Internal
Trade in
Somehow, the
original link
to politics.ie nolonger works; so as it happens, I had the piece saved.
So here
it is!
May 2010.
[QUOTE=irishproduce;2676515]Is
it not unfair though to ask the prudent tax payer who is trying to put
away his
money, who didn't buy into the property circus we had going there for a
while
and who didn't run up debts using cards/ personal loans etc? I mean, is
there
no personal responsibility here at all?
I don't have any of
the aforementioned debts, I am almost 30 and I feel my time is coming
soon
thank God when I can start to make a go at getting a home for myself at
what a
home should be worth - a fair price based on what it is I am buying.
I understand there
will be some who will argue that I am already bailing out banks for
their
mistakes and all of that but as a citizen of the state, I kind of
comprehend
that I need the banks to function in order for my country's financial
system to
function to some degree so I don't get too twitchy when I think about
this.
However, what will really make my teeth itch is the thought of having
to fork
out more to ensure that friends and friends of friends who I had to
explain
myself to when deciding not to buy a house (while they thought they
were the
bees knees buying it all up without thinking for a second) get to keep
theirs
using my money while the whole thing becomes harder again for me
because my
extra cash is being used to fund a scheme that ensures I pay for
someone elses
personal gain.[/QUOTE]
An attempt to
answer your concerns is here
[QUOTE]I see your
point about not bailing out the people who were given jumbo mortgages.
But you
are not taking into account the very real financial harm that these
mortgages
are having on the real economy. I calculate that the jumbo portion is
around
€80bn. This amount of mortgages is not owned by the Irish financial
institution
who gave out the mortgages but by bank bond holders i.e. international
hedge,
pension and banks. The amount leaving the country as annual mortgages
are
repaid is c.€6bn. This money is earned by our young mortgage holders
and is
earned in every locality in
It is my contention
that the annual repayment portion €6bn representing the over payment on
house
purchases will cripple our economy. All our economic negative
indicators is
directly related to this leakage out of the system of working capital.
It
affects every bodies lives; it is the action that knocks down the whole
pack of
cards. Our economy can not work with this massive hole, through which
the hard
income of our young men and women just flows away out of circulation.
THIS
SITUATION MUST BE SOLVED. It can be done in two ways.
[*]Writing off Bank
Bonds to release €80bn into circulation.
[*]Our government
injects €80bn into the economy.
It appears that the
current powers that be in the EU or
[*]Borrow it. It
can be paid back from the VAT etc generated in the economy over the
following
five to six years as stated in the link to my previous submission above.
[*]Our government
could tap the new ECB/IMF initiative by selling government bonds to the
ECB.
The beauty of this
initiative is that the economy not only gets an initial jolt of €80bn,
but each
year for as long as people are paying back a more reasonable mortgage
repayment.
irishproduce.
This would benefit everyone. There would be no way on this wide earth
that
another housing balloon would be allowed develop.8-)
Well I never!
Support for the idea in my last submission comes from global financial
giant
Citi, or to be precise in its London-based European economics unit.
Here is an
extract from article "Nama for the little people finds backer in global
giant" by John McManus in the Irish Times.
[quote]In a recent
report, Euro Weekly: Sovereign Crisis – How Will Policy Respond, the
Citi
economists homed in on the problem of private sector debt in the
peripheral
euro-zone members, Ireland, Spain and Portugal (but not Greece), which
is
between six and four times larger than their respective Government debt.
They are talking
about money borrowed by households and business during booms, fuelled
by low
interest rates.
They concluded that
this debt had be addressed first – or at least in tandem – with any
sort of
solution to the Government debt crisis faced by these countries.
The reason for
this, they argue, is that the measures being put in place in these
countries to
deal with their government debt problems – massive cutbacks in
Government
spending and higher taxes – could shrink their economies so drastically
that a
vicious cycle sets in.
More and more
private sector firms and households will go bust, causing more and more
problems for the banks, requiring more and more government help,
requiring more
and more government borrowing, warns the bank.
The solution,
argues Citi, is for some sort of upfront measures to reduce the private
sector
debt burden and stop this cycle setting in. They go so far as to
suggest some
sort of European Bank Rescue fund that would fund the orderly up-front
writing
off by banks in peripheral countries of private sector debt; a
veritable
National Asset Management Agency (Nama) for the people.
It would have to be
funded by the euro zone as a whole, believes Citi, and the authors of
the
report – which predated the €750 billion emergency measures announced
two
weekends ago to try to head off the sovereign debt crisis – are under
no
illusion as to how unlikely this might be. Nama
for the little people finds backer in global giant - The
Irish Times - Mon, May
17, 2010[/quote]
The whole house
building mania should never have taken place in a country with an
abundance of
Third Level Business Educational Establishment. But it did! The result
is that
too many of our young people are in serious Negative Equity in relation
to the
business activity of our small economy. The jumbo part of mortgage
repayments
as stated previously above is crippling Internal Trade. If these people
are not
rescued; Ireland Inc. is sure to go under, and more cutbacks etc will
hasten
this process.
[quote]The Debt
situation must be resolved: personal as well as banking and government
debt;
this can only be done by a complete change of tact on behalf of the EU.
We have got to
enter a period of consolidation and drop the notion of economic growth
at all
cost, which sadly The Lisbon Treaty emphasises quite a lot. Our young
people
have got to be rescued from the noose of Negative Equity,
and exposure to too much government debt.
"No generation has a right to contract debts greater than can be paid
off
during the course of its own existence."- George Washington to James
Madison 1789. Will Durant (
These Negative
Equity people should be rescued in an orderly fashion. Otherwise, they
will
stop paying their mortgages in drips and drabs over the coming years.
In the