A global recession is on the horizon - please read OP for mod warning

yes the investors are generally not Irish and are using an Irish entity for tax planning. It would still impact the economy as financial services is a large employer and it has potential to impact banks as they lend to funds etc.

80% of shadow banking are just vehicles to package up debt and sell to investors or are investment vehicles. They play an important role in the financial system in providing an active market. What scares people is the fact that they use derivatives. 80% of derivatives are pure vanilla forward fx & IRDs. It’s the 20% of both that are the unknown and where the risk is lying. It’s also where the returns are and most people will have an exposure if they have any investments or insurance.

Yes and no… it depends on the investor and the risks they are willing to take. it all boils down to fear and greed. The two things that move markets. When rates were low investors took risks chasing yield. (Greed) when rates rise they hear about investors getting burned and invest in safer assets as a result (fear).

Take for example an investor that purchased shares in a bank During the low interest rate environment they invested in bank A who were posting higher profit than other banks and as a result the share price kept rising due to other investors also chasing yield and not stopping to ask what is bank A doing that the other banks are not doing and what risks are bank A taking.

Interest rates rise which for a bank normally means more profit as they can get away with increasing their net interest margins. Bank A doesn’t benefit from the interest rate rises because of the risk they took on when rates were low other banks start showing a healthy profit and the share price of bank A collapse and investor that was also chasing yield gets burned.

The same happens with funds with investors chasing yield and investing in funds with the highest returns without understanding the risks. Rising rates generally expose the risks that were taken to get these higher returns. And yes these investors get gripped by fear and invest in a safer asset such as a money market fund instead so less money invested in other type of funds.

An investor that did their homework and invested in a fund with lower returns and lower risk is now benefiting from higher returns as rates rise they will still invest and may even invest more as their are more options to invest without taking on to much risk. They are the ones that generally do better over the long term and suffer less losses.

JP Morgan takes over First Republic Bank https://www.cnbc.com/2023/05/01/first-republic-bank-failure.html

Plenty of banks have failed and collapsed. It's just better to find a buyer. And when the system was threatened (e.g. 2008) it made sense to lend to the banks rather than let the system collapse.

If we look at e.g. Credit Suisse, on paper it's fundamentals were relatively okay, unfortunately it became the victim of contagion and panic (mainly due to it's optics)

...or maybe we should be nationalising some of these banks under such conditions, as according to some, potential buyers are also engaging in highly questionable activities!

...its common for financial institutions that end up in a bail out/insolvency situations, have in fact been engaging in high risk, and regularly illegal activities, fraud etc, and according to some, the institutions that end up purchasing such institutions, are also up to no good.....

no, from respected sources such as bill black....

...black has always been outspoken about these kind of outcomes and the behaviors that lead to such, and the fact, we have a very strong unwillingness to do anything about it!

...as always, dont worry about it so, all is fine within the global financial system!

....black has been banging this drum for decades now, he certainly didnt hold back during our own banking enquiry either!

Ireland bounced back... 🤣

We are still barely servicing interest on bailout loans and will continue to do so for generations.

Even more amazing when you consider we are up there with the wealthiest per capita countries in the world.

Must of been some cracking investments the ECB made in the last decade or so. Amazing performance turning 1 trillion into 7.7 trillion.

All payments due on all public debts have been made.

None of those factors listed are actually a measure of the irish economy - they are distortions caused by MNCs using tax vehicles here in ireland for booking offshore profits and assets (aircraft, IP).

The CSO recognise this and have a good explainer as to why modified GNI is a thing and what is removed from it and why.

Unless you with your full time job and part time farm know better than the central statistics office as to how to measure Irish economic activity?

Property appreciation and depreciation are included in both GDP and GNI figures. It is treated like any other asset class.

Retail sales starting to drop in quite a few countries lately. Germany has the biggest YoY fall since the 50's and yet the stock market keeps flying to the highest point ever.