Ah were grand, Brian Lenihan says there will be no Mortgage Meltdown

Dempo1

Jeez we once believed everything that came out his mouth to our detriment, now he professes there will not be a Mortgage meltdown stating unemployment plays an important part in the reasons people default on their mortgages and gold bless him, he states unemployment trends have stabilized. Christ all mighty as he completely gone GaGa. Unemployment has stabilized and its 450k. Even if a percentage of those unemployed gain employment they will need years to catch up on missed payments.

The only thing we can be assured of is Mr lenihan is wrong again!

http://www.breakingnews.ie/ireland/lenihan-not-worried-about-potential-mortgage-meltdown-485618.html

keithclancy

Dempo1 wrote: »

Jeez we once believed everything that came out his mouth to our detriment, now he professes there will not be a Mortgage meltdown stating unemployment plays an important part in the reasons people default on their mortgages and gold bless him, he states unemployment trends have stabilized. Christ all mighty as he completely gone GaGa. Unemployment has stabilized and its 450k. Even if a percentage of those unemployed gain employment they will need years to catch up on missed payments.

The only thing we can be assured of is Mr lenihan is wrong again!

http://www.breakingnews.ie/ireland/lenihan-not-worried-about-potential-mortgage-meltdown-485618.html

2 years time i'm sure we'll see it on failblog.

Cookie_Monster

so on the basis that he's been wrong about everything so far, how long before this meltdown happens then?

beagle001

Sure we have turned a corner with the banks and jobs will come rushing in with multinational companies fighting to do business in Ireland now that we have a reduced minimum wage.
Time to start dreaming of that 35yr mortgage as Lenny and co seem to know what's going and were in safe hands.

senordingdong

Cookie_Monster wrote: »

so on the basis that he's been wrong about everything so far, how long before this meltdown happens then?

Yesterday.

cavedave

"The first point to make about mortgage defaults is that it tends to correlate very closely to unemployment," he said. "Unemployment has stabilised.

Is this factually correct? The best figure I can get for the correlation between unemployment and mortgage default is around .5 which is a fairly weak correlation. around .8 and you might be able to claim "very closely" correlated.

Cookie_Monster

senordingdong wrote: »

Yesterday.

but then he can't say it was only the information available to him at the time

danbohan

Dempo1 wrote: »

Jeez we once believed everything that came out his mouth to our detriment, now he professes there will not be a Mortgage meltdown stating unemployment plays an important part in the reasons people default on their mortgages and gold bless him, he states unemployment trends have stabilized. Christ all mighty as he completely gone GaGa. Unemployment has stabilized and its 450k. Even if a percentage of those unemployed gain employment they will need years to catch up on missed payments.

The only thing we can be assured of is Mr lenihan is wrong again!

http://www.breakingnews.ie/ireland/lenihan-not-worried-about-potential-mortgage-meltdown-485618.html

all one can say is that brian lenighan snr was an excellent teacher !

Anonymous1987

Dempo1 wrote: »

Unemployment has stabilized and its 450k.

If it makes you feel any better the 450k figure refers to everyone receiving benefits, some of which are working part-time or on low incomes. There are approximately 300k unemployed.

Dempo1

Cookie_Monster wrote: »

so on the basis that he's been wrong about everything so far, how long before this meltdown happens then?

It will commence in February and then the real fun begins! Already there are 100's of cases listed in the High court.

senordingdong

Cookie_Monster wrote: »

but then he can't say it was only the information available to him at the time

Ah well, ah, ya'see, going forward, that's eh, abit of the old, in fairness- going forward.

POSITIVE OUTLOOK!

Dempo1

Anonymous1987 wrote: »

If it makes you feel any better the 450k figure refers to everyone receiving benefits, some of which are working part-time or on low incomes. There are approximately 300k unemployed.

It certainly does not make me feel better, for the record 300k of the entire amount of recorded unemployed figures are NEWLY UNEMPLOYED since this crisis commenced and i suspect a large percentage of those NEWLY UNEMPLOYED form a large percentage of those with distressed mortgages!

Permabear

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Dempo1

donegalfella wrote: »

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Yes i could not agree more, the above points you make are also contributing to the crisis. I am sick of the Government Mantra that the cost of living has reduced, i believe it has in fact increased and substantially. Sadly part of the governments justification for some bizarre budgetary decisions is the nonsensical notion cost of living is at 2006 levels, i am not at all sure what planet they are on. Just one example, this time last year a 500lt of home heating oil was €275, this week its €395, Go figure that one out?

About America, god i hope we don't end up in that situation, its a mess there, just spoke to a friend in Delaware last night. Two years ago he was earning $150k a year, lost his job and the bank foreclosed on his condo a month ago meaning he had to move out. Such is the state of affairs there, the bank have now asked him (actually begged him with some incentives) to move back into the condo, they will hold off on foreclosure in the hope he will find work and re look at the situation in 12 months time. In essence things are so bad, the banks don't want to foreclose, instead have owners occupy and maintain the properties. Incredible stuff!

Anonymous1987

cavedave wrote: »

Is this factually correct? The best figure I can get for the correlation between unemployment and mortgage default is around .5 which is a fairly weak correlation. around .8 and you might be able to claim "very closely" correlated.

That's interesting, at present US unemployment is about 9.8% versus 13.7% here, the % of people in arrears of over 3 months in Ireland is 4.6% whereas the US is 9.4%. Just a casual observation though, the US economy is growing while the Irish economy is mired in austerity.

Anonymous1987

Dempo1 wrote: »

It certainly does not make me feel better, for the record 300k of the entire amount of recorded unemployed figures are NEWLY UNEMPLOYED since this crisis commenced and i suspect a large percentage of those NEWLY UNEMPLOYED form a large percentage of those with distressed mortgages!

That assumes the unemployment rate was 0% before the crisis?

Dempo1

Anonymous1987 wrote: »

That assumes the unemployment rate was 0% before the crisis?

Your being ficious now, check back on the figures, 150k was the number of registered unemployed in or around 2008! were now up to 450k, work it out!

ei.sdraob

Anonymous1987 wrote: »

That's interesting, at present US unemployment is about 9.8% versus 13.7% here, the % of people in arrears of over 3 months in Ireland is 4.6% whereas the US is 9.4%. Just a casual observation though, the US economy is growing while the Irish economy is mired in austerity.

The Americans have a lot more incentives to seek work (much lower min wage and welfare) and the people I met over there are very hard working and entrepreneurial.

Here people look to the state to sort everything out and hold their hand from cradle to grave, over there alot of people oppose large state interference.

Irish Socialism fail.

Dempo1

ei.sdraob wrote: »

The Americans have a lot more incentives to seek work (much lower min wage and welfare) and the people I met over there are very hard working and entrepreneurial.

He people look to the state to sort everything out, over there alot of people oppose large state interference.

Irish Socialism fail.

I agree there may be slightly more incentive for Americans to look for work but it should be noted congress has been passing increased and prolonged substantial social security payments to the unemployed. Admit idly is ongoing emergency funding but the government had no option with up to 10 million currently unemployed. Its worth pointing out, the current payment for a single person is $500 approx per fortnight, this i know for sure. I am not justifying it but could you imagine the anarchy on the streets if that amount of people had no income?

ei.sdraob

Dempo1 wrote: »

I agree there may be slightly more incentive for Americans to look for work but it should be noted congress has been passing increased and prolonged substantial social security payments to the unemployed. Admit idly is ongoing emergency funding but the government had no option with up to 10 million currently unemployed. Its worth pointing out, the current payment for a single person is $500 approx per fortnight, this i know for sure. I am not justifying it but could you imagine the anarchy on the streets if that amount of people had no income?

Well in most states you can also own a gun

Monty Burnz

"Everything is fine!" say the people who told us there would be no property crash, that the banks were well capitalised, that the banks weren't welll capitalised but would be after a recapitalisation, that NAMA would 'fix' the property market and the banks, that NAMA would make a profit, that they knew what the state the banks were in before they guaranteed their debts, that ours was the cheapest bank bailout in the world, that we were not going to go bust, and that the IMF were definintely not coming to bail us out.

I feel so relieved.

Anonymous1987

Dempo1 wrote: »

Your being ficious now, check back on the figures, 150k was the number of registered unemployed in or around 2008! were now up to 450k, work it out!

Apologies if the comment was a bit harsh, I misunderstood where you were getting the figures from. I do think it important to differentiate between those unemployed and those working part-time and on low incomes though.

Dempo1

ei.sdraob wrote: »

Well in most states you can also own a gun

In all states i believe:D

Most americans who are unemployed main concern is health care costs, their frightening. I worked and lived in the states for three years and even before the crisis it was a scary place particularly poverty levels. I was in Baltimore and i was shocked at the levels of homelessness, indeed in the nations capital, you only have to walk (if you dare) ten minutes from the white house to see squaler akin to south african townships!, so much for the worlds biggest economy.

Dempo1

Anonymous1987 wrote: »

Apologies if the comment was a bit harsh, I misunderstood where you were getting the figures from. I do think it important to differentiate between those unemployed and those working part-time and on low incomes though.

Yes fair enough, i apologies if i was snotty, i just feel at times people forget there are sincerely a lot of newly um employed. Statistics can all too often be misleading. My genuine concern is the spin we are fed fails to take into considering real hardship out there, notwithstanding real difficulties for people paying their mortgages, they now have to contend with a host of additional expenses, reduced income and stealth taxes.

Permabear

This post has been deleted.

zig

Anonymous1987 wrote: »

If it makes you feel any better the 450k figure refers to everyone receiving benefits, some of which are working part-time or on low incomes. There are approximately 300k unemployed.

on the other side of that, the 450k doesnt include people in fas courses, or on back to education allowance etc.

Scofflaw

That's interesting, at present US unemployment is about 9.8% versus 13.7% here, the % of people in arrears of over 3 months in Ireland is 4.6% whereas the US is 9.4%. Just a casual observation though, the US economy is growing while the Irish economy is mired in austerity.

Cultural differences, as well as legal differences regarding bankruptcy and the lack of an Irish version of 'jingle mail'.

There's a good summary of the Irish situation with respect to repossession, voluntary surrender, and 'jingle mail' here: http://www.mortgagebrokers.ie/blog/index.php/2009/06/22/jingle-mail-jangle-mail-or-voluntary-possession/

Essentially, there is no legal way out of mortgage debt here - your only real option is fleeing the country, changing your name, and abandoning any intention of ever returning. There is no statute of limitations on debt - the bank can come after you in 10, 20, 30 years - and the house itself is pretty much irrelevant. Even if you abandoned the house, and came back in 20 years time to discover that someone had moved in and acquired title by adverse possession, you'd still owe the bank the mortgage.

Add to that the element of shame involved in having bought a nice house and having to admit that you can't pay for it, and you have strong incentives for Irish mortgage holders to keep paying as long as possible, and to restructure as quietly as possible rather than default. At the moment, the banks have a nearly equal interest in such a restructure, since it allows them to keep your mortgage on the books at the nominal value.

I'd imagine that any correlation with factors such as unemployment would only operate within a particular social and legal framework - correlating across different frameworks would only offer weak correlations.

Thinking about the size of mortgages, though - say you were 30, clerical, earning €33k, when you took on your mortgage. Partner earning the same. Your lifetime expected earnings from that point were about €1,165,648. Assuming one or the other of you would be taking time out for children (say 50% lifetime earnings), and a 10% lifetime chance of unemployment for you, that's a total of €1.65m in lifetime earnings over the next 35 years. Assuming that mortgage debt is kept to a lifetime average of 28% of your income, you can afford to pay mortgage debts of about €457k. That suggests a loan of about €257k, and a house price of about €280k - as your lifetime home.

cordially,
Scofflaw

Dempo1

donegalfella wrote: »

This post has been deleted.

Yes indeed all the above is true, but what is your point? i hardly think sympathy is high on the list of priorities for banks at the moment. The above only highlights the pitfalls of what is ahead for our banks of something is not done to realistically address the mortgage crisis. An interesting aside, just heard on the BBC news, inflation is now at over 3% as a direct increase in consumer prices, it says many will struggle with house hold bills with inflation increasing and yet we are led to believe by our beloved government our cost of living is reducing! Pile of horse**** really!

cavedave

Given there seems to be week correlation between unemployment and defaults when Brian Lenihan says there is a strong Correlation. What does correlate? There is more research on the UK than Ireland but we have a similar social and legal framework (though I think our debt loans are significantly harsher)

This paper on the UK gives some time series analysis methods for predicting defaults. It used mainly arrears and loan-to-value ratio
macroeconomic variables seem to be of less importance.

Another paper on UK default rates suggests investment properties (which are particularly popular in Ireland) are risky
'Fitch believes a borrower is even more likely to default on an investment
property than on a second home. Accordingly, Fitch increases base default rates by 10%-35%.'

If LTV and Arrears are the main predictors of mortgage default in Ireland that means this talk of unemployment being steady is useless.

Cavehill Red

Anonymous1987 wrote: »

If it makes you feel any better the 450k figure refers to everyone receiving benefits, some of which are working part-time or on low incomes. There are approximately 300k unemployed.

Not remotely true. The Live register figure currently stands at 438,000. The true figure for unemployment in Ireland is significantly higher again, once the number of people who have been forced to emigrate, the number who are on BS 'training programmes' and those who have been migrated onto other benefits to remove them from the live register are taken into account.

sollar

Its very worrying that out finance minister thinks unemployment is the only threat to mortgages.

They seem to believe that once you have a job everything is ok, its not. Rising interest rates and lower take home pay is as big a threat imo.

Permabear

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Permabear

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KindOfIrish

Scofflaw wrote: »

Cultural differences, as well as legal differences regarding bankruptcy and the lack of an Irish version of 'jingle mail'.

There's a good summary of the Irish situation with respect to repossession, voluntary surrender, and 'jingle mail' here: http://www.mortgagebrokers.ie/blog/index.php/2009/06/22/jingle-mail-jangle-mail-or-voluntary-possession/

Essentially, there is no legal way out of mortgage debt here - your only real option is fleeing the country, changing your name, and abandoning any intention of ever returning. There is no statute of limitations on debt - the bank can come after you in 10, 20, 30 years - and the house itself is pretty much irrelevant. Even if you abandoned the house, and came back in 20 years time to discover that someone had moved in and acquired title by adverse possession, you'd still owe the bank the mortgage.

cordially,
Scofflaw

I can guarantee that in the next 2-3 years this medieval law will be challenged in European Court of Justice and it has no chance to stand.

Anonymous1987

zig wrote: »

on the other side of that, the 450k doesnt include people in fas courses, or on back to education allowance etc.

Cavehill Red wrote: »

The Live register figure currently stands at 438,000.

Yes and the Live Register includes people who are working part-time or on low incomes, not to mention fraudsters who are working and receiving cash while on the dole.

Cavehill Red wrote: »

The true figure for unemployment in Ireland is significantly higher again, once the number of people who have been forced to emigrate, the number who are on BS 'training programmes' and those who have been migrated onto other benefits to remove them from the live register are taken into account.

Depends on how broadly you want to define unemployment, fas scheme certainly massage the numbers with questionable benefit to equipping people with concrete skills in demand but would you say the same for someone studying accountancy or computer programming? I guess it depends on if relevant jobs are available for them when they complete their training, all that investment is for nothing if there is no demand for their skills. If that is the case they might as well be unemployed so yeah I sort of agree with you.

Again emigration is a tricky one, clearly people emigrated because jobs were not available in Ireland but now that they are gone we can presume they are mostly working albeit not paying Irish taxes. I'm not so sure an open economy like Ireland can include its emigrants among unemployment figures even if there is a loss to the economy. Would you include someone working in Belfast or London among the unemployed? It's more a loss of jobs than employment per se.

Leiva

I also heard Lenihans Interview and there was one extremely important aspect missing from it .

Errrmmmm ..the Elephant in the Room .

Rising E.U Interest Rates .

He says he wont listen to the Morgan Kellys etc of this world , and will only take advice from the Financial regulator .
Well has the financial Regulator done a simple stress test on the current situation in the mortgage default risk assessment ? say if the interest rates went up 1 , 2 or 3% ?

There is a hell of a lot of mortgage payers just about keeping their head above water , IMO these are the silent majority .
A couple of % interest increase will see thousands upon thousands more defaults ...something blindly missing from all discussions recently

Confused .
M.

jetsonx

If Lenihan says something is NOT going to happen it WILL happen.

Every assertion he has made since September 2008 has been WRONG.

He has lost all credibility with any half-intelligent members of the electorate.

Cavehill Red

Anonymous1987 wrote: »

Yes and the Live Register includes people who are working part-time or on low incomes, not to mention fraudsters who are working and receiving cash while on the dole.

The black economy isn't nearly as big as people think. You suggested there were only 300,000 unemployed in Ireland. I challenge you to support that figure with fact, because the facts state that you are underestimating by at least 50%.

Anonymous1987 wrote: »

Depends on how broadly you want to define unemployment,

As defined by the state, the figure is 438,000.

Anonymous1987 wrote: »

fas scheme certainly massage the numbers with questionable benefit to equipping people with concrete skills in demand but would you say the same for someone studying accountancy or computer programming?

Yes, generally I would because...

Anonymous1987 wrote: »

I guess it depends on if relevant jobs are available for them when they complete their training, all that investment is for nothing if there is no demand for their skills.

... of this. There is little or no demand for their skills. Those accountants who will get work will be chartered with degrees. What then for the Fas trainee with their crappy bit of paper? Similarly in IT.

Anonymous1987 wrote: »

Again emigration is a tricky one, clearly people emigrated because jobs were not available in Ireland but now that they are gone we can presume they are mostly working albeit not paying Irish taxes. I'm not so sure an open economy like Ireland can include its emigrants among unemployment figures even if there is a loss to the economy. Would you include someone working in Belfast or London among the unemployed? It's more a loss of jobs than employment per se.

I think you misunderstood me. If it were not for the age-old Fianna Fail tradition of exporting those they betray, unemployment would be enormously higher right now. Of course someone working in Belfast isn't unemployed in the Republic. But if they WERE to remain in the Republic, they would be unemployed.
This is why it is odious to read of government ministers trumpeting minor falls in the unemployment rate, since those falls are almost entirely related to emigration and not to job creation.

later12

I would encourage anyone who believes Morgan Kelly and other economists predicting a similar doom, to read this

http://www.bankofireland.com/fs/doc/calendar/announcement1211.pdf

I'm not saying the Minister is correct, but in fact the mortgage loan book situation is stabilising, and the current situation is rather different to that being put forward by the likes of Morgan Kelly.

Jesus Wept

ei.sdraob wrote: »

The Americans have a lot more incentives to seek work (much lower min wage and welfare) and the people I met over there are very hard working and entrepreneurial.

Here people look to the state to sort everything out and hold their hand from cradle to grave, over there alot of people oppose large state interference.

Irish Socialism fail.

I don't think entrepreneurialism is really encouraged here

ei.sdraob

later10 wrote: »

I would encourage anyone who believes Morgan Kelly and other economists predicting a similar doom, to read this

http://www.bankofireland.com/fs/doc/calendar/announcement1211.pdf

I'm not saying the Minister is correct, but in fact the mortgage loan book situation is stabilising, and the current situation is rather different to that being put forward by the likes of Morgan Kelly.

Bank Of Ireland, creators of fine reports such as this

read and weep

2006 – A stellar year for wealth creation
Last year was a stellar year for wealth creation in Ireland with the net wealth of Irish households standing at
€804 billion, a 19% increase on the 2005 number. Gross assets of Irish households stood at €965 billion at
the end of 2006, an increase of €153 billion or 19%, while household debt increased by €27 billion or 20%
to stand at €161 billion.
Unsurprisingly, the vast bulk of this wealth was driven by the domestic residential market, although other assets
also saw increases. Despite the continued high level of debt accumulation, the household balance sheet remains
very robust with assets outnumbering liabilities by a multiple of six.

Anonymous1987

Cavehill Red wrote: »

The black economy isn't nearly as big as people think. You suggested there were only 300,000 unemployed in Ireland. I challenge you to support that figure with fact, because the facts state that you are underestimating by at least 50%.

As defined by the state, the figure is 438,000.

The official measure of unemployment, the unemployment rate measures unemployment at 299,000 for the period June to September. The 438,000 figure is the live register and is not an official measure of unemployment, it is a register of those people receiving benefits who are mostly but not necessarily unemployed.

Cavehill Red wrote: »

There is little or no demand for their skills. Those accountants who will get work will be chartered with degrees. What then for the Fas trainee with their crappy bit of paper? Similarly in IT.

I agree that without jobs there is little point in training.

Cavehill Red wrote: »

I think you misunderstood me. If it were not for the age-old Fianna Fail tradition of exporting those they betray, unemployment would be enormously higher right now. Of course someone working in Belfast isn't unemployed in the Republic. But if they WERE to remain in the Republic, they would be unemployed.

This is why it is odious to read of government ministers trumpeting minor falls in the unemployment rate, since those falls are almost entirely related to emigration and not to job creation.

I agree, taking the unemployment rate as it is grossly understates the actual job losses and politicians constantly use selective figures that support their arguments. Jobs creation should be the focus.

Nevertheless when we piece together all the figures for the live register, unemployment rate, emigration and the size of the labour force we get a more accurate picture of the situation.

The point I was making is it is important to know what is and is not included in the figures and their definitions otherwise we risk misinterpretation.

Dempo1

later10 wrote: »

I would encourage anyone who believes Morgan Kelly and other economists predicting a similar doom, to read this

http://www.bankofireland.com/fs/doc/calendar/announcement1211.pdf

I'm not saying the Minister is correct, but in fact the mortgage loan book situation is stabilising, and the current situation is rather different to that being put forward by the likes of Morgan Kelly.

Quoting from a Bank of Ireland(taxpayer ltd) document is hardly going to be objective. How in heavens name can anyone honestly think the mortgage loan book situation is stabilizing? since this crisis began we have had to endure

• Further Bailouts.
• Banks also borrowing from the ECB at such levels they eventually had to say no.
• The IMF arriving on our door
• Zero credit, especially for new mortgage business
• Property prices tumbling and negative equity increasing weekly
• Long term unemployment levels increasing and little or change in the overall unemployment situation
• Utilities, food and fuel prices rocketing (not helped by new VAT increases and the ludicrous carbon tax on home heating fuel
• Absurd Budget that has pretty much stifled any notion of increased consumer spending and adding to the hardship of those already struggling
• Jobs initiative that is dependent on FAS who have just had all there course certification suspended by FETAC

Jesus I'll start to weep if i continue, FFS the RSA Can't even determine how much salt we need to treat our roads, is there any hope!

later12

ei.sdraob wrote: »

Bank Of Ireland, creators of fine reports such as this

2006 – A stellar year for wealth creation
Last year was a stellar year for wealth creation in Ireland with the net wealth of Irish households standing at €804 billion, a 19% increase on the 2005 number. Gross assets of Irish households stood at €965 billion at the end of 2006, an increase of €153 billion or 19%, while household debt increased by €27 billion or 20% to stand at €161 billion.
Unsurprisingly, the vast bulk of this wealth was driven by the domestic residential market, although other assets also saw increases. Despite the continued high level of debt accumulation, the household balance sheet remains very robust with assets outnumbering liabilities by a multiple of six.

read and weep

Hmm. I'm reading but I'm not weeping. That was correct in 2006. Is there something else you meant to quote from that report because it doesn't look like that should be it. Assets did outnumber liabilities, 2006 was a good financial year for the BoI group.

Anyway, I would add this much from the current report, which seems to disappoint predictions by some pundits including Morgan Kelly's well hailed (at least on boards.ie) pre-bailout article.

Arrears in our UK mortgage book have stabilised over recent months and loan losses are less than our previous expectations.
The performance of our unsecured consumer loan books is better than we had expected. Our Business Banking books have continued to experience downward grade migration albeit there are some signs that this is moderating in the SME / Agri segments. The retention of the €2.1 billion previously NAMA bound assets is not expected to materially alter our previous loss estimates for this book.

later12

Dempo1 wrote: »

Quoting from a Bank of Ireland(taxpayer ltd) document is hardly going to be objective. How in heavens name can anyone honestly think the mortgage loan book situation is stabilizing?

But it is.

http://www.ifgfinancial.ie/press/index.php?NID=797

Even Prof Honohan, who has undeniably been the most honest of all public banking figures since this mess began, has said that there is no evidence of a dramatic deterioration.

Personally, I can't stand this notion that anything that Morgan Kelly says is true. I'd wager that nobody who instills their confidence in him knows much about his track record. Unfortunately, this sensationalist sort of predicting outcomes is extremely popular right now.

This country has dies 1,000 deaths in the last few months, most of the assassins happen to be economic pundits, but if you ask me, their shot is a little off.

Jesus I'll start to weep if i continue, FFS the RSA Can't even determine how much salt we need to treat our roads, is there any hope!

Oh Jesus there's no salt, ah well the banks must be f*cked so. People seriously need to get a hold of their brains.

dan_d

Anonymous1987 wrote: »

That's interesting, at present US unemployment is about 9.8% versus 13.7% here, the % of people in arrears of over 3 months in Ireland is 4.6% whereas the US is 9.4%. Just a casual observation though, the US economy is growing while the Irish economy is mired in austerity.

Off topic a bit....I've a couple of friends over there who are working and who tend to keep an eye on economic matters both here and in the States.They reckoned in August that the stimulus package had just falsely buoyed the USA economy, and it was going downhill pretty quick again.

Speaking to an American recently, they expressed the opinion that there were jobs out there in the States, but many people were reluctant to take them as they are the working in the local Spar type jobs and many American people won't take them.Having said that, that's being said from an American viewpoint, so it may not be true (she was being fairly harsh in her remarks!)

I'm not sure if the numbers are telling the whole story there.

ei.sdraob

later10 wrote: »

Hmm. I'm reading but I'm not weeping. That was correct in 2006. Is there something else you meant to quote from that report because it doesn't look like that should be it. Assets did outnumber liabilities, 2006 was a good financial year for the BoI group.

Anyway, I would add this much from the current report, which seems to disappoint predictions by some pundits including Morgan Kelly's well hailed (at least on boards.ie) pre-bailout article.

The worth of these "assets" was based on overpriced property bubble valuations

you are making same mistake BOI made, looking at figures but not asking the "why" questions

later12

ei.sdraob wrote: »

The worth of these "assets" was based on overpriced property bubble valuations

you are making same mistake BOI made, looking at figures but not asking the "why" questions

Well thanks for the advice ei.sdraob, but I am merely pointing out that the information you quoted directly was factually correct.

Like I said assets did actually outnumber liabilities, and yes, 2006 was a good financial year for the BoI group. These are simple naked truths. There was a festering problem, indeed, in the BoI loan book, but that part of the report that you quote, commenting 'read it and weep' was itself correct nevertheless.

Anonymous1987

dan_d wrote: »

Off topic a bit....I've a couple of friends over there who are working and who tend to keep an eye on economic matters both here and in the States.They reckoned in August that the stimulus package had just falsely buoyed the USA economy, and it was going downhill pretty quick again.

Economic growth projections have been revised upwards in anticipation of extending Bush era tax cuts in the US. In fact a good deal of the previous economic stimulus was tax relief so I'd be optimistic about short term prospects in the US. Nevertheless the national debt is likely to grow larger without increased taxes and reduced government expenditure so expect a slowdown in the medium term yet again.

dan_d wrote: »

Speaking to an American recently, they expressed the opinion that there were jobs out there in the States, but many people were reluctant to take them as they are the working in the local Spar type jobs and many American people won't take them.Having said that, that's being said from an American viewpoint, so it may not be true (she was being fairly harsh in her remarks!)

I'm not sure if the numbers are telling the whole story there.

As mentioned earlier in this thread, there is a lot more pressure to minimise your time on welfare in the US, in particular you have a two year limit to find work after receiving your first benefits and there is a lifetime limit of five years assistance. This would seem to me to be enough incentive to take any job that's available.

swampgas

later10 wrote: »

I would encourage anyone who believes Morgan Kelly and other economists predicting a similar doom, to read this

http://www.bankofireland.com/fs/doc/calendar/announcement1211.pdf

I'm not saying the Minister is correct, but in fact the mortgage loan book situation is stabilising, and the current situation is rather different to that being put forward by the likes of Morgan Kelly.

Direct quote from the BofI Statement linked above:

Asset Quality
The latest consensus economic forecasts for Ireland and the UK are broadly in line with those
used by the Group in March 2010 for its expectations on asset quality and future loan losses.
While economic conditions remain challenging the Group maintains its expectation that
impairment charges on loans and advances to customers peaked in 2009 and that the overall
charge will progressively reduce in each of 2010, 2011 and 2012.
Our Corporate Banking loan book has begun to benefit from the general improvement in world
economic conditions. While arrears in our Irish mortgage books have continued to rise, there is
evidence that these are stabilising, particularly for owner occupier borrowers, and our loan losses
for our Irish mortgage portfolios are in line with our expectations. Arrears in our UK mortgage
book have stabilised over recent months and loan losses are less than our previous expectations.
The performance of our unsecured consumer loan books is better than we had expected. Our
Business Banking books have continued to experience downward grade migration albeit there are
some signs that this is moderating in the SME / Agri segments. The retention of the €2.1 billion
previously NAMA bound assets is not expected to materially alter our previous loss estimates for
this book.
Taking into account the diversity and mix of our loan portfolios, we anticipate that our loan losses
for 2010 will be broadly in line with previous guidance.

This is very carefully worded. I don't find it particularly reassuring. What I take from it is this:

• Arrears in Ireland are still rising, and have not yet stabilised - there are only unspecified "signs" of stabilisation.
• Any such signs of stabilisation are primarily for owner occupiers - which suggests that buy to let or investment properties may not be stabilising at all.
• Business banking is still getting worse, but maybe getting worse less fast in some sectors.

Call me a cynic, but I think this report is a lot less positive than it might seem.

thebman

Generally Lenhian seems to come out with such statements as these things are about to occur and there is lots of rumours around and he still believes people believe a word he says.

This is now no longer the case after all the misleading and inaccurate statements he has made since the start of the crisis.

As witnessed on this thread, when he now says something isn't likely, many people believe the exact opposite to be true which make him opening his mouth at all a liability IMO.