I am doing research on Globalization of economies. Economist argue over what is the best course to take. This is MHO the use of bank cards and not paying cash for things has caused this problem. If you make 50,000 (insert currency) and you are in debt because of bank cards and a mortgage of 500,000. Then you are living beyond your means. The bankers approved mortgages for people who did not have the means to pay for them. They in turn sold these derivatives to others. These had no real value, thus we had the real estate crash. This in turn caused the bank crash. This is simplistic but gets to the point of consumers and governments buying crap on credit with no means to clear the debt completely.
You thought the British banks were bust?
- Thread starter WeLuvIbiza
- Start date
West London Shadow
Active Member
I remember seeing a sh*tty bungalow outside Thurles on the market for 420,000.00 eur. An area in which there is virtually no local economy & the average wage is circa 20,000 eur. It made no sense & was always going to end in tears.
Apartments in Dublin which exchanged for 1m at their peak are now being sold via auction for circa 200k...
Apartments in Dublin which exchanged for 1m at their peak are now being sold via auction for circa 200k...
I remember seeing a sh*tty bungalow outside Thurles on the market for 420,000.00 eur. An area in which there is virtually no local economy & the average wage is circa 20,000 eur. It made no sense & was always going to end in tears.
Apartments in Dublin which exchanged for 1m at their peak are now being sold via auction for circa 200k...
That is the problem all over the world. The false wealth can not last.
agentundercover
Active Member
I remember seeing a sh*tty bungalow outside Thurles on the market for 420,000.00 eur. An area in which there is virtually no local economy & the average wage is circa 20,000 eur. It made no sense & was always going to end in tears.
Apartments in Dublin which exchanged for 1m at their peak are now being sold via auction for circa 200k...
I lost nearly 30 grand on a terrace in a sh1t part of Manchester, that take some doing % wise I can tell ya!
At present I reckon I am in 130k negative equity. Luckily, it is negated by my very competitive tracker mortgage rate of 2.1%. (set by the EU central bank, not irish banks)
It is these tracker rate mortgages that are crippling the Irish banks mortgage books at present, as they are now borrowing at higher interest rates to facilitate them. Persons who took out variable or fixed rates are now paying 5% rates.
We still have to bottom out......about another 20% drop at least id say.
The number of vacant houses and ghost estates is frightening. Many will have to be knocked down.
At present there is a big corruption story involving a previous Minister for Thurles called Michael Lowery. Allegedly, he awarded the biggest telephone license in the state to a friend of his and pocketed a large bribe in the process, and it was not his first time to do so. Another big name businessman, caught with bags of cocaine and hookers in a LA hotel, as he was about to jump off the balcony, paid to have Lowerys house improved.
The local people of Thurles, in their wisdom, knowing his dodgy past, still came out and elected him, topping the poll in the process. Like, what does that say about us?
It is these tracker rate mortgages that are crippling the Irish banks mortgage books at present, as they are now borrowing at higher interest rates to facilitate them. Persons who took out variable or fixed rates are now paying 5% rates.
We still have to bottom out......about another 20% drop at least id say.
The number of vacant houses and ghost estates is frightening. Many will have to be knocked down.
At present there is a big corruption story involving a previous Minister for Thurles called Michael Lowery. Allegedly, he awarded the biggest telephone license in the state to a friend of his and pocketed a large bribe in the process, and it was not his first time to do so. Another big name businessman, caught with bags of cocaine and hookers in a LA hotel, as he was about to jump off the balcony, paid to have Lowerys house improved.
The local people of Thurles, in their wisdom, knowing his dodgy past, still came out and elected him, topping the poll in the process. Like, what does that say about us?
WeLuvIbiza
Active Member
That's bad sh*t for you, Bez. Hope some good (whatever that might possibly be) comes out of this for the country. The oirish raiders certainly had a bumper Cheltenham, a teeny, temporary crumb of comfort for some.
I have been hacked off with losing 30-40k, your post puts it into perspective.
gl m8.
. Hope some good (whatever that might possibly be) comes out of this for the country. The oirish raiders certainly had a bumper Cheltenham, a teeny, temporary crumb of comfort for some.I have been hacked off with losing 30-40k, your post puts it into perspective.
gl m8.
Thats all that I can do!
Lots of people in similar or worse situation than me. Means very little disposable income and nobody spending in the economy, which means less tax's received and a bigger budget deficit.
As I said previously, we are odds on to default on our debt. Its just not sustainable. The bank debts are dragging down the country with it and we need to cut them off to survive.
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Morbyd
Moderator
The thing is, you only lose money on an asset if you sell.
I had this argument with journalists a million times when they were writing, at the height of the recession, that Russian businessmen had "lost" billions of dollars. No one "lost" any money just by the devaluation of assets. They only saw their net worth reduced.
I explained it this way: Let's say you bought a house for $100k and it rose in value to $200k in the boom, and then fell to $50k in value in the bust. Also, you've got $10k in the bank in cash.
At any point have you made or lost money? No. Not at all. You had $10k in cash and continue to. Your net worth is lower, but that's temporary as long as you've got a long investment horizon and no need to sell assets.
The problem comes when you have to sell assets, or if you can't keep up with the mortgage if you've gone "underwater" (when mortgage value is more than asset value)
I had this argument with journalists a million times when they were writing, at the height of the recession, that Russian businessmen had "lost" billions of dollars. No one "lost" any money just by the devaluation of assets. They only saw their net worth reduced.
I explained it this way: Let's say you bought a house for $100k and it rose in value to $200k in the boom, and then fell to $50k in value in the bust. Also, you've got $10k in the bank in cash.
At any point have you made or lost money? No. Not at all. You had $10k in cash and continue to. Your net worth is lower, but that's temporary as long as you've got a long investment horizon and no need to sell assets.
The problem comes when you have to sell assets, or if you can't keep up with the mortgage if you've gone "underwater" (when mortgage value is more than asset value)
agentundercover
Active Member
x 2
agentundercover
Active Member
Yeah we got the same + a bit more off the market peak value of the house, but were lucky that we had a big deposit in the first and parents with big pockets to....
wait there, this is becoming like a money management forum. I'll shut up!
agentundercover
Active Member
The problem is that many people have walked away or defaulted on loans on real estate. These have become real debt loss to banks when the housing bubble burst. The thought that housing values would continue to rise and people selling mortgages that were bad, made the problem worse. The real value of something of something is the price you can sell it for not the appraised value.
Ive seen this guys performances on tv before. Just another angry anti-anything journo. and after skimming the article, i can smell the fury of the words with the usual Tory bashing.
It wouldnt surprise me if he's replaced the letters on his keyboard with mug shots of the Coalition.
homes should be for living. not for profit. those housing speculators/buy to let, are just as guilty as those nasty bankers.
I agree that greed is at the center of the housing and bank crisis. Bankers and speculators saw profit in real estate. They thought there would not be a housing bubble. This does not apply to all cases but the consumer took loans their incomes would not support. The banks approved these loans recklessly for profit.
agentundercover
Active Member
And all of us as individuals. We - well most of us - kidded our selves that property was only going up and behaved accordingly.
Who, now, would take out a 105% loan on an asset you may wish to sell that has a variable value? I've got a few mates who did this as I bet we all have.
But imagine if Gordon had turned around in 2005 and
- Raised interest rates to prevent the property bubble
- Implemented a max to loan ratio of say 85%
- Banned self cert loans
And then gone to the city and wall st
- Heavily regulated derivative trading
- Banned credit insurance for anyone but holders
- Linked all bonuses for CDO traders to 25 year repayment stats.
Just imagine - he'd would have lasted 5 seconds for stealing the aspirations of young home owner and for damaging the city (god forbid). Sometimes humans only learn with stuff goes wrong.
i.e it was always going to happen who ever was in charge.
I agree, when people have more skin in the game they are more prudent
Thanks for the well wishes guys.
Its not as bad as it looks. The tracker saves me 100k over the life of the mortgage 25 years (as long as the rates stay under 3%) compared to a variable.
As Morybd correctly states I only loose if I sell the asset. Its my home and I intend to live here for a while. These things happen in cycles, it will come back again.
The results of the stress test on our banks were released today. They need another 24 Billion!
The new government proposes to have just 2 banks now, the rest are to be incorporated into Bank Of Ireland and AIB. All banks will be forced to sell off their assets.
Senior Bond holders are safe.........Subordinated to burden share after consultation with Europe.
Its not as bad as it looks. The tracker saves me 100k over the life of the mortgage 25 years (as long as the rates stay under 3%) compared to a variable.
As Morybd correctly states I only loose if I sell the asset. Its my home and I intend to live here for a while. These things happen in cycles, it will come back again.
The results of the stress test on our banks were released today. They need another 24 Billion!
The new government proposes to have just 2 banks now, the rest are to be incorporated into Bank Of Ireland and AIB. All banks will be forced to sell off their assets.
Senior Bond holders are safe.........Subordinated to burden share after consultation with Europe.
WeLuvIbiza
Active Member
Topical tweet from a bloke who used to work in a bank;
Nick Leeson
popular consensus is against banks too big too fail yet ireland is set to reverse this trend by amalgamating all banks into two
Nick Leeson
popular consensus is against banks too big too fail yet ireland is set to reverse this trend by amalgamating all banks into two