RTE Primetime, 5th April 2011 on Housing

Primetime RTE, 5th April 2011- on Tax Relief for Mortgages from Irish Mortgage Brokers on Vimeo.

We were delighted to take part in the studio portion of Primetime on Tuesday the 5th of April, covering housing and the problems of the indebted, the package beforehand was presented by Donogh Diamond while Richard Crowley was in charge of the studio section. The guests were Brian Hayes (FG), Michael McGrath (FF) and Karl Deeter of our own firm.

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The 4 year plan (synopsis) in simple English [including some sarcasm]

The idea behind it:

A plan to reign in out our spiralling deficit and national debt.

Why do it?

Because without this or something like it we are up $h1t creek royally (paddle optional).

Should you be happy about it?

If you are a masochist then yes, if you are a sadist then perhaps, otherwise no good news – except that with any luck we get economic growth back and sort out our mess once and for all. The big failure is the absence of a pain-plan for the bank, the taxpayers got one minus any anaesthetic, financial institutions once again (as always) are off Scott free.

GDP expected back on moderate increase this year due to strong export growth of 6% in real terms (real: considering inflation/deflation so +2% in a -4% deflationary environment = 6%).

Numbers losing jobs is slowing down – in Govt. speak they call this ‘stabilization of the labour market’. Deleveraging (paying off money) and high savings are causing a drop in …

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Falling euro, friend or foe?

Many critics of the Eurozone are sceptical because they have always raised the fact that countries cannot devalue their currency, think twice would be my response, what is happening with the Euro is a large scale depreciation that means nobody has to leave the zone to get cheaper currency.

There is a race to the bottom happening in my opinion, the Chinese have definitely lead the way thus far with their Yuan manipulation, the only reason the world plays ball with them is due to their manufacturing output of cheap goods (which would be cheap compared to 1st world production costs even if Yuan traded at fair value) which we want and willingly buy.

Then you have the dollar, the US has such massive forward liabilities that the dollar will have no choice but to tank, the UK sterling doesn’t have a great future either, fifty years ago it was worth five dollars now it is at $1.43 – but currency is not absolute, it is relative – and that is why you have to look elsewhere to see what …

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Behavioral Economics & Arrears – avoid repossession by reward

I had an interesting conversation with Frank Pallotta of Loan Value Group in New Jersey earlier today. Loan Value Group is an organisation that was set up to help avoid foreclosures, they use the expertise of behavioural economists from Wharton, mortgage finance experts, mortgage advisers, and consumer marketing experts, to work with lenders at risk of strategic default and likely default.

There are really only two classifications of borrowers in difficulty, those who can’t pay and those who won’t pay – Loan Value Group can both identify and work with either cohort.

We share a common view on principle reduction, Loan Value Group’s opinion is that ‘blind principle reduction’ is very negative, it addresses the consumers balance sheet, but from a working point of view for every other stakeholder its a mess. And if people are willing to lie for a 0.5 to 1% – reduction in rate then imagine the incentive if there was 10k or more in principle reduction? Therefore, we need solutions that don’t disadvantage the …

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Taxing Banks & Taxing Risk

In the first clip, James Galbraith (son of the famous JK), economics professor at University of Texas, discusses whether a new tax on big banks is justified. Ken Bentsen, of the Securities Industry & Financial Markets Association, and Mark Calabria, of the Cato Institute, share their insight as well.

In the second clip Mark Walsh, of ‘Left Jab,’ and Dan Mitchell, of the Cato Institute, discuss taxing banks based on their risk to the system.

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