you don't believe me go compare syllabi from 20 years ago to today, you have stuff that's only dealt with at Masters level now that would have been done at undergraduate level back then.

Seriously, while we do have some excellent fourth level research groups in this country, this is only because they are allowed to restrict access to them, the standard of our average graduate is nowhere near world class and companies know it.

Crash

blast05 wrote: »

Highly educated relative to what ?
Google in Dublin were trying to hire 100 engineers a few months back. They could only fill 30 positions cos they couldn't get the right calibre of employee so moved the whole 100 posts elsewhere. The highly educated thing is a myth in my view, perpetrated by everyones favourite FF :mad:
To make the situation worse, over the last 10 years too many people went off doing arty farty degrees instead of technical subjects.

Never take google as a good example - its been long proven that the one thing majorly limiting google is its own overly stringent hiring policies. Actually limits the rate at which they can expand.

TutuKaka

This recession hasn't even started yet. There is much more bad news to come and no good news over the horizon for the next 12-18 months. Thats if we are lucky.

The January redundancy figures will be huge and will snowball for the rest of the year. Despite the collapse in share prices and revenue not one of the big banks have announced a redundancy program yet. I think they are all holding off being the first to announce a package in case it would make people think they were in trouble :rolleyes: But once the first bank announces big cuts the rest will row in behind.

ronbyrne2005

Kelly is right about the depression we face. Irish people generally dont realise that the entire economy(GNP per capita) and salaries and costs WILL fall 20-30%. If costs of living and doing business fall by similar amounts then the average standard of living shouldnt fall much if any.
I was listening to Pat Kenny and they have a speical programme onfriday where they will be asking listeners to suggest solutions to get economy moving again. Kenny was asking for people in building and auto trade to contact them with suggestions as if those sectors of the economy will recover in next decade and as if they were essential to the economy when in fact construction and consumer spending are largely responsible for us getting into this problem.
Kenny doesnt seem to realise that the economy wont stabalise and begin to grow again untill average wages, costs etc fall 30% and we become a competitive exporting economy again. There is no magic bullet, salaries, property prices and costs have to fall to around EU average if we are to save the economy but the union headbangers wont accept this reality. This is a once in a century perfect storm for the irish economy of a fiscal crisis/currency crisis/liquidity crisis/property crash. Please unions , help save jobs even if it means 30% pay cuts, cost of liivng will fall by that amount during this depression and your members will be no worse off and as more of them will be working you will maintain or even grow your numbers. Lets put the greater good ahead of the 20% of people in public sector with excessive salaries(in current climate), gold plated pensions, great terms and conditions and job security. Maintaining employment levels and cutting the public expenditure should be everyones priority.

PeakOutput

ronbyrne2005 wrote: »

Kelly is right about the depression we face. Irish people generally dont realise that the entire economy(GNP per capita) and salaries and costs WILL fall 20-30%. If costs of living and doing business fall by similar amounts then the average standard of living shouldnt fall much if any.
I was listening to Pat Kenny and they have a speical programme onfriday where they will be asking listeners to suggest solutions to get economy moving again. Kenny was asking for people in building and auto trade to contact them with suggestions as if those sectors of the economy will recover in next decade and as if they were essential to the economy when in fact construction and consumer spending are largely responsible for us getting into this problem.
Kenny doesnt seem to realise that the economy wont stabalise and begin to grow again untill average wages, costs etc fall 30% and we become a competitive exporting economy again. There is no magic bullet, salaries, property prices and costs have to fall to around EU average if we are to save the economy but the union headbangers wont accept this reality. This is a once in a century perfect storm for the irish economy of a fiscal crisis/currency crisis/liquidity crisis/property crash. Please unions , help save jobs even if it means 30% pay cuts, cost of liivng will fall by that amount during this depression and your members will be no worse off and as more of them will be working you will maintain or even grow your numbers. Lets put the greater good ahead of the 20% of people in public sector with excessive salaries(in current climate), gold plated pensions, great terms and conditions and job security. Maintaining employment levels and cutting the public expenditure should be everyones priority.

ok you might be right but this is my thinking of it

we have had a property crash exasberated by a world wide banking crisis as it stands now from all the info in the public domain aib and boi are solvent companies that can carry on with there business on a day to day basis. their problem is the property crash which has devalued their assets. they cant loan out therefore the economy cant expand or even sustain itself so it contracts.

so we have a problem that will be sorted by proper recapitalisation of the banks. this is very doable in theory from what i have heard, i dont particularly have confidence in the government to do it properly but assuming they did that is a massive part of the problem sorted in one fell swoop.

then we have increased unemployment and we are uncompetitive in the manufacturing industry but this is only one industry and we already knew we were going to be uncompetitive in this industry within a few years and we have the advantage in that respect because of the education that has been available to us for the last 20 or so years there will be job losses and pay cuts obviously but we should still come out of this with a gdp of 180/190billion according to commentators today which will give us a great basis to rebuild and reorganise quickly

dell moved their manufacturing to poland they did not move their marketing department / administration / r+d(not positive about the r+d but im pretty sure about the other) this is very telling i think as it shows were we are competitive and what we need to focus on. intel have apparently not upgraded their manufacturing plant so that it can make their new chips so it looks like it may go the same way as dell but there is no reason why we cannot gain intel r+d jobs

[/quote]What do you mean by top class? If you mean our universities do well in the ranking tables they simply do not. We rank consistently well below the major universities in other countries, which considering the funding going towards our universities isn't surprising.[/quote]

we had at least one uni in the top 100 up until last year i believe and we have two in the top 150/200 dont we? we have 4million people on an island on the outskirts of europe were do you expect our unis to rank? trinity has an amazing international reputation when it comes to research which does filter down to the quality of undergrads and dcu ul and dit are outputting very very good computer graduates(admittedely small numbers but this is due to the marketing problem

i am no expert in any of these areas (so tell me where im wrong or the people iv been listening to are wrong but i am genuinely interested) but this recession is very recoverable with the right leadership (which i dont think we have) according to the independant commentators that i have heard.

Mr.Micro

i am no expert in any of these areas (so tell me where im wrong or the people iv been listening to are wrong but i am genuinely interested) but this recession is very recoverable with the right leadership (which i dont think we have) according to the independant commentators that i have heard.

The problem I see is that the country got rich quick on the back of the housing/construction boom and gave us an inflated belief in our wealth. A return to modest growth for a small open economy with less money is probably the best we can expect eventually. We cannot expect to see the sort of silly money that was being thrown around in the boom times for long long time, (unless we find gold in the hills) or if ever again. Unemployment and possibly social unrest may the big problems in the near future.

nesf

Mr.Micro wrote: »

The problem I see is that the country got rich quick on the back of the housing/construction boom and gave us an inflated belief in our wealth. A return to modest growth for a small open economy with less money is probably the best we can expect eventually. We cannot expect to see the sort of silly money that was being thrown around in the boom times for long long time, (unless we find gold in the hills) or if ever again. Unemployment and possibly social unrest may the big problems in the near future.

In the long run, 3ish% would be doing well year on year. But we're a long way from that at the moment.