Marking Time

I don’t know much about economics but I’ve always been curious as to where the tsunami of cheap money that fuelled the Irish housing boom came from. I wonder did this open the gates - the Asset Covered Securities Bill, 2001:

The purpose of this Bill is to allow international banks based in Ireland and domestic banks and mortgage providers to access international capital markets on the most competitive terms and in doing so to underpin the strength of the Irish financial system and the continued attractiveness of Ireland as a base for financial institutions. To do this, the Bill provides for the introduction of new financial instruments - the asset covered securities of the title - by Irish institutions into the euro zone market. These securities will be backed by assets held by the institutions concerned, in particular, mortgages and public sector loans.

Martin Cullen, Minister of State (Finance), 23rd October, 2001

And then this:

It was almost as if the demand for that paper created the mortgages…[c]alled forth the loans, because it became a really profitable business. You saw where you could issue these liabilities. Say, I could issue these liabilities at a weighted average cost of LIBOR [London Interbank Offered Rate] plus one-fifty, and I know all I have to do is just push that money out the door, push that money out the door, LIBOR plus three hundred, and I’ll make a huge amount of money from doing that origination activity or just on the equity piece that I keep, which is highly, highly leveraged. The person who really knows the mortgages is not the person who is really taking most of the risk. The person who is taking most of the risk is the kind of undifferentiated mass of buyers out there.

Anonymous Hedge Fund Manager, n+1, 7th January, 2008

The person who is taking most of the risk is the kind of undifferentiated mass of buyers out there. Now who might that be I wonder?

These strike me as linked in some way:

This is the thing, you know. We have money, but feck all to spend it on, when you think about it. I mean, if I lived in Paris, I wouldn’t need ten houses and four investment pads because there’s so much other - cute - nice stuff you can spend it on.

Winds and Breezes, 13 January 2008

To replace a notion of ourselves as workers who strive to increase pay and rights with that of consumers erodes the little power we have with in society. Because as consumers we are entirely passive – the collective power of consumer demand is a myth and any power that one may have as an individual consumer is dissolved by the manipulative efforts of producers, advertisers, and somewhat down the pecking order, feature writers for glossy magazines.

Dublin Opinion, January 16, 2008

It seems to me in Ireland today we are not making good choices. Rather then using our new-found wealth to solve problems and build a better place to live we are using it to cope better with the problems we already have. We seek refuge and comfort in short term fixes but seem incapable of a larger vision. Our wages have increased but we still struggle to control our lives with the pressures of house prices, childcare, depression, alcoholism, social disconnection, and more, all pushing in on us. We meekly bow down and accept that ‘that’s the way it is’.

Marking Time, June 17th 2004

I also note there was a time I could string two sentences together to make an almost coherent point.

• Easily Distracted : Blog Archive : Competency as a Cultural Value
  Might explain why people vote Fianna Fáil.
  (tags: Irish Politics culture)

Looks like it got caught in some rope, managed to chew its way free but wrapped the rope around its neck and was strangled.