The Central Bank stated that the policy implications of its analysis is "stark". "Pre-crisis property-related borrowings have an economically and statistically large impact on the likelihood that firms will default on their 'core' enterprise debts," it stated.
It also said that the unlinking of non-core property related debt from the debts of otherwise potentially viable SMEs represents an area of "crucial policy importance".
Anyone want to guess what that last line means? Bad bank for sme debt? Nama? Some kind of ecb solution?
"I understand what you are saying about demand , but everyone loves a bargain, so demand slump will be short lived."
Take the everyone loves a bargin bit. I need to fill my oil tank here for the winter heating. On the news I hear that oil for november delivery is way cheaper than todays price. If I wait 3 weeks more I will have my bargin. But in 3 weeks I hear that oil for December delivery if even cheaper. If its not essential to buy yet I'll wait and have an even better bargain for Christmas. If other smart people like your self are thinking the same way then putting off that purchase becomes a self fulfilling prophecy.
Oil might not be the best example because cheaper oil is actually good deflation. On its own it would be a good thing and infact ireland will be a beneficiary of the cheaper oil because people here have the confidence to spend what they are saving and so boosting further the economy here.
In other countries of Europe that's not so true. Oil is cheaper so the expectation of cheaper transport and product production doesn't cause them to up spend the savings on other goods. It actually encourages them to save in the expectation of getting a better deal next month. Everyone loves a bargin becomes a danger to Europe's economy.
If a government could stimulate their economy in such a way that they put a floor on prices or push prices up even slightly that would change things immediately. At that stage the public attitudes changes and the fear of missing out on a bargain is much more of a driver than actually getting one. Europe is stuck in a rut and if they are not careful they are very likely to drag the US and UK and even ireland down with them.
Cheap oil will have a growth effect on europe, in my opinion.if investors see it the same way ,there will be a swift rise in european equities soon, as investors turn to exit mid east/asia for new growth.
I understand what you are saying about demand , but everyone loves a bargain, so demand slump will be short lived.
I believe this oil price war has been coming for awhile , an USA has been ferociously stock piling oil for this reason.
Europes low rate policies have given it the perfect shock absorbers for an oil bonanza.
..was reading Charles Schwab weekly stock report and found the mention of $80 dollar /B gas from Saudi Arabia.. generosity does not come suddenly.. politics are always behind these moves.. the recent conflicts from the middle east are enough to raise the white flag and plead for mercy..theron the $80 dollar/b gas..
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