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I disagree. Failure to keep public spending in check is what has us where we are. In the good times we were up around 8-10% annual public spending growth. Ireland has no future if it looks to match tax levels of UK or Germany - we can only thrive in low rate economy as foreign investment with dry up if we raise taxes.Quote:
Originally Posted by Macy
What public spending though? Has infrastructure improved? Has education? There's absolutely no way you can say that public spending has been excessive. Certainly not on any of the basic services.Quote:
Originally Posted by pete
I think the issue is that we did spend lots of money but not on the right things and did not get value for money.
EBS Results
I don't know if their "development loans" are any different than the banks but that seems a very high write-off percentage. Anything like those numbers from AIB & BOI would surely bankrupt the country?Quote:
EBS building society has announced the resignation of its chairman Mark Moran and finance director Alan Merriman after the lender posted an annual loss of 38.2 million for 2008.
The loss was incurred after the building society took a bad debt charge of 110 million, which included 69 million on the lenders 512 million property development loan book. The write-off represented 13.5 per cent of the development loans and the building society anticipates further losses on these loans this year.
It's the over reliance on indirect taxes that has us where we are. If we'd widened bands instead of cutting rates, and put more away for this rainy day we would be in a much better position. Scheme's like the SSIA's, which had to be implemented due to ECB pressure because of inflationary direct tax cuts, show that the policy was wrong from the get go.Quote:
Originally Posted by pete
Yes, there was obviously wasteful spending and yes obviously things could be done more efficiently, but our spending isn't and never was out of line with other european countries. It was our bang for our buck, and that isn't totally down to wages - many areas of waste are down to Government decisions (evoting and decentralisation are only tips of the iceberg).
We can't possibly compete on cost with eastern european and asian countries.
EBS entered the commercial development market late, so has been stung more.Quote:
Originally Posted by pete
Interesting response and contribution to whether we should cut or increase taxes. I agree that you should not decrease taxes in a boom and then increase them in a recession which we appear like we are going to do. As someone said its like putting on the brakes going up a hill and pushing down on the accelerator going down a hill
http://www.davidmcwilliams.ie/2009/0...ession-of-2010
Once this is all done and dusted I would expect Irish property development loan write offs well in excess of 50%. Thats probably a best case scenario.Quote:
Originally Posted by pete
To show this isn't just scaremongering or hyperbole, one of the Sunday papers asked a panel of experts to anonymously value the Jury's and Irish Glass Bottling sites (which sold for over 300 and 400m respectively). Consensus current valuation was 80m for the former and 100m for the latter, but even this was caveated as being optomistic as with banks closed to development business, nobody could get a loan to buy either site.
FYI Pete, AIB have property development loans circa 20-25bn and BOI 12-15bn. So not enough to bankrupt the country (on its own), but enough to mean another bailout is inevitable (a la US and UK who are on their 2nd and 3rd round of bailouts).
At this stage, consideration really should be given to the formation of a new system of "good" banks.
Look, it's an over-budget development, with builders and consultants going back to the pump not once but twice! Such a rare thing in Ireland.Quote:
Originally Posted by NeilMcD
What you're saying is economically correct but there's no way that it could ever have happened politically. The public budget had a surplus of 5 billion or so every year during the boom and the government took a lot of stick for not spending it. There's no way they would have been allowed to maintain a surplus of 10 to 15 billion.Quote:
Originally Posted by NeilMcD
Democracy doesn't guarantee that the public gets what's right, it only guarantees that the public gets what it asks for.
I know but doesn't Anglo have something like 70 billion? Lets just say 100 billion total. Could this country raise 50 billion in loans? Bare in mind that does not include mortgage & other loan defaults.Quote:
Originally Posted by OneRedArmy
Remember that banks make profits on performing loans and have a capital buffer as well.Quote:
Originally Posted by pete
But your core point is correct, it will put immense strain on the public finances, which are already creaking.
Another black mark against the Government for allowing banks individually to take on excessive concentrated risk and the Irish banking sector as a whole to be much too big and too highly correlated.
Surely, and especially given their share prices, it's nationalisation that's inevitable. From the very start, the Governments been peeing on the fire instead of getting out the fire hose...Quote:
Originally Posted by OneRedArmy
Nationalization of the existing banks is only half the solution. The Government need to work out how banking is going to work going forward. Since the Swedish model worked before (with no long-term cost to the nation, yes, that is correct, no cost!) I think we should follow that.Quote:
Originally Posted by Macy
This involved nationalising all the bad banks, firing the senior management and trying to sell the toxic assets over time. Meanwhile, the performing assets (loans) and liabilities (deposits) were transferred to newly set-up "good" banks. Crucially, the good banks were run by a new management team and subject to enhanced supervision.
I think ICTU have suggested this in their play. Not saying the plan is the perfect plan but it does have the Swedish model as the bed rock to its way forward.
I wouldn't disagree, but first the must accept that Nationalisation is inevitable and just get on with that, and on to the longer term solutions. Unfortunately there is no indication they've spotted their tinkering and no upside guarentee aren't working, and they're happy for the same people to be in charge.Quote:
Originally Posted by OneRedArmy
Aye, ICTU have been quite open about it being the Swedish model, with a twist of Danish with flexisecurity.Quote:
Originally Posted by NeilMcD
I think the government are delaying making decision on Banking restructuring until last possible moment. They might be waiting to see how it works out for other countries. It is a difficult decision because if they jump too soon & make the wrong one it will make matters worse. They also have the problem of not acting...
ORA.....You know more about this than me but I think the difference between now and the 90s is our banks here have bought bonds of which some are from the subprime in the states, where as the Norics pretty much lent to themselves during the 90s, and certainly wern't exposed to the extent our banks are now. i.e We couldn't give the toxic assets away! Therefore, should we not just write the lot down over the next three-five years and start again?? It is going to cost us bigstyle all ends up, lets get on with it.
I am open to correction on this but I don't think Irish banks have much if any exposure to the sub prime junk packages from the US. Irish bank loses are Irish loan loses.Quote:
Originally Posted by Fr Damo
The Nordic countries experience was almost identical to Ireland, the main difference was they had their own currency (which has positives and negatives). Irish banks actually didn't invest much in US subprime, most assets of the main Irish players would be overwhemingly Ireland and UK.Quote:
Originally Posted by Fr Damo
In terms of writing the assets off, nationalization would effectively make this irrelevant. But that is not to say we shouldn't over time seek to recover the most we can from each asset. So whilst property loans are vastly over-valued, they certainly aren't worthless, particularly in the medium-long term.
Thanks for the enlightenment, but they still should be writing down at a more realistc level, (Did AIB write off 1.5% of it's loan book?) as I know our company has increased it's bad debt provession from about 5% to 10% of debtors and we are fairly sure we will get the other 90% of debt back. AIB seem to think that the other 98% of their book is safe. Aint going to happen, and that's why the markets reckon they are all but finished as PLCs, that is to say, won't survive without Government intervention.