Who's to blame?

Wookster

Irish banking collapse caused by greed and complicit public – report
Peter Nyberg inquiry into Irish banking system's failure is scathing about banks and regulators

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".

http://www.guardian.co.uk/business/2011/apr/19/nyberg-report-into-irish-banking-collapse

There are a number of parallels with many other economies in the western world, particularly those that experienced house price booms.

DexterA

If the monies flowing, people are usually more interested in accumulating it, than asking where it's coming from. Good times indeed. To be fair to the general public, not many in the media drew sufficient attention to the money supply, debt boom and risks being taken.

StevieJ

DexterA wrote: »

If the monies flowing, people are usually more interested in accumulating it, than asking where it's coming from. Good times indeed. To be fair to the general public, not many in the media drew sufficient attention to the money supply, debt boom and risks being taken.

The worry about Ireland was they didn't have the experience of a previous house price crash. I was apalled by their attitude in 2000 never mind 2006. Oh BTW who is to blame for problems in the Irish economy, Gordon Brown of course

Jimmy_31

So somebody has had to do a study into why things went wrong.

The banks were throwing money at people and the people took it.

I think it was a waste of time doing the study to be honest.

Loughton_Monkey

I'm torn between blaming "the unhindered expansion of the property bubble financed by banks using wholesale market funding" and blaming Brother Brown.

But the true culprit is probably Gerry Adams. He absolutely decimated the local arms and explosives industries - with all the knock on effects.

Really2

Jedward...?

Irelands problem stemmed from an overheating economy that could not put it's rate up to cool it down.

The next problem was having a crashing economy and could not lower rates.

Blame looks to be being in the Euro.

ninky_2

well when it's happening in lots of different countries it's not so much who is to blame but what are the inherent flaws of the economic system everyone is using.

Loughton_Monkey

Really2 wrote: »

Blame looks to be being in the Euro.

You could be right.

So I took a €1 coin outside earlier today. I absolutely bashed it with a large hammer. Got it to almost double size. Then bent it over by banging it hard on the edge. It's now looking pretty sick.

That has probably taught it a lesson and it won't ruin another country ever again. They'll all live happily ever after....

[PS Oh !!!!!!! In only three weeks I'm off on an 8-week tour of inner Spain and Portugal for a bit or R&R. So thanks to you, I have one less € to spend! Damn!]

Thrugelmir

Jimmy_31 wrote: »

So somebody has had to do a study into why things went wrong.

64% of all Irish bank lending went into property and the construction industry. At the peak the construction industry accounted for 17% of GDP.

To put the size of the bail out into perspective. If Britain had to undertake a similar size rescue, it would mean spending more than 10 times as much as in rescuing RBS, Lloyds Banking Group, Northern Rock and Bradford & Bingley.

Every man , woman and child in Eire will have to shoulder a tax burden of around £14k (or £53k per household) to fund the bank bail out.

Makes the state of the UK banking sector appear exceptionally good in comparison, and puts matters into a wider context.

vivatifosi

ninky wrote: »

well when it's happening in lots of different countries it's not so much who is to blame but what are the inherent flaws of the economic system everyone is using.

I don't agree. One of the fundamentals of any market is supply and demand. If you supply too many houses by a huge amount, prices will go down. The market was so far off equilibrium yet nobody could see it because they wanted to make money. I do feel sorry for FTBs who made a loss though because it will take them a long time to come back from.

In America, the other key market which people look at, the situation was different and NINJA loans were added to the equation. Lending money to people who will never be able to pay it back is not a good business model.

chucky

trying to compare the Ireland situation to any other country or even blaming house prices is quite simple.
each economy has had it's own issues and mostly due to their dependency on house prices not because of them.

for the causes or the blame, you need to look at the massive wealth destruction that took place reducing the amount of liquidity everywhere.