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Posts tagged ‘Goodbody Stockbrokers’

With unemployment soaring and an economy on its knees

DUBLIN (MarketWatch) — With unemployment soaring and an economy on its knees, thousands of Irish people are taking the drastic step of emigrating in search of better opportunities.


Data from the Central Statistics Office showed that, following 13 years of net immigration during the Celtic Tiger economic boom, more people left the country in the year ended April 2009 than entered it.

Preliminary figures for the following fiscal year showed the net number of departures rose fourfold and the total number of emigrants hit 65,300 — the highest level in more than two decades.

Ireland has a long history of emigration, most notably during the Great Famine in the mid-19th century. There have been several other periods of high emigration, including following World War II and during the 1980s, but that trend reversed sharply in the 1990s as the economy took off.


Dublin, Ireland


“People really, genuinely believed emigration was over,” said Noreen Bowden, a consultant and former director of the Emigrant Advice Network.

Even with the rising numbers of departures, there’s still a notion that the effect is temporary and that emigrants will eventually return, but Bowden doesn’t think there’s any evidence to back up that idea.

“If you look historically, there was a big period of return in the 1970s and also for the Celtic Tiger. But the Celtic Tiger’s return was driven by huge staff shortages,” she said.

That scenario doesn’t seem likely to be repeated.

The current downturn, which follows a slump in the property market and huge bailouts for the banks that funded the construction boom, has left Ireland facing 15 billion euros ($20.55 billion) of spending cuts and tax increases in a bid to persuade markets that it can repay its debts. See full story on Ireland’s budget woes.

Initially the emigrants were mostly Europeans who had moved to Ireland for work during the boom years, but more recently it’s younger Irish people who are starting to leave as they finish college and are unable to find a job, said Dermot O’Leary, chief economist at Goodbody Stockbrokers.

While the “brain drain” may be a cause for concern, the government is likely to be conflicted over its response as emigration also helps keep unemployment figures in check.

The Department of Finance made that link unusually explicit in its recent economic forecast for the next four years, effectively saying it’s needed to get unemployment back into single digits.

“Net outward migration will restrain the pace of growth in labor supply, which combined with the increase in net employment will reduce unemployment to under 10% by the end of the forecast horizon,” the Department of Finance said.

Outflow to accelerate

The Economic and Social Research Institute, an independent Irish research group, believes the official estimate of a 34,500 net outward migration in the year to April 2010 appears too conservative when compared with data from a separate quarterly household survey.

The institute has also increased its forecast for the net outflow in the current year, which ends in April 2011 — to 60,000 from 50,000.

Bowden said the figures would likely be even higher if it weren’t for the fact that some people simply can’t leave because they’ve found themselves in a debt trap, owing more on their mortgage than they could get by selling their house and moving abroad.

That’s resulted in an increase in families being separated as one person moves abroad to find work, while others remain in Ireland trying to pay the mortgage, she said.

The destination of emigrants is also changing as the traditional destinations of the U.S. and U.K. are also not doing well.

Instead there appears to have been an increase in the number of people heading to Canada, Australia and Asia, which brings further problems over providing support for emigrants, Bowden said.

“It’s one thing to be in trouble in New York, where you have two or three Irish centers to help you out. It’s another to fall between the cracks in South America or Asia,” she said.

Still, there could also be a longer-term upside to the fresh emigration as it feeds the Irish diaspora — the communities of Irish emigrants and their descendents across the globe.

The government has begun a review of how to forge closer ties with the diaspora, which recognizes how valuable it could be to the Irish economy in the years to come, Bowden said.

Simon Kennedy is the City correspondent for MarketWatch in London.

More Billions to go down the Irish banks black holes

A report from Goodbody Stockbrokers has argued that the State cannot bear the losses from the banking crisis on its own.

In a report on Irish debt levels, Goodbody says there should be some form of risk-sharing with bondholders. But it adds that Ireland cannot do this on its own, and should push for a Europe-wide solution to the problem.

Goodbody says some €21 billion of bank debt should be restructured now – otherwise there will have to be a restructuring of Irish sovereign debt some time after 2014. Goodbody economist Dermot O’Leary says a new government must act urgently, as two-thirds of these bondholders are due to be repaid over the next 24 months.

Goodbody estimates the savings to the taxpayer could be around €10 billion if a 50% haircut were applied to the outstanding stock of unsecured, unguaranteed senior and subordinate bondholders.

The stockbroker believes Ireland will not reach the target of a 3% of GDP budget deficit by 2014, as foreseen under the four-year plan. Instead it believes the deficit will still be 4.3%, and the debt/GDP ratio will reach 115%.

The report also warns that reducing Ireland’s debt to levels required by the EU Stability & Growth Pact could take 20 years of tight budgets, even if the targets set out for the next four years are met.

Goodbody says the costs of the banking crisis make it less likely that Ireland will be able to pay back its debts in the future. It has raised its estimate of the cost of the banking crisis to €57.5 billion or 36% of gross domestic product.

‘The new Government has a small window of opportunity to convince the EU that it is in everyone’s interest to implement a more comprehensive reform of the banking system, which recognises that the Irish sovereign can no longer support the burden alone,’ said economist Dermot O’Leary.

Other options suggested by Goodbody are allowing the European Financial Stability Facility to directly recapitalise weak banking systems such as Ireland’s or facilitate the sale of Irish banking assets through an EU-wide insurance scheme.

The Goodbody report also says a reduction in the interest rates charged under the EU/IMF bail-out is needed. It calculates that every one-point reduction saves €675m a year in interest payments.

Ireland will need more EU help to raise funds – NCB

Stockbroker NCB has said that Ireland will need further EU help after 2013 to raise funds. It says a lowering of the interest rate on EU loans would give Ireland a higher probability of weaning itself off aid by 2014.

The ‘Ireland Moves Forward’ report also identifies state assets that could be the first to be sold off to help the Government finances, including those in the areas of forestry, energy, networks and ports.

The report says Ireland can look forward to a two-tier jobless recovery in 2011 with exports continuing to grow but domestic demand remaining weak. It says that the country’s competitiveness has improved significantly through the economic downturn.

It also points out that foreign direct investment in Ireland increased significantly last year, despite the global pot declining by 8%.

NCB says the country will be rolled into the European Stability Mechanism (ESM), the permanent EU crisis mechanism to replace the current European Financial Stability Fund.

It says a lowering of the interest rate on EU loans would give Ireland a higher probability of weaning itself off aid by 2014.

But it argues that any post-general election attempt renegotiation of the terms of the EU/IMF financial support for Ireland would lead to a deal that looks ‘very similar’ to the existing one.

It says the only changes would be in the exact details of how the €15 billion in budgetary corrections in coming years are achieved. However, NCB does see changes to the interest rate taken at a European level as likely in the coming months.

Today’s report says the Irish banks remain reliant on the state for capital and on the ECB and Irish Central Bank for liquidity. It adds that the March stress tests will determine whether any additional capital is needed apart from the €10 billion already earmarked for the financial institutions.

NCB predicts that the National Asset Management Agency will be a major ‘dictator of activity in 2011’ and beyond.

NCB says the VHI, Coillte, Rosslare Port as well as energy sector assets like Bord Gáis and the ESB with generation and supply assets should be sold off ahead of network assets such as distribution and transmission.

Today’s report also says there are further falls in house prices with a further 10% fall from peak levels expected.

NCB says that the Irish equity market is no longer a reflection of the Irish economy. The report notes that Irish derived profits now represent 17% of overall profit in its sample of recommended Irish shares. That compares to 36% in 2006.

It says publicly quoted food and construction companies are likely to be active acquirers of other businesses this year, while the area of renewable energy/cleantech industries continue to be an area of significant investor interest.



As Max has been saying we are still not been told the real figures and we continue to get a drip drip feed on this financial disaster .Now Dukes comes out and tells us that we must pump 15 billion more into these toxic black holes that is now All of the Irish Banks

The two main contenders for the top jobs in the new Government are choosing to ignore the real problem that is because they are themselves not in a position to understand the debt of this financial meltdown

The Banks must be allowed to fold and a new commercial bank that has new capital be brought into existence. The new 15,000,000,000: and not forgetting the new 1,500,000,000 for Bank of Ireland  billion  could be better spent in a new jobs stimulus packet and new Bank credit for small business

For God sake anybody with a atom of sense should know this !

See the Republic of Ireland’s national debt mount up, a measure of the legacy the Irish Government is in the process of bequeathing to the children of Ireland:

€ 95,314,656,426

The FINANCE DUBLIN Irish Government Debt Clock was set at midnight on June 30th 2009, when it was €65.278 billion It updates the latest figures for the National Debt of Ireland. The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and independent economists.

Returning the economy to growth

Ireland Must Focus on Economic Recovery After Deficit Cut, Economists Say

By Fergal O’Brien – Oct 27, 2010 9:45 AM GMT+0100

Ireland’s government must now focus on reviving economic growth after announcing a 15 billion-euro ($21 billion) plan to cut its deficit by 2014, economists said.

The planned spending cuts and tax increases are twice as much as the government previously said it would put in place to narrow the budget gap to the European Union limit of 3 percent of gross domestic product in four years.

“It will be a tall order for Ireland to meet the 2014 deadline given the fragility of both the domestic and global economy,” Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin, said in a note to investors. “Ireland will have to generate economic growth if the target is to be met.”

Investor concern that Ireland won’t be able to lower the deficit due to the mounting burden of bank bailouts has pushed up the nation’s borrowing costs. Finance Minister Brian Lenihan will next month announce details of the budget plan, which he said will include a “significant frontloading” for 2011.

“With the scale of consolidation now known, the department’s strategy for returning the economy to growth” could “now be described as more important than the consolidation measures,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin.

Ireland’s budget shortfall will reach about 32 percent of GDP this year, due to a one-time spike from bank-bailout costs, the government said last month. Excluding that, the deficit will be about 12 percent.

Yield Spread

full aricle  at source http://www.bloomberg.com/news/2010-10-27/ireland-must-focus-on-economic-recovery-after-deficit-cut-economists-say.html

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