North Korea Increases Aid to Russia, Mos... Tue Nov 19, 2024 12:29 | Marko Marjanovi?
Trump Assembles a War Cabinet Sat Nov 16, 2024 10:29 | Marko Marjanovi?
Slavgrinder Ramps Up Into Overdrive Tue Nov 12, 2024 10:29 | Marko Marjanovi?
?Existential? Culling to Continue on Com... Mon Nov 11, 2024 10:28 | Marko Marjanovi?
US to Deploy Military Contractors to Ukr... Sun Nov 10, 2024 02:37 | Field Empty Anti-Empire >>
Promoting Human Rights in IrelandHuman Rights in Ireland >>
Has the Royal College of Psychiatrists Killed the Assisted Suicide Bill? Wed May 14, 2025 17:40 | Will Jones Kim Leadbeater's assisted suicide bill has been described by MPs as a "farce", an "embarrassment" and "beyond a joke". But last night's damning statement from the Royal College of Psychiatrists may be the fatal blow.
The post Has the Royal College of Psychiatrists Killed the Assisted Suicide Bill? appeared first on The Daily Sceptic.
The Hidden Mechanisms of Unfreedom Wed May 14, 2025 15:41 | Alex Klaushofer When politicians claim the public supports extreme measures like banning meat or digital ID you can be sure that behind it is a Citizens' Assembly or other dubious method for manufacturing 'consent', says Alex Klaushofer.
The post The Hidden Mechanisms of Unfreedom appeared first on The Daily Sceptic.
Saving Greenery From the Greens Wed May 14, 2025 13:00 | Sean Walsh Greens have hijacked environmental concern and turned it into a branch of radical Leftist politics. But in truth conservatism cares about conserving our home. Conservatives need to reclaim green politics, says Sean Walsh.
The post Saving Greenery From the Greens appeared first on The Daily Sceptic.
Ed Miliband Set to Lose Seat to Reform at Next Election in Labour Wipeout Wed May 14, 2025 11:10 | Will Jones Ed Miliband is set to lose his seat to Reform at the next election in a Labour wipeout, the most comprehensive analysis of this month?s?local election results?has found.
The post Ed Miliband Set to Lose Seat to Reform at Next Election in Labour Wipeout appeared first on The Daily Sceptic.
Thirty-Five People Died the Same Day as Their Covid Shot ? But Authorities Did Not Investigate Wed May 14, 2025 09:00 | Rebekah Barnett 35 people died the same day as their Covid shot but authorities in Australia failed to investigate, and then claimed the cases had been "carefully reviewed", according to FOIs obtained by Rebekah Barnett.
The post Thirty-Five People Died the Same Day as Their Covid Shot ? But Authorities Did Not Investigate appeared first on The Daily Sceptic. Lockdown Skeptics >>
Voltaire, international edition
Will intergovernmental institutions withstand the end of the "American Empire"?,... Sat Apr 05, 2025 07:15 | en
Voltaire, International Newsletter N?127 Sat Apr 05, 2025 06:38 | en
Disintegration of Western democracy begins in France Sat Apr 05, 2025 06:00 | en
Voltaire, International Newsletter N?126 Fri Mar 28, 2025 11:39 | en
The International Conference on Combating Anti-Semitism by Amichai Chikli and Na... Fri Mar 28, 2025 11:31 | en Voltaire Network >>
|
Morgan Kelly predicts further fall in house prices as wave of mortgage defaults are next
national |
miscellaneous |
other press
Tuesday November 09, 2010 13:30 by T

ECB keeping Ireland solvent for now
In the latest piece in Monday's Irish Times from Prof. Morgan Kelly who at the height of the boom in 2007 said Anglo had lent over €100 billion and would eventually go bust, now says the country is facing a wave of mortgage defaults and that the country is effectively gone bust already.
 According to Morgan Kelly, this is where our economy is headed Morgan Kelly who flagged up our bubble economy long ago and got bad press for it, has struck again this week with an article in Monday's Irish Times, saying the country is basically bust already and is being quitely kept going for the moment by the European Central Bank (ECB) who are now the main source of funding for our banks.
He was also against the bank bailout all along and says that since September when we had our last chance to get out of it, our fate has effectively been sealed. He also argues if it were not for the bank bailout our deficit would be no worse than any other country like France, and it is the cost of the bank bailout that is the real issue.
As an aside (not covered in the article), a check of the NAMA website on the publications for the first and second tranche of loans to NAMA show 30% of the loans were for property in the UK for tranche 1 and 44% for tranche 2! which all goes to show that despite the mainstream media trying to convince us all it was all caused by people being greedy buying expensive house, in fact the problem was caused by commercial property and a good slice of it abroad.
The point of this though is that Morgan in his article now says the cost for the bailout of AIB and Bank Of Ireland combined will now rise to that of Anglo because of the huge wave of mortgage defaults that will hit soon and so far this has not been counted in anywhere. As he says himself:
The next act of the crisis will rehearse the same themes of bad loans and foreign debt, only this time as tragedy rather than farce. 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.
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.
Banks have been relying on two dams to block the torrent of defaults – house prices and social stigma – but both have started to crumble alarmingly.
People are going to extraordinary lengths – not paying other bills and borrowing heavily from their parents – to meet mortgage repayments, both out of fear of losing their homes and to avoid the stigma of admitting that they are broke. In a society like ours, where a person’s moral worth is judged – by themselves as much as by others – by the car they drive and the house they own, the idea of admitting that you cannot afford your mortgage is unspeakably shameful.
That will change. The perception growing among borrowers is that while they played by the rules, the banks certainly did not, cynically persuading them into mortgages that they had no hope of affording. Facing a choice between obligations to the banks and to their families – mortgage or food – growing numbers are choosing the latter.
And as regards the situation with the country's solvency and where we are with it, he says:
The other crumbling dam against mass mortgage default is house prices. House prices are driven by the size of mortgages that banks give out. That is why, even though Irish banks face long-run funding costs of at least 8 per cent (if they could find anyone to lend to them), they are still giving out mortgages at 5 per cent, to maintain an artificial floor on house prices. Without this trickle of new mortgages, prices would collapse and mass defaults ensue.
However, once Irish banks pass under direct ECB control next year, they will be forced to stop lending in order to shrink their balance sheets back to a level that can be funded from customer deposits. With no new mortgage lending, the housing market will be driven by cash transactions, and prices will collapse accordingly.
While the current priority of Irish banks is to conceal their mortgage losses, which requires them to go easy on borrowers, their new priority will be to get the ECB’s money back by whatever means necessary. The resulting wave of foreclosures will cause prices to collapse further.
Along with mass mortgage defaults, sorting out our bill with the ECB will define the second stage of the banking crisis. For now it is easier for the ECB to drip feed funding to the Irish State and banks rather than admit publicly that we are bankrupt, and trigger a crisis that could engulf other euro-zone states......
....Ireland faced a painful choice between imposing a resolution on banks that were too big to save or becoming insolvent, and, for whatever reason, chose the latter. Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.
Full article can be read at the link below
|
View Full Comment Text
save preference
Comments (8 of 8)