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Reserve Bank says housing crash will not improve affordability.; Luci at it again
Topic Started: 28 Oct 2014, 01:04 PM (6,489 Views)
Veritas
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skamy
30 Oct 2014, 03:26 PM
Veritas you do not use facts. You have proposed your own theory that Australia is just like Ireland and you bend and twist everything to fit this silly theory.

I have tried over and over to explain to you what happened in Ireland but you refuse to accept basic facts, the banks being the middle man makes no difference to the fact that this money headed straight into Irish property to ride the Irish boom.
Yes, you have tried to explain it.

And everytime you have, you have revealed your total ignorance of what happened.

Here is the thing dear: you are entitled to your opinion, you are not entitled to your own facts.

Your factual assertions in relation to this matter have been totally wrong


Read this and learn Skamy

Quote:
 
Bankers taking risks on a "almost unbelievable" scale, a complicit public willing to "let the good times roll" and a lack of regulation combined to cause the collapse of the Irish banking system, a government-commissioned report concludes.



A nine-month inquiry by Finnish finance expert Peter Nyberg published is scathing about the banks which, he says, lost control, but also contains criticism of Irish society in general and institutions including the civil service and regulatory authorities.

Nyberg, a former International Monetary Fund economist, says that no one in the banks appreciated the risks being run and, that although global events did not help, the main reason for the Irish banking collapse was "the unhindered expansion of the property bubble financed by banks using wholesale market funding".

"It appears now, with hindsight, to be almost unbelievable that intelligent professionals appear not have been aware of the size of the risk they were taking," as they piled money into property pipedreams with little regard for risk analysis or even loan documentation, he says in the 156-page report commissioned by former finance minister Brian Lenihan.

There was, he says, an "inability and unwillingness to remember basic principles of banking" that providing credit is not a sale, "it is the acquisition of a risky asset".The public was also complicit, he says, because "large parts of Irish society were willing to let the good times roll".

The Irish banks have now received five bailouts costing the taxpayer €70bn (£61.5bn), while the economy is still in recession and is struggling to recover.

The decision, on September 29 2008, by former Taoiseach Brian Cowen and Lenihan to give the banks a blanket state guarantee was a key moment in the story and Nyberg gives an extraordinarily bleak analysis of the day that has been dubbed "Black Monday". Cowen and Lenihan's action had "profound" implications for Ireland but was "conducted on the basis of very deficient information", borne out of a lack of proper interest in the financial markets in the preceding years.

"If more relevant information on and analysis of the underlying position of some of the banks had been available, discussions and policy recommendations may have been different."

He analyses the years 2003 to 2009 and concludes that banks "valued loan sales skills above credit analysis and risk," a fact born out by the wide availability of 100% mortgages and interest-only mortgages. At the same time bankers got carried away with a "slow slide" in lending from "small to large to enormous loan amounts" while management and boards and other observers failed to "fully appreciate" the risks their banks were undertaking.

"Bank management and boards seem to have been totally unprepared for both of their key risks [property loan impairment and funding problems] occurring simultaneously," the report says. "Banks set aggressive targets for profit growth. This drive for growth really implied a partial change in business model and strategy without the necessary corresponding strengthening of governance, procedures and practices."

Anglo Irish, the so-called builders' bank, which was the catalyst for the collapse of the entire sector, is singled out for criticism as is Irish Nationwide Building Society in which "deficient and ineffective" credit risk was found. "Most Anglo board members did not appear to have sufficient experience or specialist knowledge" to do their job or recognise the risks attached to a bank that specialised in one area only – property development.

Nationwide, which he describes as "unusual", was lacking in a number of key functions including IT, treasury, and commercial lending and the "loan approval" procedures were not up to acceptable banking standards.

Nyberg goes on to describe a banking system in which loans were not properly classified and files often badly maintained and lacking in documentation.

Nyberg is also critical of the financial regulator who, he found, had identified poor practices at Anglo and Nationwide but was "hesitant to act". Nyberg adds that this failure meant the bad banking practices "continued undisturbed". Auditors also came under fire as they failed to engage in any "challenging dialogue" with the banks. The Central Bank of Ireland should also have also been more involved, he says, as should the department of finance, which ought to have taken a greater interest earlier on.
Edited by Veritas, 30 Oct 2014, 04:15 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Mike
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Veritas
30 Oct 2014, 03:55 PM
Yes, you have tried to explain it.

And everytime you have, you have revealed your total ignorance of what happened.

Here is the thing dear: you are entitled to your opinion, you are not entitled to your own facts.

Your factual assertions in relation to this matter have been totally wrong
You ignore the fact that Ireland spent almost 300% more per capita on housing construction then Australia did at the time. Hence why that had a crash, they overbuilt massively.

In comparison Australia under builds and has done for along time, even with recent years improvement in construction we are still some 250% less per capita under what Ireland was spending on residential construction capex.

Australia would need to see our construction levels double and then double again to get to where Ireland was, not going to happen.

You are just plain wrong, this has been explained to you in great detail by myself with all the links to the data last year, you just choose to ignore it. Similar for the USA although a bit smaller then Ireland on a per capita level it was still well over double what Australians spent on construction per capita, part of the reason they had a crash.

Australia does not build at those levels due to our strict lending standards which were miles in front of both nations at the time.
http://mike-globaleconomy.blogspot.com.au/
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Veritas
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Mike
30 Oct 2014, 04:18 PM
You ignore the fact that Ireland spent almost 300% more per capita on housing construction then Australia did at the time. Hence why that had a crash, they overbuilt massively.

In comparison Australia under builds and has done for along time, even with recent years improvement in construction we are still some 250% less per capita under what Ireland was spending on residential construction capex.

Australia would need to see our construction levels double and then double again to get to where Ireland was, not going to happen.

You are just plain wrong, this has been explained to you in great detail by myself with all the links to the data last year, you just choose to ignore it. Similar for the USA although a bit smaller then Ireland on a per capita level it was still well over double what Australians spent on construction per capita, part of the reason they had a crash.

Australia does not build at those levels due to our strict lending standards which were miles in front of both nations at the time.
Quote:
 
You ignore the fact that Ireland spent almost 300% more per capita on housing construction then Australia did at the time. Hence why that had a crash, they overbuilt massively.


When did I ignore that fact Mike? We are arguing about what happened in Ireland not comparing Ireland and Australia.

Quote:
 
In comparison Australia under builds and has done for along time, even with recent years improvement in construction we are still some 250% less per capita under what Ireland was spending on residential construction capex.


This argument has noting to do with Australia.

Quote:
 
Australia would need to see our construction levels double and then double again to get to where Ireland was, not going to happen.


See above.

Quote:
 
You are just plain wrong, this has been explained to you in great detail by myself with all the links to the data last year, you just choose to ignore it. Similar for the USA although a bit smaller then Ireland on a per capita level it was still well over double what Australians spent on construction per capita, part of the reason they had a crash.

Australia does not build at those levels due to our strict lending standards which were miles in front of both nations at the time.


Mikey, I can only be wrong about the arguments I am actually making not the ones that you and that other fool Skamy imagine I am malking. :re:
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Sydneyite
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Veritas
30 Oct 2014, 04:23 PM
When did I ignore that fact Mike? We are arguing about what happened in Ireland not comparing Ireland and Australia.
WTF????? :bl: You CONSTANTLY compare Ireland to Oz! And claim that we have all the same issues that they did so it's only a matter of time before our crash etc etc etc etc...... :re:
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Veritas
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Sydneyite
30 Oct 2014, 04:44 PM
WTF????? :bl: You CONSTANTLY compare Ireland to Oz! And claim that we have all the same issues that they did so it's only a matter of time before our crash etc etc etc etc...... :re:
Yes, with good reason.

However, in this particular instance, the conversation was exclusively about what happened in Ireland.

The reason why the point was being pressed was because Skamy insists on telling fantastic tales about what actually happened there.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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miw
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Sydneyite
30 Oct 2014, 04:44 PM
WTF????? :bl: You CONSTANTLY compare Ireland to Oz! And claim that we have all the same issues that they did so it's only a matter of time before our crash etc etc etc etc...... :re:
You mean he googles up two charts, and then says that because they both have blue borders they have a high correlation and therefore prices are gonna crash BECAUSE I WANNA CHEAP HOUSE DAMMIT!
Sydneyite
29 Oct 2014, 09:54 AM
miw - that was a feisty post! :oo:
I can only handle so many crocodile tears.
Edited by miw, 30 Oct 2014, 05:28 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Emmanuel
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miw
30 Oct 2014, 05:27 PM
You mean he googles up two charts, and then says that because they both have blue borders they have a high correlation and therefore prices are gonna crash BECAUSE I WANNA CHEAP HOUSE DAMMIT!

Yeah, well, he aint going to get it.
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Veritas
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Emmanuel
30 Oct 2014, 05:40 PM
Yeah, well, he aint going to get it.
So I give Skamy another absolute hiding and Team Bull rallies round to comfort their fallen comrade.

Truly, heart-warming stuff guys.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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herbie
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miw
30 Oct 2014, 05:27 PM
You mean he googles up two charts, and then says that because they both have blue borders they have a high correlation and therefore prices are gonna crash BECAUSE I WANNA CHEAP HOUSE DAMMIT!

MIW - You have some sort of tiny little heart too? Cuz; Bro; I never would have thunk it ... :)
Edited by herbie, 30 Oct 2014, 05:59 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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miw
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herbie
30 Oct 2014, 05:58 PM
MIW - You have some sort of tiny little heart too? Cuz; Bro; I never would have thunk it ... :)
I save the admittedly piddling amount of sympathy that I have for people who are seriously trying but still having trouble making food and rent. Heaven knows there are plenty of them in the world.

I couldn't give a shit about the petit bourgeois who think they should have it even easier.


Veritas
30 Oct 2014, 05:52 PM
So I give Skamy another absolute hiding and Team Bull rallies round to comfort their fallen comrade.

Truly, heart-warming stuff guys.
If you think you gave Skamy a hiding, then more power to you. Check your iPhone. There's probably an app that will give you a badge for that.
Edited by miw, 30 Oct 2014, 06:23 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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