If an Irish bank goes down? So what?

[Meathman99]

No, it's not. Builders and developers are still in a state of denial. Rather than cutting prices to a realistic level, they're playing around will silly gimmicks in order to to allow prices to drop to their natural market prices.

P.

What is a realistic level? Just exactly how much profit do you think most builders are making on each sale?
There isnt much more to cut. Unless of course the government will allow builders not to pay stamp duty, VAT, council contributions, highly inflated wages to staff etc

You're advocating that taxpayers finance their greed by buying up their unwanted stock. You're advocating that we use we do this when it looks like there will be huge cutbacks in public services already.

P.

The government has been bailing out farmers and fishermen for years. And today they bail out the banks.

 

[oceanclub]

What is a realistic level? Just exactly how much profit do you think most builders are making on each sale?
There isnt much more to cut.

So, builders and developer got into dick-swinging battles for land and paid way over the odds for it, as Matt Cooper has said, why are they entitled to be bailed out?

Sean Dunne paid €57 million per acre for his Ballsbridge site, and will have to make over €1million per apartment to break even. If he can't, is this my fault, and am I expected to bail him out?

The government has been bailing out farmers and fishermen for years. And today they bail out the banks.

When I was very young, I was told by my aunt not to jump off a cliff because someone else does it. Good advice.

P.

 

[Meathman99]

My point is that why should the government be bailing out some groups
Farmers How many 100 million per year
Fishermen
Banks
and not not provide some support for others
Builders
All the support jobs that construction creates

It is sickening to see the begrudgery that some people have against builders.
Others have also benefited massively, farmers sold land that they never worked a day in thier life on for massive money. They collected thier government cheque every month.

 

[oceanclub]

Others have also benefited massively, farmers sold land that they never worked a day in thier life on for massive money. They collected thier government cheque every month.

Did I even mention supporting these people? It's a pretty poor argument to say that we should throw money at group A merely because we previously threw money at group B. It's an especially idiotic argument when group A consists of people who boast to the Irish Times about their Ferraris.

Also, you seem to be misuing the word "begrudgery". It does not mean "to be annoyed by the fact that a group of people vastly richer than yourself are sending you the equivalent of begging letters".

P.

 

[Fearbocht]

Have to agree totally with Oceanclub on this. For the past few years the developers have been pulling numbers out of the head when it came to making up house prices. And the banks were the reason they could do this.

Whatever number the developer thought up, the banks supplied the funds, regardless of the intrinsic value of the property. Instead of making a modest profit of 10 or 20%, the developers were making 100%, 200% or 300% at a minimum.

The reason the banks operated unchecked was because the politicians had a serious confilict of agreement. The bigger the profits the bigger the donations. While we may feel sorry for the poor man who has been tricked by the craziness, it is no reason to mug other poor unfortunates into buying overprices houses.

Many intermediaries had the hands well greased by the unprecented flow of profits cumulating with an annual tribute to the arch facilliators in the tents of Galway. Sadly the real suckers were the people who were pressurised into buying for whatever reasons. Their houses are now worth at best half what they paid for them. If they dont believe me, let them try and sell. The main reason being, the banks simply dont have the sort of money to maintain the artificial prices.

Worringly the government has now come to the rescue of their good friends, the banks and the developers. One suspects it is an attempt to prop-up inflated property values. The reality, however, is that money or credit, call it what you will, has evaporated and I suspect the deadweight of an overvalued Irish property market will prove too much to bear for the flimsy shoulders of a sovereign bankrupt state.

 

[CGorman]

Currently watching prime time coverage... just had a notation - is it a possibility that the global credit crunch could end up, ironically, saving the irish banking system?! Here's my logic...

Any other year: Irish Housing market collapse, banks face massive bad debts, depositors run on banks, and they collapse one by one.

2008: Irish housing market collapses, banks face prospect of massive bad debts, government (thanks to international circumstances) implements massive gaurantee for bank deposits, and due to international collapses, foreign depsoitors rush to put funds into Irish banks... hence Irish banking system survives and indeed may gain long term international market share!!

This is just a beermat notion... but would'nt it be highly ironic if Irish banks end up surviving partly due to the credit crunch that is destroying foreign banks!

 

[Simeon]

AFAIK money has already been shifted from abroad. Even with the original guarantee there was money from John Bull.

 

[ClubMan]

No man or banking system is an island. If things continue to slide internationally even the Government guarantees might not be of much help. Ireland is unlikely to prosper regardless of what goes on elsewhere - especially in the USA.

 

[darag]

My point is that why should the government be bailing out some groups

Because handouts to farmers and fishermen have minimal impact on the rest of us.

Property is an input cost for nearly all businesses outside of construction and indeed for nearly all young individuals who pay the most tax and receive the least subsidy from the state. Propping up a housing bubble screws the entire economy. Let it pop and then let us get back to normal where people through work and saving can accumulate wealth instead of being sucked into the childishly stupid fantasy that everyone - simply by sticking 10k down and getting a mortgage to buy an average priced home - can become 30k a year wealthier by doing nothing except sitting on their This post will be deleted if not edited to remove bad language.

Given that deposit conditions for getting a mortgage have already gotten more stringent and that salary multiples are being reigned in, how do you think any non-home owner could even think about buying a property if the current price levels are maintained? It's quite likely mortgage lending could return to the historic norms of requiring a 20% deposit and offering only 3.5 times gross salary. Now your 320K appartment would require 70K cash and a salary of 75K a year.

Every attempt to "protect" property producers, screws property buyers. It's a zero sum game and so the best the government can do is to step back and let people decide, voluntarily, how much money they want to exchange a piece of property for. The Japanese government tried to "protect" property prices which just lead to a long painful slow 15 year slump.

Even from a moral point of view I would find any measure introduced by the government to aid or encourage first-time buyers to buy at this time to be repugnant. It would effectively consitute a subsidisy (paid for by every tax payer) for sellers and builders at the expense of the poor young saps who'd be burdened with a life sentence carrying bubble sized debt.

The suggestion that our public sector should start a Canute like attempt to prop up current prices using public funds at the expense of everyone else is similarly repugnant.

 

[annette mac]

Oceanclub, you've a great line in righteous indignation but I'm not sure where that gets us! We (all of us) have a problem which needs solving and what I'm suggesting is rational. I'm more concerned about keeping people in employment than bailing out builders but the two are interconnected so if you are intent on punishing builders and bankers you also punish their employees, that's a fact and there's no getting around it. I've always felt that you could divide the world into those who talk about problems and those who try to solve them. You and I fall on opposite sides of that divide!

 

[oceanclub]

Oceanclub, you've a great line in righteous indignation but I'm not sure where that gets us! We (all of us) have a problem which needs solving and what I'm suggesting is rational. I'm more concerned about keeping people in employment than bailing out builders but the two are interconnected so if you are intent on punishing builders and bankers you also punish their employees, that's a fact and there's no getting around it. I've always felt that you could divide the world into those who talk about problems and those who try to solve them. You and I fall on opposite sides of that divide!

You don't solve problems by throwing money at them, and that's the only thing you're suggesting. In fact, you're suggesting we throw money at developers twice, directly and indirectly - directly by the government using public funds to buy property at the existing inflated prices that developers are lookng for, and indirectly by allowing those purchases to artificially inflate prices even more so that FTBs are handing even even more money over to developers. If a company was failing, would your advice be for the government to buy shares in said company to artificially inflate its price?

It would be far better to channel all this money you're proposing we waste into training and job-finding for ex-construction workers. Many of these workers weren't even originally in the construction industry - my wife works as a recruitment consultant and says that many current job-seekers are people who spend the last few years in construction because of the bubble, but were previously in other sectors such as hospitality.

You're in the same position of denial as many in the country - that Ireland was special, that the housing boom would go on forever with the existing level of employment, that somehow we had achieved a new paradigm. The party is over. The construction bubble is gone, those construction jobs are gone. We have way too many houses as it is, so even if we do throw money at developers, they're not going to use it to more employ to staff - they will simply pocket the money and sit on their existing stock.

P.

 

[oceanclub]

Here's a priceless example of what happens when the government gets involved in bumping up the housing market:

http://www.thepropertypin.com/viewtopic.php?f=10&t=13913

To summarize:

* The council bought apartments for a certain price and currently values them at €345K
* It attempts to sell them to tenants for €281, and refuses to sell for any lower
* The banks now judge those apartments to be worth €280K and refuse to supply the tenants with the cash
* On the open market, the apartments are currently worth €270K

The Affordable Housing Scheme has now become a farce, and should be renamed the Developer Bailout Scheme.

P.

 

[Davidmul]

Re: If an Irish bank goes down?

A bit of a novice but from what i understand the irish banks have now one of the safest..

I have a situation were a relative just moved back from abroad after spending many years away. As he is building a house in the UK the builder will not take the money for the house till he completes the job - he (the builder) does want have such a large amount of cash just in case the banks in the UK go belly up..So my relative asked me to if he could put the funds into my account here in Ireland till Jan 09 - that is when the house shall be completed.

So would anybody know the following

Am I liable for anything by putting those funds into my account for 3 months? If so what?

What options are available...

Thanks

 

[iPoker]

Re: If an Irish bank goes down?

A bit of a novice but from what i understand the irish banks have now one of the safest..

I have a situation were a relative just moved back from abroad after spending many years away. As he is building a house in the UK the builder will not take the money for the house till he completes the job - he (the builder) does want have such a large amount of cash just in case the banks in the UK go belly up..So my relative asked me to if he could put the funds into my account here in Ireland till Jan 09 - that is when the house shall be completed.

So would anybody know the following

Am I liable for anything by putting those funds into my account for 3 months? If so what?

What options are available...

Thanks

totally off point, but anyway, why doesn't the builder or the other bloke put in Northern Rock, or British Post Office, which I understand is run by BOI, and covered by the Irish Government 100% guarantee? Alternatively, he could buy gold, silver or cigarettes as an alternate currency!

 

[Sherman]

Re: If an Irish bank goes down?

A bit of a novice but from what i understand the irish banks have now one of the safest..

I have a situation were a relative just moved back from abroad after spending many years away. As he is building a house in the UK the builder will not take the money for the house till he completes the job - he (the builder) does want have such a large amount of cash just in case the banks in the UK go belly up..So my relative asked me to if he could put the funds into my account here in Ireland till Jan 09 - that is when the house shall be completed.

So would anybody know the following

Am I liable for anything by putting those funds into my account for 3 months? If so what?

What options are available...

Thanks

Absolutely no need to move the money to Ireland. Your relative could just put the money into one of the Irish banks in the UK - their UK subsidiaries all benefit from the Irish Government guarantee. Also, Northern Rock is 100% backed by the UK Treasury, which would be another option for your relative. By keeping their money in the UK they avoid exchange rate risks in transferring the sum to/from Ireland.

 

[Sunny]

Re: If an Irish bank goes down?

Absolutely no need to move the money to Ireland. Your relative could just put the money into one of the Irish banks in the UK - their UK subsidiaries all benefit from the Irish Government guarantee.

For the moment! Don't be surprised if they remove the guarantee from UK subsidiaries of Irish banks. All depends on how tough the EU want to get with Ireland

 

[Maximus152]

Wrote:
lowly paid trainee nurses are, would it not make sense for those trainees to have access to accommodation owned by the hospital, it was the norm that every hospital had a nurses home until relatively recently.[/quote]

Well seems like a great idea, why ddont we also set up a fund for them in summer for there Holidays so they can have 2 weeks in the sun for free as well, perhaps a Christmas club with donations from the Tax payer (mandatory of course) would be a lovelly idea.
Yes the rest of us can just slave through the week save in the knowledge that we are reducing some one elses burden. Makes me feel all warm n fuzzy.

 

[mainasia]

Oceanclub, you've a great line in righteous indignation but I'm not sure where that gets us! We (all of us) have a problem which needs solving and what I'm suggesting is rational. I'm more concerned about keeping people in employment than bailing out builders but the two are interconnected so if you are intent on punishing builders and bankers you also punish their employees, that's a fact and there's no getting around it. I've always felt that you could divide the world into those who talk about problems and those who try to solve them. You and I fall on opposite sides of that divide!

You're suggesting a solution through giant retro tinted Celtic Tiger Raybans.
Let's get things straight here, the government is broke. There's no money for further bail-outs as you suggest. There is NO money. Apart from the fact that the construction industry doesn't need our money as they made off with plenty in the last 10 years.

Keeping people in employment can be done by constructive industries to our economy that also bring revenue in from outside rather than ones that boom and bust and cause environmental damage and ruin our country's economy and young people's future.

You are not proposing any solid solution whatsoever, your solution is to try and prop up the whole sorry mess with more taxpayers money. Finally people don't need to buy houses they can't afford, they can rent.

 

[PaulHoughton]

Does anyone want to discuss the original question? What would happen if an Irish bank went down?

Would this not be a healthy thing?
Shareholders would lose their money and learn not to invest in banks that overlend.
Bank management would learn to be more prudent.

Customers would switch to another bank that had invested more wisely.

I thought bad companies had to fail for capitalism to work. In the dotcom crash of 2000, many companies went to the wall including listed companies. All staff were fired, shareholders lost everything, some were acquired for a fraction of their former valuations, survivors had their share prices cut down and acted more cautiously. And most people would see that as a healthy process. The industry survived with more realistic business models.

Should world governments have stepped in to save these broken companies? Buy their shares, guarantee their loans? I don't think so.

 

[mainasia]

'Too big to fail'. The consequences of multiple major banks failing in the US and worldwide would have been horrendous. Most of the Irish banks would already be dead (one or two will probably fall by the wayside anyway) as would a lot of major European banks. But not only that, millions would have lost everything, millions of companies would have no credit to operate and would have to immediately shut-down and wouldn't be able to pay staff.
Sure it could be done like this and things would recover eventually, but what would be the point of that?