How to rescue the financial system

I found this clip today, it is talking about some of the issues I mentioned in the post ‘Survival of the Weakest’ and it talks about the need to save healthy banks in favour of saving weaker banks. The common sense approach would be that you don’t privatise profits and socialise all losses and that you focus on saving firms (albeit banks) that are entities worth saving to begin with.

“A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him” – John Maynard Keynes.

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Generic overview of the market 2009: by sector

I was asked by a colleague in the UK to provide an overview of the Irish mortgage market, he has often advised the Bank of England in the past on the UK buy to let market, however this time it is in relation to a talk he was due to give to an international financial services group on the Irish economy. Below are the contents of my correspondence which is a no holds barred view of the mortgage market in 2009.

Remortgage: This area is finally starting to see some life again, the rate drops are filtering through and many of the people on fixed rates taken out in 2005/2006/2007  are shopping around, as always new business attracts better rates than existing customers so there is once again an argument for switching.

However, the many people who took out trackers are basically out of the market in the long term as every single lender has removed tracker mortgages from the market, in fact, if you know of a lender willing …

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Bill Gross of Pimco talks about the deficit in the USA

Bill Gross, known as ‘Mr. Bond’ runs the largest bond fund in the world, in this video he talks about many of the issues facing the economy under the new Obama presidency. Bill Gross is a fascinating character who started his careers as a professional gambler I always enjoy listening to his views on the market which he does with an intersting mix of macro/micro/common sense views.

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New trends in underwriting and credit

It is 2009 and one of the things we need to look at (at least from the mortgage market perspective) is the availability of credit. Many associations such as ISME and politicians such as Joan Burton have voiced strong opinion on the need for credit to be extended to small businesses. The same credit contraction is happening in lending for property.

While our firm, and almost everybody involved in the mortgage market accept that we are not at market clearing levels, the unavailability of credit for those who do wish to buy and are capable repaying their loans is going to cause an unnecessary distortion which will drive prices down further than is rational. Without getting too deeply into the reason for the credit contraction/deleveraging process which we have covered many times here before, the point of interest is the new brand of underwriting we are likely to see.

In the past people within the financial industry were looked upon favourably, not only due to the fact that they normally represented a …

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‘Thrift’ and why it will be the next fashionable trend

If the Celtic Tiger brought the fashion of consumption and SUV’s then certainly the polar opposite will come true in a downturn, and that will be the emergence of ‘Thrift’ as a way of doing things. Today we will look at some popular thrift websites, as well as how recycling will come into play in the way we do things for the coming years.

The older generation must be secretly laughing at us, they were frugal and appreciated the value of money, I have heard this said on radio, the television, and even on the streets. I suppose it never hit me too much personally because I’m not a flash type of guy, I own a car but I cycle to work (partly due to my feelings on environmental responsibility and party because its faster than sitting in traffic), I could afford nicer clothes but I don’t feel the need to be impressive in that department so my banged up civvies will suffice (as far as I’m concerned). …

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'Thrift' and why it will be the next fashionable trend

If the Celtic Tiger brought the fashion of consumption and SUV’s then certainly the polar opposite will come true in a downturn, and that will be the emergence of ‘Thrift’ as a way of doing things. Today we will look at some popular thrift websites, as well as how recycling will come into play in the way we do things for the coming years.

The older generation must be secretly laughing at us, they were frugal and appreciated the value of money, I have heard this said on radio, the television, and even on the streets. I suppose it never hit me too much personally because I’m not a flash type of guy, I own a car but I cycle to work (partly due to my feelings on environmental responsibility and party because its faster than sitting in traffic), I could afford nicer clothes but I don’t feel the need to be impressive in that department so my banged up civvies will suffice (as far as I’m concerned). …

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Every little helps…. Mortgages by Tesco?

I read an interesting article today (here) about Tesco. Apparently Tesco Personal Finance will offer mortgages in the UK in the near future, however, they have not decided if they will include broker facing product ranges in the recently announced offering.

The supermarket chain has taken on Benny Higgins, former head of retail business at HBOS, and in press over the weekend he says there are plans to expand the Tesco Personal Finance offering to include mortgage and current accounts products.

He said “Today there is an opportunity to be a responsible lender in mortgages. At present there are still funding problems but that will change. In the second quarter of next year financing will be freer and there could be a very active re-mortgaging market.”

Tesco have (in Ireland) faced bitter competition from discounters such as Aldi and Lidl, however, neither of those firms have entered into the personal finance arena. Tesco is already doing car insurance, …

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A tale of two commissions.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.

Some of you may recognise this line from ‘A Tale of Two Cities’ by Charles Dickens, however, I am not a classical scholar, instead it sums up my monetary sentiments for 2008. On one hand we are seeing property prices [the very foundation of the majority of Irish wealth] wither away, as global conditions worse, especially in the USA where house prices are now falling quicker than they did during the Great Depression.

There has been more than a few articles in this blog about the current issues in the broker market, the description I would use to describe it at the moment tends to modulate between ‘ugly’ and …

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Permanent TSB? More like Permanent inability.

Permanent Tsb are in the financial news again, this time its not for ripping off brokers though, its because their sub-prime mortgage wing ‘Springboard’ have had their funding pulled by Merrill Lynch. Springboard is a joint venture between PTsb and Merrill Lynch, the question now is ‘what does a mortgage company who can’t lend money do?’. I suspect they will be standing in line with the Woodworm who specialises in concrete only products.

The same thing happened several months back to another lender and they swiftly left the market. The concern now is for the IL&P share price, Dennis Casey will have some serious wangling on his hands to avoid disaster because he now has a war on several fronts, in fact, if I could raise Bismark from the dead and get a decent Prussian translator I would do it and let the original ‘Mr. Blood and Guts’ lay down some facts for the beleaguered CEO of Permanent Tsb.

Today’s news is about the fact that a major bank (Merrill Lynch) is pulling funding from Springboard, they are not pulling …

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IBA invites you to… never mind…actually, we changed our mind. (PIBA & IBA merger is cast out)

The Irish Broker Association (IBA) made an approach to the Professional Insurance Brokers Association (PIBA) whereby their 300 strong membership might amalgamate with PIBAS nearly 800. They all went into a room and entered negotiations. This wasn’t a case where one had a gun to another’s head, it was something that would be of mutual benefit to all brokers in Ireland, because brokers, unlike almost any other industry, don’t have a single representative body.

So it makes total sense right? Of course it does! Standing as a united front and being able to ensure that members reach certain standards of operation, giving a voice to a multi-million euro industry, there is such great scope that I figured ‘even if we have to get over 75% in favour we’ll still be able to do it’. And we were.

Actually, PIBA were, the votes came in and in a voice of unity we voted with an 80% majority to go ahead and make one proper representative body.

The IBA on the other hand, who actually made the approach for all of this …

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