Friday, 29 April 2011

Empty Houses - Let's Build More!

We're surrounded by empty houses - so why did council give go-ahead for even more homes?

RESIDENTS in an area of north Dublin awash with empty homes are objecting to plans to build even more new properties.

Homeowners in Brackenwood, Balbriggan, Co Dublin, say there is no need for a new development of 18 units, since they are already flanked by empty homes in surrounding estates.

The developers, Parkway Partnership, were last week granted planning permission for the units, which will be located adjacent to Brackenwood, after they modified their original application.


But local resident Rose Allen said: "We don't need any more houses. Who has the money to buy houses now?

"Now we have a developer coming in who wants to build 18 houses and it's the only green that we have in our estate. They're all going to be crammed in because the site is no bigger than a football pitch.

"It's in our own green area. We've no field, no trees in the whole estate, this is the only green we have.

"And they're planning to build a by-road as well which would bring a lot of traffic into the estate."

Another resident Siobhan Curtis pointed out that there are already idle units in Brackenwood, and a new development would be ludicrous.

"I really feel strongly against this. There are houses empty around us and I really don't want this to go ahead. I don't understand it.

"There are idle apartments in Brackenwood.

"We don't need more houses, ideally we need a playground there or something like that.

"In the estate behind us, we can actually see houses behind it that are idle, and the houses haven't been finished either."

However, a spokesperson for Parkway Partnership said that he believed there would be a market for the new housing development which, he added, would be sympathetic to the surrounding area.

"We got the planning permission a couple of years ago, and we're just varying it now. We're actually putting in a much more sympathetic plan with less housing units, lower density and lower height.

"We already had permission for 44 duplex apartments on that site, and we're now looking for 18 houses so it's a lot more sympathetic. The open space there will be better and the existing road will be better maintained."

Fingal County Council declined to comment on the issue yesterday.

A spokesperson said: "Fingal County Council does not comment on any individual planning applications... the decision for this application may be appealed to An Bord Pleanala within a four-week period from the date of the decision granted."

Report by Geraldine Gittens - Evening Herald.

Wednesday, 27 April 2011

Irish Property Overvalued By 30%...

Irish property could still be overvalued by 30 percent...

Irish house prices increased by around 330 per cent between 1996 to 2007 – a bubble of impressive scale and duration, but a bubble nonetheless.

Plenty of outside observers saw the writing on the wall and said so, but they were overlooked in the Celtic Tiger gold rush. The European Central Bank (ECB), the Organisation for Economic Co-operation and Development (OECD), the Financial Times, the Economist and the International Monetary Fund (IMF) all spoke of dire portents early and often.

They were ignored. Cheap and easy money arrived in Ireland just as the tiger economy geared up. The country adopted the euro and access to a large pool of low-cost European finance with it.

When the bubble burst Ireland's main domestic financial institutions were wiped out and European institutions and the IMF took over the nation's financial affairs. So the question now is has the country reached the end?

According to a report in The Irish Times this week one key factor will be residential and development property values. Ireland is currently hoping for a stabilization of prices at current levels.

From 1953 to 1996 the ratio of the price of new houses in Dublin to average industrial earnings was 5.3. That is also where it was in 1996. In 2006, it reached 13.7 but by 2010 it had fallen back to 7.4.

Returning to the pre-bubble level, average house prices in 2010 should have been approximately €180,000 instead of approximately €250,000 in terms of average house prices and average incomes.

Report by DARA KELLY - Staff Writer

Sunday, 24 April 2011

Bailout Boys Go to Dublin...

Brian Lenihan tells the Irish bailout story on Radio 4...

The inside story of Ireland's unprecedented economic bailout is revealed in Bailout Boys Go to Dublin, a new documentary on BBC Radio 4.

In his first major interview since the last November's bailout, former Irish Finance Minister Brian Lenihan recalls his feelings as he prepared to sign up to the 85bn euro (£75bn) bailout - a deal which would end Ireland's economic sovereignty.

"I have a very vivid memory of going to Brussels on the final Monday and being on my own at the airport and looking at the snow gradually thawing and thinking to myself: this is terrible. No Irish minister has ever had to do this before," he says.

"I had fought for two and a half years to avoid this conclusion. I believed I had fought the good fight and taken every measure possible to delay such an eventuality and now hell was at the gates".

Dan O'Brien, the economics editor of the Irish Times, tells the story behind the bailout.

It is a tale of high drama, international diplomacy and - ultimately - political meltdown.

In the space of just two weeks and two days, the country was transformed.

The Celtic Tiger was dead and Ireland was forced to go with the proverbial begging bowl and accept a multi-billion euro international bailout.

It was an unprecedented situation. Never before had the International Monetary Fund given a bailout to a country that - publicly at least - was insisting it did not need it.

Mr O'Brien talks to the main players to uncover the truth of just what happened during those weeks in November and how the deal was reached.
'Totally nailed down'

Many believe Ireland was bounced into the bailout by Europe - and in particular the European Central Bank.

"The Irish government decided on its own to seek help. We have not pushed anyone" says Klaus Masuch, the chief negotiator for the European Central Bank.

But Brian Lenihan tells a very different story.

"The European Central Bank appeared to have arrived at a view that Ireland needed to be totally nailed down," he says.

When asked if the ECB bounced Ireland into a bailout, Mr Lenihan responds: "I would say that, yes".

Mr O'Brien describes the chaos as teams from the International Monetary Fund, the European Commission and the European Central Bank arrived in Dublin.

"There weren't enough desks so for the first few days we just sat with our laptops on the floor" one negotiator says.

He hears about the government's fears of widespread social unrest during these weeks as the country lost control of its own finances. And he hears about the 2am meetings as the international teams struggled to save not only the Irish economy - but the whole future of the euro.

Bailout Boys Go to Dublin is broadcast on BBC Radio 4 at 1330 BST on Sunday 24 April and again at 1100 BST on Wednesday 27 April.

Report - BBC

Friday, 22 April 2011

More Allsop Fire Sales...

Allsop plans five fire sales a year...

THE UK auction house Allsop and its Irish affiliate Space plans to hold up to five distressed property auctions a year following the success of its first auction last Friday when 81 out of 82 lots were sold for a total of €15 million.

The next auction is scheduled for July 7th, when 200 lots will be auctioned, including apartments, tenanted shops, farms and houses.

According to Space director Stephen McCarthy, his company is being inundated with requests from receivers, banks and individuals who want to sell their property fast.

Many of the properties in Friday’s auction were sold by Bank of Scotland Ireland and it’s believe there is plenty more of this stock to sell. These include apartments in the Castleforbes development in the Dublin docklands, as well as units in Dublin 8 and in Castleknock. However, the agency is also considering taking on more agricultural land. One lot, a 55 acre farm in Co Wickow sold particularly well, making €420,000 against a reserve of €290,000.

Around 20 per cent of the buyers at Friday’s auction were from overseas, according to McCarthy, including buyers from France, England, Scotland and Israel. The event was marketed heavily in the UK, and some London investors were in the room, although more are likely to become interested in the Irish scene as the auctions become more established, he says.

Among Irish buyers, the most significant group was made up of parents buying for their children, says McCarthy.

Future auctions are likely to have a similar mix of apartments and commercial buildings priced at the lower end of the scale.

“It’s clear that the easiest properties to sell are those under €200,000,” says McCarthy. “Agricultural land also went very well, and we hope to have more of that.”

However, he does not see much opportunity to sell houses at the upper end of the market. “You won’t see houses on Ailesbury Road in these auctions,” he said.

Report by ORNA MULCAHY - Irish Times

Thursday, 21 April 2011

Celtic Tiger Soap Opera...

Soap opera life of Celtic Tiger dynasty...

THE wealth built up by their parents was a launch pad for sons Jim Jnr and PJ in a boom-time era world of beautiful women, powerful cars and fashionable parties.

In true soap opera style the family has seen more than its share of strife and tragedy.

All three of Jim Mansfield's sons were brought into the family businesses, but personal rather than business dealings catapulted two of the boys into the media limelight.

Youngest son PJ married model and former Miss Ireland Andrea Roche in a high-profile wedding ceremony in 2006.

The event was a magnet for Ireland's fashionistas.

Leggy models and household names were packed into a marquee in the grounds of nearby Palmerstown House for the reception.

Nearby, the village of Saggart was choked to capacity by the fleet of Mercedes, Bentleys and Chryslers -- as well as the Mansfield's family Rolls-Royce -- which had been left parked on the narrow streets during the big event.

His brother Jim Jnr had dated the fashion model Katy French, who died of a drugs overdose some time after the couple split up.

Last year Jim Jnr hit the headlines again with a conviction for drink driving in the family Rolls Royce and was in the papers again for business reasons after AIB took him to court for a €6.3m debt.


AIB registered a legal judgment against Jim Jnr and four business partners last July for an unpaid debt of €6.3m over a land deal, but the case caught the public attention when Jim Jnr claimed in his defence that he suffered from a reading disability.

That defence got short-shrift from Justice Peter Kelly, the head of the commercial division of the High Court.

Mr Justice Kelly noted that Jim Jnr was a director of 25 companies and qualified to fly a helicopter.

Third son Tony keeps a low-profile, but it was he who faced up to creditors when the company behind Citywest was put into liquidation earlier this year.

It was Tony who read lenders and suppliers the directors' statement and faced the hostile reaction of business partners left out of pocket by the firm's insolvency.

Report by Donal O'Donovan - Irish Independent

Wednesday, 20 April 2011

Property Mania At Heart Of Crisis...

'Property mania' at heart of bank crisis...

The Nyberg report into the handling of the banking crisis has found that the main cause was the 'unhindered expansion of the property bubble'.

The Nyberg report into the handling of the banking crisis has found that the crisis was the result of domestic Irish decisions and actions, and not international developments.

The report, written by Finnish banking expert Peter Nyberg, said the main cause was the 'unhindered expansion of the property bubble', which was fuelled by banks using money borrowed from international markets.

It said the risks linked to the bubble were undetected or seriously misjudged by the authorities. It said any warnings from the authorities were 'modest and insufficient'.

The report said nobody abroad forced Irish households, investors, banks and authorities to take what it called 'unsustainable' financial risks.

The report referred to the development of a 'national speculative mania' in Ireland during the property boom. It said neither banks or borrowers really understood the risks they were taking.

It said Anglo Irish Bank, because of its strong growth, came to be seen as a role model for other Irish banks, leading to a general lowering of credit standards.

The report refers to a 'pervasive pressure' for consensus during the period leading up to the crisis, saying banks appeared to have behaved in a 'herding' fashion, while there was a widespread lack of critical discussion within many banks and authorities.

The report says the way Anglo Irish Bank and Irish Nationwide were run fell short of best practice. Mr Nyberg says that while procedures and process existed on paper at Anglo, they were not followed in practice. At Irish Nationwide, he says, some essential, independent functions either did not effectively exist of were under-resourced.

It found that there were 'numerous' instances were banks did not comply with banking regulations, but went unsanctioned by the Financial Regulator. In the cases of Anglo and Irish Nationwide, where the regulator did raise concerns, they led to little real change.

The report describes it as 'remarkable' that the regulator accepted the severe problems in Irish Nationwide and allowed it to continue without major reform or sanctions. It adds that the regulator's problem was not lack of powers but lack of scepticism.

On the other banks, the report says some board members interviewed indicated that there was a 'strong preference for consensus'. The report says it appears to have been difficult for individual board members to express views which went against the majority. Mr Nyberg also says the documentation of board discussions over the period was 'insufficient'.

Central Bank 'may have been in denial'

The report says the Central Bank and Financial Regulator took note of risky bank behaviour, but did not seem to think it worrying enough to take major policy measures to restrain the banks.

It says a 'very limited' number of individuals argued for stronger measures but failed to convince their superiors.

The report says the Government actively supported the property market over a long period against the 'apparently weak but clear' opposition of the Department of Finance.

The report says the Central Bank may have been in a state of denial, and did little to alert banks or other authorities to potential financial risks. Any warnings that were made public were toned down. The report says staff at the Central Bank and Financial Regulator did not co-operate in a meaningful way until the crisis.

It adds, however, that international organisations such as the IMF, EU and OECD, were at most modestly critical and often complimentary about Ireland. 'This gave the authorities and the banks additional reason to assume that all really was well,' it says.

It also says that the banks' external auditors fulfilled their narrow function according to existing rules, but did not appear to have questioned the banks about their growing exposure to property. The report says such dialogue could have highlighted the risks to the banks' business models.

Guararntee talks 'based on wrong assumption'

On the bank guarantee of September 2008, the report says that if accurate information on the state of the banks had been available at the time, it is 'quite likely' that a more limited guarantee, combined with a State takeover of at least one bank might have been considered more seriously.

The Nyberg report says decisions at the time were made on the wrong assumption that all the banks were and would remain solvent.

It says the guarantee represented a considerable risk to the country, and it could have been useful to consider other ways of keeping the banks going for a few days. But the report adds that, given the mood of financial markets at the time, the risk fo destabilising the situation would have been 'substantial'.

Noonan says Government will reflect on report

Finance Minister Michael Noonan has welcomed the publication of the report.

He said the Government intends to reflect on its contents after making a formal statement to the Dáil tomorrow when the House is due to hear statements on its findings.

Today's report is the final of three reports into the banking crisis. That collapse has so far cost the taxpayer €70 billion.

Last summer Central Bank Governor Patrick Honohan's report focussed on regulation of the banks. A second report by experts Klaus Regling and Max Watson examined the economic background which led to the crisis.

The Cabinet discussed the report earlier today before its publication.

Report - RTE

Tuesday, 19 April 2011

At Last ! A Plan...

At last! A plan to kick-start property...

Nama's €1bn 'financial muscle' to get sales moving and help balance books.

Frank Daly, the chairman of Nama, which has €1bn at its disposal, has said that the State agency intends to use its "financial muscle" to "kickstart the property market".

Yesterday, Mr Daly told the Sunday Independent that the provision of "limited financial support" for the purchase of property was a "natural next step" for Nama.

He said: "What we're aiming to do is build market confidence at sustainable levels -- to use Nama's financial muscle to kickstart the property market in a way that will benefit the project itself and provide people with an opportunity to own their own home."

The disclosure that Nama has up to €1bn to directly intervene in the moribund market comes after an auction of property in Dublin on Friday which has generated a huge level of excitement.

A total of €15m was spent on over 80 "distressed" properties, in many cases exceeding the stated reserve. This may be an indication that the Irish love affair with property remains undiminished, particularly when perceived bargains are available.

The prices fetched at the auction will further inform Nama as to the state of the market as it prepares to sell off thousands of properties around the country.

All of the properties sold at the five-hour auction went for in excess of 50 per cent below prices they would have realised at the peak of the boom. The outcome has generated a feel-good factor, which many experts hope will serve as a precursor to a sustainable recovery in the market.

Yesterday, financial adviser Eddie Hobbs said the proposed intervention by Nama would be a welcome "upward pressure" that would help the market recover somewhat.

However, he urged caution against expectation that the market was poised to rebound: "It won't," he said, "there are still too many downward pressures."

Mr Hobbs said the property auction at the Shelbourne Hotel in Dublin was another indication that the "mood" of the country had changed for the better since the new Government was elected.

Figures published last week show that consumer sentiment rose sharply in March, after the Government was elected. The gain was the third largest monthly rise in the 15-year history of the index.

"The auction caught a little of that pulse, a very low pulse, but it is there," Mr Hobbs said. "It is perceptible, many business people have said it to me since the Government was elected. There is a little pick-up and that should be protected."

Figures recently published by the Department of Finance reveal there is €126bn in retail deposits in Irish banks -- in fact, people here are the highest savers in Europe.

It seems certain that a majority of bidders at the auction were such 'cash buyers' who could afford to purchase the properties outright.

Therefore, irrespective of whether prices fall further or not, these purchasers will be satisfied that they have achieved a good deal as most of them secured properties for less than construction costs, including site value.

For the property market to recover, Mr Hobbs said that "downward pressures" would have to be addressed.

He added: "The cost of borrowing has almost completely offset the fall in property prices so far. For example, the cost of a €200,000 mortgage today is almost the same as the cost of a €300,000 mortgage a few years ago. We won't see the floor and a recovery until the banks' margins on mortgages tighten up."

There is a view among experts that a recovery will not be widespread, but that good properties in urban areas, or established suburban areas, will recover relatively within the next year or two.

Mr Hobbs also said that the Government and the European Central Bank should force banks to introduce mortgages on a fixed rate between 20 to 30 years.

A Nama spokesman yesterday said: "Nama's aim is to work with the existing banks to help them provide adequate finance for people who wish to purchase Nama assets.

"The customer will still deal with their bank, but behind the scenes part of the finance may be supplied by Nama or part of the risk of providing a mortgage to a customer may be borne by Nama. We'll be talking to the banks in the coming weeks about the proposals."

Mr Daly said: "Nama's proposal to explore how it can provide liquidity to the market is a sign of strength and reflects the progress it has made in the 15 months since it was formally established."

The chairman also said that some of the top property developers were being co-operative and "they will help us recover money for taxpayers". But he added that some were "still in denial" or were "refusing to co-operate".

In those cases, Nama would move to begin enforcement proceedings, he said.

Report by Jody Corcoran and Ronald Quinlan - Sunday Independent

Friday, 15 April 2011

Allsop Cut Price Auction Results...

The bargain hunters were out in force today in Dublin!

It was a busy day at the Shelbourne Hotel where many cut-price homes and properties were sold. Here are the Allsop Auction results:

Lot Type Location Reserve Price will not exceed this figure
1 Vacant Flat Temple Bar Sold €126,000
2 Investment Flat Dublin 1 Sold €129,000
3 Investment Flat Dublin 8 Sold €102,000
4 Investment Flat Dublin 8 Sold €159,000
5 Investment Flat Bray Sold €154,000
6 Investment Freehold Building Clifden Sold €141,000
7 Investment Flat Portlaoise Sold €61,000
8 Investment Flat Portlaoise Sold €62,000
9 Investment Freehold Building Roscrea Sold €336,000
10 Vacant Freehold House Dundrum Sold €410,000
11 Vacant Flat Dublin 1 Sold €120,000
12 Vacant Flat Dublin 1 Sold €116,000
13 Investment Flat Dublin 1 Sold €190,000
14 Vacant Flat Dublin 7 Sold €107,000
15 Vacant Freehold House Renmore Sold €332,500
16 Investment Freehold Building Renmore Sold €205,000
17 Investment Flat Dublin 8 Sold €159,000
18 Investment Flat Galway City Centre Sold €74,000
19 Vacant Flat Dublin 8 Sold €345,000
20 Investment Dublin 6 Sold €350,000
21 Investment Flat Dublin 8 Sold €93,000
22 Investment Flat Castleknock Sold €207,000
23 Investment Flat Castleknock Sold €200,000
24 Investment Flat Rathfarnham Sold After
25 Vacant Freehold House Churchtown Sold €495,000
26 Vacant Freehold House Churchtown Sold €505,000
27 Investment Flat Galway City Centre Sold €70,000
28 Investment Flat Portlaoise Sold €64,000
29 Investment Kilmallock Sold €285,000
30 Investment Flat Dublin 1 Sold €179,000
31 Investment Freehold Building Wexford Sold €560,000
32 Investment Flat Castleknock Sold €159,000
33 Investment Flat Castleknock Sold €160,000
34 Vacant Freehold House Dublin 4 Sold €550,000
35 Vacant Flat Galway City Sold €95,000
36 Investment Flat Galway City Centre Sold After
37 Vacant Flat Dublin 1 Sold €161,000
38 Retail Dublin 1 Sold €190,000
39 Investment Flat Dublin 8 Sold €120,000
40 Investment Flat Dublin 7 Sold €100,000
41 Vacant Freehold House Dublin 14 Sold €470,000
42 Investment Flat Rathfarnham Sold €145,000
43 Investment Flat Castleknock Sold €160,000
44 Vacant Freehold House Dublin 18 Sold €530,000
45 Retail Bettystown Withdrawn
46 Vacant Flat Dublin 1 Sold €99,000
47 Vacant Freehold House Wicklow Sold €420,000
48 Investment Mahon Village Sold €130,000
49 Investment Freehold House Tuam Sold €70,000
50 Investment Flat Galway City Centre Sold €70,000
51 Investment Flat Dublin 8 Sold €103,000
52 Investment Newbridge €70,000
53 Investment Flat Rathfarnham Sold €139,000
54 Vacant Castleknock Sold €163,000
55 Retail Crumlin Sold €220,000
56 Land/Site Malahide Sold €230,000
57 Investment Flat Dublin 1 Sold €140,000
58 Investment Flat Portlaoise Sold €64,000
59 Vacant Dublin 8 Sold €160,000
60 Retail Dublin 8 Sold €57,000
61 Investment Flat Galway City Centre Sold €70,000
62 Vacant Flat Dublin 1 Sold €163,000
63 Investment Freehold Building Castletownbere Sold €365,000
64 Investment Flat Dublin 8 Sold €121,000
65 Vacant Freehold House Corrandulla €125,000
66 Investment Flat Rathfarnham Sold €140,000
67 Leisure Arklow Sold €400,000
68 Investment Flat Galway City Centre Sold €78,000
69 Investment Flat Castleknock Sold €172,000
70 Investment Flat Castleknock Sold €180,000
71 Investment Flat Dublin 8 Sold €119,000
72 Investment Flat Dublin 1 Sold €165,000
73 Investment Flat Dublin 1 Sold €185,000
74 Vacant Freehold House Lucan Sold €250,000
75 Vacant Freehold House Tinryland €77,500
76 Vacant Freehold House Athlone Sold €49,000
77 Vacant Freehold House Lucan Sold €161,000
78 Vacant Freehold House Carlow Sold €129,000
79 Vacant Freehold House Mullingar Sold €30,000
80 Vacant Flat Withdrawn Withdrawn
81 Vacant Freehold House Lucan Sold €181,000
82 Vacant Freehold House Tuam Sold €74,000
83 Land/Site Wicklow Town Sold €52,000
84 Vacant Freehold House Rathangan Sold €140,000
84 Lots sorted by Lot Number Lots: 1-84

Allsop Auction Chaos...

Fire-sale auction draws bargain hunters...

So many people turned up for an auction of distressed properties in the Shelbourne Hotel today in Dublin that it had to be suspended amid Garda concerns for safety.

Some 80 lots, ranging from a Ballsbridge mews to a collection of cut price flats in Portlaoise, are being offered to the highest bidders. The majority of properties are being sold by receivers and include homes in Dublin, Wicklow and Galway as well as small commercial buildings and shops.

Such was the interest in the sale that crowds spilled out of the hotel and onto the street. Proceedings had to be suspended for several minutes while non-bidders were asked to leave the main auction room. The venue has seating for 350, with standing room for an additional 500.

One lot, an apartment in Portlaoise, was sold to a bidder who was forced to stand on the pavement on St Stephen's Green due to overcrowding.

To ease pressure on the hotel, the entire auction is being broadcast to Doheny Nesbitts pub a couple of hundred metres away.

Lot 1, a first floor studio apartment overlooking Essex Street in Dublin's Temple Bar sold for €126,000, well above its reserve price of €80,000.

Lot 9, a pharmacy in Roscrea, Co Tipperary, sold for €336,000, some €131,000 above the reserve.

Lot 14, a two-bedroom apartment in the Castleforbes development, near the IFSC in Dublin's docklands, sold for €190,000, some €50,000 over its reserve.

The lowest priced property is a site in Wicklow town with a reserve of €20,000 while the most expensive is the Dublin 4 mews, which is estimated at €600,000.

The majority of lots are priced between €35,000 and €150,000 and include period homes with large gardens in the Dublin suburbs.

The sale is expected to set a new floor for Irish house prices which are widely accepted to have dropped by at least 50 per cent from peak.

The event is being organised by Allsop, a UK auction house that specialises in distress sales, and its Dublin affiliate, Space.

A 30-strong team from Allsop in London is joining Space’s 15 employees to help buyers through the process. Those planning to bid have to produce a cheque on arrival to prove their intentions.

Report by CONOR POPE and ORNA MULCAHY - Irish Times

Cut Price Homes...

Cut-price homes go under the hammer...

Up to 1,000 people are expected to attend today’s auction of distressed properties in the Shelbourne Hotel in Dublin when some 80 lots, ranging from a Ballsbridge mews to a collection of cut price flats in Portlaoise, will be offered to the highest bidders.

The majority of properties are being sold by receivers and include homes in Dublin, Wicklow and Galway as well as small commercial buildings and shops.

The lowest priced property is a site in Wicklow town with a reserve of €20,000 while the most expensive is the Dublin 4 mews which is estimated at €600,000.

The majority of lots are priced between €35,000 and €150,000 and include flats in the Dublin docklands discounted by over 50 per cent and period homes with large gardens in the Dublin suburbs.

The sale is expected to set a new floor for Irish house prices which are widely accepted to have dropped by at least 50 per cent from peak. Today’s prices may indicate an even steeper fall, as the auctioneers say that the published reserves may be revised downwards before the 12.15pm start of the auction.

The event is being organised by Allsop, a UK auction house that specialises in distress sales, and its Dublin affiliate, Space. According to Space director Stephen McCarthy, interest has been extremely high, leading to some concerns about crowd control. The venue has seating for 350, with standing room for an additional 500.

To ease pressure on the hotel, the entire auction is to be broadcast to an alternative venue - Doheny Nesbitts pub a couple of hundred yards away.

A 30-strong team from Allsop in London will join Space’s 15 employees to help buyers through the process. Those planning to bid will have to produce a cheque on arrival to prove their intentions. However, they are likely vastly outnumbered by curious estate agents and investors, some of whom have been calling the hotel to book seats in advance.

Report by ORNA MULCAHY - Irish Times

Many Irish Are 'Broke'...

250,000 'broke' after paying mortgage and utility bills...

A QUARTER of a million people have nothing left to live on once they have paid mortgage and electricity bills, according to a new survey which reveals the true extent of the hardship imposed on households by the recession.

And another 210,000 people are so hard-up that their income does not even cover their essential bills for heat and the cost of the home, research commissioned by the Irish League of Credit Unions shows.

Another three-quarters of a million people have on average just €70 left each month after paying essential bills, the iReach survey conducted for the Irish League of Credit Unions shows.

The research, conducted to see how much disposable income households have, found that a large number -- 428,000 -- feel there is no future for their family in this country.

Family incomes have been hit by tax changes, higher utility bills and transport costs, the research found.

Most people regard their mortgage as their most important bill, followed by electricity and gas and then groceries.

Car costs, loan repayments, credit cards and health insurance were all ranked at a similar level of importance.

The survey, conducted among 1,000 adults, found that 245,000 adults have nothing left to live on after they have paid their mortgage and utility bills.

Chief executive of the Irish League of Credit Unions, Kieron Brennan, said: "It has become more and more apparent that many Irish families are seriously struggling in what are very difficult financial times.

"We have just seen a European Central Bank rate increase last week which is likely to push families and individuals further into mortgage difficulties and arrears."

He said that increasing mortgage rates combined with increasing fuel costs, the introduction of the universal social charge and cuts in social welfare meant that 2011 will be one of the most difficult years for the Irish population in terms of money management.

The researchers estimate that around one million people have €35 left a week after paying their main bills.

These people worry about how they will cope with an unforeseen expense like a medical emergency or a big car bill.

Almost half of those who responded to the survey said they they are unlikely to have money to save in the current economic climate.

Report by Charlie Weston - Irish Independent

Thursday, 14 April 2011

Dalai Lama On Irish Crisis...

Do not lose hope, urges Dalai Lama...

Tibet's spiritual leader the Dalai Lama has urged Irish people not to be discouraged or lose hope as they struggle to cope with the financial crisis.

In his first visit to Ireland in 20 years the exiled Nobel peace laureate spoke to a sold-out conference of 2,000 people on the first leg of a two-day trip.

With the country reeling from its worst recession and facing the costliest banking crisis in history, the 76-year-old said money would not make people happy.

"The ultimate source of happiness, peace of mind, cannot be produced by money," he said.

"Billionaires, they are, I notice, very unhappy people. Very powerful, but deep inside, too much anxiety, too much stress.

"So where I go, I always say ... the ultimate source of happiness and successful life is within ourselves."

The 14th Dalai Lama, Tenzin Gyatso, addressed the Possibilities civic summit organised through the Children in Crossfire charity, established by his friend Richard Moore.

Blinded by a British soldier in the North aged 10, Mr Moore said the purpose of the conference was to create a sense of community for people facing the despair of financial ruin.

The Dalai Lama, describing Mr Moore as his hero, clutched his hands warmly throughout the public event.

"There's no one on this planet that would inspire people more, I believe, than His Holiness," Mr Moore said.

Dressed in his traditional red Buddhist robes, the Dalai Lama said he had an emotional connection with Ireland as the country supported his initiative to raise the political plight of Tibet at the United Nations in 1959.

He fled his country that year after a failed uprising against Chinese rule, and now lives in India.

The Dalai Lama said he did not know much about "money matters", but said friends had told him the global recession was caused by short-sightedness and too much greed.

People who rely solely on money, he said, suffer greatly, and he suggested a happy family life filled with love and affection would bring inner peace.

Asked if people should forgive reckless bankers, he said forgiveness did not mean one should forget.

The Dalai Lama said people should criticise, but not allow anger to come into their thoughts.

"Once anger comes into your mind - biased," he said. "So your criticism will not be genuine."

The Dalai Lama also addressed emigration, with 1,000 people estimated to be leaving Ireland every week, the vast majority looking for work abroad.

He said with self confidence, hard work and determination, the country's battered economy would prosper again.

The 2,000-strong crowd at the Citywest Hotel in Dublin gave him a standing ovation as he began his at times humorous and cheeky speech, none of which was scripted.

More than 1,200 tickets for the event sold out within five days of going on sale on February 1. The remaining 800 tickets were sold cheaply or given away to youth and community groups throughout the country.

As he clasped Mr Moore's hands, the Dalai Lama urged people to be warm hearted and compassionate, which he said was good for the health.

He opened the floor to questions, with the first from an 11-year-old girl who wondered what advice he would have for Irish people at this time.

"I want to tell you (there is) no need (to be) discouraged, or hopelessness," he said.

He talked about how he had lost his freedom and his country, but said he had no reason to feel demoralised or discouraged, suggesting the experience had made him stronger.

"The tragedy transformed more inner strength," he said.

The crowd also gave a standing ovation as he stepped down from the stage, greeting well-wishers and supporters as he went.

Former President and ex-United Nations Commissioner for Human Rights Mary Robinson was also among the speakers, along with performances from Irish musicians, theatre from schoolchildren at Scoil Eoghan in Moville, Co Donegal, and other acts.

The exiled spiritual leader later travelled to Kildare, where he was greeted with music by local schoolchildren as part of a visit organised by nuns of the Brigidine Sisters.

He was presented with the Brigid Flame, in recognition of his work for peace and his lifelong commitment to non-violence, along with other gifts before addressing a crowd of up to 700 people at St Brigid's Parish Church and holding a private reflection.

The Dalai Lama formally announced earlier this month that he plans to step down as Tibet's head of state and make way for his elected replacement.

The Chinese government had long considered him to be a dangerous separatist, with a senior Communist Party official describing him as a "wolf in monk's robes".

Dalai Lamas are believed to be manifestations of Avalokiteshvara or Chenrezig, the Bodhisattva of Compassion and patron saint of Tibet.

Bodhisattvas are enlightened beings who have chosen to be reborn to serve humanity.

The Nobel laureate will visit the University of Limerick in the west of the country tomorrow, where he will deliver another sold-out public address to about 3,100 people.

Report by Press Association - Irish Independent

Sunday, 10 April 2011

Homeowners To Blame For Crisis...

Homeowners to blame for crisis too, says Bruton

Irish people 'ought to have been aware where things were going' when buying during boom...

FORMER Taoiseach John Bruton says that Irish people "ought to have been aware where things were going" with the economy when they bought houses during the boom.

"I have been someone who has been very critical of the EU authorities and the ECB and others in not using powers that they clearly had under the treaties to ensure prudential supervision both in the countries lending to Ireland and in the Irish banks themselves, and I think there is a responsibility there that I don't row back from, but, on the other hand, we also ought to have been aware where things were going.

"Everybody could see that house prices were rising faster [than they should have been]," Mr Bruton -- who now holds the position of president of the IFSC -- told the Sunday Independent.

The former Taoiseach's attempt to add ordinary homeowners to the list of those whom he believes are to blame for Ireland's economic difficulties will be seen as particularly insensitive, coming in a week in which the ECB hiked its key interest rate by 0.25 per cent to 1.25 per cent, heaping further misery on hundreds of thousands of families.

According to the latest figures from the Central Bank, 44,508 borrowers were already three months or more behind in their repayments and owed €709m in back payments at the end of last December.

Responding to the point that many had merely paid the going market rate, Mr Bruton -- who was attending the inaugural conference of Federation of International Bankers at the Four Seasons Hotel in Dublin -- conceded that there were "people who bought their first and only house at a very high price".

"Those people are in a very difficult situation," Mr Bruton said, before going on to criticise those who had bought buy-to-let properties.

"We had as a country perhaps a sense of comfort with houses, even houses in other countries.

"Houses accommodate people but they don't produce wealth unless people want to live in them and pay a rent. People probably invested too heavily in one field, namely property," he said.

But whatever his views are on the plight of ordinary homeowners and small-time property investors, Mr Bruton insisted that the restoration of our banking system had to take priority.

Asked if he believed it was fair that taxpayers were being forced to carry the €70bn burden of bailing out the banks, Mr Bruton pointedly avoided the question, saying: "I suppose what we have got to look at is what we need at this stage.

"One thing we certainly need is a functioning banking system. The country would come to a stop if it didn't have a banking system."

He also appeared to endorse the decision on the night of September 29/30, 2008, by former Taoiseach Brian Cowen and his finance minister Brian Lenihan to guarantee the deposits of all the Irish banks, Anglo Irish Bank included.

He said: "Of course, one can look back and say we could have taken a more daring approach back in 2008 and allowed some banks to fail.

"And that experiment was tried with Lehman Brothers two weeks previous to our decision and we know the consequences of that. It was also tried in 1931 by another small European country, Austria, and that led to a rash of bank failures."

Report by RONALD QUINLAN - Sunday Independent

Saturday, 9 April 2011

What Happened to the Celtic Tiger?...

ECB-IMF deal is a noose that will strangle economic recovery...

OPINION: What the ECB and IMF have forced on Ireland is fundamentally corrupt and doomed to failure.

WHAT HAPPENED to the Celtic Tiger? For many years, Ireland’s growth was based on fundamentals: investing in education and infrastructure to make the country an attractive place for investment and a gateway to Europe for companies from the US and Asia.

But then, like so much of the rest of the world, Ireland was distracted by the lure of fast bucks and the wizardry of finance. As in much of the rest of the world, false economic doctrines advocating unfettered markets prevailed, claiming the seeming success of the economy as evidence of their verity. Not surprisingly, economic doctrines that helped create the crisis have not served the country well in dealing with its aftermath.

With those still in office entering into international lending agreements that benefit the Irish banks and their debt holders but not necessarily the Irish citizens, fundamental questions arise about how to move forward.

Today, those fundamentals that created the Celtic Tiger are still there, but the real resources, the most important of which are its people, are increasingly sitting idle. Unless the right policies are put into place, matters are likely to get worse.

Unfortunately, the question of which policies are right is being distorted by an effort to “save” the banks. The new Irish Government, after the old was tossed out for its dismal failure at managing the crisis, had (and still has) the opportunity to put Ireland on a more sustainable path, but has failed thus far to address the underlying problems.

There are two fundamental interrelated problems. What to do with the banks? And how to get the economy started again? We know policies of austerity will lead to lower output and lower tax revenues, and if there is any improvement in the deficit, it will be smaller than expected. What matters for debt sustainability is the ratio of debt to gross domestic product (GDP); the higher the ratio the more unsustainable the economic trajectory.

Even in more optimistic scenarios, Ireland’s debt to GDP ratio is expected to soar to 125 per cent in 2013, up from 25 per cent in 2007. Low growth could make things worse, as stagnant GDP offsets the reduction in Ireland’s debt. If Europe continues to falter – 2011 growth is projected to be lower even than last year – this will make Ireland’s recovery all the more difficult.

Even the EU is now anticipating that projections made just a short while ago were too rosy. But the EU recipe for recovery is more of the same: to meet the deficit reduction targets, more austerity – which in turn means still lower growth and still higher unemployment.

In effect, the International Monetary Fund (IMF) and European Central Bank (ECB) are asking ordinary Irish workers and citizens to bear the burden of mistakes that were made by international financial markets. But it is important to recognise that these mistakes are at least partly attributable to following deregulation and liberalisation policies that were advocated by the IMF and ECB and that these policies provided significant benefits to the financial sector.

Irish citizens bear the costs of these mistakes not only through higher unemployment, but also through lower wages, higher taxes and cutbacks in public services. That there will have to be some cutbacks is inevitable, but it is not inevitable that they be of the current form or magnitude. The Government’s steadfast and continuing policy of bailing out the Irish banks and their bondholders is at great personal cost to Irish citizens. The fundamental economic policy question is who should bear the costs of the mistakes. And this is where the first question, what should be done with the banks, links with the second, how to reignite the economy.

Under capitalism, those who provide capital, whether through bonds or equity, are supposed to oversee what is done with their funds; this accountability is what makes capitalism work. It is the system of incentives that underlies the success of a market economy. We tolerate a high degree of inequality in defence of these incentives – it is argued that high rewards are necessary to compensate for risk and to motivate responsible entrepreneurship.

In Ireland, as in much of the rest of the world, though, those who seemed to believe in markets, started to rewrite the rules in the midst of the crisis. They argued for the socialising of losses, while the gains had been privatised. Such a system of ersatz capitalism is doomed to failure, and is fundamentally corrupt and inequitable. Some argued that globally it was necessary to support the too-big-to-fail financial firms but this logic certainly doesn’t apply to relatively small institutions in a relatively small country at the cost of its citizens. There are alternatives.

Many Irish citizens now realise the cost of bailing out bondholders (whether in Germany, the US, the UK or even Ireland) is being borne by them. It is a massive, unjustified and unjustifiable redistribution of resources.

The IMF and ECB are lending money to ensure Irish taxpayers bail out Irish bank bondholders, but with little concern for economic growth and welfare.

The international lending terms imposed on the Government and its citizens are onerous in large part due to the Government’s continuing policy of bailing out the Irish banks. Raising interest rates to Ireland to tame European inflation is senseless. The budgetary “correction”, arising from higher taxes and lower services to pay for interest on the debt, will balloon to over 6 per cent of GDP and cumulatively amount to 9.6 per cent of GDP.

But Ireland should realise this may be only the first step in the bloodletting. As we noted, already there is recognition the Government underestimated the adverse effects on the economy – and thus overestimated tax revenues and the budget. But even worse, there are grounds to believe the €85 billion may be inadequate because of the ongoing posture towards the banks.

No one can be sure what will happen with the economy or the banking sector and therefore judgments about the adequacy of the international lending package are contentious. This is in part because the answers depend on the policies pursued. If the austerity programme continues, the economy will slow, defaults will increase and property values will decline even further.

Sometimes countries are faced with unpleasant choices. And there is a tendency when facing those unpleasant choices to avoid making the hard decisions. But there are high costs to postponing facing reality.

Under the current strategy, under “rosy” scenarios, Ireland’s debt to GDP ratio will quickly reach 125 per cent. Think what that implies. Assume that Ireland doesn’t try to repay the money, but just pays the interest, and assume that market interest rates return to something more “normal” – compared to the current very low rates resulting from the flood of liquidity from the ECB and the Fed. A country with a debt to GDP ratio of 125 per cent could easily have to pay 8 per cent interest rates. This would mean that 10 per cent of Ireland’s GDP would have to go forever to just service the debt.

This is a noose around the country’s neck that will strangle it. It makes clear the IMF, ECB and Government must come to terms with imposing losses on the international lenders whose loose lending policies played a central role in the current crisis.

Debt restructuring is neither easy nor costless; but the costs are far less than the alternative. Argentina, after its debt restructuring, grew at an average annual rate of more than 8 per cent for six consecutive years until the global economic crisis hit. Ireland, with its talented people, its location, and the advantages provided by being in the EU, would be in an even better position.

After restructuring, Ireland would attract new banks and new firms that would see these fundamental strengths. In contrast, continued delay in dealing with the inevitable day of reckoning will cast uncertainty over the economy: so long as there is not debt restructuring, the country faces low growth, high taxes and/or low public services, a disgruntled labour force and citizenry that has been made, unfairly, pay for others’ mistakes.

And so long as there is not debt restructuring, economic risks of a highly levered economy and associated uncertainties of a future debt restructuring and its consequences will discourage investment, both domestic and foreign.

Those representing the interests of the lenders (bondholders) have, of course, a different view. They want to extract as much out of the Irish people as they can.

The new Government faces hard choices. Any path presents risks. If there were reasonable prospects of avoiding the turmoil that might result from a debt restructuring, we could understand why one might gamble on the strategy of postponement. But as we look at the numbers, the hard facts suggest otherwise. It is time to get the Irish economy back to work. The current strategy will simply increase the gap between the economy’s potential and actual output, and lengthen the time before a return to full employment.

And even were it to succeed, it will mean Ireland will be in partial indentured servitude for as far as the eye can see – devoting 10 per cent or more of what it earns to pay off what are largely the consequences of the financial sector’s misdeeds. There has to be a better answer – and there is: international loan loss recognition combined with pro-Irish growth policies will be better for all in the long run.

Article by MICHAEL CRAGG and JOSEPH STIGLITZ - Irish Times

Friday, 8 April 2011

ECB Rate Hike For Irish Homeowners...

ECB interest rate hike to affect over 75% of Irish homeowners...

THE EUROPEAN Central Bank (ECB) raised its main lending rate by a quarter of a point to 1.25 per cent yesterday in a move that will add about €40 on to the monthly repayments of a person with a €300,000 tracker mortgage.

The announcement marks the first time in more than two years that tracker mortgage holders will feel the pinch of rising interest rates and it is expected to be the first of at least three rate increases over the next 12 months.

It will see the cost of mortgages climb for more than three-quarters of Irish homeowners. For every €100,000 owed on a 30-year tracker mortgage of 1.5 per cent plus the ECB rate, a quarter point increase adds about €13 on to the monthly repayments.

As a result of the ECB announcement, a person with a €300,000 tracker will see their monthly repayments rise by about €480 annually while someone with a €400,000 mortgage will have to pay a further €52.50 monthly, or €630 each year.

Speaking after the announcement was made, and using language that usually means another rate increase is in the offing, ECB president Jean-Claude Trichet said the bank would “continue to monitor very closely all developments with respect to upside risks to price stability”.

He insisted the ECB’s governing council had not decided that yesterday’s increase would be “the first in a series” but analysts suggested another rate hike is likely in June or July rather than May.

Mr Trichet also dismissed suggestions that the rate hike would increase pressure on Ireland and other so-called “periphery” euro zone states and said the decision was not intended to help or hurt any one country but to maintain price stability to benefit “directly and indirectly all 331 million citizens in the single currency area”.

“We do what we have to do even when it is difficult and not necessarily pleasing to everyone, that’s our job,” he said. Referring to peripheral countries, he said: “It is in their interests to follow their plan. They have to do what is necessary and they have the means to do so.”

Mr Trichet indicated he did not support any Irish proposals to include private bondholders as part of a rescue plan, saying that those who suggest such measures should “reflect on the confidence of the market”.

He denied that the bank’s economic policy was dictated more by the needs of Germany, the euro zone’s largest economy, than by smaller peripheral countries and said that the ECB was sticking to its rulebook and that euro zone member states should stick to the austerity plans they have agreed.

Bank of Ireland and ICS Building Society were first out of the blocks in confirming that as a result of the increases, all tracker rates will go up by the same amount from Wednesday, April 13th.

The bank and building society also announced increases to their fixed rate mortgage product range ranging from 0.7 per cent to 1.3 per cent across fixed rates for owner occupiers and buy to let customers.


ECB tracker mortgage of 2.25% over 30 years after rate rise

€100,000 + €12.63

€200,000 + €25.25

€250,000 + €31.57

€300,000 + €37.88

€400,000 + €52.50

Typical standard variable rate of 4.25% over 30-year loan after rate rise

€100,000 + €14.52

€200,000 + €29.05

€250,000 + €36.31

€300,000 + €43.57

€400,000 + €58.10

Report by CONOR POPE and DEREK SCALLY - Irish Times

Tuesday, 5 April 2011

Irish House Prices Falling...

10.8pc plunge in Irish house prices...

House prices in Ireland are falling at a double-digit rate but property values in other countries are showing signs of stabilising, research indicated today.

The average cost of a home in Ireland dropped by 10.8pc during 2010 as the market suffered from the fall-out of the country's economic problems, according to estate agent Knight Frank.

The drop was the biggest recorded for the total of nearly 50 countries looked at by the group. The pace of the falls are also showing little sign of easing, with property losing 3.5pc of its value during the final quarter alone.

Steep price falls were also seen in Dubai, with property values diving by 6.1pc during the third quarter of 2010, the latest quarter for which figures are available.

But there was better news for those who have bought second homes in France, with house prices in the country actually rising by 9.5pc during 2010.

The more conservative French mortgage market means that house prices have been hit less hard by the credit crunch than in some other countries.

House prices were also only 1.4pc lower in Italy at the end of 2010 than at the beginning of the year, with the pace of decline easing to just 0.3pc during the final quarter.

Property values in Spain, which has seen a severe house price correction, also showed signs of stabilising during the fourth quarter, edging down by 0.4pc to leave them 3.5pc down for the year, while the cost of a home in Portugal dropped by 4pc during 2010.

Hong Kong saw the strongest annual house price growth of 20pc, followed by Latvia at 16.9pc, and Israel at 16.2pc.

The UK came 31st out of 49 countries, with prices edging ahead by 0.7pc during the whole of 2010 but falling by 2.5pc during the final three months of the year.

Overall, Knight Frank said global house prices had risen by 2.8pc during 2010.

Liam Bailey, head of residential research at Knight Frank, said: "This annual figure hides the fact that a growing number of countries are seeing negative quarterly price movements.

"In the second quarter of 2010 the proportion of countries in our index recording negative quarterly growth was less than a third at 31pc, in the third quarter the figure was 35pc, in our most recent fourth quarter figures the proportion is 41pc.

"Across an increasing number of European countries and also in the US, markets were weaker in the second half of 2010, following a brief revival in the previous 12 months."

Press Association - Irish Independent.

Sunday, 3 April 2011

Only A Miracle Can Save Ireland...

Only a miracle can save financial system from complete meltdown...

MICHAEL Noonan talks the talk, but last Wednesday the only walking he did was backwards. It confirms that the EU is running the show. The light we saw flicker at the end of the tunnel has been blown out and is unlikely to be rekindled any time soon.

The new Government had an opportunity to deliver on its election promises. It failed abysmally on one of the key issues. It didn't renegotiate the EU/IMF deal to withhold repayments to the senior bondholders, as promised. It might have been shot down in flames had it persisted with this approach. But it would have preserved its credibility at home. Its proposed bank reorganisation is a whitewash, and only intended to distract us from the cover-up of what is going on at the highest level in Europe.

This is not totally unexpected, but it is very disappointing. Weeks before the general election Pat Rabbitte and Simon Coveney said, on separate occasions, that protecting our banks was of paramount importance. It was clear even then that they had no intention of penalising senior bondholders. That was all election talk. We still have politicians who are not up to the job of reforming our banks and setting us on the path to recovery.

It was a mistake to try to save all the banks. Now we have the same, albeit fewer, contaminated banks. But we owe even more. Independent experts, who should know better, have suggested that there is so little owed now to senior bondholders that we should forget about haircuts. Tell that to the SME sector, in which people can't get an overdraft to sustain their businesses.

Based on recent reports, the €16bn or so that we owe senior bondholders would halve the total indebtedness of the SME sector. It would avoid robbing the National Pension Reserve Fund, which should never have been touched. It even makes the cost of the outgoing TDs (€13m) seem cheap. When that happens, you know it's too much.

And €16bn is a lot of money to forget about. Would the IMF or the ECB lend us €16bn without charging interest? They should do that, and more, to help with what we are doing to solve our economic problems. After all, the financial burden that is being placed on the Irish taxpayer has been created so that our EU partners can offload their own problems.

If we didn't have to pay back this €16bn we could reschedule impaired homeloans and avoid the inevitable defaults coming down the line. Mr Noonan and Mr Kenny need to realise that their plan will not work. They have not solved our problems. They are not even close. In fact, they have created an even bigger problem and, like Nama, once it starts there is no going back.

Mr Noonan has put the cart before the horse. Renegotiating our position with senior bondholders within the EU framework should have been first. There were various options open to us, including deferring any more payments until the bigger picture in Europe is established. Portugal has fallen and Spain is not out of the woods. We have already gone too far, and the EU has done nothing to restore confidence on international markets.

Our new Minister for Finance claims that the EU has been very supportive. He claims that investors and bondholders have already sustained losses of over €70bn. But aren't they mainly our own people who lost their savings and pension funds? That is not new! We were counting on you to rewind the bad deal that was made by Fianna Fail. You have let us down. All the upbeat talk about this new solution will not make it viable. When you've a bad apple in the barrel, get rid of it and save the rest. When they're all bad, it is time for a new barrel.

Maybe it is time to call it a day for more of our contaminated banks. If the EU was more supportive of our radical actions and cut our debts or extended interest-free credit we might succeed in saving all the banks. We cannot afford to service the national debt as it stands. Failing a miracle it is only a matter of time before our entire banking system implodes.

Even though the Government won't admit it, the EU is abandoning us. In the circumstances, we cannot afford to support all of our contaminated banks. If the banking system collapses, we run the risk of having no access to funds. Businesses would collapse, as could our society, unless the EU or the international community stepped in.

Given that they have been abandoned, with the exception of the costly EU/IMF bailout fund, we should reappraise our banks on a break-up basis. The EU wants to avoid bank failure, but it is not willing to pay the price. Is it really only about €16bn? I support a unified Europe, but not at any price.

We don't have the resources to save all our contaminated banks. Therefore, we are left with no choice but to save what we can and leave the rest. We can afford to do that, but we can only afford to prop up all the ailing banks if the EU pays the rest. We need a functioning banking system. Those who are already funding the part of the system that will live will continue to fund it. It is in their interest to do so. Our decisions will guarantee their investment.

What is left is no different to what we have. That is a contaminated banking system for which the clock is ticking. There is no reason why even that cannot repay its investors in an orderly wind-down. We couldn't do any more than we already did in terms of honouring our financial commitments. The EU is not being realistic. But even Michael Noonan has abandoned the national interest and is being led by his EU masters.

A radical restructuring does not mean that the whole system will collapse as we are led to believe. We are not running away, but we should be realistic.

Report by James Fitzsimons - Sunday Independent

(James Fitzsimons is an independent financial adviser specialising in tax and financial planning)

Friday, 1 April 2011

Irish Property Prices Crash...

Property prices now down 51pc from peak of boom...

HOUSE prices across the country are now worth less than half of their value during the property boom, according to the latest price survey.

The Sherry FitzGerald price index shows that average prices for second-hand homes nationally have fallen to 51.1pc of their highest value during the peak of the housing boom in 2006.

Prices have dropped even further in the capital with the average second-hand home in Dublin now worth almost 56pc less than in 2006.

The stark figures released yesterday reveal that the value of houses across Ireland is now back at early 2002 levels.

At a comparative level it means prices -- especially in the Dublin market -- are now the same as they were 20 years ago.

The grim news comes on the same day that banking stress tests released by the Central Bank yesterday predict the four leading banks will need an injection of €24bn in capital to offset future losses.

Among the predictions are that they stand to lose close to €9.5bn in residential mortgage loans alone over the next three years.


And according to the latest house price index for the first quarter of 2011, house prices are continuing to fall.

Prices have now dropped by 12.5pc in the past 12 months in the capital and by 13.2pc nationally between the end of March 2010 and 2011.

Marian Finnegan, chief economist for the Sherry FitzGerald Group, said the lack of consumer confidence and the lack of access to bank credit are the main drivers of the downward price spiral.

"The pace of price deflation remained quite strong in the opening quarter of the year, a reflection of the negative consumer sentiment, concerns surrounding the wider economy and the interest rate cycle," she said.

"Looking to the year ahead, there is no doubt that the market will remain challenging in the coming months as consumers digest the income tax implications of the Budget together with a rising interest rate environment.

"The greatest obstacle for all markets in the year ahead lies in the availability of credit. As previously stated, true stability will only be achieved with a normalisation of the credit flow in the economy."

But there is some light on the horizon for first-time buyers, she added.

"We're not an over-inflated market any more," she said.

Report by Allison Bray - Irish Independent

Property Tax On Way...

Property tax on way within year...

THE Government has been ordered by the EU/IMF to impose a property tax on all homeowners within a year.

The controversial annual tax is expected to be announced in December's Budget -- even though it was not in the Programme for Government.

The imposition of the tax and the precise timeline for its roll-out are key requirements for Ireland to avail of the EU/IMF €85bn bailout package.

And the Department of the Environment confirmed that the tax will rise within a year of being introduced.

Details of how and when the so-called 'site-valuation tax' will be introduced and increased are in a briefing note prepared by civil servants for Environment Minister Phil Hogan. The document has been obtained by the Irish Independent.

Under the heading "EU/IMF requirements", the document states that Ireland must "adopt a property tax by end Q4 (quarter 4) 2011", adding that this tax must then be increased by the end of 2012.

The Fine Gael/Labour Programme for Government said only that such a tax would be "considered".

REport - Irish Independent