Who will now bail out the 40,000 homeowners who cannot pay their mortgages?

Thursday, 23 December 2010 17:23

0 Comments

Watching Pat Kenny's Frontline TV show on Monday, November 29, we were given another bellyful of waffle from Minister Barry Andrews and the deputy finance spokesman for Fine Gael, Brian Hayes. While Minister Andrews assured us all that the IMF bailout gave Ireland a lifeline to save the banks and the country, Pat Kenny ran to the audience to get in as many questions as possible. Questions without seeking answers serve little purpose other than to make a show last the hour and drive a lot of us to near insanity if we bother to watch.

Minister Andrews assured us the deal would work, even at an interest rate of 5.8 per cent or any other interest rate. Hayes suggested we got a bad deal.
One way or the other, if we got no deal at the time the banks would have gone broke within two weeks and there simply would be no money to pay our nurses, gardaí and civil servants.
When you're broke, and that's the reality of insolvency, begging on the streets or any handout is welcome.

The people who had the answers were in the audience, not on the panel. The new age economists and so called experts on financial matters usually steal the show and mider us all with figures that have little relevance to the state of our economy. They seem to be experts at juggling figures and percentages around to come up with figures that are often not realistic.

One member of the audience asked the simple question: "What was the Government's plan to bail out the 40,000 people who were unable to pay or were in arrears with their mortgages?"
This was a question directed at Minister Andrews. Rather than asking Andrews what their plans were, Kenny simply pointed down to 'that man at the back with the beard' for the next question.
The bailout for the 40,000 people who cannot pay their mortgages was the most important question on the night yet the Minister didn't rush to answer it.

Why it is an important question is, if the banks fail to get paid outstanding loans it can change the playing field considerably regarding the amounts needed from the IMF if the establishment fail to bail out the mortgage holders. The banks are the losers and obviously the Government cannot put an accurate figure on the cost of the bailout.
If one takes an example; suppose 40,000 house owners are unable to pay, say, an average €1,000 mortgage monthly, the banks are losing €40 million each month or €480 million per year.

Have our financial whizkids factored in issues and costs like these? Highly unlikely, because it has never been discussed. It's speculation at every corner. We might need this amount, we won't need that amount.
Anyway, with the figures that are being bandied around what's €480 million? Most people would need that when they go on holidays. It's only paper and if we run out print more.

The deal is done with Mr. Chop, Chop Chopra from the IMF and he has sounded a warning that he would be making periodic checks on his loot just to ensure they don't go back to their wayward ways buying sweets, ice cream, expensive holidays and high powered Mercs.
That move won't go down too well with our boys because up to now they were a law unto themselves with no interference from outside interests, but alas no one runs forever.
The boys at the helm now have suggested that there may be more black holes to plug, while the governor of the Central Bank says there are no more black holes.

When the bankers do finally come out, open up the real books and tell the truth, there may be a black hole in tracker mortgages and loans to small businesses that may not be recoverable, but that's for another era. Interest rates may rise even on loans that are not being paid back.
Best approach here would be to double the interest rate so it looks good on paper. Double the levies on building land those developers have abandoned so it looks good on paper and in the financial reports. Our boys are too honest; they wouldn't do things like that.

Mr. Chopra, on speaking of black holes - and he wasn't speaking about the black hole in the oil well disaster off the coast of Mexico, rather of the blacker hole in the Irish economy - suggested it would be completely unrealistic to expect in two weeks at the helm in Ireland to look at the whole banking system and come up with a scientific number that tells you 'this is it'.
Mr. Chopra, ask the politicians how they came up with figures in two days. We don't need any money on Monday and on Wednesday, we're broke. Mr. Chopra must not have gone to school as long as our financial whizkids or else he is not as good at the sums as our heroes.
It's a long road ahead and we might as well let them get on with it.

I wouldn't suggest for one moment that we cannot pull ourselves out of this fiasco and return to the good times. We have some options left to save us from defaulting on our loans to the IMF and European banks, but if we ignore the plight of the 40,000 people who today cannot pay their mortgages, there is nothing to say that there won't be 80,000 in 12 months.
If these are ignored by the present or incoming government the chances of any government surviving are slim.

Minister Gormally suggested that for Fine Gael and Labour going into government is like going into an asylum. He forgot to mention if the lunatics would be gone or still in situ.