Somehow, I don’t think the same estate agent will be emailing today’s article by Morgan Kelly in The Irish Times. As readers of the blog will know, Kelly predicted the crash and even put a percentage on the amount he thought prices would fall. 80% was his
most recent estimate.
The two Brians keep telling us we have turned the corner, and that the spoilsport media are talking down the economy. Nonsense, of course. Sections of the media had a vested interest in talking up the market, profiting as they were from a property advertising bonanza, but they have no reason to talk it down. They are simply telling it like it is, that’s all.
Kelly, who is professor of Economics at UCD and so is not in the employ of the banking/property sector, reckons that Ireland is effectively insolvent. He believes that the cost of the bank bail-outs will be €70 billion. To put that in perspective, it means that “every cent of income tax that you pay for the next two to three years will go to repay Anglo’s losses, every cent for the following two years will go on AIB, and every cent for the next year and a half on the others." In other words, the Irish State is insolvent: its liabilities far exceed any realistic means of repaying them.
It seems that we have seen nothing yet. The economist expects the banks to pass under direct ECB control next year, and they will be forced to stop lending in order to “shrink their balance sheets back to a level that can be funded from customer deposits.” This will mean that the market will then “be driven by cash transactions, and prices will collapse accordingly”. He also predicts there will be massive mortgage defaults in the coming years, which will exacerbate the crisis even further.
Interesting times we live in
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10 comments:
I noticed blog comments below his article- one described him as a true patriot for telling it as it is
I read Morgan Kelly's article and his warning regarding the possibility of large scale mortgage defaults amongst the hundreds of thousands of people who are likely to rethink their budgeting priorities away from repaying the banks who ensnared them financially in the first place to the survival needs of their families makes for a daunting prospect. Sorry about the long sentence - got carried away but you know what - he's clearly the best prospect for Prime Minister.
oh and of course GM for Deputy ;)
ITS A GUBUU GM, reality sucks even in the second richest coutry in the world,bring back bertie the suicide counsellor bh
Hi GM, "Interesting times" - yes that's one way of putting it! Here's the article in full for your blog readers (I got the link to the article from http://newsausirland.blogspot.com/
http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html?via=rel
GM, mortgage interest rates will eventually rise, the exact date, is the only contention. The rest can be left up to your imagination.....Mr Kelly's article was poignant.
Yes folks, I think it helps that Kelly is not attached to some financial concern, I imagine his only motivation is to forecast accurately?
Certainly the rest of the world's financial markets don't seem to have been won over by our glorious leaders flailing around in a sea of FF rubby-dubby (insert Jaws music here).
There is a very quick way the PTB could alieviate this possible additional crisis, and thats clarity. A very un-Irish trait I know but nontheless, it could be worth a try. You see GM, we are now "officially," 2 years, into this mess and what's their plan, (lol) for this event horizon? I think essentially its a holding mechanism. A gambling strategy, which would see China coming in and buying the banks, in combination with a system of complicated (oh so very Irish, great excuse to wear a suit and look important) mortgae reliefs, to alievate the pain?
Oh oh, they're forgetting about gravity again. Ah well, happy clappy Ireland and give us a jig and everything will be alright. If you're Irish come into the parrrrrlour there's a.....LA LA LA
Yes, D.
Or how about:
"If you're the IMF, come into the parlour... "
After reading this, which backs up my personal theory of the mortgages arrears that have not really been factored into any realistic future debt (another crisis waiting to happen), The banks seem to have perfected the art of lying and deceit to the government who is blindly letting them get away with it even though they own their asses
I feel there is actually (in the very near future) a real scenario where even with over 50% cash in hand when paying for a house one might not be able to get a mortgage to cover the remainder :-O now how f**ked up is that. in a mad twist with cheap property prices and cash in your pocket one sill might not be able to get on the property ladder
where Morgan Kelly quotes from an estate agent "now might be a good time to buy".
IT ACTUALLY MIGHT BE
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