January 15, 2008

British property market is no longer quite as safe as houses

Posted in Ireland · 24 comments ·
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‘Robopaddy’ has suddenly realised that buying property abroad doesn’t spread the risk.

Back in 2005 a strange creature emerged out of the Irish property boom. He could be seen at regional airports all around Europe, but particularly in Britain.

You might have seen him, sweating, laden down with paperwork, Celtic away strip with unsightly wet patches under the arm, squinting up at the monitor to see just how long the Ryanair flight from Teesside is delayed.

What does he care: he has just picked up half a dozen council houses in South Shields, just outside Newcastle, for half nothing. Do you remember the movie Robocop? Robocop went around the world trying to save the place, whereas our new character – Robopaddy – flies around the world trying to buy the place.

Like Robocop, he is an invincible good guy – an indestructible force – driven by his own mission, which is to buy as much foreign property as humanly possible. Robopaddy lives on his wits, by the seat of his pants. He is curious, adventurous and loves life.

He has never been to Newcastle until this one afternoon driving around in the company of a matey Geordie salesman. It’s not too bad really. The conversation revolves around Newcastle United, Shay Given and Gazza. The city is in the middle of its own buy-to-let boom. Rick the salesman sells about 40 per cent of his stock to Irish investors. They deal quicker and in bigger amounts than the equivalent English buyer, ask fewer questions and cough up deposits on the spot.

Rick purposefully drives him though the better areas, the leafy redbrick suburbs with clean Waitrose shopping centres, red pillar boxes and alarmingly precise road signs – all staples of upright, balanced, suburban England. The place is a shrine to red Vauxhall Astras, Courage pubs, dyed blond hair, sports and leisure wear and ill-advised Argos male jewellery endorsed by a premier league footballer.

This is Ant and Dec land – the interface of middle England and underbelly England which the Labour government is intent on privatising — and Robopaddy is a beneficiary, or at least he hopes he is. He checks out the show house, which has been vacated and tarted up for him. Neighbours peer over walls and from the white van parked in the driveway.

He’s seen enough, shakes on the deal, and by the time he is sitting down to his pale ale at the Formica tables in Teesside Airport, fruit machine flashing away as another work-shy feral Darren or Lee gambles away his giro, Robopaddy has added to his portfolio: ‘‘11 per cent yield – where would you better it?”

Today, in early 2008, Robopaddy is worried. His overall portfolio is looking shaky. He tried to offload the Geordie council houses and got nowhere. More to the point, he is now realising that his entire portfolio is interlinked.

It is slowly dawning on Robopaddy that the global property market, which he had argued was diversified, is in fact one large bet on a single asset class. Most crucially, this bet is subject to contagion.

When one market suffers, others do too. This idea of intertwining bets and contagion was reinforced for me years ago when I met an investor on a business trip to Hong Kong in 1997. A savvy investor, facing losses in Asia, he started asking questions about Ukraine where he had exposure. He flogged his Ukrainian assets to cover his Asian losses, despite the fact that there was nothing intrinsically wrong with the Ukrainian economy. The same is happening now in the global property market.

The Irish, who have been the biggest foreign investors in Britain, are now trying to flog their British assets to cover losses in Ireland. The only problem now for Robopaddy is that the British market is weakening quickly.

It is becoming apparent that the credit crunch in Britain is leading to the following dilemma: British banks are demanding more credit to restructure their balance sheets but other British banks are lending less because they are trying to do exactly the same. So the home builders caught in the middle with huge leverage are getting hammered. This is the macroeconomic backdrop which explains Robopaddy’s anxiety.

Because housing markets move slowly and underlying problems take months and years to play out, the best way to get a snapshot of the fundamental state of the British property market is to examine listed property shares. The picture is not pretty. For example, British Land’s share price has fallen by 45 per cent in the past year, wiping out all the gains it made in the past four years.

Last week, Britain’s second largest home builder announced that house sales had fallen by 14 per cent in the last quarter of 2007.TaylorWimpey, Britain’s largest home builder has seen its share price fall by almost 60 per cent, while Barratt Development has lost more than 70 per cent. Meanwhile, weakness from the housing market has seeped into industry with the Confederation of British Industry revealing this week that 44 per cent of its survey respondents confirmed declining order growth and 70 per cent believed the credit crunch would last longer than six months.

All this should be prompting the Bank of England to cut interest rates but it is in a catch-22 situation because underlying inflation in Britain is on the rise, particularly with food prices, which have risen by 5.3 per cent, and petrol prices, which are up 16.5 per cent. Even if the Bank of England wanted to cut interest rates to save the housing market, higher inflation prevents it.

This policy confusion is weighing very heavily on sterling which is below its all time low against the euro and still falling. Interestingly, the last time sterling was so weak, Ireland had a currency crisis prompting a major devaluation in 1993. This time we can’t devalue, so all the pain of the adjustment will be felt in the real economy, mainly through ever weaker house prices.

For Robopaddy – the swashbuckling property prince of a few years back – it’s becoming clear that all markets are related. The English market, which many Irish investors deemed to be stronger than our own, has proved over the past few months to be just as vulnerable. It is now not easy to sell in one housing market to offset losses in another. What goes up together, goes down in unison.


  1. AndrewGMooney

    Having had my bollocks in the vice of a mega-mortgage on Black Wednesday 1992, I vowed: “I’ll never make that mistake again”. And I haven’t. Financial sobriety. Slow but sure incremental and iterative gains. The hare and the tortoise, etc.

    The ‘wisdom of crowds’ is, once again, revealed to be mass hysteria. Mob group-think. Get rich quick or die tryin’ as 50 Cent put it. Only he is open about being an amoral thug gangsta. Unlike the average British Estate Agent.

    As mortgage costs rise inexorably on overpriced ‘assets’, the future opportunities are limitless for the wise and the cautious. Rent. And Save. Rent. And Save. Repeat until nauseous.

    Just as the ‘irrational exuberance’ of the last few years helped the buy-to-let class take leave of their senses, so the ‘neurotic fear’ of the downturn will take the property market to unrealistic lows. Then the ‘real players’ who have sold up to sit out the implosion will pounce. Like panthers. It’s called Capitalism. Winner takes all. Who’s Paddy last? Not me, mate.

    ‘RoboPaddy’ is perhaps the most extreme example of this, literally, hysterical belief in bricks and mortar as an investment class.

    Recently, Morrissey, another Anglo-Irish genius like myself, made the comment that Britain was unrecognisable due to unmanaged immigration. He was summarily put on trial by the ‘P.C Police’ for doing so.

    What he said is pertinent to this discussion:

    “If you travelled to Croatia tomorrow for instance, and walked around Zagreb hearing nothing but Dublin accents, you’d find it shocking.”

    Actually, Morrissey: I wouldn’t find it shocking in the least to find to find RoboPaddies piling on off-plan apartments to their portfolio. Well, I wouldn’t have found it shocking a few years ago.

    But, I have a feeling that the streets of Zagreb won’t be hearing many Irish or English accents for a few years, and that it’s eerily calm there today.

    My birthday is 11th September. Being a rational kind of eejit, I sold up on my spare property after Arse-O-Rama’s Big Spectacle. Naively assuming that The Feds would hold the line on ‘sound money‘. Well, they didn’t. They flooded us all with cheap cash and ‘new paradigm’ CDO’s, etc. Now we are all in a sub-prime twilight zone for a very long time. But some of us have prepared.

    You enjoyed the binge. Take the hangover like a man. Time to take a shower, or an early bath. There’s rules to this game, but lot’s of people don’t realise that they’re not the advertised ones. Until they face bankruptcy.

    Kind regards

  2. Nostromartus

    Excellent article but let’s not forget botox betty who bought a holiday home in florida and every other section of Irish society caught in this extended pyramid scheme. I wanted to respond to the “The game is up for the housing hype-peddlers”article but can’t find it, some of attacks on david in the comments section of the irish independent seem to say so what?, property will lose 15-25 of it’s value that only effects those whose bought in 2005 and 2006. This would have been true if there was an honest drop in the price in october 2006 when the writing was clearly on the wall, the advise given by the hype-peddlers was to hold out and not drop the price instead pull a fast one by having new developments offer incentives, like furnishings worth up to 15% of the value of the property. We have now dragged the property correction into 2008 when it will combine with the credit crunch and according to goldman sachs a U.S. recession to decimate a section of irish society who are over exposed to debts and dependent on multinational jobs maintaining pay increases in excess of inflation at a time when oil prices have broken through their highest ever recorded levels.
    I’m 32 and most of my friends who bought four years ago bought investment properties in 2006, the rest of my friends bought their first home in 2006, it was in 2005 when as david outlines with robopaddy that these young professionals were frantically trying to get in on the property game because they believed it was their turn to have a younger generation pay a mortgage for them ,as they had done for the jagger generation. The problem was the only properties they could get mortgages on were in the commuter belts, it became a ridiculous game , the whole point of which seemed to have more to do with bragging rights down the pub parroting Davy’s and daft.ie on projected earnings over the next ten years. The banks have been playing three card monte with the sub-prime debt since then and the knock-on effects of the oil crisis has exposed banks like citigroup as even worse debt junkies than anyone had expected.
    2008 is the handgrenade that’s going to be lobbed into the middle of the pope’s children, they’re going to be the first domino in irish society to fall victim to a global recession, eventhough I suspect these contributers unconcerned by a 25% drop in property prices are over 40 they fail to see their individual circumstances are the exception not the rule, I would argue it’s the numbers that matter, generally the popes children are extreme commuters, savings are unheard of and they move jobs every three years between multinationals who offer the best pay. The bono boomers and jagger generation have slaughtered the geese that laid the golden eggs, and they did it at least five years ago,the popes children simple don’t have the resources to survive 2008, despite having much higher pay than previous generations they have been systematically bled and have no actual wealth , but they do have a lot of debts. The first thing multinationals will do in a recession is cut jobs to maintain their share price, that will expose the popes children to hardship for the first time ever,forcing them to move to cheaper accommodation, in many cases sadly they will probably move back in with their parents. By 2009 the social effects will be obvious, we’ve had an indication already from the increase of men collecting unemployment as to who will be hit hardest , I would argue it’s young men with larger paypackets that were buying houses at the worst possible time.
    If you agree with Eddie Hobbs and I do, then women having children seriously impacts on their earning potential, so a greater number of couples will now be choosing between their mortgage and having children as both incomes are needed to pay mortgages. A social perfect storm will follow the economic one, a generation who barely remember poverty, who’ve rejected core values and who judge themselves based on economic success are as ill equiped socially as they are financially to survive a downturn.

    David’s new book title should be “THE POPES GRANDCHILDREN: revenge of the waynes” http://www.davidmcwilliams.ie/2006/03/08/when-waynes-world-meets-clockwork-orange. The Dublin commuter belts will become what Southill in Limerick once was, it won’t matter if you as an individual are financially stable, the disproportionate pressure of 2008 on parents will sow the seeds for an army of waynes. Economics is the invisible hand that guides all our choices, quite a few young men today might choose the pragmatic option of simply breaking up with long term girlfriends to maintain a standard of living they’ve become accustomed to, as one time these women were an asset doubling their monthly income, the reality of supporting a partner and children is like a cold bucket of water that brings their situation into focus. Men can act the maggot for another 10 years until house prices are more reasonable and will still be more attractive to younger women because of their disposable income, women on the other hand have a sell-by date, and after the age of 30 depreciation sets in. That’s cruel and simplified but how can an average male earning 30,000 euro with a 300,000 euro mortgage support a family, inevitably the financial pressure on these couples will break them up, at least enough to transform a disposable society into a fractured one. Yes there were always ghettos and waynes but it’s the concentration and numbers that dictate a societies course, in the past there were few choices couples reproduced themselves into poverty largely because they were slaves to religious dogma but now men and women both have parachutes earning similar amounts of money with few remaining social constraints. The pendulum has swung in the opposite direction to the point where many see starting a family as financial suicide, but that doesn’t mean there won’t be children. This will bring forth “THE REIGN OF WAYNE”, in the absense of a stable community most teenagers will mimic whatever behavior they see around them, while a generation disintegrates into the blame game of who spent what in the years prior to 2008, todays teenagers accustomed to money as a substitute for parental care will be looking elsewhere to maintain this income. If the popes grandchildren have learned anything from tribunals and the celtic tiger, it’s that money is god and nothing else matters.

    One in three houses were burnt out in Southill, with those kinds of odds applied to Lucan how much rental income do the bono boomers and jagger generation project over the next 10 years. Yes people have to live somewhere but being unemployed in Leitrim renting one of the large developers 20% social housing stock will become a lot more attractive than living in Dublin without well paid multinational jobs. Across all rental stock in 2008 people will be on the move to cheaper accommodation , immigration will probably slow to the point where renting apartments becomes financially viable and necessary.

    I’ve been an ardent “McWilliamite” for the last 5 years and I’ve been attacked for being so, it was blasphamy to even suggest restraint in the housing market especially among the popes children. But I’d hate to tell david what Wayne would do with his social contract idea.

  3. laura

    Interesting you mention British Land. As you may recall, they quietly withdrew from the Irish property scene about 4 years ago. Telling, indeed.

  4. Callan

    If you’ve got a site with full planning permission then there’s never been a better time to build. I was reliably informed at the weekend that blocklayers in Galway have reduced their prices from 1.20 – 1.30 down to 60 cent per block layed.

  5. Mark

    I so wish you’d stop trying to coin all these phrases like “Robopaddy”, “Botox Betty” etc. They make me cringe for you!

    But on the subject, you can’t deny that “Robopaddy” has made a tidy fortune over the last 10 years & with regard to the UK property market, ultimately it will recover strongly as structurally they have a HUGE undersupply of houses relative to their population growth…..

  6. David Mc Williams

    Cringe away Mark! Economics is far too important to be left to academics and their dry, inhuman analysis. No one is trying to coin phrases, rather I am trying to bring economics to life. Communication is about images. If you don’t like it, don’t read it!

    On you substantial point, the data show that the vast majority of Robopaddys got into the UK market in the past three/four years and, far from making a tidy fortune, most have not sold. So unless you are given to the panglossian impulse to value and asset before anyone has bought it, I’m not so sure about the “fortunes made”. Regarding the so-called fundamentals and supply, you could be right but as Keynes observed “these markets can remain irrational longer than you can remain solvent”

    Best, David

  7. SpinstaSista

    Nostromartus,

    The following is a cruel analogy but oh so true.

    “Economics is the invisible hand that guides all our choices, quite a few young men today might choose the pragmatic option of simply breaking up with long term girlfriends to maintain a standard of living they’ve become accustomed to, as one time these women were an asset doubling their monthly income, the reality of supporting a partner and children is like a cold bucket of water that brings their situation into focus. Men can act the maggot for another 10 years until house prices are more reasonable and will still be more attractive to younger women because of their disposable income, women on the other hand have a sell-by date, and after the age of 30 depreciation sets in.”

    I’m glad to know I’m a depreciating asset, if I were a piece of livestock I would probably be culled!

    I think that the above scenario has been in place for the last five years. Several of my male friends have no intention of getting married because of property prices/cost of living in this country. They have their skiing holidays, their nights at the pub with the lads, their trips to football matches – why would they want to settle down and scrimp and save to raise a family when the future in Ireland is so uncertain?

    In 10 years time men in their late 30s/early 40s may not be as attractive to younger women as they might think. The tables will be turned and there will be more single men than single women competing for women in their 20s. These girls will be choosing ambitious 20 something male graduates, not moribund 40 somethings playboys who, after years of playing around, are in a panic trying to settle down and replicate themselves.

    In my opinion, children are a privilege, not a right. You need a licence to own a dog but any idiot can have a child. Only those who are responsible and financially secure should have children. As it is, the very poor are having children to maximise their welfare payments, and the very rich are having children because they can afford it. Those in between cannot afford children – they are too busy paying off mortgages and other debts.

  8. SpinstaSista

    Nostromartus,

    The following is a cruel analogy but oh so true.

    “Economics is the invisible hand that guides all our choices, quite a few young men today might choose the pragmatic option of simply breaking up with long term girlfriends to maintain a standard of living they’ve become accustomed to, as one time these women were an asset doubling their monthly income, the reality of supporting a partner and children is like a cold bucket of water that brings their situation into focus. Men can act the maggot for another 10 years until house prices are more reasonable and will still be more attractive to younger women because of their disposable income, women on the other hand have a sell-by date, and after the age of 30 depreciation sets in.”

    I’m glad to know I’m a depreciating asset, if I were a piece of livestock I would probably be culled!

    I think that the above scenario has been in place for the last five years. Several of my male friends have no intention of getting married because of property prices/cost of living in this country. They have their skiing holidays, their nights at the pub with the lads, their trips to football matches – why would they want to settle down and scrimp and save to raise a family when the future in Ireland is so uncertain?

    In 10 years time men in their late 30s/early 40s may not be as attractive to younger women as they might think. The tables will be turned and there will be more single men than single women competing for women in their 20s. These girls will be choosing ambitious 20 something male graduates, not moribund 40 somethings playboys who, after years of acting the maggot, are in a panic trying to settle down and replicate themselves.

    In my opinion, children are a privilege, not a right. You need a licence to own a dog but any idiot can have a child. Only those who are responsible and financially secure should have children. As it is, the very poor are having children to maximise their welfare payments, and the very rich are having children because they can afford it. Those in between cannot afford children – they are too busy paying off mortgages and other debts.

  9. paddy cullen

    The 1990’s saw similar sizeable decreases in property prices that created much hardship for house owners in the United Kingdom who bought on borrowed money at the height of the bubble. When the property boom of the late 1980’s suddenly began to falter, most people either never noticed or refused to take heed. However, the signs soon became obvious when some began to notice that property was not selling as quickly as it had been. At the time prices continued to edge higher, but there was a distinct slow-down in the numbers of homes being sold and worry soon began to spread. In order to reduce the panic of the homebuyers/owners, the government described the slow down as a healthy breathing space that would permit the boom to continue for many years into the future. By the turn of the 1990’s, the imminent crash was obvious to anybody who cared to look realistically. People with mortgages where defaulting in increasing numbers. Practically everyone who had property in the UK where wiped out unless they acted fairly quickly after the previous price peaks of the late 1980’s. After the collapse of the UK property boom, investment in property lost some of its luster. The illusion of “good old bricks and mortar” was suddenly broken. It would be difficult to convince anyone who had purchased property in the UK around 1990 that property prices could only rise and never fall. It took until 1996 before steady growth reappeared in the housing market. For many, it had been a painful lesson in market economics. For the Conservative Government at the time, it also spelt the beginning of the end of their grasp on power.

  10. paddy cullen

    P.S There is one big difference between what is happening in the UK and what is currently happening in Ireland, the fact is that Ireland is facing a housing slump with higher and not lower interest rates. No country in the world has ever faced the prospect of negative equity and a falling housing market without the cushion of falling interest rates.

  11. Paul

    I have a very small mortgage, I was advised by a so called mortgage advisor, to borrow twice as much
    money as I eventually did, but I lived in the UK during the 1990′s so I never fully trusted the housing game
    after witnessing people losing the shirt off the backs, back in 1992 (some of them Irish). So I found a place
    that I could afford even if there was a downturn, much to the bewilderment of some friends and the bank. But,
    rather than patting myself on the back, I fear the worst for most of my friends who are now heading into negative
    equity on properties they have, not just in Ireland, but a lot of them ventured to the UK, and further. They used
    money they didn’t really have, they borrowed on the value of their Irish property to invest in these other countries.
    It is as if the whole nightmare of 1992 is coming back again, this time on the other side of the Irish sea, a lot of
    people in this country are in for a rough time over the next few years, it is very sad and depressing to watch.

  12. Stephen Kenny

    SpinstaSista
    I’m not altogether sure that marriage is so strongly related to property, wealth in general certainly, but not particularly property.
    The history of marriage is quite interesting. In the UK, the marriage rate peaked in 1970, and has been falling consistantly ever since. The general rule is that the marriage rate is linked, generally, to the economy. In boom times it rises (or falls at a lower rate), and in recessions it falls (faster).
    Marriage may make a resurgence, but even if it does, it’s unlikely to the be old fashioned “for life” model. Men and women both have, in general, too much to give up. Finally, what, pray, in the 21st century, has marriage got to do with procreation?

  13. SpinstaSista

    Stephen,

    I was responding to Nostromartus post above – scroll up and you’ll see it. He and his ilk are happy to have a live-in girlfriend who has a full-time job and helps to fund a comfortable lifestyle, but are not happy to take on the responsibilities of fatherhood and family life. Instead they would rather “act the maggot” for 10 years or so and are deluded and arrogant enough to think that they can pick up nubile 20 somethings when they are in their 40s and have a bit of financial padding. They’ll probably have a bit of belly padding as well, but that’s another story.

    Marriage has always been linked to property in Ireland – matches were made on the relative wealth of both partners until relatively recently. Traditionally Irish children could only marry if they could afford to do so – if not they either emigrated or stayed at home caring for the elderly.

    I fear for Irish society now that so many to have “middle-class” couples cannot afford to have children. The extremely wealthy can afford to have children but they always look after their own interests and don’t care about the rest of society. The extremely poor also have children regardless of whether they can afford it (the State can also look after the bill) and don’t care about the rest of society either. I fear that there will be an underclass of near-feral adolescents roaming housing estates all over Ireland in years to come, engaging in gang warfare and causing mayhem.

  14. Nostromartus

    I’d like to plead the Eddie Hobbs defence on this one, he recently made a statement that at a time when women are just starting to make money a.k.a wealth in their careers coincides with a period (ages 30-35)when they are most likely to have children thereby stalling their earning potential. Even if they do start back after maternity leave they still have to pay childcare fees, if you add in pay freezes and current inflation then they could find themselves in a lot of debt without even buying a house, hence stalled earning potential – (inflation + previous debts+ childcare)= depreciating asset. Where as a man can work through until he is 35-40 when economic conditions better suit him and he can use the wealth he has built up as a buffer against a downturn and the unbroken experience exponentially increases his earning potential. An accountant once told me that 6 months he spent travelling would mean a paycut on return to work even though he was fully qualified, his new employers had to bring him up to speed on the latest tax changes and they had to be confident enough in him to let him handle big clients. Even a short period out of work would require adjustment during which time an employer may not want to risk mistakes on big projects, so it’s time off plus time to catch up to reach even their previous position of trust.

    I was trying to point out a social micro-trend within the popes children group that will perpetuate the house price correction and feed a future social problem, it wasn’t meant to be a personal attack. You have 1 million people in Dublin 1.6 million in the greater dublin area , many of whom live in poorly planned commuter belts with few facilities, in the past it may have taken 2 generations of social deprivation to produce the concentration of vulnerable young people and Colosseum developments that would result in the kind of anti-social behavior that would really impact on society as exceptional and financially detrimental, but we’ve saved up whole estates of these young people and repeated obvious mistakes with a middle class who aren’t just going to be poor they’ll be in negative equity. So now we’ve created generational poverty that can’t be solved by the usual transition of wealth from parents to children as robopaddy’s pissed it all away on foreign developments using the family home as equity.
    I never said anything about marriage , if I had I would have told the story of breakfast roll man’s country cousin, this is the latest horror story doing the rounds. A young man around 35 who wasn’t terribly good at school but went into the building industry at the right time about 15 years ago, his father a retiring farmer had the equity in land to underwrite the loan his son needed to start his own business. He was making good money but there weren’t enough hours in the day, his father gave all his children land to build houses on and this meant breakfast roll man’s country cousin had the smallest mortgage in the country. Then he married his very attractive girlfriend of three years(big wedding), a year in they have a child , he buys his wife a 4×4 for her birthday, his parents comment on the lavish gift , she tells them where to go then files for divorce. The young man has to leave the house he’s paid the mortgage on until everything is sorted, it’s valued in 2006 and he has to get a loan for around half the value of the house to give to the wife plus child support and alimony eventhough she has a good government job, benchmarking = freemoney. But she goes further, the remaining parts of the farm are legally owned on the deed by the young man and his two brothers, more than likely some kind of tax dodge I assume ,the four stone walls plus a roof sitting on the land can legally be defined as a dwelling and so she applies for her share of this land as well. The judge tries to force a swift sale but after debate of the effects settles on a cash sum, all three brothers have to pool resourses to pay to keep the land. The ex-wife picks meeting times she knows will conflict with BRMCC’s business, he has to choose between his business and his daughter, both suffer, the ex-wife records dates he misses meetings or is late and will use these later when her alimony is up for review. Oh yeah when she left his house she took everything apart from one plate, one glass, you get the idea including the batteries out of the smoke alarm. This guy went from prince to pauper and took his family with him, he’s now a McDonald’s dad looking at 2008 in a deflated industry, and all that for 2 years of marriage.
    I don’t know how much of that story is true, for all I know he beat her for every day of that 2 years, but marriage forget it, 40-50% of marriages break down in the u.s., most cite money problems as a main contributary factor. Young men today can lose 25% plus on property or 50% of everything they don’t own or might make in the future.
    I have a brother who’s 40, the same age as David Mcwilliams, when he got married in 1994 his middle class wife came with a house paid for by her daddy, it cost 40,000 irish pounds, they sold a couple of years ago for 300,000 euro but bought a house for 410,000 euro, 10 years with no rent or mortgage while in a good job, but still with 3 children they say they struggle.
    Spinstasister I don’t agree with your Ed Walsh type idea of eugenics, poor people shouldn’t reproduce, if that happened no one would be having children. I remember seeing a burnt out house in the O’Malley Park area of Limerick on the paper for 10,000 euro, if I wanted to at the time I could have bought the plot and built a house on it but I wouldn’t last a week in there and I wouldn’t be able to resell to anyone. One third of the occupants in moyross are single mothers, I don’t believe anyone has a child for a couple of quid more dole, it’s more likely trying to escape the poverty trap they see men as a partner to get them out of hell, more often then not they land them with an other child and deeper in debt, it’s Desperation not a cunning money making scheme. I knew of one girl who had 2 children and ended up renting a house in Moyross with her boyfriend, in the short time they were there, they had their car burnt out once and stolen once, after several nights of constant anti-social behavior, this girl in her mid-twenties had a heart-attack, it was on the paper.
    I’d say yes to rebuilding southill, but properly fully resourced and crime mapped, I’d bulk buy all the holiday homes empty nine moths of the year for social housing limiting it to maybe 30 single mothers more per sea side town depending on population, and again fully resourced in order break up slums and free up city centre apartments and repopulate rural ireland. These women should be allowed to work 3 months of year during the busy summer season without any reduction in benefits and after 10 years have the option to buy their homes if their children have a good school record and haven’t set any other children on fire and in 15 years they can sell the houses. In smaller communities troubled children would be identified more quickly and wouldn’t get away with broken windows(rudi giuliani reference), the state is going to have to clean up the mess in most cases as sewege systems weren’t adaquate to support the numbers of new developments in these towns. The first things to be sold in a downturn will be holiday homes and the wifes people carrier.
    There was an infamous nightclub in Limerick where women with Electra complexes went to meet married and divorced men, it was a horrific sight of men pushing sixty with comb-overs, medallions , whiskey red noses and beerbellies with young women hanging off them. That was a level of hell I’d never like to see again, it reached it’s zenith in 1997 when it was still vulgar to be rich so no one talked about these places ,but there was a cross section of women of all ages there and the men were out numbered 2/1. Men today take a lot better care of themselves and so should preserve a lot better until 40.

  15. Hi David,
    I put together this Youtube Video about roboPaddy
    http://www.youtube.com/watch?v=TKB-s6La-xg
    Enjoy

  16. John

    David,
    There is more than a hint of outright snobbery in your article. Would you prefer to see your stereotypes drinking all day rather than trying to make some money? There is a large part of middle class Ireland who are willing a recession so that the so-called robopaddies will be put back in their place and the old order will be restored.We can go back to the Doctor/Solicitor/BankManager on top and all the rest kow-towing. No thanks!

  17. David Mc Williams

    Hi John, that’s not what i meant at all. I written extensively on why the credit boom facilitated a fantastic period of social anarchy where the old class system has been turned on its head. I’m all for this type of stuff because the Ireland of my teenage years was a country ruled by a tight-assed professional class who had access to credit and who strangled the place with their petty snobbery. This is a country i never want to go back to. I’m with you on your sentiments regarding “no thanks”. best David

  18. Garry

    Hi,
    Its hard to have any sympathy for our Robopaddies. I’m sure some of them are decent enough human beings, and most of them have been ripped off, driven mad by greed…

    But still there was always something distasteful seeing these guys (and girls) on their house shopping ‘holidays’ pricing people out of their own country. And whats worse, often behaving like complete c****s in the process.

    There is a huge story quietly unfolding in places like bulgaria where paddy last will end up with an apartment worth f*** all, but with an extra 100k on his irish mortgage, just to remind them ….

    Maybe the locals weren’t so stupid after all :)

  19. shtove

    I’m not really interested in the social effects of what’s happening – que sera sera. People will adapt.

    I think what we’re seeing in Ireland pretty much mirrors what’s been happening in parts of the US since 2005. A period of house price stagnation, accompanied by “it’s just a healthy pause” advice from vested interests, followed by declines in prices and increasing foreclosures and repossessions, increasing defaults on other types of debt, government advocating fiscal stimulus, central banks doing what they do to no effect – and, eventually, the whole mess spilling over in to the real economy with severe job losses.

    David’s point about cross-market contagion is sound. But an even more important point is that this incredible bubble in house prices internationally was inflated through lunatic lending. As the lunatic lending is taken off the table – again, keep an eye on the US – the bubble will be deflated internationally. So, anyone pointing to the UK and saying “but it’s different!” will be correct, but only insofar as the UK market crashes at a different pace.

    To my mind, this is all inevitable. The debate should now shift to the issue of whether we get sustained inflation or sustained deflation. Yields on US government treasuries in the long term are creeping down inexorably, suggesting deflation over the next ten years. Gold and other commodities have marched higher, and may go even higher, suggesting inflation for the next few years.

    I expect deflation. If you have cash and no debt, you’ll ride it out. If you have debt and no cash, you’re fewked.

  20. SpinstaSista

    “There was an infamous nightclub in Limerick where women with Electra complexes went to meet married and divorced men, it was a horrific sight of men pushing sixty with comb-overs, medallions , whiskey red noses and beerbellies with young women hanging off them. That was a level of hell I’d never like to see again, it reached it’s zenith in 1997 when it was still vulgar to be rich so no one talked about these places ,but there was a cross section of women of all ages there and the men were out numbered 2/1. Men today take a lot better care of themselves and so should preserve a lot better until 40.”

    Nostromartus, you could be right, and those young girls will take them to the cleaners!

  21. Garry

    shtove, the social effects are definitely what interests me. I dont give a toss whether we get deflation or inflation….. whats important is what is the effect on me, my family and the rest of us ….

    the comments already made on the celtic tiger are spot on… great stuff! maybe that nightclub closed down when there was better opportunities for young women other than bagging some rich oul fella. Maybe it’ll reopen again this year?, we could call it Greenspans

    just look at the War on Terror… some social effects…. 1) the public have become much more tolerant of information gathering, you never hear from the civil liberties crowd these days… people put stuff up on facebook that their parents would have went on protests about… 2) Even movies that were made just a few years ago could never be funded now… Michael Collins, even Independence Day… car bombs going off or rebels taking on empires is just a little too close to the bone for Hollywood.

    Given the fed has cut rates by .75% today whats going to happen. Will the US get Britain and the EU on board a “Coalition Of The Borrowers” in their new “War on Financial Probity”? Either way, its going to affect us

  22. Mark

    Hi David,

    Sorry about the cringe comment. I think I was in a bad mood when I wrote that. Maybe I’m cringeing at the thought of these ‘robopaddies’, ‘botox betties’, ‘breakfast roll men’ etc. I mean, is that what we’ve become? Ugh!

    I reallly need to get off this island for an extended period! Seriously……

  23. shtove

    Garry said,

    on January 22nd, 2008 at 5:17 pm

    “shtove, the social effects are definitely what interests me. I dont give a toss whether we get deflation or inflation….. whats important is what is the effect on me, my family and the rest of us ….”

    Well, deflation/inflation is THE serious one for everybody to ponder.

    Government will muck about and pretend to do things, but their efforts will be quite futile – in fact, they are certain to make things worse. Look how they let the bankers run away with the credit system during the “good times”! Those bonuses! O the humanity.

    Meanwhile, you and your family are set to take the brunt. If you think it’s deflation coming, then get out of debt. If it’s inflation, then you may be OK on your mortgage – so long as it’s WAGE inflation.

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