Comments on: We face a debt-fuelled downturn http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn?utm_source=rss&utm_medium=rss&utm_campaign=we-face-a-debt-fuelled-downturn The website of economist, author and broadcaster, David McWilliams Wed, 08 Feb 2012 16:55:03 +0000 hourly 1 http://wordpress.org/?v=3.2 By: The coming crisis? – The Story http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-72015 The coming crisis? – The Story Thu, 04 Feb 2010 03:39:24 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-72015 [...] McWilliams recently argued that we are facing a debt-fueled crisis, and I agree. There is something going on with our banking [...] [...] McWilliams recently argued that we are facing a debt-fueled crisis, and I agree. There is something going on with our banking [...]

]]> By: Fergal73 http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70785 Fergal73 Thu, 21 Jan 2010 03:43:48 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70785 A little realism in the financial world is to be welcomed. Other people are paying for bankers' mistakes no matter what way you look at it - NAMA, nationalisation, reduced liquidity and business going to the wall. Interest rates will rise - it is inevitable. At least O'Grady is not trying to suck in more FTB's with false assurances on the stability of the market and the wisdom of 'seizing the opportunity' to buy property at historically affordable prices. Raising interest rates will hurt, agreed, but any way out of this shambles is going to hurt. A little realism in the financial world is to be welcomed.
Other people are paying for bankers’ mistakes no matter what way you look at it – NAMA, nationalisation, reduced liquidity and business going to the wall. Interest rates will rise – it is inevitable.
At least O’Grady is not trying to suck in more FTB’s with false assurances on the stability of the market and the wisdom of ‘seizing the opportunity’ to buy property at historically affordable prices.

Raising interest rates will hurt, agreed, but any way out of this shambles is going to hurt.

]]> By: Big Willie http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-1#comment-70777 Big Willie Wed, 20 Jan 2010 23:22:44 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70777 We as a people are very much alike in attitudes, political, religous etc. There is little variety in our thoughts probably a historic hang up which has become engrained into our herd mentality, not realy that unusual we look around us a think all germans, french and british are all alike. There would seem to be very little chance of political change, there is no one of any charisma, and personality, no one of conviction or patriotism in the dail or seanad, well there probably isnt, but by being involved in this sight shows a level of inteligence, humour, willing to learn and some patriotism. Unfortunatly the only grouping to threaten to put its "collective head" above the parapet is Amhran Nua and there first public sound byte was to say they were against FIANNA FAIL in the national anthem not much of a platform. Realy to have any change there needs to be a bloodless reveloution (hate to take the fun out of revolution) but before there has to be a coming together of minds and an aceptance of democratic resposibility and have a cabinet and a plan in waiting or the status quo will remain and nothing will be achieved. I am willing to be there is there anyone else. We as a people are very much alike in attitudes, political, religous etc. There is little variety in our thoughts probably a historic hang up which has become engrained into our herd mentality, not realy that unusual we look around us a think all germans, french and british are all alike.
There would seem to be very little chance of political change, there is no one of any charisma, and personality, no one of conviction or patriotism in the dail or seanad, well there probably isnt, but by being involved in this sight shows a level of inteligence, humour, willing to learn and some patriotism. Unfortunatly the only grouping to threaten to put its “collective head” above the parapet is Amhran Nua and there first public sound byte was to say they were against FIANNA FAIL in the national anthem not much of a platform. Realy to have any change there needs to be a bloodless reveloution (hate to take the fun out of revolution) but before there has to be a coming together of minds and an aceptance of democratic resposibility and have a cabinet and a plan in waiting or the status quo will remain and nothing will be achieved. I am willing to be there is there anyone else.

]]> By: Tim http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70776 Tim Wed, 20 Jan 2010 22:16:23 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70776 "Hail to Niall O’Grady, permanent tsb general manager, at last some truth from a senior financial figure." You want to "Hail" the first (and so-far only) Bank manager that has already raised the interest-rates charged to customers to pay for his own mistakes? “Hail to Niall O’Grady, permanent tsb general manager, at last some truth from a senior financial figure.”

You want to “Hail” the first (and so-far only) Bank manager that has already raised the interest-rates charged to customers to pay for his own mistakes?

]]> By: Ruairí http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70775 Ruairí Wed, 20 Jan 2010 20:24:54 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70775 Following on from that statusireland.com site is a link to http://www.ronanlyons.com/2010/01/19/spotting-the-swallows-irelands-rental-market-in-2010/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+RonanLyons+%28Ronan+Lyons%29 Interesting comments by other readers. The floor in rents may be supported fully by the HSE rent allowance. I wonder how the government will juggle keeping house prices up with keeping social benefits on a deflationary spiral?? Unless of course we have the magic fairyland scenario all over again whereby assets appreciate while economic rents on them decline !! Following on from that statusireland.com site is a link to http://www.ronanlyons.com/2010/01/19/spotting-the-swallows-irelands-rental-market-in-2010/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+RonanLyons+%28Ronan+Lyons%29
Interesting comments by other readers. The floor in rents may be supported fully by the HSE rent allowance. I wonder how the government will juggle keeping house prices up with keeping social benefits on a deflationary spiral??
Unless of course we have the magic fairyland scenario all over again whereby assets appreciate while economic rents on them decline !!

]]> By: Ruairí http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70774 Ruairí Wed, 20 Jan 2010 19:51:16 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70774 http://www.independent.ie/business/irish/boi-plans-debtforequity-move-2022566.html "debt for equity" for bondholders. Of course, it dilutes things for existing shareholders. Isn't this as David predicted the Commission would do, only 2-3 months ago? ""The threat of the banks falling into majority state-ownership remains a live and worrying issue if (either BoI or Allied Irish Banks) are unable to raise capital privately," said a senior Dublin stockbroker. An equity capital ratio of 8pc has emerged as the global market consensus that banks should aim for -- double the previously acceptable minimum. BoI's "liability management" signal came yesterday as it informed the market, as expected, that the European Commission has told it to stop paying discretionary coupons on subordinated debt as it considers the bank's restructuring plan. " http://www.independent.ie/business/irish/boi-plans-debtforequity-move-2022566.html

“debt for equity” for bondholders. Of course, it dilutes things for existing shareholders.

Isn’t this as David predicted the Commission would do, only 2-3 months ago?

“”The threat of the banks falling into majority state-ownership remains a live and worrying issue if (either BoI or Allied Irish Banks) are unable to raise capital privately,” said a senior Dublin stockbroker. An equity capital ratio of 8pc has emerged as the global market consensus that banks should aim for — double the previously acceptable minimum.

BoI’s “liability management” signal came yesterday as it informed the market, as expected, that the European Commission has told it to stop paying discretionary coupons on subordinated debt as it considers the bank’s restructuring plan. “

]]> By: Ruairí http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70773 Ruairí Wed, 20 Jan 2010 19:48:57 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70773 Fascinating, and encouraging, thanks for the link. Fascinating, and encouraging, thanks for the link.

]]> By: Colin_in_exile http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70772 Colin_in_exile Wed, 20 Jan 2010 19:45:49 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70772 We're now back to the April 2003 level for house prices. Next month it should be back to December 2002 levels. Young Parlon, pay attention there at the back of the class or else you'll be given extra homework! http://www.statusireland.com/statistics/property-house-price-statistics-for-ireland/3/Irish-House-Prices-Since-1996.html We’re now back to the April 2003 level for house prices. Next month it should be back to December 2002 levels.

Young Parlon, pay attention there at the back of the class or else you’ll be given extra homework!

http://www.statusireland.com/statistics/property-house-price-statistics-for-ireland/3/Irish-House-Prices-Since-1996.html

]]> By: Fergal73 http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-2#comment-70771 Fergal73 Wed, 20 Jan 2010 18:27:12 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70771 Hail to Niall O'Grady, permanent tsb general manager, at last some truth from a senior financial figure. This is the <i>debt-fuelled downturn</i>. Negative feedback loop: Prices fall (we have deflation already), people don't buy, prices fall further, businesses lose funding, liquidity freezes more, people lose jobs, people don't buy, prices fall further. http://www.independent.ie/breaking-news/national-news/house-prices-down-a-fifth-in-year-2024119.html This is the leagcy of FF. Irish citizens mortgaged way up past their necks, caught in a spiral of negative equity, rising unemployment combined with reduced mobility (they can't chase a job in another town) . From Eireannach above: ‘experience is a dear school, but fools will learn in no other’. Will the Irish electorate learn this time. FF overspent in the 70's and we had a recession in the 80's when the UK and US were doing well. FF overspent in 00's and now Ireland has a recession / depression, that they are exacerbating with insane policies like NAMA (and a private banking inquiry?). The lesson is simple, with the pedigree of FF, from CJH to Ahern to the Flynns, down to the Jackie Healy Rae's (independent - right), Ireland needs to stop voting FF. <b><i>The Irish electorate has looked after their tree while the forest burned.</i></b> Hail to Niall O’Grady, permanent tsb general manager, at last some truth from a senior financial figure.

This is the debt-fuelled downturn. Negative feedback loop: Prices fall (we have deflation already), people don’t buy, prices fall further, businesses lose funding, liquidity freezes more, people lose jobs, people don’t buy, prices fall further.

http://www.independent.ie/breaking-news/national-news/house-prices-down-a-fifth-in-year-2024119.html

This is the leagcy of FF. Irish citizens mortgaged way up past their necks, caught in a spiral of negative equity, rising unemployment combined with reduced mobility (they can’t chase a job in another town) .

From Eireannach above: ‘experience is a dear school, but fools will learn in no other’. Will the Irish electorate learn this time. FF overspent in the 70′s and we had a recession in the 80′s when the UK and US were doing well. FF overspent in 00′s and now Ireland has a recession / depression, that they are exacerbating with insane policies like NAMA (and a private banking inquiry?).

The lesson is simple, with the pedigree of FF, from CJH to Ahern to the Flynns, down to the Jackie Healy Rae’s (independent – right), Ireland needs to stop voting FF.

The Irish electorate has looked after their tree while the forest burned.

]]> By: wills http://www.davidmcwilliams.ie/2010/01/17/we-face-a-debt-fuelled-downturn/comment-page-1#comment-70770 wills Wed, 20 Jan 2010 18:16:35 +0000 http://www.davidmcwilliams.ie/?p=2115#comment-70770 Eireannanch - Nicely put, each observation. I think though its one facet to a multi facetted problem. Ireland s ruling classes are 'on the make' and will seize any chance possible to get away with pulling a fast one irrespective of illumination, they are governed by their id and unrestrained desires. It will take an 'asteroid' event to neutralize this threat. I 'm observing such an event underway now. Eireannanch -
Nicely put, each observation.
I think though its one facet to a multi facetted problem.
Ireland s ruling classes are ‘on the make’ and will seize any chance possible to get away with pulling a fast one irrespective of illumination, they are governed by their id and unrestrained desires.
It will take an ‘asteroid’ event to neutralize this threat.
I ‘m observing such an event underway now.

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