The ISEQ Thread Part I - March 2008 - October 2008 **LOCKED**

cactus flower wrote:

....NCB Stockbrokers' economists Dermot O'Brien and Eunan King, say that the population of the Republic will grow by 30% to over 5.3 million by 2020 with immigrants accounting for a fifth of the population, maintaining housing output at an annual average of 65,000 - more than a third of the UK's current annual housing output.

I have to say that as much as I respect immigrants I find it hard to get excited about the fact that it is projected that they will make up a fifth of the population by 2020. Food security, social cohesion, workers' rights, education problems and the consequent deprivation are all big issues. I don't think the few bob we get from such a huge amout of immigration in such a short space of time is going to make up for all that.

Zhou_Enlai wrote:

cactus flower wrote:

....NCB Stockbrokers' economists Dermot O'Brien and Eunan King, say that the population of the Republic will grow by 30% to over 5.3 million by 2020 with immigrants accounting for a fifth of the population, maintaining housing output at an annual average of 65,000 - more than a third of the UK's current annual housing output.

I have to say that as much as I respect immigrants I find it hard to get excited about the fact that it is projected that they will make up a fifth of the population by 2020. Food security, social cohesion, workers' rights, education problems and the consequent deprivation are all big issues. I don't think the few bob we get from such a huge amout of immigration in such a short space of time is going to make up for all that.

I think that the projection has got it wrong. I have been involved with scoping the assumptions for population projections. In Ireland population levels are very sensitive to economic fluctuations, and these are rarely sufficiently considered.

cactus flower wrote:

Zhou_Enlai wrote:

cactus flower wrote:

....NCB Stockbrokers' economists Dermot O'Brien and Eunan King, say that the population of the Republic will grow by 30% to over 5.3 million by 2020 with immigrants accounting for a fifth of the population, maintaining housing output at an annual average of 65,000 - more than a third of the UK's current annual housing output.

I have to say that as much as I respect immigrants I find it hard to get excited about the fact that it is projected that they will make up a fifth of the population by 2020. Food security, social cohesion, workers' rights, education problems and the consequent deprivation are all big issues. I don't think the few bob we get from such a huge amout of immigration in such a short space of time is going to make up for all that.

I think that the projection has got it wrong. I have been involved with scoping the assumptions for population projections. In Ireland population levels are very sensitive to economic fluctuations, and these are rarely sufficiently considered.

That's to do with our peripheral status and lack of demographic depth. We're a country which is less than 100,000 km squared and about 5 million in number. We don't have the mass of a UK or Germany to be a stable force. We need the economy to be strong to maintain and sustain things.

Bad news from AIG and Allianz. Could this push up the cost of insurance or lead to difficulties getting pay-outs or even a collapse by an insurer? If so there would be huge ripple effects affecting businesses in Ireland. On the other hand, will the insurers keep the prices down to court the little bit of business that is there? If they follow theexample of mortgage lenders, then I guess not.

It has been cut throat over the last year - our insurances went down by more than a half.

Back to 4372 today.

Something to interest youngdan and other followers of precious metals. The Swiss National Bank are getting ready to throw 1000 tons of gold onto the market.

Sorry the link is in German but Ard-Taoiseach my get the gist of it-

http://www.20min.ch/tools/suchen/story/24990645

Slim Buddha wrote:

Something to interest youngdan and other followers of precious metals. The Swiss National Bank are getting ready to throw 1000 tons of gold onto the market.

Sorry the link is in German but Ard-Taoiseach my get the gist of it-

http://www.20min.ch/tools/suchen/story/24990645

At 870 dollars per fine ounce, they'll get a very fine price for it. This would be the time to sell, not like Gordon Brown back in 2000 when prices were a fraction of current values.

Time to bump the Auld Lad off and flog his gold!

cookiemonster wrote:

Time to bump the Auld Lad off and flog his gold!

Bit harsh that surely there is another way to get at his dental work?

Did you notice that Zimbabwe has abandoned paper currency in favour of coinage, barter and petrol vouchers?

cactus flower wrote:

Did you notice that Zimbabwe has abandoned paper currency in favour of coinage, barter and petrol vouchers?

That doesn't surprise me at all. The paper the notes were printed on probably costs more than the value of the money printed.

Squire wrote:

cactus flower wrote:

Did you notice that Zimbabwe has abandoned paper currency in favour of coinage, barter and petrol vouchers?

That doesn't surprise me at all. The paper the notes were printed on probably costs more than the value of the money printed.

They should really get rid of a lot of the paper money in circulation. That could help in curbing the ridiculous level of inflation they have there. It's madness.

Ard-Taoiseach wrote:

Slim Buddha wrote:

Something to interest youngdan and other followers of precious metals. The Swiss National Bank are getting ready to throw 1000 tons of gold onto the market.

Sorry the link is in German but Ard-Taoiseach my get the gist of it-

http://www.20min.ch/tools/suchen/story/24990645

At 870 dollars per fine ounce, they'll get a very fine price for it. This would be the time to sell, not like Gordon Brown back in 2000 when prices were a fraction of current values.

Where's youngdan - didn't he predict a gold-related conspiracy theory, wouldn't this be a part of it? What will be the impact of this on world money? Speculators will have something other than oil to buy now or what so oil should go down? Though gold has been directly tied to currencies in the past this won't have a direct effect on currencies. Will it just be super rich getting richer and the Speculative getting more material to speculate on?

I expect this is the end of the commodities bubble for the moment. When the banks jump ship it is time to take your profits. The same thing started happening with land in Ireland acouple of years ago as the bank started selling off some serious property. Can anyone tell me how weapons industry stocks are going?

Zhou_Enlai wrote:

The same thing started happening with land in Ireland acouple of years ago as the bank started selling off some serious property.

Eg their own headquarters! And in the same month you had the owners of three of the biggest estate agents in the country selling their firms - HOK, Gunne and Colliers!

Zhou_Enlai wrote:

Can anyone tell me how weapons industry stocks are going?

Lockhead Martin is the world's biggest defence contractor. Its shares have stayed fairly static over the last year - they are slightly lower now than 1 year ago but higher than 3 months ago.

The second largest defence contractor in the world is the European Aeronautic Defence and Space Company, it is the largest in the EU. Its shares are considerably lower now than they were a year ago - abut 30% lower.

The third largest defence contractor in the world is BAE, a UK company which also manufactures alot of aircraft and has a large stake in airbus - this would presumably have an effect on its share value. Their shares have been fairly static over the last year.

There are always grubby little wars to make money on.

Squire wrote:

There are always grubby little wars to make money on.

Exactly. Especially if one is investing in Lockhead or BAe or something like that. BAe got a contract not to long ago to build new aircraft carriers for the UK didn't they? Something like a 20 year project so you can presume that they are a decent investment in that regard.

Isn't that what Buffet invests alot in? Stuff he knows everyone is going to need, railways and the like?

Well, I've had a good read at the weekend papers and various blogs (one's where traders are for the most part pessimistic to say the least) and I'm more perplexed than I've ever been. I'm not surprised oil has fallen far and fast given a worldwide slowdown in economic growth. Once it started to slide I wasn't surprised to see gold and silver follow suit, although there is no direct price correlation that I know of. What has surprised the troosers off me is the slide in the Euro. For all the talk about interest rates, the status quo was maintained last week. Any talk of impending Euro interest rate drops seems fairly premature even for "forward" thinking traders. Whose to say that the Fed won't be tempted to drop theirs. Sure, they don't have much room for cuts, but for all the manipulation of markets and the domestic economy, the domestic economy is still in serious trouble. Given the level of intervention, the economy really hasn't responded in kind. A few more quarter point drops might be necessary before the November elections.

So why is virtually every currency declining against the dollar? Who are buying these dollars and to what purposes? There was a serious self off on Euros last week for the dollar. Can anyone imagine why you'd want to sell Euros which can be invested in safe Euro bonds for dollars which can be invested in an ever burgeoning pool of Fed debt debentures? Is there some dollar denomiated asset that future investors/traders are just waiting to pounce upon? Get the answer to this question right and I reckon you can make a tidy profit.

On a local note, I just read that Ulster bank is thinking of taking equity stakes in construction firms who can't service their debt. This has several interesting aspects. One, there is finally some acknowledgement that after more than a year that Banks know that some construction firms won't be able to service their debt for some time to come. Two, some banks are able to forgo profits. Three, the banks may dig themselves in a deeper hole. I've worked for a decent sized constuction company in NY in a finance and marketing role. A construction business is essentially comprised of its management team, full stop. The offices and machinery are incidental and almost never costs of debts. All too often the properties the firm has built comprise the bulk of security against debts. Falling home prices ovbiously impact the the ability to cover the loan covenants.

This leads to several questions. How and when can Ulster bank expect to get its money back? How will it get a profit on the money lent? While foreclosures on properties finally gets the pain over with, Ulster bank now will become a mortgage lender, the owner of construction firms and no doubt is the landlord of 100's of properties which they haven't foreclosed on but have taken full title to and rent back to prior mortgage holders. If I'm an investor in RBS, I have to be worried about this. A bank should not be a large landlord nor should it be in the construction business. This is not a bank's function nor its area of expertise. Also I don't like the fact that is lent money out and now has no foreseeable ability to get the money back and hasn't made a profit on monies lent. Overall, the scheme and the bank deserve an F grade.

Two very interesting questions.

Firstly on the construction industry: here the banks have been giving developers interest holidays for some months. A lot of developers bought land in the last two years at very high prices ( I read that land prices doubled in 2007). They bought with bank loans and may have put up a certain amount of property along with the land itself. Their loan would have been interest only for the first period after which they would have aimed to be selling off the drawing board to pay the bank.

Up to the mid 2000s developers would have been careful and bought only subject to planning permission and in many cases only bought options to buy rather than outright purchase. Since then so many more buyers entered the market that sellers could demand outright purchase without conditions. The option for the developer was to stop trading or to buy on the available terms.

Consequently there are lads potentially in big trouble from several different directions.

Even before the crash, most sewerage systems in Ireland ran out of capacity (see our thread "The Throttling of Development in Ireland". A lot of developers are sitting on land with planning refusals due to lack of sewerage capacity,l or with planning conditions saying they can't start until a new public treatment plant is built. Planning generally has got much tighter and development on even zoned land on flood plains is being refused. Some developers bought land at prices that assumed high buildings would be permitted and have been refused. An Bord Pleanala is dealing with a large number of appeals against refusals.

Then, for a developer who has got planning permission, nothing is selling and there are a lot of unsold properties that people can't get mortgages for - banks are pushing for at least a 30% reduction on already reduced prices. Unemployment is going up at a rate of knots and there is likely to be a wage freeze. There are still people who want and need a house and can afford one but they would be mad to buy until they think the market has bottomed out.

The banks have loaned serious money and it doesn't seem likely that they will be getting all of it back. They are trying to keep the big borrowers afloat with interest holidays and delaying the repayment of capital. Some may survive to build again and others will not.

How long can the banks afford to do that? Are they taking equity because it makes their books look better than a bad debt would? Who would put a value on the land and property taken as equity?

To add to their joys, Irish banks are affected by US mortage products too.

It is interesting to note that the route of taking equity follows the Islamic banking model - Islamic banks take equity instead of interest and are expanding rapidly. However I don't think that they take the equity on unless the projects looks sound.

On the other question - decline against the dollar - that is a much more complex question as it relates to perception of both the dollar and the euro.

Would the euro have been affected by the No vote? Was the rise of the dollar more to do with the weakness of the dollar than any inherent strength in europe? Unemployment is rising, Lisbon has failed, the UK property market is in free fall and Europe has little in the way of oil and gas resources. The situation in Georgia won't help, and neither did Kosovo. It has an aging population. Europe looks to lack the advantages of the rising states China, India and Brazil in many respects. The ECB strategy in raising interest rates has not stopped inflation. Overall, it may just be that the fundamentals aren't that good.

There is an assumption that all developers are operating on good will and little else, many have land and property that they simply cannot sell. Quite a few still have substantial assets. The problem may be cash flow. They have over extended when the market turned. It really depends on the developer and the assets that are in place. Impossible to judge this without the detail. The Banks know that if those assets were thrown onto the market now they could well get buttons for them so they are enabling delay until there is some clear floor. May be clever enough move. Means less pickings for the vultures.

I must confess to being utter wrong footed about the dollar. No matter what way you look at it the US economy is on life support. Is there an orchestrated attempt to prop up the dollar? If so why and who gains? Who would take the risk of the apparently inevitable loss? I don't understand it. Perhaps it is just the market considering that there was an over correction in value? Or is it simply money flowing out of blotted commodities back into dollars? American investors who jumped ship returning?

I am not a great fan of precious metals (It's dead money in my reckoning). If you look at the price graphs over 10-15 years there has already been a massive increase in the value of gold and it slipping back a bit is against that background.

rockyracoon wrote:

So why is virtually every currency declining against the dollar? Who are buying these dollars and to what purposes? There was a serious self off on Euros last week for the dollar. Can anyone imagine why you'd want to sell Euros which can be invested in safe Euro bonds for dollars which can be invested in an ever burgeoning pool of Fed debt debentures? Is there some dollar denomiated asset that future investors/traders are just waiting to pounce upon? Get the answer to this question right and I reckon you can make a tidy profit.

Squire wrote:

I must confess to being utter wrong footed about the dollar. No matter what way you look at it the US economy is on life support. Is there an orchestrated attempt to prop up the dollar? If so why and who gains? Who would take the risk of the apparently inevitable loss? I don't understand it. Perhaps it is just the market considering that there was an over correction in value? Or is it simply money flowing out of blotted commodities back into dollars? American investors who jumped ship returning?

It's likely that the Euro and Dollar will bounce around like this between them for another few years until they settle at some point of equilibrium. The crux, at the risk of sounding monotonous, is energy. Remember that 87 million barrels of oil per day is consumed by the world and America alone uses 20 million barrels of that.


http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_20.pdf

America could make incredible savings if it broke this oil dependency or took advantage of the general worldwide dependency on oil-like products (could the States be getting geared up to produce algae oil on a big scale?) The automobile news that's coming from the states would also affect the oil situation - shrinking car lines and the noise about the appearance of electric vehicles like the Chevy Volt and the Tesla Roadster.

Could it be the Sleeping Giant waking up now or that correction happening that Squire is talking about? Here's the year Dow

http://www.bloomberg.com/markets/stocks/movers_index_dow.html

Here's what the Dow did last: Why now though - if indeed there's any concrete reason for it. Could the prospect of Obama getting elected have anything to do with it all? Or is it just testiment to the sheer power of the American economy?


I was talking to a fella working in Doonbeg Golf Course in West Clare over the weekend and he said visitor numbers are down 20% there - mostly Americans but more Europeans are turning up there now. The falling euro against the dollar should help bring the Americans back in the long run it is hoped.

Auditor #9 wrote:

Could it be the Sleeping Giant waking up now or that correction happening that Squire is talking about? Here's the year Dow

http://www.bloomberg.com/markets/stocks/movers_index_dow.html

Here's what the Dow did last: Why now though - if indeed there's any concrete reason for it. Could the prospect of Obama getting elected have anything to do with it all? Or is it just testiment to the sheer power of the American economy?

Don't make too much out of one day's movements. That could be little more than short covering by traders in Dow stocks. The Dow is down heavily on previous highs, and, when you look at average returns since the start of the decade, the Dow has barely covered the rate of inflation. The real return from the Dow over the Bush presidency has, in many cases, been negative since the core rate of inflation has exceeded the negligble returns the Dow has made since 2000. It would have to be about 15,000+ to be producing substantive returns. The only way to have made money over the past 8 years would have been to pursue a short-term investment strategy where you buy on the dips and sell on the highs.

Quote :

I was talking to a fella working in Doonbeg Golf Course in West Clare over the weekend and he said visitor numbers are down 20% there - mostly Americans but more Europeans are turning up there now. The falling euro against the dollar should help bring the Americans back in the long run it is hoped.

That's assuming that the currency markets favour the dollar in the long term which is unlikely given interest rate differentials, the inflation differentials, the financial imbalances and the credibility gap between the eurozone and the dollarzone

I don't buy it being about a possibility of reduced oil consumption, that is too far ahead. There is now massive investment in alternative energy but some of this will take quite a few years to mature and some of the more interesting developments may be in places like Japan.

There is something about this that defies sense. It is a huge flight of money back into the currency or out of other currencies. In the last 3 months the dollar has risen against the Yen from 97 where it fell to in March back up to 110. It fell against the Yuan and is now rising, this is crazy. If any currency should be rising it is the Yuan. There is no sense in this that I can see and that bothers me. I wouldn't hold dollars unless I was forced to.