Robert Peston: “the Irish economy is hideously and perilously balanced between recovery and Armageddon”

As John has noted, the Irish government is teetering on the brink of a lost confidence vote.  And the Anglo-Irish Bank’s credit rating has just been significantly downgraded by credit agency Moody’s, just as the Irish Finance Minister prepares to reveal how much more that bank will cost the state tax-payers. 

But a change in government won’t change the fundamentals. 

And, everyone’s hero, Robert Peston spells out the scary reality

All of which is to say that the banks and the Irish state are more-or-less one and the same thing right now. And the greater are the banks’ losses, the greater the strain on taxpayers.

What will determine those losses – in part – is whether house and property prices stabilise after their 40 to 60% falls since the end of 2006. It hasn’t happened yet, though the rate at which prices are falling has slowed down.

Of course, the great fear for the Irish government is that its putative virtue in making deep public spending cuts – and Mr Lenihan conceded that there are some big and painful decisions ahead – will further undermine confidence in the value of Irish assets, triggering further losses at banks, and thus eliminating the fiscal benefits of the deficit reduction programme.

Or to put it another way, it will be many months yet before Ireland can be certain it’s over the worst.

That’s presumably why Mr Lenihan didn’t rule out in his interview with me that the Irish government might eventually be obliged to ask for financial support from the European Financial Stability Facility, the special €440bn fund set up by eurozone members to lend to financially challenged eurozone states.

Naturally Mr Lenihan doesn’t want the national humiliation for Ireland of being the first eurozone member to tap the special bail-out fund set up after Greece went to the brink of insolvency in the spring.

Nor does he expect it.

But he daren’t say no, nay, never – for fear that those all-important overseas creditors lose confidence in the existence of backstop insurance to cover their cripplingly huge claims on the Irish banks and the Irish state.

Read the whole thing.

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  • Itwas SammyMcNally whatdoneit

    With due regard to Robbo we all have a good idea of the ‘reality’ what is needed is for economists (such as himself) to agree with the government and ideally with the other parties in oppostion the sensible way forward.

    A government of National unity is what is called for in times of emergency (WW2 etc) and that is what is required now.


    Have you seen anywhere a list of who has lent the money to the banks i.e. who are the bondholders or at least a breakdown of whether they are individual investors, banks, governments. These are the people who would be fecked off if the government simply declared the banks bust – after of course they paid the depositors back their dosh.

  • John East Belfast


    I cant do these links but there is a very good article by Peston on BBC website udner Business which includes

    “Total foreign bank exposure to Ireland’s economy is $844bn, or five times the value of Ireland’s GDP or economic output. Of that, German and UK banks are Ireland’s biggest creditors, with €206bn and €224bn of exposure respectively.

    To put it another way, German and British banks on their own have each extended credit to Ireland greater than Irish GDP. Which doesn’t sound altogether prudent, does it?

    As for direct bank-to-bank lending, overseas banks have provided Ireland’s banks with €169bn of loans, which is also greater than Irish GDP.”

    The gist of the article is why The Irish Govt cant do what Alias wants them to do and that is simply default on the debt

  • Pete Baker


    That’s the article linked [twice] in the original post…

  • John East Belfast

    Very sorry

    It is just when I read it on the BBC I concentrated on the earlier bit as to why the ROI could not default on its banks and you gave it a slightly different emphasis which through me

  • pippakin

    It may sound simplistic but he can default on the debt. All the government has to do is not pay it. The world will not end. There will be another crisis but would it be worse?

    Money saved on loan repayments could be used instead of borrowing more.

    I would be interested to know

  • Itwas SammyMcNally whatdoneit

    Thanks JEB,

    Presumably Ireland (in traditonal neutral fashion) may decide to Pay the Germans and not the British Banks- could be dressed up as an electoral point for SF reparations, plantations, famines et al).

  • Itwas SammyMcNally whatdoneit


    They may need to borrow more money from the same people ie the German banks and that would mark them down as somewhat unreliable to put it mildly as far as ANY banks are concerned.

  • pippakin

    Itwas SammyMcNally whatdoneit

    Yes I know that’s the theory, and I also know that it would be all banks applying the breaks. So what? Banks are in the business of loaning money. If they take a hit tough, that’s business.

    The Irish government is propping up loans made to independent banks by independent banks, that is the cause of the problem and I have yet to see a convincing reason for why they should be doing it.

    I noticed your previous comment, you don’t seriously believe there are any British banks left do you?

  • slug

    Its a very long hard road now for the southern Irish. Their price levels are quite uncompetitive so the rate of economc growth is likely to be modest. These debts will take a long time to pay off and the option of inflating them away is not in Ireland’s hands.

  • Glencoppagagh

    “Total foreign bank exposure to Ireland’s economy is $844bn, or five times the value of Ireland’s GDP or economic output.”
    “As for direct bank-to-bank lending, overseas banks have provided Ireland’s banks with €169bn of loans, which is also greater than Irish GDP.”

    Difficult to reconcile these two statements. If overseas banks have only lent Irish banks €169bn, what does the remaining exposure comprise? Some of it is probably exposure to subsidiaries operating in the IFSC but I can’t believe that accounts for all of it.

  • slug

    Its clear the GOVERNMENT should not default on government debts. And as I understand it the government has bought up the debts now.

  • A.N.Other

    “One of the largest holders of Anglo Irish bonds is the Union Investment Group;”

    So who owns Ireland? Irish debt ownership figures:

    It is only a matter of time before the credit rating agencies reduce Anglo’s rating to BBB (Blarney, Bluster and Bullshit).

  • Itwas SammyMcNally whatdoneit


    “The Irish government is propping up loans made to independent banks by independent banks, that is the cause of the problem and I and the banks will have yet to see a convincing reason for why they should be doing it.”

    Credit rating downgrading – and the Irish government will therefore have to pay much more for their future loans – also they would probably have to ask permission of the EU – who would say Nein.

  • Itwas SammyMcNally whatdoneit

    Cracking link ta.

  • pippakin

    Itwas SammyMcNally whatdoneit

    Yep the EU would say nein, but the EU would not be getting their billions from Ireland so what will they do sue?

    The real question I believe is how much actual money would the Irish government have if they did not pay the debt. In other words are they borrowing to live or borrowing to pay the debt.

  • Itwas SammyMcNally whatdoneit


    ” In other words are they borrowing to live or borrowing to pay the debt.”

    They are borrowing to do both as they are running a deficit. They had to borrow more last week to run trhe country next year.

    What worries me (occasionally) is that shenanigans going on in the banks might have reflected badly on the governmment and they protected them not because it was in Ireland’s interst but their own.

  • Itwas SammyMcNally whatdoneit

    If Ireland looked like they were fecking up the Euro zone by defaulting – presumably they would be suspended or thrown out otherwise Greece etc would follow suit.

  • pippakin

    Itwas SammyMcNally whatdoneit

    I’m sorry I’m not explaining myself very well. I know they are borrowing to do both, but if they default on the repayments would the situation be much worse, bearing in mind there would be no more, or not as much, borrowing. In the long term would that be a bad thing.

    The government has been making cuts for a couple of years and there will be more. It will almost certainly increase tax, if not before, then after the next GE.

    I am not convinced we are being told all of the truth and I am not convinced continuing to borrow is the answer.

  • SDLP Man

    Someone, probably an ultra-diligent turbo accountant needs to have plenary powers to slash the obscene salaries paid to the governing classes in the Irish Republic. I saw a reference in the weekend to Maurice Manning, a civil enough and decent guy, being paid €230K as President of the Irish Human Rights Commission and the boss of the NTMA being paid €800k and all this at a time when someone like Ben Bernanke, the head of the US Federal Reserve, being paid $200k for infintely more onerous responsibilities.

    All these salaries and fees need to be hammered and the trade union bosses should be brought into this too.

    We need a few people to be made an example of, and I’m thinking of people like the bank bosses, Ahern, the former Chair of the Central Bank, McCreevy, John O’Donoghue, the former Financial Regulator (failed First Arts in UCD, and got to the top, ye Gods!). A bit of true Republican Rectitude would change the public mood. Loking back, it’s hard to believe that Dev got elected on 1932 on the slogan “No man is worth more than a thousand a year”.

    Incidentally, did anyone pick up on the comedy turn by Preisdent of the NI Law Society who, in opposing NI Attorney General John Larkin’s idea that lawyers who have become obscenely rich over the last 40 years on free legal aid, should reciprocate by giving their services free for a while, portentously announced:

    “Justice is not a commodity which any government can ration. If it is not accessible to all, the result will undoubtedly be an unequal society. There can be no equal justice where the type of trial you get depends on the amount of money you have. We cannot have a two-tier justice system, one for the haves and another for the have-nots”.

    What this guy is saying is that before legal aid was introduced (1949), the barristers and solicitors were conniving at the maladministration of justice.
    In other words, let the legal pigs keep dipping their ugly snouts in the trough as the lawyers both North (Bloody Sunday, Wright inquiries) and South (Moriarty, Flood inquiries) have done for decades.

    There is no justification for UK legal aid costs being the highest per capita in the world. If Larkin wants to institute a real reform, let him put in place a system of public defenders rather than the current system of privatised legal aid.

    At least give us the honest and refreshing cynicism of Mr Justice Darling who once opined-in the days before legal aid-

    “The law courts of England are open to all men, like the doors of the Ritz Hotel”.

    Mind you, Larkin could look at himself for starters. He negotiated a salary for himself far in excess of that paid to the Attorney General for England and Wales.

  • John East Belfast


    I assume the rest will include loans to the ROI Govt – or Net National debt

  • Itwas SammyMcNally whatdoneit

    SDLP Man, I agree curbing excessive pay is important in its own right and also to keep the Plain People of Ireland from revolting as they take their increasingly unpalatable medicine.

  • Itwas SammyMcNally whatdoneit

    Not sure if our posts crossed, but I would like independent and all party confirmation/agreements (as far as possible) that the government has been entirely truthful (I mean we were asked to believe that Berty didnt need a bank account when minister of finance) before the Plain People of Ireland sign up to further bailing out.

    I am convinced at a minimum that the Government knew just how bad the situation was but chose to drip feed out the information which is understandable as there could have been widespread panic.

    But as I understand it, defaulting is not an option at the moment becuase of membership of the EU and putting up the cost of further borrowing – but I agree there should be an explicit and clear statement to that effect from the government and clear statment of why that is wrong from the oppostion – if that is what they believe.

  • ITER_saveus

    (Not wanting to sound too selfish) but I would be interested to know if any economist has published research on the implications of all of this for the Northern economy?

    For example, examining the level of recent private sector investment from the south and what happens now when (presumably) there is little or none.

    With NI’s public sector about to get a severe battering will there be any private sector investment to replace it?

    Any pointers out there?

  • pippakin

    Itwas SammyMcNally whatdoneit

    Yes! That is it! we are told default is out of the question and we all know our own and every ‘expert’ reason why, but the government have never explained.

    We are told how much is borrowed and then it goes up! what bank would give us a blank cheque as we seem to be giving the banks.

    It is all a bit sus to me. The government must have a clearer idea of the figures than any we have seen and the opposition whilst seeming to object to NAMA offer no explanation and no alternative.

  • sammymehaffey

    Dont forget it was membership of the Euro zone that caused the ridiculously low interest rates which in turn caused the explosion of credit, the property boom and hence the bust. therefore it is logical to leave the Euroxone, re-create the PUNT at a rate of 1 Euro = 1 Punt and then devalue the punt by 50% thereby making imports very expensive and exports cheap and reducing the national debt by half. Hey presto, happiness all round. back to eating potatoes and drinking cheap guinness.

  • Itwas SammyMcNally whatdoneit

    Sammy eile,

    JeeZusHChristo, have some consideration for the Newry traders.

  • Alias

    Preston is simply wrong in some crucial areas of his analysis: (a) that rabid europhiles such as Peter Sutherland are promoting the redundant Irish national interest rather than the EU’s collective interest that has constitutionally replaced it, and (b) that the foreign lenders loaned their money to a non-existent legal entity called “the Irish economy” or to the Irish state rather than to a plethora of private corporate entities with whom their respective contracts exist.

    His bogus argument there is that if Bank A in Germany loaned 10 billion to Bank B in Ireland and Bank B defaulted, then hundreds of other banks elsewhere would boycott all borrowers in Ireland. That is nonsense. Bank A would not lend to Bank B again, with Bank A learning a lesson in how to avoid reckless lending in future. Admittedly, Bank B would also default to Bank C and so on, so those lenders would all learn valuable lessons that would help them to avoid reckless lending in future.

    If all banks decided to boycott all borrowers in Ireland as a consequence of Bank B’s default, as Preston bizarrely thinks, they would thereby ensure that none of them would get any of their money bank. No bank is going to undermine its own contracts, putting them at risk, in order to stand shoulder-to-shoulder with some other competitive bank that has lost its own money in a bad investment on its part.

    In reality, the total external debt is 1.67 trillion euros so that is the amount of wealth (plus interest) that the Irish economy has to generate over the course of those loans. Given that most of that wealth has disappeared in a plethora of bubbles in all sections of the economy, the banks and other borrowers are only able to repay the short-term debt (70 billion of it had to be repaid by September) by scrounging money off the government and with ECB and Central Bank shenanigans. The reality of what the government has done by promoting the EU interest at the direct expense of the national interest will begin to kick in when the next repayment of that external debt is due and there is nothing left to be scraped out of the bottom of the barrels.

    When you give your sovereignty away, you agree that those who are then to determine your affairs should do so in their collective interest and not in your particular interest. Rather than reckless eurosystem lenders losing their money, it will be the next four or five generations of poverty-stricken Irish who will have lost their money before they even earned it…

  • JJ malloy

    Was there any alternative to the Gov’t nationalizing the debt? A complete economic meltdown?

  • JJ malloy


    I’m sold. F the Eurozone

  • JJ malloy


    If you were in charge, what would you do? Pull out of the EU as soon as possible and let all the bad banks fail instead of nationalizing the debt?

  • JJ malloy

    *Instead of NAMA, I should say

  • SDLP Man


    I don’t agree with your eurosceptic (to put it mildly) stance in general but I do tend to agree with your view that default on, say, Anglo loans would not be that disastrous.

    Governance in Ireland from our native government has been so pathetic over the past couple of decades that I think we actually need a new Republic.

    The reckless bankers, Irish and elsewhere, need to take a share of the financial pain that is and will continue to be inflicted on the Irish tax-payer for many years to come.

    Being a bit personal, Peter Sutherland comes over to me as a fat, annoying, complacent git, bloated by his own sense of self-importance. I just wish he’d shut his big slabbery gob. This is a man who is chair of Goldman Sachs (the world would be a better place if it was obliterated) and a past chair of BP (think Gulf of Mexico oil well). If I was him I’d be looking for a hole to hide in. How about that plugged oil-well?

  • Watcher

    The high cost base in the South needs to be reduced.

    There needs to be a severe reduction in public sector pay. As SDLP Man points out, the salaries people were on and still are on is ridiculous. It was fuelled by the Celtic Tiger but now seriously needs to be redressed.

    Reduce public pay should be one straightforward approach which Lenihan should take. There will be uproar from the Unions but they cannot be allowed to hold the country to ransom.

    The government really should be taking the lead on this and taking substantial pay cuts. Then joe public can see that the cuts are all encompassing but necessary.

  • sammymehaffey

    Dont worry about the Newry traders – they are all in Florida or the Algarve.

  • sammymehaffey

    That is all very well but without a devaluation of the currency – an Irish currency – the pay benefits and cost of Irish produced foodstuffs and other good will remain ridiculously high.
    reducing fat cat pay is a one-off sticking plaster which will solve nothing. there is no prospect for a future within the Euro.
    Trust me – i am an economist!

  • JJ malloy


    Has that even been discussed among the elite? Would they even consider leaving the Euro?

    How would they be able to face their friends in Brussels?

  • hopefully for the sake of your sanity that’s a wind up post.

    A government of national unity is a bit of a rich statement when the government itself down there is a divided mess. I’m sure though there’ll be some such imagined ‘populist’ line developed come the elections – the primary upgrade/downgrade in a perennially sectional RoI life.

  • sammymehaffey

    The elite must think about it a lot. think of the money it would save not having those jobswoths in Brussels. Its a bit like the Alicadoos in the IFA or turkeys voting for christmas.
    they think about it and wake up in a cold sweat at night.

  • Itwas SammyMcNally whatdoneit

    st etienne,

    Yes it was – but desperate time lie ahead so you never know – probably popular at the polls.

  • sammymehaffey

    And there is enough beef spuds and cabbage in ireland to keep the population well fed. And don’t we make loads of the worlds drugs too- the more i think about it the idea just gets better.
    And we could fish what we wanted where we wanted and as much as we wanted without some greek telling us to stop doing this and that.
    And we would be inundated with American golfers coming to play the best courses in the world. sure we would soon have more dollars than the Chinese – and they are starting to play golf as well!
    And there is nothing wrong with Cork Gin and C&C tonic so we would be grand.
    And Ryanair could rule the world of aviation and coolmore would still have the best stallions and we could finish the Curragh.

  • SDLP Man


    The problem with leaving the Eurozone is that all the state’s liabilities will continue to be denominated in Euro/Dollar/Sterling and have to be repaid in those currencies. The RoI economy is one of the most open in the world, which will cause special problems with inflation/deflation. The only game in town is to get the cost structure down. It’s no use blaming the Euro: the hard and bitter truth is that an awful lot of Irish people went buck bad racking up liabilities after we joined up circa 1995 and we are paying the price for it now.

    Some people like David McWilliams have suggested leaving the Eurozone and re-joining it when/if the fiscal problems have been rectified (if ever) but, even if that was allowed, everyone would be at that game and the Germans simply would’t allow the PIGS countries to do it.. Currency devaluation is not an option.

    As you are an economist, care to hazard a guess on the putative convertibility rate of the Punt Nua [New irish Pound] against international currencies?

    Suggest you read the late Tony Judt’s magnificent book ‘Postwar’, about Europe post 1945. Haven’t finished it but is confirming me in my view that closer integration of all Europe is the only way to go.

  • John East Belfast

    I think one of the biggest implications of this debt will be migration.

    If you are young, mobile and well educated then you wont want to pay the kind of taxes that will be required during your life time – at least – to service it.

    Infact if you are sitting on a big pile of negative equity it will be another reason to do a runner.

    When Germany and France need Euro rates to rise to stop inflation then it will be unbearable.

    The 26 Counties have seriously screwed up – you can totally forget a United Ireland as the only people voting for it will be those in the SF voting underclass with no assets and who survive on welfare – infact even they may be put off if they are losing out on British welfare.

    There is only one solution – a return to perfidious albion – and I am serious.

  • Pippakin

    John East Belfast

    Surely the British economy is as big a basket case as the Irish?

    Ok their housing problem will bounce back fairly quickly and it is a larger economy but why would that make them an attractive proposition for Ireland?

  • JJ malloy

    Back to emigration? So basically the last 15 years in Ireland has been an aberration. The natural state of Ireland is to have many of our young people leave our shores.

    Unfortunately for this generation, sh*t is hitting the fan in the US and other places that have long been destinations of the Irish diaspora.

    The western world has been living it up on borrowed money for decades now. The alarm clock went off in 2008 and the long, cruel hangover is just setting in.

  • John East Belfast


    The UK Economy remains the 6th largest in the world.

    It is well placed to trade out of these problems – its current debt will weigh it down but wont sink it
    And – unlike the ROI – it is in control of its own monetary policy and has the safety valve of devaluatuion and a boost to exports

    A population of 70million to share the burden is much wider base than what will be left in the ROI.

    As an attractive proposition to Ireland it offers a floor to any Punt devaluation should the ROI have to do the unthinkable and leave the Euro. It also has similar econommies – including an emphasis on financial services and home ownership.

    It is its nearest geographical neighbour and indeed shares an ecomomic land border with it.

    Language and cuture are alligned and basically both nations have more in common than that which divides it.

    But them I am a unionist – and an Irish one at that and believe that the departure of the ROI from the Union has brought nothing but misery to this island for the best part of 80 years.

  • John East Belfast

    JJ Malloy

    The world is a big place – 1 million educated Irish will easily be absorbed into Canada, California, Australia, Hong Kong and the like. Infact for the adventurous China and India and other emerging economies will snap them up

  • Pippakin

    John East Belfast

    I cant help thinking you are clutching at straws. True the British economy will bounce back faster but it is not so far away anymore. Jobs will be there and for some a weekly commute is not out of the question.

    It goes deeper than a need for work.

  • Comrade Stalin

    Not being in the Eurozone is surely the reason why the UK and USA have booming economies, low levels of public debt and are bucking the current worldwide recession.

  • John East Belfast


    I cant see how I am clutching at straws – i am simply telling it as I see it.

  • Comrade Stalin

    If you are young, mobile and well educated then you wont want to pay the kind of taxes that will be required during your life time – at least – to service it.

    I’m not sure about this argument given that people in the UK very happily spent most of their working lives following WW2 paying off reconstruction loans to the USA. The debt levels were an order of magnitude, we had just finished on a vastly expensive and destructive war, and yet the country still found time and resources to invest in broadening the availability of public services, especially the NHS. They only dropped below their current levels in the latter half of the 1980s.

    I don’t like debt, I think it’s bad business and bad economic management, but I’m not overly convinced that it’s the end of history. The Coalition aims to get the public sector deficit to 1.1% by 2016, the debt levels have relatively rarely been as low as that at any time during the past 50 years.

  • John East Belfast


    They didnt know any better and most weren’t mobile – the impact of the Education reforms and the Grammar schools didnt impact until the seventies onwards.

    They also didnt have the huge levels of personal negative equity in their homes.

    And of course the world was a much “bigger” place.

    Not to mention people were probably less selfish.

    The other thing that will frighten off the young will be the ageing population and their need for health and pension provision.

  • slug

    We don’t have lower debt in the UK but the lower level of sterling does help with boosting the economy.

    The US is having more problems than the UK in part because the Chinese currency is refusign to appreciate.

  • HeinzGuderian

    pip……………I wish you were a money lender !!!! 🙂

  • Aquifer

    Cut public sector pay but allow employees to borrow money against future income, to be repaid by a surcharge on income and inheritiance tax, or by redundancy payments. This will allow people who need to adjust over a period to do this, e.g. with children at university, and will maintain spending levels when others expect income in future. e.g. From inheriting overinflated property.

    And invite foreigners in.e.g. By clearing areas of new developments for arabic and chinese speakers. And open more universities to fill those bedspaces.

  • Alias

    JJ malloy, as Dylan said “It’s all over now, Baby Blue.”

    It will now take a revolution to undo all that the government have done to convert external debt into sovereign debt and to contain eurosystem debts within the state. What should have been done is that failed banks should have been allowed to fail, and failed lenders should have been allowed to suffer their own losses. Of course the nation should have guaranteed national depositors (up to a 250k limit for private individuals but zero for corporations who could and should have taken out indemnity) but the bondholders and others should not have been bail-out. The assets of the banks should have been used to fund the depositors as preferential creditors, with all others getting pro rata shares in the bank as final payment.

    That will occur within two years at the extreme outer limit when capital has taken flight and the government has no money to pay for state pensions, health care, or even soup for those on the dole. 70 billion has just been extracted from the country by those that have economically colonised it and the regime that now serves their interests, and there is another few hundred billion to go via that route with the remainder of the wealth exiting the country via the private route.

    The good news, however, is that 1.67 trillion in borrowed wealth won’t exit the country, but the bad is news is that it doesn’t exist anymore. All the wealth is exiting the economy, with little to nothing left to reinvest in the country. Not that a bankrupt country will be able to generate the new wealth that is required to replace the bulk of the 1.67 trillion that disappeared in bubbles but that is what will the focus will have to be. It won’t be a case that incomes taxes can be increased since they already at unsustainable levels for a country that has such high personal debts and if corporations are used to increase taxes with the purpose of exporting that wealth to eurosystem banks rather than it being reinvested in further wealth creation in the economy then there goes the last of the soup…

    The reality is that Ireland traded its economy for a credit card when it joined the eurosystem. The actual Celtic Tiger occurred prior to Ireland surrendering sovereignty over its monetary and macroeconomic policies to the EU and dumping its banking system into the eurosystem. That was circa 1993 to 2000. Ireland’s exports were the foundation of its real economic success, but those exports are now less than half the level in real terms that they were before it joined the Eurozone. So instead of importing wealth by exporting goods, Ireland started importing wealth by borrowing it. The good thing about export-based manufactured wealth is that you don’t have to pay it all back – ‘tis yours to keep and spend as you please. Just as the last 10 years was squandered spending that borrowed money (and pretending we’d actually earned it rather than just borrowed it), so will the next 100 years be spent paying it all back. Unfortunately, you’ll have to earn that wealth before you can repay it… and you’ll have to do that bankrupt!

  • Alias

    Given that 340,000 properties are vacant and that the average is three-bedroomed, over a million new immigrants would have to be imported in order to work the law of supply and demand to the point where devalued assets regain their former value. While that would please haters such as you who would like nothing better to undermine the right of the Irish nation to a nation-state, it won’t work as a solution because neither one million state-funded university places nor one million jobs exist for them to pay the rent on those properties so all that would happen is that another few hundred thousand immigrants would be added to the few hundred thousand that are already funded by Irish taxpayers. When it is soup and not cash that is one offer from the state then it will be the immigrants that will be the first to feel the heat so be careful of what you wish for…

  • sammymehaffey

    It is not true that the owed Euro would remain in Euro. negotiation is the name of the game. Lenders always negotiate if that is the only option. As for closer integration this has not happened and will never happen. One size does NOT fit all. the Eurozone is a failed entity as long as the PIGS are in it and the greater integration the less likely it is to succeed. Sorry.

  • Betterworld Now

    EUOBSERVER are reporting today ( that the European Central Bank considered activating the eurozone’s emergency rescue mechanism to provide Ireland with funds, if last week’s bond auction had gone wrong.

    Citing unidentified government officials, a German daily said several euro-area governments had been told to raise money on Ireland’s behalf in case the need arose.

    This is contrary to the framework agreement for the European Financial Stability Fund, which says that member states must first make an application for aid before the ECB and the European Commission can make a decision.

    Unless of course our government did make that application and didn’t tell us about it – some journalist or opposition TD should ask them.

  • Congal Claen

    Hi Alias,

    I also believe that the RoI should not have guaranteed the banks. However, when the banks failed that would have meant their loans being called in ie a firesale of residential property. Really, it’s just a big mess with very little that can be done except just watch and see without anyone truly knowing what is going to happen…

  • JJ malloy

    It’s all very depressing, to say the least.

    Where do you find most of your news and analysis on what goes on? I’m interested to check it out myself.

    Also, is there any books or reading you would recommend on what happened to the Irish economy in the last 10 years? There are some out there, I know, but many of them take the conventional line.


  • barnshee

    “ie a firesale of residential property”

    Just returned from at trip up the west from Limerick. The place is littered with half finished/,empty/ semi occupied housing areas/estates- found the odd one in NI as well,

    its going to take the above firesale in some form or other to shift the surplus or knock it down.

  • DK

    Like new famine houses – except the occupants didn’t die, they never existed in the first place.

  • Betterworld Now

    The occupants exist alright – they are “living” in B&B accommodation at the tax payer’s expense BECAUSE the government wont buy up the property at fire sale rates and prefers to support the landlord class by guaranteeing rental returns.

    In other countries the government would have spotted the opportunity to solve the housing crisis by offering a 6month window to purchase all the empty houses at, say, 30% of their book value and rent them out to people on the housing list at a fixed percentage of their income (lets say 18%) ad infinitum.

    After 50 years all the debts would have been repaid and the taxpayer would be raking in the rental income and banking the capital appreciation. It would make for a very useful buffer fund for future bank collapses or pensions.

    If ECB rules prevent this (and it is about time that Ireland started to spell out the options to them – we have the power to pull down the Euro if they don’t play ball with us – and they know it, because Greece spelt it out to them 12 months ago), Ireland Inc. should package them up and flog them to an oil rich nation that wants a hedge against a post peak oil future. There could be a buy-out clause after 50 years, like a motorway toll.

    At a 70% discount, the speculators will loose their shirts (bo hoo!) but the state will gain an asset that will save it money in the longer term.

    We have got to get real about the sovereign rights of states who are serious about protecting their citizens. The kinds of forelock tugging we currently witness our government engaging in, at our and our children’s expense, is verging on the treasonous.