Ireland on the brink (?)

[financeguy]

In this thread: http://www.u2interference.com/forums/f199/iceland-on-the-brink-190058-2.html , we discussed the Icelandic financial and economic crisis, and I predicted that Ireland would be the next domino to fall (in Western Europe, although arguably the UK has already 'fallen' given its bailout for major banks announced by Brown and Darling recently)

In recent days and weeks, I have heard and read a number of things which give me cause for significant concern.

In the next few weeks and months, I predict the following:


(1) A change of government in Ireland, but without a general election. Possibly, a national government.

(2) Several resignations of significant public figures

(3) Government financial backing for major banks, possibly involving government taking equity stakes (as has already happened in the UK and US)


This is all speculation at this juncture, but unfortunately I am usually right about this kind of thing.

If I am correct, then at a macro level, this will have happened largely because of the Greenspan-era liquidity splurge.

As Peter Thiel of Clarium Capital put it back in '06:

We are living in a world distorted by the biggest financial bubble ever seen.....there has to be a deleveraging of the world's financial system.

 

[financeguy]

Ireland is fecked, the bad debts of one bad bank are easily in and of themselves enough to cause a default on the country's sovereign debt, never mind our spiralling unemployment rate and collapsing tax take.


Government to nationalise Anglo Irish Bank | Ireland.com


Anglo Irish Bank nationalised | Business | guardian.co.uk

 

[anitram]

How has your real estate market been the last 6-12 months?

 

[financeguy]

How has your real estate market been the last 6-12 months?

Down 18% last year

Business World, live news from Ireland, plus Irish archive, lists, companies information

but this probably underestimates the decline because for some areas there is no market. Nothing is selling. Level of transactions is probably down 80% from peak.

All large real estate developers are technically insolvent. I'm not aware of a single one that isn't.

The two largest banks are probably still solvent. For now.

 

[A stor]

I feel for Ireland. Things are just as bad, on this side of the pond, if not worst. Lots of folks, myself included, have lost their jobs. And their homes are in foreclosure. Luckily, my house is payed for. Credit, especially for small business, is difficult to obtain.

 

[financeguy]

Things are getting hairy here. A lot of careers and reputations have been ruined.

Emerging from the meeting, shaking and tearful, the widow was as confused as when she arrived - Financial crisis - Independent.ie

By Carissa Casey


Saturday January 17 2009

"Fellow shareholders, in case you didn't know, the patient is dead. Twas announced last night by the minister," began Donal O'Callaghan, just one of the many hundreds of Anglo Irish shareholders crammed into the Mansion House in Dublin yesterday.

"This is the wake. Now the reading of the will comes later when the assessor announces how much we will get."

They came armed with umbrellas and woolly scarves, newspapers tucked securely underarm, shocked, confused or downright angry, sometimes all three.

"I'm a pensioner. I have a son on disability. There was a fund set up by Bloxham stockbrokers to provide me with an income. I was due to be paid a dividend at the end of January. As far as I know my shares are gone. I have a very, very small widow's pension. I couldn't possibly live on it."

She had asked three different people about her shares but no one seemed to have any answers.

 

[Salome]

Ireland did so well to get to where they are
but in the end it proved to be too 1 dimensional
low wages can't compete anymore with the likes of China
and being strong in the financial market ......

I wonder how the new vote on Europe will end

 

[financeguy]

Ireland did so well to get to where they are
but in the end it proved to be too 1 dimensional
low wages can't compete anymore with the likes of China
and being strong in the financial market ......

I wonder how the new vote on Europe will end

I, for one, welcome our new IMF overlords.

 

[A_Wanderer]

Are you rounding up others to toil in the underground sugar caves?

 

[financeguy]

(in Western Europe, although arguably the UK has already 'fallen' given its bailout for major banks announced by Brown and Darling recently)

The UK is fecked too.

Labour stakes its reputation on second gamble | Politics | The Guardian

Privately, something close to desperation is starting to develop inside government. After watching the slide in bank shares on Friday, one cabinet minister did not altogether joke when he said: "The banks are fucked, we're fucked, the country's fucked."

Speaking at a Fabian Society gathering at the weekend, Lord Mandelson was typically and disarmingly frank. "I'm not going to say to you I think we've now at least reached a set of measures and actions that almost for sure are going to work."

RBS suffers biggest loss in UK history - Telegraph



One of the major UK banks lent £2.5b to a Russian oligarch.

I think that tells us everything we need to know about their risk management.

 

[vaz02]

Are we heading for Barter Britain ?

 

[Kieran McConville]

one cabinet minister did not altogether joke when he said: "The banks are fucked, we're fucked, the country's fucked."

And there you have a slogan that any party would be happy to take to the next election.

 

[vaz02]

I cant wait to return to Tory boom and boost

 

[financeguy]

I don't know what is going to happen.

 

[pgv]

I cant wait to return to Tory boom and boost

Don't you even joke about us having a Tory anything ...

 

[financeguy]

Labour always mess up the economy and it is left to the Conservatives to sort it out. I think in around 4 years' time Britain will be in an ok position.

Ireland I don't know what is going to happen.

 

[pgv]

Perhaps if everything hadn't been sold off and privatised back in the day we wouldn't have fallen so hard now... oh, and who did all of that? Thatcher.
Our current economic failings have nothing to do with the Labour government.

 

[financeguy]

Perhaps if everything hadn't been sold off and privatised back in the day we wouldn't have fallen so hard now... oh, and who did all of that? Thatcher.
Our current economic failings have nothing to do with the Labour government.

I can't believe how anyone can say that with a straight face. New Labour inherited an economy in a pretty good state back in 1997. If you read Jeff Randall and Ambrose Evans-Pritchard they have been warning of the debt bubble for years now.

Even New Labourite Will Hutton admits the situation is dire.

 

[pgv]

The economy was in a brilliant state when Blair came into power, because it was experiencing the 'boom' of Capitalism. Now we're experiencing the crash. It hasn't worked.
However I'm no fan of New Labour

 

[Knuckle]

I don't know what is going to happen.

World history would suggest that your countrymen will start to make any working and lower class immigrants feel most unwelcome. The mob is already muttering over their pints in the pubs.

 

[financeguy]

World history would suggest that your countrymen will start to make any working and lower class immigrants feel most unwelcome. The mob is already muttering over their pints in the pubs.

You are right to point to this danger. I haven't seen much evidence of outright racism thus far but unfortunately this is something to be concerned about going forward.

 

[AliEnvy]

Would all the unrest ultimately lead to acceptance of the Euro?

 

[financeguy]

Would all the unrest ultimately lead to acceptance of the Euro?

Ireland is already in the Euro. If your question refers to the UK, for that country to enter the eurozone would be idiotic, in my opinion, as I said before. Neither would UK electorate accept it, in my opinion.

 

[AliEnvy]

Ireland is already in the Euro. If your question refers to the UK, for that country to enter the eurozone would be idiotic, in my opinion, as I said before. Neither would UK electorate accept it, in my opinion.

Yep, was referring to UK. So you don't think the situation would deteriorate to the point of acceptance?

 

[financeguy]

Yep, was referring to UK. So you don't think the situation would deteriorate to the point of acceptance?

I have seen this point made before, but with respect, I don't quite understand the logic here. Where is the benefit? They have a freely floating currency so they can devalue any time they want, hence making their exports more competitive and helping recovery. Indeed, they have already done this.

 

[Knuckle]

If, God help us, a depression comes, I fear that we (speaking for modern Americans like myself) are so ill-equipped to handle any genuine collapse of the everyday life we've grown up in. Most Americans (and I expect western Europeans) haven't known much outside of a society where you can have anything you want almost the moment you think of it. I honestly can't remember the last time I was hungry. It's a very unique time and place in world history when even the most common members of society have everything they need on a daily basis, and consider it struggling to afford a giant plasma TV or intercontinental vacation. Pray we can stay this flabby.

 

[financeguy]

If, God help us, a depression comes, I fear that we (speaking for modern Americans like myself) are so ill-equipped to handle any genuine collapse of the everyday life we've grown up in. Most Americans (and I expect western Europeans) haven't known much outside of a society where you can have anything you want almost the moment you think of it. I honestly can't remember the last time I was hungry. It's a very unique time and place in world history when even the most common members of society have everything they need on a daily basis, and consider it struggling to afford a giant plasma TV or intercontinental vacation. Pray we can stay this flabby.

True enough. The thing I'm concerned about presently is the bond markets for government debt. I'm going to be flagging this in future posts.

Edit: I think I could live on very little, if I set my mind to it. Plenty of people live on very little without having a choice in the matter, so I suppose it's a matter of perspective.

 

[AliEnvy]

True enough. The thing I'm concerned about presently is the bond markets for government debt. I'm going to be flagging this in future posts.

Me too, which is why I worry for all major currencies and wait to see who's left standing (if anyone) and what types of further integration will happen out of desperation.

 

[Knuckle]

True enough. The thing I'm concerned about presently is the bond markets for government debt. I'm going to be flagging this in future posts.

You flag that bond market, I'm stocking up on tins of sardines and distilled water. My underground bunker is almost finished.

 

[financeguy]

Me too, which is why I worry for all major currencies and wait to see who's left standing (if anyone) and what types of further integration will happen out of desperation.

Yes I see what you're getting at now.

You flag that bond market, I'm stocking up on tins of sardines and distilled water. My underground bunker is almost finished.

Guns and butter, as they say...