October 26, 2015

Don't fix your mortgage rate....just yet

Posted in Sunday Business Post · 75 comments ·
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Even at these historically low rates, don’t fix your mortgage. Interest rates are going lower. Renegotiate now if you can! Don’t take my word for it: listen to Mario Draghi.

 

The chief bottle washer of the ECB is worried, so worried in fact that he’s ready to print more money on top of the €1.1tn he’s already minted in the past year, in order to kick start the European economy. Interest rates in Europe fell again yesterday , not because Enda claimed that the Oglaigh na h’Eireann were ready to do some Latin American Junta-style head-kicking at the ATMs if the Euro money ran out,  but because Draghi said he’d cut rates again.

 

On the face of it, Enda’s fear of widespread Euro-related unrest in 2011/12 and Mario’s fear of Euro-related deflation now seem unrelated. But they are not. They are inextricably linked. In truth, they are two sides of the same coin.

 

Despite the fact that the Euro seems much safer now and its existence is not immediately threatened, the underlying problems that nearly tore the Euro asunder, haven’t gone away. Indeed, you could argue that the problem has worsened, but they just have been masked by the ECB willingness to buy every IOU issued by every European government.

 

Back in 2011, the ECB was run by Mr Trichet who showed no understanding of either the severity of the crisis or the role of the central bank in easing it. As investors stopped lending to Eurozone governments, someone or some bank had to step in and lend – and that institution had to be the ECB.

 

As the crisis became more acute, Trichet was replaced by the pragmatic Draghi , who tore up the rule book and did what all Italians do in a crisis – he printed money.

 

This move caused all bond rates to fall because the ECB was now the buyer of last resort for everyone and everything. Falling bond rates are supposed to signal that risk has fallen, but is this actually the case in Europe?

 

Have the underlying factors that caused the 2011 Euro crisis actually dissipated or do they lurk under the surface?

 

Ironically, the Eurozone back then and still now, is faced with what could be described as a Trokia of problems – (1) not enough growth, (2) too much debt and (3) no political leadership.

 

It is now nearly four years since Draghi said he would do “whatever it takes” to save the Euro but still none of the fundamental problems have been solved. All the money printing hasn’t kick-started the Eurozone economy; rather than causing growth and inflation, the Eurozone is now facing deflation.

 

This deflation is leading to panic because the solution to too much debt is inflation not deflation. For the past four years, the ECB has got its inflation forecasts wrong, yes wrong. But in the unaccountable world of central banking, failure is rewarded and getting forecasts wrong doesn’t seem to matter.

 

Europe’s economy isn’t growing and it isn’t investing. The money that the ECB is printing is not going into productive investing which delivers growth. Instead, it is driving up asset prices, fueling financial speculation by the rich, which is causing greater inequality.

 

But why isn’t the European economy growing? Why aren’t European companies – some of whom have never been more profitable – investing right now?

 

This is where we have to go global to explain things.

 

While the average European mightn’t travel too much and especially not outside Europe, corporate Europe is hyper-global. Its worldwide footprint makes it highly sensitive to the global economy and the reluctance of Europe’s biggest companies to invest is a function of global conversations at board level.

 

Those conversations will start with the observation that demand in Europe is still very weak. America may be growing but is that enough when Japan hasn’t been right for a generation and the Chinese economy is facing a rapid post-boom contraction? Elsewhere, the big commodity-based emerging markets like Brazil, South Africa and Russia are simply derivatives of China as their wealth is largely a function of China’s demand for their raw materials.

 

So global aggregate demand is too soft to justify new large-scale investment. There isn’t enough aggregate demand in the rest of the world to make large corporations commit to investment. Remember that real investment tends to be in big machines that make big stuff.

 

This lack of demand is unfortunately coincident with a massive glut of supply. There’s over-capacity everywhere, particularly in China. Five years of hyper-investment in China has led to over-capacity in almost every major industry. How else can you explain slumping commodity prices and deflationary pressures everywhere?

 

Against such a background, can you imagine what would happen to the career prospects of a French steel executive who suggests to the CEO that they build a massive new plant to export steel to China?

 

The short-term implication of the Chinese investment boom is far too much supply in the global economy. All the heavy equipment that the world needs is already in China and this will take quite a while to use up. Corporate Europe faces a global supply chain – not a national supply chain – too much capacity in China actually means too much capacity in Europe. As a result, it would be wrong to expect a material pick-up in large-scale Europe business investment.

 

Without investment, income can’t rise.

 

When investment increases, demand increases, driving up wages and income. Ultimately, where do savings come from? Savings come from income, of course! Income is the font of savings. Without income you can’t possibly have savings and without investment you can’t raise income in any material way.

 

Therefore the ECB is stuck. It has used all its bullets and the problems haven’t gone away. Debts are still enormous, as deflation stalks, it becomes more difficult for people, governments and companies to pay their debts, because they can’t raise their prices or wages to cover their interest payments. So all the central bank can do is keep rates at zero for as long as it can.

 

This is what is happening, which is why you’d be mad to fix your mortgage just yet!


  1. Grey Fox

    I think we all agree that Debt is the anchor around all our necks, it is why thousands of families are in financial distress, why small business is struggling to stay afloat, why financial institutions can’t advance credit,(not that that is remotely the answer) so it seems to me that Draghi’s QE is completely mistargeted, debt forgiveness is the dirty filthy term everyone runs a mile from but when do the lemmings come to the realisation that the cliff is looming, the ponzi has completely expanding too far, or has it? It seems to me that the will to deal with the overall debt problem is never going to be dealt with by the folks who have the ability to do so, it is the ordinary man and woman who will deal with this, we see cracks all over Europe Portugal, Poland, Greece, Spain.. the so-called upstarts on the left are not going away! they are gaining ground slowly and why? because again the folks who can prevent this, financially, are impotent or ignorant. Sentiment ebbs and flows, here in Ireland we see a predominently rosy picture because that is the flavour the media is spinning, although in fairness with a smattering of real news such as the UTV offering on Ireland’s Hidden Homeless last Friday night. Our moral and social compasses are seriously askew but they have a history of righting themselves, but even that in itself scares me but we will have to go through the treatment if we are to recover, so lets all get on with it and book ourselves into the Debt Treatment Centres! before the black dogs take over completely. I was going to ask Draghi if he is listening but then I realised the futility and stupidity of such a comment!

  2. Mike Lucey

    Subscribe! Somebody is enjoying that extra hour this morning ;-)

    Thanks for the picture of the overall situation David and for the sound advice.

    • Subscribe, it is only 8.50am here Mike!

    • DB4545

      David I read your articles because your track record is to call it as it is not as we might wish it to be. We had enough chancers and outright thieves trying to convince people to commit suicide or invest in property in Cape Verde (and not in any particular order) and various other bullshit get rich quick schemes during the Celtic disaster period. You and very few others called the bubble correctly and honestly when our gombeen culture rewarded hefty commissions to those who aligned themselves with the thieves. I don’t know you from Adam but that’s why I believe brand McWilliams has value.But what have we done to prevent this shit happening again and move our Country forward? Sweet f**k all I might suggest. We really need to get to grips with reality David and start locking up these bastards.

      As Tony Brogan pointed out in comments on your previous article Iceland with a population of less than 325,000 has jailed 26 of their thieves to date. On a pro-rata basis we should have at least 260-340 people behind bars for conspiring to destroy our economy. We need to put these people behind bars even if they’re friends, family or people we went to school with. We managed to jail people in this Country to a limited degree with the clerical abuse scandals.That’s what Iceland has done with it’s financial abuse scandal. Icelanders have even placed pictures of their politicians, bankers and other thieves on public urinals so Citizens can literally piss on those in power who’ve pissed on the people. Instead in this State we’re wilfully ignoring reality and we’re paying thieves pensions or employing them to mismanage real estate assets or allowing them back into the boardrooms of the public and private sector. We are not prepared to confront reality.You have a gentleman called Nassim Nicholas Taleb appearing at Kilkenomics next week. This is a guy who is not afraid to call it as it is and has made good money doing just that. He has a serious track record. Please ask him for his unbiased advice on behalf of the people of this State and publish his answers. I’m certain his answers will be able to shine the hard light of reality on our behaviour to date.

      In relation to interest rates and what appears to be another period of quantitative easing(printing money) just look at what’s happening in the markets. The Euro is down 3 cents against the dollar in less than a week and it’s slightly down against gold. The market gets paid to trade and price and deal with reality not fairy stories. Maybe we’re in need of some kind of national catharsis or purification to help us confront reality? Perhaps like the Icelanders we should place laminated A4 pictures of our politicians and bankers and developers on public urinals so we get to pay back what they’ve done to us in kind? It would be cheap and cheerful and the public would be able to accord them their correct status in our society based on our perception of their performance? It may not be a complete answer but it might be a start.Until we cut these people down to size and start doing that as a people we’re going nowhere fast.

      • Deco

        Mr. Cape Verde is a chancer indeed. He even expects access to political power, without having to ask the people for their opinion.

        Who does he think he is ? The EU Commission President ?

        • DB4545

          Deco

          He’s just one of many waiting in the wings ready to pull the handle on the slot machine that is the Irish taxpayer revenue account. The Icelanders have the right idea even if it is crude.

          1. A laminated A4 of your favourite thief..
          2. A public urinal.
          3. Some duct tape.
          4. Rubber gloves.

          It’s a break from the past and an investment in your future for less than a Euro unit cost and it would show them the contempt in which they are held. Screw Movember p**s on a politician/banker/developer.

      • The bankers have us suckered as they persuade us to compare one currency against another. More particularly is the comparison using the US dollar as the base to be measured against.

        Using the US dollar as the measuring stick obscures the fact the standard is constantly moving too.

        Therefore we have no proper measuring stick to evaluate the value of a national currency . That traditional measuring stick has been discredited and ignored. It is continually attacked verbally and physically.

        The central bankers are desperate to occlude the fact that the fiat currencies are a disaster for the people and benefit only the bankers and the financial elites. The reasons for the discrepancies in the economy are obscured . The reasons for the gap between the the haves and have nots is expanding rapidly are also obscured.

        Gold as the traditional measuring stick of currencies is desecrated but refuses to die or go away. As the currencies are inflated to oblivion by the central bankers and their policies of competitive devaluations Gold will rise like the Phoenix to assert its rightful place as the economic measuring stick of the currencies and the economies of the world.

        This event is inevitable . The timing is unpredictable but closer than ever. In the meantime we will be subjected to the politics of corporate global dominion. Secret trade deals are the flavour of the day.

        Start the revolution at home. Work and trade amongst yourselves. Support each other. Then nationalize the currency. Then make the currency the peoples own by removing the control of the currency from the bankers and the politicians. Think of it a cloud money, belonging to nobody but everybody at the same time.

  3. Mike Marketing

    Excellent summary David.

    These major, vital issues are bubbling away out of sight, outside of Ireland as Lehman’s was in 2006. It is outside the Irish coalition government’s control.

    As the road to an “early Spring” election is pitted with large numbers of destructive landmines, to blow up in Enda’s face, (* Homelessness, * Irish Water, * Hospital trolleys etc) perhaps now is the time for him to listen again to the wise words whispered in his ear recently and go very early.

    Labour is finished – a spent force.

    So as was shouted on the Titanic all those years ago
    “Abandon ship, very man (and woman) for him/herself.”

    Remember we are talking about the average TD retaining an average annual gross income of €1/4 million.

    Serious ‘facts of life’ comfortable survival stuff.

    • Deco

      “Labour is finished”. Really ? They will bribe enough voters to keep the collection of family seats.

      I am sorry to say that, but that is what the 1.5 Billion in discretionary spending is about. Keeping the ILP in political power.

      The ILP will make democracy entirely transactional. Watch the bullsh1t that comes from the LP leadership about “achievements”, sacrifices, etc, etc. All nonsense. But it is entirely predictable.

  4. Deco

    Excellent assessment of what is going on.

    I would add that in some Eurozone countries there is a public sector that does not perform. Ireland being a prime example. So these countries structure themselves politically so as to pretend that there is no problem with the elephant in the room.

    The principal achievement of the ILP in power (as the tail that wags the dog) has been to ensure that there was no serious reform ever occurring within the official “reform” program of the Irish state system.

    There has been no change in the Irish institutional state. That has been the principal attainment of the ILP.

    The state is still as unaccountable as ever. And as inefficient. And as badly managed. With cronies stuck onto even miniscule locations like the Ordinance Survey. The state is even more wasteful, and misdirected than ever. As proof I point to NAMA and AIB special rate loans for well connected businessmen.

    Belgium, Italy, Spain, and France are other prime examples. Again the state system is the source of massive inefficiency. This is not about ideology. This is about malaise. Again to what happened in the USSR in the Breshnev era.

    The mainstream political parties are wasting time and causing a buildup of inefficiency and underperformance that will emerge in the next serious economic crisis.

    So what is the next economic crisis.

    Two potential weaknesses emerge.

    1. Sweden’s financial system which is Bertie era Ireland on steroids.
    2. The continuing weight of public deficits on certain EU countries.

    The idiots in the ECB think monetary easing is the answer. It is not.

    The idiots in Brussels are even more clueless.

  5. Deco

    Everything that EK says is a distraction from the massive underperformance of FG/ILP in the running of the state system.

    This is a facilitation of the ILP objective of shoring up the vote and being sweet to union politicians who really have no clue or interest in efficiency, or public service.

    EK is a liar. And people are wising up to that.

    This government is not serious about productivity, because it is not serious about debt.

  6. Dionysius

    David, your assessment is accurate except for one fact. You stated that “America may be growing but is that enough when Japan hasn’t been right for a generation and the Chinese economy is facing a rapid post-boom contraction?”

    America is NOT growing either and is in no better shape than Europe. I urge you to check the facts on this and why Yellen and Fed are hog tied.

  7. Pat Flannery

    I’m trying to understand the scenario you describe – two sides of the same problem coin. Let’s see.

    You describe Mario’s fear of deflation as one side and Enda’s fear of a run on the Euro as the other. You merge the two problems into one by asserting that Enda’s fear is masked by Draghi’s commitment to “do whatever it takes” and buy “every IOU issued by every European government”. Now there is a buyer for just about any sovereign bond floated in the Eurozone. This amounts to fiscal funding by the ECB which is clearly a bad thing and forbidden by EU Treaty. OK, I get that.

    The patient on the table is the EU economy. The ECB-prescribed QE medicine is not working. In fact it is having the opposite effect to the one intended: the patient is deflating rather than inflating. And there are serious social side effects emerging: asset prices are inflating, financial speculation is rife and wealth is becoming even more unevenly distributed with social unrest looming as a result.

    So, the economists “go global to explain things”. They blame an economic concept called “aggregate demand”; they tell us that as a result of the power of this “aggregate demand” there is no longer any autonomous local or regional economies; even pooled-sovereignty groupings like the EU are not sovereign anymore; if countries or groups of countries can’t “make large corporations commit to investment” they are powerless; economists now concede that the large international corporations run the world economy; they say “we the people” must all hunker down until the global corporations tell us that we are now cleared to get on with our lives.

    That seems to be the essence of your economic analysis.

    Hopefully the global practitioners of economics, if it is in fact a real science, will come up with a better answer. Telling “we the people” that we’re screwed doesn’t work for me. Maybe it’s time “we the people” elevated politics as a science. Maybe we have relied too much on economists in the past. I therefore can only agree with number (3) of your proposed Troika of problems: “no political leadership”. But that can be fixed. I trust in “we the people”. I believe they will fix it.

  8. DB4545

    Pat Flannery

    I absolutely trust that “we the people” will fix it. We the people have always had to fix it. We started that process of creative destruction and dissolved one major political party. We just need to continue with the job and dissolve the rest of them. Then we can start electing Independent public representatives accountable to us and elected to represent OUR interests. It’s in our history and DNA to do it. Who knows we may even grow a pair of balls like our forefathers and be prepared to fight for a decent future for our kids. But we don’t even have to do that. If we work hard and SMART and actually THINK before we vote we may even become an Iceland one day.

    • Pat Flannery

      DB4545

      Thank you. That is the kind of thinking we need to encourage. The upcoming election is a great opportunity for us to vote for clear thinking independents.

      Enda will try to scare us into voting for him to ensure “stability” and characterize everything else as chaos. We must not fall for it. We must always remember that “stability” means rule by corporations.

      The main parties are corporate proxies. Under “party” rule power is totally centralized. Even the candidates are chosen by the party bosses with the corporations pulling the strings, the purse strings that is.

      • DB4545

        There’s no need to thank me Pat most people have a firm grasp of reality and certainly those who have been at the sharp end of that reality since the Celtic disaster. We really need to forget about “leaders” as it simply makes the rest of us followers or sheep. In the last election the electorate destroyed FF as was their intention. I’m sure the electorate have realised that vested interests then poured their resources into the FG/Lab coalition as money flows to the government because regardless of who’s been elected the government always gets into power. The electorate just needs to continue with the process they started and my money remains on the good Citizens of this State.

        There’s no issue with stability in this State and the proof is the Country runs perfectly well when the wasters are away on their extended holidays for almost half the year (in fact most of the last five years). I’m sure observers have noted that we don’t throw the baby out of the pram in a crisis and riot when things don’t go our way. Why should we it’s our Country and why would we destroy what our taxes have built? We just need to focus on the ballot paper and complete the job. We’ll be forced to elect a bunch of thieves regardless of whose on the ballot paper. Once we realise that our duty is to fire the most experienced thieves in office and elect the least experienced thieves because it takes them longer to learn how to steal our money we’ll start making progress as a society. It’s the only thing that politicians fear and it’s why they’re in the process of blowing sunshine up our ass at the moment. Smile at them and be polite when they come knocking and be sure to waste as much of their time as you can telling them lies that you’ll vote for them. It means that they’ll have less time to spend elsewhere bullshitting the gullible and the insane.

        Corporations are not bad but large ones most certainly are as are all large institutions. That’s why we need to engage in continual creative destruction with our wallets. Small really is beautiful in the business world and we need to realise it because that’s how we’ll get to control it. Spread the contents of your wallet as diversely as your personal circumstances permit.

    • To become an Iceland requires leaving the EURO and adopting a national currency. Then having the balls to go the further step of issuing currency from treasury while shutting down the central banking system.
      That will give you your national sovereignty back but be still open to inflationary policies of money expansion, so not your personal sovereignty.

      Then repealing the legal tender legislation and implementing a system of fixed volume of currency to stabilize the economy. How you do that is the current (currency) debate but traditionally done by using a gold OR silver backed currency.

      NOT BOTH as a bimetallic standard does not work either.

      It would be a grand project for the 100th anniversary of the State. Freedom at last.

  9. “Even at these historically low rates, don’t fix your mortgage. Interest rates are going lower. Renegotiate now if you can! Don’t take my word for it: listen to Mario Draghi”

    I thought there was a rant a few months ago about those scoundrels on tracker mortgages.

    I’m not sure that staying on a tracker is the best advice at this stage. Despite the central banks fixing the CB rates the bond markets and the mortgage markets are more closely aligned.

    Keep your eye on the bond market as fixed rate mortgages can move to higher rates while the tracker rates initially are lower. But waiting too long is a trap as then the fixed rates will already be higher than can be afforded.

    In the long term tracker rates tend to be cheaper than fixed rates. Personally I have gone to a fixed rate as then I sleep well for 5 years and do not worry about the Central bank machinations.

    In the 1980′s I was fixed at 10.25 % when the bonds rate shot up and tracker mortgages were are at 18% and fixed rates 23% for a couple of years. Tracker mortgages are better to be in when there is a spike in the rates and then ride it down. When the rates are low is the time to fix the rate in the long term. Nobody can guess the bottom.

  10. “Indeed, you could argue that the problem has worsened, but they just have been masked by the ECB willingness to buy every IOU issued by every European government.”

    Indeed it is called monetizing the debt.
    Overall the debt load is doubled since 2008. Nothing solved. Problems double what they were. Credit is maxed. Nothing but default to come and trillions of mythical wealth will be wiped out.

    Then we shall see the “Unrest”.

    • DB4545

      Tony Brogan

      I’m starting to think you may have a touch of OCD in relation to this gold business Tony. But I do think your heart is in the right place as is your brain. The problem is the money changers in the temple and elsewhere Tony and that problem has been with us for some time as I recall a Mr. Jesus Christ of Nazareth drawing our attention to this problem at some length. With a 1% margin on paper gold (Bitgold) and a 15% to 25% on physical gold (Degussa) and up to 24% VAT on silver in the EU the money changers seem to hold the edge at the moment Tony. How do you fix that problem in a way that persuades the little guy to buy in without scaring the shit out of him by telling him the world is going to collapse? Solve that problem Tony and I’m sure David will be asking you to appear at Kilkenomics 2016 and beyond.

      • I have not mentioned gold as a personal investment for some time. I talk about the money systems and the central banking system.

        Several times I have invited others to come up with suggestions re stabilizing the economy and our money system. No responses to date.

        The world will not collapse but the money fiat ponzi scheme we use assuredly will. Many will be wiped out and they do not need to be. Central banks are net buyers of gold, not me, them. Ever wonder why? Why is russia and China buying, why do the Indians and Arab peoples buy. Can you tell me? Force of habit? They do not know any better? Like I said, you tell me.

        I just want to know what they know that I don’t. Can you help me.

      • You are strangely silent on the issue of the control of our money by central bankers. I have stated time and again a transition from Fiat to treasury is easy to do given the will.The result will be lower taxes no national debt and more money in the pocket of the people . If that is deemed to be the cause of a disaster then all I can say is the thought process is backwards.

        The problem is, as you say, the money changes in the temple. They have a good thing going and will kill to keep it.

        The damage is already done. The sooner the change comes the less the disruption, and the better off we will all be. If there is no change then a breakdown in the money system is assured.

  11. http://davidstockmanscontracorner.com/the-central-bankers-death-wish/

    “Indeed, the 2% inflation meme is so threadbare that it needs to be called out for what it is. It’s a convenient cover for the radical usurpation of power undertaken by the world’s central bankers during the last two decades. And it survives only because it serves the interest of Wall Street gamblers and the world’s politicians and fiscal authorities alike.”

    “In short, Europe, the US, Japan, China and most of the rest of the world is in thrall to a tiny coterie of power-hungry central bankers. If you do not think they are driving the financial system to the mother of all bubble crashes, just ponder the following justification by a top ECB authority for depriving eurozone consumers of even a brief spot of zero inflation in their cost of living:”

    • cont…

      “So there is no alternative except to take cover because the latest stock market rip is based on pure central bank hopium

      Indeed, Mario Draghi has confirmed once again that the world’s central bankers have a monetary death wish. Unlike the gamblers who bought Cramer’s top 49 stock picks, the best course of action is to sell, sell, sell—–and do it now.

  12. DB4545

    Tony Brogan

    I’m against centralized control of all institutions and systems Tony. I think they become a menace to civilisation over time. However much sharper minds than mine have made the case against centralization and I think most sensible people instinctively grasp the logic of it without worrying about grand theories. Nassim Nicholas Taleb makes very compelling arguments about the dangers of worshipping science in general and economics specifically in books such as Antifragile. Taleb views most of what passes for economic theory as bad maths or outright falsification and he uses the Long Term Capital Management scandal as a prime example.Adam Smith sounded warnings about debasement of money and even sagely forewarned the dangers to a society than was fragile to or overdependent on a food source like potatoes almost a century before the Irish potato famine.

    Adam Smith was a moral philosopher who as we know wrote on how societies came to grow wealthy. He was not a right wing nut job but his book is unfortunately quoted by virtually every right wing nut job to justify their greed. Smith pointed out the poverty created by the serf society in Scotland or the slave societies in places like Bengal. These disgusting conditions were created by the East India company and others. He pointed out that real wealth could only be created by free societies and used the examples of the original colonies in North America.

    But back to gold and precious metals Tony. Less well developed but possibly wiser societies than ours place great value in gold as a store of wealth. It has a long history and shouldn’t be ignored. Huge amounts of gold move from places like Dubai to India and elsewhere. I’m in agreement with you regarding gold and precious metals as a store of wealth. The challenge is to persuade the average Joe in the West that the average Joe in India has a much more fundamentally sound money system. Bitcoin seems persuasive but it was created by man and it’ll be broken by man and gamed.In essence gold has to be seen to be effective. Gold(and Silver) has to provide a useful means of exchange in a convenient way at a sensible price. Not at a 15% to 25% margin or a 24% VAT rate. When someone can achieve that the money changers are doomed as is paper or electronic currency.

    • Thanks for the above.

      I think we will end up with a combination of precious metals and electronic transfer. It is already available and the only thing in the way is government regulation and the central bankers.

      Trust is the problem. Trust in fiat money will evaporate. Trust in PM will need to be regained.

      There is a lot of propaganda in the press to be overcome. Economists in general need to be re-educated.

    • DB4545

      Try Goldmony.com
      Here is a reply to my enquiry re VAT

      “Thank you for your message.

      Value Added Tax (VAT) and sales tax are not due on any metal purchased and stored with GoldMoney.

      However, please note that silver and other “white metals” such as platinum and palladium may be subject to VAT or sales tax if you choose to take physical possession of one or more bars.”

  13. mike flannelly

    France and Germany have mortgage products with 25yr fixed rates@ 2.75%
    Repayments would be 1,153euro/mth for 250,000euro mortgage or 923euro for a 200,000euro mortgage.
    This amount is less than 25% of take home pay for an average industrial wage couple joint earnings of 75,000euro gross.
    In the old days 3.5 times one earner was the metric with the average first time buyer being 28 yrs of age.
    Now at 7 times one earner with the average age being 36yrs of age.
    On Sean O Rourkes radio show(22nd oct) Tom Parlon considers pushing out the metric to 9 times one earner(for couples on the same salary) so that housing is more affordable. Tom says that 350,000euro is the cost of a starter home in Dublin. Thats 10 times the average industrial wage.
    You can build a 3 bed semi house outside Dublin for 180,000 on a free site. A million for 8 acres for 50 houses would be 20,000euro a site.

    Irish Economists and new money commentators have hidden for seven years from discussing mortgage metrics. New money commentators said that there was no need for mortgage metrics cos of unguaranteed low interests in 2007 when interests were 4%. These experts have watched land bank debt writedowns of 90%, Apartment value writedowns of 65% and house value writedowns of 55%.

    With 25 yr fixed rates of 2.75% like France and Germany our economists could stop hiding from bankers politics and give their recommendations for domestic mortgage debt.

    What are Davids Loan To Income mortgage metric recommendations to ensure that a couple can have a family,educate them and comfortably save for retirement without the financial anxiety of Irelands Russian Roulette variable rates. You dont Negotiate with Stonewalling failed bankers.

    The old days 10% deposit metric on a mortgage of 3.5 times ONE earners wage was more affordable than the 10% deposit metric on a mortgage of 3.5 times TWO earners wage. Today you have to save twice as much.

    What are Davids Loan to Income mortgage metric recommendations for 2016 ?

    What are Davids Loan to Value mortgage metric recommendations for 2016 ?

    Core Questions that provide a platform for a functioning domestic economy, savings, investments and retirement planning.

    Do we need a NEW bank/ building society to deliver the 25 yr fixed rate mortgages @ 2.75% ?

    • DB4545

      mike flannelly

      We may need a new bank/institution Mike but the real question is why nobody has as of yet decided to service that market at the rate you mention. Given that CB rates are at historically low rates and I’ve just been quoted close to 6% on a 200K buy to let somebody is on a serious little earner. The usual suspects have bought heavily discounted land banks, the REIT’s have bought up apartment blocks and together with the institutions they are intent on squeezing every last drop of blood from first time buyers. They are determined to screw the already heavily taxed net income of working people whether they’re renters or buyers and the Institutional State (which should be protecting its Citizens) is fully behind them. If I was in my 20′s I’d be on the first plane out because kids just haven’t got a chance in this environment. Sadly I think it’s a global problem.

  14. Interest rates at the current percent are below the inflastion rate if the inflation is correctly calculated.

    governments continue to spend more than revenue and encourage people to spend more than they earn. This disastrous behavior is obscured by the inflation which robs us all but makes debts easier to service with inflated currency. All is well until economic slowdown cause unemployment and wage growth to stagnate. Then debt becomes a problem. We are reaching the end days of such behavior as inflation squeezes the capability of people to pay.

    http://www.econmatters.com/2015/10/the-inflation-lie.html

  15. http://www.jsmineset.com/2015/10/23/jims-mailbox-1759/

    Jim’s Mailbox
    Posted October 23rd, 2015 at 2:21 PM (CST) by Jim Sinclair & filed under Jim’s Mailbox.

    Jim,

    Does Money Supply include all the below?

    -Equity investments
    -Bond investments
    -Credit investments
    -Derivative investments

    If not, if it is only cash and deposits held in banks (and those are slowly being eliminated), then wouldn’t it be impossible to track the velocity and supply of money in order to judge inflationary pressures?

    It seems all money is being diverted into risk assets.

    Is true money supply, as an indicator, dead?

    CIGA Wolfgang Rech

    Dear Wolfgang,

    This is a complex item that we have no way of changing. The BLS and Fed will continue to report their data on flawed metrics as you and I see. In this administration it will not change.

    Your conclusions are totally correct, but what do we do about the false data we inundated with every day?

    The money went to the banks and has disappeared into the monstrous debits created by failed OTC derivatives that still exist. The debits covered transformed the program cash into the vaults of the winners on the derivative and was reported by them as trading profits. It thereby created the 1%.

    The worldwide financial entities were broke and are still if “mark to market” accounting was reinstated by the gatekeepers on truthful accounting who have sold their souls, also known as the FASB.

    These falsehoods will not stop the economic reactions to the truth, just slow it down. The result is certain, and will occur and are now taking form.

    Stay the course and do not allow the hired hands of the opposition scare you out here. Payment can be made in many ways including acceptance by the elite they strain to become.

    Remember them all when Gold closes over $2100.

    Respectfully,
    Jim

  16. http://www.jsmineset.com/2015/10/21/a-saturated-world/

    Talking about resetting a mortgage rate reminds me that the world is awash in debt. In fact, so much debt that it cannot be serviced at the current economic output.

    Simply stated the debt payments exceed total income. What is a central bank to do to reinflate the economy except lower interest rates and add liquidity by the exponential production of more money. Thus we have ever lower interest rates that only now have the option of being negative by larger and larger amounts.

    That is paying people , institutions to borrow in the hope they will spend. All this money has apparently gone to service failed derivative contracts. The winners of those contracts being paid have become the 100th of the 1% and the super wealthy elite. Thus the central banks have paid the price, by direct monetization, to allow the system not to collapse and extend the scheme for another day.

    Wealth is transferred to the few by indebting the rest.

    In the meantime central bankers have been accumulating gold on a net basis. Some more aggressively than others. Gold is seemingly moved from West to East. The question now is ,,, does the East have all the gold that used to be in the West.

    Gold is the only central bank asset that has not been inflated to nothing. Inflating gold to a higher price, a much higher price in order to balance the books, would perhaps allow central banks to be solvent and not bankrupted like they appear to be. This will be at considerably higher prices for gold. Put another way gold will appear to be much higher as the confidence in fiat currencies erodes and the values of fiat currency plummet.

    Here in more succinct form is a discussion of this. The question yet to be answered is,, Does the West actually have the gold as claimed. He who has the gold rules and it seems as if the shots are being called by others than the West. Do they have all the gold and are they the real new rulers of this world of ours.

    http://www.jsmineset.com/2015/10/21/a-saturated-world/

  17. There are lots of housing available for under 100,000. Place your bid here.

    http://brggibsonauctions.com/properties.asp?Auction=B

    • Sorry, it is all in Ulster, I just noticed!!

      • DB4545

        Tony Brogan

        I had a look at those links Tony and there’s a lot of margin hidden in the details with for example storage fees, taxation issues and VAT. It took me a long time to realize that paper currency is purely a debased cellulose derivative and has been for a long time and isn’t capable of paying the bearer anything on demand. The Indian labourer on a Dubai building site has a more instinctive grasp of that fact that most so called sophisticated Westerners.

        • DDB4545

          There is a margin to be paid anywhere one looks. It costs to have the service. If possible one pays the premium and takes the booty home to shove in a drawer or attic etc.

          The fiat notes may or may not say “I promise to pay” on them or just “this is legal tender” . Being legal tender means essentially that if one offers to pay a debt using legal tender it cannot be refused.

          Any other tender may be acceptable as agreed between the parties. Repealing the legal tender laws would put the domestic currency in direct competition with all other provisions of payment and thus help to keep the domestic currency honest and of value. Otherwise it would fall out of use in favour of a better store of wealth or a currency better trusted.

  18. Deco

    We have full market regulation now of the asset markets.

    The whole thing is nonsense. Marxism for Millionaires is nonsense. Asset price bubbles.

    Particularly evident in the IT sector.

  19. mike flannelly

    Cost Benefit Analysis question for David.
    Could David tell us if the domestic economy and Irish bank customers are better off with the present take it or leave it 2% higher interest rates with “bad will” and total mistrust of todays Irish (same 2007) bankers ?

    or

    Slower return on the 25 bn euro so called pillar bank shares
    But
    25yr fixed mortgages@ 2.75% .
    Restructures for families with overvalued mortgages to replace firesales.
    Consumer confidence with Real Value Debt and a clear vision for families to plan their futures.

    Are the 25bn euro pillar bank shares worth the feeling of hopelessness, higher irish mortgage debt repayments and zero affordability of retirement planning for 1 million workers?

    Would a NEW BANK be better for All our mental health and economic health? Hope for our childrens future.
    The billions on deposit could be moved to the new bank.
    Irish bankers would not have to complain any more about buying @ .15% and charging 5%. and breaking even on tracker mortgages.

    Where do we draw the economic line ?

    Put up with continuous bankers abuse or moving on?

  20. michaelcoughlan

    Hi,

    “Europe’s economy isn’t growing and it isn’t investing. The money that the ECB is printing is not going into productive investing which delivers growth. Instead, it is driving up asset prices, fuelling financial speculation by the rich, which is causing greater inequality.

    But why isn’t the European economy growing? Why aren’t European companies – some of whom have never been more profitable – investing right now?”

    A very courageous article especially from a Keynesian because you are grasping the nettle that too much debt is the problem. The above excerpt highlights your sometimes error of over thinking the problem. You stated that Europe isn’t growing then told us why and subsequently asked the question why isn’t Europe growing?

    So Adelaide hasn’t posted recently but the mall investment from miss allocated capital is a huge part of the problem which you correctly pointed out is causing over supply.

    Gold is the canary in the mine. It will show when the time is right to get out.

    The answer to the question at the end posed by Tony and DB4545 about how we solve the problem of growing an economy when too much debt is the problem is that it is happening already. Let me explain;

    Many business’s are now being crowd funded and when a business is crowd funded it doesn’t get a loan from a bank. This means NO NEW INCREASE IN THE MONEY SUPPLY. That’s the answer. The funds are coming from the existing supply. Keiser has launched banktothe future but there are many many crowd funded business emerging all over the world.

    The interest payable by the market in these enterprises is between 5% to 6%.

    The way to solve the problem is to forget about what ANY central bank is doing because they know fuck all. Start a citizen driven initiative from the ground up using crowd funding to drive it and you will start to create a new economy to run in parallel to the one controlled by banker scum through their control of the currency supply.

    Regards,

    Michael.

  21. Ron Paul says there is plenty of inflation and the middle class is being destroyed.

    https://www.youtube.com/watch?v=qZwkWuMSERY

  22. sravrannies

    Very interesting article in the Guardian which articulates and reflects what some of you guys have been saying recently. He suggests that the UK Government is deliberately promoting a housing boom so that homeowners/private sector take on more debt to facilitate a reduction in Government to reduce it’s own debt. Surely the Irish Government wouldn’t be doing that – again!!

    Peter

    http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus

    • All well and good Peter.
      True if we insist on using central bank fiat currency which is always issued into existence as a debt or IOU as the author says. Because of this, when debt is redeemed the IOU is paid off and the bank note retired. I.E. it no longer exists. So quite correct. If nobody borrowed and went into debt there would be no money left in circulation. Except the coin in your pocket which is not an IOU, it is actually money.

      It seems ludicrous that we use such a system that binds us all to a debt that charges interest. When the interest is paid that also reduces the money in circulation, so in order to keep money in circulation then more has to be issued, but that is more debt at interest. The money system demands it be fed with ever increasing amounts of debt which in turn adds to the interest that removed money from circulation and we go around this loop faster and faster until it crashes.

      Of course some of us know it does not have to be this way. All we need to do is replace this absurd system with another. Money that is not a debt and that does not charge interest. Simply issue money from treasury and close the central banking system.

      Replace fiat central bank money with free treasury money , one for one. Simple, Not debt, no interest, stability, prosperity, no boom, no bust.

      No more articles from the Guardian that do not go to the root of the problem by explaining how we get off the debt treadmill.

      The solution is so simple nobody can see it. Absurd it is.

      • Don’t mention The Guardian whatever you do lads.

        Coldblow will be straight on calling you an extravert, or extrovert, or something.

        • coldblow

          I have gone back to the older spelling with an ‘a’: extravert (as used by Jung, either directly or more probably in translation – see Psychological Types 1921). The Guardian would doubtless use the ‘o’ variant because they think it is more correct. Similarly the Irish Times always spells words ending in ‘ization’ as ‘isation’. They share many delusions in common, in particular that of intellectual superiority.

          Here is a very interesting article by the late Richard Webster in which the Guardian’s moralizing past as a campaigning newspaper figures prominently. Of course, it doesn’t moralize any more, preferring (like the IT, RTE and our e*******t friends) to wag its fingers at its opponents.

          http://www.richardwebster.net/jersey2.htm

          The article is in response to Nick Davies’s book Flat Earth News, which examines the evils of sensationalist journalism. Davies writes for the Guardian of course.

          ‘Although Davies identifies himself at the outset of his book as ‘a Guardian man’ even the history of the Guardian itself is passed over without comment…

          ‘The fact that the Guardian, commonly regarded as the most secular of all the well-established broadsheets, itself has its roots in religion may seem irrelevant to the argument advanced in Flat Earth News.

          ‘But one of the reasons it is necessary to take this argument further is that it helps to illuminate not only what is wrong with Davies’s analysis of modern journalism, but also one of the facts about modern journalistic error which he signally fails to deal with in his book: namely that modern journalists spend a significant amount of their time crusading against what are perceived as evils. It is when they are doing this that secular journalists are often, like their religious precursors, at their most credulous.’

          In short, what we have is the most credulous, the most opinionated, the most moralistic journalists and journals working flat out to uncover these same faults in everyone else.

          I’d forgotten about this article, so thanks for reminding me.

          All I do (as I modestly point out) is provide the psychological explanation, using exciting new 100% Irish concepts like extravert cliché, extravert rhetoric and extravert policing of behaviour. If nobody else has even noticed it then perhaps they should get out more. Or open their minds. Ha ha!

          And I worked it out from this very blog a few years ago! Go raibh mile etc.

          • coldblow

            Here’s Part 1, but read Part 2 first.

            http://www.richardwebster.net/jersey1.htm

            Cooldude and Tony should read it too.

            In fact everyone should.

          • cooldude

            Read your link Coldblow and found it to be a simple cover up for paedophiles,

            Lenny Harper was a good cop but the reason he couldn’t find any bodies around the Haut de Garenne childrens home in Jersey is because the children were taken out to sea by the paedophiles and their bodies were disposed of afterwards. This was confirmed by security expert Michael Shrimton in his book Spywatch in which he gives details of Edward Heath’s fondness for this disgusting brhavour.

            Here is an article which gives full details on this paedophile ring. It’s a bit strange that you bring this up on an economic blog but you seem to be very interested in this subject.

            http://www.davidicke.com/headlines/78362-what-david-icke-has-said-since-1998-about-paedophile-and-child-killing-prime-minister-ted-heath-is-backed-up-here-by-barrister-michael-shrimpton-an-intelligence-and-national-security-consultant/

          • coldblow

            cooldude

            I looked up Michael Shrimpton (with a ‘p’, but I assume it is the same person) and this is no. 1 on the search list:

            http://www.mirror.co.uk/news/uk-news/michael-shrimpton-barrister-who-claimed-5116584

            The Mirror’s article is headed:

            ‘Michael Shrimpton: Barrister who claimed Nazi spies were planning to attack London Olympics with nuclear bomb is jailed’

            I remember David Icke as a television presenter for snooker and minority sports. Mentioning his name in polite society will raise a smile. This is moving onto the wilder shores of fantasy. We may yet get to Lobsang Rampa, author of several best sellers in his day full of his amazing paranormal exploits as a Tibetan monk (including covering vast distances by bouncing along at 30 or 40 yards a jump, as I recall). He was exposed by the Daily Mail in 1958 as Cyril Hoskin, a Devon plumber who had never been to Tibet. Hoskin later claimed (according to wiki) that he had been taken over by Lobsang Rampa’s spirit by means of transmigration of the soul after he had fallen out of a fir tree in his garden in Thames Ditton while trying to photograph an owl. I saw one of his books translated into Portuguese in a second-hand bookshop in the Algarve last year and I wish I’d bought it. (Where is John Allen by the way?)

            I thought it was yourself and Tony (your other half, as it were) who keeps raising the topic of paedophile rings here and that I was just responding. Maybe it’s the other way round. Whatever. It is interesting as another stream in contemporary irrationality and also useful in forming an opinion of other posters’ credibility.

          • coldblow

            This is one of my faves, George Hunt Williamson (aka Brother Philip). They had one of his books in the local library when I was a teenager.

            https://en.wikipedia.org/wiki/George_Hunt_Williamson

            I love the bit where Adamski reappeared over the hill an hour later with his story worked out.

          • “Nick Davies has amassed an overwhelming weight of evidence that the British media lies, distorts facts and routinely breaks the law.”

            “Throughout the book one of Davies’s main targets is the credulity of modern journalism and the ease with which it will embrace as facts the fictions which have been spun by others – in particular by politicians, by public relations firms, by intelligence agencies or by the largely unchecked and unresearched copy of press agencies.”

            If one subscribes to the above one should not believe anything reported at all. This includes all the false flag events that are the causes of going to war. All the lies perpetrated for the excuse to invade Iraq and Libya and Ukraine and Iran and Syria and and and.

            How about all the stories of atrocities by Germans in the First WW and the Nazis in WW11. what can we believe of the persecution of the Jews. Can we believe the statement of the deaths in the “work to death camps”.
            How about the Nuremberg trials. Can we believe all were guilty as charged. Trial of the vanquished by the victors leads to impartial justice, or were there a couple of hanging judges there. Many scholarly books have been written about this.

            One thing for sure the link has suggested. Do not trust the media as it is all lies and deceit. Is that true? Who to believe is the real problem. Propaganda is pernicious.

          • Coldblow

            I think you are a shill come to the site to denigrate some posters here by innuendo. If you can cause doubt about one issue then all others must be wrong, you suggest.

            Let me see you cast aspersions on the fact that the current monetary system is a criminal fraud. Let me see you dispute that the money system is a Ponzi scheme by design to enrich the banker cartel.
            Let me see you dispute the fact that because of this money system the world population is being forced into economic serfdom.

            Back to the pedophile issue. It is remarkable to me that many of these people so accused remain strangely silent in their own defense. Why is that do you suppose? Least said soonest mended, perhaps.

            Native Indians are now coming forward with heinous allegations about their treatment in Residential schools in Canada including that there are many many missing youngsters who never saw their families again. Of course it is all myth and mirage. Just a passing figment of imagination.

            “”There has long been significant historiographical and popular controversy about the conditions experienced by students in the residential schools. While day schools for First Nations, Metis and Inuit children always far outnumbered residential schools, a new consensus emerged in the early 21st century that the latter schools did significant harm to Aboriginal children who attended them by removing them from their families, depriving them of their ancestral languages, through sterilization, and by exposing many of them to physical leading to sexual abuse by staff members, and other students, and enfranchising them forcibly. This consensus was symbolized by the June 11, 2008, public apology offered by Prime Minister Stephen Harper on behalf of the Government of Canada and the leaders of the other federal parties in the Canadian House of Commons.[8] Nine days prior, the Indian Residential Schools Truth and Reconciliation Commission was established to uncover the truth about the schools. The commission gathered statements from residential school survivors through public and private statement gatherings at various local, regional and national events across Canada. Seven national events held between 2008-2013 commemorated the experience of former students of residential schools.

            https://en.wikipedia.org/wiki/Canadian_Indian_residential_school_system

            “Residential Schools

            Two primary objectives of the residential school system were to remove and isolate children from the influence of their homes, families, traditions and cultures, and to assimilate them into the dominant culture. These objectives were based on the assumption Aboriginal cultures and spiritual beliefs were inferior and unequal. Indeed, some sought, as it was infamously said, “to kill the Indian in the child.” Today, we recognize that this policy of assimilation was wrong, has caused great harm, and has no place in our country.

            Prime Minister Stephen Harper, official apology, June 11, 2008 “”

            http://indigenousfoundations.arts.ubc.ca/home/government-policy/the-residential-school-system.html

          • To add that the native Indian experience has a direct parallel to the Irish experience.
            Perhaps it is past time for a class action lawsuit similar to the BC Indian first Nations, against the English government for similar reasons of cultural, linguistic and religious abuse. It had a similar effect on Irish society and heritage.

          • coldblow

            Tony

            I was going to reply to this but it’s a waste of time and it has all been said before many times.

        • cooldude

          Coldblow I have a lot of respect for the work David Icke has done over the years to expose paedophiles such as Jimmy Saville and Edward Heath. If this is amusing in your polite society I couldn’t really give a f–k. Icke was the first to expose Saville as a predatory paedophile in his book The Biggest Secret in 1998. No doubt you and your pseudo intellectual chums had a polite laugh over this. Not laughing now though are they.

          Again you are the one who repeatedly comes on this blog to defend paedophiles and to use your pseudo intellectual claptrap to denigrate anyone who questions your lofty opinions. There is a faction in your polite society that wants to legalize paedophilia and has a lot of legal and political clout. Lets see how they get on with that one.

          • coldblow

            I don’t have any friends in polite society, nor among the rich and famous, let alone “household names!” You think I have?

            I don’t seek to defend paedophiiles but to criticize stupid and wicked allegations made usually by stupid, wicked and *anonymous* people, against innocent, usually *dead*, people whose only crime was to be in the public eye.

            If you think David Icke, Chris Spivey and now Michael Shrimpton (“and where did he blow from?”)have anything, anything at all, worth saying then you have a problem, unless of course this is a wind-up.

            “Predatory paedophiles”: I note the obligatory adjective but what does it mean? Should we, in your case, rather talk about predatory stupidity? Next you will be using the word ‘groomed’. Seriously, stop reading and repeating rubbish.

            As for innuendo, you yourself seem to be implying that I defend paedophilia or genuine paedophiles (however they are defined). The problem is not trendy lefties pushing the boundaries of sexual licence in the wrong direction a few decades ago but irresponsible and credulous (and, yes, usually anonymous) fools destroying people’s lives and reputations, without any personal repercussions. You support this?

            And what innuendo was I using? I hardly ever use innuendo, preferring to say things out straight. Where is the innuendo here? I did have to use it on another blog some time ago, where all of the posts, conversations and arguments were, as I discovered, written by one individual with a psychiatric illness, and I had to be subtle just to get past the moderator. But that isn’t the case here.

          • coldblow

            Just to clarify what I said above about trendy lefties pushing sexual licence. I consider it all to be a mistake, but in particular the moves to sexualize children. I say this to defend myself against innuendo that I am in favour of it, although it should not need even to be said.

            You really should switch off your computer and get some fresh air.

          • Grzegorz Kolodziej

            Not to mention this (I am consciously linking to The Guardian, to avoid any speculation of conservative media bias):

            http://www.theguardian.com/film/2015/may/22/an-open-secret-documentary-reveals-paedophilia-in-hollywood

            My ex-neighbour, originally from a loyalist community, who is basically a mentally, alcohol addicted and mentally unstable Marmite-eating turd who after years of unbridled aggression finally got a walloping, has once asked me “are you not ashamed of your pope after?”, to which I had replied “are you not ashamed to watch Hollywood movies with all that child abuse that goes on in Hollywood?

            I would also like to add that a normal practice in (state, not Catholic Church run) orphanages in Soviet Union or Romania would have been to tie up kids to bed if they cried. No tears shed over that now, how selective the human memory and compassion are (actually the Irish people saved many of those kids from Romania adopting them in the early 90s).

      • sravrannies

        Hi Tony, thanks for the ongoing education. I’m slowly beginning to understand.

        Back to my Guardian!!

        p

    • I’m not afraid to say that I couldn’t make head nor tail of that video/article.

  23. mcsean2163

    Would be great if they just distributed money to all the citizens of Europe instead of giving to the banks.

    The EU covers over 4 million km² and has 503 million inhabitants

    Give €20,000 to every man/ woman and child. That’s €1 trillion.

    Imagine if everyone in Europe was given €20k. It’s sickening to see Draghi give to banks and corporations. With €60k, I could set up a business, (that’s my funding goal at them moment), instead it goes to banks and reckless governments.

  24. DB4545

    I came across a recent Sunday Times article (25.10.15) regarding Credit Unions which might have a bearing on the discussion above. Credit Unions are currently restricted from lending where the terms exceed 10 years. They’d like to get into the mortgage business. There’s clearly a market for a new entrant because Pepper Finance have indicated that they may enter the Irish market in 2016. If Credit Unions were permitted surely this would provide Irish consumers access to mortgage finance with a (relatively) clean part of the financial system which got through the Celtic disaster in reasonably good shape? This may have changed because it could be argued that the CU reforms may have over centralized what has proven to be a very robust system. If a specific mortgage product was sold through Credit Unions in this way perhaps the Credit Unions and therefore Irish consumers could source finance at rates closer to EU norms? It would also provide a separation from investment and retail banking. A certain Mr. Noonan objects to Credit Unions providing such a service. Can anyone suggest a reason why or the pros and cons of such a facility?

    • Credit Unions in BC here are a major banking source of finance for all manor of things including long term (25-30 year) amortizations of mortgages with every term from open to a closed 1,2,3,4 or 5 year.

  25. mike flannelly

    Michael Noonan is a major holder of so called private bank(when it comes to salary increases)shares.
    He also hit post office saving bonds.

    There is a multiplier effect on the damage being done to the domestic economy from diverting every ounce of spare cashflow from consumers into his banks.

    I wouldnt be surprised if its bankers that tell us when the next general election is.

    They unbelieveably seem to run the muppet show.

  26. DB4545

    mike flannelly

    Well it was a rhetorical question Mike. Who loses in this scenario,who gains and whose interests are being served? The Irish Credit Union system was anti-fragile during the meltdown, a few failed but there was no systemic risk. They were decentralized in a similar way to Swiss domestic banks so there was relatively little contagion. The reforms have now made them more “professional” and “efficient” (and ring fenced their assets for a bail-in if required) but have made them much more fragile to another shock.

    It’s like a flotilla of fishing boats in a perfect storm,some sunk but the majority survived. When they then safely arrived in port someone in their wisdom then decided all their management and assets and crew should be transferred to one large vessel to sail the oceans again.

    Crazy I know but look where we live. And look how much we’ve changed and reformed so such a situation can never happen again.

  27. mike flannelly

    In todays Irish Independent David tells us that the great expectations of land owners for future price increases is the driving force behind todays property crisis.
    Next week David is going to meet with the institute of professional auctioneers and valuers to discuss a novel system of valuing property that may be imposed on Irish Banks soon.

    Overvalued property was NOT the problem. The problem that destroyed the domestic economy and the lives of Irish families was ” Grossly Overvalued Debt” which was multiples of best practice metrics.
    Auctioneers did a brilliant job for the seller and achieved the highest price they could. Terraced houses in Cork, Limerick and Galway were fetching over 400,000e.
    These super prices were not achievable without grossly overvalued debt. Grossly Overvalued Debt was the driving force of unrealistic property prices.
    New commentators that have sneered at loan to income metrics as “barstool economics”, have witnessed Land bank debt written down by 90%, Apartment values written down by 65% and House values written down by 55%. There is “NO” economic logic in dismissing loan to income metrics. Overvalued mortgage debt hinders Retirement planning.

    Average house prices in Dublin should reflect average Dublin wages/ratio debt.
    Average house prices in Cork, Limerick and Galway should reflect their average salaries/ratio debt.
    A site cost should be a percentage of the house cost/ ratio salary/ ratio debt.
    Location has always reflected salary and house costs. Basic logic.

    In 1997 semi house prices in Galway were 4 times one earners salary. The land owner made money, the builder made money , the tradesmen made money and the bank made money. The average age of the first time buyer was 28 yrs. There was a great consumer confidence and self esteem amongst Irish citizens.

    The bankers management culture/ personnel was the main variable change during the noughties. Aggressive profit growth for share prices that ignored the basic principles of banking.

    2015 the average age of the first time buyer has gone up to 36 and now NOBODY is making money.
    The house spec has increased about 10%.

    Not recognising (unbelievably – while receiving bonus payments) Real Value Debt was the quality assurance failure of the Irish Bankers.Irish Politicians ( all parties) and the Irish Central Bank ignored Real Value Debt also.

    I wish that Economists would ignore bankers spin plus politics and promote bar stool economics. A fixed maximum percentage of your income is the only logical way to go.

    Building houses was Not the problem in 2007.
    Grossly Overvalued Debt was the problem.

  28. Getting rid of the national debt is as simple as issuing debt free money directly from the government which is used to pay off the debt. An example posited here by Ellen Brown, for the US, is worth a read for anyone interested.

    http://www.truthdig.com/report/item/how_obama_could_beat_the_debt_ceiling_and_go_out_a_hero_20151028

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