The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
Because the Fiana Fail dictatorship was not the legal government? Because everybody had to know how exactly the "Celtic Tiger" would crash?
Nationalistic nonsense. Next up: How the ECB caused the Famine.
You might want to note that most here are not irish. So it seems wrong to claim that nonsense on behalf of the irish is nationalistic.
Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
The first was malfeasance by not doing due diligence by the Irish banks and the foreign financial institutions who lent money to the Irish banks to fund the real estate bubble.
The second was the improper action by entities in the Irish government who bailed-out the Irish banks and loaning foreign institutions. Proper financial regulation and oversight would have would never allowed the Irish banks to get into this mess in the first place; proper financial regulation and oversight post-mess would have let the banks fail with the Irish government "picking-up the pieces" as Migeru has already outlined elsewhere in this discussion.
Debt is paid off by the cash stream generated from the productive (goods and services) assets the debt was used to purchase XOR the cash stream generated by a vibrant economy and then redirected to debt service. Consumer real estate purchase is a perfect example of the latter. (At least as long as the house, whatever, is held by a consumer. I note purchase for rental is different.) Consumer real estate does not generate cash but, rather, is a net drain of cash when viewed from the total amount of discretionary consumer income. This means:
As the cash stream generated by the Real Economy is diverted to debt service the total amount of consumer spending MUST fall by that amount. This, in turn, lowers economic activity (eventually) in exactly the place where the cash comes from to service the debt: the "Real Economy" where people create wealth by producing goods and services and get cash for so doing.
The result of this has been analyzed (no link, for which I apologize) to conclude banks and other financial institutions withdraw, roughly, 7 pounds for every pound of debt issued. No economy in the world, including the global economy, can withstand that rate of predation. Eventually marginal borrowers will be forced into non-performance initiating a positive feedback loop in the negative direction and the bubble bursts.
No one 'round here, I should think, is saying debt is necessarily evil. Debt assumption for increasing production generating an Internal Rate of Return (IRR) (cash) capable of debt service is a vital part of a non-barter economy. Debt assumption that doesn't generate an IRR and simultaneously reduces the ability of the micro-economy to service that debt is stupid because it WILL, eventually, crash the economy.
As a former banker, I can tell you there are known methods and procedures for determining the credit-worthiness of borrowers. Running those is what Due Diligence is. Since 2004 I have been warning the ever-increasing amount of money flowing into real estate was going to crash the global economy because I ran those methods and procedures. The various financial institutions did NOT go through that process and, IMHO, should be held accountable.
She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
How the ECB caused the Famine.
by Frank Schnittger - May 23 23 comments
by gmoke - May 19 4 comments
by redstar - May 12 18 comments
by redstar - May 14 16 comments
by redstar - May 6 50 comments
by In Wales - May 3 1 comment
by talos - Apr 29 49 comments
by Luis de Sousa - May 1 13 comments
by Frank Schnittger - May 2323 comments
by gmoke - May 194 comments
by redstar - May 1416 comments
by redstar - May 1218 comments
by redstar - May 650 comments
by In Wales - May 31 comment
by Luis de Sousa - May 113 comments
by gmoke - Apr 292 comments
by talos - Apr 2949 comments
by ManfromMiddletown - Apr 245 comments