We are faced with similar concerns on the horizon now. Unlike 2008, when this country went bust, or in 2012, when the euro as a currency was in real danger of falling apart, there is no serious internal threat. In 2012, the world’s central bankers cutting interest rates to zero prevented the disintegration of the euro. This may have saved the currency then, but it means that today central bankers have no ammunition left if there is another downturn. Interest rates are as low as they can go.
Unfortunately, the trading economies that Ireland depends on have not responded to zero interest rates with any real gusto. They are sluggish at best. This sluggishness means that the average guy feels left behind and sees real gains going to the very rich. As a result, the mainstream political players are now being rejected in favour of populists. This is happening everywhere, particularly in the UK, the US and France.
First, the Government stimulated the economy to the tune of €1.3bn rather than the expected €1bn. As you would expect from a minority government dependent on Independents and Fianna Fáil, there was no coherence. There was a little bit for almost everyone. Income taxes were trimmed marginally via modest cuts to the USC. Social welfare was increased, and capital investment was lifted.
So in short, there is no direction. It’s a mish-mash of parish-pump initiatives.
However, in terms of what signals it is sending out, there is one interesting development: the Department of Finance and the Central Bank — the two most significant economic agencies in the State — are now clearly at loggerheads. This is never good.
The Budget undermined the Central Bank’s authority profoundly.
The one significant policy unveiled by the Central Bank over the past few years was limiting the amount of money people could borrow to buy houses to three times’ income and limiting the borrowing to an average 85pc of the value.
It wasn’t popular but if we had a crash because people borrowed, then surely preventing people borrowing too much is one of the lessons we learned.
Almost overnight, house price inflation, which was nothing short of rampant in 2013/14, stopped. This has not played out well for first-time buyers, just yet — but in general, it has to be seen as one of the most successful and immediately effective policies ever.
House prices at the margin are affected by the amount of money a buyer can borrow against the house. If borrowing goes up, so too will house prices. It is really that simple. Those who warned of the crash years ago did so because we saw a massive debt bubble growing.
The problem for the Central Bank is that its policy has been too successful.
The implication of capping the amount of borrowing is that the housing market adjusts downwards and all prices and margins in the housing market will have to fall, as headline house prices come down.
However, the builders, landowners and vested interests in the business said they simply couldn’t cut prices.
They suggest now that the average cost of building a three-bed semi in the Greater Dublin area is an immutable €330,000. Construction costs come to €150,000, just 45pc of the total. Land, margin and VAT are the main elements of the other €180,000.
This logic puts the price out of the range of most first-time buyers if they are to remain within the Central Bank’s three times’ income limit plus deposit stipulation.
Rather than wait for the price of sites to fall or builders’ margins to fall, the Government yesterday came up with the tax rebate of 5pc of the cost of the house, which can immediately be offset against the deposit. This will simply allow people to borrow more.
So, for example, take a house costing €400,000. Before the Budget, the buyer had to save a deposit of €58,000. Now, because there will be a 5pc tax rebate on the price of the house, which is 5pc of €400,000, or €20,000, the buyer has to save only €38,000.
The net result will be a rush to buy now that the deposit rules have been loosened.
Prices will just go up and, meanwhile, the Central Bank’s authority will be undermined irreparably. Put simply, all the good work is now undone. That’s not a bad day’s work now, is it?
Astonishing. Through the looking glass we go.
It would be somewhat re-assuring to think that the Dept. of Finance had just gone ROUGE on this occasion but the truth of the matter is that the DoF is the ROUGE.
I have said it before on this forum that Kildare St. needs to be cleared out, not fit for purpose. Everyone above middle management would be my suggestion.
The place is full of Kevin Cardiff’s.
1. When you are a society that is up to it’s neck in debt, you are heavily dependent on interest rates. The Euro zone started to become a ponzi-racket, when Trichet took over from Duisenburg. The tall Hollander put interest rates at 4%. Trichet, dropped them, in a manner that has been wrecking Europe ever since. 2. The Eurozone is still not fixed. In fact, it is worse than ever. Germany’s biggest bank is presumably in the midst of a bank run. Soon the Germans will run out of money. At that point Finland and Holland may as well run… Read more »
[ I added this to the previous thread – but it was about this topic ]. [ The article in the Irish Independent is correct. Bertonomics does NOT work. It creates a party, and then a cathastrophe. It has the key personality, it has a whiskey nose, and a series of embarrassments as the long term consequence, like it’s key personality. The politicians are returning to Bertonomics. It is madness. Noonan wanted to out-Bertie Bertie once. And the people reject his approach. now, he is doing it again. The housing market in Dublin needs – more supply – more commercial… Read more »
Just another example of irish political groupthink in action – everything they do is reactive rather than proactive. They always react after the fact when we are already well into crisis mode. They never react proactively to prevent future crises. This is all down to vote-bribery and career politicians. Everything they do is always angling for the best personal outcome at the next election. Their careers are never on the line whether they make good or bad decisions for the nation. They constantly pander to small groups with whom they are currently less popular in order to get them to… Read more »
Insanity is doing the same thing repeatedly, and expecting a different result each time. More madness, is what is next on the schedule for Europe. The evidence is now clearly indicating that the vast experiment in statist imperialism on a grand scale, is driving every country into the abyss, one at a time. More centralism/imperials is NOT working. It did not work for Bonaparte, and it is not going to work for the current French “leadership”. [ Neither did invading Russia work, incidentally…]. Why then did the French PM, find his inner Robespierre, and compeltely lose touch common sense, and… Read more »
Hi, First of all; “it means that today central bankers have no ammunition left if there is another downturn. Interest rates are as low as they can go.” Wrong. They can opt for outright theft in the form of negative interest rates or gold confiscation and will and have done in the past. Anything that weakens a central bank is a great day for freedom. I mean it. Here is an idea; Give the developers an option to build and rent homes and allow a portion of the payment for rent go into an escrow account for the deposit element… Read more »
Surely the Irish State’s Budget was vetted by European Central Bank & E.U. Commission prior to being presented to the Cabinet ? . Meanwhile, for ur consideration as to whom u strongly advise ur USA electorate friends to vote for, please take a look at this : . Arkancide Arkancide is the unfortunate habit of potential witnesses to the Clintons’ dirty dealings in Arkansas suddenly deciding to shoot themselves twice in the back of the head. Police and Coroners in Arkansas, notably Fahmy Malak who answered to Governor Bill Clinton, automatically described these shootings as “suicides.” After Bill Clinton became… Read more »
Highly intelligent leader who has protected all the religious & ethnic groups — Muslim [ Sunni, Shihite, Alawite, Druze, Christian, Judaism, Kurds, etc in Syria since he in power being interviewed in English on Danish TV by arguably a hostile interviewer ; . Full Interview of President Al-Assad with Danish TV2 . Published on Oct 6, 2016 . . https://www.youtube.com/watch?v=UnJkaUSk4ps . . Neither Dame Enda Kenny, nor Me-Hole Martin nor Gerry-unprincipled-Adams nor Joan Burton are intelligent enough nor courageous enough to defend Irish Nation from similar invasion by Zio-Fascist Proxy USA & its Sub-Proxies ISIS, Al Queheda [ Really, Mshd-CIA… Read more »
Highly intelligent leader who has protected all the religious & ethnic groups — Muslim [ Sunni, Shihite, Alawite, Druze, Christian, Judaism, Kurds, etc in Syria since he in power being interviewed in English on Danish TV by arguably a hostile interviewer ; . Full Interview of President Al-Assad with Danish TV2 . Published on Oct 6, 2016 . . https://www.youtube.com/watch?v=UnJkaUSk4ps . . Neither Dame Enda Kenny, nor Me-Hole Martin nor Gerry-unprincipled-Adams nor Joan-the-Moan are intelligent enough, nor courageous enough, nor noble enough, to defend Irish Nation from similar invasion by Zio-Fascist Proxy USA & its Sub-Proxies ISIS, Al Queheda [… Read more »
Constrained supply creates upward pressure on price.
Which makes the two pillar banks look good. If they can clean up their bad debts, the ponzi racket can start again.
The problem is the entry point. The entry point becomes a “minimum-acceptable-floor-price-of-residential-living-space-for-the-vested-interests”.
And that is anti-societal.
In fact Ponzi-economics, is always anti-societal. It is anti-societal regardless of what the fad is. Subprime debt, Dot-com shares, Facebook shares, Irish bank shares, etc.. It is always about misallocation, and deliberate misrepresentation of “value” via distortionary pricing.
And we are heading to Ponzi-economics again.
https://wealth.goldmoney.com/research/goldmoney-insights/how-not-to-manage-a-currency?gmrefcode=gata “It is a process that cannot continue indefinitely, because, as the old adage goes, markets eventually reassert themselves. This adage is a summation of all that’s wrong with monetary and financial collectivism, the inability of central planning to allocate capital resources as efficiently as free markets” “This has always been the basic argument for not putting trust in fiat currencies, instead having a form of money whose purchasing power is more stable in terms of commodities and raw materials. The Bank of England’s inept monetary policies under Mark Carney’s governorship seem certain to expose the fragility of fiat sterling… Read more »
“First, the Government stimulated the economy to the tune of €1.3bn rather than the expected €1bn.” “The Budget undermined the Central Bank’s authority profoundly.” DMW ” It is a process that cannot continue indefinitely, because, as the old adage goes, markets eventually reassert themselves. This adage is a summation of all that’s wrong with monetary and financial collectivism, the inability of central planning to allocate capital resources as efficiently as free markets. Sooner or later, a mistake, changing circumstances, or a black swan event leads to a financial or currency crisis. This happens from time to time, and every time… Read more »
PARIS
https://www.youtube.com/watch?v=4ENBwKtBik8
“The hid their identities and mislabeled the Federal Reserve because what they were doing was wrong. They were creating an engine of monetary and price inflation that over time would break the middle class, ruin the dollar and eventually destroy the US itself. This would be the inevitable result of monetary price fixing – which is the real Fed’s real authority and power. There are central banks like the Fed all over the world now. Many are not “independent” and really that doesn’t matter. One merely needs to keep in mind that central banks are agencies of destruction to understand… Read more »
http://seekingalpha.com/article/1943091-sprotts-john-embry-feds-have-lost-control-over-monetary-policy
Disturbing Bill and Jim, Many parties have missed the significance of the Russians advice to return the students studying abroad. I recall a story my grandfather told me about when at age 17 in 1917, him being in a Boys Finishing Academy in Moscow and being summoned by his uncle who was Postmaster General of Russia and being told that war was coming and instructed to return to the Academy that afternoon, pack his belongings and get on his horse and return to the Ukraine to warn the family to disburse into the countryside because they would be hunted for… Read more »
” It wasn’t popular but if we had a crash because people borrowed, then surely preventing people borrowing too much is one of the lessons we learned – DMW ” People borrowing too much while intelligent professional lenders/bankers paid themselves up front bonus payments, was not some NEW lesson learned. Peter Nyberg was more honest than Irish economists when he said it was NOT BELIEVEABLE that intelligent professionals could ignore the basic principles of banking. Lets face it. In my opinion they made unfair gain for themselves because Irelands lightweight economists, politicians or journalists never held them to account. Todays… Read more »
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. – Alan Greenspan, “Gold And Economic Freedom” (1966)
http://moneywise411.com/2016/10/who-still-supports-trump/ ………. And “inflation” and “unemployment,” as measured by the Bureau of Labor Statistics (BLS), are largely fantasies. And the little people know it… Our friend Rob Marstrand from OfWealth just looked at one key price – one that is near and dear to the working class: the price of a pickup truck. According to the BLS, prices on automobiles have barely budged over the last 20 years. But that is clearly absurd. A new Ford F-150 pickup costs upward of $26,000 today. The same basic truck was about $15,000 in 1996. The BLS says the two are actually the… Read more »
http://www.moneyandmarkets.com/germany-warns-danger-war-u-s-russia-82341
“German Foreign Minister Frank-Walter Steinmeier said on Oct. 8 that the situation between the U.S. and Russia today is more dangerous than it was during the Cold War.
As he put it, “It’s a fallacy to think that this is like the Cold War. The current times are different and more dangerous.”
For sure, Syria & Russia are sticking to the truth, & Zio-Fascist Proxies USA, & UK, & France, inter alia are willfully telling lies. And, ISIS & Al-Queheda are Mshd-CIA creations from the get-go ; . . WAKE UP ! WAKE UP ! . . History repeats itself in so many of the same places. . The Dreadful Few could manufacture a similar scenario in Ireland again with Loyalist & Nationalist & “Secularist / Humanist” players. . Anyway, no doubt that some sort of plans for Ireland are in the making — during times of peace — for to be… Read more »
Almost unnoticed by the western press was the Chinese Yuan being added to the IMF SDR basket of currencies.
http://goldandliberty.com/money-markets/gold-silver-prices-plummet-despite-financial-instability-political-turmoil/
Alright prices are up, in fringe Dublin. Instant reaction. [ such is the impact of a rgged market].
Here is a question – who currently owns all this land that NAMA seized in the aftermath of the banking ?
This how Ireland runs the Health Service.
https://www.youtube.com/watch?v=b9ztUlve9jc
Hospitals (and towns) competing for public resources. No clear plan. No sense of combined organization. Too many layers of management. No clarity on procedures. No concept of scale of economic deploment of resources. And decisions like the location of the Children’s hospital that are absurd and ridiculous.
And not enough large, efficient scale hospitals. Located on the outskirts of the main cities, on principal transport routes.
And not enough common sense.
The HSE as Ireland’s version of British Leyland.
Organizational chaos.
It seems real world politick is going like this board and getting nuttier an nuttier; http://www.wsj.com/articles/u-s-suspends-talks-with-russia-over-syria-cease-fire-1475517771 RR6 got it right lads you and your family is what counts. Try not to hurt anyone. Do what makes you happy and makes you feel good. The only real currency you have is the positive contribution you make to the OTHER PEOPLE who live with you on planet earth. That last sentence is the key to YOUR FREEDOM. I know this to be true. I learned it from my Uncle Stephen who passed away around this time last year aged nearly 90. He… Read more »
TRUMP ON MEDIA CORRUPTION
https://www.youtube.com/watch?v=TZ_eV2TRlOg
“In other words, it could not be more obvious that the same direction the global economy is taking – led by the horrific, historically damaging actions of the Fed; is being followed politically, monetarily, and with increasing likelihood, militarily. As the saying goes, “when all else fails, they take you to war.” Which clearly, is rapidly moving from “possible” to “probable” to “fait accompli” status. And if you can’t motivate yourself to PROTECT your assets from the inevitable “fallout” under such dire circumstances, I’m not sure what more it will take. Other than the equally inevitable financial collapse; at which… Read more »
Upping the ante
The Sunday Times’ report quoted a defence source as saying: “Up till now RAF Tornados have been equipped with 500lb satellite-guided bombs — there has been no or little air-to-air threat. But in the last week the situation has changed. We need to respond accordingly.”
http://www.zerohedge.com/news/2016-10-13/royal-air-force-pilots-ordered-shoot-down-hostile-russian-jets-over-syria
Who actually runs the country.
your country
Any country
The central bankers of course.
Speaking later in Birmingham, Mr. Carney defended the bank’s independence, insisting that policymakers would not “take instruction” from politicians on how to do their jobs.
http://www.telegraph.co.uk/business/2016/10/14/carney-bank-of-england-will-tolerate-higher-inflation-for-the-sa/
Hello David,
Congratulations on the new show;
https://www.businessworld.ie/news-from-ireland/David-McWilliams-to-launch-economics-show-on-TV3-566170.html
This bit is hilarious;
“The show aims to make economics understandable and relevant to its audience”
Is it not obvious to you that its the people who run the worlds central banks who new things explained to them?
Here would be a good question for President Higgins, me thinks. President Higgins, on the one hand you are in favour of a tolerant and open society, and you said that Ireland did not receive enough refugees from Middle Eastern or African countries. On the other hand however, accepting mass amounts of people from those countries in Sweden had led to Sweden having to accept sex segregation in Swedish schools with Muslim majorities (i.e. in Al-Azhar school), which has drawn attention of the Swedish minister for education Mr Gustav Fridolin and it prompted a decision of the Norwegian director of… Read more »
Bussing voters around to different polls
Democratic fraud
https://www.youtube.com/watch?v=jUDTcxIqqM0
Lots of tasty tidbits exposing the corruption of the real world
http://needtoknow.news/archives/2016-2/2016-10-14/
http://www.gopusa.com/?p=15982?omhide=true
“Thank You Vladimir Putin
If the Russians are ultimately responsible for the release of these emails, some of which show an anti-Catholic animus on the part of Clinton campaign officials, we are grateful to them. The answer has to be to clean out the American political system of those who corrupt it and demonstrate to the world that we can achieve higher standards of integrity and transparency.”
http://www.gata.org/node/16835
Australian academic inadvertently exposes a major price setting and collusion practice in the Precious metal markets. Major banks on trial while Deutsche Bank turns evidence for the prosecution.
Donald Trump: “A moment of reckoning.”
.
https://www.youtube.com/watch?v=ZFQcZMGe4p0&feature=youtu.be
ATTENTION … ATTENTION … ATTENTION . http://www.rense.com/general96/diego.htm . . Why is Diego Garcia wall-to-wall US bombers ? . Have the USA zio-fascist Pentagon maniacs already decided to : bomb the Syrian army & thus dare Russia to start WW 3 ? . . EXCERPT ; . “I rotate through Diego Garcia every 6 weeks to pull maintenance on uplink equipment as a private contractor. I have watched GLP off & on for 4 years. . Something big is going on ; The island has more aircraft than anytime in the last 9 years. . They have blocked off some access… Read more »
Democrat Party’s Propaganda News Network “CNN International” — Christiane — Am-a-War-Whore — Amanpour Interview With Sergey Lavrov [ Russia’s Foreign Minister ] . . Video: https://www.youtube.com/watch?v=-M11fKeoyrU . . Moscow, 12. October 2016 . . Transcript ; . . http://www.mid.ru/en/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/2497676 . CLIMAX BETWEEN CNN’s “War Whore” Amanapour & Lavrov ; Time Point ; 35:10 . . CNN’s “War Whore” Christiane Amanapour ; . Question: Can I just file one last question ? One last question, a bit cheeky ; But I’m going to ask you. Russia had its own Pussy Riot moment. What do you think of Donald Trump’s Pussy Riot… Read more »
FOR GRZEGORZ,
.
There may be useful info. for u AND Poland in the following wild stuff of this Link ;
.
I did not read it in detail ; Only a quick read for gist or just quick glance ;
But, I did note interesting stuff relating to Poland, & parts of Germany close to Poland.
.
http://www.christ-michael.com/leaked-official-agenda-for-the-destruction-of-germany/
http://snippits-and-slappits.blogspot.ca/2016/10/president-bashar-al-assads-interview.html
.
Assad is one smart cookie !
Government Collects $3.27 Trillion in Taxes in Fiscal Year 2016 Gov’t still runs $587 billion deficit despite collecting record taxes . . BY: Ali Meyer October 14, 2016 4:35 pm . . The federal government collected $3.27 trillion in taxes in fiscal year 2016, according to the latest monthly Treasury Department statement. The federal government ran a deficit of $587 billion despite the record revenue. Treasury receipts include tax revenue from individual income taxes, corporate income taxes, social insurance and retirement taxes, unemployment insurance taxes, excise taxes, estate and gift taxes, customs duties, and other miscellaneous items. After adjusting for… Read more »
More germane today than in 1964. ———————————————– Reagan gained national attention in his speeches for conservative presidential contender Barry Goldwater in 1964.[82] Speaking for Goldwater, Reagan stressed his belief in the importance of smaller government. Consolidating themes he had developed in talks for GE, he argued in “A Time for Choosing”: The Founding Fathers knew a government can’t control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose. So we have come to a time for choosing … You and I are told… Read more »
Sorry if this has already been asked as I’m playing catch up. If the Central Bank’s policy has been too successful then perhaps the policy needs some adjustment or is it a case of “If it ain’t broke don’t fix it.” The current problems with the housing market are mainly due to a lack of strategic planning. Ireland is a boom and bust headcase and it has been “built” almost exclusively around the construction industry. We had five years to plan a strategy for future housing. I totally except a plan is one thing and implementation is another. But surely… Read more »