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France & Germany to Sink Ireland

LowIQ

Active member
Joined
Feb 9, 2005
Messages
286
The turnaround in the French and German economies spells serious trouble for Ireland.

If you recall, interest rates began to fall in July 2008. This money was badly needed by a heavily indebted private borrowers in Ireland. Instead of this money being used as a financial stimulus, the Clowen Economic Posse raided our wallets and purses to bail out their friends in the banking and building sectors. I sat by and watched as the extra surplus I had from a falling mortgage was eaten up by higher taxes and levies. Not only did I not stimulate any economy, I saw my safety cushion get whipped away.

Now, France and Germany are growing again. What does that mean? Higher interest rates. The other shoe is about to fall. People will be in serious pain before long.
 


ballot stuffer

Well-known member
Joined
May 21, 2007
Messages
1,504
Serious pain for those who are heavily indebted which is not everyone.

Good news for everyone else because our export sector should pick up again. With Europe being our biggest trading partner this is good news.
 

meriwether2

Active member
Joined
Nov 15, 2008
Messages
140
Ireland sunk Ireland.
Interest rate sare at 1%. People are drawing pictures of doom about interest rates dounbling to 2%.

A 2% interest rate is going to sink us. 2%.
May I suggest that 2% isn't very high? a 2% interest rate sending us into disaster sounds like the strw that broke the camel's back.

Lets blame the straw, rather than the 500lb load on his back, consisting on incompetence, NAMA and property bubbles.

Quick question: How many other eurozone countries are going to be sent into Holocaust mode from a 2% interest rate?
 

meriwether2

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Nov 15, 2008
Messages
140
As a saver, with no mortgage, and working for an export orientated company, this is fantastic news.

Why is higher interest rates good for exports? Are you exporting to US/UK? I know that higher interest rates strenghten a currency versus another with lower ones - is that what you're talking about?
 
H

Heorditas

Why is higher interest rates good for exports? Are you exporting to US/UK? I know that higher interest rates strenghten a currency versus another with lower ones - is that what you're talking about?
I think he's saying that higher interest rates are good for him because they give a greater return on his savings. I don't think he was referring to them helping exports.
 

kerrynorth

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Joined
Oct 5, 2005
Messages
1,525
Ireland sunk Ireland.
Interest rate sare at 1%. People are drawing pictures of doom about interest rates dounbling to 2%.

A 2% interest rate is going to sink us. 2%.
May I suggest that 2% isn't very high? a 2% interest rate sending us into disaster sounds like the strw that broke the camel's back.

Lets blame the straw, rather than the 500lb load on his back, consisting on incompetence, NAMA and property bubbles.

Quick question: How many other eurozone countries are going to be sent into Holocaust mode from a 2% interest rate?
Irish consumers are approx €320billion, or 200% of GNP in debt. The cut from 4.25% to 1% is the equivalent of a €10billion annual stimulus. Increasing rates by 1% is €3billion being taken out of the economy, or 3/4ths of what is proposed to be taken out of December's budget that has everyone up in arms. You can be damn sure that a 1% increase in interest rates will hit the economy hard!

We are the only country with that kind of level of consumer (mostly mortgage) debt in Ireland and will be by far the hardest hit.
 

LowIQ

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Messages
286
Irish consumers are approx €320billion, or 200% of GNP in debt. The cut from 4.25% to 1% is the equivalent of a €10billion annual stimulus. Increasing rates by 1% is €3billion being taken out of the economy, or 3/4ths of that is proposed to be taken out of December's budget that has everyone up in arms. You can be damn sure that a 1% increase in interest rates will hit the economy hard!

We are the only country with that kind of level of consumer (mostly mortgage) debt in Ireland and will be by far the hardest hit.
Exactly the point I was trying to make.
It doesn't matter how low rates are now or where they are in relation to "historical norms." Our stimulus was robbed off us. Now we have nothing to fall back on. We are in for a world of hurt.
 

seabhac siulach

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Joined
Feb 6, 2008
Messages
412
Rising interest rates will cause Ireland problems...as they will again run counter to our economic cycle.

During the boom here interest rates were low, when we needed them high, and now we are likely to see the reverse. But, the problem was not joining the Euro. The problem was in not running our economy sensibly over the last 10 years to deal with our newly constrained (in terms of interest rate control) circumstances. During a period when we had no control of our own interest rates and were in a boom, our government lowered taxes and increased spending! This ignited the almighty and unprecedented credit binge whose unwinding is presently crippling the country. Exactly what the country didn't need. Really, breath-taking, knuckle dragging levels of idiocy...

Lower/higher interest rates are imposed on us from outside; this is part of the discipline that comes from sharing a currency (that, despite all, is in our interests). Idiotic decisions to overheat a boom, however, came from our own incompetence or rather the incompetence of those we allowed to 'lead' us. Due to the present unwinding of those idiotic decisions, we are now going to suffer. Don't blame France or Germany for this...
 
Last edited:

atlantic

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Joined
Jan 25, 2008
Messages
649
I wouldn't worry yet ,down the line yes.This recession /depression has a long way to run.Umemployment rising, Nobody is buying anything except the chinese and now they are pulling in the horns .Keep an eye on the Baltic Dry index it an good indicator of what's happening globally.
The Media across the word want good news stories they will jump on this like a rash .
The turnaround in the French and German economies spells serious trouble for Ireland.

If you recall, interest rates began to fall in July 2008. This money was badly needed by a heavily indebted private borrowers in Ireland. Instead of this money being used as a financial stimulus, the Clowen Economic Posse raided our wallets and purses to bail out their friends in the banking and building sectors. I sat by and watched as the extra surplus I had from a falling mortgage was eaten up by higher taxes and levies. Not only did I not stimulate any economy, I saw my safety cushion get whipped away.

Now, France and Germany are growing again. What does that mean? Higher interest rates. The other shoe is about to fall. People will be in serious pain before long.
 

Eye of Angkor

Well-known member
Joined
Feb 20, 2009
Messages
335
Rising interest rates will cause Ireland problems...as they will again run counter to our economic cycle.

During the boom here interest rates were low, when we needed them high, and now we are likely to see the reverse. But, the problem was not joining the Euro. The problem was in not running our economy sensibly over the last 10 years to deal with our newly constrained (in terms of interest rate control) circumstances. During a period when we had no control of our own interest rates and were in a boom, our government lowered taxes and increased spending! This ignited the almighty and unprecedented credit binge whose unwinding is presently crippling the country. Exactly what the country didn't need. Really, breath-taking, knuckle dragging levels of idiocy...

Lower/higher interest rates are imposed on us from outside; this is part of the discipline that comes from sharing a currency (that, despite all, is in our interests). Idiotic decisions to overheat a boom, however, came from our own incompetence or rather the incompetence of those we allowed to 'lead' us. Due to the present unwinding of those idiotic decisions, we are now going to suffer. Don't blame France or Germany for this...
I agree completely. Ireland (like many small states) cannot have an independent currency. If we floated off from the euro the punt would go back to being valued by reference to sterling/euro/USdollar, as it has been in one shape or form since independence.

In acny case I do not believe that fairly slow growth in the eurozone (for that is what there will be at best) will lead to a significant rise in interest rates.
 

DaveM

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Joined
Sep 16, 2010
Messages
15,963
Why is higher interest rates good for exports? Are you exporting to US/UK? I know that higher interest rates strenghten a currency versus another with lower ones - is that what you're talking about?
I presume it's the end of the French and German recessions that he's referring to in relation to our exporters as opposed to interest rate hikes.
 

Vega1447

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Joined
Oct 18, 2007
Messages
5,685
What's driving German and French growth however? Is it sustainable? Germany in particular is an export oriented country, are they just selling cars and plant to the Chinese who are trying to dump as many USD as they can?

Quite.

All this talk of recovery is complete rhubarb.

German Chancellor Merkel faces an election later this year.

She has done what it takes (car scrappage schemes etc) to jump start the German economy - at least for long enough to get re-elected.

Sadly as Dios suggests; Germany, like other exporting countries, have a shrinking world market to export to.

I cannot see any prospect of ECB interest rates increasing.
 

seabhac siulach

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Joined
Feb 6, 2008
Messages
412
What's driving German and French growth however? Is it sustainable? Germany in particular is an export oriented country, are they just selling cars and plant to the Chinese who are trying to dump as many USD as they can?
I was thinking the same thing.
Well, if it is Chinese 'growth' that is underpinning this economic 'renaissance', then it is likely to be short lived. The Chinese are creating their very own version of an uncontrolled credit bubble to maintain their unfeasible 'growth' figures: state own banks lending hand over fist to state run factories to keep producing products no consumer (east or west) is buying, and a surging housing and stockmarket bubble due to the flood of liquidity. If I remember correctly, a lot of German exports in the last quarter were machine tools, and components for final assembly, likely destined for those same Chinese factories producing piles of goods no one wants, but being propped up, zombie-like with state aid.
Unless the Western consumer steps in again (unlikely given sluggish consumer confidence and high saving rates), how can China continue? Even its coffers or stimulus money are limited...how long can the show go on?
 
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lapsedmethodist

Active member
Joined
Jun 15, 2008
Messages
143
If the recession in France and Germany is slowing then perhaps this will attract inward investment to Ireland again as companies seek to enter or expand in the european market?
Naive ?
 

atlantic

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Joined
Jan 25, 2008
Messages
649
The Chinese are pulling back a bit ,they may feel they were moving to fast while everyone else is in recession,but if chinese growth falls to much they will be off again next year.The Chinese are now building a property bubble like USA, Britain,Spain,Ireland and I think they are looking for a soft landing and we all know in the property bubble market there is no such thing,so headaches a plenty for the chinese in the next couple of years,if they can not up exports that have fallen by 22%/25% over the last year.
I was thinking the same thing.
Well, if it is Chinese 'growth' that is underpinning this economic 'renaissance', then it is likely to be short lived. The Chinese are creating their very own version of a uncontrolled credit bubble to maintain their unfeasible growth figures: state own banks lending hand over fist to state run factories to keep producing products no consumer (east or west) is buying, and a surging housing and stockmarket bubble due to the flood of liquidity. Unless the Western consumer steps in again (unlikely given sluggish consumer confidence and high saving rates), how can China continue? Even its coffers or stimulus money are limited...
 

civilservant

Member
Joined
May 21, 2007
Messages
70
Why is higher interest rates good for exports? Are you exporting to US/UK? I know that higher interest rates strenghten a currency versus another with lower ones - is that what you're talking about?
When I took out my first mortgage in the UK in 1991, interest rates were at 12% and had been even higher.
 


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