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Ireland’s Home Mortgage Crisis: No Debt Relief.
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worker & community struggles and protests |
opinion/analysis
 Sunday March 17, 2013 21:34 by Caoimhghin Ó Croidheáin - Artist
The Destruction of Savings and Pensions
We are living in a society where the combination of fractional-reserve banking (lending out multiples of deposits) helped along by quantitative easing (printing almost unlimited quantities of money) based on fiat currencies (money without intrinsic value) has created exponential growth for the world’s financial elites. This led to unprecedented bubbles in the property market as banks made it easy for people to borrow more money than they would have been allowed in the past when a conservative banker guideline for a home buyer was to have a two to two and a half times mortgage-to-salary ratio.
In contrast to these methods for almost unlimited sources of (false) wealth conjured up by financial elites, workers (borrowers) have only one source – wages – which are going into decline due to government cutbacks and increased taxes. Yet despite this obvious anomaly, whereby the banks get bailouts with even more money, borrowers are expected to pay back, and in full, under threat of repossession, every single cent of the flawed money lent to them to pay exorbitant house prices inflated by excessive lending in the first place.
According to David Hall, Director, Irish Mortgage Holders Organisation:
‘The Irish mortgages crisis, now into its sixth year, is still raging beyond any control of the authorities. Per latest figures from the Central Bank of Ireland, 186,785 mortgages (including BTL) in Ireland are at risk (in arrears, restructured or in repossession), accounting for an unprecedented 25.3% of all mortgage accounts still outstanding.’
Hall goes on to state that ‘with some 650,000-750,000 estimated people residing in the households with the principal residence in mortgages difficulties, we are witnessing a wholesale destruction of savings, pensions and wealth of several generations of Irish people.’
As if that wasn’t bad enough the government is introducing property charges from 1st July. Media discussion of these issues revolve around valuations of properties and not around the huge amounts of tax already paid to the government when the houses were purchased or the fairness of such a tax on properties which were bought during the bank-inflated boom, delusionally misnamed yet commonly known as the ‘Celtic Tiger’.
Media pundits, sounding like poodles discussing the length of their leashes, have not questioned the ethics of forcing people to pay back such huge sums of money under the rubric that allowing people to write-down a portion of the debt would cause a ‘moral hazard’ (as if the initial lending spree was itself moral). Similarly, there is little discussion of the property tax deferral option for low income persons, a sinister move, which implies, (like with the hard line taken on mortgage repayments) that exemption is not an option any more for low wage earners but only more accumulated debt (with interest) to be paid sometime in the future- further impoverishing those least able to pay.
Adding insult to injury, the Department of Finance secretary general John Moran spoke recently of an “unnaturally low level of repossessions” and that ‘homeowners could not expect the taxpayer to subsidise them to remain in a house “that is beyond their means”.’ It is interesting to note that ‘their means’ didn’t seem to matter at all when it came to lending out the huge amounts of money at the outset.
Credite posteri - Believe it, future generations (Horace).
Caoimhghin Ó Croidheáin is a prominent Irish artist who has exhibited widely around Ireland. His work consists of paintings based on cityscapes of Dublin, Irish history and geopolitical themes (http://gaelart.net/). His blog of critical writing based on cinema, art and politics along with research on a database of Realist and Social Realist art from around the world can be viewed country by country at http://gaelart.blogspot.ie/.
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Comments (7 of 7)
Jump To Comment: 1 2 3 4 5 6 7Interesting points raised above. It is quite amazing the way there is no moral hazard bailing out the bankers, speculators & gamblers and builders but there is when it comes to ordinary people.
The point about the deferral of the property tax, I noted in Dec when the budget was announced. See here: http://www.indymedia.ie/article/102832
And regarding repossessions the govt has been very pointed about how these are going to significantly. If the level does rise to the Spanish level then we could see up to 10k of them a year. It will be interesting to see how the spin that in the media if or when it does happen. I guess they will just ignore it.
"combination of fractional-reserve banking (lending out multiples of deposits)"
You don't actually understand this. Looks like voodoo, doesn't it, how when there is ANY fraction of deposits that can be loaned out there ends up being more "money" in circulation than currency initially deposited.
Refer to any economics 101 text but I'll try to briefly explain.
Suppose the "reserve requirement" is 50%. That doesn't mean that the bank is allowed to loan out MORE than was deposited but just half, the other half kept in reserve. But what they loan out gets deposited into some bank and that bank can loan out half of that (1/4 of the original deposit), then 1/8, etc.
Well 1/2 + 1/4 + 1/8 + ........ is 1 AND the original 1 is still on deposit so the total "money" is now 2. The amount of "money" in existence got multiplied. The only way not to have this multiplication is to have a reserve requirement of 100% but that means NO MONEY LOANED OUT.
Reply to Mike Novack Mon Mar 18, 2013 21:40 ...
"Fractional-reserve banking" (as you refer to it) is just one of the problems associated with allowing the banksters to provide a nation's money supply.
The solution to ALL of the "bankster problems" involved -- which are EXTREMELY serious and dangerous (in my opinion) when considered as an overall set of global social difficulties -- is for independent nation-states (such as the Republic of Ireland for example) to supply themselves with there own money supply, along the lines outlined at:
http://www.indymedia.ie/article/101780#comment289703
Any nation which allows, or invites, the banksters to supply it with its money supply will be forever under the full and firm control of the banksters (for looting and bullying purposes of all kinds, lawful and otherwise): regardless of the fact that the banksters may install puppet governments which the bankster-owned MSM (Main Stream Media) hoodwink "the people" into believing are "democratic": as has happened in the Republic of Ireland, for example.
Related Link:
NO to "government of the banksters, by the banksters, for the banksters" ...
http://tinyurl.com/ccbwshn
erm....
surely if savers have saved 100 euro
and the bank loans out half of it
then money is NOT created out of nothing
AND people can get loans!
Admittedly, it would be a smaller economy but in many ways a more real one.
We do NOT need fractional reserve lending.
And perhaps Mike can explain where the extra interest charged to customers is expected to come from considering what the nature of the money in circulation actually is.
The answer is, EVEN MORE DEBT is created in the system to try to pay the interest.
We should seriously consider banning derivatives, Not allow lending AND stockmarket speculation in the one bank, and minimise / eliminate fractional reserve lending.
But we have to consider where the current money is from too. Even if it is linked to say gold and it currently isn't -what is it that gives value.
If we consider that the "wealth" of society has risen in the past century or two you have to ask where does it really originate from and I think you will have to agree it is ultimately grounded in availability of resources and energy particularly. So if you were to imagine for a moment that we were to run low on resources and energy then the pile of notes or even the stack of gold beside you would effectively be worth less because in the real world without those resources and energy you can do less.
There seems to be few economic texts or discussions or any other fora that attempt to tease out the physical grounding of where money really comes from. Having said that, it is clear the current system creates more money from debt out of thin air but the confidence or expectation is that somehow the system overall will grow to service that and that growth requires extraction and use of more resources and energy.
And given that the total global debts far exceed the real economy and would require the world economy to grow indefinitely which of course is not possible, then therefore those debts cannot and will not be paid and that goes for the debts here as much as anywhere else. The only way it might happen is hyper-inflation which would basically make the money worthless and although I am not saying this will be the mechanism, but if it didn't happen it really amounts to the same thing which is not really paying off the debts. Anyhow the debts are not ours and so should not be paid. If you look at them critically they are just a means to transfer ownership of hard assets from one set of people to another set.
Reply to T at Tue Mar 19, 2013 11:30 ...
"There seems to be few economic texts or discussions that attempt to tease out the physical grounding of where money really comes from."
That's true, and the main reason (I strongly suspect) for this ongoing and extremely dangerous situation (as I see it) is because the Banksters have made it their business to make absolutely sure that "the people" are in total ignorance of this subject: to the very largest extent that they can possibly manage. That way, it's much easier for the Banksters to fool "the people" into accepting all the trickery, fraud, and criminal scams (of the Banksters), and for "the people" to keep on (and on, and on) accepting them, albeit in confused, confusing, and half-hearted ways: even though it's obvious to everybody (just about) that there HAS to be sometime TERRIBLY WRONG SOMEWHERE with the global money-supply system the Banksters are at present presiding over, and, that it's getting worse and more threatening, by the day, for the vast majority of "the people" of the world.
Nevertheless, as it happens, there is a small number of first-class texts (as I see the situation) available on the "money" subject; and, on May 17th 2012 (just two months short of two years ago now) I sent an e-mail to an international selection of senior politicians and lawyers (and others) with information on what is in all likelihood the MOST important of the "money" texts in question: the one which has been described by some very well-informed people as "one of the world's greatest and most important political declarations", no less!! It's worth keeping in mind (I feel) that "the people" only need ONE really good-quality, highly authoritative, text on the "money" subject: for the purpose of protecting themselves from being completely fooled, and robbed blind -- left, right, and centre -- by the Banksters and their "bought and paid for" puppet-government (executive, legislative, and judicial) gophers: of the kind we have the sad misfortune to be saddled with in the Republic of Ireland at the present time.
A full copy of the May 17th 2012 e-mail (referred to in the paragraph immediately above), which was addressed primarily to Mr Ban Ki-moon (Secretary-General of the United Nations), can be viewed at the following www location:
http://www.humanrightsireland.com/UnitedNations/17May20...l.htm
Sadly, the recipients of the e-mail at the above address, Mr Ban Ki-moon included, and which also included a number of senior Republic of Ireland Cabinet Ministers, and Republic of Ireland Chief Justice Susan Denham, all appear to have COMPLETELY ignored the "text" in question, in its entirety: judging by their collective actions since May 17th 2012.
If they used the above mentioned "text" provided for them, at all -- the text that is of "one of the world's greatest and most important political declarations" -- it would have been to wipe their backsides with, I imagine?
Such is the maximum extent of the "power" (I believe) of our "public servants" (so called), and of people like Mr Ban Ki-moon (another "bought and paid for" gopher of the Banksters I strongly believe), that the Banksters will ever allow them: when it comes to acting in the best interests of "the people" of the Republic of Ireland, and of "humanity as a whole" throughout the entire jurisdiction of the United Nations.
Beneath the surface, "Banksterism" and "Totalitarianism" are one and the same thing (it appears to me): regardless of how well, and how deceptively, the "Banksterism" is dressed up and presented to "the people" as genuine "constitutional democracy" (for example): via the Bankster-owned MSM (Main Stream Media), via the Bankster-owned Republic of Ireland type governments (executive, legislative, and judicial), and via government-controlled media outlets (such as our own RTE for example).
And, "Global Totalitarianism" will undoubtedly be the end result -- the final product -- of the Global Banksterism" process now in progress (it seems to me): unless "the people" of the world find the means to successfully decommission that process, by peaceful and lawful means.
It's worth keeping in mind also perhaps, especially when things all look so very grim for "the people" at the present time, that:
"The 'Opera' ain't over til the fat lady has finished her final song."
Related Link:
Democracy will rise superior to the money power, Abraham Lincoln, Aristotle, Human Rights Ireland, William Finnerty ...
http://tinyurl.com/bupryav
Taking back Ireland:
(a bunch of mad ideas that need a fair bit of refining)
free flight of capital out of the country blocked.
default, stop paying gambler bankster debts, print our own currency.
we need to introduce the extra money (we print) in the form of infrastructure projects. wages for these would be paid for by government printed money.
The projects would need to be stimulating to the local economy.
Of course, we'd cancel the current resource grabs and start to develop our own oil and gas / trees / water / seaweed / fishing / wave / wind energy / non GMO food, with our own workers, building up expertise.
Our universities would have to create (free) courses to equip graduates to work in these areas. Online education free for all. Jobs for coders, teachers, etc.
create a State savings and small loans bank, provide housing for people receiving rent allowance, removal of upward only rental agreements for small businesses, kick out the unproductive leeches and propertied parasites draining our economy at every turn.
build co-operative local produce supermarkets to replace tescos etc, extra rail links, subsidised public transport (fuel dependency), cheap electricity (reduces costs for small business), cost price fuel. low rent / rent free offices for small business (from NAMA). If you employ people you get benefits of low costs
Emphasis on producing stuff we currently import, that we don't need to. Wish lists created and those who work on these areas get incentives.
removal of all upward only rental agreements for small businesses, rents standardised at reality levels. Non compliance risks state compulsory rental and subletting of premises to business.
ditto for large tracts of arable lands that are not being used.
food production co-operatives,
Legalise marijuana farming and use in prescribed cafe's etc.
Across the board maximum wage introduced for everyone. 50k tops
State gives everyone a living wage of 6k, vouchers for use purchasing local services / produce
Insurance companies banished. Financial criminals get a transaction tax.
State runs banded insurance schemes with fixed payout levels for fixed set of activities
Legal system thrown out and we start again with a greatly simplified system of peer courts.
prisons saved for violent criminals only. others do community service, linked to their housing / living wage etc.
systematic optimisation of non frontline staff in civil service. Same basic state pension and services for all.
lots to be getting on with. We'd trade food for oil with Iran / venezuela, increase corporation taxes up to a decent level, leave the EU, default on the gambling debts.
A genuine connollarian revolution!
The hope would be that the local economy would low cost and be going again, less import / multinational oriented employment and we'd be providing more of what we need ourselves in a lower cost economy with better infrastructure before inflation got us. Taking back our own resources would buy us time too.