TWO issues have been dominating the Irish economic landscape this week. The first is: what does our being described as a “special case” by Angela Merkel and Francois Hollande actually mean? If it means we will be treated specially, what will other countries, like Spain, think? The second, and equally important, issue is this: does being “a special case” mean we will get a legacy bank deal, which would be a big step forward? If so, what would such a deal do for the biggest problem facing our society — the coming tidal wave of mortgage defaults initially in the “buy-to-let” market, and then in the residential mortgage market?
The last five days have not been easy for the faint-hearted. On Friday, Ms Merkel poured freezing Baltic water on Ireland’s chances of getting a legacy deal. Then, following a flurry of diplomacy, a joint communiqué issued by Berlin and Dublin suggested we were in fact a special case. Our specialness has not yet been defined, but on Monday, the Taoiseach took a swing at it, saying Ireland was special because we had “taken one for the team”, in not applying the rules of capital to the bankruptcy of the banks; leaving the creditors to take a major hit.
As soon as it became apparent that the Irish State, bullied by the ECB, was following a “no bondholder left behind” policy with respect to the banks even as their losses mounted, this column always argued that the bondholders should be burned. The basic logic of not paying up front — instead of paying and then looking for your money back — is obvious.
Yesterday, it looked like the door had been left tantalisingly open for us to get our money back in some form through this “special case” reference. Given how things have gone over the past few years, it’s hard not to be sceptical, but equally, if the facts truly have changed, it would be misguided not to adjust to the new reality of our being special.
For a moment, imagine that the hoped for outcome materialises. Ireland is treated as a special case because we “took one for the team” — we stuck to the austerity programme and are small in European terms. Our fate will then be governed by the American expression “you don’t get what you deserve; you get what you negotiate”.
This is when we should focus on a deal that provides not just enough money for the legacy debts, but also the future debts of the banking system, which will come via the mass default on buy-to-lets and later, on residential mortgages.
Last year the Minister of Finance in the Dail put the figure for personal household indebtedness at 143pc of GDP. This is bigger than the national debt and much bigger than the banking debt. The problem with much of this debt is that it was used to finance house buying. Now those houses — the assets — have fallen in value, but the debt remains fixed and rising because interest rates, although low, are positive.
More worrying still is the fact that interest rates are now at historic lows. The implication is they can only go up. A total 45,165 of all mortgages are in arrears of over 90 days; 17,553 are in arrears of over 45 days and 65,698 are in arrears of over 180 days. These figures come from the Central Bank’s latest bulletin. Already, €15bn worth of mortgages have been restructured.
Fitch, the rating agency, believes 20pc of Irish mortgages will eventually default as incomes fall.
The reason people default is not so much because houses are in negative equity but mainly because people’s incomes fall and they can’t keep all the balls in the air. This week’s survey from the credit unions reinforces the contention that we are very close to this tipping point. It suggests that 1.8 million adults had less than €100 at the end of the month after all the bills were paid.
So rather than wait for the debt bubble — the corollary of the housing bubble — to burst, wouldn’t it be more sensible for the State to try and put a figure on the worst case scenario. Then it could go to Europe with that figure added to the existing legacy debt and demand that much money. The logic of this is simple: you only get one chance to strike a deal. If the Government has indeed secured special treatment (which we deserve) then it’s better to go big.
This makes sense because, for starters, the average person needs a break. Secondly, the default tsunami is coming. If we only deal with past debts, the future ones will sink the banks after we get the deal that was supposed to solve their bankruptcy.
In these situations you only get one chance.
The article’s argument hinges on the ECB as the bad guys in the room.
But, are they?
The Irish banks and their local crony networks are the bad guys.
We´re only special because were taking the cuts without rioting and we´re growing while implementing austerity. The Germans can then say to he other PIIGS, Ĺook at Ireland – Austerity works so do it too.Whats more Inda admitted its all our own fault beacuse we went mad and that hes sure well pay back all our debts. Special eejits!!! We also overpay our civil service and medical consultants with borrowed money so our German friends remain even more convinced we have plenty of money so why would we need help.
I would fear even if we were to get a bank deal the deal will not be good enough and certainly wont cover future losses. I just don’t think anyone in goverment or in oppositon is strong enough or clever enough to get the deal that is needed.
On a second note really looking forward to Kilkenomics and will get down to the box office to get a few tickets for a few of the shows!
Special Case
Define it ? These are two words banded together by the incumbent Abattoir Manager Noonan . They have no basis in fact and never will .
This is an attempt to grovel and fornicate to the new masters and be sucked more into the abyss .
We are all in the Darkness of Doonan
http://www.thomaspringle.ie/?p=1392
That’s the only case that’s special. Enda’s posturing is nauseous, but at least it shows him for what he is. He’s not a man, he’s a no-liathroidi Ken Doll. Silver-haired Peter Matthews, he of dulcet tones and VB riler, said it like it is: the financial products, derivatives and the shadow banking, are complicated and the politicians are behind the curve.
Diarmuid O’ Flynn, Thomas Pringle, NAMA wine lake and Judge Peter Kelly are great people.
Perhaps Willis, your question is raised for the purpose of playing Devil’s advocate. However, I fear that this is not the case as it is obvious that so many in this country, let alone those abroad who need to be educated, still don’t get it. And that’s not to mention our own Taoiseach who tells the world we bring this on ourselves because we went mad borrowing and spending. “The Irish banks and their local crony networks are the bad guys.” No one is arguing with that but let’s look at the bigger picture. Irish banks get caught up in… Read more »
With regard to Irish mortgage debt: “…… wouldn’t it be more sensible for the State to try and put a figure on the worst case scenario. Then it could go to Europe with that figure added to the existing legacy debt and demand that much money.” Your reasoning is the exact opposite to that of both the present Irish Government and the present EU leadership. They are trying to uncouple bank debt from sovereign debt; you want to bind them together. You want the Irish Government to take responsibility for Irish mortgage debt and then pass it on to the… Read more »
A most informative essay for those interested in the current advent of gold as money.
http://www.gata.org/files/DeutscheBankReport-09-18-2012.pdf
Hi David , fully agree that existing quantum of legacy debt is not representative of what the final outcome will be after “buy to let” + “owner occupier” defaults and write downs occur.However I feel that whatever chance we have of striking a write down with the ECB/EU/IMF is , they will be loathe to include these future losses which our Banks are hiding by lying continually to us. In terms of the whole debt problem Ireland has it has many compoents – it’s not just down to the money we “owe” because Trichet forced us into a bail –… Read more »
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The solution is pretty simple. The Irish government tells the Europeans to go to hell. we are not playing your game anymore. We will not pay any more public (aka taxpayer) money to a private business for their losses. That means no one!! not the banks not the homeowner, no more subsidies. Do an accounting for the money already paid to the banks on for their losses and register a charge against assets. If the banks can not repay then sieze the assets and sell them to recover the money. That is do to the banks what they do to… Read more »
BTW talking of action.
Is there not a tour for the bank debt protest this saturday in Castlebar.
I am in Newport here and could cycle to Castlebar in support if anyone has the details please
We are due to exit the IMF/ troika at the end of 2014. This government have not learned much about running a country, other than looking after themselves and their cronies . When you listen to the government talking they are never in the wrong and they have rigged the the system in there favour. The game is rigged in such away to cover the crow park and the pay and perks enjoyed by over payed and over fed people not to forget about the lump sums, pensions, the good by hand shakes and the gravey expanses what a train… Read more »
special case, yeah – pure stupid
kenny is the specialist of them all..
This is not a case of government overspend. It does not matter what Enda or Angela say about special cases. This is a simple case of can’t pay at the citizen level all happening at once. 1.8M living on the edge – Personal debt 143% of GDP. 140K mortgages in trouble. OK… assuming 200K each, thats about 30Bn. If that suddenly crystalises…what will take the shock? Surely they know that coming default on Mortgages has to be headed off or else it will force hands and I believe it’ll ripple thro the entire European banking system. There is no money… Read more »
What and who is this all powerful ESM/EFSF? Well see for yourselves !!!
EIR Team Films The Invisible ESM “Headquarters”
After attending Thomas Pringle’s case being heard at the European Court of Justice, an EIR (Executive Intelligence Review) film team went to the office of the European Stability Mechanism (ESM) in Luxembourg.
First of all, the ESM has its own web page but no address. Thus, we went to the EFSF. And what did we see? This place is so low-profile that one suspects they are hiding themselves.
For the full story :
http://laroucheirishbrigade.wordpress.com/2012/10/25/eir-team-films-the-invisible-esm-headquarters/
HOENIG CONTINUES CAMPAIGN FOR GLASS-STEAGALL Oct. 6 (EIRNS)–In a speech to a seminar of the Bank Holding Company Association on Oct. 5, former Kansas City Federal Reserve governor, and current member of the FDIC Board of Directors Thomas Hoenig gave a major presentation entitled “The case fo reinstating Glass Steagall.” The speech is not yet available. Coverage in the Minneapolis Star Tribune highlighted Hoenig’s attack on the pending imposition of Basel III capital requirements on the nation’s community banks. Reporter Jennifer Bjorhus says that “the maverick bank regulator repeated his calls to separate investment banking from commercial banking and to… Read more »
I’m working away as usual and the ould Blackberry is a great yoke for catching up on things but functionally quite useless. Sue me now why don’t ye. Anahow. Going back to the top of the page where David makes some comment about keeping this blog going because it keeps him sane, or words to that effect, shortly after he started writing this column/blog or whahever its called now, I came back from 28 years in England thinking that this place had for once and for all got itself sorted out. Not too long after I docked back I realised… Read more »
If we get our money back for the promisory note and sell our ownership of the banks to the ecb for a premium won’t any future liabilities go to the new owner.
Glass-Steagall – Split the Difference
There was a new editorial in London’s {Financial Times} calling for full Glass-Steagall bank separation, with a polemic against Vickers’ ring-fencing, and the Volcker Rule, on Oct. 18, after testimony in the British Parliament. See:
http://www.ft.com/intl/cms/s/0/e5b00f6a-192a-11e2-af88-
00144feabdc0.html#axzz2AJSbZswg
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It will ask to register – it is indeed free.
Draghi tells Bundestag, he’s running bailouts on behalf of the German taxpayer! Oct. 25, 2012 (EIRNS)–ECB President Mario Draghi came out in full defense of his new bond-purchase plans, in a speech before the German Bundestag yesterday. The meeting between Draghi and members of Germany’s Parliament was designed as a sign that the ECB and German Chancellor Angela Merkel were fighting for the euro shoulder-to-shoulder. Draghi certainly did not convince his most outspoken critics in the Bundestag, like Frank Schaeffler, who told the media afterwards that his concern over inflationary consequences of the ECB’s policies have not been removed by… Read more »
Morning all How are we all today ? Hope everyone is in good form and enjoying the show we now call Government ? I do hope that all this financial debate is done with the knowledge that the present situation is here to stay.? Its not personal,its only business. This is a new era in our civilization, an era of debt,slavery.asset stripping,care-takers NOT Government. Where lies,deceit,spin and waffle have the high ground. Society is so dumbed down now,Government can do what they want now,without any fear,while people are Sheeple and prefer to live in fear. Don,t get me wrong,I acknowledge… Read more »
Dont Believe the Hype!!!! This Govt’s use of spin would put Tony Blair and Alistair Campbell to shame. Ireland a special case – yeah right!!! http://trueeconomics.blogspot.ie/2012/10/22102012-is-ireland-special-case-in.html I often wonder how Europe (politicos) see Ireland. The patronising arrogance of Charlie McCreevey. The grab all attitude of McSharry etc. Some points to remember. Ireland implemented a blanket bank guarantee without consulting its european partners. ireland has consistently said no to corporate tax reform. Yes Ireland is a tax haven for US comapnies. http://www.irishcentral.com/news/Google-pays-just-10-million-Irish-tax-bill-by-routing-9-billion-profits-abroad-173020581.html Ireland has said no to a Tobin tax. Ireland has demanded that there are no changes to CAP and… Read more »
Time to quit the EU. Default. Get out. Get clear of the nonsense. Time to live within our means. And to accept the need to live within our means.
Because this relentless borrowing habit is not working. Since 1996, we have been on a relentless trajectory of relentless debt accumulation in either one sector or another. Debt has become the economic model. And it is not working. The whole thing is just making us more and more into debt slaves.
All men who went to war!!!!.
We shall use our intelligence
to win this battle, not guns.
He who is weak must be smart,
and smart we will be.
Under our constitution we remain a
sovereign people.
We have not given away or rights.
We can and will change any law we wish.
AWAKEN IRELAND.
.
AWAKEN IRELAND.
http://www.thedailybell.com/28204/The-Recovery-Meme-and-Why-Its-Just-Talk
For whom does the bell toll,
Is the Daily Bell right or wrong about the economy/
One thing they are right about– the very people that caused the problem are the ones claiming to be fixing it— Yes , Gold star,, the central Banks.
http://www.youtube.com/watch?feature=player_embedded&v=RjQu9qFpStw
Max Keiser : Germany isn’t sure where it’s gold reserves are? Links in to this:
http://www.faz.net/aktuell/finanzen/devisen-rohstoffe/reserve-der-bundesbank-wo-steckt-das-gold-der-deutschen-11844207.html
..and your comments previously Tony
Govt bonds are the new bubble so…. Bloody hell
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/10/26_Celente_-_Its_Not_Just_Germanys_Gold_Thats_Missing.html
15000 tonnes of gold will be missing. GATA has been right for 12 years
Could gold and silver become the next big scam look what is going on with paper money and electronic money.
When the scammers are looking for new ways to scam us out of our hard earned money it’s only a matter if time ,who’s to say its already going on .
Who are the scammers ????????????
Before this blog heads south into Tiger territory : Glass-Steagall in Icelandic Parliament Yesterday, Icelandic parliamentarian Ãlfheidur Ingadóttir re-introduced her bank- separation resolution, which has 16 co-sponsors, in the Icelandic Parliament, Althingi, followed by a one-hour debate. The resolution calls for the Finance Ministry to prepare guidelines to implement a full bank separation by February 1, 2013. The resolution will now be considered by the Economic and Trade Committee, and then come up for a vote in the Althingi. The debate occurred after last week’s release of a banking reform report by three “wise men,” which called for seriously considering… Read more »
More hot air from Gilmore – Tánaiste Eamon Gilmore has said he is very confident of securing a “timely” deal on Ireland’s bank debt with European partners, allowing Ireland to exit its EU-ECB-IMF programme next year as planned. After talks in Berlin with German foreign minister Guido Westerwelle this morning, Mr Gilmore said Berlin understood that programme success and bank debt were interlinked, and that Germany would co-operate with Ireland on improving the sustainability of its programme. “We’re in the business of exiting the programme not entering a new one,” said Mr Gilmore, expressing his appreciation for Berlin’s support in… Read more »
Good man David. Well done. You are great.
Brilliant. Fantastic as always David.
And you were right David Morgan Kelly backed you up on that. Arthur Cox?
Morgan Kelly!!! Ryan you twat
Ryan on your salary…you keep a straight face….david get him on that
http://www.youtube.com/watch?v=tg00YEETFzg
….and when it’s over you almost wish that you ould have all the bad stuff back so that you have the good
We found love in a hopeless place….
Hi Dorothy
There are 5 postings in a row from you but no connect to what david said.
i am missing something here.Are these private emails posted?
any help??
http://www.irishtimes.com/newspaper/weekend/2012/1027/1224325772087.html A Dublin-based TD could have a package worth almost €200,000, including unvouched expenses and two secretaries or parliamentary assistants at a combined salary of €70,000, in the first year after election. With vouched expenses he or she could be pulling in about €210,000. If the TD lived in a far-flung district of Co Kerry, extra travel expenses would bring the figure to about €235,000 — and if the deputy were an Independent there would be €41,152 on top of that, making a total of about €276,000 before tax. I heard FG TD on the radio Wednesday night trotting out… Read more »
Outside the Room of Special Cases : Finland Discusses Advantages of a Euro-Exit Oct. 26 (EIRNS)–The London {Financial Times} warned today that the “once-unimaginable” could happen if, while all eyes are on Greece, Finland decides to leave the euro from its position of strength. Heikki Neimelaeinen, chief executive of the Municipal Guarantee Board (an entity of the Finance Ministry), says “we have started openly discussing the mechanism of euro exiting, without indicating that we will initiate such a process.” The recent research paper from Nordea bank in fact suggests that if Finland introduces a parallel (national) currency to the euro,… Read more »
Afternoon all Their were three types of people on the TITANIC 1/Those who knew it would sink and tried to survive. 2/Those who thought it might sink but figured they would be okay either way. 3/ and those who resisted the very idea it would sink and ridiculed the above until it was too late. Human nature Hard to help people who don’t want or ask for help. Remember most people do not accept the truth until it is too late. In History,the majority of Revolutions,”Arab springs” our own War of Independence are carried out by a small minority of… Read more »
TYPO..”I do NOT pretend to have all the answers” even I don’t know everything …!!!!!
Regards
RR6
Obama Attacks Glass Steagall
President Obama has finally come clean on his categorical opposition to Glass Steagall, in the most recent edition of Rolling Stone Magazine. As LaRouche has emphasized, this nation can no longer endure with Obama as president. Glass-Steagall remains the only alternative to hyperinflation.
Watch this short LPAC video report http://larouchepac.com/node/24311
http://www.goldmoney.com/gold-research/felix-moreno-de-la-cova/golden-stability-versus-fiat-chaos-part-II.html?utm_source=english-subscribers&utm_medium=email&utm_campaign=w43-2012-newsletter
A fairly good article on why gold as money is superior to the fiat unlimited we have today.
Why it restricked the business cycle to minor ebbs and flows and does not lead to booms and busts.
Worth the read for those trying to understand.
Is Canada the tail of the american ass
http://www.thedailybell.com/28200/Anthony-Wile-Sit-Silently-as-Bombs-Burst-in-Air
Switzerland is widely considered to be one of (if not) the freest and most open countries in the world. This is primarily based on the Swiss system of direct democracy and its long history of independence and neutrality, combined with its high level of diversity and international interrelations. Currency markets have a history of rewarding countries that are free. Why is that? Freer countries have the tendency to avoid over-taxation, over-regulation and support policies that promote freedom and innovation. Freer floating currency regimes allow market forces to play a role in determining value. Market forces and (truly) democratic systems, and… Read more »
PRINGLE CALLS FOR CONSTRUCTIVE DEBATE ON ESM CASE Thomas Pringle TD has today called for constructive and informed debate on his case on the ESM which was heard in the European Court of Justice( ECJ) this week following ill-conceived comments made by public representatives in recent days. http://laroucheirishbrigade.wordpress.com/2012/10/27/pringle-calls-for-constructive-debate-on-esm-case/ “Ireland’s total commitment to the ESM is in excess of €11 billion — of which €508 million was paid last week — while there is no fixed commitment by the ESM to support Ireland.” This is a shattering press release. “The fact of the matter is that the ESM is an inter… Read more »
Ireland shoud get out too.
http://www.thedailybell.com/28201/Diminishing-EU-a-Wonder-to-Behold
David good to see you on RTE ,do you ever get the feeling you are talking to a brick wall,the past has proved you correct ,the future will do the same.