Ireland’s long nightmare of generational private debt…

If you missed RTE’s Frontline last night it is well worth doubling back on. Anchored in some robust market research from Amarach, the conversation seemed to reveal a generational split between those concerned about the moral hazard implied in mass debt forgiveness and those pointing out the that those who have bought houses in the last ten/twelve years find themselves under an unprecedented collective burden that is simply unsustainable.

A majority, 54%, of those in the Republic own their own homes. But when it comes to those over 55, that rises to an incredible 88%. When it comes to those with mortgages, the proportions are inverse: 89% of those between 35-44 have mortgages, whilst just 27% of those over 55 have exposure to mortgage debt.

The trouble is that this kind of debt is not going to get forgiven by any big deals in Europe; and despite the feverish speculation around Greece, we’re not even sure about how that’s going to happen. Whatever happens, the tougher questions will remain. Personal debt issue is not going to get wiped out in one (not necessarily easy) hit the way developer/bank debt/sovereign debt might.

That is more likely to be restructured through one of three mechanism: direct tax increases; mortgage levy; or a property tax. None of them are popular, with even minority, 43%, of those not owning a property supporting it.

As Amarach note, “the desired end is clear, the means less so…”