Comments on: Time for the banks to cut ties with their builder mates http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates?utm_source=rss&utm_medium=rss&utm_campaign=time-for-the-banks-to-cut-ties-with-their-builder-mates The website of economist, author and broadcaster, David McWilliams Thu, 09 Feb 2012 07:42:45 +0000 hourly 1 http://wordpress.org/?v=3.2 By: M Kershaw http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-39266 M Kershaw Sat, 02 Aug 2008 09:50:03 +0000 http://www.davidmcwilliams.ie/?p=652#comment-39266 David; With unemployment now running so high, lets say e.g. 70,000 out of the new unemployed default @300,000 after 12 months. This is the equivelant of 25% off the now depleeting ISEQ ie a 21billion loss to lenders. whom in gods name would put money into an irish bank at the moment when the shit has only begun to hit the fan. u cant get blood from a stone. Lots of people are going to cut and run leaving irish lenders holding the baby. serves them rite for lending far above peoples earnings. This is not taking into account the developers whom are over extended or the fallout for any business relating to construction e.g Wavin,ect. I once worked for a very sucessful developer, he said when i owed the bank 50k i was scared, now i owe them 50 million they ar scared. Heads down fingers crossed?. David;
With unemployment now running so high,
lets say e.g. 70,000 out of the new unemployed
default @300,000 after 12 months.
This is the equivelant of 25% off the now depleeting ISEQ ie a 21billion loss to lenders.
whom in gods name would put money into an irish bank at the moment when the shit has only begun to hit the fan.
u cant get blood from a stone.
Lots of people are going to cut and run leaving irish lenders holding the baby.
serves them rite for lending far above peoples earnings.
This is not taking into account the developers whom are over extended or the fallout for any business relating to construction e.g Wavin,ect.
I once worked for a very sucessful developer,
he said when i owed the bank 50k i was scared,
now i owe them 50 million they ar scared.
Heads down fingers crossed?.

]]> By: Jack http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37813 Jack Wed, 09 Jul 2008 11:17:59 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37813 Do not blame Fianna Fail for the economic mess we are in. Do not blame the people who voted for or against them. As the great philosopher, Cantona, said: "You do an injustice to the pig if you expect it to walk with the grace of the giraffe." Do not blame Fianna Fail for the economic mess we are in. Do not blame the people who voted for or against them. As the great philosopher, Cantona, said: “You do an injustice to the pig if you expect it to walk with the grace of the giraffe.”

]]> By: Stiofain http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37757 Stiofain Mon, 07 Jul 2008 17:02:07 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37757 David , would you be of the opinion that depositors should not hold more than €20,000 ( yes i know they are lucky if they have that much ) in an account at a single Irish bank based on the limits of the depositors insurance scheme ? as far as I know depositors are insured by the state for 90% of the first €20,000. thanks and regards, Stiofain David ,

would you be of the opinion that depositors should not hold more than €20,000 ( yes i know they are lucky if they have that much ) in an account at a single Irish bank based on the limits of the depositors insurance scheme ?

as far as I know depositors are insured by the state for 90% of the first €20,000.

thanks and regards,

Stiofain

]]> By: Malcolm McClure http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37733 Malcolm McClure Sun, 06 Jul 2008 16:29:09 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37733 John McDermott said " The banks dilemma is interesting though. they haven’t a red cent to lend at any rate it seems, and as their shares plummet nobody will give it to them to lend (a government/taxpayer bailout once more maybe?) Their valuation is so low that even if they clean up their books they may be snapped up by some big continental banking fish such as BBVA (Spain) for example." Maybe things aren't quite as bad as that. Over the past 3 months AIB shares have lost 35% of their value, whereas Royal Bank of Scotland has lost 47% of its value and Halifax Bank of Scotland has lost nearly 55% of its value. Seems that continental banks looking for a bargain would go for RBS or HBOS rather than AIB? John McDermott said ” The banks dilemma is interesting though. they haven’t a red cent to lend at any rate it seems, and as their shares plummet nobody will give it to them to lend (a government/taxpayer bailout once more maybe?)
Their valuation is so low that even if they clean up their books they may be snapped up by some big continental banking fish such as BBVA (Spain) for example.”
Maybe things aren’t quite as bad as that. Over the past 3 months AIB shares have lost 35% of their value, whereas Royal Bank of Scotland has lost 47% of its value and Halifax Bank of Scotland has lost nearly 55% of its value. Seems that continental banks looking for a bargain would go for RBS or HBOS rather than AIB?

]]> By: John McDermott http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37715 John McDermott Sat, 05 Jul 2008 19:24:46 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37715 I think I have read your best David-but every week gets better.! Malcolm McClure said, "ON JUNE 30TH, 2008 AT 2:55 PM David: In this excellent article you are getting close to the nub of the problem. Maybe soon you’ll use the dreaded word ‘cartel’ and will describe practices that lay at the heart of the cost spiral and in opposition to smaller, efficient competitors. The cure for land hoarders is a National Land Bank with compulsory purchase powers and valuations set at say agricultural value plus (say) 50%. Land needed for public purposes would be acquired by this Bank. Also land zoned for development by the Planning Authority. The latter would be released to the developer that tendered the lowest bid to complete each parcel to an agreed specification" This was done in Norway 40 years ago. Imagine the tractor brigade riots at the hint of such a move-not to mention the big builders with their huge land banks circumscribing our capital city. the army will have to be called out to declare martial law and restore order if Fianna Fail/Fine Gael are ever replaced, and a progressive political entity ever gets into power in the distant future in this country. The banks dilemma is interesting though. they haven't a red cent to lend at any rate it seems, and as their shares plummet nobody will give it to them to lend (a government/taxpayer bailout once more maybe?) Their valuation is so low that even if they clean up their books they may be snapped up by some big continental banking fish such as BBVA (Spain) for example. A distressing situation for the irish financial institutions it seems,-even when the tide goes out, and their nakedness is covered over with a fig leaf they may still be in trouble.! I think I have read your best David-but every week gets better.!
Malcolm McClure said,

“ON JUNE 30TH, 2008 AT 2:55 PM
David: In this excellent article you are getting close to the nub of the problem. Maybe soon you’ll use the dreaded word ‘cartel’ and will describe practices that lay at the heart of the cost spiral and in opposition to smaller, efficient competitors.
The cure for land hoarders is a National Land Bank with compulsory purchase powers and valuations set at say agricultural value plus (say) 50%. Land needed for public purposes would be acquired by this Bank. Also land zoned for development by the Planning Authority. The latter would be released to the developer that tendered the lowest bid to complete each parcel to an agreed specification”
This was done in Norway 40 years ago. Imagine the tractor brigade riots at the hint of such a move-not to mention the big builders with their huge land banks circumscribing our capital city.
the army will have to be called out to declare martial law and restore order if Fianna Fail/Fine Gael are ever replaced, and a progressive political entity ever gets into power in the distant future in this country.
The banks dilemma is interesting though. they haven’t a red cent to lend at any rate it seems, and as their shares plummet nobody will give it to them to lend (a government/taxpayer bailout once more maybe?)
Their valuation is so low that even if they clean up their books they may be snapped up by some big continental banking fish such as BBVA (Spain) for example.
A distressing situation for the irish financial institutions it seems,-even when the tide goes out, and their nakedness is covered over with a fig leaf they may still be in trouble.!

]]> By: Kiek dar kris būsto kaina Airijoje? : Saulius.Blogas http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37681 Kiek dar kris būsto kaina Airijoje? : Saulius.Blogas Fri, 04 Jul 2008 14:28:34 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37681 [...] ir realistiškiausių airių ekonomikos žurnalistų - David McWilliams savo šių metų birželio straipsnyje aprašo statybinių kompanijų , Airijoje dar tapatinamų su konkrečiais verslininkais vadinamais [...] [...] ir realistiškiausių airių ekonomikos žurnalistų – David McWilliams savo šių metų birželio straipsnyje aprašo statybinių kompanijų , Airijoje dar tapatinamų su konkrečiais verslininkais vadinamais [...]

]]> By: Philip http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37667 Philip Fri, 04 Jul 2008 06:40:08 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37667 Great article David. I am still laughing at "Algarve and blacked-out Jeep brigade" comment. Great article David. I am still laughing at “Algarve and blacked-out Jeep brigade” comment.

]]> By: mdalton http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37647 mdalton Thu, 03 Jul 2008 10:27:28 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37647 True Garry but people are still in a state of denial. There was one house on the market for a while and when it eventually sold, I was spoke to the auctioneer who sold it and when I asked him did it achieve the asking price, he paused, and then stuttered that it did - I told him he was a liar and still wonder how in this day and age he can tell this outright lie and no-one does anything about it, I know it didn't because I know the owners. They took a 30k hit. Even in the context of a hit I mean that their profit took a hit they bought it some years ago and had a very low mortgage. I feel that auctioneers also have to take blame as well as the banks - I mean if you look at it they send their valuers to properties to put a value on homes and instead of valuing homes properly ( In the German renting system for example there is a point system where size, location etc are subject to various points which dictates the rent), houses in Ireland are valued on inflated prices and on existing mortgages. This is the basic flaw with property here. It is not valued at it's true worth but rather on what an individual borrowed for it. The other main problem was stamp duty, when buyers were selling their homes on they added the stamp duty to the new price - ching ching for the government, which is why they were happy to go along with it, but bad news for the next buyer and ultimately disastrous news for the economy... True Garry but people are still in a state of denial. There was one house on the market for a while and when it eventually sold, I was spoke to the auctioneer who sold it and when I asked him did it achieve the asking price, he paused, and then stuttered that it did – I told him he was a liar and still wonder how in this day and age he can tell this outright lie and no-one does anything about it, I know it didn’t because I know the owners. They took a 30k hit. Even in the context of a hit I mean that their profit took a hit they bought it some years ago and had a very low mortgage. I feel that auctioneers also have to take blame as well as the banks – I mean if you look at it they send their valuers to properties to put a value on homes and instead of valuing homes properly ( In the German renting system for example there is a point system where size, location etc are subject to various points which dictates the rent), houses in Ireland are valued on inflated prices and on existing mortgages. This is the basic flaw with property here. It is not valued at it’s true worth but rather on what an individual borrowed for it. The other main problem was stamp duty, when buyers were selling their homes on they added the stamp duty to the new price – ching ching for the government, which is why they were happy to go along with it, but bad news for the next buyer and ultimately disastrous news for the economy…

]]> By: Garry http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37638 Garry Thu, 03 Jul 2008 07:55:43 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37638 daltonm, to me it looks like you've managed to do what very few experts could ...... sold out at the top of the market ...... And then even better.......... the banks have done you a favour by not giving you a much bigger mortgage .... so you can buy later closer to the bottom.... daltonm, to me it looks like you’ve managed to do what very few experts could …… sold out at the top of the market …… And then even better………. the banks have done you a favour by not giving you a much bigger mortgage …. so you can buy later closer to the bottom….

]]> By: Malcolm McClure http://www.davidmcwilliams.ie/2008/06/30/time-for-the-banks-to-cut-ties-with-their-builder-mates/comment-page-1#comment-37626 Malcolm McClure Wed, 02 Jul 2008 22:20:48 +0000 http://www.davidmcwilliams.ie/?p=652#comment-37626 Ruairi O'Brien asserted "WE own the land. Not the state". This possessiveness about real estate, particularly land, unfortunately lies at the very heart of the Irish psyche and is responsible for much of the recent economic trouble we have gotten into. Of course this statement by O'Brien is a complete fallacy, as was demonstrated by the 1923 Irish Land Act. Under this, successive governments appropriated land and the Land Commission redistributed it to needy people, mostly from the Congested Districts. In all 14% of all agricultural land was redistributed in a bloodless revolution that only ended in 1987. There is no reason why the Government could not again assume these powers and redistribute hoarded development land through a Landbank. Ruairi O’Brien asserted “WE own the land. Not the state”. This possessiveness about real estate, particularly land, unfortunately lies at the very heart of the Irish psyche and is responsible for much of the recent economic trouble we have gotten into. Of course this statement by O’Brien is a complete fallacy, as was demonstrated by the 1923 Irish Land Act. Under this, successive governments appropriated land and the Land Commission redistributed it to needy people, mostly from the Congested Districts. In all 14% of all agricultural land was redistributed in a bloodless revolution that only ended in 1987. There is no reason why the Government could not again assume these powers and redistribute hoarded development land through a Landbank.

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