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Irish credit rating is downgraded
http://www.x404.co.uk/forum/viewtopic.php?f=19&t=10198		 Page 1 of 1
Author:  Amnesia10 [ Wed Aug 25, 2010 4:59 pm ]
Post subject:  Irish credit rating is downgraded
http://www.bbc.co.uk/news/business-11081069

Quote:
The Irish Republic has had its credit rating downgraded by a leading ratings agency, Standard and Poor's (S&P).

S&P fears that the growing cost of propping up the country's troubled banking sector will further weaken the government's finances.

It now thinks that the Irish government will spend 90bn euros ($101bn; £74bn) helping the banks, 10bn euros higher than previous estimates.

The country's own debt agency described the analysis as "flawed".

It claimed that S&P's outlook was based on an "extreme and unrealistic" scenario of the cost of recapitalising the banks and questioned its calculations.

S&P cut the rating one step to from AA to AA-, its lowest since 1995.

It is not just S&P who think that Ireland are at serious risk of defaulting. The credit swaps market has increased the premium for Irish debt considerably recently. Ireland will default just a matter of when. It could take a year or two but they will collapse and default. The same prospect is in store for the UK in two years time, if we carry on with the austerity measures.
Author:  pcernie [ Thu Aug 26, 2010 6:48 pm ]
Post subject:  Re: Irish credit rating is downgraded
Amnesia, any idea what effect this might have in NI (or even just the border counties)?
Author:  Amnesia10 [ Thu Aug 26, 2010 7:41 pm ]
Post subject:  Re: Irish credit rating is downgraded
It could lead to more Irish moving north for work, especially those close to the border. That might mean unemployment staying higher than normal. For those from the south that will still be less than home. Though I suspect that the bulk of the migrants will move further afield to Australia or Canada etc.

I would suspect an huge increase in smuggling at some point as goods become seriously cheap one side of the border compared to the other. That could lead to a resurgence of the paramilitaries to make money in a new turf war. It could mean less support for Sein Fein as reunification will be even further away. Many will not want to join a near bankrupt country. So the SDLP could gain. The Unionists might find support for the Tories hard to stomach so might be more moderate. I do not think that it will lead to more trouble just more crime. All these factors could force the Tories to backtrack to some extent on the cuts there.

For Ireland itself it will mean it will be much more expensive to operate in the south. Property values will fall, even more because higher interest rates will make it simply impossible to rent for that sum. Banks will suffer even more losses. Though since Lloyds and RBS have already lost billions in the Republic they are leaving so meaning that the big three will be even more powerful in Ireland. Though the fact that they are insolvent requiring even more money from the government could push the republic closer to default. These things will take time to draw out weaknesses. It also is affected by the continuation of austerity measures there, and elsewhere. Governments here and elsewhere can change policies and I fully expect many to do so.
Author:  hifidelity2 [ Fri Aug 27, 2010 8:28 am ]
Post subject:  Re: Irish credit rating is downgraded
Was in Dublin earlier in the week. When going donw one street the guy I was with pointed out the houses and said that just before the crash they were selling for over 1 millions Euros and now go for under 500,000 euros

There were whole areas of empty flats and I guess this will just make the situation worse
Author:  Amnesia10 [ Fri Aug 27, 2010 9:15 am ]
Post subject:  Re: Irish credit rating is downgraded
hifidelity2 wrote:
Was in Dublin earlier in the week. When going donw one street the guy I was with pointed out the houses and said that just before the crash they were selling for over 1 millions Euros and now go for under 500,000 euros

There were whole areas of empty flats and I guess this will just make the situation worse

And at €500 000 they are probably still over priced. You could buy one and find that prices fall for the next couple of years. In Japan prices fell by 70% over the preceding decade. That prospect faces all the economies which had a rampant property bubble. Bubbles need credit and with banks reluctant to make loans that prospect means the prices cannot maintained everywhere.

In the rest of the country there are developments with 50 plus houses and one or two are occupied. That sort of overhang will take years to clear. It will be worse with the native population emigrating at the rate of 60 000 a year. The rest of the migrants from the rest of Europe have probably all gone home.
Author:  MrStevenRogers [ Fri Aug 27, 2010 1:12 pm ]
Post subject:  Re: Irish credit rating is downgraded
PIIGS, Portugal, Italy, Ireland, Greece and Spain with a side dish of Turkey. its called the 'domino' effect
just like toy soldiers, they all fall down ...
Author:  Amnesia10 [ Fri Aug 27, 2010 6:58 pm ]
Post subject:  Re: Irish credit rating is downgraded
MrStevenRogers wrote:
PIIGS, Portugal, Italy, Ireland, Greece and Spain with a side dish of Turkey. its called the 'domino' effect
just like toy soldiers, they all fall down ...

There is very little connection between them. They have broadly similar levels of debt and that is what has attracted the attention of the bond vigilantes. The problem for Ireland is that it followed the same plans as the coalition, cut deeply and fast and had to have another two emergency budgets and yet while its debt has fallen its debt burden is still as high as it was at the start of the austerity program. So it is actually no better off. It will probably still have to default and it was all unnecessary. The domino effect is only because they will be looked for the same reasons. The collapse of one will embolden the speculators in that they can try the same trick on another country and make a fortune in the process. Hence a domino effect. Though the main impact on a default of Ireland will probably be felt most here, because UK banks have large investments there.
Author:  MrStevenRogers [ Sat Aug 28, 2010 3:07 pm ]
Post subject:  Re: Irish credit rating is downgraded
we will have to wait and see, i can be very patient especially when disaster is unfolding ...
Author:  Amnesia10 [ Sat Aug 28, 2010 9:20 pm ]
Post subject:  Re: Irish credit rating is downgraded
MrStevenRogers wrote:
we will have to wait and see, i can be very patient especially when disaster is unfolding ...

It will be like a slow crash. It could take a couple of years before it hits the rails.
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