Our Toxic Financial Sector

April 4, 2016

This blog has argued that the Irish Central Bank with its policies underwritten by the ECB has been the single most cause of our housing and homelessness crisis. Shortages have been engineered by the Central Bank to prop up property prices and to ensure repayments of mortgages without the added burden of negative equity.
vulture_funds__fiestoforo

To prop up this bubble in housing and property, loan to value relationships that includes extortionate rent rates, rich property developer stakeholders with large investment portfolios are assured of a good return, their repayments on their own outstanding loans, made ‘safer’. 

The consequence of this policy is that the young cannot afford housing as they are forced to pay Sheriff of Nottingham rents. 

In an interesting contribution to this debate, Master of the High Court Edmund Honahan, has entered the fray. Tackling Alan Kelly’s misinformed and ill-judged view that the constitutional protection provided for property ownership is the leading cause of our crisis of homelessness.

Kelly’s views on this matter lay bare the lack of intellectual probity and competence available to Irish citizens at the political level in dealing with our crisis.

Our constitution on this matter does not require change. It is clear and well worded and provides adequate safety measures to ensure the public good should not be compromised in favour of private interests.

 

“2 1° The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.

 

2° The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.”

 

Honahan suggests the state act to acquire large property portfolios now in private hands:
“If the owners of these refuse to sell, acquisition can be by compulsory purchase with full compensation assessed by an arbitrator”.

Honahan does not visit  the scandal of NAMA selling Irish housing stock at knock down prices to vulture funds at a vast cost to the Irish taxpayer; the further cost being the hidden tax/high rents these vulture funds can impose on the market place.

Part 11

Also argued on this blog is the view Ireland should strongly entertain leaving the EU along with Brexit on a journey to create a fairer national and global economy, ending homelessness and the usury of financialisation that is becoming increasingly toxic as it brings us closer to global market collapse.

Without reform of the global financial system, war and the current refugee crisis in Europe and further turmoil in Africa are all inevitable. The euro is contributing to this crisis as it follows the path of support for austerity rather than reining in the profligate markets that favour the 1%.

In Europe a Scandinavian and UK commitment to a trade agreement, with its own members acting with the EU as partner, alongside reform of the financial system, at its best is a better trade-off than the imminent possibility and consequence of global financial collapse. Brexit should lead to such new trade agreements and partnerships.

Meanwhile in Ireland repercussions of our own bailout and its repayment burden with Ireland the second most indebted country in the world are felt everywhere. It is leading to farcical economics.

Credit unions have offered up to €8bn to invest in social housing. Captured by financial interests and increasingly stripped of its power to act, the Oireachtas currently unable to form a government, has become at odds with the needs of Irish people sold out to financial interests.

Investment in social housing is seen to be at odds with the for profit vulture funds and the banking requirements of our creditors.

The credit unions have been ignored. Nothing is being built.

No action on above, no action on investment of our pension funds, other than to pillage to spend on the propping up of a failed Irish bailout. There is a frozen lack of ideas and even less action from politicians only concerned with their pension rights and salaries protected against the cuts in salaries faced by young teachers and young gardai.

There is no cross party support for a large investment programme as provided by other Irish governments in the earlier part of this century.

Perhaps too many members of the Oireachtas wealthy on the result of their property investments, do not wish to compromise same.

Part 111

Today young people earn less than their parents with prospect of inferior standard of living going forward while living expenses have skyrocketed. Young teachers, gardai and a huge range of public servants have little to no chance of owning a home in their lifetime.

Property has been acquired by the financial sector as a new speculative arm with ever more complicated arrangements ballooning debt and selling it as lure to trap the unwary.

Risky mortgages based on rising property prices were the keystone of a new speculative gamblers economy offering risky assets with prospect of fantastic returns to investors large and small including home owners.

It was an Enron scam. Those in early spread the word, those in last paid the piper of financial collapse, negative equity.

A fairer system of global taxation ending the casino manipulation and corruption inside the global financial system, is a long due reform of 1% interests outweighing those of the 99%.

In Ireland recent years have led to the current political stalemate consequent on support of the 1%.

The policy that ensure the 1% exploit the 99% is a policy fed by central bank manipulation globally; both in Europe and in Ireland it is a policy that is bound to fail.

Not only are the 1% fuelled by bailout but according to Sunday Business, March 27 “Elite syndicate in Revenue deal for ‘aggressive’ tax avoidance’. Revenue will not publish their names as part of a deal to make them pay up. Ireland’s 1% get special tax avoidance favours too.

This is the tip of the iceberg.

“Mossack Fonseca is not a household name, but the Panamanian law firm has long been well-known to the global financial and political elite, and thanks to a massive 2.6 terabyte leak of its confidential papers to the International Consortium of Investigative Journalists it’s about to become much better known. A huge team of hundreds of journalists is poring over the documents they are calling the Panama Papers.

The firm’s operations are diverse and international in scope, but they originate in a single speciality — helping foreigners set up Panamanian shell companies to hold financial assets while obscuring the identities of their real owners. Since its founding in 1977, it’s expanded its interests outside of Panama to include over 40 offices worldwide, helping a global client base to work with shell companies not just in Panama but also the Bahamas, the British Virgin Islands, and other notorious tax havens around the world.”(2)

Hopefully names will be published and unlike our Revenue Commissioners, journalists will reveal all.

Lastly, on a wider note, Greece has not gone away. On a wikileaks analysis Paul Mason has speculated the IMF is contemplating a credit event for Greece this coming July around the time of Brexit when the IMF may walk away from a restructuring of the circa €300bn of debt held by the ECB on Greece. See 4.

 

till again

 

 

 

  1. https://en.wikipedia.org/wiki/Deregulation
  2. http://www.vox.com/2016/4/3/11356326/panama-papers
  3. https://www.constitution.ie/Documents/Bhunreacht_na_hEireann_web.pdf (Article 43)
  4. https://medium.com/mosquito-ridge/imf-plots-new-credit-event-for-greece-534b4b300318#.f7gyaaw58

 

 

 

 

 

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