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When Irish Eyes Are Crying

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Re: When Irish Eyes Are Crying

#71

Post by ebiester »

yummyfajitas wrote: post #33
ebiester wrote: post #27

Earlier quoted context omitted.

On the other hand... for the equivalent square feet in Tucson, my rent went up 50% over a decade for the same square footage. When you see your rent go up so drastically, while everyone is getting low interest rate mortgages, you start to question your "fiscal responsibility." If I had bought in 2006, I couldn't have sold my property today. However, we didn't know where the "new normal" would even out. People took on…

People took on these home loans, in most cases, because of the fear of rent increasing past their ability to pay. This is one of the most retarded ideas I've ever heard. Renting: a small, liquid, short duration, unleveraged short position. Owning: a large, illiquid, long duration, highly leveraged long position. So basically, to follow a short term trend, people decided to tie up a large chunk of their life savings i…

I forgot to follow this with: The problem with 2006 is not only that the property value is diminished, making a property sale impossible, but it is combined with a recession. If you could afford it before, you can't after you lose your job, at least not past your savings. (I know people out of work for over 9 months.)

Re: When Irish Eyes Are Crying

#72

Post by barrkel »

greenmachine wrote: post #5

As someone currently living in Ireland, I found the subtitle of this article particularly appropriate: "Where's the rage?". The Irish government bankrupted the country many times over by putting the debts of the banks on the backs of the people. But, unlike France, for example, where people have taken to the streets and brought the country to a halt to be heard, in Ireland there is nothing like the level of activism…

Ireland is the old sow that eats her farrow. It's no new thing for the old cronies to eat, in advance, the productivity of the younger generation. They'll sell off the country's future to protect what they have today. The only way around it is to leave; there will be no tolerance of a revolution.

Re: When Irish Eyes Are Crying

#73

Post by yequalsx »

yummyfajitas wrote: post #53
yequalsx wrote: post #39

Earlier quoted context omitted.

I guess it's fine to put a lot of blame on people who bought houses they ended up not being able to afford. However, there were fraudulant practices by mortgage companies. Banks have more responsibility for the mess because they are the experts (allegedly) at assessing risk. They are the ones that got ratings agencies to give high scores to the mortgage backed securities. They are the ones in a position to wreck the…

They are the ones that got ratings agencies to give high scores to the mortgage backed securities. And that's an issue between them and the people/institutions they sold those securities to. It does not in any way absolve individuals for making dumb bets, particularly when those individuals often lied on their loan applications. The housing bubble simply could not have occurred without financially illiterate people m…

"The housing bubble simply could not have occurred without financially illiterate people making bets they didn't understand in the hopes of getting rich quick."

A financially illiterate person who makes a bad bet does so with someone lending them money. In the case of the mortgage market it is a financially literate person giving them money. It's not mere convenience to place greater blame with (investment) banks.

Re: When Irish Eyes Are Crying

#74

Post by krakensden »

abrenzel wrote: post #60
yummyfajitas wrote: post #53

Earlier quoted context omitted.

They are the ones that got ratings agencies to give high scores to the mortgage backed securities. And that's an issue between them and the people/institutions they sold those securities to. It does not in any way absolve individuals for making dumb bets, particularly when those individuals often lied on their loan applications. The housing bubble simply could not have occurred without financially illiterate people m…

Spot on. The whole "Fraudclosure" thing is a bit of a red herring. Yes, banks should be made to pay for their negligence in complying with basic mortgage laws, but does their negligence change the fact that the occupants of those homes have not and cannot pay their mortgages? The mortgages are delinquent, no matter who the actual owner of the note is. All the controversy has done is slow down a process that will even…

I thought JP Morgan came out relatively unscathed from the crisis, weren't they the one bank to not need TARP funds?

Re: When Irish Eyes Are Crying

#75

Post by bhoung »

j2d2j2d2 wrote: post #11
6ren wrote: post #10

Australia also has had a long, rolling property boom, with bank lending behind it all. It didn't pop when expected because our economy was propped up by mineral/metal prices, due to China's demand and surprisingly little supply from other countries. Both may change.

It still has a bubble which hasn't popped. Australia is def a nation to watch.

Crossed my mind to ask if anyone saw any parallels with Australia. Glad to see someone mention it.

My rough interpretation of the article is that cheap labour from Poland distorted the Irish economy, and the banking contagion resulted in loans to the Polish who couldn't afford the loans, and subsequently disappeared, especially once the whole economy went sour.

An important difference to Ireland's story is that the people who make up Australia's cheap imported labour face greater restrictions in entering the country as they are, with the exception of New Zealanders who are have the same living standards as Australians, international students (and possibly people on working holiday visas) who, to my understanding, are required to demonstrate sufficient funds to get by. Staying on after graduation of whatever course is not guaranteed and has become more difficult post a recent policy change. Australia runs a points system in issuing residency visas and has just cut the number occupations/courses which receive points.

My feeling is that the same expectations fueled bubble has arisen here (I'm in Melb) but has been sustained by the resilient resources dependent economy as well as the capital inflows from those who see Australia as an attractive place to invest and/or also live/have a holiday home.

"real-estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations."

Although the factors driving the housing bubble in Australia are different from those in Ireland, if we concede there is a bubble in Australia, and we listen to economics professor Morgan Kelly, we're due for a crash.

A couple counterpoints to the above: China's demand for resources will probably span another two or three decades, and also Australia's financial lending practices are not and haven't been as lax as those of Ireland or the US.

Re: When Irish Eyes Are Crying

#76

Post by bsandbox »

fdghjkh wrote: post #51
greenmachine wrote: post #5

As someone currently living in Ireland, I found the subtitle of this article particularly appropriate: "Where's the rage?". The Irish government bankrupted the country many times over by putting the debts of the banks on the backs of the people. But, unlike France, for example, where people have taken to the streets and brought the country to a halt to be heard, in Ireland there is nothing like the level of activism…

Best reply I heard was an interview with a new graduate. "We will just do what we have always done when the government fucks-up - we emigrate!"

In a nutshell, that's it. People have a sense of resignation on the whole thing. There is very little prospect of things improving any time soon. The choices would appear to be a) adjust to a lower standard of living, or b) get out.

Re: When Irish Eyes Are Crying

#77

Post by bsandbox »

duke_sam wrote: post #26

The bank bailouts made very little sense, the biggest toxic bank, Anglo Irish Bank, was not a retail bank. They specialised in property financing. Letting them go under would not have resulted in the Irish Government having to cover huge amounts of deposits. The current majority party (Fianna Fail) has a history of connections to property developers and this connection is what a lot of people though spurred the savin…

That was my general perspective too.. ie. that Anglo was the biggest source of the problem. So I was surprised to read this line:

"In October 2008, the Irish Independent published a list of the five biggest real-estate deals in each of the past three years. A.I.B. lent the money for 6 of the 15, Anglo Irish for just 1, as a co-lender with A.I.B."

Clearly the bank guarantee was a disastrous decision, and in hindsight could have been handled very differently. But at the time, as Lehman and AIG and Fannie and Freddie were in chaos, it didn't seem all that outrageous.

Re: When Irish Eyes Are Crying

#78

Post by ebiester »

protomyth wrote: post #54
ebiester wrote: post #27

Earlier quoted context omitted.

On the other hand... for the equivalent square feet in Tucson, my rent went up 50% over a decade for the same square footage. When you see your rent go up so drastically, while everyone is getting low interest rate mortgages, you start to question your "fiscal responsibility." If I had bought in 2006, I couldn't have sold my property today. However, we didn't know where the "new normal" would even out. People took on…

Don't forget the US has tax deductions for home buyers (interest), but nothing for renters.

Also a good point, but that was constant pre and post bubble.

Re: When Irish Eyes Are Crying

#79

Post by protomyth »

ebiester wrote: post #78
protomyth wrote: post #54

Earlier quoted context omitted.

Don't forget the US has tax deductions for home buyers (interest), but nothing for renters.

Also a good point, but that was constant pre and post bubble.

Yeah, but it was another encouragement for people to buy homes when they probably shouldn't have.

Re: When Irish Eyes Are Crying

#80

Post by vdm »

Padraig wrote: post #47
fdghjkh wrote: post #45

Earlier quoted context omitted.

There's a great book written by a civil servant in Ireland's foreign ministry in the 80s. He said he had two maps on his wall, one of the eastern bloc enemy and a bigger one of his minister's constituency - a crisis (eg a pothole) in the constituency was the priority.

Ha! That doesn't surprise me at all. What's the book called? There is an appetite to reform this stuff now, but it's hard to imagine the winners of the game when played by those rules deciding to change it dramatically.

'An Accidental Diplomat'? http://www.amazon.co.uk/dp/1902602390
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