Morgan Kelly is back

[Duke of Marmalade]

He does sum up the moral problem well though - giving 10s or 100s of thousands of taxpayers money to someone is the other side of the writing down mortgages that can never be paid off.

And what is the tax position? It is one thing for a bank to write down a loan in its accounts. But telling people that they no longer owe money is a gift. It should be subject to CAT. Or maybe it is CGT. I think a debt being discharged for less than its face value is specifically mentioned in the Tax Acts as a chargeable capital gain.

 

[Sunny]

And what is the tax position? It is one thing for a bank to write down a loan in its accounts. But telling people that they no longer owe money is a gift. It should be subject to CAT. Or maybe it is CGT. I think a debt being discharged for less than its face value is specifically mentioned in the Tax Acts as a chargeable capital gain.

Revenue already ruled on this. If they are satisfied that it is a legitimate commercial and business transaction, there will be no tax liability.

 

[RainyDay]

There was a nugget in MK's talk which amazingly has got no coverage at all. Maybe it is because he couched it in a form which would escape libel. But he more or less insinuated that AIB being a state owned bank which is now writing down loans will do so on the basis of political patronage. "If you went to the same school as the son of..." was how I think the insinuation went.

If this is happening it is totally outrageous. Noonan thinks MK should be taken seriously. Political patronage in loan write downs by a state owned bank is firmly within the watch of the Department of Finance and Noonan himself. Instead of advising others to listen to MK, Noonan should be talking directly to him to ascertain what basis he has for this claim.

Perhaps he might be referring to the large write downs of debt by Irish state-owned banks to Independent Newspapers, with Denis O'Brien as the main beneficiary? Or the large write down of Siteserv's debt to Anglo as part of the deal to sell Siteserv to Denis O'Brien?

 

[Brendan Burgess]

He has published his speech as an article in today's Irish Times

Morgan Kelly warns our real economic crisis will begin if ECB credit stops


It's the same stuff as in the lecture. Absolutely no analysis to back it up.

 

[Brendan Burgess]

The Irish Times has helpfully provided links within the article to three previous articles by Morgan Kelly

Better to incinerate €1.5billion than squander it on Anglo December 2008
"[FONT=&quot]Then, given lending of about €80 billion to developers, it follows that Anglo Irish is facing losses on the order of €15 billion. The true figure could easily turn out to be twice as large."

Good article but he overlooked the point that most of the money borrowed at 1% to bail out Anglo went back to Irish depositors. Depositors and bondholders should have been burned.
[/FONT]

If you thought the bank bailout was bad, wait until mortgage defaults hit home November 2010

"Once we accept, as the Government does, that Anglo will cost the taxpayer about €30 billion, we must accept that AIB and Bank of Ireland will cost at least €30 billion extra.

When you apply the same assumptions about lending losses to the other banks, you end up with a likely taxpayer bill of €16 billion for Bank of Ireland (deducting the €3 billion they have since received from investors) and €26 billion for AIB: nearly as bad as Anglo. i.e. total cost €60 billion "


"
This time the bad loans will be mortgages, and the foreign creditor who cannot be repaid is the ECB. In consequence, the second act promises to be a good deal more traumatic than the first.
[FONT=&quot]Where the first round of the banking crisis centred on a few dozen large developers, the next round will involve hundreds of thousands of families with mortgages. Between negotiated repayment reductions and defaults, at least 100,000 mortgages (one in eight) are already under water, and things have barely started"[/FONT]

Ireland's future depends on breaking free from the bailout May 2011
"[FONT=&quot]Just as the Lenihan bailout destroyed Fianna Fáil, so the Noonan bankruptcy will destroy Fine Gael and Labour, leaving them as reviled and mistrusted as their predecessors"[/FONT]

 

[Brendan Burgess]

Between these three articles and the one today, he has made many precise, measurable forecasts.

Like any other economist, he has got around half of them right and half of them wrong.

He is not special.

 

[Brendan Burgess]

Good summary from Séamus Coffey in today's Sunday Business Post

AIB, Bank of Ireland and PTSB have issued about €150 billion of loans to customers in Ireland across all areas: mortgages; SMEs, corporate, property and consumer. Of these, around €60 billion are non-performing. However, over the past few years the banks have made over €30 billion of provisions against these loans to cover likely losses. They were required to further increase this after the Balance Sheet Assessment, which drove some of the losses announced by the banks in their recent 2013 annual reports.
...
The Irish banks are in a strong position going into the ECB's stress tests and will pass them. This is not because their assets are performing well; it is because they have provided for the likely losses on their non-performing loans. It is possible that the next few years will see the Irish banks engage in reverse-provisioning, that is removing the provisions for losses that did not materialise.

 

[dub_nerd]

Between these three articles and the one today, he has made many precise, measurable forecasts.

Like any other economist, he has got around half of them right and half of them wrong.

He is not special.

I'm not sure that's the right way to look at it. If Morgan Kelly speculates about the future of politics (e.g. the right wing groups he predicted would appear), he's probably speaking outside his area of expertise. What is galling is to see him make predictions that barely even qualify as predictions -- that we were going to have a housing crash and a banking disaster, when the writing was already on the wall and the banks' exposure to developers already known -- and to see other talking heads rubbish those predictions on national TV. So I would be more inclined to laud Kelly's willingness to call a spade a spade, when others were either sticking their heads in the sand or living in some "emperor's new clothes" fantasy world. Compare, for instance, his performance on Prime Time in September 2008 with that of the financial regulator two weeks later. Let's remember Kelly is a crusty academic whose area of expertise is the medieval economy of England. Pat Neary is the man whose day job is understanding the operation of Irish banking. Kelly simply calls things as he sees them. Neary ... well, it's hard to fathom what planet he's living on in retrospect. Planet Incompetent, most likely.