May 22, 2014

Cut in ECB rate could push up rates in Ireland to first time buyers not down!

Posted in Banks · 44 comments ·

What better city for a football lover to be in this week than Madrid? I have always loved Spanish football commentary. Even though I haven’t a word of Spanish, I love the rapid-fire speech, the dramatic rolling Rs, the intensity and pace of the commentators and of course, the demented celebrations when a goal is scored.

As the locals here in Madrid gear up for the Champions League final between Real and Atletico on Saturday, the only talk is of the game, its significance and how it sets up Spanish football for the World Cup where they are defending Champions.

Spain has an extraordinary record having won the Euros in 2008 and 2012 and the World Cup in 2010. The national team is not the force it was in 2010, but no one in Europe can deny the dominance of Spain over the past decade.

However, Spain’s purple patch in football has been mirrored by a catastrophe in its economy.

Almost since the day Iker Casillaslifted the European Cup in June 2008, Spain itself has remained firmly in the red. The economy has been in freefall.

Like Ireland, Spaniards were conned into thinking they could get rich buying and selling Spain to each other with other people’s money. The subsequent bust was spectacular and is still being felt in debilitating levels of unemployment and indebtedness.

As any economic textbook would tell you, when countries go through this type of contraction, prices fall. When people get used to prices falling they expect it to continue and this leads to a deflationary spiral. The very act of cutting prices prompts people to think that prices are going to fall even more next month or next year, so they hold off spending.

Deflation – which means that the price of your product is falling – is a disaster when you have lots of debt because it means that although your debt repayments stay the same you have less money. The less money you have, the less likely you are to spend and the spiral takes hold where deflation leads to less spending and lower prices. Bank lending falls and people try to pay back debt.

Those with savings save more, not less, because they are delaying spending. As such, deflation is much more difficult to deal with than its nemesis inflation.

The cure for deflation is inflation. Both Ireland and Spain need inflation right now.

Now here’s where things get interesting, because whereas both Ireland and Spain need inflation now, the fact that Spain needs it matters to Germany.

Why is this? It is because in Europe, size matters. A problem in a small place like Ireland isn’t a problem to anyone else but the Irish. However, a problem in a big country like Spain is everyone’s problem. This is why deflation in Spain – and Italy – prompted the ECB to say that it would cut interest rates again to prevent deflation taking hold in the southern periphery.

So what might the ECB do and how will it affect us in Ireland?

The ECB, which used to be a Germanic fiefdom has suffered what might be termed an Italian coup d’etat, under the Italian Mario Draghi. He will cut rates next month to help Spain and his native Italy; how this affects Ireland will not be high on anyone’s agenda in Europe but affect us it will.

The ECB is likely to cut the base lending rate from 0.25pc to zero and possibly cut the deposit rate, the rate that banks get for depositing money at the ECB from 0pc to -0.15bps. This means saving money will cost you.

Now what will this do in Ireland and how will it affect the property market, which everyone is talking about now? When this move comes in June, the headlines will say that interest rates for borrowers will fall. They will fall for some, but not all.

Here is where the existence of tracker mortgages changes the game and, counter-intuitively, the fall in ECB rates will mean that interest rates to first-time buyers might go up, not down! How could this be?

It is because banks make money by lending. So they need to lend more than they take in as deposits. This is why they charge more money for a loan than they pay out for a deposit. The difference is their profit. But with trackers they can’t charge more money on the loans because these loans are linked to the ECB base rate. So this means the banks have to charge higher margins on other new loans to compensate for the “subsidy” they are paying out on the trackers. This means that new first-time buyers could end up paying actually more interest – above 5pc – on new loans even though the official rate of interest is zero!

How will his affect the housing market? It means that the “cash buyer” is in an even stronger position to elbow out the first-time buyer because the cash buyer will have at least a 5pc cushion to bid above the first-time buyer with a mortgage. This means that the dynamic of recent months, where first-time buyers are being priced out of the market, will continue.

The fascinating and worrying thing about this story is just how little control we in Ireland have over our destiny. Deflation here in Spain is dictating conditions in Ireland far more than events in Ireland are dictating conditions in Ireland. Do you find that bizarre? I do. It is something to consider when voting this week. Every time you vote for “more Europe”, you are voting for less and less influence over your own life. And there was me thinking that our forefathers fought for democracy to have more, not less control over their own affairs!


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David McWilliams writes daily on international economics and finance at

  1. McGoo

    David, could you please do an article showing where all these “cash buyers” are getting their cash from, and how much of it there is, and when it is likely to run out? No commentator seems to have attempted to answer these questions.

    • tim1234

      At a first glance, there does appear to be a lot of cash buyers out there (consisting of around 55% percent of the market) with 16,000 cash sales in 2013. Then when you consider that in 2006 there were over 110,000 new mortgages given out, the 16,000 in reality seems a small amount to the estimated home sale figures in the boom years. With anecdotal evidence from sellers, the cash buyers are mostly newly retired people who perhaps have had a good few years of no mortgage and had plenty of saving done in those debt free years. My own opinion is that it would be hard to estimate potential cash buyer’s behaviour and predict how many there are out there (certainly commentators opinions could influence cash buyers). Regardless of the state of the economy there will always be well off people out there who could buy with cash if they believe they see a good bargain.

    • Bamboo

      Hi McGoo,
      There is so much data hidden away from the public or there have been no initiatives to gather data about this.
      That is why IMO commentators can’t say anything about this and give a clear answer. The data is simply not there.
      It is only since January 2010, that we have transparency about the property price index. Even when this is finally put in place it is open for errors which is acknowledged by the relevant authority.

      This site says: “The data is primarily filed electronically by persons doing the conveyancing of the property on behalf of the purchaser and errors may occur when the data is being filed.”
      This means that it is also very much open to deliberate errors for the benefit of all real estate industry.
      For example: Someone purchase a property for 250 000 Euros. Then the purchaser redecorate or revamp the property for another 50 000 Euros. So when this property is all done up it is worth 250 000. What figure do you think is filed on the system? Beside that – Who is checking the integrity of the figures that are filed?
      The purchaser or the PSP (Property Services Providers)?
      The only system that is put in place to notify “apparent errors” is to send an email.

      In this example – As a purchaser I can well imagine that I’d like see my property filed with a value of 250 000 rather than 200 000. A PSP (for the benefit of hiking up the prices) goes along with that. Who in this case will come out and complain and shoot themselves in the foot.

  2. cooldude

    Bit of an error in your description of the lending process. Banks do NOT lend out deposits they keep them as reserves. What they lend out is newly created money which did not exist previously. This is how over 95% of our money is created and this has been confirmed by a recent report from the BOE. During the boom the banks create more and more new money and become careless about the level of reserves they hold. It is this process of fractional reserve lending which actually creates the boom/bust economy we now have especially when the bankers are being paid massive bonuses on how much they can lend. This is the worst possible system of money creation and banking anyone could think up. It exists purely to benefit the money creators and works to the detriment of all other sectors. Then when this reckless lending eventually leads to a bust these reckless banks get bailed out by the taxpayers. This system is totally flawed and until it is completely overturned things will only get worse.

    • Tyler


      that’s a regular ‘error’ it seems?

      And almost all of that imagined into thin air Trillllions of money/debt,didn’t feed the Growth/efd of the physical economy/the real economy ,in a Productive way,but rather,was purposefully steered into London Stock Exchange/WallSt‘s array of speculative casino stocks,shares,property and of course creating financial weapons of mass destruction – derivatives. An illusion of wealth creation.

      Trillions to serve a single purpose of propping up defunct, parasitic banks.Non productive debt,creating unsustainable bubbles – financial warfare,literally threatening our future existence and of course the threat of a world war,to save this imperial system,in it’s last throes.

      “and until it is completely overturned things will only get worse.”


      Dude, face with the “obvious realities” ,how might we completely overturn things?

      • Tyler
        Fire the central banker and replace all fiat currency by replacement with freshly printed treasury notes.

        This means Ireland leaves the Euro as the first step the reclaiming sovereignty.

        There would be no requirement to go to the international bond market. Interest rates can be set at market value rather than that manipulated by the central bank.

        Revoke all government acquired odious debt. Pay the rest off with the treasury notes.

        The money saved in interest payments will allow the removal of income tax as there was none prior to the central bank fiat debt based interest costing money

        Glad you asked Tyler. In short reform the money system.

        • Tyler

          And now back to reality.You remain rigidly conditioned to observe the world thro’ your monetary lens.If only you could step out of this ‘construct’ and look thro the [revolutionary] eyes of V.I.Vernadsky,you would very soon discover that your bottom-up tactics for Ireland alone,is but a light gale of ephemeral popularity and will have zero affect on the current global financial crises,that humanity now faces.[ A military leader with such blind spots,could be easily outflanked and loose all his troops in an afternoon!]

          You look at Ireland as a singularity,somehow independent of the entire financial system,in which it functions and you stubbornly persist in being “obsessed with Hayek’s Scylla and not looking over the prow at Charybdis,about to devour entire cultures”. You conveniently overlook the ‘known knowns’ of Deuthche bank’s derivative position of being [at least] 20 times greater than German GDP,that I posted recently.And the Wall St serpent you always choose to IGNORE is that of the devastating tsunami of Quadrillions of fake,literally worthless,speculative toilet paper,which undeniably has every potential to decimate mankind! Although you consider yourself cognoscenti on matters relating to economics ,derivatives you’ll rarely mention? After a year on this blog,i find that truly amazing!

          Derivatives remain the central burning issue and undeniably the GREATEST THREAT that defines our global economic reality and to secure our future survival,this threat needs to be neutralised!!

          • Remove the fiat money (not monetary policy as you insist) and the derivatives die.
            Ireland as a sovereign entity can look after itself. It has the one product others need; food.

            Currently the reverse process is operated by the PTB as any country endevouring to operate outside of this banking system is isolated and or attacked and destroyed.

            Iraq, Iran, Libya and Ukraine come immediately to mind. All the good little NATO countries send troops and bombs to enforce democracy (and the banking system.

            Admittedly Ireland may suffer a similar fate by exiting the Fiat Ponzi scheme, but it would not be the first time Ireland fought for freedom. Currently like others it has opted for voluntary enslavement.

            Meanwhile China plays both ends against the middle and shorts paper gold and buying cheap bullion.

            They have suffered the disaster of fiat ponzi money in the past and are now preparing to become the world super power by owning more gold than any one else, both nationally and individually.

    • Plus 10 Cooldude
      You lay it on the line, but too gently.
      Our good friend David is smart enough to know the truth which means he deliberately deceives. That makes him an out and out liar on this question of money production.
      Either the above or he is a lot dumber than we give him credit for.
      Trillions produced in this fashion and fed to the financiers by his bosses the central bankers

      • Tyler

        Speaking of central banks,did anyone watch this?


        Watch how these financial ‘gurus’ morph into property developers and then de-volve into ponzi schemers!

        Mezzanine financing – “Payday” loans for the financial sector! Expensive source of finance,but quick access to [generally much needed] funds,but expensive bridging loans and conveniently no stress about due diligence

        Ireland needs a Banking Enquiry !

        It will be worth every cent to discover the TRUTH and then a revolutionary social change can take place.

        We deserve to know why we are being flogged !

  3. Jill Kerby

    This link, an article by economist Dieter Schlichter makes a very contrary argument about deflation:

    Japan is often mentioned as a country where deflation has been disastrous. Really? Schlichter, first on how some might argue that “deflation” can also be seen as a form of price stability for savers:

    ‘…Martin Wolf flatly stated in the FT recently that the “low-risk-seeking saver” no longer served a useful purpose in the global economy, and he approvingly quoted John Maynard Keynes with his call for the “euthanasia of the rentier”.

    ‘“Interest today rewards no genuine sacrifice,” Keynes wrote back then, obviously in error: Just ask Britons today if not spending their money now but saving it for a rainy day does not involve a genuine sacrifice.

    ‘Today’s rentiers do not even get interest for their sacrifices, thanks to all the “stimulus” policy. And now the call is for an end to price stability, for combining higher inflation with zero rates. It is not much fun being a saver these days – and I doubt that these policies will make anyone happy in the long run.

    ‘What the “euthanasia of the rentier” may look like we may have chance to see in Japan, an ideal test case for the policy given that the country is home to a rapidly aging population of life-long savers who will rely on their savings in old age.

    ‘The new policy of Abenomics is supposed to reinvigorate the economy through, among other things, monetary debasement. “In as much as Abenomics was intended to generate strong nominal growth, I have been a big believer,” Trevor Greetham, asset allocation director at Fidelity Worldwide Investment, wrote in the FT last week (FT, May 15, 2014, page 28). “Japan has been in debt deflation for more than 20 years.”

    ‘Really? – In March 2013, when Mr. Abe installed Haruhiko Kuroda as his choice of Bank of Japan governor, and Abenomics started in earnest, Japan’s consumer price index stood at 99.4. 20 years earlier, in March 1994, it stood at 99.9 and 10 years ago, in March 2004, at 100.5.

    ‘Over 20 years Japan’s consumer prices had dropped by 0.5 percent. Of course, there were periods of falling prices and periods of rising prices in between but you need a microscope to detect any broad price changes in the Japanese consumption basket over the long haul.

    ‘By any realistic measure, the Japanese consumer has not suffered deflation but has enjoyed roughly price stability for 20 years.

    ‘“The main problem in the Japanese economy is not deflation, it’s demographics,” Masaaki Shirakawa declared in a speech at Dartmouth College two weeks ago (as reported by the Wall Street Journal Europe on May 15). Mr. Shirakawa is the former Bank of Japan governor who was unceremoniously ousted by Mr. Abe in 2013, so you may say he is biased.

    ‘Never mind, his arguments make sense to me. “Mr. Shirakawa,” the Journal reports, “calls it ‘a very mild deflation’ [and I call it price stability, DS] that had the benefit of helping Japan maintain low unemployment.”

    The official unemployment rate in Japan stands at an eye-watering 3.60%. Maybe the Japanese have not fared so poorly with price stability.’

    Be that as it may, after a year of Abenomics it turns out that higher inflation is not really all it’s cracked up to be. Here is Fidelity’s Mr. Greetham again: “Things are not as straightforward as they were….The sales tax rise pushed Tokyo headline inflation to a 22-year high of 2.9 percent in April, cutting real purchasing power and worsening living standards for the many older consumers on fixed incomes.”

    Mr. Greetham’s “older consumers” are probably Mr. Wolf’s “rentiers”, but in any case, these folks are not having a splendid time. The advocates of “easy money” tell us that a weaker currency is a boost to exports but in Japan’s case a weaker yen lifts energy prices as the country is heavily dependent on energy imports.

    The Japanese were previously thought to not consume enough because prices weren’t rising fast enough, now they may not consume enough because prices are rising. The problem with going after “nominal growth” is that “real purchasing power” may get a hit.

    • Adelaide

      Hi Jill
      I miss your pieces in the Sunday Times. Also where is Constantin Gurdgiev? You two made the Sunday Times worth buying for its ‘Business Section’. It’s bland without both your contributions

      • cooldude

        Excellent link Jill. As the article points out there has been no real deflation in Japan over the last twenty years just price stability which suits consumers fine but doesn’t suit the reckless bankers who create these booms and busts. This deflation phobia is just another excuse for Keynesian economists like David and Martin Wolf to promote more money printing even though these policies have consistently failed. The hatred of savers that all these economists have shows their complete contempt for the middle classes. Current central bank policies of soon to be negative interest rates and the real threat of bail ins are trying to force people to play in the boom/bust markets of housing and stock markets. This all comes from Keynes’s General Theory which is generally wrong. If people don’t spend because consumer prices are falling why do they queue up for the latest Iphone even though they know it will be cheaper in six months. Because of immediacy of demand and this is never recognized by these economists. All of this flawed theory is just an excuse for reckless fiscal policies which lead to economic ruin.

    • michaelcoughlan

      hi Jill,

      The first 3% of growth in the economy in normal circumstances (whatever that growth figure is) is the portion of the growth going back to the central bank as payback for nothing more than issuing the notes.

      In other words no growth equals a money supply in contraction for the length of time an economy stays in the same place size wise. Since the lackeys in charge serve banking interests the reason they need inflation is to prevent the collapse of the banks and nothing more. An economy will function without a banking system and will thrive without a central bank at all.


      • Bitcoin and related technologies will play the largest role in getting rid of parasitic banks once and for all.

        I advise everyone to start using them immediately and hasten this process.

        Here’s are some potential uses for Bitcoin etc.

        “Bitcoin’s Promise Goes Far Beyond Payments”

        • cooldude

          I hope you are right Adam. Bitcoin has certainly got the banksters worried and as it’s supply is limited it cannot be debased and in this area it is sound money. Also when something goes wrong, such as the Mt Gox debacle, the individuals who used this dodgy exchange lost their money and the failed enterprise went bust as should happen in normal banking. No bail outs in the land of bitcoin.

          The one area that does worry me is how the banksters will fight back to the threat to their exclusive franchise on what we are allowed to use as a voluntary medium of exchange. That is why legal tender laws need to be changed and people should be allowed to use whatever type of money they want in exchange for goods and services. This would give us real choice and the parasites would be left to rot.

          • Not too worried about the so-called law (it ain’t my law) cooldude.

            I have about as much respect for the law as Alan Shatter does.

            It’s about finding away around the law without drawing attention to oneself.

            Bitcoin cannot be shut down now, the genie is out of the bottle.

    • Excellent commentary Jill. Thank you
      Plus 30

  4. coldblow


    What you say about Europe at the end is interesting as I thought you were (at least broadly) in favour of Europe. I know you have been against Euro (as in currency) membership of course, but are you beginning to take a more sceptical view of the “European project” than before? (I may have missed developments in recent times.) Raymond Crotty campaigned against EC membership, as I recall, for the same reason you give.

  5. Adelaide

    Hi Jill
    I miss your pieces in the Sunday Times. Also where is Constantin Gurdgiev? You two made the Sunday Times worth buying for its ‘Business Section’. It’s bland without both your contributions.

    • Jill Kerby

      Alas..the terminal decline in hard copy newspapers continues…we were just too expensive..the ST experiencing endless budget cuts triggered every February by the ABC circulation figures. I am still writing my MoneyTimes syndicated column and contributing to the Sindo. Closed circulation blog on the way…Meanwhile, I have a little more time to comment here. David and I don’t always agree, but he’s a fine writer and has a rare quality in Irish life – integrity.

    • Tyler

      That was some party Mr.Mooney

      and a throbbing headache i suspect?

      i’ve had my fair share ;)

      • He’s not here. He’s gone out to vote for Nikki Sinclaire the transgender thorn in Nigel Farage’s side. Like Eurovision, it’s the transgender folk who are pushing the envelope to stop this island also becoming Europa’s interest-rate bitch like this article is on about.

        “A former UKIP MEP said her petition for a referendum “forced David Cameron to the Despatch Box” and that showed what a small party could do”

        He’ll be back when we’ve done the legal stuff on his new name. Me and Kitty Purry aren’t meant to comment, just do admin, but it’s hard not to….We’ve both got headaches from partying, but it’s Manchester tomorrow (Katy Perry), Sheffield on Sat(Katy Perry AGAIN!) and Nottingham (Nine Inch Nails) on Sunday for the BrummieBoys. They iz mental….then there’s the ‘soccer’ World Cup to deal with!! That’s just how they roll.

        Marley Cyprus-The Intern

  6. Colin

    10% of Dublin properties lie empty! People own these (silver haired generation I’d guess – the ones who take to the streets when their non-means tested medical card comes under threat), and maybe the owners have forgotten that they own them or don’t need to take in rent because they are already so comfortably well off??? Between this and 16,000 (mostly silver haired) annual property ‘cash’ buyers out there, it’s great having one foot in the grave – on the pig’s back with the pig in the grave. Now, where did I leave the silver hair dye, I want a piece of the magic to rub off on me, and a piece of the cake too!

  7. Shatter The Illusionist The Dynamic :

    €70,000 Lump Sum

    Choice 1 – He Refuses – Tax payer keeps the €70,000 ; and

    Choice 2 – He Accepts – Shatter keeps €35,000 net , Tax payer keeps €35,000 ; and

    Choice 3 – He Accepts …..but ….but…but…he gives it to Charity —
    Shatter claims tax relief of €35,000 , Charity receives €70,000 and Tax Payer receives NOTHING …and LOSES €105,000 .

    Shatter The Illusionist ….supported by the invisible pen of his assistant QUINN of Labour .

  8. “Many are called, few are chosen”

    Dennis Brown – Revolution.

  9. HenryJames

    You must forgive my thundering lack of understanding of economics and how it all works. I have never formally studied the system.
    I am confused by the comment in the above article “Deflation…means that although your debt repayments stay the same you have less money”
    My confusion stems from the fact that I read somewhere that he definition of inflation/deflation was something like “Inflation reduces the real value of money over time; conversely, deflation increases the real value of money” more or less anyway?
    Having read the Detlev Schlicter article linked by another poster I returned to my former position of believing that as a saver-never having being wealthy enough to afford a mortgage I want interest rates to soar and deflation or at least price stability to become the norm.
    As a comment on the social and economic interplay of these processes I suggest that only when the reality of the situation(people being mired in debt)is made known will people walk away from the table-by this I mean when it is made clear that the debt is unmanageable and worse unreal and alternative will be sourced -maybe?

    • “Deflation…means that although your debt repayments stay the same you have less money”

      Prices decrease in a deflationary period, including the price of your labour (i.e. your wages), but your debts are the same in nominal terms so you have less ability to pay off those debts.

      “Inflation reduces the real value of money over time; conversely, deflation increases the real value of money” more or less anyway?

      I think this is incorrect – substitute the word ‘nominal’ for ‘real’. It doesn’t strictly matter what the nominal value of money is (until it becomes unwieldy and you need wheelbarrows of the stuff) but the problem arises when people have nominal debts at a fixed value, but the real value of money declines (deflation) and they can’t service those debts.

      The debts should be written down at that point. Whether or not the loans should have been given in the first place and under what conditions is a different debate.

      By the way I’m just explaining a small sliver of classic economics here, I’m not agreeing with it.

      Personally I don’t take debts and I’m transferring all my expenditure over the Bitcoin (or as much as possible).

      Yes, I am a BITCOIN BUG!

  10. CorkRob

    There was a very interesting comment made during the week about increasing the supply of housing – following on from DMcWs weekend TV interview on The late Late Show – not only should developers lose Planning permission on sites if they haven’t started developing them within 24 months and pay a hefty CGT on any undeveloped sites being “Flipped”, but why not also impose a higher Stamp Duty on sales of New or 2nd hand houses to Non Owner-Occupiers.
    Say if Stamp Duty is 6%-9% for normal family homes (occupied by the purchasers) and Zero % to 1st Time Buyers, then why not impose a 25% Stamp Duty to Property Investors, with a clawback over 120 years if they sign a rental agreement on a fixed rent to their local authority for Social Housing use.
    To avoid this clawback effecting a further rise in house prices, the fixed Local Authority rent should be set at “Competitive rates” – e.r 2% above Bank Deposit rates.
    This should have a cooling effect on the Estate Agency shylocks efforts to continually spiral prices upwards and allow 1st Time buyers to effectively compete on a more balanced pitch.

    • CorkRob

      Sorry, that should have read “……. a clawback over 20 years” !!!

    • So if you can not afford a house by buying it where are you going to live if there are no landlords to rent you a place.

      A tenant gets to use the capital of the landlord at a subsidized rate. By the time the repairs are paid, and the taxes and rates there is little profit in being a landlord. Maybe it is a better return to keep the property empty rather than rent it out and have to pay for the tenants abuse of the property.

      Just thinking out loud!!!!

      • Colin

        You talk to Joe, and let the liveline switchboard get jammed with do gooders who will arrange for your appropriate accommodation needs to be met.

        Or talk to Fr. Peter McVerry.

  11. David NZ

    In a deflationary environment cash is king at the start. People spend less on consumption goods because they think they will be cheaper later. Demand dries up. Firms sell fewer goods. Firm lay people off. People spend less and save more. The economy contracts. The govts’ tax take falls.

    This is where it gets interesting. The govt looks for ways to balance its’ books. It spends less and increases taxes. Firms stop taking out loans. Banks reduce their loans and their profit falls. They can’t afford to pay savers high interest rates. Savers’ incomes fall. Small private banks begin to fail. Savers’ cash bank balances vanish.
    Cash is no longer king if it is in a small bank, finance company or as we saw last time around in some large banks.

    People seek security in short term bonds in large stable companies. Govts can’t balance their books even with the confiscation of select (weaker) interest groups assets. Govts fall. Revolutionary committees start taking assets in earnest. Elites helicopter off embassy buildings while the mob surges below. Blood flows in the streets and wealth is redistributed very rapidly. Wars start and there is a lot of not very creative destruction.

    At the end of it all, few people have much left, there is a need for investment and consumer goods, manufacturing starts up, people bring out the silver they buried in the ground when the going got really tough and slowly and painfully the economy starts to expand again.

    Those who wish for deflation or who think it might be a good thing should realise that once it starts it is a very hard thing to stop. Japan has been fortunate in that the rest of the world was not in deflation this past 20 years, has provided an export market for its’ goods and an outlet for its’ citizens savings. It is also a homogeneous society, more able to withstand social stress that deflation brings.

    Europe is not Japan, and should the germans continue down this extremely stupid path of ECB restraint and fiscal restraint the whole edifice will sooner or later come apart at the seams. A lot of smug well off people may well be left wondering what on earth happened to them.

  12. CorkRob

    Sorry, That should have read, “…a clawback over 20 years”

  13. Colin

    Well, now that All Hallows is closing down, here’s a God given opportunity for the unelected political padre Fr Peter McVerry to do something once and for all for ‘the homeless’. Your time to shine in the spotlight now Father, don’t be shy, hundreds of people depending on you to deliver free homes.

    P.s. I’ve just stopped paying my rent, soon to be made ‘homeless’ (Godhilpiss). I’ve booked my Ryanair one way flight home, I’ll help you out on the construction of the refit and refurb required to change the building from education to residential use, if you agree to give me a 4 bed penthouse apartment there with views over the large gardens.

    P.p.s. I’ll require a private entrance of course, can’t be mixing with the riff raff, don’t you know!!

  14. Colin

    So, what do you know? Well, now that All Hallows is closing down, here’s a God given opportunity for the unelected political padre Fr Peter McVerry to do something once and for all for ‘the homeless’. Your time to shine in the spotlight now Father, don’t be shy, hundreds of people depending on you to deliver free homes.

    P.s. I’ve just stopped paying my rent, soon to be made ‘homeless’ (Godhilpiss). I’ve booked my Ryanair one way flight home, I’ll help you out on the construction of the refit and refurb required to change the building from education to residential use, if you agree to give me a 4 bed penthouse apartment there with views over the large gardens.

    P.p.s. I’ll require a private entrance of course, can’t be mixing with the riff raff, don’t you know!!

    • paddythepig

      In fact, they could open up every parish house in every town and village in the country. The vast majority of them have 4-5 bedrooms, with just a single lodger – the priest.


    Why can we not issue a banking licence to a European bank which does not need to use one set of clients to subsidize another? We would then be able to borrow at reasonable rates?
    Of course, that would mean the existing banks would fail which is of course what should have been allowed to happen (in a controlled manner) at the start of this whole process.
    The decision not to do this is the decision that keeps giving (or taking).

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