Why the Irish Crisis is Going Global

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This is the result of fiat, paper money. And the parnership of government and banking and real estate. Most people in government had/have no idea how the bottom line works: Income - expenses = net income or loss.

ROY JOHNATHAN KENDALL of CA 1:31AM December 17, 2010

Ireland had a nearly 10 years party that had to end and the hang over is the big one ! EVERYBODY there is guilty and everybody took profit of the boom for a certain time except the one who did realised it won t last and cashed their chips before and you did not have to hold a nobel in economy to see the crash coming . Civil servants had salaries twice above the european average, everybody was more or less into properties (some on foreign markets without a clue of their nature...property fairs were hold every weekend) with skyrocketing mortgage/remortgage + a four by four and a lump sum...complete nonsense eveywhere. Ireland is now going to be bailout, will recover and find it s 'cruise speed' but with :
1- The property market that needs another -20% purge.
2- A minimum of 100000 locals will emigrate (not counting the foreigners who started to leave two years ago).
3-A minimum of 25% of civil servants had to go and the one left will get a pay cut of 20 %.
4-A series of cuts (mainly on social welfare recipients, pensions,primary and secondary properties ,water charges and child benefit).
No rocket science there ...a simple equation ..the state need 50bn per year and only get 25...so mind the step !
(NB : this has nothing to do with the banking crisis which is the cherry on top of the cake !)

Loulou 6:24AM November 18, 2010

You have to understand that this is not about greed. Yes, the whole reason there is a global recession stems from the housing market in the U.S. Clinton wanted to increase homeownership and that he did, by lowering mortgage rates, dropping interest rates, no background checks on possible defaults. So as the housing market soared, a bubble was created. People who normally could not afford a home now could. The bubble was made. Since housing prices increased, financiers on Wall St. did what they were told to do; make money. That is not greed, that is their job. So COD's and CDS's were developed and sliced and diced and when the housing bubble burst, no one could pay the debt that was owed on these financial instruments. Fast forward to now, and Ireland has experienced the similar rippling effect as the States. Housing bubble bursts and banks cannot pay back their debt. Bonds have been defaulted upon and the Irish state is in crisis. A bailout by the EU and IMF would lead to terrible austerity measures. (Look up Haitian death plan and Asian Financial Crisis) These crises have turned some nations back assward's. The Irish must do what they do best and that is to work hard and rely on themselves, they are the ones who can get themselves out, surely they got themselves in.

Micheal of CT 2:03PM November 17, 2010

I'm beginning to think that the nature of all human beings on this planet is the same. And when provided the chance, we will let greed trump all and any that is righteous and good.
We have met the enemy and it is us.

stjohn7 of CT 10:09AM November 17, 2010

sorry 140BILLION EURO I meant below

portroe 8:45AM November 17, 2010

to answer the above question, I heard on German News this morning that German banks loaned 140m EURO to Irish banks...no wonder the German government are eager to have us sign up to a bailout procedure

portroe 8:43AM November 17, 2010

This is essentially a home grown housing bubble. Over the past 2 years shocking stories of collusion between the main political party Finna Fail, the top banks (AIB, BOI and Anglo Irish Bank) and top land developers have come to light. It has been crony capitalism at its worst. It was allowed by the light touch Irish regulator. Most people including the opposition parties supported the government direction at the time.
The issues were cheap 100% mortgages, tax breaks for rented second properties and owner occupied properties. This feed into the Irish peoples love of owning their own home. As a result of this 2 bedroom houses in terrible areas were going for over €500,000.
The bubble bursting coincided with the global financial crisis and as an export driven economy we were in a lot of trouble.
Great article Rick.

Eanna 8:21AM November 17, 2010

I found your article very intersting. There is only one think i would to ask you regarding the particular matter. Where the irish banks exposed to the american market and mainly to other major US banks?
I would be really greatful if you could provide me with such an answer if you are aware of it.

Chris Roussos of CO 6:06AM November 17, 2010