Is the difference between Iceland and Ireland not R but €?

I have been reading Paul Krugman’s “The Return of Depression Economics”. It was originally written to cover problems in the Asian economies in the late nineties, but has been updated to cover the strikingly similar things that have occured everywhere in the past year. He spends a good deal of time on how small economies come under pressure. It’s interesting to note how this works, and interesting to note that Ireland has largely escaped.

As I best understand it, the mechanism behind a currency collapse in an economy runs as follows (I’ll update this if more knowledgeable people wish to correct me):

1. A country enters a growth period.
2. Investors see the potential for big gains investing in the country; a lot of foreign money flows into the country.
3. A bubble develops in the economy; either the government or a significant segment of private enterprise racks up a lot of debt denominated in foreign currency.
4. The economy begins to slow, investors get nervous, rumours of a devaluation start.
5. Hedge funds or other investors see the opportunity to make money from a devaluation in the currency. The country comes under speculative attack. Regardless of justification, a self fulfilling prophecy (or feedback mechanism) is created.

At this point the country has a Hobson’s choice. It can attempt to shore up its currency. To do so it must make it an attractive place to invest. In order to do this, it must raise its interest rates to punitive levels. This will cause the economy to contract severely, trigger fresh discussion on whether the country should devalue the currency. Eventually it finds it must devalue. Alternatively it can devalue the currency; now it will find that the foreign debts it holds are now relatively much larger when measured in its own currency. This in itself becomes a problem. There is fresh discussion on the solvency of the country. Eventually the country must call in the IMF and it ends up with massive interest rates and other punitive measures. Measures, it should be added, that the larger countries that are ultimately behind the IMF would never agree to during a recession under more or less any circumstances.

This is almost precisely what happened to Iceland; interest rates there are 17% at the moment, down from a high of 18%. It is estimated that this might ultimately cost the country something like 85% of its GDP.

I am trying to imagine an Ireland that didn’t join the Euro. It is true that a large portion of Ireland’s bank problems is down to huge loans to property developers. Presumably these loans would have been denominated in Punts in this scenario. However I fail to see how an Ireland whose economy had been running hot for the best part of two decades, well positioned between the US and Europe and running extremely free market policies avoids taking in a serious amount of hot foreign money. I also fail to see how an economy the size of Ireland could possibly have defended its currency even in a moderately healthy state, much less with the type of budget problems we are now seeing. Is the only thing standing between Ireland and Iceland the Euro? And for those on the fringes floating the suggestion Ireland leave the Euro, how would a new Punt avoid that fate?

The Euro seems completely unassailable, backed as it is by the major European economies, most notably Germany. But as a complete layman I also wonder is a similar attack — and resultant damage to the economy — possible through other means? We’ve heard a lot about credit spreads recently. Can a speculative attack be mounted through this mechanism?

Further reading:

The Return of Depression Economics
Paul Krugman blog
Report on the Icelandic collpase
Telegraph speculation on Ireland leaving the Euro
ECB on Ireland’s credit rating

  • Scaramoosh

    Kensei

    Whilst the Euro clearly softened the blow; these two more recent articles would suggest that Ireland is still in the intensive care ward;

    http://www.ft.com/cms/s/0/1bbcfb92-2bb1-11de-b806-00144feabdc0.html

    http://www.independent.ie/national-news/states-bad-bank-is-doomed-to-fail-says-builders-chief-1713453.html

  • Harry Flashman

    Missing from the list above is a very crucial factor that almost always comes into play on these occasions; corruption or at least massive bending of the rules. The problem of a ‘bubble’ shouldn’t of and in itself be fatal if the assets whose values are inflating are themselves sound.

    The asset values might revert back to the price they were three or four years earlier but that is hardly disastrous. Invariably, however, as in Japan, Asia, Ireland and I am fairly sure Iceland, one rapidly discovers as the bubble deflates that there was a whole heap of skulduggery and chicanery going on and what people thought they were buying into was not in fact there when they sought to cash in their investments. Panic ensues and as good money drives out bad so the solid, decent assets become tainted with the dross.

    Of course for those who can hold their nerve that means that some superb bargains rapidly emerge, I believe we are already entering that phase.

  • Dave

    It would have been fab if things had worked as Klugman describes in 2 – particularly the foreign investment flooding into the country. Sadly, the 1.67 trillion debt is external which means that the borrowing is internal. If external investors lose their money, too bad for them. If internal investors lose it, too bad for the country. You still have to pay every penny of that 1.67 trillion debt back, so your internal economy has to generate 10s of billions of wealth per year to meet the repayments. Good luck with that.

    Joining the Eurozone increased Ireland’s external debt from about 14% of GDP to over 900% of GDP in just under 10 years. That’s what happens when you gain unqualified access to capital markets, and are subject to a regulatory framework and monetary policies that promote over-leveraging, overheating, and over-borrowing. And, of course, you can do nothing to stop the out-of-control borrowing because you no longer have the applicable sovereignty.

    Those monetary policies created bubbles in the financial as well as the commodity markets, so property (commodity) inflation is only a small part of the 1.67 trillion debt. Most of those financial assets are equally devalued, so the actual bust easily exceeds Ireland’s total wealth. In other words, the country is bankrupt but they just don’t know it yet. Give it another year, and they will.

  • Modernist

    Dave just wondering where you got your figure of 900% from.

  • Dave

    Mod, it’s just the figure for the external debt divided by GDP. I can’t be too specific on it because GDP is rapidly falling while the external debt is rising, so it’s probably over 1000% at this point. According to Wiki, the current figure is 960.86%. Ireland’s external debt was 11 billion in 1998, so that would have been 7.46% of GDP. It’s 25.21% in Iceland, 5.11% in China, 0.00% in Liechtenstein, 2.27% in Greenland, but 220.11% Zimbabwe. So, the actual Celtic Tiger from 1993 to 1999 was virtually debt-free, but that was killed off by membership of the Eurozone. None of that rampant borrowing went to build the indigenous Irish entrepreneurial base that the actual Celtic Tiger laid the foundation for, since exports stagnated after joining the Eurozone (and are now less than the level they were at before we joined it) and are still 90% controlled by foreign-owned companies while only 1.5 billion in venture capital found its way to entrepreneurial start-ups in Ireland since 2001.

  • kensei

    Harry

    In the first instance, I think you’ll find “skullduggery” in larger economies too, but theya re more able to protect themselves. Second, it is not true in every case — otherwise sound countries can be tipped into really bad situations by investor panic. Countries can become locked into a vicious cycle. I suggest you read the book.

    Dave

    Klugman

    Oh look you have changed his name so it sounds stupid! I cannot tell you how much I despise people doing this and how little regard I hold their opinion thereafter.

    That external debt figure is very large. However, in order to fuilly understand the problem, you need to know how much is backed by assets, and what the asset composition is. I suspect this is down to the IFSC, which is small comfort.

    The key point here is that if that external debt was in Euros and Ireland was on Punts, and the Punt collapsed, then that external debt would be a hell of a lot more than 900% of GDP. It’d be thousands. And any problem would be magnified.

  • Mack

    Kensei, Dave –

    I think the external debt figure encompasses all ‘foreign’ debt, by Irish domcillied instituitions, i.e. it includes borrowings by foreign multi-national banks operating out of the ‘financial wild-west’ that is the Dublin’s IFSC.

    I also think most of that debt is denominated in the domestic currency – Euros, so a currency devalution wouldn’t neccessarirl adversely affect the agencies responsible ability to repay that debt – which incidentally is not the Irish state / taxpayer – but independent commercial entities – many of which are foreign owned.

  • kensei

    Mack

    I also think most of that debt is denominated in the domestic currency – Euros, so a currency devalution wouldn’t neccessarirl adversely affect the agencies responsible ability to repay that debt –

    Devaluation of the Euro is not an option. We’re talking about the scenario where Ireland is not in the Euro – as Iceland. Is all that debt in the Wild West likely to be Punts in this scenario? Can’t see that one, myself.

    In which case the Euro is probably saving the Republic from being Iceland II.

  • Mack

    Kensei –

    The loans to developers are denominated in Euro, but the Irish banks funded them by borrowing on the European wholesale markets (banks had an average 160% loan-to-deposit ratio, when you factor in Fractional Reserve Banking and M3 (Money supply) expanding at 35% p.a. there were huge external borrowings). Had Ireland not joined the Euro, it is possible the loans to developers would be in now devalued Punts, but the banks (the state/ taxpayer via the guarantee) would still owe huge amounts of much more expensive Euros.

    By the way, read a bit of the updated version of George Soros’ “Crash of 2008”, he reckons the Euro is huge stabilising factor. Although we don’t here it, Denmark (outside the Euro) is hurting more than Greece. You can read his outlook for 2009 @ the link below..

    http://www.turkishweekly.net/news/64217/my-outlook-for-2009-by-george-soros-.html

    In the Sindo yesterday Brendan Keenan put forward the argument that the reason you don’t here any of this is that the British media is solidly Eurosceptic and are promoting an anti-Euro agenda.

  • Mack

    Kensei – Wrote the above before seeing your reply. Imho, the external debt is a non-issue – all that matters is the states debt-to-GDP ratio and the liabilities of the guaranteed banks. I’ve no idea what the situation would be wrt to that had Ireland not joined the Euro.

  • Mack

    Brendan Keenan article : –

    http://www.independent.ie/opinion/columnists/brendan-keenan/oh-dear–devaluation-like-flares-could-make-a-comeback-1713386.html

    Oh Lord: maybe they will make a comeback too, what with TV’s Life on Mars and so on. Flared or not, there has been no shortage of pundits extolling the virtues of a falling currency.

    Mostly, they are people whose currencies are already disappearing down the rabbit hole. Which largely means sterling. It is the latest in a curious pattern in most of the UK media, which excoriates the Labour government, and particularly Prime Minister Gordon Brown, while actually supporting almost everything he does, where macro economic management is concerned.

    While Chancellor Brown was running the loosest fiscal policy in Europe, he was hailed as the master of prudence, presiding over Europe’s most successful economy. Now, with a debasement of the currency which puts Harold Wilson to shame, Mr Brown is again doing all the right things, according to many, while those benighted members of the euro area can only watch with envy.

  • Here is Krugman’s update of Ireland’s problems, and quite possibly those of many more:

    http://www.nytimes.com/2009/04/20/opinion/20krugman.html?_r=1&th;&emc;=th

  • Frustrated Democrat

    Kensei/Mack

    You are talking about nuances of how bad the economic situation is, with the EURO it is awful, without it it might be truly awful.

    The only way to turn it around is exporting, where are they coming from with the high Euro allied to high costs and wages?

  • Kensei

    FD

    You are talking about nuances of how bad the economic situation is, with the EURO it is awful, without it it might be truly awful.

    No. Without it, it is completely catastrophic. It is not a unimportant distinction.

    The only way to turn it around is exporting, where are they coming from with the high Euro allied to high costs and wages?

    Over the long term there will a correction in costs and wages. The Euro is also possibly overvalued and will drop a little with interest artes heading down. Basically, it’s the same problem everywhere.

  • Mack

    FD –

    Imports from outside the Euro are also cheaper, wrt to Sterling a weak Sterling is a net benefit to Ireland. Ireland is running an expanding balance of trade surplus at the minute.

    http://sluggerotoole.com/index.php/weblog/comments/sterlings-weakness-is-irelands-gain/

    FDI makes up 80% of the Irish economy, most of that is investment by US multi-nationals who are accessing European markets via Ireland. While a strong Euro pushes up their cost base here, it also increases their profits in Dollar terms (taxed at low Corporate tax rates in Ireland).

    Brendan Keenan covered Irish wage competitiveness in that article also

    Right now, we are having wage reductions in the private sector as the euro rises, although the driving force is the biting recession, not the currency. Yet, for at least as long as sterling remains outside, there is a crying need for some permanent process to adjust costs, including wages, up and down in line with the currency’s “real” rate against Ireland’s trading partners.

    That’s what we lost when we joined the euro. Not the delusion of regular devaluations, but the ability to keep the currency stable against those trading partners.

    I have to admire Singapore on this one. They set their dollar against just such a “basket” of currencies. But the make-up of the basket is a secret — so that speculators do not know exactly what they are betting on.

    The Irish Central Bank has a known basket, in which sterling and the dollar loom large, and helpfully continues to measure Ireland’s costs — its “real” exchange rate against it. What matters for the economy is not the cost of consumer goods, but the costs for producers. If one calls the real exchange 100 when the euro was launched in 1999, the “producers’ exchange rate” fell to a low of 92 in 2000 and is currently around 113.

    That is a swing of 21 points. Between 1995 and 1999, before the euro, the rate never varied more than six points, as the Central Bank quietly targeted the real rate.

    If we cannot adjust the currency as before, stability requires that we adjust our costs instead — with workers benefiting at times, and having to take some pain at others.

    Current events show it can be done, and it would not normally be anything so drastic. But there are no free lunches; neither in devaluation nor monetary union.

    http://www.independent.ie/opinion/columnists/brendan-keenan/oh-dear—devaluation-like-flares-could-make-a-comeback-1713386.html

  • AS Nancy

    Fair dues to LA Vecchia Signora for lifting the joke from the internet and putting it on the letters page as if one of their readers came up with it.

  • Frustrated Democrat

    Guys

    The problem is if a US corporation is looking at FDI, that is if Obama allows it to maintain it tax advantages, will they look at the UK or Ireland if they want an English speaking location.

    The only positive I can see in Ireland is the 12.5% CT, the negatives are high costs, high Euro, high wages. Both now have a plentiful supply of labour.

    It may be that the UK will cut their taxes in the budget and that benefit could be eroded.

    I would see a dfficult few years in Ireland as they attempt to climb out of the abyss.

  • Kensei

    FD

    You see them going to the UK; bias much?

  • Glencoppagagh

    “banks had an average 160% loan-to-deposit ratio”

    Mack
    Please fill me in here as there appears to be a gigantic hole in the liabilities side of their balance sheets.

  • j

    Couple of things:

    if irelands debt really is 900% of GDP this works out at around 340K net for every man woman and child in the country – fairly unrealistic I think.

    Majority of this is IFSC based and is backed with matching assets.

    In relation to 160% loan to deposit ratio – the banks take in 100 euro, borrow 60 euro from bond investors and lend out 160 euro to someone (lets say to build a house).

    Now the banks assets are

    160 euro owed to it in loan (backed by house)
    total = 160

    liabilities are

    100 owed to depositor
    60 owed to bond holder
    total = 160

    no hole there – only to the extent that the loan cannot be repaid.

    Pensions are a much bigger problem than the banks (that is not to say banks are not a biggish problem – they are but not insurmountable).

  • Mack

    Glencoppagh –

    The banks lent out more than they had on deposit. They borrowed additional funds on the European wholesale market and lent those funds out to developers. The developers then spent those funds – land acquisition, materials, equipment, wages, taxes – and much of the spend wound up on deposit (and lent out again via the Fractional Reserve system). When you consider that the loan-to-deposit ratio was 160% and that a huge proportion of the Irish deposit base was created as a result of foreign borrowings being spent you may get something of a sense for the scale of the problem.

    If the banks were prudent their loan books would be assets, but they weren’t and they can hope to recover only a smallish portion of the money lent out.

  • j

    “The only positive I can see in Ireland is the 12.5% CT, the negatives are high costs, high Euro, high wages. Both now have a plentiful supply of labour.”

    One of the effects of having a much higher GDP per capita than the UK is having higher wages. Much (though not all) down to higher productivity. Euro is also an advantage. If any of these companies moves out of Ireland it wont be UK but Poland or India they will be heading to.

    I cant see Gordon coming anywhere near 12.5% (want to bet that it will even come to 25%) as the UK finances would be decimated).

    The north is stuck with Gordans rate which is calculated to suit the city profits rather than attract any jobs to north england, scotland or northern Ireland.

  • Mack

    J – borrowings by private corporate entities do not constitute part of Ireland’s national debt – which runs at something approaching 40% of GDP. The Irish state is not responsible for the borrowings of foreign (or domestic) private corporations residing in the IFSC (or elsewhere) except for those domestic banks covered under the Irish Bank Guarantee. Total liabilities under that scheme comprise about 250% of GDP, but of course they are backed by assets many of which are not impaired. Some of which are. Bailing out the banks may well double (or at worst treble) Irelands debt-to-gdp ratio, talk of 900% ratios is pie in the sky stuff really.

  • Frustrated Democrat

    Kensei

    I didn’t make any judgement, I set out the parameters that FDI will look at.

    It will be more diffcult to compete against the UK for FDI, never mind the Eastern EU countries, than it was for the past 10 years. It doesn’t take any bias to understand that.

    I seem to remember you extolling the virtues of Ireland, the Celtic Tiger and the per capita GDP not so long ago. Don’t wear green tinted glasses now, they won’t solve Ireland’s problems.

  • Kensei

    FD

    I didn’t make any judgement, I set out the parameters that FDI will look at.

    You took a jaundiced look at what you think FDI will look at and concluded – wow! – that you’re favoured political jurisdiction would win.

    I seem to remember you extolling the virtues of Ireland, the Celtic Tiger and the per capita GDP not so long ago. Don’t wear green tinted glasses now, they won’t solve Ireland’s problems.

    I don’t: this crisis is very grave and the speed at which things have turned is truly astonishing. The UK however, is in an almost as large hole. I expect both to attract their fair share of FDI, relative to what is available, as both still many attractive elements. Who wins on a per capita basis? I’m nto sure it is an entirely relevant question.

  • Frustrated Democrat

    Kensei

    I have been in the FDI business for a long time and I know what they look for, I don’t have to guess.

    I think a lot more will go to Eastern Europe now and these islands will lose out. The biggest saviour in the short term for the UK is the low £ in the longer term who knows.

    FDI however is not the long term solution in terms of Multi Nationals, it may bring some short term benefits but a much higher percentage being locally owned has to be the long term goal both North and South.

  • Mack

    The income tax hikes in the recent budgets can’t have helped either – many (perhaps even any) more of them and Ireland’s ability to attract skilled labour from across Europe and the World maybe seriously impaired.

    High wages aren’t neccesarily a problem if you’ve got other advantages that keep companies profitable. Google have two big centres in Europe, – Dublin and Zurich. Both are in high wage countries. Will Dublin be able to compete if Zurich offers engineers from Italy, Germany, France, Spain etc higher net salaries and better public services?

  • Dave

    “Klugman

    Oh look you have changed his name so it sounds stupid! I cannot tell you how much I despise people doing this and how little regard I hold their opinion thereafter.” – Kensei

    It was a simple typo. Edit: Man playing is not tolerated, Dave.

    “That external debt figure is very large. However, in order to fuilly [sic] understand the problem, you need to know how much is backed by assets, and what the asset composition is.” – Kensei

    Thanks for that, genius. Maybe it’s backed by the only world’s only commodity and financial assets that haven’t collapsed in value, eh?

    http://www.cso.ie/releasespublications/documents/economy/current/externaldebt.pdf

    Mack, external debt is comprised of all debt owned by residents of the state, both individuals and corporate. The policy of the government is amended in accordance with EU guidelines to underwrite all debt deemed to be of systemic risk. This systemic risk is not simply to the Irish economy but also applies to the Eurozone, so it is now about protecting banks in the EU from exposure to debts to private businesses. In effect, the bulk of this external debt has become the de facto national debt.

    When, for example, a hedge fund or a pension fund operating out of the IFSC finds that its investments in shares is no longer paying a dividend (as will be kicking it about now and certainly in a year or so), it’ll also find that it cannot service its debts. If it tries to sell its devalued assets, it’ll trigger a write-down and loss. When this begins to happen, you’ll see the government underwrite these external debts too. Applying a conservative figure of 40% gives a write-down of 668 billion. Over 800 billion of the external debt is short-term loan, so these are people who are forced to release equity from their investments in the middle of a crash.

    What you actually had in Ireland since joining the Eurozone was an overdraft and not an economy, so all of that borrowed money was your economy. Borrowing money and spending it in the curious believe that that activity creates wealth and not debt is classic Keynesian muppetry. Now, of course, all of that inflow of wealth must go in reverse, as the nation tries to repay its debt. Because that wealth was not invested in wealth-creation but, rather, was a result of expansionist monetary policies that led to too much money chasing too few investments, you will find that the nation does not have the means to generate the wealth that is required to repay its debt.

  • Kensei

    FD

    I have been in the FDI business for a long time and I know what they look for, I don’t have to guess.

    Oh, please.

    The UK had comparatively high wages and a strong currency for most the past decade, yet still pulled in an admirable amount of FDI.

    I fully expect a lot of FDI to head towards lower wage economies and new opportunties. I also fully expect both the UK and Ireland to pull in substantial amounts of FDI as they both retain their own advanatges and will offer plenty of potential for growth and profit. Will it be as much as in the past? Maybe not. Will the economy be DOOOOOOMED if that is the case? Probably not.

  • Of course for those who can hold their nerve that means that some superb bargains rapidly emerge, I believe we are already entering that phase.

    You are deluding yourself; at least if you are talking about property in the UK and Ireland. It remains staggeringly high relative to incomes in historic terms and outside South Eastern England there is no shortage of dwellings anywhere on these islands. Shortage of dwellings that aren’t microscopically small plywood boxes, sure, but those are also still staggeringly overvalued.

    It’s a bit like saying there were bargains to be had in Japanese property in 1991 just because it was cheaper than it had been in 1989. We are only at the start of a long, painful, process which is being prolonged by a government terrified of trapping people in negative equity (to prevent which it effectively shuts first-time buyers out of the market).

    If you’re talking about stocks, you may have a point; p:e ratios look very nice at the moment, but negative investor sentiment and shaky corporate profits may mean we are in a bull market for some time to come. The world went through a spectacular asset price bubble between 1995 and 2007. The borrowed cash which fuelled it is now going expected to be repaid and just about every asset class except maybe precious metals could fall dramatically, as everyone realises they weren’t as rich as they thought they were.

  • Duh, obviously meant to say bear market in the last paragraph.

  • Kensei

    Dave

    Thanks for that, genius. Maybe it’s backed by the only world’s only commodity and financial assets that haven’t collapsed in value, eh?

    There is decline and there is collapsed, Dave. CDO’s have collapsed. The price is never returning to its highs. Not even close, though canny investors may make money at low prices. Oil has dropped, but not through the floor, and oil prices will rise again. Demand pressure remains,. That is true of several other asset classes, and stocks.

    No mattter how you spin it, quoting a headline debt figure without corresponding assets is sensationalism and dishonest, O Great One.

  • Glencoppagagh

    Mack
    “They borrowed additional funds on the European wholesale market and lent those funds out to developers”
    So when you use the term depsoit you are only referring to the ‘little people’s’ money. Funds borrowed from other sources are not deposits? Of course they could be in the form of CDs or maybe something more exotic but they amount to the same thing. Irish banks must have been offering more attractive rates than other Eurozone banks in order to attract them. If Ireland had not been inthe Euro, there woudl have been a currency risk or hedging cost attached to this inflow of funds.

  • Frustrated Democrat

    Kensei

    When I said I had been in the FDI business for a long time I meant it; across 3 decades to be exact (almost 4 now) and in 3 continents.

    So no, I don’t have to guess.

  • Comrade Stalin

    There has been something of a stock market rally over the past couple of days and major financial institutions are turning in results that are not as bad as everyone expected, and possibly even quite good, eg Bank of America, and Citibank; this is probably in some part due to the stimulus/quantitative easing but it’s also due to the fact that most of these banks, outside of the bad parts of their loan books, are operating profitable businesses. The margin on consumer credit (and in certainl cases on savings accounts) has widened significantly lately; insurance premiums and other things are also going up, and in parallel the banks are cutting back on their cost base.

    It’s way, way too early to say what some people have been saying – that the bust is over. The problems in the manufacturing and service industries are still in the process of bleeding through into the wider economy. I’m not personally optimistic that we have turned the corner yet. House prices will only fall if unemployment rises and tips the market over the rubicon into a freefall but we’re still far from the point where that is merely a distant possibility.

  • Mack

    Glencoppagh –

    Loan-to-deposit ratio is the ratio of the Euro loan amount lent versus the Euro amount held on deposit. It’s not simply the ‘little people’s ‘ deposits either. There is over €300bn on deposit in Ireland, much of it in Corporate / Business accounts. There wasn’t much mucking around with derivatives in Ireland.

    Irish banks must have been offering more attractive rates than other Eurozone banks in order to attract them

    No. The Irish banks borrowed from European banks (paying Euribor for the funds) in order to fund lending at a higher rate at home, the deposit base was mostly domestic.

  • kensei

    CS

    I would treat the financials of those big banks with a certain amount of scepticism . I believe they managed to somehow lose December form them:

    http://blogs.wsj.com/deals/2009/04/14/goldman-sachs-and-merrill-did-december-ever-happen/

    FD

    I do not doubt that’s where you worked, but an appeal to experience falls somewhat flat, given the amount experienced people have got wrong lately. Using your criteria the UK should have had little FDI in the past decade. That was not the case.

  • Glencoppagagh

    Mack
    I still fail to see any useful distinction between funds originating from Irish residents and funds originating from non-Irish residents whether raised in wholesale markets or not. Large Irish companies could equally well have placed funds in wholesale markets which might just as easily ended up as liabilities of non-Irish banks within the Eurozone.
    You seem to be implying that if only Irish banks had relied on plain vanilla domestic deposits all would have been well. All that happened was that Irish banks misguidedly identified lending opportunities in property which could not be fulfilled by exclusive reliance on domestic deposits. That was the problem, the source of the funds was surely irrelevant as the banks were not exposing themselves to any currency risk in the process.

  • The problems in the manufacturing and service industries are still in the process of bleeding through into the wider economy. I’m not personally optimistic that we have turned the corner yet.

    Nor am I. Everyone is ignoring the fact that the enormous, debt-fuelled, asset bubble can only deflate as borrowers are forced to default on borrowings taken out on the prospect of capital gains that will never occur now. People were buying Japanese stocks on margin and Japanese apartments as speculative investments in the late 1980s which are still less than half their purchase value and after 20 years see no prospect of breaking even in a natural human lifespan. The irrational exuberance in these islands in the past 5 years never quite reached the fever pitch of Japan in the 1980s – but it came close. So what if out peak to trough fall is only 40% or 50% rather than the 65% for Japanese property or 75% for Japanese stocks; it will still poison the economy for a generation.

    House prices will only fall if unemployment rises and tips the market over the rubicon into a freefall but we’re still far from the point where that is merely a distant possibility.

    I don’t buy that. There is an enormous oversupply of property across this island and in most of the island next door. Not to mention Spain, Bulgaria, Turkey, the Gulf, the Western USA, Australia… As unemployment rises, rents will invetiably fall and BTLers barely washing their face at present will find rents no longer cover their mortgage payments and they will be forced to default. Look at the hundreds of unlettable apartments bought off plan for insane prices in Belfast alone, and due to be completed in places like the Ormeau Bakery site, Cathedral Quarter, Titanic Quarter, etc., in the next year and then multiply that by every post-industrial city on the planet and every little market town that you could reach the nearest big city in less than 2.5 hours from.

    There are 250,000 vacant properties in the Republic. 250,000. Sure, the market will find its own level eventually, but anyone buying a not even dead cat bounce because Helen Carson said so in the Belfast Telegraph needs their head examined.

    I see no painless way out of an asset bubble popping. I hope there is. I hope I’m wrong. But history says there isn’t. And the UK stimulus money is being wasted on rescuing financial institutions from the consequences of their own irresponsibility instead of being invested in a once-in-a-lifetime opportunity for a massive investment in rail, road, water and sewage, telecomms and ports infrastructure which could put hundreds of thousands back to work and make hay when labour and materials are cheap.

  • Harry Flashman

    You’re concentrating rather too closely on residential property Sammy, the ressy property market despite the hype was never the driving force of the UK economy. Even so residential property is not suffering the catastrophic losses that were predicted six months ago, there is a surprisingly small percentage of defaults and the market appears to be stabilising. I agree at the margins there is pain but I stress it is largely on the margins, the fact is that the vast and overwhelming majority of households are perfectly able to service their debts. Hopefully we will never again see the huge and unsustainable bubble in property prices again (although I’ll bet within a decade the insanity will start again, it usually does) but neither will we see any further significant crash.

    I was thinking more along the lines of equities and, surprisingly enough, commercial property which has seen a devaluation of almost 30% in the past eighteen months and when combined with the decline in sterling means that overseas investors are seeing assets now worth 60-odd% less than they were two years ago but which are still showing the same returns, I can assure you such things get noticed and are already being acted upon.

    Just for the record I have no interest in the market right now, I got out when I could, I have stashed the dough and I have no intention of ever getting back in again, what I went through was quite scary enough to last a lifetime thank you very much, but the fact remains that whilst the pain in the economy will continue for another year or so the worst is in fact over. We didn’t experience the cataclysmic collapse of world capitalism that we still feared even as recently as January. We are suffering a recession, a very severe recession, but just as all booms eventually end so do all recessions.

    Sit tight folks, if you got through it this far, chances are you’ll be ok.

    Keep Calm & Carry On.

  • kensei

    Glen

    It is not quite that simple. Loans made on wholesale markets might need to be rolled over at regular intervals and if that is prevent you run into big problems. the crisis originally started with liquidity problems.

    Harry

    Much too early to make those kinds of calls. There are still shocks waiting in the ystem: European banks haven’t really recognised their losses in Eastern europe yet. Unemployment is still rising. Defaults will also take time to rise. In the UK we’re having a period of calm before the tax and interest rate shitstorm that is to come.

    We are probably clear of a return to the 1930’s but by no means clear of becoming Japan.

  • Harry Flashman

    Maybe Ken but my main point relates to doom mongers who are the mirror image of the boomers that said during the good years that this boom was some sort of new paradigm and would never end, well it did, but recessions end too, this recession is not the end of history (as admittedly I was beginning to believe myself four months ago).

    The main tremor has struck, the major damage has already been done, there may be some after shocks but already the process of rebuilding has begun, hopefully this time around we might learn some lessons and it’ll be another generation or so before we feck up quite so spectacularly again.

    When we hear our grandchildren in thirty years time telling us to “lighten up Gramps, this isn’t like in your day, this time it’s different” as they make super duper whizz kid deals, well hopefully we’ll remember to take all our cash out of our investments, buy Krugerrands and bury them in the back garden.

  • kensei

    Harry

    It is worth remembering that the boom was very long indeed. Those proclaiming disaster were wrongfor a long time. There probably also was a paradign productivity shift brought on by modern IT. Some of those gains were real.

    I never had any doubt the market economy would pull through, it survived the depression after all. But there was a real risk of systemic failure about October / November last year. We seem to have thankfully past that. But the bust may also be very long indeed and I am not getting too happy just yet.

    Several commentators have also pointed out that the road to the Depression wasn’t straight down. there were several dead cat bounces. I’ll hold fire on any optimism for a bit yet.

  • Harry Flashman

    Another point that is very important about Japan and which no one likes to address because it is seen as something only cranks and oddballs worry about but which is in fact the proverbial elephant in the living room. Japan’s problems are fundamentally not economic, they are demographic, put simply Japan is in a population death spiral and that is why it is having such difficulties reviving its economy.

    For whatever reasons best known to themselves about a quarter of a century ago the Japanese simply decided to stop having babies, those missing adults are causing devastation today to its economy and its society, it is getting worse, in another quarter century Japan will be mainly a society of geriatrics supported by a tiny inverse pyramid of young people, no society can survive such a scenario and Japan is not going to.

    The same is occurring in vast swathes of the western world as Europeans and Canadians decide that having babies is such a hassle but fail to realise that their massive welfare systems and now borrowing requirements are predicated on women producing at least 2.1 babies each, given that they are singularly refusing to do so and given that old people are living much longer we must assume that most western nations will have shrivelled to irrelevancy by the middle of the century. Russia will have to all intents and purpose ceased to exist as a global nation.

    Like I say no one likes to address this issue, they are uncomfortable with it, it sounds so “old fashioned” and vaguely “right wing” but it is the most fundamental issue facing western societies and economies today and makes drowning polar bears seem as relevant as the seventh secret of Fatima. It is noticable that it wasn’t even discussed at the G20 meeting, trust me by the 2019 meeting they’ll be discussing it.

    So why am I nonetheless optimistic? Because I don’t live in a western society, I live in an Asian society where babies are popping out in their millions and who will grow up demanding goods and services which will be provided by themselves and their neighbours. I’m not talking about China by the way, China needs to end its stupid one baby rule if it wants to see 2050 as a global power, but throughout SE Asia, India and South America dynamic societies are emerging that will make the west look like worn out, dead end, has beens, largely because that is what the western societies will be in the very near future.

  • kensei

    Harry

    Population aging is a big issue for Japan and several other European countries, but it was not the cause of their economic woes in the 1990s.

    Over the long term again populations will right themselves. The problem is getting through the long transition.

  • Harry Flashman

    No, I didn’t say it was the cause of their woes but it is most certainly the reason why they are having such huge problems bringing their economy round again.

    As to your assertion that “over the long term again populations will right themselves” there is simply no evidence in history to back up that belief, on the contrary the evidence shows in fact that when a society’s population replacement level drops below a critical level, the level which most western societies are currently at, then there is simply no hope of recovery for that population and that society dies off.

    If you believe that German or Swedish or Dutch women are going to start having four or five kids all of a sudden then I am afraid, Ken, you are living in Cloud Cuckoo Land.

  • Greenflag

    sammy morse ,

    ‘there are 250,000 vacant properties in the Republic. ‘

    One of the newer trends now developing in the USA I read is the number of ‘foreclosures ‘ which will never be lived in again for the simple reason that as many as one third will be bulldozed as the banks cannot afford to maintain them and the cost of repairing many is not worth it particularly in parts of Florida, California . It’s now a toss up as to whether any benefits from Obama’s economic stimulus will come soon enough to prevent another round of foreclosures this time precipitated not by the property bubble burst but by increasing unemployment . A large number of Americans are just a pay check or two away from becoming unwilling ‘renters ‘. They have virtually no unemployment compensation and only a third of the labour force qualifies for it anyway . Also it lasts for 25 weeks in most states and after that it’s food stamps and/or homelessness .

    However another positive trend is developing amidst those that are affected by the USA’s economic implosion and that is the number of 60 year olds who can’t get jobs and have run out of unemployment and have taken it upon themselves to rob banks in the hope of being arrested and imprisoned for at least three years .

    In prison they get health care and are fed -clothed and don’t have to pay bills . Admittedly it’s somewhat restrictive and can wreak havoc with one’s credit rating . But when they are released from prison they will at least qualify for social security and perhaps if rents are low enough by then be able to afford to rent a small apartment ?

    Factoid

    The USA has 1.3 million units of public housing but over 2 million prison beds . It costs almost 70,000 dollars to keep one of these old fogies in jail for a year as against maybe 18,000 to keep them on ‘welfare’.

    The Republicans had plans for another million ‘prison ‘ beds . As for ‘public housing ‘ their plans were to reduce the number of units so that the working ‘poor’ would be forced to pull themselves up by their bootstraps and get some training to apply for the non existent jobs that most 12 million illegal immigrants do .

    The so called ‘free market’ in the USA has now become just another term for ‘indentured slavery’ New graduates are employed as unpaid interns while the huge number of newly qualified ‘lawyers’ are getting jobs as ‘adjuncts ‘ ( nice name for poorly paid young lawyers slaving away in windowless New York basements).

    As for the futures of the 280,000 ex financial services and MBA crowd who are staring into the economic abyss .?

    Let’s try to forget that the entire economic world is waiting for the above country USA to pull itself out of this one sooner rather than later . I don’t like to think about that too much ?

    Weimar Republic anyone ? Well perhaps not just yet . But if americans don’t have much in the way of a social security net they do at least have 50 million weapons to aim at whoever they think is responsible for this mess. Neither Bush nor Cheney nor Greenspan or Paulson have yet applied for political asylum . I could imagine if they had to they might find it difficult . Israel comes to mind as perhaps their only possibility 🙁

  • Greenflag

    Harry Flashman :

    Here’s your ‘nightmare ‘ as forecast for 40 years hence . According to this scenario there will be more Aghans than Brits, more Turks than Germans more Ethiopians than Russians , more Ugandans than Japanese and almost as many Indians as Chinese and Americans put together . The positive side is that when Bangla Desh finally submerges it’s population will have plenty of space to move to in Siberia which by then will be denuded of Russians and should be much warmer given global warning . Of course that will only work out if the Russians are amenable to withdrawing to the Urals and the 80 million Iranians or 100 million Turks don’t how shall I put it stake a predatory claim on all that Lebensraum first ?

    I expect that long before this particular 2050 scenario arises the populations of many of these huge states will have reverted to cannibalism or will have used rational and less violent means to limit their numbers . There will of course be no shortage of protein i.e of the human variety . The question is however would that be kosher eh ;)?

    Of course none of this really matters . What will be truly important come 2050 is whether or no the magic 50% plus 1 is achieved in NI for those espousing the ‘nationalist ‘ cause 😉

    Country (2008 Ranking) Projected Population 2050

    1 India (2) 1,807,878,574
    2 China (1) 1,424,161,948
    3 United States (3) 439,010,253
    4 Indonesia (4) 313,020,847
    5 Pakistan (6) 295,224,598
    6 Ethiopia (14) 278,283,137
    7 Nigeria (8) 264,262,405
    8 Brazil (5) 260,692,493
    9 Bangladesh (7) 233,587,279
    10 Democratic Republic of the Congo (18) 189,310,849
    11 Philippines (12) 171,964,187
    12 Mexico (11) 147,907,650
    13 Uganda (39) 128,007,514
    14 Egypt (16) 127,563,256
    15 Russia (9) 109,187,353
    16 Vietnam (13) 107,772,641
    17 Turkey (17) 100,955,188
    18 Japan (10) 93,673,826
    19 Sudan (31) 88,227,761
    20 Afghanistan (38) 81,933,479
    21 Iran (19) 81,490,039
    22 Germany (15) 73,607,121
    23 Yemen (48) 71,278,172
    24 France (21) 69,768,223
    25 Thailand (20) 69,268,817
    26 Tanzania (32) 66,843,312
    27 Kenya (34) 65,175,864
    28 Colombia (28) 64,977,344
    29 United Kingdom (22) 63,977,435
    30 Madagascar (56) 56,513,827

    195 . Northern Ireland 1,800,000 includes 900,001 Catholics and 899,999 Protestants (Est )

  • Harry Flashman

    Ah, good old Greenflag with his absurd anecdotes pulled from the wilder fringes of internet that have actually no relation to the reality of American society but which reinforce his crazy undergraduate prejudices about the third largest nation on the planet and the world’s largest economy.

    Just for the record GF, when most European nations have ceased functioning as viable economic units the United States will still be chugging along.

    Look at Europe and Russia today, don’t read illiterate conspiracy theories from the internet but actually closely examine the structural Ponzi schemes which are supposed to underpin European society, trust me it will put the fear of the living Jeebers into you.

    Worry ye not about the US, they’re big enough and ugly enough to sort out their own problems, it’s Europe which is on the point of societal collapse and that point is coming much more rapidly than you know.

  • kensei

    HF

    No, I didn’t say it was the cause of their woes but it is most certainly the reason why they are having such huge problems bringing their economy round again.

    It really isn’t. Japan was stuck in a rut for the entirity of the nineties – long before demographics became a serious factor.

    As to your assertion that “over the long term again populations will right themselves” there is simply no evidence in history to back up that belief, on the contrary the evidence shows in fact that when a society’s population replacement level drops below a critical level, the level which most western societies are currently at, then there is simply no hope of recovery for that population and that society dies off.

    Old people die off eventually, Harry. Populations will eventually stabilise and over time the burden will grow less. The question is how and can you handle the meantime.

    If you believe that German or Swedish or Dutch women are going to start having four or five kids all of a sudden then I am afraid, Ken, you are living in Cloud Cuckoo Land.

    Then again the government could slip fertility drugs in the drinking water. An upturn is not impossible though — changes in behaviour can and do happen. I doubt it will, and doubt it would counteract the current demographic bomb, but some upturn is certainly not beyond possibility.

    If we are going for demographic time bombs, no one seems to take on board the conssequence fo China’s one child policy and the habit of abandoning girl babies.

  • Harry Flashman

    Those figures are perfectly believable GF and are accurate based on current birth rates, you can stick your fingers in your ears and scream “Nya, nya, not listening!” all you want but the fact remains that unless the women of western Europe start producing five or so babies in their lifetimes and countries like Nigeria, Indonesia or India suddenly decide to adopt Swedish reproduction rates, neither of which scenarios seems particularly likely to me, then yes Indonesia will rapidly become a more important global economic power than Russia or for that matter most of western Europe.

    The future belongs to those people who show up for it, right now Japan and much of the western world have decide to take a rain check, we’ll see how well that works out in twenty five years time. As a matter of interest 25 years ago was 1984, not that long ago, I reached adulthood that year and I expect to be around in 25 years time, which is more than you can say for all those European babies whose mothers opted out of the dreary chore of motherhood, the same mothers (and fathers of course) who will be wondering who exactly will be paying for their pensions, medical bills and nursing home costs, they think maybe immigrants from third world countries will be happy to do so, hmmmm, I wouldn’t like to bet my old age on that scenario.

    I can see why Europeans are suddenly so fond of euthanasia, it might end up being the least complicated future for them very soon.

  • Mack

    The French birth rate began to rise after the government there took measures to encourage having kids (including showing late night soft-porn on state TV). Both the Russian and Japanese governments are currently incentivising rearing a family at the moment in an attempt to halt their demographic decline.

    If there is financial assistance from the state, why would families not want four (or even five kids)? Modern fertility treatment not only lengthens female fertility, but makes multiple births much more likely.

    Some of those emerging nations highlighted by Greenflag have already seen huge falls in female fertility, by the way. With a tiny number of dependents per worker, many others will be well placed for an economic boom if their birth rate drops (in a self-reinforcing process, that both boosts living standards and the cost of living, making it harder financially to have large families)…

  • Harry Flashman

    If we are going for demographic time bombs, no one seems to take on board the consequence fo China’s one child policy and the habit of abandoning girl babies.

    No one? Not so, perhaps you missed what I wrote in the third paragraph of my post at 1.08, let me repeat it:

    “I’m not talking about China by the way, China needs to end its stupid one baby rule if it wants to see 2050 as a global power.”

    Demograhics is everything, never mind fatuous ideas like Global Warming, rest assured throughout the emerging economies of the world Global Warming is rightly regarded as nothing less than a weird, self indulgent, western obsession, the countries that will be calling the shots in the coming decades are those that many people in Europe today couldn’t even find on a map.

    If you don’t have a population you can perhaps survive as some sort of niche market, fringe operation or tax haven, but any nation that wants to have global economic clout needs to have the bodies to back it up, Russia no longer has them, Japan doesn’t either and neither do the vast majority of western European nations. The tectonic plates are already moving and the great fissures are opening before our eyes and yet Europeans still complacently convince themselves that the hegemony they have enjoyed for a mere two centuries will last forever.

    The game’s up folks, new, hungrier kids are already on the block and there’s feck all squared Europe can do about it. They should have had those babies back in the ’70s and ’80s because it’s too late now.

  • Greenflag

    Harry Flashman ,

    ‘with his absurd anecdotes pulled from the wilder fringes of internet that have actually no relation to the reality of American society’

    Not from the wider fringes of the internet HF but from

    Barbara Ehrenrich’s book
    ‘This is Their Land’

    Go have a read . It might help to remove your all too rosy tinted glasses approach to the home of the brave and the land of the free .

  • Harry Flashman

    The French birth rate began to rise after the government there took measures to encourage having kids (including showing late night soft-porn on state TV). Both the Russian and Japanese governments are currently incentivising rearing a family at the moment in an attempt to halt their demographic decline.

    Those incentives amounted to little less than sticking plasters aimed at addressing horrific gaping wounds. As a small matter of interest in Russia and France (as indeed in most European countries) there are healthily reproductive communities, strangely however they don’t give their children traditionally French or Russian names like Oleg or Vladimir or Jean Claude or Vivienne, no these rather more fertile ‘French’ and ‘Russian’ people share the same names with many of the countries featuring at the top of Greenflag’s list of fertile nations.

    Face it folks, it’s the last Mango in Paris, it’s Lights Out Vienna. People like Greenflag spend so much time obsessing about the United States, the only western country which actually maintains healthy fertility rates, that they cannot see the terminal decay already affecting their own societies, I see it very clearly more and more every time I go back, something which I do less and less as time wears on.

    Europe is finished, so is Japan and Russia, they are already zombie societies.

  • Greenflag

    Kensei ,

    ‘no one seems to take on board the conssequence fo China’s one child policy and the habit of abandoning girl babies. ‘

    With a predicted 40 million excess males in the 18 to 35 year age cohort expected by 2020 there is no truth in the rumour that the Chinese Government is involved in high level discussions with the Vatican to see if the latter would be amenable to take in a couple of million or more recruits for the priesthood as a means of counteracting the growth of Islam in the EU 😉

    The situation in India is also now beginning to skew towards preference via early scan methodology to reduce the number of females . Dowries can be financially ruinous for Indians and the less daughters one has then the more money one can save for retirement ? Not as pronounced as China yet but it’s happening .

  • Greenflag

    harry flashman

    ‘Europe is finished, so is Japan and Russia, they are already zombie societies.’

    Whatabout Israel then Harry ? With a billion Muslims to the East (Middle East and Iran /pakistan etc ) and another 700 million Muslims to the West (France , Germany , Italy etc ) do you think the 6 day war strategy of waiting to be surrounded on all sides before launching a surprise attack will work again as it did in the 1967 war ?

    ‘the USA is only western country which actually maintains healthy fertility rates,’

    I don’t believe so . Both Holland and Ireland have an excess of births over deaths . But again just as in the USA this is achieved mainly through the more productive couplings of the newer immigrant populations .

    The Israelis have a major job on their hands . Where will their immigrants come from ? Iran ?

  • kensei

    HF

    Countries are not disappearing overnight. You do not wake up and discover everyone is gone. Consider the aging population as a big pile of debt. You can carry high debts perfectly well for a long time. But if it gets too high, it’ll crush you. But if your paying down even a little capitala nd can survives, eventually matters will improve.

    The questions are: is the problem enough to crush countries? Can some of that “debt” be made more productive, e.g. by people working longer? What percentage of immigrants want to just adapt and live the new way of life? There is important an issue here. But you are indeed on a right wing rant.

    I look forward to my Islamic child dealing with his Hispanic Catholic American counterpart, by the by.

  • Ulster McNulty

    Kensei

    “I look forward to my Islamic child dealing with his Hispanic Catholic American counterpart, by the by.”

    I bet your European Islamic child will studying advanced Geometry at the University of Al Andaloose while Harry’s American child will be out trying to catch varmints somewheres.

  • Harry Flashman

    You see what I mean Kensei? Better to simply shout “Racist Bigot!” than actually address the situation rationally.

    And yet you make my point for me exactly, a massive and ever growing percentage of the children and grandchildren of people in Europe today will be Muslims or will be descended from other non-European cultures. You have no problem with that, as indeed neither do I, but at least be honest and admit that my thesis is in fact correct. The nations of Europe today will still exist as locations on a map but they will have ceased to exist as the nations that have previously been there for centuries.

    I don’t actually care about the future of Europe, I believe they’re fucked anyway but if you do care about the future of the nations of Europe then at least accept my point that they are now largely going out of business and will be utterly unrecognisable in a generation’s time. If you’re happy with that then fine but don’t try to dismiss me as some sort of right wing nutter for pointing out that rather obvious fact.

    It always amazes me how Northern Irish people who obsess about comparative birth rates for decades, and who know the vital importance of which lot are having the babies, seem to be blinded by the glaringly obvious facts that precisely the same thing is going on throughout the world. Some people are having kids, some aren’t, in twenty five years from now the world will be organised around the wishes of those people who had the kids, it’s as simple as that.

    GF provides a remarkably obvious example of that simple fact; Israel. Israel is doomed, Israelis are having children at western European levels while their Arab Muslim neighbours (and indeed Arab citizens) are having them at the rate of, well, Arab Muslims. All the Arabs have to do is sit back and wait, Israel will fall into their hands within a generation.

    In Serbia in the 1970’s, Serb women stopped having babies at the rates their mothers and grandmothers did, meanwhile the Albanian population in places like Kosovo continued churning out the babies at the traditional rate. Who’s got Kosovo now?

    It will be the same for Russia, Japan, the Netherlands, France, the UK, Spain and all those other complacent, cradle to grave welfare states who decided to outsource the fundamental duties of adulthood to the state and third world immigrants. Kensei is right in at least one way, this didn’t happen overnight, it was a slow process starting forty or so years ago, the consequences of which are only coming obvious to us now, within the next twenty years it will snowball until the whole thing comes crashing down.

    But hey, what do I know? I’m just a ranting right wing bigot (but one who lives a large proportion of his life in Asia with his Asian family and who can see perfectly clearly from that perspective the rapid decline of Europe).

    Enjoy it folks, you’ll soon be living in interesting times.

  • Harry Flashman

    I bet your European Islamic child will studying advanced Geometry at the University of Al Andaloose while Harry’s American child will be out trying to catch varmints somewheres.

    Ah yes Ulster, the usual casual inverse racism so beloved of people who would be outraged if I changed the ethnic backgrounds in the statement around.

    But just for the record I used to pass twice daily on my commute to work a branch of the rightly famous Al-Azhar University, the second most important teaching institute in the Islamic world. The students would pile on the the bus and they were a lovely bunch, very well mannered and a credit to their families, much nicer than their equivalents back in Belfast. I have to tell you though that they weren’t studying Geometry or Micro-Biology or Geo-Physics or Art or French Literature, no, 95% of them would have their noses stuck in the Koran or in books interpreting the Koran, that’s all they studied and that’s all they wanted to study.

    As for those stump toothed hicks of Americans who are fit for nothing more than varmint hunting, well see that nice shiny computer you’re using to enter your thoughts onto the worldwide web for us all to share? Well just for the record they weren’t invented by graduates of the Al Andalus university.

  • kensei

    HF

    You see what I mean Kensei? Better to simply shout “Racist Bigot!” than actually address the situation rationally.

    I don’t think anyone has done that, and I dislike people claiming they have. There are also certain undertones to your comments — an implicit assumption that (Western) Muslims do not share many of our values taht perhaps you do not know you are doing.

    And yet you make my point for me exactly, a massive and ever growing percentage of the children and grandchildren of people in Europe today will be Muslims or will be descended from other non-European cultures. You have no problem with that, as indeed neither do I, but at least be honest and admit that my thesis is in fact correct. The nations of Europe today will still exist as locations on a map but they will have ceased to exist as the nations that have previously been there for centuries.

    No, that is wild speculation. As pointed out, several countries have decent birthrates. But that is largely irrelevant. Europe is not a theocracy, people are not defined solely by their religion. Civic nationalism exists in Europe as it does in the US. There are plenty of UK Muslims who like football, going out and don’t think about religion or poltiics that much. There are even some who care deeply about democracy.

    Second you don’t realy understand how demographics work, I think. Even if a big differences in birthrates held, it would take several generations — not just two — before Muslims became a plurality. Even then they would have huge minorities – and not just White Christain either – that would be part of the population. We don’t wake up one morning and we’re Iran, Harry.

    I don’t actually care about the future of Europe, I believe they’re fucked anyway but if you do care about the future of the nations of Europe then at least accept my point that they are now largely going out of business and will be utterly unrecognisable in a generation’s time. If you’re happy with that then fine but don’t try to dismiss me as some sort of right wing nutter for pointing out that rather obvious fact.

    There are serious issues with demographics. Pensions and health care the most immediate. Generational accounts. There are issue sof how to manage multicultural societies and how institutions should adapt, though we have that problem now. Saying “the nations of Europe are going out of business” does mark you as swallowing a bit too much of the right wing medicine for your own good, Harry.

    It always amazes me how Northern Irish people who obsess about comparative birth rates for decades, and who know the vital importance of which lot are having the babies, seem to be blinded by the glaringly obvious facts that precisely the same thing is going on throughout the world. Some people are having kids, some aren’t, in twenty five years from now the world will be organised around the wishes of those people who had the kids, it’s as simple as that.

    In twenty five years we’ll have had at most, two generations. We’ll nt have many particularly new problems. In 100, possibly.

    In Serbia in the 1970’s, Serb women stopped having babies at the rates their mothers and grandmothers did, meanwhile the Albanian population in places like Kosovo continued churning out the babies at the traditional rate. Who’s got Kosovo now?

    Holy shit taht is the most batshit mental explanation for what happen I’ve ever heard.

  • Mack

    Here’s a demographic change for ya..

    Women to make up the majority of the workforce in Ireland and the US..

    http://www.turbulenceahead.com/2009/04/man-cession.html

  • Harry Flashman

    Ken old son, you seem to believe that we are at square one and the process is only starting, no, I’ve already told you, this process started three, perhaps four, generations ago, it has been under way for decades, it’s coming to a head now and in one more generation we’ll will be able to see its effects“ very clearly.

    It is you unfortunately who do not understand the dynamics of demographics; if fifty percent of your population is over thirty and have only on average 1.5 kids but fifty percent of the remaining population under thirty is a particular subset who are having four or five kids, well trust me it only takes a decade or two for that to have a major effect, not a hundred years, in a hundred years the older non-reproducing population will have to all intents and purposes ceased to exist. This is not some sort of overnight phenomenon, it has been under way for decades and like a cloud that has been building in a distant sky it is now about to break on us.

    The Serb population of Kosovo was once a majority, it ceased to be a majority because Albanians had more children, it is now majority Albanian, Kosovo is no longer part of Serbia, simple absolute facts, please tell me what is “batshit mental” about those glaringly obvious facts? If Catholics have more babies than protestants in Northern Ireland and in twenty years time form a majority that votes for a United Ireland, will you call me batshit mental for drawing the rather obvious conclusions? Likewise in Israel if Israeli Arab Muslims have more kids than the Jews and take control of that state will you regard that as batshit mental?

    What the flying fuck is batshit mental about pointing out blindingly obvious facts?

  • kensei

    HF

    Ken old son, you seem to believe that we are at square one and the process is only starting, no, I’ve already told you, this process started three, perhaps four, generations ago, it has been under way for decades, it’s coming to a head now and in one more generation we’ll will be able to see its effects“ very clearly.

    It is irrelevant. What only matters is the population as it stands today. At the last census the percentage of people inthe UK guiven as “Whitye” was 91%. That does not turn around i two generations. Sorry.

    It is you unfortunately who do not understand the dynamics of demographics; if fifty percent of your population is over thirty and have only on average 1.5 kids but fifty percent of the remaining population under thirty is a particular subset who are having four or five kids, well trust me it only takes a decade or two for that to have a major effect, not a hundred years, in a hundred years the older non-reproducing population will have to all intents and purposes ceased to exist. This is not some sort of overnight phenomenon, it has been under way for decades and like a cloud that has been building in a distant sky it is now about to break on us.

    You cannot pull numbers out of your ass like that. For a start, twenty years won’t kill everyone over thirty. Second, if you make up 5% of the population you do not get to 50% in twenty years, unless you are a fucking rabbit. Will not happen. Sorry. US right Wing Muslim Europe fantasies will ahve tio wait for a while yet.

    Even if it was true, it does not follow that its the end of civilisation and we wake up in Iran. That is prejudice, pure and simple.

    The Serb population of Kosovo was once a majority, it ceased to be a majority because Albanians had more children, it is now majority Albanian, Kosovo is no longer part of Serbia, simple absolute facts, please tell me what is “batshit mental” about those glaringly obvious facts? If Catholics have more babies than protestants in Northern Ireland and in twenty years time form a majority that votes for a United Ireland, will you call me batshit mental for drawing the rather obvious conclusions? Likewise in Israel if Israeli Arab Muslims have more kids than the Jews and take control of that state will you regard that as batshit mental?

    Demographics is not destiny. Pay attention to the “if they vote….” bit.

  • John East Belfast

    Harry

    I think you are casting the bleakest of several outcomes as fact and hence scare mongering.

    You cannot ignore the outcome that British/Eurpean Muslims may grow up with largely British/European values and will be able to separate state from a medieval approach to their religion.

    There is also the outcome that radical Islam will itself fizzle out as a force within a generation or two as it has done in the past.

    Of course nothing can be taken for granted.

    Full integration is not happening as it should – the fact that 65% of British Pakistanis find a spouse in Pakistan is concerning.

    The next danger in the UK is the formation of Islamic parties to play a role in UK democracy – which in turn will help shape UK Foreign and Domestic policy should they ever find themselves holding a balance of power.

    Having versions of Sharia law will be first on their list.

  • kensei

    JEB

    You cannot ignore the outcome that British/Eurpean Muslims may grow up with largely British/European values and will be able to separate state from a medieval approach to their religion.

    May? There are plenty of second and third generation Muslims in the Uk, right now.

    Excellent post on this topic in religion thread:

    #

    Oh how quickly fertility rates change,

    http://en.wikipedia.org/wiki/List_of_countries_and_territories_by_fertility_rate

    2008

    Tunisia – 1.73
    Algeria – 1.82
    Lebanon – 1.87
    Turkey – 1.87
    Morocco – 2.57

    With the countries where most European Muslim immigrants come from nearly now at European fertility levels it’s hard to see that Muslim immigrants in Europe are going to be the great breeding time bombs some make them out to be and growth by conversion is negligible.

    Sure in the UK it’s mostly south Asian Muslims

    Pakistan – 3.73
    Bangladesh – 2.83

    but unlike continental countries only half of the immigrants to the UK are Muslims and about half of those are fundy Protestant types with comparable fertility to Muslims, often from Africa.

    Speaking of which, unlike the Catholic church, fundy Protestantism is increasing almost everywhere you look in the world, particularly the Pentecostal variety. The largest Latin American country, Brazil, is now about 13% Protestant. The Philippines about 10% Protestant. Nobody seems to notice these continuing vast changes because they spend their time looking at mainline Protestantism and Catholicism dropping to secularism on the one hand or increases to Islam on the other. It doesn’t seem to be in anyone’s script, whether Richard Dawkins or Mark Steyn’s, but for some reason it is happening.
    Posted by Sentinel on Apr 21, 2009 @ 05:12 PM

  • Greenflag

    harry flashman ,

    ‘It always amazes me how Northern Irish people who obsess about comparative birth rates for decades, and who know the vital importance of which lot are having the babies, seem to be blinded by the glaringly obvious facts that precisely the same thing is going on throughout the world.’

    I recall being in Johannesburg in 1990/1991 and by chance found myself attending a remembrance ceremony for the South African Irish Regiment commemorating the 3,000 approx ‘deaths ‘ they suffered at the Battle of Sid el Rezeigh in North Africa at the hands of Rommel’s Afrika Corps . It was a dignified cermeony and apparently each year they read out some of the names of those who died . Amidst the Irish sounding names read out there were also English , Scottish , German , Afrikaner and even African names .

    Afterwards in the marquees I found myself seated at a table sitting beside a former Northern Ireland ‘Unionist’ and opposite him a former Northern Ireland ‘Republican nationalist’. It was’nt long before these two started the usual vituperation . It started as banter but quickly soured into almost fisticuffs ( yes drink was involved ) . At one point I reminded both that as of the present and future for South Africa some 40 million of their fellow darker hued citizens were shortly to be given the vote and that would be that for the aparthied regime which even then was a nonsense .

    Did’nt faze either a bit so consumed were they by the centre of the universe from which both had sprung decades before .

    I’m not sure the blind spot ‘phenomenon’ is just an NI thing . I guess people decide for themselves whats important and what isn’t

  • Greenflag

    JEB,

    ‘The next danger in the UK is the formation of Islamic parties to play a role in UK democracy – which in turn will help shape UK Foreign and Domestic policy should they ever find themselves holding a balance of power.’

    Yes it is posssible that radical islam will fizzle out just as radical catholicism did and even more radical protestantism except of course for in a few parts of NI and the USA .

    And yes nothing can be taken for granted . Full integration is not happening with the Muslim community for several reasons mainly cultural , and religious . Most English people are secular .Most Muslim males would not be able to tolerate a traditional western wife given their traditional customs and thus the need to import more submissive future brides from overseas .

    ‘The next danger in the UK is the formation of Islamic parties to play a role in UK democracy – which in turn will help shape UK Foreign and Domestic policy should they ever find themselves holding a balance of power.’

    Well as long as it’s not a rerun of the Irish Home Rule business eh ? We all know what that IHR and it’s aftermath cost not just in terms of lives but in the economic cost of political instability , sectarianism etc etc .

    ‘Having versions of Sharia law will be first on their list.’

    I doubt if Sharia law will ever see the light of day in England . English women are not going to give up the rights they have won over the past 100 years . Nor will Irish or european women . I would expect that more Muslim women will gravitate to the freedoms won by their western fellow citizens than to what women ‘enjoy’ in traditional Islamic socieities.

  • Ulster McNulty

    Harry Flashmann

    “Ah yes Ulster, the usual casual inverse racism so beloved of people who would be outraged if I changed the ethnic backgrounds in the statement around.”

    You are mistaken, casual inverse racism is always unusual.

    The reason I inverted the usual casual racism, is because I wanted to achieve the effect of unusual casual racism, from a western point of view, which I think I did.

    It’s unusual casual inverse racism because when we in the west compare the west to the middle east, we draw conclusions like you (and Kilroy Silk) do – that we are superior because we have invented things like the computer. This is our usual casual racism.

    Obviously this is the other way around in the middle east where they think they are superior to us because they invented the computer (abacus etc), agriculture, towns, literacy, numeracy, monotheism etc, etc, etc while we in the west were worshipping trees and climbing trees looking for nuts and berries. That is their usual casual racism and my would-be unusual casual inverse racism.

    Also, I think America may be on the skids. We might now be living in the post-American century. America had been a very dynamic country for quite a while, but they have done some awfully stupid shit, politically, ecoonomically and military over the past decade. “Chuaigh a lá” as you might say.

  • Greenflag

    harry flashman

    ‘I’ve already told you, this process started three, perhaps four, generations ago, it has been under way for decades, it’s coming to a head now and in one more generation we’ll will be able to see its effects“ very clearly.’

    So with any luck my great grandchildren may reduce their chances of getting skin cancer and will instead sportas athletic magazine cover tan instead of the former pasty faced and freckle spotted visage of the clan ?

    Perhaps all of this is a subliminal evolutionary response to global warming via the convolutions brought about by the globalisation of the world economy on a scale never before experienced ?

    Que sera sera . It’s the economy etc etc

  • Greenflag

    Ulster Son of Ulster (mac an ultach )
    .

    Everything comes from somehwere else originally either directly or indirectly . Casual inverse racism is lie a boomerang . It returns usually to strike the thrower 😉 Jared Diamond’s ‘Guns Germs and Steel ‘ gives a good exposition of how ‘superiority’ can be just in the eye of the beholder 😉