Will stimulus plans lead to disaster?

In this video which was featured on Yahoo! Tech Ticker Peter Schiff of EuroPacific argues that any additional stimulation of the economy or bailout packages will actually exacerbate the situation rather than remedy it. The outcome of the current economy will perhaps decide once and for all who holds the keys to recovery, the Keynesians or the Austrians.

The Keynesian solutions were fine tuned post-fact and this is the first time since the 1930’s that the theory is getting a real life test, in watching the Davos Debates one interesting factor is that Austrian Economics seems to be getting an equal amount of airplay. Stephen S. Roach said at Davos that we need to get on with the ‘heavy lifting’ where the global rebalance occurs, current account deficit nations have to start saving while current account surplus nations need to spend, this is the inverse of what Keynesians would perscribe because under their guide countries like the USA (deficit nation) need to spend their way out of …

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The bailout has arrived, Irish banks in line for Government funds.

The banking bailout has come along, as many of us always thought it would, in the form of a (potential) €10 billion Euro package. An announcement was made yesterday and shares in financial institutions surged on the back of the news. The actual details of the deal are scant at present.

The Minister of Finance remarked on RTE radio that the main thing he hoped to see as a result of this was for lending to return to the market, we can only assume this refers to enterprise lending and not to mortgages as the mortgage market has not frozen to the same degree the business loan/credit area has.

The National Pension Fund Reserve is the area the funds will come from, an obvious issue here is that the fund made losses of c. 33% in the last year and cashing out now will mean those losses are crystallised without hope of return should the markets come back any time soon. …

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How to get a Mortgage, getting a mortgage is easy…

If you want to get a mortgage the process is fairly simple, it’s a big undertaking for certain but that doesn’t mean that everything surrounding it is overly complex. A mortgage is a security backed loan, this means that there is some actual asset that a lender has a lien on (lien: this term means ‘ownership of’ so if a lender has a lein on your property in the form of a mortgage then they own the property ahead of you owning it until you pay them off) and its generally called ‘the security’ or just the ‘property’.

The biggest concern for any bank or building society when considering a mortgage is the clients ability to pay back the loan, this is sometimes referred to as ‘repayment capacity’, or if you want the hardcore underwriting terminology its the ‘debt service ratio’ and its normally a calculation that decides numerically if a person has the ability to service a loan obligation. There are different ways of doing this, some banks use a multiplier, for instance: you can borrow four times your …

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