Whats worse? Notre Dame Football? Or the Irish Economy?
Why do we have to read foreign newspapers to get the straight story?
You thought US Policy Makers were stupid?
If you thought the bank bailout was bad, wait until the mortgage defaults hit home
http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html
Its getting worse in Ireland.
Please remember that home prices are driven by the size of the mortgages that banks lend out.
I don't have to embellish this fact. Long term interest rates in Ireland are nearing 8%, yet the Leprechauns are still issuing 5% mortgages. Please! Someone tell me this is not so?
The Irish housing market makes Florida Real Estate look healthy. To keep an artificial floor on Irish home prices, the banks with of course help from the Government are keeping rates lower than they otherwise would be.....Sound familiar? This keeps home prices higher than they would otherwise be...does this sound familiar?
Without this absurd behavior, home prices would completely collapse which would lead to banks going into bankruptcy.
One problem here and this is why Ireland will assuredly need a bailout from the IMF and the Euro Stability fund is that next year all Irish Banks will come under the control of the ECB. This is devastating for the Irish Banking Sector, Irish Housing Market, and Irish Economy. By that time ECB rates will be higher. The ECB will force the Irish Banks to stop lending and to deleverage and reduce their balance sheets. This means the ponzy ends. No new inflated mortgages propping up inflated homes will lead to a massive housing correction.
The current extend and pretend policies of the Irish banks will meet face on with the ECB. The ECB wins.
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