The European Central Bank is proposing to stress test Irish Households by gradually increasing interest rates to see at what point the majority of households break down in distress. Ireland has the second highest proportion of owner occupiers in the developed world (and below only Singapore and Rwanda in the world as a whole) and all of those who purchased homes in the past 6 years are now in negative equity. Mortgage foreclosures have been rising exponentially as unemployment rises to 14% and are now set to reach the majority of recently established households as interest rates are increased.
“Our estimate is that 50% of households who bought in the last 6 years will be forced to foreclose but we have no understanding of why that hasn’t happened so far. Ireland represents an ideal laboratory experiment in determining how much stress a household can take before it collapses and this will be important in determining interest rate regimes for Europe as a whole in the years to come” according to ECB spokesperson April Weber. “It is important that the damage be contained in a limited area, and a small Island off the north west of Europe is the ideal location. We had hoped to encourage Iceland down this track, but they decided not to get involved.”
In an unrelated development the European Commission has launched a consultation document on wind utilisation and regulation which promises to be controversial in windswept countries such as Ireland. It proposes to make EU member states responsible for wind wastage on their territories and liable for the damage that wind can do to public properties in their leeward wind-scape. As Ireland is the “gateway” for 14% of the wind transiting Europe, it will carry the largest burden for moderating and regulating the wind hitting the rest of Europe.
In defence of the European Commission proposals on wind regulation, it has to be admitted that there is huge wind-spill wastage in Ireland at the moment, with only 0.0000002% of wind being captured for productive use and the rest left to run wild damaging crops, boats and poorly maintained buildings and with no realistic attempt to manage it better. This is like sowing a crop and harvesting only a tiny fraction of it except you don’t even have to sow it. People don’t appreciate what they get for free.
Only the worst storms are deemed newsworthy and no one blames the wind industry for its pitiful failure to manage and control this abundant resource. It seems the wind industry has the media bought and paid for – a bit like BP – and soon we’ll have our equivalent of US Republican leaders apologising to the wind industry for others blaming it for not making the wind safe.
It’s time we got the wind industry off our backs and force them to make our wind resources safe by capturing at least 50% of ground level wind and prevent it doing any damage in the future. Of course there will always be some storms that are difficult to control but that does not excuse the wind industry for its extraordinary wastage and corporate negligence in ensuring we have safe wind for all.
Bragging about record windfarm development in Ireland is only so much wind industry PR spin trying to distract us from the woeful reality that the wind industry has wasted more energy than the oil industry ever did. Only the solar panel industry comes even close in its profligate wastage of our natural resources.
The ECB’s proposals for stress testing Irish households are likely to be altogether more controversial. Essentially they have insisted that €70 Billion of banking losses be transferred from largely European investors in Irish bank to Irish households. “We cannot expect European banks to bear the responsibility for their poor lending decisions when Irish households have borrowed even more” explained April Weber, and added that “moral hazard is a concept more applicable at a family and personal level. This is a problem which originated in Ireland and it is only right that the Irish should carry the primary responsibility. The fact that Irish households where customers rather than investors of the banks does not reduce their responsibility to ensure he smooth operation of the market”.
The new Irish Fine Gael/Labour coalition government signalled its approval of the ECB proposals by taking full responsibility for making up the banking losses and with no reference to “burden sharing” with senior bondholders in today’s announcements of the results of the banking stress tests. “It’s all very well talking about burning bondholders in the heat of an election campaign” said a spokesperson, Larry O’Flahulach “but Governments have to live in the real world”. Meanwhile emigration is expected to reach record levels this year. Irish people who emigrate lose the vote the moment they embark. “We need to lose a few people who wouldn’t vote for us again anyway” a spokesperson added on condition of anonymity. “It’s called realpolitique.”
