An argument for and against property tax in Ireland

Today’s article will be unpopular with almost everybody, myself included, however, it is not intended to scare or cause frustration, merely it is intended to give a rational answer to an ongoing problem that we have had in Ireland. The problem is that of fair and sensible taxation on property and how to go about it, at the moment property tax is a front-loaded scheme referred to as ‘stamp duty’ and the system for charging is as follows.

1. First time buyers pay no tax irrespective of what they buy as long as it is for their primary residence. 2. Second time buyers pay stamp duty (property tax) if they buy an existing property, however, if they buy a ‘newly built’ property then they are exempt. 3. Investors pay stamp duty (property tax) on all property transactions. 4. Commercial buyers pay stamp duty (property tax) on everything costing …

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Brokers short sell themselves in a race to the bottom.

It is clear that I am no fan of the new ‘homeloanchoice‘ scheme brought into being in the 2009 budget. I have always felt that ‘if it ain’t broke, don’t fix it’ and this is a case in point. There has been no empirical evidence to suggest that this scheme was called for, there is no research, no surveys, nor any hard fact that gives the foundation to the creation of a scheme that will potentially see upwards of half a billion going towards it.

When you take medical cards away from old people and give income levies to even the most low paid of workers, a scheme that helps create debt when none was asked for seems ridiculous at a minimum. So why was it created? There was no demand for it, and we know from speaking to our customers and from other people in the mortgage market that …

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The best monetary decision will be that which is taken

I have looked back at market crashes, the Dutch Tulip Bulb crash, the Railway crash in the USA, the Great Depression, the Oil Crisis in the 70’s, The 1987 Stock crash, the S&L crisis, the dotcom bust and our most recent and several things have become clear.

The ‘solution’ is whatever was done at the time thus meaning we try to find the answers of tomorrow by looking back at what worked in the past and applying it to the new situation, it is one of the most basic human methods of learning. Children will get a burn from a fireplace once and it is then engraved in their minds that fires are hot and can burn you. Thus we see the same happening with monetary policy and with businesses.

The question though is this: What if what we did in the past was wrong? Does it make a solution that appeared to work relevant? If for instance I was the sole solution provider for the Great Depression …

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NIB's 'LTV' Tracker now extinct

NIB had long championed their ‘LTV Tracker’ as the best value product on the market. Indeed it was, but today we have seen the removal of it and must question why they even continued selling at a loss so far into the worldwide financial crisis as NIB themselves would accept, it was a negative margin offering for quite some time now.

NIB’s LTV tracker was born two years ago and ceased to exist as of close of business yesterday. NIB have shown a trend in their marketing, they were amongst the last to offer tracker mortgages and now they are amongst the last to cease offering them. The news comes hot on the heels of news that NIB is responsible for a third of the losses of parent company Danske Bank, those losses amount to c. €80 million.

We had mentioned in the past on this blog that their loans were unmatched, however, …

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NIB’s ‘LTV’ Tracker now extinct

NIB had long championed their ‘LTV Tracker’ as the best value product on the market. Indeed it was, but today we have seen the removal of it and must question why they even continued selling at a loss so far into the worldwide financial crisis as NIB themselves would accept, it was a negative margin offering for quite some time now.

NIB’s LTV tracker was born two years ago and ceased to exist as of close of business yesterday. NIB have shown a trend in their marketing, they were amongst the last to offer tracker mortgages and now they are amongst the last to cease offering them. The news comes hot on the heels of news that NIB is responsible for a third of the losses of parent company Danske Bank, those losses amount to c. €80 million.

We had mentioned in the past on this blog that their loans were unmatched, however, …

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ECB Cut Rates by 0.5% bringing the ECB base rate to 3.75%

The ECB rate change has given many of us a pleasant surprise, the ECB has cut rates by 0.5% giving a new base rate of 3.75%. For many of us that means new lower mortgage repayments (if you are on a tracker mortgage) for people on variables you will have to adopt a ‘wait and see’ approach because banks are not obliged to pass on the rate change. The pressure is coming down at least for now.

[Take note: this is not a ‘positive’ rate cut, it can have a positive result but the motivation behind it raises questions about the solvency and losses of major institutions as well as the threat of deflation.]

So, why would a bank opt to not pass on a rate reduction? Simply put, the income from many tracker mortgages does not cover the cost of funds that banks run on and therefore it would not make commercial sense to give people …

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Things are gonna change ’round here.

The banking sector is in for some big changes, today we will consider some of ‘what may be’, this article is taken with a view of looking at some of the results that could come out of the current financial market.

One brief mention is deserved for out all time low-popularity bankers. I am not banker, but I do have some understanding of the financial systems which is what forms my opinion… There are people calling for the government to cap the wages of bankers. We should not have government officials decide their wages, as bankers never decided government wages despite pay rolling the state for years during the upturn. Banks and credit flow are the basis of modern society, lack of which is one of the hallmarks of second and third world countries.

If politicians want to make a true difference they should cut their own wages, its seems ludicrous that our Taoiseach earns more than the President of the USA. And if they want to challenge them on the grounds that financial institutions ‘brought the country down’ it …

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Things are gonna change 'round here.

The banking sector is in for some big changes, today we will consider some of ‘what may be’, this article is taken with a view of looking at some of the results that could come out of the current financial market.

One brief mention is deserved for out all time low-popularity bankers. I am not banker, but I do have some understanding of the financial systems which is what forms my opinion… There are people calling for the government to cap the wages of bankers. We should not have government officials decide their wages, as bankers never decided government wages despite pay rolling the state for years during the upturn. Banks and credit flow are the basis of modern society, lack of which is one of the hallmarks of second and third world countries.

If politicians want to make a true difference they should cut their own wages, its seems ludicrous that our Taoiseach earns more than the President of the USA. And if they want to challenge them on the grounds that financial institutions ‘brought the country down’ it …

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Bailout Abuse – distortions occur within 24 hours of Finance Bill

It is no secret that your author is anti-intervention, we speak at times about market distortions caused by government intervention. The recent finance bill was barely born when Irish Bankers chose to abuse some of the security and opportunities it brought about.

First of all we saw an email go out from Irish Nationwide in the UK going out touting deposit business because the bank was now fully backed by the government. One oversight we will see is that we are now going to do the job of HM Treasury. How? Simply put, the current bill backs Irish banks, not only here, but their branches abroad as well. What that translates into is the Irish state backing sterling deposits for sterling/UK based customers. Obviously there is no issue with clients themselves, they didn’t initiate the finance bill, but is it really the responsibility of the Irish state to extend this protection to other nations?

A further issue is that it will distort …

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The road less travelled and life in the new world

I wrote Monday night/Tuesday morning about buying distressed stocks. So yesterday morning I bought Anglo Irish at €2.94 and today they are sold for €4.55 meaning that the idea brought in a 55% in just over 24 hours, it was risky, yes, but it also brought a return that would take about 7 years in a deposit account. Taking into account capital gains tax it is still 45% clean and clear (although I won’t have any as this is the first stock I sold and it the profit didn’t exceed the €1,270).

However, the point being made by the post yesterday was that it is a time of volatility, it is a time of risk and there are problems in the world, but there is also still PROFIT! The type of trading I did is also not advisable for the average person due to the risk attached, as stated in the first post I was willing to lose, to realise a total loss, if you don’t have the stomach …

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