That old fool Philip Pullman is upset at the prospect of library downsizing. In a recent speech, he lashed out against the difficult choices facing many local authorities:
"Here in Oxfordshire we are threatened with the closure of 20 out of our 43 public libraries. Mr Keith Mitchell, the leader of the county council, said in the Oxford Times last week that the cuts are inevitable, and invites us to suggest what we would do instead. What would we cut? Would we sacrifice care for the elderly? Or would youth services feel the axe? I don’t think we should accept his invitation. It’s not our job to cut services. It’s his job to protect them.”
Showing posts with label Northern Ireland. Show all posts
Showing posts with label Northern Ireland. Show all posts
Sunday, February 20, 2011
Friday, July 24, 2009
The UK has the highest inflation rate of any major economy
Well done Bank of England, you are a world beater. Lets keep up the good work and keep printing the cash.
Saturday, May 9, 2009
Thursday, April 2, 2009
Surprise house price increase in March
Is this a one month wonder or the start of something really terrible?
Monday, March 30, 2009
Ireland's credit rating downgraded; worse to come
Ireland has just been downgraded. It lost its coveted AAA credit rating. Standard & Poor’s weren't comfortable with the country's rapidly deteriorating public finances.
As soon as I heard, I quickly logged onto the Irish Department of Finance website, eager to find some lurid fiscal numbers as a basis for a new post.
Alas, the website is a total mess. The only thing I could find out for sure was that in 2008, the deficit was over 6 percent of GDP. As for recent performance, the Irish are keeping it quiet. As far as I can tell, they don't publish monthly tax or expenditure data.
Undeterred, I logged onto the Irish Central Statistical Office website. There I found some data that pointed to the source of Ireland's difficulties; the housing market, or to be more precise, housing construction.
The Irish bubble was totally different from the one in the UK. Whereas UK planning laws restricted housing construction, Irish planning laws encouraged new building. Over the last 15 or so years, Ireland embarked on a frantic construction frenzy. Between 1991 and 2008, the Irish built over 873,000 new dwellings. In a country with just 4 million inhabitants, this number was extreme.
More recently, the housing construction frenzy accelerated. Between 2002 and 2006, 378,000 homes were built, while census data recorded just 182,000 new households. Rough For every new household created, the Irish economy built two new dwellings.
In 2008, the construction boom came to a ruinous conclusion. The number of completed dwellings fell 45 percent from the 2006 peak. The collapse in construction activity pushed the Irish economy into an appalling recession. Tax revenues have crumbled, and the Irish government is now running up colossal deficits.
There is worse to come. The European Commission forecast that Ireland’s budget deficit may widen to 11 percent of GDP. Credit default swaps, i.e. the cost of insuring Irish government bonds from default, are hovering around 250 basis points. Wallpapering the deficit with Irish government paper is now extremely expensive.
As a member of the Eurozone, the Irish government has few policy options. It cannot devalue the exchange rate, nor can it adjust monetary policy.
With the cost of borrowing rising, it may have to consider an agonizing deficit reduction programme. This will, of course, only serve to reinforce and prolong the present recession. However, housing bubbles are like that. During the good times, they bestow prosperity, and then they cruelly steal it all back.
As soon as I heard, I quickly logged onto the Irish Department of Finance website, eager to find some lurid fiscal numbers as a basis for a new post.
Alas, the website is a total mess. The only thing I could find out for sure was that in 2008, the deficit was over 6 percent of GDP. As for recent performance, the Irish are keeping it quiet. As far as I can tell, they don't publish monthly tax or expenditure data.
Undeterred, I logged onto the Irish Central Statistical Office website. There I found some data that pointed to the source of Ireland's difficulties; the housing market, or to be more precise, housing construction.
The Irish bubble was totally different from the one in the UK. Whereas UK planning laws restricted housing construction, Irish planning laws encouraged new building. Over the last 15 or so years, Ireland embarked on a frantic construction frenzy. Between 1991 and 2008, the Irish built over 873,000 new dwellings. In a country with just 4 million inhabitants, this number was extreme.
More recently, the housing construction frenzy accelerated. Between 2002 and 2006, 378,000 homes were built, while census data recorded just 182,000 new households. Rough For every new household created, the Irish economy built two new dwellings.
In 2008, the construction boom came to a ruinous conclusion. The number of completed dwellings fell 45 percent from the 2006 peak. The collapse in construction activity pushed the Irish economy into an appalling recession. Tax revenues have crumbled, and the Irish government is now running up colossal deficits.There is worse to come. The European Commission forecast that Ireland’s budget deficit may widen to 11 percent of GDP. Credit default swaps, i.e. the cost of insuring Irish government bonds from default, are hovering around 250 basis points. Wallpapering the deficit with Irish government paper is now extremely expensive.
As a member of the Eurozone, the Irish government has few policy options. It cannot devalue the exchange rate, nor can it adjust monetary policy.
With the cost of borrowing rising, it may have to consider an agonizing deficit reduction programme. This will, of course, only serve to reinforce and prolong the present recession. However, housing bubbles are like that. During the good times, they bestow prosperity, and then they cruelly steal it all back.
Tuesday, February 24, 2009
Economic treason
It won't be long before bankers will be doing what the American's call the perp-walk; naughty men with their handcuffed hands behind their backs, smiling at the cameras.
The Irish authorities are off to a good start, with a raid on Anglo-Irish Bank.
Fraud squad officers and corporate crime investigators have raided the headquarters of the Anglo Irish Bank in Ireland.The Garda were understood to be searching the St Stephen's Green offices in central Dublin for books, documents and other materials which could provide evidence of any offences under company law.
Anglo Irish Bank was nationalised last month after the share price plummeted amid a wave of controversies. These included a loans-for-shares scandal, revelations about secret loans to former chairman Sean FitzPatrick and a multibillion-euro deposit from an apparent rival bank to boost its books.
Up to 20 officers working under the Office of the Director of Corporate Enforcement were acting on a search warrant issued on Monday by a judge in the Dublin District Court.Investigators are examining if any crimes were committed by the bank under Section 20 of the Companies Act.The raid followed remarks by Transport Minister Noel Dempsey on Monday in which he accused those involved in wrongdoing at the bank of engaging in "economic treason".
The Irish authorities are off to a good start, with a raid on Anglo-Irish Bank.
Fraud squad officers and corporate crime investigators have raided the headquarters of the Anglo Irish Bank in Ireland.The Garda were understood to be searching the St Stephen's Green offices in central Dublin for books, documents and other materials which could provide evidence of any offences under company law.
Anglo Irish Bank was nationalised last month after the share price plummeted amid a wave of controversies. These included a loans-for-shares scandal, revelations about secret loans to former chairman Sean FitzPatrick and a multibillion-euro deposit from an apparent rival bank to boost its books.
Up to 20 officers working under the Office of the Director of Corporate Enforcement were acting on a search warrant issued on Monday by a judge in the Dublin District Court.Investigators are examining if any crimes were committed by the bank under Section 20 of the Companies Act.The raid followed remarks by Transport Minister Noel Dempsey on Monday in which he accused those involved in wrongdoing at the bank of engaging in "economic treason".
Sunday, February 15, 2009
No more celtic tiger
My favourite quote: "This is how banks operate, when they make loans, they give themselves bonuses"
It is well worth taking note of what the Irish Finance Minister unwittingly says about monetary policy. He outlined perhaps the strongest arguements anyone is likely to hear why the Euro was a bad idea.
I have to give a quick plug for the subofdub blog, where I found this youtube clip.
Friday, January 30, 2009
Ireland faces rating dowgrade
That generous blanket deposit guarantee from the Irish government is starting to look a little silly.
Ireland has become the first western European country to have its top-notch credit rating given a negative outloook by Moody’s Investors Service, in a further sign of the strains being put on national economies by the financial crisis.
Ireland has already been given a warning that it could soon lose its triple-A status by rival agency Standard & Poor’s, which has already downgraded Spain, Greece and Portugal in recent weeks.
(from the FT)
Ireland has become the first western European country to have its top-notch credit rating given a negative outloook by Moody’s Investors Service, in a further sign of the strains being put on national economies by the financial crisis.
Ireland has already been given a warning that it could soon lose its triple-A status by rival agency Standard & Poor’s, which has already downgraded Spain, Greece and Portugal in recent weeks.
(from the FT)
Monday, January 19, 2009
It is all starting to fall apart
Item one: Spanish public sector debt has just been downgraded. No more triple AAA.
Item two: UK bond prices fell sharply today, which is equivalent to saying UK interest rates went up. If I read the Bloomberg webpage correctly, 30 year gilt yields are up almost 15 basis points. Markets have just woken up to the fiscal risks of unlimited bank bailouts. Just how far is the UK away from a rating downgrade? Too close for comfort, I'd say.
Item three: There is talk in Ireland of leaving the euro. Irish exports are being crushed by that extremely unfriendly sterling devaluation. There is a whiff of default wafting around Ireland right now.
What do these three economies have in common? Housing bubbles.
Item two: UK bond prices fell sharply today, which is equivalent to saying UK interest rates went up. If I read the Bloomberg webpage correctly, 30 year gilt yields are up almost 15 basis points. Markets have just woken up to the fiscal risks of unlimited bank bailouts. Just how far is the UK away from a rating downgrade? Too close for comfort, I'd say.
Item three: There is talk in Ireland of leaving the euro. Irish exports are being crushed by that extremely unfriendly sterling devaluation. There is a whiff of default wafting around Ireland right now.
What do these three economies have in common? Housing bubbles.
Saturday, January 17, 2009
Irish house prices to fall by 80 percent
I have seen some wild predictions, but nothing to compare with this one in the Irish Times. Morgan Kelly, a University College Dublin economist, reckons prices could fall by up to 80 percent. "Construction, but not demolition, of residential and commercial property will fall to zero for the foreseeable future," he said.
The casual observer might dismiss this kind of prediction as scare-mongering from a publicity seeking academic. Unfortunately, there is one killer fact about Ireland that makes the prediction credible - the country has something like a quarter of a million empty holiday homes. These houses are probably worthless.
80 percent? Could be; maybe; anything is possible.
HOUSING MARKET: IRELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference. In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms. Recovery will be slow: “It has taken us 10 years to get into this situation – it will in all likelihood take us 10 years to get out of it.”
The casual observer might dismiss this kind of prediction as scare-mongering from a publicity seeking academic. Unfortunately, there is one killer fact about Ireland that makes the prediction credible - the country has something like a quarter of a million empty holiday homes. These houses are probably worthless.
80 percent? Could be; maybe; anything is possible.
HOUSING MARKET: IRELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference. In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms. Recovery will be slow: “It has taken us 10 years to get into this situation – it will in all likelihood take us 10 years to get out of it.”
Tuesday, November 18, 2008
Ireland - what is going on?
Someone left this intriguing comment on one of my posts yesterday:
Alice can you shed any light on what is going on in the Irish Republic?
Last week beef prices collapsed. This week I am unable to sell finnished beasts at all.
Last week a police strike in Donegal was narrowly averted when the local authority agreed to stump up accrued overtime.
Bank of Ireland shares are trading for under 90 cents from a one time high of 18 Euro. It looks like the Government's bluff is about to be called...
Rumour has it that the caszhpoint sustem will stop within 3 days
Can you shed any light?
Is there anyone out there who can help?
Alice can you shed any light on what is going on in the Irish Republic?
Last week beef prices collapsed. This week I am unable to sell finnished beasts at all.
Last week a police strike in Donegal was narrowly averted when the local authority agreed to stump up accrued overtime.
Bank of Ireland shares are trading for under 90 cents from a one time high of 18 Euro. It looks like the Government's bluff is about to be called...
Rumour has it that the caszhpoint sustem will stop within 3 days
Can you shed any light?
Is there anyone out there who can help?
Thursday, October 9, 2008
We need a market based approach to the credit crisis
We keep hearing that commercial banks will not lend to each other, but that is not quite true. When the crisis started a year ago, spreads in the interbank rose sharply. These higher rates reflected a repricing of risk. Banks were willing to lend to each other but needed higher rates of return in compensation of the increased risk of default.
Central banks were not too keen this market based outcome. Instead, they tried to work around it. The Federal Reserve, the Bank of England, and the ECB cut their policy rates and opened up emergency credit lines at below market interest rates. Over time, these credit facilities have grown and in the post-Lehman world, the outstanding stock of central bank credit has reached astronomical levels.
How does this approach foster interbank borrowing? If the central bank is providing unlimited amounts of credit at extremely low interest rates, what is the incentive for a commercial bank to go to the interbank market and pay a higher rate? In effect, cheap central bank credit has crowded out the private interbank market. Or to put it another way, central banks are offering subsidized credits, and this distortionary price setting has destroyed the interbank market.
If the interbank market is ever to recover, central banks are going to have reduce the amount of credit they offer banks. Otherwise, central banks will become the only source of short-term funding. In fact, this is a reasonable description of the current situation.
The central banks are now stuck in a hole. Despite yesterday's interest-rate cuts, the interbank market shows no sign of recovering. According to Bloomberg, the cost of borrowing in dollars for three months in London soared to the highest level this year. Libor rate for three-month loans rose to 4.75 percent today, the highest level since last Christmas. Remember that the Federal Funds rate is only 1.5 percent. At the same time, and commercial banks are stockpiling huge amounts of cash, which is offering a zero rate of return, while other banks are borrowing cheaply from the central bank.
Perhaps a more sensible strategy would be for the central banks to offer unlimited credit lines at interest rates fractionally above the market determined interbank rate. This would encourage banks to return to the interbank market.
Slowly but surely, we would see the market return to normal as banks regain confidence in each other. Any bank deemed an unacceptable risk could still get credit from the central bank, thus preventing a bank run. Moreover, if a bank continued to seek central bank credit, this would be a powerful signal that the bank needed something more than just a credit line, like for example, a capital injection, or even full nationalization.
Without a market-based approach to this problem, central banks will be trapped in a permanent funding crisis, with banks begging huge amounts of low cost credit.
Central banks were not too keen this market based outcome. Instead, they tried to work around it. The Federal Reserve, the Bank of England, and the ECB cut their policy rates and opened up emergency credit lines at below market interest rates. Over time, these credit facilities have grown and in the post-Lehman world, the outstanding stock of central bank credit has reached astronomical levels.
How does this approach foster interbank borrowing? If the central bank is providing unlimited amounts of credit at extremely low interest rates, what is the incentive for a commercial bank to go to the interbank market and pay a higher rate? In effect, cheap central bank credit has crowded out the private interbank market. Or to put it another way, central banks are offering subsidized credits, and this distortionary price setting has destroyed the interbank market.
If the interbank market is ever to recover, central banks are going to have reduce the amount of credit they offer banks. Otherwise, central banks will become the only source of short-term funding. In fact, this is a reasonable description of the current situation.
The central banks are now stuck in a hole. Despite yesterday's interest-rate cuts, the interbank market shows no sign of recovering. According to Bloomberg, the cost of borrowing in dollars for three months in London soared to the highest level this year. Libor rate for three-month loans rose to 4.75 percent today, the highest level since last Christmas. Remember that the Federal Funds rate is only 1.5 percent. At the same time, and commercial banks are stockpiling huge amounts of cash, which is offering a zero rate of return, while other banks are borrowing cheaply from the central bank.
Perhaps a more sensible strategy would be for the central banks to offer unlimited credit lines at interest rates fractionally above the market determined interbank rate. This would encourage banks to return to the interbank market.
Slowly but surely, we would see the market return to normal as banks regain confidence in each other. Any bank deemed an unacceptable risk could still get credit from the central bank, thus preventing a bank run. Moreover, if a bank continued to seek central bank credit, this would be a powerful signal that the bank needed something more than just a credit line, like for example, a capital injection, or even full nationalization.
Without a market-based approach to this problem, central banks will be trapped in a permanent funding crisis, with banks begging huge amounts of low cost credit.
Sunday, August 10, 2008
The fastest crash
House prices in Northern Ireland are falling at a frightening rate. Since last summer, prices in the province have fallen 21 percent. Well, prices did go up at a frightening rate. It shouldn't surprise anyone that the downswing is equally violent.
Friday, May 2, 2008
The bubble is over in Ulster
Since 1983, house prices in Northern Ireland have increased 8-fold. Either they were giving houses away for free back in 1980s, or the province has just experienced one of the most appalling housing bubbles in history.
Notwithstanding the peace dividend, my money is on the bubble. Low interest rates, smooth taking estate agents, and foolish banks; the three vital ingredients for a speculative mania were all present in Ireland over the last ten or so years.
Well, it is all over now. Prices peaked last summer. Since then, prices have fallen by about 6 percent.
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