Chris Donoghue interviewed Karl Deeter of Irish Mortgage Brokers regarding the rule changes that were brought in by the Central Bank and both how and who they would affect.
We were part of the ‘Friday Panel’ on Pat Kenny’s show on Newstalk, the other guests were MEP Nessa Childers and Fr. Peter McVerry. Shane Coleman was sitting in for Pat that day and we talked about all sorts of topics from bankers to country music and the Pope!
In this piece by Stephen Murphy of TV3 we spoke about the issue of Regulators enforcing pricing and the fact that it is not a common practice.
An excellent analysis of the issue with banks being bailed out, banks get into trouble and they are rescued (bailed out) or they default and creditors take a hit. However, often times the sovereign gets into trouble as well. Does the Sovereign then privatize assets or default themselves? Assets such as the banks fall into the hands of foreigners at that point – as we have already seen with Bank of Ireland.
If you look at the dynamic of the crisis to date you see the following flow (broadly but not exactly)
1. Sub-prime mortgages in the USA started to go under 2. Interbank lending froze as banks liabilities were unknown & collateral was of unknown quality 3. Interbank rates shot up 4. The crisis was not contained, culminating in the fall of Lehman which triggered a series of world events the most substantial aspect of which was a loss in confidence. 5. Markets fell rates were dropped to record lows in the EU, USA and Britain. 6. Recovery began with several bailouts in the majority of nations affected.
7. This is critical – bank and private debt effectively became public debt, in Ireland’s example this was via our banks, in other countries it was in the same manner or via quantitative easing. Across Europe the ECB was a key facilitator of liquidity.
The debt has now, in many countries become a public debt issue, in Europe specifically it is a Sovereign debt issue, the like of which the US …
We hear about Debt/GDP all the time (national debt/Gross Domestic Product; total output of the economy) and the standard argument is that we should be looking at Debt/GNP (national debt/Gross National Product; GNP strips out non-Irish domiciled output – what remains here).
The question should perhaps not be ‘which is better Debt/GDP or Debt/GNP’ it should be is ‘Debt/G-anything’ the relevant metric? There are a few reason for why GNP and GDP are both lacking, in fact it distorts a true view of our Deficit
1. It’s a thing of the past – both examples are historical by nature, they change and that is why any conversation on GDP and GNP is a constantly movable feast. Imagine if I asked you to drive across the country and describe the scenery to me, but you could only do so by telling me what you saw in the rear-view mirror? That is what GDP & GNP are about. Debt/GDP levels in Europe soared after …
One of my favourite firms is Institutional Risk Analytics who study banks and rate their risk. Chris Whalen of that firm is in the clip below, he recently wrote a book called ‘Inflated’ and I hope to review that on this site and elsewhere in the future. IRA are widely acknowledged as one of the best bank analyst houses in the USA.
Primetime looked at the property market news of a 40% drop in prices from peak to date and after the package piece they had an ‘in studio’ piece. The debate centred around property and mortgages as well as some of the issues regarding negative equity.