Very interesting article. The question of whether Ireland
should continue it’s addiction to growthism is one of the
most urgent facing Ireland today, however it is not one
that many dare to even dream of. It’s highly likely that
such an addiction will lead to a segregation of society
and a disintegration of community. As long as governments
believe that what Irish people want are policies that
facilitate continued growth and the enablement of a
consumer culture than they will continue to structure
their agendas to match. Perhaps that is what Ireland
wants, (it looks like it) despite any consequences,
however it’s high time we started some serious debate on
this topic in this county. The reaction to this report in
the public was either “it’s too good to be true” or ”
isn’t that great, there will be no housing crash”. I have
not heard one politician or commentator ask whether this
is really the future we disire for our country besides
yourself, so I commend you for doing so.

The ‘report’ engages the reader in ludicrous flights of
socio-economic fantasy; the authors pile the absurd upon
the ridiculous, in a positive cornucopia of cutting
satire. The comic effect is breathtaking and I must say,
my ribs still ache following my first reading.

So I say well done chaps on a masterful and highly
original effort. I look forward to more of the same in
the future.

Is this to mean David McEgo graces us by publishing two
articles a week? one in the indo and one here?

Best Regards,

David

Overlooked International Factors;
Oil, (self explanatory)
Japan’s recovery, it is already affecting the stock markets
in the Middle East. (as you have pointed out)
Germany’s recovery, the great interest rate debate in the
EU!!
Middle East instability, possibility of an Iraqi civil war,
Iran’s development of Nuclear weapons. The government’s
interference in the stock markets of their respective
country as happened last week.
Aids, at what point does a social crisis in Africa become
an economic one?
How the American economy fairs, bearing in mind their
astronomical debt!
The jobs that moved here from America, eventually moving to
India.
Global environmental factors, from natural disasters to the
green house effect/ controls to co2 output
European civil unrest, as in France.
And as you mention growth of the neo-European-rightwing, as
happened in Austria.

Overlooked Irish Factors
Oil, the cost of and where we will get it? Home heating;
the over priced houses need to be heated with over priced
oil, the balance will surely tip and of course petrol for
all these cars.
Pollution/ waste problems, sewage, garbage, co2
Roads, lack there of; where are all these cars going to
go???
Collapse of tourism, green Ireland???
Housing; where are all these houses going to be built, the
local councils are obscenely unproductive; and developers
control the market.
The growth of the underclass/ civil unrest
The lack of police on the streets and the rise of street
crime both petty thievery and more serious attacks.
Lack of investment in anything other than property
Dependence on foreign companies
The introduction of energy ratings on homes
Inflation after ssia’s flood the economy
Unlike Japan (as you have pointed out in the past) we have
No manufacturing industry.
Electricity, we can’t cope with this massive projected
demand, and indeed we rely on foreign imports in this arena
too.
And finally broadband, despite eircom’s great PR drive a
vast amount of Irish homes still don’t have broadband and
the entire network is completely outdated and unable to
deal with future extra million plus capacity.

thanks

But I do not accept that house prices will rise to 2 or 3
times what they are now, for a number of reasons:

1. Interest rates are probably going to rise over the next
few years, making houses totally unaffordable for most
people even at current prices, let alone double.

2. Wages growth would be restrained by the competition
from another million immigrants, which should limit house
price growth. If wage growth is not restrained, Ireland
will lose competitiveness and jobs, leading to recession,
emmigration and lower house prices.

3. Rental houses are not worth buying for the rental
return at current prices, with many new landlords putting
their hand in their own pocket every month to make the
mortgage payments (and reap the capital gain). Unless
rents increase dramatically, very few investors will be
able to bear the monthly negative cashflow of investing in
rental property at twice current prices, particularly if
interest rates rise. If rents DO increase dramatically,
see (4.) below

4. If house prices (and rents) double, and wages do not,
there will be mass emmigration. It will simply not make
sense to many people to spend 2 generations paying off a
mortgage of 20 times their salary for a semi-detached
shoebox in the middle of nowhere, when a 40-minute flight
away they can get similar job prospects and income, and
houses at less than half the price. If wages DO double,
see (2.) above.

In summary, either rising interest rates will kill house
prices, or uncompetitiveness will kill the economy, which
will kill house prices. Or both. Obviously the former
option is better, because that way we still have a
competitive economy.

A slightly off-topic rant, but relevant, is the subject of
inflation. In the financial press (including the SBP)I
regularly see articles or tables comparing the rate
of “inflation” in Ireland to that in other Eurozone
countries, like Germany or France. Now, every economics
textbook I’ve read defines inflation as “the fall in the
value of money”, and since Ireland and Germany use the
same money (the euro), their inflation rates must
therefore be the same. If prices in Ireland increase
faster than in Germany, it doesn’t mean that our inflation
rate is higher than theirs, it just means that Ireland is
getting more expensive and less competitive.