Au revoir à l'euro?

It is not a goodtime to be one of the PIGS – Portugal, Ireland, Greece and Spain. Greece, Ireland and Portugal, the euro region countries that needed 256 billion Euros ($366 billion) in emergency aid to avoid default, may all see their debt loads exceed the size of their economies this year. The only one of the PIGS whose economy has not been bailed out is Spain which is arguably too big to be bailed out in any event.



However the possibility of a second Greek Bail-Out and the increasing likelihood of defaults on Sovereign Debt is threatening not just the continuation of the Eurozone but the entire European Banking System – it is estimated that UK Banks have over €88 Billion exposure in Ireland and French and German Banks over €100 Billion exposure in Greece. Moody's has placed three large French banks on negative review based on their exposure to Greek debt.



In Ireland the political opposition is building up to the IMF Bailout fuelled by resentment that the Developers, Bankers and idiot Politicians who caused the bubble in asset values are getting off scot free. Finance Dublin kicked off The Irish Government Debt Clock which was set at midnight on June 30th 2009, when it was €65.278 billion. It updates the latest figures for the National Debt of Ireland. The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and independent economists. The clock is set now at €107 Bn, an amount which would be unserviceable even if the boom had continued. For further background on what the debt figures mean click here.

http://www.financedublin.com/debtclock.php


Cheerful Hibernians in between Riverdancing

Greece’s debt, already the biggest in the euro’s history at 143 percent of gross domestic product last year, will jump to almost 158 percent this year and 166 percent in 2012, the European Commission said this week in Brussels. Portuguese debt will surpass total economic output for the first time this year, growing to 101.7 percent of GDP, while Irish debt will reach 112 percent, the forecasts show.



As European Union officials consider boosting aid for Greece a year after its 110 billion-euro bailout, today’s report shows little sign of debt levels becoming more manageable. Soaring borrowing costs have left the three nations shut out of financial markets with investors increasing bets that Greece will become the first euro member to default.



The scale of Greece's problem is simply stated: her national debt will approach 160 per cent of GDP on current trends. Here in the UK we are supposed to be in crisis because that ratio is heading for about 75 per cent.


Les porcs

The Celtic Sage takes no satisfaction in predicting as far back as 2007 that the “One size fits all” Monetary Policy would be unsustainable in the EU’s peripheral economies when I wrote;

“There is widespread and growing disquiet about the consequences of the Euro, especially as the preparations for it already seem directly responsible for rising unemployment in Europe. Some argue cogently that the regional imbalances from monetary union will be a source of conflict not harmony between states. Popular resentment about high unemployment in depressed regions and about the scale of financial transfers to them from richer states could lead to a possibly violent break-up of monetary union.”

http://daithaic.blogspot.com/2007/09/euro-opportunity-or-threat-for-britain.html

Earlier this year I pointed out the sheer impossibility of Ireland servicing its (then smaller) debt and how the election of a new brand of Gombeen Government would not make an iota of difference;




Beware of electorates carrying placards

“So the € 80 Bn Bailout equates to roundly € 55,000 for every productive worker. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.”

http://daithaic.blogspot.com/2011/02/terrible-default-is-born.html

You know, sometimes it would be good to be wrong?

Au revoir à l'euro?

It is not a goodtime to be one of the PIGS – Portugal, Ireland, Greece and Spain. Greece, Ireland and Portugal, the euro region countries that needed 256 billion Euros ($366 billion) in emergency aid to avoid default, may all see their debt loads exceed the size of their economies this year. The only one of the PIGS whose economy has not been bailed out is Spain which is arguably too big to be bailed out in any event.



However the possibility of a second Greek Bail-Out and the increasing likelihood of defaults on Sovereign Debt is threatening not just the continuation of the Eurozone but the entire European Banking System – it is estimated that UK Banks have over €88 Billion exposure in Ireland and French and German Banks over €100 Billion exposure in Greece. Moody's has placed three large French banks on negative review based on their exposure to Greek debt.



In Ireland the political opposition is building up to the IMF Bailout fuelled by resentment that the Developers, Bankers and idiot Politicians who caused the bubble in asset values are getting off scot free. Finance Dublin kicked off The Irish Government Debt Clock which was set at midnight on June 30th 2009, when it was €65.278 billion. It updates the latest figures for the National Debt of Ireland. The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and independent economists. The clock is set now at €107 Bn, an amount which would be unserviceable even if the boom had continued. For further background on what the debt figures mean click here.

http://www.financedublin.com/debtclock.php


Cheerful Hibernians in between Riverdancing

Greece’s debt, already the biggest in the euro’s history at 143 percent of gross domestic product last year, will jump to almost 158 percent this year and 166 percent in 2012, the European Commission said this week in Brussels. Portuguese debt will surpass total economic output for the first time this year, growing to 101.7 percent of GDP, while Irish debt will reach 112 percent, the forecasts show.



As European Union officials consider boosting aid for Greece a year after its 110 billion-euro bailout, today’s report shows little sign of debt levels becoming more manageable. Soaring borrowing costs have left the three nations shut out of financial markets with investors increasing bets that Greece will become the first euro member to default.



The scale of Greece's problem is simply stated: her national debt will approach 160 per cent of GDP on current trends. Here in the UK we are supposed to be in crisis because that ratio is heading for about 75 per cent.


Les porcs

The Celtic Sage takes no satisfaction in predicting as far back as 2007 that the “One size fits all” Monetary Policy would be unsustainable in the EU’s peripheral economies when I wrote;

“There is widespread and growing disquiet about the consequences of the Euro, especially as the preparations for it already seem directly responsible for rising unemployment in Europe. Some argue cogently that the regional imbalances from monetary union will be a source of conflict not harmony between states. Popular resentment about high unemployment in depressed regions and about the scale of financial transfers to them from richer states could lead to a possibly violent break-up of monetary union.”

http://daithaic.blogspot.com/2007/09/euro-opportunity-or-threat-for-britain.html

Earlier this year I pointed out the sheer impossibility of Ireland servicing its (then smaller) debt and how the election of a new brand of Gombeen Government would not make an iota of difference;




Beware of electorates carrying placards

“So the € 80 Bn Bailout equates to roundly € 55,000 for every productive worker. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.”

http://daithaic.blogspot.com/2011/02/terrible-default-is-born.html

You know, sometimes it would be good to be wrong?

Ireland – Where did the money go?

Fianna Fail Government sacked, now what?

Well that is the €85bn question, the value of the “bailout” to the Irish economy from the IMF / ECB not to mention asset stripping Ireland’s “fund” for Public Sector pensions which is to be filleted as part of the IMF / ECB conditions. No doubt many in Ireland will find this question relevant as they stare into the abyss of default, repossession and plummeting living standards.

As I have already pointed out the € 85bn Bailout may well turn out to be nothing of the sort. It equates to roundly € 55,000 for every productive worker in Ireland. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.

http://daithaic.blogspot.com/2011/02/terrible-default-is-born.html

The Irish Banks are increasingly likely to need most of the €35bn bailout fund set aside to keep them afloat, latest estimates indicate. Experts hired by the Central Bank are in the final stages of examining the bank's loans, with financial sources putting the final bill at between €25bn and €35bn. This would be the worst case scenario as envisaged in the IMF/EU bailout agreed last November. The new Government will have to pump even more money into the banks than the €10bn earmarked by the outgoing administration, Finance Minister Michael Noonan admitted yesterday.



News that the Government will have to put even more cash into the banks is a bitter blow to the Fine Gael-led administration, which had insisted it would put no more money into the banks until "senior bondholders" had been forced to take losses. The HUGE mistake Ireland made was to guarantee not just deposits but ALL the liabilities of Irish Banks. The Hedge Fund Bondholders have been in LMAO mode ever since. Having made their financial bed of nails there is no going back, Ireland will be forced to sleep on it for years to come.

Well I can’t tell you where all the money went but a lot of it went into commercial and trophy property in London bought at overheated asset values. Let me illustrate the case of a London mansion owned by an alleged fraudster which it is suggested will attract bids of more than €23m tomorrow. Located at 31 Brompton Square, Knightsbridge, the mansion was owned by Achilleas Kallakis, a Greek property tycoon who is awaiting trial for an alleged £61m (€70m) fraud. Barclays Wealth, which has a mortgage on the property, appointed insolvency experts Begbies Traynor as the receiver to the property and the receiver has set tomorrow as the closing date for bids.



Mr Kallakis and his business partner Alexander Williams are awaiting trial for an alleged £56m fraud against Allied Irish Banks and £5m fraud against Bank of Scotland. The two have each been charged with two counts of conspiracy to defraud, 13 counts of forgery, five counts of fraud by false representation, two counts of money laundering and a count of obtaining a money transfer by deception. AIB had to write off €63m as a result of losses on loans which it gave the duo between 2003 and 2007 to purchase properties in some of London's most up-market areas.

The Blurb for the property which is advertised as “distressed property” says;

"A magnificent Grade II listed family house, with one of the largest private gardens in Knightsbridge, perfectly positioned in the crescent overlooking the communal gardens of Brompton Square. The property benefits from full planning permission to develop over 23,000 sq ft of accommodation with underground parking. This is a rare opportunity to create one of Central London's largest and finest private residences.”

It then goes on;

“The property benefits from a number of historic planning and listed building consents, the most recent being granted in November 2010. The latest permission finalises the extent of the basement to approve the current building works and allow the creation of further bedrooms, entertainment space, a spa complex with swimming pool, staff accommodation, a car lift and garaging. The basement extension is part complete with the initial ground works, excavation and secant piling concluded.”

What the last bit means is that the property has been transformed from a decent family home with a larger than usual garden in a nice crescent but off a busy road in South Kensington into a subterranean building site. Not just that but the new purchaser will have to buy the props and finish off this building site which has remained dormant for two years; so much so that the property is on the English Heritage at risk register which says;

“House 1824-39, part of Brompton Square layout. A series of planning and listed building consents have been granted for internal alterations and rear extensions. Works to implement the consents came to a halt in December 2008. An urgent works notice to make the building weathertight was served and complied with in December 2009.”




How 31 Brompton Square could look with only another £10m spent

So the blank cheque to finish off almost quadrupling the size of the house to Listed Building standards along with the swimming pool, leisure centre, car lift, staff quarters etc; which take up the full underground garden space could easily come to £10m as restarting such a project after two years is more expensive than starting from scratch. So added to the £20m sale price this would make the house price £30m sterling. So what is it actually worth, this development left unfinished with borrowed money by people awaiting trial on fraud charges?

The last recorded house sale in Brompton Square, which is mainly flats, was No. 29 which sold in 2007 some 20 minutes before the credit crunch for £10m. This was of course actually habitable (unlike No. 31) and in walk in condition. You have to ask if I was an Oligarski or a Mid-Eastern Potentate (both troubled classes at the moment) would I want to pay potentially £30m for a shell and a building site in Central London. For £4 – 7m they could buy a similar space in less polluted surroundings on private estates at St. Georges Hill, Virginia Water or Gerrard’s Cross in walk in condition. For £12m they could buy a huge mansion on the Crown estate overlooking Regent’s Park. So I don’t think there is a market for this property at £20m and its value is £4 ½ to 6m, if that, around a quarter of what was borrowed after fees. You really have to ask what valuation criteria did Banks use to lend on property like this that they felt 31, Brompton Square would be worth 3 TIMES the highest price ever achieved on this road at the peak?




Today the 3 storey basement containing the swimming pool, leisure centre, staff quarters and 3 storey garage (with car lift) is a 40 foot deep chasm


Add this in London to the many busted investments bankrolled by Irish Banks such as prestige hotels like the Connaught, Berkley and Claridges as well as the estimated 230,000 unsold new homes in Ireland of which 110,000 are “holiday” homes. Add to this the zombie estates, the zombie hotels built for tax breaks and without customers and the zombie developments then there are so many walking dead in the Irish property world that nobody can reliably predict future asset values or ascertain the reality of security behind current borrowings. The Irish Banks incompetent obsession with lending on property has led to their bankruptcy and the effective nationalisation by the Irish State of Allied Irish Banks, Bank of Ireland, Anglo-Irish Bank, Irish Nationwide and I.L. & P.

It is not a new claim to incompetence by the now bankrupt Irish Banks, indeed Bob Geldof pointed out in his 1986 biography “Is that it” that he was treated with derision when he approached a bank looking for backing for a business proposition, not a property. He later went on to cause outrage by describing Ireland as a “Banana Republic without bananas” and when receiving the civic honour of Freedom of Dublin said that “Modern Dublin and its planning can only be explained in terms of widespread political corruption.” With hindsight as Ireland heads into an extended economic winter paying for hundreds of Brompton Squares even Bob the Gob must be astounded at his gift for understatement.

http://daithaic.blogspot.com/2007/08/bob-geldof-and-me.html


31, Brompton Square today

Ireland – Where did the money go?

Fianna Fail Government sacked, now what?

Well that is the €85bn question, the value of the “bailout” to the Irish economy from the IMF / ECB not to mention asset stripping Ireland’s “fund” for Public Sector pensions which is to be filleted as part of the IMF / ECB conditions. No doubt many in Ireland will find this question relevant as they stare into the abyss of default, repossession and plummeting living standards.

As I have already pointed out the € 85bn Bailout may well turn out to be nothing of the sort. It equates to roundly € 55,000 for every productive worker in Ireland. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.

http://daithaic.blogspot.com/2011/02/terrible-default-is-born.html

The Irish Banks are increasingly likely to need most of the €35bn bailout fund set aside to keep them afloat, latest estimates indicate. Experts hired by the Central Bank are in the final stages of examining the bank's loans, with financial sources putting the final bill at between €25bn and €35bn. This would be the worst case scenario as envisaged in the IMF/EU bailout agreed last November. The new Government will have to pump even more money into the banks than the €10bn earmarked by the outgoing administration, Finance Minister Michael Noonan admitted yesterday.



News that the Government will have to put even more cash into the banks is a bitter blow to the Fine Gael-led administration, which had insisted it would put no more money into the banks until "senior bondholders" had been forced to take losses. The HUGE mistake Ireland made was to guarantee not just deposits but ALL the liabilities of Irish Banks. The Hedge Fund Bondholders have been in LMAO mode ever since. Having made their financial bed of nails there is no going back, Ireland will be forced to sleep on it for years to come.

Well I can’t tell you where all the money went but a lot of it went into commercial and trophy property in London bought at overheated asset values. Let me illustrate the case of a London mansion owned by an alleged fraudster which it is suggested will attract bids of more than €23m tomorrow. Located at 31 Brompton Square, Knightsbridge, the mansion was owned by Achilleas Kallakis, a Greek property tycoon who is awaiting trial for an alleged £61m (€70m) fraud. Barclays Wealth, which has a mortgage on the property, appointed insolvency experts Begbies Traynor as the receiver to the property and the receiver has set tomorrow as the closing date for bids.



Mr Kallakis and his business partner Alexander Williams are awaiting trial for an alleged £56m fraud against Allied Irish Banks and £5m fraud against Bank of Scotland. The two have each been charged with two counts of conspiracy to defraud, 13 counts of forgery, five counts of fraud by false representation, two counts of money laundering and a count of obtaining a money transfer by deception. AIB had to write off €63m as a result of losses on loans which it gave the duo between 2003 and 2007 to purchase properties in some of London's most up-market areas.

The Blurb for the property which is advertised as “distressed property” says;

"A magnificent Grade II listed family house, with one of the largest private gardens in Knightsbridge, perfectly positioned in the crescent overlooking the communal gardens of Brompton Square. The property benefits from full planning permission to develop over 23,000 sq ft of accommodation with underground parking. This is a rare opportunity to create one of Central London's largest and finest private residences.”

It then goes on;

“The property benefits from a number of historic planning and listed building consents, the most recent being granted in November 2010. The latest permission finalises the extent of the basement to approve the current building works and allow the creation of further bedrooms, entertainment space, a spa complex with swimming pool, staff accommodation, a car lift and garaging. The basement extension is part complete with the initial ground works, excavation and secant piling concluded.”

What the last bit means is that the property has been transformed from a decent family home with a larger than usual garden in a nice crescent but off a busy road in South Kensington into a subterranean building site. Not just that but the new purchaser will have to buy the props and finish off this building site which has remained dormant for two years; so much so that the property is on the English Heritage at risk register which says;

“House 1824-39, part of Brompton Square layout. A series of planning and listed building consents have been granted for internal alterations and rear extensions. Works to implement the consents came to a halt in December 2008. An urgent works notice to make the building weathertight was served and complied with in December 2009.”




How 31 Brompton Square could look with only another £10m spent

So the blank cheque to finish off almost quadrupling the size of the house to Listed Building standards along with the swimming pool, leisure centre, car lift, staff quarters etc; which take up the full underground garden space could easily come to £10m as restarting such a project after two years is more expensive than starting from scratch. So added to the £20m sale price this would make the house price £30m sterling. So what is it actually worth, this development left unfinished with borrowed money by people awaiting trial on fraud charges?

The last recorded house sale in Brompton Square, which is mainly flats, was No. 29 which sold in 2007 some 20 minutes before the credit crunch for £10m. This was of course actually habitable (unlike No. 31) and in walk in condition. You have to ask if I was an Oligarski or a Mid-Eastern Potentate (both troubled classes at the moment) would I want to pay potentially £30m for a shell and a building site in Central London. For £4 – 7m they could buy a similar space in less polluted surroundings on private estates at St. Georges Hill, Virginia Water or Gerrard’s Cross in walk in condition. For £12m they could buy a huge mansion on the Crown estate overlooking Regent’s Park. So I don’t think there is a market for this property at £20m and its value is £4 ½ to 6m, if that, around a quarter of what was borrowed after fees. You really have to ask what valuation criteria did Banks use to lend on property like this that they felt 31, Brompton Square would be worth 3 TIMES the highest price ever achieved on this road at the peak?




Today the 3 storey basement containing the swimming pool, leisure centre, staff quarters and 3 storey garage (with car lift) is a 40 foot deep chasm


Add this in London to the many busted investments bankrolled by Irish Banks such as prestige hotels like the Connaught, Berkley and Claridges as well as the estimated 230,000 unsold new homes in Ireland of which 110,000 are “holiday” homes. Add to this the zombie estates, the zombie hotels built for tax breaks and without customers and the zombie developments then there are so many walking dead in the Irish property world that nobody can reliably predict future asset values or ascertain the reality of security behind current borrowings. The Irish Banks incompetent obsession with lending on property has led to their bankruptcy and the effective nationalisation by the Irish State of Allied Irish Banks, Bank of Ireland, Anglo-Irish Bank, Irish Nationwide and I.L. & P.

It is not a new claim to incompetence by the now bankrupt Irish Banks, indeed Bob Geldof pointed out in his 1986 biography “Is that it” that he was treated with derision when he approached a bank looking for backing for a business proposition, not a property. He later went on to cause outrage by describing Ireland as a “Banana Republic without bananas” and when receiving the civic honour of Freedom of Dublin said that “Modern Dublin and its planning can only be explained in terms of widespread political corruption.” With hindsight as Ireland heads into an extended economic winter paying for hundreds of Brompton Squares even Bob the Gob must be astounded at his gift for understatement.

http://daithaic.blogspot.com/2007/08/bob-geldof-and-me.html


31, Brompton Square today

A terrible default is born

Congratulations to Ireland on electing a new puppet Government. The election will not reduce the interest rate on its €80bn bailout by a quarter of a percentage point; it will not diminish the burden of the deficit by so much as an old Irish Punt (the pre-euro currency which rhymed with Bank Manager). It will hang around the necks of the Irish for decades, and rest upon the shoulders of their children and their children’s children. If Gaddafi Adams is the answer then what is the question? The HUGE mistake was to guarantee not just deposits but ALL the liabilities of Irish Banks. The Hedge Fund Bondholders have been in LMAO mode ever since. Alas I had anticipated years ago that a monetary policy designed for Germany and France would make the PIGS (Portugal, Ireland, Greece, Spain) squeal and so it has come to pass;

http://daithaic.blogspot.com/2007/09/euro-opportunity-or-threat-for-britain.html



Welcome to Dublin!


Fine Gael have been swept to power on the back of a promise to renegotiate the terms of Ireland’s €80bn bailout by the European Union and International Monetary Fund. But Enda Kenny (a leader so impressive his own party tried to give him the heave 8 months ago) like all the other “believe my promises" Irish Politicos has no real power, Ireland’s sovereignty has been removed. The greatest joy is that the Greens have been totally stuffed, losing all their six seats. It's funny how it works that way. They do alright until they get a bit of power – then people realise how absolutely crap they are, and they never get another look in.



As for the Labour Party well I’ve always voted Labour in any country I’ve lived in and I know and like Eamonn Gilmore since we were both involved in the Union of Students in Ireland in the 70’s. However their economic policy has not moved much beyond the “increase taxes to eliminate poverty era.”


We'll always have Riverdance!


Lack of democratic accountability means the same austerity measures will still be imposed, exactly as they are across the euro zone. The impotence of Ireland to influence its own future will lead to bitterness and alienation. This in turn will lead to continuing dishonesty and delusion among a population for whom the “stroke” is a National Religion – this is the only country where a €78 million Euro lottery winner was found to be on benefits and working, claiming “Single Mother’s Allowance” when with a partner and having a holiday home in Turkey and was feted as a “character.” This is a country with the same population as Greater Manchester which still supports 340 Quangos full of self important, self serving popinjays getting in the way of reality. This is a country which when it became wealthy spent its money on buying itself in a huge property bubble.


You can't go wrong with land - sure they are not making any more of it!

But let us consider the nature of the Bailout and the preceding speculative Bubble and the issue of Ireland’s default becomes a “when”, not an “if.” Before the property bubble Ireland had the highest level of home ownership in the EU, at 62% way ahead of Germany, France and the Netherlands. Indeed the nearest is its near neighbour the U.K. where the “love of property” has really really been a “love of inflation.” So where does this leave property values in the short term as we enter a low inflation or possibly deflationary scenario? In the UK when residential property crashed in 1990 the average house price was 11 times average earnings. When reality hit Ireland in 2007 the average house price was an astounding 23 times average earnings. There are estimated to be 230,000 unsold new homes of which 110,000 are “holiday” homes. Add to the zombie estates, the zombie hotels built for tax breaks and without customers and the zombie developments then there are so many walking dead in the Irish property world that nobody can reliably predict future asset values or ascertain the reality of security behind current borrowings.



The Irish Independent reports today that there are 44,508 mortgages more than 3 months in arrears totalling €8.6 Bn, making each non-performing mortgage worth around € 193,000. Take the € 80 Bn Bailout Ireland has received. Ireland has a labour force of 2.2 million of which around 430,000 are currently claiming unemployment benefit of some sort. Abstract also the estimated 300,000 Public Sector workers this leaves a generous 1,470,000 workers (including those working in zombie hotels) in the wealth producing sectors of the economy. So the € 80 Bn Bailout equates to roundly € 55,000 for every productive worker. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.


Fecked!

Of course the election is not all bad news - but at least we don't have to look at Cowen any more ... until he turns up again with a nice little earner, courtesy of the "colleagues". The inevitable default in the next two years will alienate a whole generation. The puppets may have changed but the same puppet master is still pulling the strings. Congratulations to Jean Claude Trichet of the European Central Bank on his election win. IMF/ECB still rules! Simples!



For an insight into the high quality leadership which has brought Ireland to such a happy place see;

Bertie Ahern and poverty in Ireland;

http://daithaic.blogspot.com/2007/12/bertie-ahern-and-poverty-in-ireland.html

The Naked Taoiseach

http://daithaic.blogspot.com/2009/03/naked-taoiseach.html

A terrible default is born

Congratulations to Ireland on electing a new puppet Government. The election will not reduce the interest rate on its €80bn bailout by a quarter of a percentage point; it will not diminish the burden of the deficit by so much as an old Irish Punt (the pre-euro currency which rhymed with Bank Manager). It will hang around the necks of the Irish for decades, and rest upon the shoulders of their children and their children’s children. If Gaddafi Adams is the answer then what is the question? The HUGE mistake was to guarantee not just deposits but ALL the liabilities of Irish Banks. The Hedge Fund Bondholders have been in LMAO mode ever since. Alas I had anticipated years ago that a monetary policy designed for Germany and France would make the PIGS (Portugal, Ireland, Greece, Spain) squeal and so it has come to pass;

http://daithaic.blogspot.com/2007/09/euro-opportunity-or-threat-for-britain.html



Welcome to Dublin!


Fine Gael have been swept to power on the back of a promise to renegotiate the terms of Ireland’s €80bn bailout by the European Union and International Monetary Fund. But Enda Kenny (a leader so impressive his own party tried to give him the heave 8 months ago) like all the other “believe my promises" Irish Politicos has no real power, Ireland’s sovereignty has been removed. The greatest joy is that the Greens have been totally stuffed, losing all their six seats. It's funny how it works that way. They do alright until they get a bit of power – then people realise how absolutely crap they are, and they never get another look in.



As for the Labour Party well I’ve always voted Labour in any country I’ve lived in and I know and like Eamonn Gilmore since we were both involved in the Union of Students in Ireland in the 70’s. However their economic policy has not moved much beyond the “increase taxes to eliminate poverty era.”


We'll always have Riverdance!


Lack of democratic accountability means the same austerity measures will still be imposed, exactly as they are across the euro zone. The impotence of Ireland to influence its own future will lead to bitterness and alienation. This in turn will lead to continuing dishonesty and delusion among a population for whom the “stroke” is a National Religion – this is the only country where a €78 million Euro lottery winner was found to be on benefits and working, claiming “Single Mother’s Allowance” when with a partner and having a holiday home in Turkey and was feted as a “character.” This is a country with the same population as Greater Manchester which still supports 340 Quangos full of self important, self serving popinjays getting in the way of reality. This is a country which when it became wealthy spent its money on buying itself in a huge property bubble.


You can't go wrong with land - sure they are not making any more of it!

But let us consider the nature of the Bailout and the preceding speculative Bubble and the issue of Ireland’s default becomes a “when”, not an “if.” Before the property bubble Ireland had the highest level of home ownership in the EU, at 62% way ahead of Germany, France and the Netherlands. Indeed the nearest is its near neighbour the U.K. where the “love of property” has really really been a “love of inflation.” So where does this leave property values in the short term as we enter a low inflation or possibly deflationary scenario? In the UK when residential property crashed in 1990 the average house price was 11 times average earnings. When reality hit Ireland in 2007 the average house price was an astounding 23 times average earnings. There are estimated to be 230,000 unsold new homes of which 110,000 are “holiday” homes. Add to the zombie estates, the zombie hotels built for tax breaks and without customers and the zombie developments then there are so many walking dead in the Irish property world that nobody can reliably predict future asset values or ascertain the reality of security behind current borrowings.



The Irish Independent reports today that there are 44,508 mortgages more than 3 months in arrears totalling €8.6 Bn, making each non-performing mortgage worth around € 193,000. Take the € 80 Bn Bailout Ireland has received. Ireland has a labour force of 2.2 million of which around 430,000 are currently claiming unemployment benefit of some sort. Abstract also the estimated 300,000 Public Sector workers this leaves a generous 1,470,000 workers (including those working in zombie hotels) in the wealth producing sectors of the economy. So the € 80 Bn Bailout equates to roundly € 55,000 for every productive worker. Add to this annual interest servicing costs of € 4,960 per annum and you get the scale of the problem, Ireland’s public and private debt is simply unsustainable. Most reconstructions, Bankruptcy and liquidations, involve substantial debt reduction, a write off of debt before you begin a fresh start. Ireland is in unrealistic denial about being able to service its Public and private debt making the hard stop of debt default inevitable sooner rather than later.


Fecked!

Of course the election is not all bad news - but at least we don't have to look at Cowen any more ... until he turns up again with a nice little earner, courtesy of the "colleagues". The inevitable default in the next two years will alienate a whole generation. The puppets may have changed but the same puppet master is still pulling the strings. Congratulations to Jean Claude Trichet of the European Central Bank on his election win. IMF/ECB still rules! Simples!



For an insight into the high quality leadership which has brought Ireland to such a happy place see;

Bertie Ahern and poverty in Ireland;

http://daithaic.blogspot.com/2007/12/bertie-ahern-and-poverty-in-ireland.html

The Naked Taoiseach

http://daithaic.blogspot.com/2009/03/naked-taoiseach.html