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Thread: France & Germany to Sink Ireland

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    Politics.ie Member LowIQ's Avatar
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    Default France & Germany to Sink Ireland

    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.

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    Politics.ie Royalty toxic avenger's Avatar
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    The very argument I made against joining the Euro. People looked at me like I had said I was a paedophile, sure what's wrong with not having to change your money before going on holiday...

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    Politics.ie Member ballot stuffer's Avatar
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    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.
    Sow the wind, reap the whirlwind.

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    Politics.ie Member seabhcan's Avatar
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    As a saver, with no mortgage, and working for an export orientated company, this is fantastic news.

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    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?

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    Quote Originally Posted by seabhcan View Post
    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?

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    Quote Originally Posted by meriwether2 View Post
    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.

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    Quote Originally Posted by meriwether2 View Post
    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.

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    Politics.ie Member LowIQ's Avatar
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    Quote Originally Posted by kerrynorth View Post
    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.

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    Politics.ie Member seabhac siulach's Avatar
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    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 by seabhac siulach; 14th August 2009 at 03:04 PM.

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