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Generational Dynamics Web Log for 9-Nov-2010
9-Nov-10 News -- Investors shrug off Ireland's growing debt problem

Web Log - November, 2010

9-Nov-10 News -- Investors shrug off Ireland's growing debt problem

Israel moving ahead with plans for 1,300 new apartments

Investors shrug off Ireland's growing debt problem

Interest rates (yields) on Ireland's debt surged again on Monday to fresh new highs approaching 8% interest, on concern that the nation's financial system is unsustainable, according to AP.

Even though interest rates are at historic high in several countries, investors don't seem very concerned, according to Canada's Financial Post, as they were last spring with the Greek debt crisis. "There is less systemic fears this time around," according to one analyst. "Then, there was much more concern that Europe as a whole would be dragged into recession."

Irish home loans nearing default <font face=Arial size=-2>(Source: WSJ)</font>

Irish home loans nearing default (Source: WSJ)

Apparently the reason that there's less concern this time around is that Ireland has enough money in reserve to stave off default for several more months, while Greece was facing an immediate "drop dead" date prior to the billion dollar bailout in May.

Nonetheless, there's little doubt that Ireland is in serious trouble. Like the U.S., Ireland had a huge real estate bubble during the heady days of the middle of the last decade, and now the number of foreclosures has been surging. More than 36,000 were at least 90 days behind on their loans as of June 30, according to the WSJ (Access), and nearly 200,000 Irish mortgages -- about one of every four -- is expected to be "underwater" by the end of this year. "Underwater" means that the bubble price of the home has collapsed so much that the home is worth less than the amount due on the mortgage loan.

Whenever analysts, journalists and politicians talk about these problems, they're always making the assumption that if we just wait another month or two, then the "V-shaped recovery" will kick in, and good ol' days of the bubble economy will return.

From the point of view of Generational Dynamics, that's impossible. The risk-ignorant Boomers and Gen-Xers have been burned, and they'll be risk-averse for the rest of their lives. Meanwhile, the worst is yet to come, as Generational Dynamics predicts that the financial crisis has barely begun, and will get much worse.

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Israel announced that it is moving ahead with plans for 1,300 new settlement apartments in East Jerusalem, thus shooting another bullet into the already dead "peace process" corpse. The U.S. State Department said that it was "deeply disappointed" by the announcement. Voice of America

The elections in Burma (Myanmar) on Sunday the re-elected the current government are widely viewed as sham. Reports of voter intimidation are widespread, and there was regional fighting between government forces and the Karen ethnic group, forcing 10,000 refugees across the border into Thailand. Independent

On Monday, speaking to India's parliament in Delhi, President Barack Obama endorsed India's bid for a permanent seat on the United Nations Security Council. This would require a renegotiation of the entire United Nations charter, since there currently can be only five permanent members -- U.S., United Kingdom, France, China and Russia. China will oppose any such status for India, of course, and the endorsement also places India's claim at a higher priority than those of Germany and Japan. LA Times

Canada is considering postponing full withdrawal of its troops from Afghanistan, and keeping 1,000 troops there to serve as "trainers," under pressure from the U.S. Globe & Mail

(Comments: For reader comments, questions and discussion, see the 9-Nov-10 News -- Investors shrug off Ireland's growing debt problem thread of the Generational Dynamics forum. Comments may be posted anonymously.) (9-Nov-2010) Permanent Link
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Generational Dynamics Web Log for 9-Nov-2010 9-Nov-10 News -- Investors shrug off Ireland's growing debt problem

Investors shrug off Ireland's growing debt problem

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Generational Dynamics Web Log for 9-Nov-2010
9-Nov-10 News -- Investors shrug off Ireland's growing debt problem