Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Can i ask a favour please

  • 23-12-2010 7:37am
    #1
    Closed Accounts Posts: 3,619 ✭✭✭


    I believe a lot of people do not understand whats happening about this econmic crisis. They know we are in a sorry state but i think dont understand what it means

    Would someone here kindly put together a short word document explaining what it means. What are the options and what they would mean - ie accept the bailout as it it, default, or separate bank and country dept and default on bank debt.


Comments

  • Closed Accounts Posts: 289 ✭✭feicim


    ilovesleep wrote: »
    I believe a lot of people do not understand whats happening about this econmic crisis. They know we are in a sorry state but i think dont understand what it means

    Would someone here kindly put together a short word document explaining what it means. What are the options and what they would mean - ie accept the bailout as it it, default, or separate bank and country dept and default on bank debt.


    Damned if we do, damned if we don't.


  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    we will recover
    will take a long time
    banks we irresponsible
    government kept folk happy short term-screwing them long term
    the public got greedy-mental mortgages, didn't heed warnings.


    government took on the debt of the banks/publics mortgages/developer massive loans.

    dont think they realised the size of the debt.

    but got dumped with it

    people wanted us to tell the banks to take a hike

    would have messed us up more in reality

    EU gave us a loan to cover us, not the best interest but sure you never get a good interest rate when your in a financial mess.

    government having a long hard look at our inflated wages and welfare.

    5-8 years time, we'll be in the pub laughing bout all this and FF will be back in power


  • Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    5-8 years time, we'll be in the pub laughing bout all this and FF will be back in power

    Last I checked its not Halloween anymore :(

    if Irish people forget what FF have done in 5 years then they ****ing deserve all the getting now


  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    back in the rainbow days people said the same


  • Closed Accounts Posts: 805 ✭✭✭BeeDI


    ilovesleep wrote: »
    I believe a lot of people do not understand whats happening about this econmic crisis. They know we are in a sorry state but i think dont understand what it means

    Would someone here kindly put together a short word document explaining what it means. What are the options and what they would mean - ie accept the bailout as it it, default, or separate bank and country dept and default on bank debt.

    You don't need a word document. You need an excel document :D


  • Advertisement
  • Registered Users, Registered Users 2 Posts: 1,206 ✭✭✭zig


    we will recover
    will take a long time
    banks we irresponsible
    government kept folk happy short term-screwing them long term
    the public got greedy-mental mortgages, didn't heed warnings.


    government took on the debt of the banks/publics mortgages/developer massive loans.

    dont think they realised the size of the debt.

    but got dumped with it

    people wanted us to tell the banks to take a hike

    would have messed us up more in reality

    EU gave us a loan to cover us, not the best interest but sure you never get a good interest rate when your in a financial mess.

    government having a long hard look at our inflated wages and welfare.

    5-8 years time, we'll be in the pub laughing bout all this and FF will be back in power

    the problem is every post thats put here will have the story told in their own opinion, like the one here ^^^


  • Registered Users, Registered Users 2 Posts: 3,934 ✭✭✭RichardAnd


    back in the rainbow days people said the same


    A good point. FF are unlikely to be in power after the next election but, in my honest opinion, they will not be decimated as many wish to believe. Opinion poles suggest they will receive 17% of the vote if they are lucky but these poles are wholly unreliable ways to judge the situation. The reason is simply because even in the boom when everything was hunky dory (or so it seemed to Joe Normal), if you asked a person were they happy with the government the answer would, most likely be no.

    Does anyone recall that U2 concert in 2005 when Bono got 60-70k people to boo Bertie?

    FF will get back into power eventually. There could be another boom and the, guess what, another recession and the cycle will continue as it has for hundreds of years.


  • Closed Accounts Posts: 39,022 ✭✭✭✭Permabear


    This post has been deleted.


  • Registered Users, Registered Users 2 Posts: 3,934 ✭✭✭RichardAnd


    I do love your posts Donegalfella. Not to sound obsequious but it's good to hear a well thought out opinion here as opposed to "the bankers did it!"

    But anyway, what you described is what I'm beginning to believe is the inevitable. Ireland, in my opinion, is heading back to how it used to be for most of it's history; the poor little state on the edge of Europe.

    I'm not optimistic that we can actually bring about the sweeping changes needed to bring ireland into the 21st century because, quite simply, I don't think the efficacy is there to do it. This is a country where true innovation (not the buzzword so often tossed about) isn't just ignored, it actually seems to frighten people.

    That being said though, there is still a future here. My own parents got started in life in the mid 80s and both are extremely successful and I was fortunate to have a privileged upbringing. My grandfather ran a modest business for the better part of his working life and several of my uncles are self made millionaires and they did this through many recessions and "hard times". I myself found a job in exports in a growing and prospering Irish owned company.

    So yes, things are bad and no, we probably will never be much more than we ever were but things are not as bad as they are in some parts of the world.

    Just my 2 cents.


  • Closed Accounts Posts: 3,619 ✭✭✭ilovesleep


    Thanks dongalfella. I'll be typing that out and emailing it to everyone i know. Id highly recommend everybody does the same to make sure everyone understands whats happening.


  • Advertisement
  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,549 Mod ✭✭✭✭johnnyskeleton


    Economics works in cycles. Boom is followed by bust. This is because booms generate additional investment because of the good times effect, and busts generate additional conservative tendencies, because of the bad times.

    For the last 30 years the world has thought that they have finally cracked it. Every time it looked like we were going into a bust, we printed a load of cheap money and spent like it was going out of style on whatever kind of asset class we could find. When that asset class collapsed, instead of the usual bust, we would simply print even more, cheaper money and moved it into the next asset class.

    Eventually, we ran out of ideas and are in a bizzare situation where we can't lower interest rates anymore, have no new asset class that is booming, and no matter how much we try we can't spend all the newly printed money.

    Thus, the world has come to realise that our miracle cure for hangovers i.e. the hair of the dog school of economics, was only setting us up for the mother of all hangovers, which we have to have since we've gorged ourselves to such an extent that we simply can't gorge any more.

    The solution, unpalletable as it is, is to stop partying, drink plenty water and good food and take it easy until we nurse ourselves back to good health. A crucial part of this recovery plan is that we never have such a ridiculous bender again, and any drinking we do will have to be moderate, and when the resulting hangover comes we try to cure it with tried and tested means, and not just simply guzzling more sauce.

    People talk about this as the failure of Keynesian economics. But its not. The failure was to take part of Keynesian theory i.e. spend your way out of recession to prevent depression, but to ignore the other part i.e. cut spending during booms to prevent asset bubbles.


  • Closed Accounts Posts: 11,299 ✭✭✭✭later12


    I just want to bring in the European dimension to this discussion.

    Firstly - I am not a Eurosceptic but I feel it is important to underline the European involvement in our fiscal crisis. It is very important. Take a look at these charts, first of all.

    9a1b040c_0d28_11e0_82ff_00144feabdc0222.gif

    Look at the huge disparity between the savers and the spenders. Countries like Germany with its weak home demand and competitive external sectors generated surplus savings.
    Look at the German household savings above. Huge. Similar story for other core economies like France. These household savings flowed into French and German banks. It then flowed downstream at small rates of interest into deficit economies like Ireland, where the banks had a low supply of deposits. This caused asset price bubbles due to an easy supply of artifically cheap credit. by 2007, Ireland’s net liabilities to foreign banks were 204 per cent of gross domestic product. See below.
    9a1b040c_0d28_11e0_82ff_00144feabdc01111.gif


    This adds a new and very important isse to the discussion: interest rates and economic vacillations within the Euro area. It is unsustainable to retain a single currency with such marked internal divisions while everyone enjoys the same rate of borrowing. It is a model which gives rise to boom and bust cycles, in short it is unsustainable.

    If the Eurozone does not change, and cahnage fundamentally, then it will continue to be a currency disaster for economies like that of Ireland; it will eventually fail to survive.


  • Moderators, Entertainment Moderators, Politics Moderators Posts: 14,549 Mod ✭✭✭✭johnnyskeleton


    later10 wrote: »
    Look at the huge disparity between the savers and the spenders. Countries like Germany with its weak home demand and competitive external sectors generated surplus savings.
    Look at the German household savings above. Huge. Similar story for other core economies like France. These household savings flowed into French and German banks. It then flowed downstream at small rates of interest into deficit economies like Ireland, where the banks had a low supply of deposits. This caused asset price bubbles due to an easy supply of artifically cheap credit. by 2007, Ireland’s net liabilities to foreign banks were 204 per cent of gross domestic product. See below.

    ...

    If the Eurozone does not change, and cahnage fundamentally, then it will continue to be a currency disaster for economies like that of Ireland; it will eventually fail to survive.

    I'm not sure it is the eurozone's fault, nor the fault of countries like Germany.

    The fact remains that globally there was loads of cheap money sloshing around, especially from Japan, China and the OPEC countries. Each of these countries had a lot of money for some reason (high exports of electronic goods, manufactured goods and oil, respectively) and the options for domestic investment were reasonably poor, so they invested abroad instead.

    The idea that an Ireland outside the Eurozone would have fared better and not gone crazy with cheap money doesn't make sense - if the Eurozone was the sole reason for this increase in credit, why did Britain with its own currency experience a similar credit bubble? And the US?


  • Closed Accounts Posts: 11,299 ✭✭✭✭later12


    The idea that an Ireland outside the Eurozone would have fared better and not gone crazy with cheap money doesn't make sense - if the Eurozone was the sole reason for this increase in credit, why did Britain with its own currency experience a similar credit bubble? And the US?
    British gilt and US treasury bonds are often seen as being the two unreproachable debentures, along, perhaps now, with Germany's. They have their own reasons for asset bubbles, and as such are bad examples.

    In any case, I'm not saying the Eurozone was the sole reason for the increase in credit, but it did create an interest rate anomaly for Ireland on account of internal economic trends and this easy flow of un-naturally cheap credit resulted in an asset bubble here as it did elsewhere within the zone.

    I'm not blaming Europe - I'm simply describing the European aspect of the problem.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    the public got greedy-mental mortgages, didn't heed warnings.

    Amazing! No "some of" preceding the above, and then absolutely no mention of all the warnings that FF didn't heed!

    If you're going to try to lay blame and/or summarise, please do so accurately.


  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    Liam Byrne wrote: »
    Amazing! No "some of" preceding the above, and then absolutely no mention of all the warnings that FF didn't heed!

    If you're going to try to lay blame and/or summarise, please do so accurately.

    a fool and his money is easily parted


  • Registered Users, Registered Users 2 Posts: 4,502 ✭✭✭chris85


    Liam Byrne wrote: »
    Amazing! No "some of" preceding the above, and then absolutely no mention of all the warnings that FF didn't heed!

    If you're going to try to lay blame and/or summarise, please do so accurately.

    it should be proceeded by a lot of. We have a historic need to own property rooted from our past history of being driven out of our land some time ago. Majority of people want to own or as it was said "get on the ladder"... what ladder, you should buy a property and should be your family home, a ladder suggests you will continue to grow your property. It lead to a mindset that we needed to buy property.

    Also the banks were giving out and credit like nothing else so there was no obstacle to getting a property. It was spiralling out of control.

    We tried to reduce the incentives on buying property especially for first time buyers, I think this was a bout 5 years and it was Mr Cowan attempting to do this (could be wrong on this so i stand corrected if so) but the public fought this and incentives were not introduced.

    Maybe the goverment should have not listened to the public and got rid of these incentives to slowly deflate the property bubble at a manageable level. This is an issue as they are an elected goverment and want/need public support to continue in power.


  • Registered Users, Registered Users 2 Posts: 3,934 ✭✭✭RichardAnd


    chris85 wrote: »

    Maybe the goverment should have not listened to the public and got rid of these incentives to slowly deflate the property bubble at a manageable level. This is an issue as they are an elected goverment and want/need public support to continue in power.


    That is precisely what the government should have done and it shows the glaring problem with the democratic system. When fools have the vote, they will only elect likewise to power.

    You made a good post but I'd re-word some of it because it suggests that the need to own property has left us. In my experience, it hasn't. If banks started offering 110% mortgages tomorrow, we'd see people taking them and calling it an "investment".


  • Registered Users, Registered Users 2 Posts: 4,693 ✭✭✭Laminations


    chris85 wrote: »
    it should be proceeded by a lot of.

    Care to.back that up with actual figures? Quantify it, how many is a lot? Did it just seem like a lot?

    I suggest you read this thread where I've at least provided some quantification.

    Also before people go spouting the old line 'we are all to blame', I'd pay some attention to the head of NAMA. Frank Daly recently said quite the opposite. 'we are not all to blame, only a few are responsible' - RTE news Dec 20th.

    In relation to DFs summary, it is generally accurate but I don't agree with his dichotomy in relation to the EU/IMF bailout (and he knows this).

    Default and the tap turns off and we collapse with strikes and riots, or agree and get crushed under €10bn interest repayments.

    We are borrowing to pay back bondholders as well as pay for current spending deficits. Any money we are giving straight to our banks to give straight to german/French etc banks should be borrowed with no additional interest. There is a wide spectrum of choices between total untargeted default and accepting the strangling deal. We can restructure, renegotiate, extend, share burdens etc.

    This government have made bad decision after bad decision. I think later's posts highlighting Europe's feeding of our bubble shows they should accept some shared blame though like he says they are not to blame, it was homegrown policy


  • Closed Accounts Posts: 1,654 ✭✭✭Noreen1


    a fool and his money is easily parted

    That being the case, the banks were extremely foolish.:p:D

    Noreen


  • Advertisement
  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    Noreen1 wrote: »
    That being the case, the banks were extremely foolish.:p:D

    Noreen

    very true haha, but i think everyone was bit foolish with their money in fairness


  • Registered Users, Registered Users 2 Posts: 4,502 ✭✭✭chris85


    Care to.back that up with actual figures? Quantify it, how many is a lot? Did it just seem like a lot?

    I suggest you read this thread where I've at least provided some quantification.

    Also before people go spouting the old line 'we are all to blame', I'd pay some attention to the head of NAMA. Frank Daly recently said quite the opposite. 'we are not all to blame, only a few are responsible' - RTE news Dec 20th.

    In relation to DFs summary, it is generally accurate but I don't agree with his dichotomy in relation to the EU/IMF bailout (and he knows this).

    Default and the tap turns off and we collapse with strikes and riots, or agree and get crushed under €10bn interest repayments.

    We are borrowing to pay back bondholders as well as pay for current spending deficits. Any money we are giving straight to our banks to give straight to german/French etc banks should be borrowed with no additional interest. There is a wide spectrum of choices between total untargeted default and accepting the strangling deal. We can restructure, renegotiate, extend, share burdens etc.

    This government have made bad decision after bad decision. I think later's posts highlighting Europe's feeding of our bubble shows they should accept some shared blame though like he says they are not to blame, it was homegrown policy

    quantify what, its a general consensus this happened and everyone knows the population were over eager to get on the "property ladder". I am not going to find an survey done on this to please you. everyone knows the attitude of the us Irish when it comes to property.

    The goverment had an opportunity to slow the property bubble down but didnt and bowed to public pressure. They made the wrong call.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    very true haha, but i think everyone was bit foolish with their money in fairness

    Can I have the names of "everyone" you spoke to and observed in order to come to this conclusion ?

    And does the glib "fool and his money" being "soon parted" now apply to the real "everyone", given that FF are robbing us to prop up failed banks and developers, using the tax system to do so ?


  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    Liam Byrne wrote: »
    Can I have the names of "everyone" you spoke to and observed in order to come to this conclusion ?

    anyone who took out mortgages they now cant pay


  • Registered Users, Registered Users 2 Posts: 1,206 ✭✭✭zig


    anyone who took out mortgages they now cant pay
    bit extreme imo, more like, anyone who took out mortgages they couldnt afford to pay at the time.


  • Registered Users, Registered Users 2 Posts: 323 ✭✭mistermouse


    I don't think that anyone can argue that the flow of cheap credit from Europe didn't help fuel the situation. The ECB have 'come to the rescue' primarily, not because we are part of europe but because they are getting us to take a loan to make sure we do not default on European banks.

    Here, the country lost sight of many thinks fuelled by cheap credit. This started a housing bubble. We also lost sight of home grown industries such as Agriculture and Tourism and relied on multi nationals who can and do move out of the country on a whim, take Dell for example.

    Due to the hike in living standards driven by cheap credit, many companies just moved and will continue to move to cheaper economies. Now we have very little sustainable Irish businesses or Tourism that bring in revenue from abroad.

    We now rely on low corporation tax to keep what foreign manafacturers we can get or have. The country has no real plan to start developing industries that are sustainable and can export/get tourism etc, essentially money flowing into the country.

    To top it off, even as the world economy rises, we will be saddled with debt and green taxes etc. and have little means to start looking after ourselves.

    No one is bailing us out, the government signed up to an EU plan to keep the EUs banks right at our expense. But most political parties were always more interested in looking good in brussels and forcing referendums through inspite of what people here thought, voted or wanted.


  • Closed Accounts Posts: 11,299 ✭✭✭✭later12


    chris85 wrote: »
    quantify what, its a general consensus this happened
    everyone knows the population were over eager to get on the "property ladder".
    everyone knows the attitude of the us Irish when it comes to property.
    While I'm not denying, personally, the extent of the property bubble and how all sorts of people from the unemployed to senior banking executives camped under it, I always get uneasy when people come up with statements like "it's a general concensus" and "everybody knows...".

    In fact, it is not a general concensus that homeowners are to blame for the Irish debt crisis. Nor does "everybody know" that everybody was foolish with their money, as another poster suggested.

    The big problem, it will come as no surprise to learn, is commercial property debt. This is the primary tumour. Commercial debt is the reason bankers at Lloyds suffered mini heart attacks en masse last week when it was announced that they had lost £4billion in Ireland, with worse yet to come, and that90% of their lending into property development are in default. On the other hand, RBS, which had been a source of concern has managed to rally because most of their mortgage loans are in private ownership.

    When people hear about bankers talking about the property boom fueling the banking crisis, they are firstly talking about the developers who built the enormous apartment and development complexes. The private mortgage loan book is a significant problem, of course, but not the primary cause. As another poster said, the people to blame on that loan book are the ones who took out loans they couldn't afford at the time... but they would not really be large enough in number to have caused all of this mess by themselves. They are, for now, small fish.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    anyone who took out mortgages they now cant pay

    Are you including people who accurately calculated how much they could afford and borrowed accordingly, only to be let go from their job and use up whatever savings that they had in the interim because the government chose to put bailing out their mates ahead of implementing employment initiatives and making it easier (and less crippling) to set up (and keep going in) your own small business ?


  • Moderators, Education Moderators, Music Moderators Posts: 10,686 Mod ✭✭✭✭melekalikimaka


    Liam Byrne wrote: »
    because the government chose to put bailing out their mates ahead of implementing employment initiatives and making it easier (and less crippling) to set up (and keep going in) your own small business ?

    without bailing out the banks i think employment initiatives would have been fruitless tbh.

    and honestly any one who bought a house at the prices during the peak was in my mind very short sighted and foolish... clearly over priced and market was headed for a crash, anyone who researched the climate knew that... and if i was taking a 300k plus loan out, i certainly would have check out what i was getting into.

    i'm not just referring to people who lost jobs, what bout people who can afford the payments in employment due to interest hikes, they were also on cards


  • Advertisement
  • Closed Accounts Posts: 11,299 ✭✭✭✭later12


    i'm not just referring to people who lost jobs, what bout people who can afford the payments in employment due to interest hikes, they were also on cards
    interest hikes? Look at the interest rate.


Advertisement