Created on Sunday, 14 August 2011 20:27 Written by Tony Healy
The increases have come in for criticism from the Irish Brokers Association as being:
“out of step with the volatile economic situation across the euro zone” according to the Irish Times 13/08/11
However, the chief executive of the brokers’ association, Ciaran Phelan, said the bank’s actions “fly in the face of the stance that the ECB took last week when they signalled that there will be no rate increases for the rest of the year”.
Mr Phelan claimed the increases will make mortgage repayments “absolutely unaffordable and may result in further numbers of homeowners falling into default”.
The big issue here is that if workers are forced to pay out more for mortgages then they can’t spend that money on other things. The net result is that the market is cut. Less demand in the economy impacts on sales and makes it even more unlikely that the bosses will invest.
Mortgage interest rates and increases in the cost of loans and credit cards affect big layers of the population also. So the impact on the economy will be significant.
Phelan goes onto make some interesting points:
“The spread of the sovereign financial crisis to other EU countries has a silver lining for many hard-pressed Irish mortgage holders who are finding it increasingly difficult to meet their monthly mortgage payments,” Mr Phelan said. “With this degree of euro wide economic uncertainty, the threat of further rate increases this year has been lifted.”
Those Bank of Ireland mortgage holders who breathed a sigh of relief last week will no doubt be shook by the bank’s announcement yesterday, he said.
While sections of the bourgeois might take some satisfaction from the fact that the “heat is off” the Irish economy, the truth is that the instability in the euro zone in general will impact on the Irish economy specifically.
The problem for the government is that the self interest of the different banks and the financial sector in the state, as well as the different capitalist companies means that it is not possible to coordinate economic policy with any degree of certainty. The various first class passengers on the Titanic are all after securing their place in the best quality lifeboats. They want to maximise their profits and despite putting on an béal bocht and their protestations about the national interest, they have one overwhelming priority to make the working class pay for the crisis.
· We say make the bosses pay!