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Irish Economy Sinks Into Recession 'official'  
User currently offlineOA260 From Ireland, joined Nov 2006, 26854 posts, RR: 58
Posted (5 years 10 months 1 week 2 days 15 hours ago) and read 3267 times:

Well we are the first country in the EU to officially fall into recession!!

http://news.sky.com/skynews/Home/Bus...nomy_Shrinks_In_Its_Second_Quarter

The Republic of Ireland has become the first European Union economy to be pushed into recession by the credit crunch.
Irish gross domestic product (GDP) shrank by 0.5% in the second quarter compared with the previous three-month period, according to data from the Central Statistics Office.
That followed a contraction of 0.3% in the first three months of the year.
The technical definition of a recession is two or more successive quarters in which the economy shrinks.
Earlier this month, the European Commission predicted that the UK, Germany and Spain would also fall into recession before the year is out.

21 replies: All unread, jump to last
 
User currently offlineOhTheDrama747 From UK - Scotland, joined Jan 2005, 291 posts, RR: 0
Reply 1, posted (5 years 10 months 1 week 2 days 15 hours ago) and read 3251 times:

I'd be very surprised if the UK doesn't follow suit when the next Q results are due.

Doom and gloom ahead...


User currently offlineFalstaff From United States of America, joined Jun 2006, 6075 posts, RR: 29
Reply 2, posted (5 years 10 months 1 week 2 days 15 hours ago) and read 3248 times:
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I read in this month's issue of the American Breweriana Journal that the ailing economy in Ireland has been one of the causes for over 1000 pubs to close in the last year. Also Guiness has seen its market share drop due to pub closures and popular imports. There is now more Guiness sold in Nigeria than in Ireland.


My mug slaketh over on Falstaff N503
User currently offlineMD11Engineer From Germany, joined Oct 2003, 13968 posts, RR: 63
Reply 3, posted (5 years 10 months 1 week 2 days 15 hours ago) and read 3245 times:

I can well believe this. A big part of the Irish new economy was construction and real estate.
Similat to the US, banks handed out loans and mortgages like crazy, always on the assumption that the price of real estate would continously rise, so that the bank always would make a profit, no matter if the debtor would be able to pay back his loan or not.
Housing prices in Ireland were crazy, especially since there doesn't really exist a tennant market and legal protection for tennants (renting contracts in Ireland are typically signed for a duration of 6 months to 2 years, afterwards the rent is renegotiated).
Housing prices went up and up and soon belonged to the highest in Europe, but at the same time salaries (which are not very high in Ireland compared to the continent anyway) didn't follow, e.g. the people, no matter if tennants or buyers wouldf have to spent a bigger and bigger share of their income on accomodation.
Eventually housing prices reached a level at which people couldn't afford them anymore.
People started defaulting on loans.
Now come the American mortgage crisis. The Irish banks realised the danger and pulled out of the market (no more 100% financing for people with bad income prospects).
Real estate prices (and rents) dropped dramatically.
Lots of construction projects were stopped or abadoned halfways (alone within 2 miles around my girlfriend's house in Northern Dublin there are lots of half finished houses and developments, as well as in her block at least 30 houses standing empty. This obviously helped her when her landlady wanted to raise the rent again earlier this year. She just pointed across the yard to an emppty house and told the landlady, that if she would raise the rent, she and her two housemates would move into any of the empty places).

As a result many builders got laid off, increasing unemployment.

Jan


User currently offlineMD11Engineer From Germany, joined Oct 2003, 13968 posts, RR: 63
Reply 4, posted (5 years 10 months 1 week 2 days 15 hours ago) and read 3240 times:

Quoting Falstaff (Reply 2):
I read in this month's issue of the American Breweriana Journal that the ailing economy in Ireland has been one of the causes for over 1000 pubs to close in the last year. Also Guiness has seen its market share drop due to pub closures and popular imports. There is now more Guiness sold in Nigeria than in Ireland.

First, do you know how expensive beer is in Ireland (mainly due to alcoholic drink tax)? I'd pay at least twice for a pint of beer in Ireland than what I would pay in Germany. I think many Irish just can't afford it anymore.
During the economic boom, the attitude of the population has changed. Ireland isn't anymore a country of farmers and blue collar workers, who like to hag out in pubs, but instead there are more and more urban professionals, who watch for their health, work out etc..

Jan

[Edited 2008-09-25 09:06:28]

User currently onlineBraybuddy From Ireland, joined Aug 2004, 5643 posts, RR: 32
Reply 5, posted (5 years 10 months 1 week 2 days 13 hours ago) and read 3192 times:

What a year! A second shite summer and now the R word is official. No surprise though, given the doom and gloom that's been emanating from the airwaves for the last few months. If there is a good side to this, it will be some serious reforming of the bloated civil service, which has been milking-it for years. Also at last first-time buyers will have a realisitic chance of owning their own house (provided they're still in employment, that is). On the positive side, we're told our banks are sound and none are in danger of going under, and even more positively, Ryanair and Aer Lingus are having sales every couple of weeks.  Smile

I guess it's batten down the hatches for the next couple of years. It's going to be a BUMPY ride!

Quoting Falstaff (Reply 2):
I read in this month's issue of the American Breweriana Journal that the ailing economy in Ireland has been one of the causes for over 1000 pubs to close in the last year.

I don't know where they got their information from, but it's news to me. Pubs have been closing at a rate of one a week for the last couple of years: the smoking ban a couple of years ago was the start of their demise. Stricter enforcement of the drink driving laws was a further nail in their coffin. The newly minted recession will add to that for sure, but their problems have been around for years.


User currently offlineClassicLover From Ireland, joined Mar 2004, 4627 posts, RR: 23
Reply 6, posted (5 years 10 months 1 week 2 days 13 hours ago) and read 3183 times:

The last recession I recall was the one in Australia around 1991. It wasn't a particularly good time, however things weren't quite as bad as the newspapers made out.

Recessions are a normal part of an economic cycle - though it's the first one in Ireland since 1983. It'll be interesting to see how Ireland weathers the storm. I believe things will be perfectly fine again in time.

The economy can't expand forever.



I do quite enjoy a spot of flying - more so when it's not in Economy!
User currently offlineFalstaff From United States of America, joined Jun 2006, 6075 posts, RR: 29
Reply 7, posted (5 years 10 months 1 week 2 days 12 hours ago) and read 3161 times:
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Quoting MD11Engineer (Reply 4):
During the economic boom, the attitude of the population has changed. Ireland isn't anymore a country of farmers and blue collar workers, who like to hag out in pubs, but instead there are more and more urban professionals, who watch for their health, work out etc..

Same in the US. The alcohol consumption rate has gone down dramatically in the last 50 years.



My mug slaketh over on Falstaff N503
User currently offlineShamrock604 From Ireland, joined Sep 2007, 4161 posts, RR: 13
Reply 8, posted (5 years 10 months 1 week 2 days 11 hours ago) and read 3154 times:

Pubs are not closing because of a slowing economy...

The economy was still booming when these closures began. High drink prices, the smoking ban, and a serious crackdown on drink driving (which was a problem in rural areas with limited public transport) has all lead to a fall in pub patronage. Many are now also entertaining at home....



Flown EI,FR,RE,EIR,VE,SI,TLA,BA,BE,BD,VX,MON,AF,YS,WX,KL,SK,LH,OK,OS,LX,IB,LTU,HLX,4U,SU,CO,DL,UA,AC,PR,MH,SQ,QF, EY, EK
User currently offlineAndaman From , joined Dec 1969, posts, RR:
Reply 9, posted (5 years 10 months 1 week 2 days 9 hours ago) and read 3108 times:



Quoting OA260 (Thread starter):
Well we are the first country in the EU to officially fall into recession!!

A Finnish paper says Denmark was the first EU country to fall in into recession, Ireland was the first one from the EURO-zone. Well, I guess the rest will follow, Finland later next year perhaps...


User currently offlineGosimeon From Ireland, joined Jan 2008, 663 posts, RR: 0
Reply 10, posted (5 years 10 months 1 week 1 day 21 hours ago) and read 3042 times:

Whilst in recession, we are certainly not experiencing the doom and gloom days of the past, as some abroad might think. A large amount of our economic growth was due to a housing boom.That has subsided and growth has stalled, but it is predicted the housing market will pick up by mid to late summer 2009 and confidence will come back into the market again. I do not think we will have the sort off unemployment and emigration we once had. Things are still good here compared to most places, and more skilled employment sectors are currently experiencing growth, the attitude on the streets seems to be "we can beat this".

I am not too worried. We will continue to be a strong economy. We will always struggle when the US gets in to trouble though, no surprise considering the two nations and economies are so intertwined.


User currently offlineOA260 From Ireland, joined Nov 2006, 26854 posts, RR: 58
Reply 11, posted (5 years 10 months 1 week 1 day 20 hours ago) and read 3023 times:



Quoting Gosimeon (Reply 10):
Whilst in recession, we are certainly not experiencing the doom and gloom days of the past, as some abroad might think. A large amount of our economic growth was due to a housing boom.

True but if the economist is right on Prime Time last night then this is just the tip of the iceberg.


User currently offlineJWMD123 From Ireland, joined May 2006, 867 posts, RR: 0
Reply 12, posted (5 years 10 months 1 week 1 day 20 hours ago) and read 3015 times:



Quoting OA260 (Reply 11):
True but if the economist is right on Prime Time last night then this is just the tip of the iceberg.

I think this was a worst case scenario.

If you drill down into the figures, you will see the underlying economy is surviving, due such a dramatic slowdown in the construction sector this is putting us into recession.

I think though that we will pull out of it this year.

Don't forget, Ireland has one of the lowest debt levels in the EU and we can borrow at government level to stimulate the economy.

Although I do qualify this comment that the bailout has to happen in the states. If not, the world economy will be up the creek without a paddle.


User currently offlineShamrock104 From Ireland, joined Sep 2000, 523 posts, RR: 1
Reply 13, posted (5 years 10 months 1 week 7 hours ago) and read 2923 times:



Quoting OA260 (Reply 11):
True but if the economist is right on Prime Time last night then this is just the tip of the iceberg.

RTE are just killjoys!


User currently offlineStasisLAX From United States of America, joined Jul 2007, 3280 posts, RR: 6
Reply 14, posted (5 years 10 months 1 week 6 hours ago) and read 2916 times:

I'm just hoping that the U.S. doesn't move right through "recession" into "depression" given the horrid poltiical games that the Congress is playing with Wall Street right now. And most Americans see right through the White House's promises (which are lies) that we (as taxpayers) will get paid back for the $1+ trillion USD financial sector bail-outs when the real estate market rebounds.

To put the severity of the bail-outs in context, it is costing every American family between $9,000 and $10,000 USD to shore up the investment and banking sectors. It will cost even more if the government decides to approve a $50 billion USD (plus any additional state monies granted) bail-out of the American automakers.

The nationalization of corporate losses and the privatization of corporate profits continues to ignite anger among most of Americans. I'm now really thankful that China continues to finance the exploding U.S. debt, otherwise this country would be in even worse shape!

[Edited 2008-09-27 17:52:04]

[Edited 2008-09-27 17:54:12]


"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
User currently offlineBaroque From Australia, joined Apr 2006, 15380 posts, RR: 59
Reply 15, posted (5 years 10 months 6 days 23 hours ago) and read 2886 times:



Quoting StasisLAX (Reply 14):
The nationalization of corporate losses and the privatization of corporate profits continues to ignite anger among most of Americans. I'm now really thankful that China continues to finance the exploding U.S. debt, otherwise this country would be in even worse shape!

The question is what will be the descriptors of that shape in about 3 years time?

Hope you do not acquire Chinese quality milk at the same time as their money!

Good luck as they say. Or best of British might be fairly appropriate when the City finds out what has happened to it!


User currently offlineBaroque From Australia, joined Apr 2006, 15380 posts, RR: 59
Reply 16, posted (5 years 10 months 6 days 23 hours ago) and read 2885 times:



Quoting ClassicLover (Reply 6):
The last recession I recall was the one in Australia around 1991. It wasn't a particularly good time, however things weren't quite as bad as the newspapers made out.

Recessions are a normal part of an economic cycle

However that recession was special and was designed to benefit the Australian economy which has been the beneficiary of this far sighted policy ever since. It was, as it does not take me to remind you, the "Recession we had to have".

And I do not need to remind you that even in those times of double digit interest rates, mortgage repayments were a smaller fraction of household income than they became under the severely misguided rule of my successor when official interest rates were close to 5%.

Signed

Paul Keating


User currently offlineHapppyLandings From , joined Dec 1969, posts, RR:
Reply 17, posted (5 years 10 months 5 days 13 hours ago) and read 2786 times:



Quoting ClassicLover (Reply 6):
I believe things will be perfectly fine again in time.

I agree 100%... This doom and gloom is a product of the media mainly... Some places will have it worse than others, and before we know it everything will be dandy again...

Here in Toronto there is not a sign of any economic downturn... Real Estate has slowed down, but not much, and prices are still on the rise although not as quickly as 6 months ago.

Everyone is welcome in Toronto  Smile


User currently onlineBraybuddy From Ireland, joined Aug 2004, 5643 posts, RR: 32
Reply 18, posted (5 years 10 months 5 days 11 hours ago) and read 2765 times:



Quoting HapppyLandings (Reply 17):
I agree 100%... This doom and gloom is a product of the media mainly... Some places will have it worse than others, and before we know it everything will be dandy again...

Indeed. As one commentator here put it recently: "This is the beginning of the next boom".


User currently offlineKaitak From Ireland, joined Aug 1999, 12411 posts, RR: 37
Reply 19, posted (5 years 10 months 3 days 12 hours ago) and read 2686 times:



Quoting Shamrock104 (Reply 13):
RTE are just killjoys!

I'd say "economists" are killjoys; I think it's irresponsible of people to come out with things like this, just scaremongering. Who was this guy? George Lee?

The government's decision to offer a guarantee for bank deposits is proving attractive to UK investors; indeed, I work in a company where lots of assets are being moved from equities to more secure investments and the guarantee offered by the govt gives a huge amount of security. I think there is a huge capital inflow at the moment, but what happens when the time limit comes to an end in 2010? Will there be an equally large outflow then?

Quoting Braybuddy (Reply 18):
As one commentator here put it recently: "This is the beginning of the next boom".

That's the way we need to be looking at it! This is an opportunity to position ourselves for the post-recession world.


User currently offlineCumulus From United Kingdom, joined Aug 2006, 1402 posts, RR: 1
Reply 20, posted (5 years 10 months 3 days 12 hours ago) and read 2683 times:



Quoting Kaitak (Reply 19):
That's the way we need to be looking at it! This is an opportunity to position ourselves for the post-recession world.

For those who survive..............



What Goes Up Must Come Down, Hopefully In One Piece!
User currently offlinePrebennorholm From Denmark, joined Mar 2000, 6389 posts, RR: 54
Reply 21, posted (5 years 10 months 3 days 11 hours ago) and read 2676 times:



Quoting Andaman (Reply 9):
A Finnish paper says Denmark was the first EU country to fall in into recession, Ireland was the first one from the EURO-zone. Well, I guess the rest will follow, Finland later next year perhaps...

What strange Finnish newspaper wrote that? How strange that we haven't seen any credit crunch yet.

It is true, however, that one small, local niche bank failed even before the US credit crunch took speed. It was totally self induced and unrelated to foreign affairs. It was down on its knees already a year ago when the manager was fired and replaced with a more sensible person. But too late.

The former manager has said "I'm sorry". Game over!

As I see it the Nordic countries excluding Iceland are virtually unaffected by the crunch. Of course we watch it carefully and fear that we could be hit one day.

Here in Denmark our major concern is that businesses in Germany might be somewhat affected by decreased export to the US. If Germany should slow down considerably, then it is expected to a minor effect to affect our export to Germany, which is our largest trade partner.

We also have a substantial export to the US, at least on a Danish scale, not on a US scale. But it is mostly medicine and other such products which will remain largely unaffected by the credit crunch.

But of course there are in all Nordic countries some individuals who invested heavily in US junk bonds. And who dreamed about a three port garage with both Porsche and Ferrari. They can just as well stop dreaming. As things are now they will keep their old Ford for the time being. And so what? In every gamble there is a looser.

The largest Danish bank has taken a direct hit worth half a billion kroner (a hundred million dollars) from the credit crunch. That's about 5% of their estimated 2008 profit. Not nice. But also nothing to really worry about.

On the other hand we might also in the end benefit slightly from the crunch. During the last few years considerable Danish assets (especially retail related) have been sold expensively to foreign balloon investors. Some of those assets might be available cheaply to Danish investors in the near future.



Always keep your number of landings equal to your number of take-offs, Preben Norholm
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