More than you think. Over a decade a business contact told me in confidence that an AIB branch in a certain small country town had over a dozen property developer borrowers owing that bank branch more than €10m each. That was €120m-odd borrowed in one of the two banks in a town of a few thousand people.
The idea that massive borrowings were confined to a small golden circle is attractive, but has no basis in reality.
But banks have provisions for bad debt. Banks have estimates for bad loans following prudent lending practices. These were blown out of the water, wrecklessly.
And the vast vast majority of such loans were and continue to be repaid. But the bad debts problems that sunk the banks were generally attributable to larger scale lending, by significant numbers of borrowers.I never suggested they were.
I suggested that the vast, vast majority of people borrowed for individual purchases, a home, a car, a holiday etc. Most tried to keep within sustainable levels, some over extended for sure.
But banks have provisions for bad debt. Banks have estimates for bad loans following prudent lending practices. These were blown out of the water, wrecklessly.
And the vast vast majority of such loans were and continue to be repaid. But the bad debts problems that sunk the banks were generally attributable to larger scale lending, by significant numbers of borrowers.
Probably true internationally but we live in a small high wage economy with very even after-tax income distribution. The latter is due to our very narrow tax base which relies so heavily on taxing the top 10% of earners.Yes, and if I borrow €50m from a bank for retail and residential development, where I have done my homework, the figures, the projections, am I really supposed to be able to factor in that the same bank has lent billions to another borrower to buy 30% shares in the same bank?
If my development falls on its face because my projections did not materialise and I go bankrupt, then its my own fault.
But if my development falls on its face due to the dodgy lending practicesof the bank, that I have no knowledge of and that results in freezing the credit, am I still as culpable?
Anyway, we could argue around the houses on this, back on topic
The case for wage led growth
"The past decades have witnessed falling wage shares and a polarization of
personal income distribution. Average wages and average labour com-
pensation have not kept up with productivity growth. Functional income
distribution has shifted at the expense of labour. In many countries per-
sonal income distribution has also become more unequal. By many measures
income inequality is worse than at any time in the twentieth century. At the
same time economic growth processes have become imbalanced. Financial
crises have become more frequent; household debts have risen sharply; inter-
national imbalances have increased, with some countries relying excessively
on export growth. This paper argues that the polarization of income dis-
tribution and the decline in the wage share play an important role in the
generation of imbalanced and unequal growth, and that a pro-labour wage
policy will form an important part of a policy package that generates a stable
growth regime. A wage-led growth strategy is thus advocated"
www.ilo.org › publication › wcms_168753
Sorry, above link opens to another doc. Not sure why, Google the title if interested.
Probably true internationally but we live in a small high wage economy with very even after-tax income distribution. The latter is due to our very narrow tax base which relies so heavily on taxing the top 10% of earners.
Yes, and if I borrow €50m from a bank for retail and residential development, where I have done my homework, the figures, the projections, am I really supposed to be able to factor in that the same bank has lent billions to another borrower to buy 30% shares in the same bank?
I was wondering why this topic came up and then it hit me last night (I can be slow like that)....maybe raising wages can be seen as a "justification" to help the ECB raise inflation. But isn't it a handy coincidence that many of the PS groups are lining up for more money???? "Sure, t'll be handy for inflation"
But a lot of people knew in 2004-06 that local banks were handing out multi-million developer loans to all and sundry. A wise few did take this into account and escaped the bloodbath, but most didn't.
The national minimum wage increased this year by 5.6% which applies to both private and public sector workers. Luas drivers are employed in the private sector, Tesco workers are fighting their own corner, contract cleaning companies have agreed new minimum rates for workers with trade unions, security workers are engaged also in negotiations.
As a side, I think it was yourself that said you were going to increase your own (wage) rates this year? If it was you that said that, then I assume you are an employer? If you are an employer, why are you increasing wages this year?
Sorry, but earlier it was "more than a dozen", implying between 13 and 23 people in a town of a few thousand, now its all and sundry. Anyway, the point stands, if I borrow €1 or €10m, I have no idea how much you or anybody else is borrowing.
The bank, on the otherhand, would know.
Anyway, the point stands, if I borrow €1 or €10m, I have no idea how much you or anybody else is borrowing.
We are reliant in high wage earners because we under tax low and middle wage earners (by international and EU standards). Nothing is implied.Thats somewhat of a contradiction. On the one hand you claim we are a high wage economy, but on the other hand, and despite all these apparent high wages, we are heavily reliant on the top 10% of earners.
This would imply that there is a lot of high earners who are being lightly taxed?
So if we are a high wage economy, how come we are so reliant on only the top 10% of earners?
You'll find that all of those organisations you have mentioned are in the red. The government is still borrowing to consume so do you think it should raise wages in the public sector?
We are reliant in high wage earners because we under tax low and middle wage earners (by international and EU standards). Nothing is implied.
If a small town bank had advanced €10m+ loans to more than a dozen locals, it's not hard to generalise that they had also offered €1m+ loans to a lot more people.
No, I said top 10% of earners, not the top 10% of high earners.Well I would beg to differ. You have stated that we are a high wage economy, and that we are heavily reliant on the top 10% of our high earners. That would imply that the other 90% of high earners do not contribute their fair share? That we under tax 90% of high earners.
Alternatively, what you really mean is that only 10% earn a high income, the other 90% earn mid to low incomes, implying a not so high wage economy after all.